Schneider Electric Infrastructure Limited has informed the Exchange about Transcript of the conference call held on February 11, 2025, for discussing the Unaudited Financial Results and earnings perfo...
SEIL/Sec./SE/2024-25/96
February 14, 2025
The Manager Listing Department National Stock Exchange of India Ltd Exchange Plaza, Bandra Kurla Complex Bandra (East), MUMBAI 400 051 Fax # 022-2659 8237/8238/8347/8348 Symbol: SCHNEIDER
The Secretary BSE Limited Phiroze Jeejeebhoy Towers, Dalal Street MUMBAI 400 001 Fax # 022-2272 3121/2037/2039 Scrip Code No. 534139
Sub: Disclosure pursuant to Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
Dear Sir(s),
In continuation of our letter(s) no. SEIL/Sec./SE/2024-25/89 dated February 06, 2025, regarding intimation of schedule of investor conference call, please find enclosed herewith the transcript of the conference call held on February 11, 2025, for discussing the Unaudited Financial Results and earnings performance of 3rd quarter and nine months ended December 31, 2024.
This transcript will be made available on the Company’s website i.e. https://infra-in.se.com/.
We request you to kindly take the above on record.
Thanking you.
Yours Sincerely,
For Schneider Electric Infrastructure Limited
(Sumit Goel) Company Secretary and Compliance Officer
Encl: As above
Schneider Electric Infrastructure Limited Corp. Office: 9th Floor, DLF Building No.10.Tower C, DLF Cyber City, Phase II, Gurgaon – 122002, India; Tel: +91 124 7152300; Fax.: +91 (0) 124-422 2036; www.schneider-infra.in
Regd. Office: Milestone-87, Vadodara - Halol Highway, Village Kotambi, Post Office Jarod Vadodara -391510, Gujarat; Tel: +91 02668 664300 Fax: +91 664621; CIN: L31900GJ2011PLC064420
“Schneider Electric Infrastructure Limited
Q3 FY '25 Earnings Conference Call”
February 11, 2025
MANAGEMENT OF SCHNEIDER ELECTRIC INFRASTRUCTURE LIMITED :
MR. UDAI SINGH – MD & CEO MS. SUPARNA BHATTACHARYYA – CFO MR. MOHIT AGARWAL – HEAD -INVESTOR RELATIONS
MODERATOR: MR. HARSHIT KAPADIA – ELARA SECURITIES PRIVATE
LIMITED
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Moderator:
Ladies and gentlemen, good day, and welcome to Schneider Electric Infrastructure Limited Q3
FY '25 Earnings Conference Call hosted by Elara Securities India Private Limited. As a
reminder, all participant lines will be in the listen-only mode and there will be an opportunity
for you to ask questions after the presentation concludes. Should you need assistance during the
conference call, please signal an operator by pressing the star then zero on your touch-tone
phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Harshit Kapadia from Elara Securities. Thank you, and
over to you, sir.
Harshit Kapadia:
Hi. Good evening. Thank you, Manav. Good evening, everyone. On behalf of Elara Securities,
we welcome you all for the Q3 FY '25 and 9-month FY '25 conference call of Schneider Electric
Infrastructure Limited. I take this opportunity to welcome the management of Schneider Electric
Infrastructure, represented by Mr. Udai Singh, Managing Director and CEO; Ms. Suparna
Bhattacharyya, Chief Financial Officer; and Mr. Mohit Agarwal, Head of Investor Relations.
We will begin the call with a brief overview by management, followed by Q&A session.
I'll now hand over the call to Mr. Singh for his opening remarks. Over to you, sir.
Udai Singh:
Thank you, Harshit, and good evening, everybody, and thank you so much for joining in, in this
afternoon. And I would like to -- I'm sure you have been able to go through whatever we
uploaded, the results of the quarter, which went by. And I would like to take you through that,
just to summarize as to how the quarter has been.
And just to reiterate, which I have been doing for a few quarters till the time I have been
occupying this chair as to what your company is. We have a vision and a mission, which is very
clear in our minds, vision of leading the new digitalized energy world, by offering our customers
and partners the most innovative connected products and solutions, which are ready for the then
emerging power distribution's elevated expectations.
Now we also have a vision of having a balanced business models, which delivers superior quality
and efficient supply chain, which keeps the growth and profitability resilient and sustainable.
And the mission, of course, to be a digital partner for sustainability and efficiency, and we
believe Life is On everywhere, for everyone and at every moment.
At this point in time, I would like to take you to the slide number where we have been talking
about the market outlook. We just went through the budget, which was delivered and stated by
Honourable Finance Minister. If you look at this, there are a lot of positives as I would read it,
if you go deeper by the line as to what's there for your company.
