BGR Energy Y 2013 Earnings Call 29 May’13
Operator Ladies and gentlemen, good day and welcome to the BGR Energy Systems Limited's Q4 FY13 Earnings Conference Call, hosted by Edelweiss Securities Limited. As a reminder, for the duration of this conference all participants' lines will be in the listen‐only mode. There will be an opportunity for you to ask questions at the end of today's presentation. Please note that this conference is being recorded. At this time I'd like to hand the conference over to Mr. Rahul Gajare from Edelweiss Securities. Thank you and over to you sir.
Rahul Gajare, Analyst Thank you, Inba. Good evening everybody. I welcome you all to the conference call of BGR Energy to discuss the fourth quarter earnings. From the management we have Mr. V. R. Mahadevan, Director ‐ Technologies; Mr. K. S. Chandrashekhar, Director ‐ Projects; and Mr. P. R. Easwar Kumar, President and CFO. We will have opening remarks from the management, after which we will move on to the question answer session.
Thank you and over to you sir.
V. R. Mahadevan, Director ‐ Technologies & HR Good evening to all of you. We have Mr. Easwar Kumar our CFO, who would give you the financial highlights for the last quarter and for the financial year '13; we will then wait for your questions.
P. R. Easwar Kumar, President & Chief Financial Officer Good afternoon. The financial highlights for the quarter four and the year ending FY 2013, I am just reading it out. The completed fourth quarter ended 31/03/2013 achieved a turnover of 1,063 crores. This is against 805 crores achieved in the third quarter of FY '13. For the full year, the turnover was 3,106 crores as against 3,445 achieved in the last year. We were able to maintain our EBITDA margins in the year FY '13. EBITDA for FY '13 was healthy at 13.90% compared to 13.74% in the previous year, in line with the management guidance of 12% to 14% of EBITDA in the year ‐‐ for the year ending FY '13. The company has had a net profit of 164 crores. This translates into an EPS of 22.68.
A decrease in net profit on year‐on‐year basis is partly on account of higher interest costs. However, during Q4 FY '13 interest costs have declined sharply in terms of percentage of turnover. The closing order book as of 31/03/2013 is about 11,000 crores. This excludes the Darlipali NTPC turbine order which were taken into our order backlog last year. We had clear L1 in one of the BOP contracts which is valued at 1,500 crores. This order book is of ‐‐ for 12,500 crore; gives us a revenue visibility of four years. The (inaudible) constitutes 95% of our order book. Capital goods segment order book stands at 600 crores. These are the three preliminary remarks. We would be willing to take up the QA session. Over to Rahul.
Questions And Answers
Operator Thank you very much sir. Ladies and gentlemen, we'll now begin the question and answer session. (Operator Instructions). Our first question is from Renu Baid of B&K Securities. Please go ahead.
Renu Baid, Analyst
Good evening, sir.
P. R. Easwar Kumar, President & Chief Financial Officer Good evening, Renu.
Renu Baid, Analyst Sir, my question, first question is with respect to the execution that we have done in the fourth quarter and overall for the year. If you could share details with respect to, how does this breakup between the BOP and the EPC projects? And individually if you can just give a broad status of how does your order book compose between the various EPC and power projects that we hold today, especially the BTG, non‐BTG portion of that?
P. R. Easwar Kumar, President & Chief Financial Officer Fine. Out of that, for the year ending, the total turnover was 3,106 crores, out of which 2,777 crores came in for the Thermal Power Projects division, out of which Mettur and Jalawar constituted about 630 crores, Chandrapur and Marwa constituted about 850 crores, Krishnapatnam 750 crores and TRN about 550 crores. As far as the division ‐‐ the product divisions are concerned, that was a balance of about 330 crores of the product by division turnover.
Renu Baid, Analyst All right. Sir, for fourth quarter will it be possible for you to share similar details?
P. R. Easwar Kumar, President & Chief Financial Officer Yeah. The fourth quarter number, in the Power Project division, we get to 935 crores. Out of 935, TRN is about 300 crores, Krishnapatnam is about 280, Marwa and Chandrapur is about 225, and Mettur and Jalawar is about 130.
Renu Baid, Analyst Okay. And for the order book, how does the breakup stand between the EPC as well as the BTG projects?
P. R. Easwar Kumar, President & Chief Financial Officer Out of total of 11,000 crores order book, the NTPC order is at about 7,200.
Renu Baid, Analyst Right.
P. R. Easwar Kumar, President & Chief Financial Officer And TRN and Krishnapatnam we have 1,300 crores.
Renu Baid, Analyst Okay, sir.
P. R. Easwar Kumar, President & Chief Financial Officer Chandrapur is about 670 crores.
Renu Baid, Analyst 670 is how much, sir?
P. R. Easwar Kumar, President & Chief Financial Officer Marwa and Chandrapur.
Renu Baid, Analyst Right.
