Suzlon Energy Limited (SUZLON) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Sussloan Energy Ltd. Q2 FY27 earnings conference call. During this call, the company management may make certain statements that reflect their outlook for the future, which could be construed as forward-looking statements. These statements are based on management's current expectations and are associated with uncertainties and risk, as detailed in the annual report. Actual result may differ, so these statements should be reviewed in conjunction with the risk the company faces. As a reminder, all participants will be in the lesson-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 star then zero on your touchstone phone. Please note that this conference is being recorded. We will begin with the opening remarks, followed by a Q&A session. To be fair to others, we kindly request each participant to ask no more than two or three questions. From the management, we have with us Mr. Ajay Kapoor, Group CEO, and Mr. Rahul Jain, Group CFO, and senior members of the finance team. I now hand the conference over to Mr. Ajay Kapoor. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and thank you for joining Suslone's Q2 F527 earnings call. Let me start by talking about the industry. This year marks a significant inflection point for India's wind energy sector. The industry has moved beyond proving its relevance and is now increasingly being recognized as a strategic pillar of India's energy security, manufacturing growth, and decarbonization agenda. During the quarter, India crossed 59 gigawatt of installed wind capacity while maintaining one of the world's largest and most indigenized wind manufacturing ecosystems. The focus is on building a resilient domestic industry capable of supporting India's long-term energy ambitions and emerging as a global export hub. Green Energy Corridor Phase 3, approved by the Cabinet recently, is a significant step towards strengthening intrastate transmission infrastructure, enabling evacuation of up to 135 gigawatt of RE capacity, This long-awaited industry demand enhances transmission readiness, reduces evacuation risk, and provides greater certainty for project execution, supporting India's target of 100 gigawatt wind and 300 gigawatt solar capacity by FY30. Equally encouraging is the strength of the industry's execution pipeline. With over 40 gigawatt of projects under various stages of implementation, annual manufacturing capacity exceeding 20 gigawatt, wind equipment exports have emerged as a major growth opportunity with exports exceeding 12,000 crores in FY26, demonstrating India's growing global competitiveness. Bid momentum is also gaining traction with almost 8 to 9 gigawatt of wind RTC FDRE wind-dominated tenders being awarded in H1 F527. CNI pipeline also stands robust. This sets the stage for a multi-year growth cycle with annual installations expected to cross 10 gigawatt in the near term and reach 15 gigawatt by F531. Overall, the convergence of energy security prioritizes manufacturing strength, repowering opportunities, offshore wind development, transmission expansion, and rising power demand provide strong visibility for a sustained multi-year growth cycle for the Indian wind sector. Now, taking you through the Q2 FY27 business highlights, Suzlon delivered 710 MW in Q2 with 40% jump Q1Q, making our ever-highest second-quarter India deliveries. This performance was achieved despite Q2 seasonally being a lean Q2 on account of monsoon. The most salient achievement for the quarter was in terms of commissioning, wherein Suzan installations grew more than 69% from 269 MW to 454 MW in quarter 2 FY27. Talking about half-year, H1, the installations reached 723 MW. Further, 1.25 GW of erected turbines in pipeline for future commissioning will pave the way for uptick in the commissioning going forward. Our order book of 6 gigawatt reaffirms our market leadership. In H-127, we have already secured 1.5 gigawatt of orders and continue to have strong pipeline. The current order backlog provides coverage for 18 months and healthy order pipeline gives strong confidence and comfort for maintaining the growth momentum. Orderwork is not constrained with strong demand in industry and DEFCO model offering in place to help keep momentum growing. Our focus remains on closing quality orders at regular intervals rather than achieving quarterly run rate. With the 175, 5X, and 1636X, SUSLON is expanding its technology portfolio with high-capacity turbines that deliver superior yields, better reliability, the lower LCOE, unlocking opportunities across repowering and new-built projects worldwide. 4.5 gigawatt manufacturing capacity, fully operational, expanding footprint with three AI-enabled smart blade factories to drive efficiency and scale. Suzan 2.0 is translating into a tangible growth opportunities across multiple adjacencies. Our RE-Tech successfully commissioned the proto of first S175 5MW turbine and secured the first customer order of 21 turbines of 105MW. Our DEFCO shows a strong market acceptance reflected in 900MW of orders already booked in H1-27. On exports, we are seeing good traction with customers expected to receive orders in the next few quarters. With respect to integrated offering in terms of FDRE, we are in active discussions and finalizing the terms with prospective partners. Suzan 2.2 is a five-way journey, and I am personally satisfied with the progress made so far. Our RE-AMS India business remains strong with 16.5 plus gigawatt of installed base, with EBITDA margins maintained north of 40%. Our foundry and forging continues to scale strongly in quarter two, delivering revenues of 167 crores and EBITDA of 50 crores with continued momentum driven by domestic demand and export growth. Now, I'll invite Rahul Jain, our group CFO, to take you through our financial performance. Rahul.