When I talk about numbers, we talk about a commitment of INR11.2 lakh crores in capital
expenditure. We expect that the GDP growth will stay somewhat what it was, about 6.3% to
6.8%. And the good news is that we also are trying to curtail our fiscal deficit to roughly about
4.4%. And the budget, if I may rate it overall is actually, is fuelled by reforms with a very guiding
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spread of how do we be more inclusive. And we drive towards being a Viksit Bharat in times to
come.
Now what we have also done, if you would see, we have actually tried to break down up into
five basic fundamental blocks. And these are relevant to your company. And if you see Power
& Grid, and I will not take much time, because you may be aware about this. If you speak about
Power & Grid, there is -- the Ministry of Power actually has a -- we are trying to -- they're trying
to put up more and more effort embedded to solar.
As of last month, we are setting about -- if I'm not wrong, about close to 98 gigas of solar being
done. We want to take it to 300-plus as per the ambition of the nation. And the good news and
differentiating news is also the thought which government has put behind the nuclear.
Now if you see, we now have a very clear cut plan about making a nuclear nation of having
about 100 gigawatts of nuclear by 2047. And it's not only that, it's also setting up another
incentives or R&D allocation for developing the modular reactors and developing the micro
reactors. Now this, as and when it comes, a positive steps taken by the government will actually,
in fact, lead to a lot of positivity around companies like us, including us, of course.
The other programs, which are like INR600 crores being allocated for the green hydrogen under
The National Hydrogen Mission and also the Green Corridors is something which also will fuel
and it will be more conducive for actually solar development in the nation. Now there are certain
focus areas, which we have been focusing, which are pretty futuristic in nature. And that's
something which India can't ignore and should not ignore, I would say, is around the energy
storage systems.
Now, this is going to be the future, because that was something which will be the call of the day
as and when we have more and more renewables coming into play and when we talk about usage
at micro grid. So, this is something which is one area, which is something, which we are
focusing, and we are good at it.
Coming at Transport, just to tell you, we have Vande Bharat trains. We have Namo trains. We
have a lot of urban rail network, which has been put up. In fact, we added 62 trains in '24. And
we have, now have 136 trains which are running. And you would be proud to know that most of
them, or rather all of them are being powered and managed by the locos which we make in our
new company.
Another good thing which actually is a positive is about UDAN. Now if you see, we are talking
about, in next 10 years, and I'm sure you guys are aware, the amount of air traffic the way it has
been going up, you go to any flight at any point in time, fly any sector, that's 100% full. So we
are trying to see as to the country envisages that in next 10 years, we need to have an
infrastructure which can cater to about 4 crore passengers traveling.
That's a number which we are talking, which would also mean maybe enhancing the fleet which
we have few x times and also talking about 120 new destinations, which will be rolled up as
years go by. And all these investments do good for us, because we are good in airport -- good in
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airport, good in driving sustainability at airports by our softwares and other solutions which we
have around.
Now one important thing which I would like to call out is, is the development of the ports. And
because the new ships will be built, the old ships will be repaired, rejuvenated, and government
has this time also gone in terms of paving the duties on the raw materials which are required for
these works. And this will perhaps propel the shipbuilding and ship rectification and
rejuvenation activities, which are required for in futuristic movement and the strength which we
will have in maritime area.
Now if you talk about Semicon & Data Center, I mean, there's a general knowledge that we are
sitting at the cusp of data center, which would be greatly equal in India because of two reasons:
one, the invent of AI; and two, the extensive usage of phones and the cost of data, which actually
is available to Indian consumers.
Now there are people, there are government, there are hyperscalers, there are colos who are
putting a facilities at breakneck speed, and we are there to support and make these data centers
run with our solutions and equipment.
Now one good thing which has happened is -- if you noticed, is typically are in the areas of the
customs duty again. We are talking about CleanTech Manufacturing. We are talking about the
incentive schemes being rolled out to manufacturing of mobile. And now first time, India is
talking about infusing INR500 crores into AI vision, which means it will all drives towards
inclusive growth and that is the area where we can make an impact.
Now, if we speak about Infrastructure, there are good -- if you -- I'm sure you would have noticed
there is one Urban Challenge Fund, which has been announced by government. I'm talking, in
this budget, which talks about INR1 lakh crore being put in trying to make cities as growth hubs.
Now what does it mean? This means that, we will actually make cities as the growth hubs for
India and exports. We need cities which are better equipped for Infrastructure, be it electricity,
be it urban development in terms of the sanitation or the water resources. And the point which I
was trying to make is when these amounts of money are being pushed in and pumped in by
government, this means a lot, because we can really do great things.
We have done jobs in the water distribution where we are managing large-scale projects which
are towards water sanitation, whether you call it desalination or any other treatment like that.
And last but not the least is the Auto & E-Mobility sector. The way government has been
creating, the way, rightfully, government has been driving about penetration of e-mobility,
where we expect to have 30% by year 2030, and penetration, which goes down by 45% from the
base year is something which we have been working on.