P. R. Easwar Kumar, President & Chief Financial Officer And Jalawar and Mettur is about 120 crores.
Renu Baid, Analyst Okay, sir. This would be largely towards Jalawar where the unit two, the last portion is left?
P. R. Easwar Kumar, President & Chief Financial Officer Yes. And of course, the product divisions, at Air Fin Coolers we have about 100 crore; Environmental Engineering 75 and Oil and Gas and Engineering division, electrical and equity is about 420 crores.
Renu Baid, Analyst Sure. Sir, with this, my first question has been ‐‐ my follow‐up question here is the order book if you look at on the BTG, non‐BTG portion of the business, that largely should be executed in the current year '14.
V. R. Mahadevan, Director ‐ Technologies & HR Correct.
Renu Baid, Analyst And some portion of EPC, BTG for NTPC will be booked.
V. R. Mahadevan, Director ‐ Technologies & HR Yes.
Renu Baid, Analyst So overall if we look at financial year '14, we should be able to grow still 15%, 20% plus or you think that could be difficult given the current execution headwinds which are there?
V. R. Mahadevan, Director ‐ Technologies & HR Right. That's the topline, I think we should grow between 20% to 25% at least.
Renu Baid, Analyst
Okay.
V. R. Mahadevan, Director ‐ Technologies & HR That would be the requirement as for the project execution that we need to do.
Renu Baid, Analyst But along with this because the share of TRN project as well as the BTG portions will increase so that will essentially moderate down the margins to about 10%, 11% levels or lower?
V. R. Mahadevan, Director ‐ Technologies & HR We would expect something between 11 to 12.
Renu Baid, Analyst Okay.
V. R. Mahadevan, Director ‐ Technologies & HR Because, I think most of the package contracts for the boiler and turbine also are under finalization now. And we are able to see the sort of volumes [ph].
Renu Baid, Analyst Okay. And the last question, if you can just throw some light in terms of how the debt side is looking, we have the balance sheet available, but within that how are you looking to further bring down the debt levels in the next 1, 1.5 years? And your status on the Hitachi JV, how has the work progressed and incremental investments that are lined up in the next 12 months?
V. R. Mahadevan, Director ‐ Technologies & HR Yeah, now in terms of the debt in the books, I think the working, what we have is the ‐‐ basically the working capital debt of about 2,150.
Renu Baid, Analyst Right.
P. R. Easwar Kumar, President & Chief Financial Officer Which is about outstanding on account of working capital to the banks. And of course ‐‐ but there is no other long‐term loans, the long‐term loans is about 20 crores.
Renu Baid, Analyst Yeah, that's minimal.
P. R. Easwar Kumar, President & Chief Financial Officer Yeah. So one of the ‐‐ and we are expecting that for the completed projects, the retention money is we should collect about 300 crores in the next three months time, which will go to reduce the working capital limit, plus (inaudible) of execution of NTPC contracts where we are backed by LCs, we expect that the utilization of working capital will come down substantially. But the yearend probably we should look at at least 300 crore, 350 crore reduction in working capital limit.
Renu Baid, Analyst Because broadly for the year and last two, three quarters the debt levels have remained flattish.
P. R. Easwar Kumar, President & Chief Financial Officer Correct.
Renu Baid, Analyst So that should translate into lower debt if you look at towards the end of '14 or probably because of equity commitments and other things, working capital for other projects, that might still remain at similar levels?
P. R. Easwar Kumar, President & Chief Financial Officer No for the projects on hand completely, we've tied up all the working capital requirements, that are the bank guarantees are other requirements have already been met. So, no, I don't expect that the working capital limits for the NTPC project will be too much by the year end. So in effective, the working capital limit should come down by '13, '14.
Renu Baid, Analyst Okay. And the status of the JV? That's the last question.
V. R. Mahadevan, Director ‐ Technologies & HR Yeah, Renu this is Mahadevan here.
Renu Baid, Analyst Yeah, good evening sir.
V. R. Mahadevan, Director ‐ Technologies & HR Good evening. Let me give you a brief update on the current status of the JV.
Renu Baid, Analyst Sure.
V. R. Mahadevan, Director ‐ Technologies & HR You are aware that we have signed a State Support Agreement with the Tamil Nadu government for our projects. And we have the building approval for the boiler plant already in hand. And on the boiler front we are looking at starting production in the last quarter of calendar year FY '14 ‐‐ last quarter of the calendar year. And with regard to the steam turbine generator plant, we are looking at the production start in the second quarter of calendar year FY '15.
Renu Baid, Analyst Okay. Second quarter calendar year '15, yeah CY '15.
V. R. Mahadevan, Director ‐ Technologies & HR That's right.
Renu Baid, Analyst Sir essentially the work at site has begun for the JV?