Thank you, Ajay. Good evening, ladies and gentlemen. I would be using slides 18 to 27 of our investor presentation, which has been uploaded on our website as the reference point for my discussion during this presentation. In Q2 FY27, revenue grew 27% Q1Q to Rs. 4,869 crore from 3,819 crore in Q1 FY27. EBITDA improved to $720 crore, up 21% from previous quarter. Profit after tax stands at $394 crore, up 29% from Q1FI27. The company has delivered strong sequential growth on key financial parameters. When compared on a YOY basis, consolidated EBITDA percentage has been impacted on a count of below. Declined WTG contribution margin from 26.9% to 21.2%, primarily due to segment customer and scope mix changes, and additionally, forex and commodity volatility, making it a key driver of the EBITDA margin decline. We are working on several levers to optimize the impact in the near to medium term. Operating expenses increased by about 80 crore during Q2FY27 versus Q2FY26, largely led by higher Suslan 2.0 related branding, travel, SG&A related to associated costs, which are around 50 crore. This is expected to be phased down in subsequent quarters. This non-recurring expense had an adverse impact of around 1% on EBITDA margin. In H1-FI27, deliveries grew 21% YOY to 1,217 MW from 1,009 MW in H1-FI26, with commissioning rising from 723 MW from 270 MW, a significant jump of 168%. Last year, Q2 and H1 PAT included significant DTA recognition benefits, making the reported numbers not directly comparable. In contrast, the current year's PAT is largely impacted DTA reversals, which are non-cash in nature. Hence, for a like-to-like comparison, PBT is a better metric to compare. Coming to the balance sheet, we are pleased to report on our balance sheet as of September 26 reflects a position of exceptional strength with consolidated net worth crossing 10,000 crore mark to 10,277 crore. Our net cash position at 2,048 crore further enhances our financial flexibility and resilience. Adequate working capital limits tied up for execution of the current order book are also in place. Our net working capital looks higher primarily due to seasonality and us gearing up for higher volumes in H2. You would be pleased to know that Crystal has elevated our long-term rating to AA- stable, and the short-term rating has been upgraded to A1+. I believe that our integrated business model, backed by a robust supply chain, strong execution capabilities, and industry-leading service network, continues to differentiate Suislawn and create a sustainable, competitive advantage. With that, I would now like to hand over the call to the operator and open the floor for questions.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Sumit Kishore from Access Capital. Please go ahead.

Good evening. Thanks. Two questions from my side. The first one is if you could elaborate on your comments around the depressed contribution margin of 21.2% in Q2. And also, in what time will the higher fixed expenses in WPG business continue? So, you mentioned the 50 crore number on planting travel SG&A this quarter. So, I mean, what kind of a hit should we expect or impact should we expect in coming quarters? And so what should be your normalized, or when would the operating leverage benefit with growing volume start reflecting in numbers? That's my first question.

Thank you, Subit. I'll take the question. The contribution margin, the part of the margin impact is attributable to higher volatility in effects and commodity, which is largely, I would say, due to the West Asia crisis. Now, when we think about it, this is a crisis that has been ongoing, and all of us have been hoping that some of this should get sorted out. It is difficult to predict the timing of this resolution, given the nature of the externalities. Any such resolution should normalize this impact. Again, like I said in the opening remarks as well, we are working on several initiatives to normalize the impact as well, and optimize COG, which should address part of this issue. WTG contribution margins are expected to remain in that 22-23% range for FY27, is the belief. And it should get normalized, subject to some of these externalities getting normalized. I hope that answers it to me.

How much is the FX impact?

See, again, it is difficult to be able to, let's say, articulate it, but I would say, when we think about it, a commodity and FX impact put together has about a 50 basis points impact.

Okay, and on the fixed expenses, yeah.

Okay, so can I come in, Rahul? Just add to what Rahul just mentioned. You know, if you look at the key components of the margin decline, one is the customer and scope mix. It's about 150 to 180 BIPs. Segment mix, because, you know, we have our service business, which generates much higher EBITDA margin, but the share of that changes as the wind turbine revenues go up. So, that has an impact of around 50 BIPs. Non-recurring OPEX, which you are, I think, asking, has an impact of around 1%. So, between commodity and FX, 50 BIPs, and between non-recurring OPEX, 100 BIPs, so you could take about 1.5% is something which is, of course, I cannot comment about commodity and, you know, FX, but for sure the recurring will not be there in future.

Okay. Customer and scope mix is basically the EPC shift that you have made.

No, this is also the kind of customers we have. Like last year, similar time, we had certain customer offers, you know, so those had a little higher, you know, margin. At the same time, they also had an impact on the working capital, which we have spoken in the past. So that's something we can say. It's about last year, same time, our margin was 18.8% EBITDA margin, and now we are at 14.8%. So if I give you all the calculations, this is basically, you know, commentary from 18.6% to 14.8%. Normalized EBITDA margin should be, if I normalize for the non-recurring and also commodity, should be around 16.5% to 17%, excluding non-recurring costs pertaining to Sussbon 2.0, affects commodity and impact of West Asia crisis.