Now this means two things. This means, that EV manufacturing will pick up pace, and more
importantly, the cell manufacturing and battery manufacturing will also be looked into very
deeply. And not belittling the recyclers in the battery space, which also will get flourish. Now
the incentives, which you may clearly have read and understood, is on the customs duty, which
has been either waived or reduced drastically, actually all triggers this growth.
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And we, at Schneider, are fully geared up in terms of helping our customers who are in areas of
either cell manufacturing or EV setup or charging infrastructure, we are one of those people who
can effectively deliver solutions will make a lot of sense and a lot of appreciation by the
customers who are going to use it.
I'll go to the next slide, which happens to be Slide Number 6, where I probably would like to
share a few of our wins and what we have done, like we used to do before, is trying to see as to
how we have been contributing in India's Net Zero ambition. And I'm sure you are aware, this
is the discussion which we must have had in the past, as we are one of the most sustainable
companies around the world.
What it means? It means that, we are driving those technologies which are making environment
better by reducing the potent gases, which are around. And one of the gas, which is very clearly,
I would not use the term misused, but it is used, is SF6. We have made equipment where we
have actually removed this gas, and we have actually replaced it with pure air. This is a very
futuristic technology, which we have been talking about in India with the policyholders, the
users and other effective stakeholders.
And happy to share that we actually are now selling these pilots at one of the progressive
discounts, which we have in India at two locations. So this is something which we have done.
The world is changing, and we are helping it to change. The other is, if you see in the solar space
is a special inverter duty transformers, where we are helping one of our key accounts or rather a
solar farm developer in his 150-megawatt plant, which he's trying to make in India.
The third is, I don't want to name it, but the first steel -- Green Steel manufacturer, I'm sure you
know about it. We are helping him to make Green Steel by giving a green transformer to them.
When I say green transformer, it's a transformer, which is actually with all distilled sensors and
making prediction and preventive maintenance easy in a way making the transformer more
efficient.
So two things -- two first in this. The first one on the slide is the SF6 Free secondary distribution.
And the second is the third one where we actually are trying to help one of the steel producers
in India have refused, who's actually into making green steel to making green steel in a greener
way.
I would like to turn it to the other point where we talk about our wins in the digital area. Again,
we have actually had three tiles. The first tile is in Energies & Chemicals space, where we have
provided transformers, which are again equipped with two layers of sensors and a lot and a lot
of analytics around. It is also actually embedded in these solutions, which we have given to one
of the, I would say, Government of India Enterprise.
The second is a Power & Grid space, where we actually have been electrifying one of the leading
transmission utilities in East India, where we have provided a state-of-the-art automation
systems, which also comes along with opportunities of having a recurring business from this
utility.
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And the last is where we are trying to work along with a very established carbon black
manufacturer in terms of giving our primary distribution in AIS, again digitalized and fully
synthetized.
If I turn page and I go to Page Number 8, as we are talking about while we do this still, we do
sustainable. We are not leaving behind the core. Core stays as a core, and therefore, we actually,
again, three tiles for you, one on the Power & Grid; the other one MMM, which is nothing but
Metal, Mines & Minerals; and Energies & Chemicals again.
In Power & Grid, we have actually made inclusive entries at East India DISCOM, where we
have provided three buildings of state-of-the-art and also supplied equipment, which are all our
equipment. If you read GIS and something which is insulated busbar GIS and RTU panels and
the regular GIS in substations.
If I speak about MMM, and this is one area where we have been working with all metal
manufacturers in terms of Waste Heat Recovery scheme. And we have given lots and lots of
AIS and transformers to one project with the repeat orders through either directly or through
different contractors in India.
Energies & Chemicals, the last tile I would like to speak about and share with crowd is, in this
space, again, we are trying to give the power transformers and AIS in one of the largest
petrochemical industry in East India. And here, we have been leveraging our one full SE
solutions along with customer engagement and interaction, which we take pride of.
Turning to the -- not but not the least, to Page 9 is something which we are talking about the new
emerging segments, because -- which are very relevant and pertinent because they may carve
out the future for us, is especially data centers, where we have supplied -- is the same
engagement, which we have been doing repeatedly with one of the colo developers where we're
electrifying the one of the largest centers, which they have developed in India.
As well as when we talk about semiconductors, we are actually also supplying in continuation
with what we did last year in the same location, Power Transformers with ETE. And we are
here, I would like to have a special call out. This is one first plant, being first put in India for
Semiconductor, where we have actually given most of the electrical distribution from Schneider.
So this is the one good thing which I'm proud of, and so I'm sure you will be.
Now I'm turning to Page 10. And Page 10 actually just gives you a sense as to what's happening
inside and -- which is leading to all this. We initiated, I'm sure you are aware about the
assessment, which we got done from ESGRisk.ai and is a special focus, which your company
has been giving on ESG.
And we have installed a tool, which is, we call as Recording tool for BRSR. And this eliminates
and facilitates multiple things. One, it gives you a real-time information. Second, it gives you --
it removes any error which human intervention can make. Third, it can -- it uses and the
backbone is our own software, which is making it happen.