V. R. Mahadevan, Director ‐ Technologies & HR Yes for Solapur we already commenced construction at site.
Renu Baid, Analyst And at the factory how has the progress been there?
V. R. Mahadevan, Director ‐ Technologies & HR The supplies are predominantly from sub contractors for the structures which is going on right now.
Renu Baid, Analyst Right
V. R. Mahadevan, Director ‐ Technologies & HR Once the structure in place then the pressure pack have to be erected and we expect that Hitachi will be supplying this pressure pack will ‐‐ because we certainly expect them (inaudible).
Renu Baid, Analyst Right. Because my largely concern on the factory progress comes from the fact that the Hitachi MHI JV is in pipeline.
V. R. Mahadevan, Director ‐ Technologies & HR Yeah.
Renu Baid, Analyst So is there any thinking from the parent, the original technology partners and from Japanese heads, in terms of how the course of action would be for Indian JVs which is yet to begin operation and the factory is yet to come up.
V. R. Mahadevan, Director ‐ Technologies & HR See for the entire.
Renu Baid, Analyst Any clarity on that side?
V. R. Mahadevan, Director ‐ Technologies & HR This is not an issue with regard to NTPC projects because it was not envisaged to make any supplies from the JVs factories for NTPC projects.
Renu Baid, Analyst
Right.
V. R. Mahadevan, Director ‐ Technologies & HR The supplies are predominantly in the case of Steam Turbine Generators being completely imported from Japan.
Renu Baid, Analyst Right
V. R. Mahadevan, Director ‐ Technologies & HR And in the case of Boilers, the pressure parts for most of the units coming from Hitachi Power Europe. So the JV's supplies would predominantly be for projects which we will secure over the next year or so, that will the first starting orders for the JV.
Renu Baid, Analyst Right. Sir will the JV continue to participate in new projects even if there is not much clarity on the global front?
V. R. Mahadevan, Director ‐ Technologies & HR Number one is, we have absolute clarity that the JV will continue.
Renu Baid, Analyst Sure.
V. R. Mahadevan, Director ‐ Technologies & HR And of course will participate in bids.
Renu Baid, Analyst Sure. Sir thank you so much and I'll get back with more queries if any. All the best sir.
V. R. Mahadevan, Director ‐ Technologies & HR Thank you.
Renu Baid, Analyst Thank you.
P. R. Easwar Kumar, President & Chief Financial Officer Thanks Renu.
Operator Thank you. (Operator Instruction). We will take our next question from Vaishnavi G of Citigroup Global Markets. Please go ahead.
Atul Tiwari, Analyst
Yeah. Good afternoon sir. Sir this is Atul here.
V. R. Mahadevan, Director ‐ Technologies & HR Yes Atul, good afternoon.
Atul Tiwari, Analyst Sir I have a broader question on the outlook for order inflows. What is your sense on the market situation in terms of ordering from new power projects over the next one to two years, are you seeing any new projects in the pipeline and could you elaborate more on that?
R. Ramesh Kumar, President ‐ Corporate & Secretary Hello. I am Ramesh Kumar here.
Atul Tiwari, Analyst Yeah, sir.
R. Ramesh Kumar, President ‐ Corporate & Secretary Yeah. During the current year, our focus will be predominantly the BOP opportunities. And we are already L1 in one of the BOP tender and we have identified certain specific projects where the coal allocation issues or the environmental related issues are not there. We have identified certain projects and that would be about close to 12,000 crore order pipeline.
Atul Tiwari, Analyst 12,000 megawatt?
R. Ramesh Kumar, President ‐ Corporate & Secretary No, 12,000 crore.
Atul Tiwari, Analyst 12,000 crore.
P. R. Easwar Kumar, President & Chief Financial Officer 12,000 crore. Because that consists of ‐‐ except two, all are BOP projects. And BOP projects, we have ‐‐ traditionally having very strong position in terms of cost as well as the price. So we are quite confident this year the order pipeline would improve significantly. And we are also looking at certain large package orders like Coal handling plant and the induced draught cooling tower for Lara and Raghunathpur. And coal handling plant, we have been using our design engineering capability to do part of our own job. Now, we have started bidding two NTPC where the projects are large.
Similarly, IDCT, we are doing currently IDCT for Solapur 2 x 660 megawatt. And Lara 800 megawatt two units and Raghunathpur two units of 660, two we've been bidding for. So that would give a clear pipeline and we have also started looking at the Middle East market on gas projects. There are large number of projects are coming up now, both in Saudi Arabia and other regions and we have started doing exploratory effort in that direction, irrespective of the other NTPC opportunities and BTG opportunities within India.
Atul Tiwari, Analyst Okay. And sir, this L1 project is this UP project that you spoke about?