There is no pass-through provision in contracts for commodity effects that you have to bear. See, steel is a pass-through, by and large,

but rest, I think, there are many commodities where, you know, like copper, aluminium, carbon, these are, you know, you need to absorb. And at the same time, having said that, we have always programs running to improve our COGS. So, what Rahul mentioned just now, those programs are being further expedited. So, I'm sure part of this, we will be able to negate it. And in time to come with the higher, you know, volumes which happen in H2, normally we will get operating leverage effect. Generally, H2 is about 1.5 to 1.65 times of H1. We believe the same will pan out this year as well. So that will give us a leverage effect of close to 100 BIPs.

That's my second question. How much key capital have you committed to your DEVCO business so far? And the SUSLON 2.0 plan included winning FDRE, EPC projects in solar and best and exports. So what is the progress on those accounts? Thank you so much.

So, from a capital allocation perspective, we had said this earlier as well, Sumit, that we are looking at about 500 crores total allocation. As of date, the net number is in the 125-130 crore range because some of these assets that we have developed through DEVCO also has been sold off again. We've also got, when we look at our order book, almost 900 megawatts of the order have been through the DEVCO model only. With respect to the overall position, I think the number remains at 500, is what I would say. Ajay, you would like to take the next one?

Yes. So, your question on solar and base, as of now, no CAPEX has been made. We are going for asset light model. Currently, we are on track to build our teams, to start negotiations, which are already progressing well, which I also mentioned, and I think Rahul also mentioned in the opening. And I think this will take next couple of quarters. And post that, we'll start our, you know, journey of KPEX. I hope I've answered your question.

Yes. Thank you so much. Thank you. Next question is from the line of Shakuntala Agarwal. An individual investor, please go ahead.

Yeah, I would like to ask basically three basic questions. One is like Adani and JSW has also entered into JSW Wind Energy. So how competitively we are getting impacted? Second is the cash conversion cycle. I want to know about that. Thirdly, the cash as on date, we have been informed that 2,100 is the net cash position, out of which how much is encumbered and how much is non-encumbered. And third, the random acquisition which we did, so we have the FY26 profitability, while the top line has increased only by 5%, the profits have halved. So, we have paid around 700 crores approximately on the acquisition cost. The profitability is around 3 to 4 crores.

Okay, so, Shakuntala, thanks for your questions. Let me address the question around the competition. You're right, we have Adani, JSW, and many other competitors in the Indian wind sector. The good news is the sector is expanding. We are looking at close to 8 gigawatt Jan to, you know, September kind of, you know, demand already. And Suzlon continues to, you know, win orders. Our market share in the H1 is still near 28-29%. On deliveries, we are at about 23% in this first half. If I compare that with the previous year, it's a substantial jump. So, there is competition. At the same time, you know, Suzanon continues to win its own customer. And these two companies are, you know, also, if you see, they have a large platform of their own. So, a large part of their production also gets used in their own captive, you know, platforms. So, now your second question was on cash conversion. I'll ask you how to…

Again, you must also appreciate that we are funding our entire capex and volume growth at the same time have been able to maintain a healthy cash position as well. So the net cash position is about 2300 crores that remain. Largely, some of this we also use for our working capital. But I think the number on the encumbered piece is something that I will have to dig more detail into and then come back to you. The balance sheet position is about 2,300 on cash is what I want to talk about. On the third question on renom, we are doing various things on renom. I think the way we look at it is the fact that there have been new additions that have happened in renom. Business is starting to grow as well. Overall, when we think about it going forward, we believe there is a large opportunity that Renom can take up, given where market sizing is. In H1, I think we added about 178 megawatts in Renom. What the market is seeing is large capacities being added, where EPC is not there and serviceability is not there. We believe it's a great, large opportunity for Renome for the future. That's how we would really look at it.

Yeah, I'll just add on to, thank you, Rahul. See, Renome has a great opportunity. It's a blue chip company in the ISP space. You see, every year we are looking at 8 to 10 gigawatt of installations in the next three to four years. And large part of these will come into, you know, there is a process by which it flows into the market. Renome is rightly placed to serve these customers. We already won close to 200 megawatts in the last quarter. As I speak, there are again discussions going on for further customers, marquee customers. So, I think it's a great opportunity for renom to build a scaled business, which I think Suzan as a backbone can offer renom to scale up fast.

Okay. So, actually, my question was like, we have paid around 700 to 800 crores, out of which annual profitability is around only 4 crores here. And as per the Christian report, which I was seeing, 2,600 crores was the net cash position as of June 30th, out of which 50% was incumbent. So that is the follow-up question that I was trying to make.

So again, you were talking about June, I was talking about September number when I was talking about 2,300. That's the position, it's available in our results release as well. I think the number of encumbrance remains at about 40-50% only, but we'll have to drill into it to understand the exact number. So, again, that's not a separate number that we disclose.

And your question for Renome, as I rightly mentioned, Renome is a long-term business. We acquired it, and as I mentioned, I'm looking at this business to be scaled up to multi-gigawatts in time to come, and I think that's when this whole leverage effect will play out. Okay. Thank you.