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And fourth and the last is that, it gets a lot of advisers and it actually tells you as to how do you
course correct and where are you lacking? This is one. If I go to Quadrant 2, which is nothing
but XROA, which is nothing but, is an extended reality, as an adviser, is a demonstration, which
we have actually done.
It's again from the EcoStruxure platform, where we have demonstrated this to one of those sites,
which are in DISCOM in East India, where we actually have been engaged in past in supplying
multiple equipment and also renovating and modernizing the substation, where we have
demonstrated this.
This is a digital solution, which leverages the Extended Reality, which leads to an increase in
safety and operational efficiency of the system, and it has been deeply appreciated by this
agency.
Now other two things are the new offers, which I would like to take about 2 minutes and explain
each one of them. One offer is what we call is P7 Series of Merging Unit. Now this is the
PowerLogic Series, which actually enables a lot of simplicity and it is actually driving towards
not only simplification, but more efficient communication within the master and slave.
Now what it does is, it eliminates running of multiple control wires between two devices, and it
actually assimilates everything and just communicates on a single fiber cable. This is something
which is again futuristic. It's something which is required for industry in Power & Grid, in any
industry for that matter, and this is supposed to be coming in future times.
And the last, if you notice, is something which is, again, a very progressive step which your
company has taken. And when we speak about medium voltage, I think, one element which is
one of the critical elements is, how do we see the safety and longevity of the equipment, which
is being done by measuring the partial discharge. I'm sorry, I'm using some very technical terms,
but this is something which is actually very critical to measure the health of the asset which you
have in the substation.
Now these are the centralization, which happens and this helps via our EcoCare to actually make
-- it can be leveraged by customers as they move on. So this is another element which I wanted
to share.
And I go back on the next slide, which happens to be Slide 11, where we are thinking and of
enhancing our capacity in the transformer line at Baroda, which means that we are typically
trying to take this capacity from 5,500 MVA for transformers to about 7,000 MVA, and investing
some money about INR14 crores into this.
Then I -- now I come to an end, and I would request my colleague, Suparna, who is sitting beside
me to take you through the financial performance of 9 months and the quarter which went by.
Over to you, Suparna.
Suparna Bhattacharyya: Thank you, Udai. That was brilliant explanation of the market has in store for us and the good
work that we have done and -- for our investor community. And of course, the support which is
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coming from the investor community is tremendous. Thank you. And I'm pleased to share the
financial performance for 9 months and the quarter, which ended on 31st December 2024.
So coming to Slide Number 13, we have the 9-month performance. We are happy to share that
we have consistent growth in orders and sales. Orders are up by 13.8% over prior period --
corresponding period of last year. We are at INR1,546 crores. Sales has seen a significant rise
at 18.2%. We closed 9 months at INR2,050 crores.
Gross margin, 26.4% rise at INR783.3 crores. EBIT, a great rise by -- of 34.5% at INR277.1
crores. At the PAT level, we have increased by 26.4% at INR213.3 crores, and we have a robust
7.3% increase in order backlog of INR1,086 crores, which definitely would ensure subsequent
business in the coming quarters.
So highest ever sales in a quarter, that's how we ended this quarter. Better EBIT and PAT, better
order intake and product mix, material productivity, volume leverage, better sales mix, because
we have a good growth in the transactional and services pieces that has given us better margins.
The strategic levers that we are looking forward are to accelerate segments, leverage emerging
segments and strengthen resilient segments, as Udai already talked of. More stress on services,
focus on modernization, digital services and remote asset monitoring as we have a growing
installed base, so that helps us in generating more service revenue. And to promote partners, the
distributors and the panel builders with whom we work very closely.
Coming to Slide Number 14, this depicts the order intake for the 9 months period and the quarter
which ended on 31st December. So we are at 13.8% growth with respect to the order intake. And
for Q3, especially, the orders, order growth is at 5.3%, which is a slight slowdown, because this
is a little lean quarter with respect to the orders. We have grown -- we closed the order intake
for December at INR442 crores. Overall a good momentum across all segments, and order
backlog, as we mentioned, it is INR1,086 crores, which is up by 7.3%.
Going to the next slide, Page Number 15, talking of the sales. We already said that at the 9-
month level, we have had an 18.2% increase, closing the sales at INR2,050 crores, and we have
the highest ever quarter with respect to sales. We closed our -- the last quarter at INR857 crores.
So this has been the highest and thanks for everybody for your support. And actually, that keeps
us going to do more and more for you all. So again, strong sales growth in transactional and
services, and this has also contributed to the better margins.
Coming to Slide Number 16, which is the 9-month P&L. Sales growth of 18.2%, closed at
INR2,050 crores, and we had our gross margin up by 28.3%. EBITDA grew by 38%, EBIT by
39.8% and profit before exceptional items was at 48.2%. And then the PBT growth is at 61.4%.