P. R. Easwar Kumar, President & Chief Financial Officer Beg your pardon.
Atul Tiwari, Analyst Sir, this BOP tender in which you are L1 ‐‐
P. R. Easwar Kumar, President & Chief Financial Officer Yeah.
Atul Tiwari, Analyst This is in UP, right?
P. R. Easwar Kumar, President & Chief Financial Officer No, no. That is in Orissa.
Atul Tiwari, Analyst That is in Orissa. So sir, I mean, very broadly, the set of power projects which you have identified which do not have fuel or environmental issues, how much megawatt it will be there and how many projects are these?
P. R. Easwar Kumar, President & Chief Financial Officer So, in terms of megawatt it will be about 5,900 megawatt.
Atul Tiwari, Analyst 5,000 megawatt?
P. R. Easwar Kumar, President & Chief Financial Officer 5,900 megawatt.
Atul Tiwari, Analyst 5,900 megawatt?
P. R. Easwar Kumar, President & Chief Financial Officer Take about 6,000 megawatt roughly.
Atul Tiwari, Analyst Okay. And sir, which are these projects? These are in private hands or these are central power sector utilities or state hold?
P. R. Easwar Kumar, President & Chief Financial Officer They are central utility, state utility, both are there.
Atul Tiwari, Analyst Okay but the private IPPs are not there, is it?
P. R. Easwar Kumar, President & Chief Financial Officer We have looked at private IPPs for the purpose of order pipeline.
Atul Tiwari, Analyst Okay.
P. R. Easwar Kumar, President & Chief Financial Officer So those will be working on few opportunities but there are some recurring those opportunities for the purpose of budgeting and the order book in this financial year.
Atul Tiwari, Analyst And sir, what is the timeline of ordering of this? When are the bids likely and when will they be decided?
V. R. Mahadevan, Director ‐ Technologies & HR In few cases, bids are getting prepared. In one tender, the bid is already approved by the Board. It's a question of time, the publication, the paper. So these bids are expected to come the next quarter and all the tenders are likely to be finalized during the financial year itself.
Atul Tiwari, Analyst Okay sir, thank you sir, thanks a lot.
Operator Thank you very much. Our next question is from Nirav Vasa of Motilal Oswal Securities. Please go ahead.
Nirav Vasa, Analyst Hello.
V. R. Mahadevan, Director ‐ Technologies & HR Hello.
Nirav Vasa, Analyst Yeah. Thank you very much for the opportunity, sir. My first question pertains to the Orissa BOP order in which we are the lowest bidder. Sir what my understanding is that BHEL has already received the BTG contract for the same and we are still seeing that we are L1, so have we not received the LOA for the project and can you give some update why it is being getting delayed, in case if it is?
V. R. Mahadevan, Director ‐ Technologies & HR Normally, if you see there is a time lag between BTG order and BOP order because ‐‐ so BTG order is given, the BTG supplier has to give certain data. For the BOP contractor to design and to do the engineering. So it is a delay. The process have to be completed.
Nirav Vasa, Analyst Sir by what time can we expect this to be a final order?
V. R. Mahadevan, Director ‐ Technologies & HR I think this quarter it should ‐‐ mid June or end of June it should come.
Nirav Vasa, Analyst In 1Q?
V. R. Mahadevan, Director ‐ Technologies & HR Yeah.
Nirav Vasa, Analyst Sir, can you please help me with the retention money lying with the clients, and if possible breakup of that retention money?
P. R. Easwar Kumar, President & Chief Financial Officer Yeah, sure. The retention money is about 1,250 crore.
Nirav Vasa, Analyst Yes.
P. R. Easwar Kumar, President & Chief Financial Officer For the ongoing projects.
Nirav Vasa, Analyst Ongoing, okay.
P. R. Easwar Kumar, President & Chief Financial Officer Yeah, which has not fallen due for payment. So in respect of completed projects, it's about 350 crores.
Nirav Vasa, Analyst And sir, this 350 crores, is this amount that you had stated in earlier opening comments that you want to receive and lower your debt, am I right on that?
V. R. Mahadevan, Director ‐ Technologies & HR Correct, that's right.
Nirav Vasa, Analyst Sir, my other query pertains to the advance that you have received in the entire year, can you give me that number please?
V. R. Mahadevan, Director ‐ Technologies & HR The advance from customers, is it?
Nirav Vasa, Analyst Yes, advance from customers, especially from NTPC.
V. R. Mahadevan, Director ‐ Technologies & HR From NTPC, we have received advance for Lara, Solapur and Meja, that's about 650 crore.
Nirav Vasa, Analyst Total?
V. R. Mahadevan, Director ‐ Technologies & HR Total, yes.
Nirav Vasa, Analyst And from other customers?
V. R. Mahadevan, Director ‐ Technologies & HR Other customers, already ‐‐ we have seen that is under execution, like executed at TRN and Krishnapatnam. So total customer advance is about 1,000 crores.