Okay. Thank you so much.

Thank you. Next question is from the line of Raj Shah from Inami MC. Please go ahead.

Yes, sir. Good evening, sir. Sir, my question was again on margins front. During the Q1 con call, you had mentioned that though we had done 18% EBITDA margin in FI 26, but this year should be around 17% few BIPs here and there. However, as you mentioned in the initial part of the call about various reasons for margin decline, see 50 BIPs relating to FX and commodity is understandable, but the customer and scope changes as well as the non-recurring nature of expense for Switzerland 2.0 is something that you would have planned for. You have that kind of visibility in terms of deliveries as well as the orders that you have under execution. But despite that, we have only reported 14.8% margins, which is much below than what we would have anticipated. If you can elaborate why did this happen, and secondly, for the remaining part of the year, what kind of margins do you see as well as for the full year?

Okay. So let me, you know, give you more clarity on the margin as I mentioned earlier. See, we have multiple businesses, the leading one being our wind turbine business. Our deliveries have, you know, been a very good number at 26-27%, both on, you know, sales as well as on on-ground execution. Both have shown substantial progress. The share of our wind turbine business has exceeded the share of the ratio interstate last year, same time versus this time, almost a couple of percentage points. That itself has an impact of about 50 bps. I mentioned non-recurring OPEX around 100 and commodities. So this itself is two percentage points. The customer mix changes also depending on the site availability. You know, while in the full year, we plan X, but in a quarter, sometimes certain sites go faster than the other sites, depending on the execution of those sites. So that's how you see this little bit of a, you know, mismatch between what you're asking. For the full year, I would say we have done 15.1% margin in the H1, with the leverage effect, with H2 being 1.5 to 1.65 of H1, more or less I expect the same to pan out this year as well. You can say 15% plus upside of 1%.

Okay, so from the first trial, 17% plus or minus, now we are saying 15% plus or minus. Is that correct?

Exactly. Yeah, yeah. Because of this, you know, some of the commodity is playing out as of now, and we don't know if it comes back, this can further go up to 17%.

See, again, even at that point in time, so we had said that there could be a variation, given we were aware of the impact of some of these West Asia crisis and commodity impacts, right? So, we had given that positioning, assuming that there will be a positive change, which has not happened.

Yeah, and also, just to clarify, my guidance was 15.1 plus 1%, not minus, huh? So, this is basically the leverage panning out, huh?

Understood, understood. Secondly, on the debt side, I mean, the finance cost side, I think what we would have, we were I'm guiding for the estimating around 300 crore kind of finance cost. However, in H1 itself, we have crossed 250 crores. You did mention about the strained working capital position because of higher inventory. But when you see the full year picture, where this number should go? And similarly, what will be the sustainable networking capital, sir?

Okay, so I don't think multiplying H1 FY26 gives you a position to say that it will be 300 next year, right? You have also to look at the deliveries. H1 FY26, we did almost 1000 megawatt of deliveries. This year, we are higher by 21%. We have already done 12-17. Overall revenue also is higher by about 24%. So there will be an effect of this that will come into the working capital. What I can tell you is our overall interest costs are coming down from a percentage like-to-like basis. Also, I think when we look at a sustainable working capital, the question that you asked, what we are currently focusing is on growth, right? And effectively, we are deploying slightly higher working capital for being able to manage growth as well. So, no single lumber, but yes, we are working on various levers to manage our working capital better as well. I would like to say that.

Okay. Okay. Last, sir, you did have, you mentioned about an export opportunity for repowering some order related to smaller turbines. If you can elaborate where we are in terms of any export opportunity in re-powering or any other opportunity on the export front.

So export, as I mentioned, one on the five, our Blue Sky platform, which has 5 megawatt and 6.3 megawatt, which I will mention in the opening. We are currently in certification. Likewise, there is a good interest shown in small turbines of, you know, 2.1 megawatt. As I mentioned in my last call also. So these are customer engagements very much in place. For each of these geographies, teams are now actively working alongside our, you know, technical center based out of Germany and also repowering opportunities internationally. I think all these orders should start showing first, you know, somewhere around, I would say, next year. We should be able to get a better position to give you a firm position. But currently, the pipeline is getting stronger. Customer engagement is there. All the work which is needed to seed the market is currently on, including technical specs, certification. And in India, we have already got first repowering order, as I mentioned, with Tata's. Which we are working at a project site. It is a small order, but we are working on that site. And I think, I believe, there is a great opportunity for us. In India itself, there is a 25 gigawatt opportunity. Internationally, also, there is a huge opportunity for this in time to come.

Okay. Okay. Thank you, sir. All the best. Thank you.

Thank you. Next question is from the line of Shweta Jain from Anandrati Shares and Stock Brokers Limited. Please go ahead.

Good evening. So, most of the questions on margins are answered. We wanted to ask you if you could elaborate why there is a realization dip on a QOQ basis.

On a quarter-one quarter basis?