Overall, at the PAT level, we have grown by 26.4%. The obvious reason being that we had just
started entering into profits during the corresponding period of last year, less taxes, but then this
year was a full-fledged load of the corporate taxes on our P&L.
So again, margin expansion has come due to better product mix, order pricing, volume leverage
and operational efficiency. And at the exceptional item level, we have reversed an interest
provision, which I'll talk of in the next slide.
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Going on to the next slide, Page Number 17, we have our P&L for quarter 3. Again, highest ever
sales number, INR857 crores, which is a 15.2% increase over last year. Gross margin 25.7%
increase. EBITDA at 31.6%. EBIT at 32.3%. And talking of the exceptional items, we actually
have an income here of INR17.6 crores for the current quarter, which is basically the reversal of
interest provisions relating to past direct tax litigations upon application made under the Vivad
se Vishwas scheme.
So -- and this has been favourably accepted by the tax authorities, and we have agreed to pay
the taxes with a 10% increase as a part of this scheme. And while we saved significantly on the
interest, which we had accrued in the -- in quarter 4 of last financial year. So that's all from our
side. And thanks again for your overwhelming support over the last 1.5 years that me and Mr.
Udai Singh have taken over the reigns of the organization. We look forward for your questions.
Moderator:
We have a first question from the line of Sanjaya Satapathy from Ampersand Capital.
Sanjaya Satapathy:
Congratulations on a great set of number. So just two questions. One is that you mentioned your
order inflow was a little slow in quarter 3. How your deal pipeline and future outlook in terms
of order going forward?
Udai Singh:
No, Sanjaya Ji, this was more of a time effect, I would say, because we are in a business where
there are multiple project orders given by multiple stakeholders. And we intentionally try to pull
up some orders, so that we can make the year more robust. If you ask me, generally speaking,
the pipeline is good, is healthy, and we don't see any road block in the pipeline as we see today.
Sanjaya Satapathy:
And my last question is that, your other expenses continues to rise fairly strongly like almost
30%, 40% rise, again, in this quarter. And can we -- can you get a sense like how things will go
moving forward? And will there be the benefit of operating leverage will finally kind of kick in
to the company?
Suparna Bhattacharyya:
So other expenses, yes, rightfully said that, it is -- it has grown in the 35% to 40% bracket. Some
of the expenses are particularly related to sales with respect to the provisions, etcetera, the
accounting entries that we make. So out of this 38%, so almost 18% goes into such directly
chargeable provisions and expenses that we incur.
And apart from that, yes, there has been rise in expenses, but this is mainly with respect to the
expenses, which we have incurred internally to strengthen the organization in team building,
capability building, having, I mean, expert people to work in the organization. So that's how we
are kind of building internal capabilities in the organization.
Which was somewhere -- till the time the company stabilized, we were not building such
expenses, but now we are building your company for the future and increasing these expenses.
And very -- in the near future, you'll see that we'll be able to, I mean, optimize on these expenses
with respect to our operations.
Sanjaya Satapathy:
That's wonderful. And if I can just ask the last thing. There was some expansion which is going
on in your Kolkata factory. What really is the status there?
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Udai Singh:
So it is on track. We are trying to make interruptors there and going to be one of the kitchen
factory of Schneider Group. So this is on track. The way it was planned, it is happening, and it
is expected to go live very soon as per the plan.
Moderator:
The next question is from line of Rucheeta from iWealth.
Rucheeta:
So major of my question was on the order book, which was already answered. Second was, sir,
on the nuclear part of it. In the nuclear part, what can be our opportunity size out of this plan of
100 gigawatts? And where are products -- what products can we supply here?
Udai Singh:
So Rucheeta, it's an important question, and a very nice one. Government has actually, if you
must have seen the budget, they are talking about developing indigenous expertise in developing
smaller reactors. So you have -- typically, if you see we have the nuclear power plants, which
are capacities of 700 or 800-megawatt energy.
Now we are thinking about making something which is being called as small modular reactors
or SMRs, which go up to 300 megawatts, and then micro reactors, which are of a smaller scale,
will be typically around 10 megawatts. This 100 gigawatts is the capacity which is slated to be
in year 2047.
Now what is important is the dependency on our own Indian manufacturers who make this. What
it also brings in is the ease at which it can be put, the pace at which it can be put. And the third,
if you would have noticed, government is also trying to think about how to tweak the liability
part. Because that was a major deterrent for enabling private participation in development of
nuclear plants in the past.
Now, if you -- the second question which you had asked as to what we can supply there? The
entire -- because finally it's a power plant, whether it's a coal-fired or a gas-based or a nuclear,
is one and the same. What we can do is supply the same set of equipment, same set of softwares,
although that would mean that this happens to be slightly more critical and the criticality
typically depends on how closer are you as to the reactor core.