Nirav Vasa, Analyst Sir and my last question pertains to the pricing scenario which is happening in the industry. Sir, the pricing bids that we had seen in Suratgarh and Chhabra seems to be really very, very excessive. So are you still sensing that that aggression would still there in the price bids which ‐‐ in which you have already put your bids and what's yours general scenario in terms of pricing that you are seeing?
And if I can just trick this question, my earlier understanding was that, BGR Energy was interested only in turnkey contracts, but now you have stated that you've started bidding for the coal handling plant and other aspects of the NTPC, which has given in packet system. So are we shifting our strategy from a turnkey contractor to also an EPC player who would be doing smaller jobs for NTPC as well? Thank you.
V. R. Mahadevan, Director ‐ Technologies & HR Basically, the package contracts they are doing where we already have contracts for boiler and turbine. In fact, we are bidding for package contracts in NTPC, and we already doing the boiler package and turbine package. So we already mobilize and resource is available there. So we are ‐‐ although NTPC as a customer, now we are quite confident about the execution and payment terms. So we are comfortable in bidding for package contracts there, (inaudible) bidding for package contracts in NTPC projects.
Nirav Vasa, Analyst Sir, only for NTPC that you are doing this, right?
V. R. Mahadevan, Director ‐ Technologies & HR
No. As of now, it is NTPC. But looking at opportunities we can always keep our options open. But the focus would be more on BOP contracts now, because they are already having about six boilers and two turbines will be executed in the next four to five years time. And probably that would require lot of resources to be put into that execution. And you probably wait for a year, because we start bidding for boiler, turbine contracts. We also expect that most of the contracts will get finalized normally post 12 months. So that's the reason why the focus is more on BOP and package contracts of NTPC.
Nirav Vasa, Analyst Sir, and the pricing scenario, can you give what's your understanding, it's still very aggressive or some bigger (inaudible) that very high degree of aggression while bidding for these projects, and it was seen in Suratgarh and Chhabra?
V. R. Mahadevan, Director ‐ Technologies & HR Yeah. I think after the price bids of NTPC were finalized, if you look at most of the contracts that were awarded, it's normally quite similar to our pricing or slightly lower than that. For one reason, could be of course that opportunities are less, but if you look at going forward, when the market picks up, probably the pricing levels can go up.
Nirav Vasa, Analyst Yeah. And sir, last question if you can allow me. The CapEx guidance for the subsidiaries, can you give for both the boiler and turbine unit for this year?
V. R. Mahadevan, Director ‐ Technologies & HR The total investment that we have planned for the boiler and turbine is now 3,000 crores. So it's reduced from the earlier expectation of 4,500 crore. And so the total equity that we need to put in is about 900 crore, our portion is about 650 crores. We have already invested 250 and we expect to invest the balance 400 crore in the next two, two and a half years. Probably '13, '14 could be about 100 crores.
Nirav Vasa, Analyst 13', '14 amount, can you please repeat, please?
P. R. Easwar Kumar, President & Chief Financial Officer About 100 crores.
Nirav Vasa, Analyst 100 crores?
P. R. Easwar Kumar, President & Chief Financial Officer Yes, that's right.
Nirav Vasa, Analyst And can you give this breakup of 100 crores in terms of what would be the amount for the boiler and what would be the amount for the turbine?
P. R. Easwar Kumar, President & Chief Financial Officer It will be more of boiler, because turbine, we've started construction only in January. It will be more of boiler.
Nirav Vasa, Analyst Okay. So boiler would be around 100 crore investment that you would be doing?
P. R. Easwar Kumar, President & Chief Financial Officer Almost.
Nirav Vasa, Analyst And sir, the debt syndication for this ‐‐ both the manufacture units, is it in place?
P. R. Easwar Kumar, President & Chief Financial Officer You already had in specific clearances from ‐‐ sanctions from SBI and IDBI. It will go back to them the way it's cost, I'll get it to you.
Nirav Vasa, Analyst So by what time are you expecting to arrange the ‐‐ to have a firm tie‐up for the debt of both of these projects?
P. R. Easwar Kumar, President & Chief Financial Officer In the next three months time.
Nirav Vasa, Analyst Next three months. Thank you very much, sir.
P. R. Easwar Kumar, President & Chief Financial Officer Thank you.
Operator Thank you. (Operator Instruction). Our next question is from Amol Rao of Anand Rathi. Please go ahead.
Amol Rao, Analyst Good afternoon, gentlemen. Sir, just to clarify a certain aspect of the Suratgarh and Chhabra bids that were recently announced. Sir, these bids were announced for the EPC execution of the project. Am I correct, sir?