Yes. Like, I think we were maintaining a run rate of 6 crores per megawatt kind of a number, but that has slipped below 6 this quarter, despite, I'm assuming, EPC mix as a scope of business improving.

So, thanks, Shaita, for your question. When you look at our Q2FI27 ASP, we are roughly at about 5.9 crore, right? While when you look at it from a Q2FI26 perspective, this was at 5.7 crore. Overall position, I would say, is that this has remained in a good range. There is no price reduction. This is as per contracted positions that we have created. It is a function of the business mix, what customer you are supplying at what time, what type of order. Is it an EPC order, whether the full supply has been completed or not. There are SPSS supplies and other supplies also. So, I don't think there is a negative in that sense.

So, we do maintain a 6 crore kind of a 100 going forward. Obviously, some pressure.

It is not a question of pressure. We have not reduced any prices here. Okay. It's a position that is played out. Obviously, there is a higher project activity that has come in, which creates this position for the price. In the last quarter, it was higher. So, project activity creates the price advantage in the last quarter.

So, what do you mean by project activity?

There are various activities within the, so there is the turbine supply, there is DOP, there is other activities that go on, equipment plus SPSS, stubs and others as well, right? So, when you look at it from an averaging perspective, each has a different element to it.

And same. Sorry?

Yeah, that's fine. Thank you. Go ahead.

Okay. The second question is on the working capital requirements. So, is it linked to the DEVCO model being developed?

Not really. I don't think there is any linkage between the DEVCO model and the working capital. I think in a previous answer, I had said that there is what amount of capital that we are committing to the DEVCO side. It does come in the working capital, but the intensity of working capital here is not because of DEVCO that I can assure you.

So, could you elaborate the reason, like, why we are seeing this stretch of the working capital impacting the numbers?

So, again, I think when you look at last year, there is a seasonality element that plays out here, Shreta. Right? So, if you look at it, last year, the numbers were similar ranged. Right? And, again, like, I answered this question probably earlier as well. We are building for our H2 position. Ajay also answered, saying that it is 1.5, 1.65 in terms of the overall positioning. And I think we have also said that if you look at it historically also, 40, 60 or 45, 65, 35, 65 has been the range that this H1 and H2 have panned out. So we are building for our future sales as well.

Okay, got it. Thank you so much for those answers.

Thank you.

Thank you. Next question is from the line of Abhishek from Motilal Oswal. Please go ahead.

Abhishek, your line is unmuted. Please go ahead with your question. Abhishek from Motilal Oswald, please go ahead with your question.

Yes, please. So, my question is actually on localization. You know, last year there was a lot of hope that, you know, localization will come in and there will be subsequent rounds and overall for the domestic guys, it will be a big positive. So, just wanted to see, you know, check if there are any updates over there and how is that playing out so far?

Yeah, so this question, Abhishek, as you know, the notification came on 31st July 25, with grandfathering provision provided for 18 months for CNI and 36 months for IVP, already built projects, and currently limited to six components and subcomponents, which is nacelle, blade, tower, generator, gearbox, and special bearings. The grandfathering has been extended for certain components in case of lack of availability or constrained supply chain. One year for yaw and pitch bearing, that is up to 31st Jan 28, and two years for main bearing, that is 31st Jan 29. So ALM, as you know, provides a level playing field for the Indian OEM, especially Suzlan. Reducing the price gap and ensuring quality of wind turbine gets added to the grid. And Suzlan, I believe, is very well placed since we already have 80% plus local content.

Okay, okay. So basically, you are saying maybe in about two years time, the advantage will become more sort of…

Yeah, it's already becoming. It's already becoming because most companies have set up their local manufacturing here and the ones who haven't, they have to. And India, as I mentioned earlier, almost 12,000 crores of export of turbines are happening from India and components also. So India has a very good ecosystem.

And this 12,000 crores is it directly like you know directly does it coordinate with what you are exporting or are there like you know other element in this in this 12,000 crores which like you will not qualify for at this point of time?

No, this is all put together, this is not our number, this is the industry numbers I am telling you, what the whole industry.

I understand, but is it something like you So,

so, so one of our companies, our forging and foundry company, which also does, you know, backward integration for us, they're exporting, for example, to many geographies. Elbit, not in a very big manner, it's a small company, but has a big ambition in time to come to grow, you know, and as it grows, the leverage effect makes the cost better even for Suzanon when it buys from it. So, I think what is happening is nacelles are going by the European OEMs are exporting nacelle gearboxes and components.

Okay. So, this is basically nacelle, gearbox, and various components, all of those.

Yes. Yes.

Okay. Okay. Got it. And this last question on the localization thing. So, like, you know, what we've seen for solar manufacturing is that there have been subsequent rounds, and the government has tried to go back from, you know, module to cell to ingot wafer. Maybe eventually to Polysilicon. Is there a discussion with the government that, okay, you know, after the first round is done, maybe we want to localize further and, you know, backward integrate further? Is that on the cards?