So I mean, I would -- I'm afraid that I'll go more technical. But what it means is, as closer you
go to the core, your equipment becomes more -- it has to be more stringent, it has to be more
critical and it has to be more robust. So -- and -- but the long and short, Rucheeta, is that it offers
a potential and upside for the company to get engaged with those people who actually will start
developing nuclear power plants for India for its own self-reliance.
Rucheeta:
Okay. And sir, earlier, I was just going through a few used cases. Isn't the small modular reactors
more expensive than an alternative power source?
Udai Singh:
See, nuclear is by virtue of being nuclear is a shear more expensive. So it depends on actually
how much do you produce, how efficiently do you produce, where do you produce, and at what
pace do you put up a power plant. Because in the past, and that's what I mentioned to you. In the
past, normally, we have seen because of so many regulatory approvals and the nature and the
size of the plant itself, it typically used to have an overstretch in terms of the time lines in which
the power plants were getting made.
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For example, today, we are sitting at a capacity of about 8.1 gigawatts. So just look at the road,
the strong growth, which is ahead of us. It's 10x by year '27. And also, we're talking about
building up 10x in 25 years. And when the scale picks up and when the technology would be
ours, I think, we'll be in a position to make more efficient reactors, I'm sure about that.
Rucheeta:
Okay. So we'll have an opportunity in the small modular as well as the larger nuclear power
plants. Is my understanding right?
Udai Singh:
You are right, Rucheeta.
Moderator:
We have our next question from the line of Aditya Deorah from Divisha Alternative Investments.
Aditya Deorah:
Sir, our order backlog growth is just 7% for this quarter, on a year-on-year basis. So are we
expecting some slowdown in growth that we are looking maybe for this quarter or for the next
few quarters?
Suparna Bhattacharyya:
So Aditya, thank you for keeping an eye on the backlog. Yes, this quarter was a little slow based
on the industry situation in terms of orders. But based on the pipeline that we have, we are hoping
that the next order will pick up -- the next quarter, the orders will pick up. And we shall have a
good backlog by the year-end, by the quarter 4 end.
And also, it is worthwhile to note that we pulled in a lot of sales from the orders that we had
until Q2. So with the heavy sales, the backlog has certainly reduced, but then the focus to
increase our orders in the next quarter will be surely visible to all of you.
Aditya Deorah:
Now ma'am, on a trailing 12-month basis, now are generating around INR373 crores -- INR360
crores, INR370 crores kind of an EBITDA? And in all probability, this number would be higher
next year and the years ahead. Now how do you wish to allocate this capital or this cash flows
that you generate over the next few years? Would your priority be CapEx? Would it be working
capital? Would it be debt repayment to sister entities? What would be the priority of the
management going ahead?
Suparna Bhattacharyya: Okay. So until now, I mean, the focus was being -- was always to stabilize the organization. As
you know, prior -- 3 years prior to the current period, we were into losses and the company was
stabilizing. Now with the last 3 years, we have stabilized and funds which we are generating, we
are doing better, much better in terms of cash, and it is definitely funding our working capital.
But as you've just seen that we have announced an investment, and we are looking for major
expansion and investments in the years to come, and we will use our cash to fund both the
working capital as well as the growth strategies.
Aditya Deorah:
Perfect. Sir, just one last clarification. Did you mention any date of commencement for the
Kolkata plant?
Suparna Bhattacharyya: Very soon, in the next few months.
Moderator:
We have our next question from the line of Vinod from PhillipCapital.
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Vinod:
In your opening commentary, you mentioned that this quarter had a better sales mix, better
productivity. I think, there was also stress on services and better leverage. So are we seeing the
best in terms of our performance? Or you mean, are we peaking up on margins at this stage?
Suparna Bhattacharyya:
See, whenever we are doing business, we always look for seeing better in terms of sales growth,
margin growth, optimization of the fixed expenses. So that way, I mean, this question, I would
probably say that we are definitely working for a better future with respect to performance.
Specifically, to talk about saying, every business is always looking for growth.
Vinod:
No, I understand that, but I think you checked all the right boxes in this quarter. So everything
right has fallen in place. So from that perspective, I was just asking.
Suparna Bhattacharyya: No, we are looking for better times ahead for sure.
Vinod:
Sure, sure. And the second thing I just wanted to understand, this probably you've been asked
this many times, what is our offering and how is it different from the acquisition you did for
L&T's business or the group did from the -- for L&T's business 5 years back? Is there anything
complementing the offering? Or is there some overlap in the products?
Udai Singh:
The application-wise, Mr. Vinod, they are practically the same, because -- and so are the rest.
It's only -- I would say that, it is not an overlapping market. It is -- there is certain segments
where we have been greatly working, and there is a segment where the other team has been
working and it is complementary. There are certain pluses, certain minuses in both the platforms,
which customers appreciate and push through its right use and the way they want it to be done.
So if I may have answered your query, it goes like that.
Vinod:
Sir, do you also jointly bid for projects and then each of you appropriate your portion of the
product or business, is that how it happens?