P. R. Easwar Kumar, President & Chief Financial Officer Yes, that is right.
Amol Rao, Analyst Sir, and I mean, having seen the pricing, as previous participant asked, sir, I mean the pricing is working out to an EPC realization of almost around 4.6 crores to 4.5 crores per megawatt. So sir, I mean, our conventional understanding was that just the component supply, the BTG supply was usually around 4.5 crores to 5 crores per mega watt, and now you have EPC execution of 4.5 crores to 4.6 crores per megawatt. So is there, I mean, a massive, I mean, correction in let's say costing due to desperation in the system or, I mean, is there something wrong with my understanding about the bids, sir?
P. R. Easwar Kumar, President & Chief Financial Officer I think your understanding is wrong.
Amol Rao, Analyst Yes, sir.
P. R. Easwar Kumar, President & Chief Financial Officer The boiler, turbine generator by itself is not 4.5 crore.
Amol Rao, Analyst Okay, sir.
P. R. Easwar Kumar, President & Chief Financial Officer That is more closer to the 2.5 crore range, of course, it depends upon specifications and so on. So it is not the complete boiler, turbine generator which costs 4.5 crore and it has cost some and there has been a massive fall in prices.
Amol Rao, Analyst Okay, sir.
P. R. Easwar Kumar, President & Chief Financial Officer It is boiler ‐‐ BTG is only around 2.5 crores.
Amol Rao, Analyst Okay. All right. And sir, in this contract it seem that, I mean, rumor [ph] has it rumor mills have it that both players have taken just their bill of material and some tooling costs, and probably a little bit of the payroll cost. So do you think that this is a sustainable trend, I mean, not for these players, but generally for the industry as such because orders don't seem to be forthcoming over the next couple of quarter at least on a larger scale? So do you think I mean the industry is trying to kind of adopt this kind of a practice just to fill up the order book?
V. R. Mahadevan, Director ‐ Technologies & HR I think it is best that you address your questions to these companies.
Amol Rao, Analyst Okay but sir, I mean do you see, do you anticipate any large scale, let's say reduction in pricing at least on our front, sir, just to kind of fill up our order books because we have only the NTPC bulk tender orders right now in our books. So, for our new BTG facilities, would we be willing to go aggressive on pricing in the future?
V. R. Mahadevan, Director ‐ Technologies & HR See, we have orders now for six boilers and two turbine generators.
Amol Rao, Analyst Absolutely.
V. R. Mahadevan, Director ‐ Technologies & HR And we have a total order book of 11,000 crore as of now, and expecting orders for 1,500 crores. As Mr. Easwar Kumar, our CFO explained to another participant a few minutes back, we see clear visibility in revenues over the next two or three years and we have as far as Boiler Turbine Generators are concerned, we have adequate orders on hand.
Amol Rao, Analyst So there is no urgency to basically under quote an over book basically?
V. R. Mahadevan, Director ‐ Technologies & HR Sure, we do not under quote.
Amol Rao, Analyst All right sir, thank you so much, sir. All the best.
V. R. Mahadevan, Director ‐ Technologies & HR Thank you.
Operator Thank you. Our next question is from Vaishnavi G of Citigroup. Please go ahead.
Atul Tiwari, Analyst Yes sir, this is Atul again here. Sir, it will help greatly if you could throw more light on this order pipeline that we just discussed. If it is not, which are these projects and especially with regards to the fuel condition, are these based on the captive coal or they have got linkage from Coal India or imported coal, how does it look?
R. Ramesh Kumar, President ‐ Corporate & Secretary Okay. One project is a captive coal, captive mine.
Atul Tiwari, Analyst Okay. How much is that capacity?
R. Ramesh Kumar, President ‐ Corporate & Secretary That is 2 x 500.
Atul Tiwari, Analyst 2 x 500. And which project is this?
R. Ramesh Kumar, President ‐ Corporate & Secretary Project names, no, we may not be able to ‐‐
Atul Tiwari, Analyst
That's fine, okay, okay, okay. I get it yeah, that's right.
R. Ramesh Kumar, President ‐ Corporate & Secretary At this time.
Atul Tiwari, Analyst Yeah.
R. Ramesh Kumar, President ‐ Corporate & Secretary And one is nuclear plant.
Atul Tiwari, Analyst How much is that capacity?
R. Ramesh Kumar, President ‐ Corporate & Secretary That is 2 x 1000 megawatt.
Atul Tiwari, Analyst 2 x 1000 megawatt, okay.
R. Ramesh Kumar, President ‐ Corporate & Secretary Okay, nuclear plant.
Atul Tiwari, Analyst Okay.
R. Ramesh Kumar, President ‐ Corporate & Secretary And other three projects are already given coal block allocation, coal blocks are under development.
Atul Tiwari, Analyst Coal blocks are under development. So they are not dependent on Coal India for fuel supply.
R. Ramesh Kumar, President ‐ Corporate & Secretary They are not dependent on fresh allocation or they are not dependent on Coal India for coal supplies.