I think right now, as I mentioned, the current policy, NB Sages, these, you know, components I mentioned, Nessel Blade, Tower, Generator, Gearbox, and Special Bearing. On top of it, Pitch Bearing and Main Bearing. I think if you add all this, you're almost nearly hitting 85% of the cost. And I believe we can do 100% also in India. I think India is a very good ecosystem made for India, for the world. We can certainly do it. And that, I am sure, should be the roadmap ahead.

Okay, perfect. That answers my question. Thank you so much.

Thank you.

Thank you. Next question is from the line of Parmachitia from Ambit Capital. Please go ahead.

Yeah, thank you for the opportunity.

Could you be a bit longer, please? Thank you.

Yeah, yeah. Is this fine?

Yes, much better.

Yeah, yeah. So, most of my questions were answered, but one follow-up on one question which was asked earlier on the competition bit. So, like a few names like Adani and JSW were mentioned. So, recently Adani won multiple orders. So, they have an order book of one gigawatt outside their group. And, uh, major customers were NTPC, Aditya Billah, Renewables, Purva. All of these were Suzylon's customer in the past. So, considering these orders that they have won and, uh, 40% market share target given in Suzylon 2.0, uh, what's your read on that?

No, it's a very good question. Uh, you know, uh, all the names you're saying continue to remain our customers. We continue to get repeat orders from them. Aditya Villa Group, we are currently, you know, implementing some of the largest projects, which you would have seen in the recent announcements also. So I think India market is maturing. I believe what we should be looking at is that Suzan has three decades of leadership, has seen number of global pairs, has itself operated in global markets, has a presence across geographies. Our R&D centers are in three parts of Europe. We are a preferred partner for customers over the lifetime due to reliability and also the way we manage the O&M. We have today almost reached 22 gigawatt of installed capacity over the years. I think we are in a unique position. On top of it, many of these companies are largely meant for their own captive consumption. And of course, they are supplying to outsiders. And it's good for us because end of the day, Indian market is now likely to go to 15 gigawatt by FY35. And Suzuan at 40% of that, I'm very confident, should be able to reach that number. And also there is space for everybody. So I think India itself becomes such a big, you know, geography. If you see China's demand, you know, what we do in a whole year, they do in a month. I'm not saying we'll become China tomorrow, but I can see that as we navigate the potential on wind, solar already has, you know, a lot of investments already made. Today, we have almost 1,100 gigawatt of potential in India. We only used at 59, about 5%. So even if you go to 20%, there is enough room for everybody.

Right, right. Okay. Understood. Another question was on the ALMM bit that was again asked earlier. So, the costs of competitors which were basically based in China will increase because of that and that will give us a level playing field for Switzerland. But right now, there will be a particular date. So, some of the parts, the deadlines are extended. But for some of it, the deadline, if I'm correct me, if I'm wrong, was Jan 27. So, after that, you feel that the market share for Suzanon might increase?

So, I would not, you know, I have given my guidance that by FY31, I want to hit 40%. I am trading more closer to 30% right now, like 28-29 to be precise. I have an order book of 6 plus gigawatt. After doing record deliveries of 1,200 in the first half, and also getting 1,500 megawatt of orders, and all from marquee customers, repeat customers, new customers, and I currently again have a very healthy pipeline, and then with the DEVCO, we are in dialogue with the leading CNI and other customers for year 3, 4, 5, which means I'm actually talking now F5, 28, 29, 30, I think that should give us a lot of confidence going forward. ALM has impact on building Indian supply chain and not necessarily the margin. So, I think that both the impacts are there, you know, because there's a need for India to become self-sufficient. And with FX impact, I think once you have all these things made in India, you also have a much stronger resilient supply chain. And this 12,000 crores of exports out of India, I believe can actually triple in time to come.

Right, right. Okay, thank you.

Those are my questions.

Thank you. Next question is from the line of Mahesh Patil from ICSA Securities. Please go ahead.

Yeah, thanks for the opportunity. So, my first question is on our inflation rate, commodity inflation, that we are saying for most of the parties not passed through. So, one thing here is for the new orders, right? For the new orders, at least we will be factoring in the higher cost in our prices, right?

So, very good question. See, end of the day, you are in the market with the price and, you know, you also have to see what a customer gets the price from other competitors. So, pricing is more dynamic. You know, we do try to pass on as much as we can, but then, you know, end of the day, customer also wants to get his best, you know, price for them. What we do is we keep developing alternate supplier basket. So our cost of fresh purchases, cost of manufacturing, we keep running initiatives which help us improve our cogs. And I'm happy to see the projects in Suzan we are running across our various models. I think that will help us to mitigate to a large extent the commodity risk. But in short term, it hits you. When it becomes a little near term, it actually tends. And then this effects and commodity impact will hit everybody, especially the ones who are importing more will be hit even more.

And the second question is on the pipeline, right? So how do you see the pipeline of projects where the projects are ordered, but the orders are rejected, blessed, any number that we have?

Just to clarify, you are talking about the order pipeline.

Correct, correct.