Udai Singh:
No.
Moderator:
The next question is from the line of Viraj Mithani from Jupiter Financial.
Viraj Mithani:
My congratulations to the Schneider team for outstanding performance and getting company on
the solid profit part. Am I audible?
Suparna Bhattacharyya: Yes, sir.
Udai Singh:
Yes, you are audible.
Viraj Mithani:
Okay. Okay. My first question is regarding how are we -- are we affected by this rupee-dollar
movement? Or it's -- that can be negative? So are we importing any of the imports in the raw
material side or anywhere else? Is it impacting us?
Suparna Bhattacharyya:
So we have a robust hedging policy as per the guidelines within the organization and not really
impacted by -- not impacted much over the foreseeable future, because we do have a very robust
treasury team, which is -- which helps us cover such currency fluctuations.
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Viraj Mithani:
Okay. And my second question is just with this 2030 coming nearby, which is a Paris accord,
where every country has signed this green climate agreement. Do we see the next 2, 3 years, the
traction happening? Are you seeing any signs of improvement in the market since -- in the
renewable side or maybe on the greener side?
Udai Singh:
Yes, certainly, yes. Because now if you actually look -- go back and try to see as to how the
situation was in India about 4 years ago, I think, there's a lot of sensitivity which has come in
buyers, users, consumers about how to become more greener, more efficient in their own areas
of operation.
And we -- and this is a very positive move, I would say. Because now is the sensitivity around
the same has increased, which is sort of helping companies like us to partner them in terms of
whatever solutions we have, so that we can actually make their -- the operations more efficient
in times to come.
Viraj Mithani:
Okay. My next question is this, there was an article about the grid automation in the world. The
grids are getting older and they are working on the probably thermal or carbon-consuming
technologies. And now the automation has also come in. So how are we benefited in grid since
we are a medium voltage. So are there any benefit in that where we fit in?
Udai Singh:
Yes, we are getting benefited, because I think, if I like to clarify your question, there are two
things which you said. One is, we believe that electricity is the most promising green vector in
energy space. So one, we are -- and this is one of the mantras which the company has, as to how
do we electrify processes more and more. Which means that, the processes which are being run
in the plants which we have put in India a few decades ago and they are on the fossil fuel, how
do we electrify. That's number one.
Number two is, of course, which you touched upon rightly. India actually happens to be
possessing one of the most robust grids around the globe. And where it actually needs some
more, I would say, upliftment is, how -- when -- we have more and more renewables coming in.
As we speak, we have about, as I was mentioning about 100 gigawatts of renewable already in
sight. We are talking about the green energy corridors where about 40-odd gigawatts is actually
being leveraged and channel through that green corridor.
So we are talking about the grid, which actually has these qualifiers, which are required. Number
one, it has to be strong, resilient, transparent and it has to be a rebounding one where you can
make an effective load distribution. And that is where we play a role, because we not only can
modernize equipment, which are, as you mentioned, medium voltage.
We can -- we also have a software stack, which actually can be superimposed on the grids to
make it more reliable, to make it more predictable, to make it more resilient. And that is
something which India is just, again, I would say, all DISCOMs, the nodal agencies are talking
about it. They have all felt it. It is coming in pieces, but that's the future which lies in the grids
in India.
So your question was absolutely apt. And we are one of the, I would say, apt companies who
actually can address this growing demand of Indian DISCOMs and Indian grids.
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Moderator:
We have our next question from the line of Manish Goyal from Thinqwise Wealth Managers.
Manish Goyal:
Very hearty congratulations on very strong numbers and historical high margins. Just a question
Schneider Electric Infrastructure Limited February 11, 2025
on the Digital Solutions offering. What we have that in recent past, we have been seeing a lot of
wins over there. So just want to get your perspective on industry scenario, like is it very
competitive to kind of pitch for such solutions and the competition intensity is equally high over
there? And what is the kind of adoption we are seeing from the customers in terms of
acceptability of digital products and maybe the EcoStruxure architecture, what you offer?
And then related question is, in terms of like if you can give us some perspective as to how is
the revenue share increasing from such offerings like -- and is it really helping us in improving
our margins -- gross margins and the EBITDA margin? And where does it reflect in? Does it
reflect in transactional products or it reflects even in the services business?
Udai Singh:
Yes. So I'll go and try to answer one by one. First is, India is an evolving and complex landscape
and we speak about market. So if I cannot make a general statement about the -- being
competitive, but what happens is, what I can say for sure is that there is a growing demand for
these digitalized offerings, because people have realized the consumers, the users, the sites, the
projects, they have realized the merit of adopting it. That is answer to your first question.
Now the second question is, whether where do we apply this? Now this is -- this gets applied
primarily not greatly in transaction, because transaction happens to be the one which is for more
masses, not a very specific one. It is towards items which are more engineered, more customized,
the acceptance and penetration of digital solutions is far higher there.