Atul Tiwari, Analyst Okay, okay. Okay sir, thank you.
Operator Thank you. Our next question is from Devang Patel of Avendus. Please go ahead.
Devang Patel, Analyst Sir you mentioned about Lara being booked, can you also tell us what's happening to the other 800 megawatt project?
V. R. Mahadevan, Director ‐ Technologies & HR Sorry, we couldn't get your question clearly, can you please repeat?
Devang Patel, Analyst Sir, on the Darlipali project what is the status? When are we expecting progress on that project?
V. R. Mahadevan, Director ‐ Technologies & HR I'm sure you are aware that on the Darlipali we informed NTPC that we are unable to extend our (inaudible) balance and we expect that NTPC would rebid this project either at this location or other location at a fixed date.
Devang Patel, Analyst Okay. Sir, the other question is on the retention amount, 1,250 plus 350 is about 1,600 crores of retention amount, this amount used to be 1,200, 1,400 crores, so it has gone up in the last two three quarters, where has the accretion come from and have the earlier amounts that we were expecting from Vijaywada and other BOP projects, have that come through?
V. R. Mahadevan, Director ‐ Technologies & HR Yeah, the accretion and retention of money is on account of execution because these are projects under execution, we have not handed over still. So once the revenue goes up, 10% of it also gets carried over to the retention money.
In terms of the completed projects, we have partly collected retention money from Vijaywada and Kothagudam and we are expecting the balance retention money to come in the next three months time. That's the 350 crores that we are talking.
Devang Patel, Analyst So, could you segregate this into how much is due but not yet received?
V. R. Mahadevan, Director ‐ Technologies & HR Due is 350 crores, attrition money.
Devang Patel, Analyst Okay.
V. R. Mahadevan, Director ‐ Technologies & HR 1250 is on projects under execution.
Devang Patel, Analyst Sir in the balance sheet which line item would this be reflected in?
V. R. Mahadevan, Director ‐ Technologies & HR
This will get included in receivables.
Devang Patel, Analyst In the debtors, and not in the other current assets?
V. R. Mahadevan, Director ‐ Technologies & HR Other current assets is basically contract work‐in‐progress which is not built on the customer itself.
Devang Patel, Analyst Okay. Sir, on the Mettur project it was synchronized in May '12, wherein one year after that we have not heard of commissioning, it's very close to commissioning but can you talk about why it has taken so many months between synchronizing and COD. Are there any technical issue that you would want to talk about ‐‐ how about coal availability for that project?
K. Chandrashekhar, Director ‐ Projects There is not ‐‐ this is Chandrashekhar here. There is no technical issue. We have completed the trial operation period of 72 hours recently. There have been certain technical issues which has been now sorted out and we will be now completing the project by June and handing over, because the only thing left out is the performance and guarantee test, this will be carried out in June and we'll be handing over.
Devang Patel, Analyst Sir, recently I read some article in the paper, can you throw more light on what is the reason why it has taken so long?
K. Chandrashekhar, Director ‐ Projects (inaudible)?
Devang Patel, Analyst Whey the Mettur COD has taken so long from synchronization date?
K. Chandrashekhar, Director ‐ Projects Basically, there are certain issues with respect to coal. They were not able to import the Indian coal in substantial quantity. So they were importing only the ‐‐ importing the coal. And the resultant was that when we started firing the imported coal, we had certain problems in the parameter, which we wanted to address. It has now been addressed over the period, and since January, February, we were continuously running this plant as per the tangent for requirement. And very recently now we have operated the plant operation and now it's ready for (inaudible).
Devang Patel, Analyst Right, sir. Sir, in Jhalawar when are we expecting ‐‐
P. R. Easwar Kumar, President & Chief Financial Officer Jhalawar, any time in the day ‐‐ today we are lively to hear the synchronization news for the first unit. Already the machine is in speed and I think by today evening or maybe tomorrow it's likely to get synchronization for the plant, if everything goes well.
Devang Patel, Analyst
And assuming coal is available, should COD be within three to six months ‐‐
P. R. Easwar Kumar, President & Chief Financial Officer But we will be firing on oil as synchronizing it.
Devang Patel, Analyst Okay.
P. R. Easwar Kumar, President & Chief Financial Officer And coal firing will be somewhere around June, July.
Devang Patel, Analyst Okay.
P. R. Easwar Kumar, President & Chief Financial Officer And we are targeting second unit by October.
Devang Patel, Analyst Sir, and COD should be about three to six month from synchronization?
P. R. Easwar Kumar, President & Chief Financial Officer By December we will finish.
Devang Patel, Analyst Okay. That's all from my side. Thank you so much.
Operator Thank you. (Operator Instruction).
Rahul Gajare, Analyst Inba, if I can ask a question here. This is Rahul here.