So, we have the 6 gigawatt orders, we expect that with the current run rate that we are, you know, seeing, I think next 18 months, we have a very solid, you know, visibility. And you can see our acquisition rate also is pretty good, which I also mentioned in the first half, we already got 1500 megawatts of new orders. So you add both these, I think we are in a very good position. Our order book is not a constraint with strong demand in the industry, and the DEVCO modeled offering in place will help us keep the momentum growing. Our focus would remain on closing quality orders at regular intervals rather than achieving a rush to do quarterly run rates.

Sir, just to clarify this, since we are mentioning over and above the order book, right? The pipeline that we have. Absolutely.

Okay, okay.

And this is largely FDRI, RTC, right?

This is largely when I'm talking. In time to come, as we, you know, come and talk to you more about our best offerings. As I mentioned, currently, we are in the process of incubating these businesses. The new leadership teams are joining us. And I think in time to come, we will start getting into best and, you know, other FDRI offerings as well.

Okay. And, sir, last question. On the C&I side, also, we are seeing quite a bit of traction. So, how do you see that, I mean, utility scale versus C&I, the pipeline forming ahead?

If you look at our overall order book, I think almost 78% is between CNI and, you know, PSU's utility scale. All leading CNI, we are very happy that, you know, we are repeat customers, repeat suppliers to them. Many of them have engaged us for end-to-end EPC. Many of them, we are engaged on DEVCO. So, and I think each of them have their own, you know, large requirements to do their own decarbonization journey. So, because it's not just wind sector standalone for the IPP and utilities, but also corporates who have big steel plants, cement plants, chemical plants, large industries, you know, they all want to decarbonize. So I think there's a huge demand, and I think, and the questions asked to me earlier about others, competitors entering the segment, I think we need this kind of a supply chain so that India can meet its wind potential, and thereby not only offer a long-term green supply, but also at a reasonable price. I think there's enough room.

Okay, sir. Thank you, and all the best.

Thank you. Next question is from the line of Sumit Kichor from Access Capital. Please go ahead.

Thanks. Just one follow-up on the working capital. The question is, on a sequential basis, I see that the working capital declaration is mainly on a sequential quarter-on-quarter basis, mainly because of increase in receivable days and not really a build-up in inventory days. So, you know, on Raud's clarification, just wanted to sort of…

I think, Sumit, we had answered that we are building certain inventories to be able to meet our requirements for H2 supplies. And yet, inventories are slightly higher.

Yeah, inventory has not really gone up in terms of… Slightly higher is what I said. Receivable has gone up more, is what I see.

You are right. Receivables are up. I think there is also timing of the supply positioning that gets created here. Some of the receivables are also related to commissioning and other positions that get created. And as our commissioning, again, I think when you look at it, our total commissioning this quarter and both half year has been very, very, very robust. As our commissioning levels improve, some of these, let's say, receivables that are effectively not due and are linked to commissioning should get converted to cash as well.

Okay. And one comment made that you're exploring DEFCO orders for delivery up to FY1331. Just want to understand the profile of the projects which have been booked under DEFCO so far. I mean, are almost similar in terms of delivery to other normal standalone WPG projects?

So, there are two kinds of orders. I think the orders we have announced of 900 megawatt odd. These are COD in the next 18 months. So, these are like normal ones. But here, we already have land available. So, these are like near term. What I am really saying is for year 3, 4, 5, those orders we will announce in time to come. Got it. Thank you.

Thank you. Thank you. Next question is from the line of Satpal Singh Kanuja from Ishan Ventures. Please go ahead.

Hi, sir. Good evening. Thank you for the opportunity. Sir, what are the total megawatts which are pending to be installed? Like how many megawatts are still pending to be installed?

So, it will be close to 3,900 megawatts, of which closer to 1,300 are already erected, which I think with the current 725 watt already done in H1, give us a very good visibility for the full year. I think, so I am very, very positive that it should be a very good year for our deliveries. For the installation, sir?

Sir, what is the percentage of revenue that gets held up for the installation, and what is the aggregate held up amount currently?

So, just to answer that question, it depends on customer to customer, right? Can you give me a ballpark figure, sir? I am just completing the answer, sir. Some customers, it is between 5 to 10%. For certain other customers, it could be in the range of about, let's say, So, again, I think the range remains between 5% to 7.5% to 10% max. That's the way it works.

So, there would be revenue which has been booked for which the installation has not been completed yet. Am I correct?

As the installation gets completed is when I receive the cash.

Ah, but the revenue has been booked already.

Yeah, that's how accounting gets done.

Okay, okay, okay. Sir, when do you see an inflection point coming when the installations will start exceeding the delivery?

Very good question. So, if you've seen first signs of execution, you know, on-ground uptick from Suzan, you know, last year, in a whole year, we did 750 odd. A year prior to that, we did some 350. In the current year, in the first six months, we have almost delivered what we did in the whole of last year. So I think that's a good sign. We also, on top, have an erected stock of 1,300. What we have also done is reorganized the company. Rather than having one chief project officer of the group, we have appointed three regional chief project officers with their own independent team. And I can already see, with this management, bringing in new leadership in our India business. So I'm already seeing tremendous, you know, efficiencies happening. I think it will take another 12 to 18 months, more like 18-month journey, when we will start seeing even sharper, you know, commissioning on the ground. So I think I'm very, very confident that over the next year and a half, we'll see this turn around.