And the third question, yours was, I think, how do we see this happening, which I answered
partly in my first reply, which I made to in the first part. So in times to come, I think, this would
be the future. Because we are -- we have a dearth of -- India is a very typical country, so to say,
because we are -- the way at which we are expanding, there will be a growing dearth of skilled
people who would actually maintain, and their dependency on AIs and machine learning-based,
large quantum computing, etcetera, will go up. It is a more efficient way of doing things also.
So all this digitalization actually is finally aiming towards that. Because just to give you a
perspective, whatever we do, it actually is taken to the cloud. And then, if you are a consumer,
you you've been given advisory support, which actually typically means that how your asset has
been behaving and what health life has it attained?
So -- and this is nothing but, lakhs and lakhs of mean data getting compared with the actual
performance of the equipment which we have at your site. So this is MLL adoption, I would say,
and -- which is gaining acceptance and popularity in Indian consumers and users.
Manish Goyal:
So here, the revenue would be over a life cycle in terms of -- probably earlier, we did mention
somewhere that some of the revenue potential is on subscription based on a recurring basis. So
is it already started reflecting?
Udai Singh:
Yes, it has. It has.
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Manish Goyal:
Right. And Ma'am, my question is, again, if you can please give us data points in terms of order
inflow for the intergroup, what is the revenue share for the intergroup? And the breakup of
inflows between various segments, revenue breakup that will be very helpful?
Suparna Bhattacharyya:
[Inaudible 53:45].
Moderator:
We have a follow-up question from the line of Vinod from PhillipCapital.
Vinod:
Sir, you're expanding your transformer capacity from 5,500 MVA to 7,000 MVA at a cost of
just INR14 crores. If you look at some of the competitors who are increasing capacity, the per
MVA cost is very different. So how do we look at the capital cost for a transformer on a per-
MVA basis? Is there any basis to look at this capital cost?
Udai Singh:
Sir, I don't know the benchmark which you are comparing with. I can speak about your
company's establishment, which exists today and where we want to take it. So -- because at
multiple places, it may not be right to compare and try to arrive at a project cost per MVA and
the investment required for this, because it may be a greenfield versus a brownfield expansion
and certain facilities not being there or being there makes it happen.
Because what we are trying to do here is, trying to see as to how do we scale up our existing
infrastructure by infusing some facilities and expanding there. So I think, perhaps what we are
trying to do is trying to read some announcements, which have been made regarding people
getting into a transformer business and investing.
Vinod:
Correct. Sir, is there any way to look at this capacity? I just want just to understand the business
more.
Udai Singh:
Yes. So as I said, it is actually ramping up by about 1,500 MVA. And that will require the
existing setup to get more invested in large.
Vinod:
Okay. And sir, since everyone in the industry is ramping up capacity, is also -- is the supply
chain also ramping up its capacity? Or you see some kind of a constraint on the supply side till
the supply chain catches up with the capacity that you guys have given?
Udai Singh:
The suppliers also are for -- like us and like everyone, entire ecosystem is getting for the new
demand which India offers now. So a few things here and there. Typically, everybody, I would
say, a general statement that suppliers and other partners are also trying to see as to how do they
catch up with the growing need. So net-net, everyone is supposed to be gearing up for it.
Vinod:
Okay. But what about electrical, steel and other critical components? I think, the people are
talking about a shortage on CRGO and -- CRGO steel, particularly?
Udai Singh:
There is a -- see, there is -- I think, you have picked up one thing, which is maybe perhaps, I
would say, which exists today. And where if you have a proper planning done and you have a
regular identified supplier, which actually is allowed by regulation, then it is all right. But yes,
we are now, as you may be knowing that there are people who are trying to make steel by
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Schneider Electric Infrastructure Limited February 11, 2025
themselves in India, and we will be slowly also looking towards them, as they start making the
steel, the quality of the steel which we want.
So CRGO, at times in the past, in few quarters, past quarters have been challenged to few of us,
and we are going to eliminate it along with government. I think, there are multiple government
agencies, which -- including MHI, who actually is trying to see as to how do we eliminate and
come out of this situation, which we -- few of us were in last and last -- quarter before last.
Moderator:
We'll take that as the last question for today. And I now hand the conference over to the
management for closing comments. Over to you, sir. Udai sir, any closing comments from your
side?
Udai Singh:
No, I would like to thank everybody for joining this call and being a great support all this quarter.
And let me assure on behalf of management, that all teams are focused towards delivering, as I
mentioned, the vision and the mission which I shared at the beginning of the presentation. We
are working and trying to make Schneider Electric Infrastructure do things which are the first in
the nature, which is more focused towards customer needs and requirements, and we abide by
all ethics in why we do business. So all the best, and thank you so much.
Moderator:
Thank you so much, sir. On behalf of Elara Securities India Private Limited, that concludes this
conference. Thank you for joining us, and you may now disconnect your lines.
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