P. R. Easwar Kumar, President & Chief Financial Officer Yeah, Rahul.
Rahul Gajare, Analyst Sir, now NTPC's Darlipali order is basically canceled. Now, A, would you be betting for it and when do you think the biting are likely to come through?
P. R. Easwar Kumar, President & Chief Financial Officer
At the moment, we are not clear about ‐‐ we are aware of any new bidding date.
Rahul Gajare, Analyst Okay.
P. R. Easwar Kumar, President & Chief Financial Officer And that, of course, depends on the issues like Lara getting resolved, being sorted out by NTPC.
Rahul Gajare, Analyst So you would look forward to NTPC's Darlipali bid, right?
P. R. Easwar Kumar, President & Chief Financial Officer Certainly.
Rahul Gajare, Analyst Sure.
P. R. Easwar Kumar, President & Chief Financial Officer We look forward to any new BTG bids.
Rahul Gajare, Analyst Certainly. Sir, on the second thing, now you basically indicated that you are looking at export market as the next growth driver. So could you through more clarity ‐‐ could you give more clarity in terms of which countries or is there any groundwork that you have done in that region?
P. R. Easwar Kumar, President & Chief Financial Officer We have done our broad market study and identified potential areas and are looking at now putting in a the back‐end to address this market. We will certainly share details with you as and when we evolve on this market.
Rahul Gajare, Analyst But we are primarily looking at Gulf regions, correct?
P. R. Easwar Kumar, President & Chief Financial Officer In the Middle East, yes.
Rahul Gajare, Analyst Okay. Right, sir. Thank you very much. Inba, we can move onto the next question.
Operator Sure. We got ‐‐ our next question is from Nirav Vasa of Motilal Oswal Securities. Please go ahead.
Nirav Vasa, Analyst Yeah, sir. It's again regarding the new growth opportunity that you are targeting that is mainly in the export market. So what my understanding is that, A, when you go for any new country, you would be needing pre‐qualification. So do you think the work that you've done in India should act as a strong pre‐qualification in those new geographies as well?
P. R. Easwar Kumar, President & Chief Financial Officer As we have mentioned to you ‐‐ mentioned to the earlier caller, basically we have done a market study, have identified potential issues or potential facts that we have to get ready with that we are working on the (inaudible) to get this addressed and we are sure then in time and on focused project we will certainly be believe [ph] in the near future.
Rahul Gajare, Analyst Okay. Sir regarding your boiler and turbine manufacturing unit, what would be the land required for both this projects and how much land has been acquired till date?
P. R. Easwar Kumar, President & Chief Financial Officer See, I think we can certainly inform you that all the private land required for this purchase is, two projects have been secured. There are some government lands on which we have requested the government and we understand the government is in the process of valuing the plan and we hope to have it shortly with us.
Rahul Gajare, Analyst No, but I wanted to have the ‐‐ if you can help me with some absolute number in terms of how many acres of land would you be needing for boiler factory and how much for turbine and how much have you paid for it?
P. R. Easwar Kumar, President & Chief Financial Officer We are looking at about 200 acres for each of this plan.
Rahul Gajare, Analyst And we have a position of 200 acres across both the places?
P. R. Easwar Kumar, President & Chief Financial Officer For the boiler plant we have possession of around 160 acres. For the turbine plant we have possession of about 80 acre.
Rahul Gajare, Analyst 80 acres. And how much have you paid for this 150 and 80 acres in all?
P. R. Easwar Kumar, President & Chief Financial Officer See unfortunately, you would have to excuse us, we would not be able to share this.
Rahul Gajare, Analyst Okay, sir. Thank you very much sir.
Operator
Thank you. As there are no further questions from the participants, I would now like to hand the floor back to Mr. Rahul Gajare for closing comments.
Rahul Gajare, Analyst I would like to thank the management for taking their time out to address the investors on this conference call. Thank you very much. Sir, over here would you like to have any closing comments?
P. R. Easwar Kumar, President & Chief Financial Officer It's fine, Rahul. We are okay with it.
V. R. Mahadevan, Director ‐ Technologies & HR I think what we would like to say is that, as Mr. Easwar Kumar mentioned in his opening remarks, we possibly will look at a 25% increase in our topline in the coming year. We have an order book of about 11,000 crores, expecting another 1,500 crores of order, which gives us clear revenue visibility over the next two, three years. And we are certainly looking at bidding on balance of plant projects in this year which we expect to get finalized, valued at around 10,000 crores. And are looking at preparation for the overseas markets.
Rahul Gajare, Analyst Right, sir. Thank you.
P. R. Easwar Kumar, President & Chief Financial Officer Thank you.
V. R. Mahadevan, Director ‐ Technologies & HR Thanks Rahul.
K. Chandrashekhar, Director ‐ Projects Thank you very much.
Operator Thank you very much. Ladies and gentlemen on behalf of Edelweiss Securities Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.