Sir, my second question, we have an unutilized capacity, like we have a capacity for four and a half gigawatts. We have cash and working capital. What is stopping us from, you know, going faster?

So, you know, two things. Number one, we are looking at a plan which we unveiled a couple of months back as part of Sundan 2.0, wherein we have said from our 30-33% market share, we wish to increase our India market share to 40%. This, we said, we'll do by FY31. We also mentioned we are looking at an order book from current 6 gigawatt to 15 gigawatt as an exit of FY31. We also mentioned we are looking at an annual sales of close to 10 gigawatt from current last year, 2,500. Current run rate, you can already calculate. 1,200 in the first half, 1.5 to 1.65 second half. And then we have also given a trajectory of 25% CAGR. If you take that trajectory, and also I mentioned about exports, we are looking at 3 gigawatt order book by F531. We are looking at 1 gigawatt sale by F531. You work backwards. So I think capacity will not be a deciding factor. It's basically the pull from the project, the current heading order book, the future DEVCO strategy. I think as they play out, I think this 25% CAGR, which I've guided, should more or less pan out, and that will help us not only utilize this, and this 4,500 is with 3.3 megawatt, you know, capacity turbines. As we go for higher, of course, we have to do some new blade points. This capacity can still be increased and enhanced. So I think that will not be a constraint for us. Right, sir.

Sir, when are we planning to recognize more deferred tax assets for the unabsorbed losses?

Okay. See, again, I think this is an annual exercise that has to be done, right? The deferred tax assets, so again, I think there will be an evaluation that will get done in March 27, based on discussions, based on future profitability projections, will there be a recognition that will come through?

Previously, you were doing it half-yearly, sir.

See, again, I think the scale and size has changed, right? So, at that point in time, we were doing it half-yearly because there was a very large, we were growing 60%, and therefore, confidence-building measures were also being taken into account. So, but we now believe that, like Ajay said, a 25% CAGR is the one that we are looking at, And therefore, we believe, and the auditors also believe, that it is a good time to do this on an annualized exercise basis.

Right. Sir, can I make a small suggestion? In one of the presentation, I think it was four or five quarters back, Mr. Emanchu Modi did that. There was a clear presentation of the position of the installations, like how many the foundation work has been completed, How many have been erected? How many are pending for the machine installation and all? Like, I think we'll divide it into three or four stages. So that thing has been taken out of the presentation. If it can be included again, that will give the investors a lot of clarity.

So we will evaluate that. We'll think about it. But again, the point is that we can keep drilling into more and more detail. I think what Ajay has talked about and what we've been talking about It is a thematic and industry positive that we've all kind of created here. The DevCo model, the export positioning, the AMS growth. I think we have to look at it from that perspective rather than drilling down into detail.

I understand, sir, but there was a very good information that was shared.

Yeah, yeah. So what is important is, you know, how is the on-ground execution? As I mentioned, we did almost 169% growth in the on-ground in the current period. This is the highest ever done by the company. We have also given a number of close to 1300 megawatt erected already, and also guided how does the H2 look like. So I think by and large these numbers are there. We can separately engage as well and, you know, have a discussion. If you wish to get a more detailed insight, sir. Thank you for the clarity.

Thank you.

Thank you. Ladies and gentlemen, we'll take the last question from the line of Nikhil Popatana from Kizuna Wealth. Please go ahead.

Yeah, I'll tell you. Most of my questions are going to answer. Sir, I just wanted to ask what... Could you be slightly louder? Your voice is a bit muffled. Yes, sir. Is it clear now? Slightly better. Thank you. Yes, sir. So, most of my questions have been answered.

And, sir, I just need to ask one question.

What is the update on the European export side that we talked about, like the 2 megawatt, which are really going on in the European and Australian markets, BlueSky platform?

So, is there any kind of update on that?

Yeah, good question. Actually, this was asked before, but I'll answer it for you. Blue Sky platform is for the larger wind turbines we have launched in Europe, 5 megawatt and 6.3 megawatt. These are currently under various stages of certification and, you know, the local requirements of great requirements. So those studies are currently underway at an advanced stage. The 2 megawatt is not blue sky, but it is also having a demand in repowering as well as we have seen some good demand in some of these geographies you mentioned. For this also, we need to get a certification for the local countries. So that is also work is undergoing. I think next year we should be in a better position to start reporting our export order. But the order book, the detailing from the customers, I think the business development outreach is very, very encouraging. It's basically now the technical aspects to be sorted out, and then we start reporting the orders and shipping the turbines.

Okay, thank you, sir.

Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for the closing comments.

Thank you very much, everyone, for joining Suzlon's H1 FY27 call. I hope we've been able to answer some of your questions. Our teams will be happy to engage if there are any additional questions that we are for us to be possible to answer.

Thank you so much, sir. On behalf of Suzlon Energy Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.