Sterling and Wilson Renewable Energy Limited (SWSOLAR) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Sterling & Wilson Renewable Energy Ltd. Q1 FY27 Earnings Conference Call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company and it may involve risks and uncertainties that are difficult to predict. 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 this conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. Today on the call, we have Mr. C.K. Thakur, Global CEO and Mr. Ajit Pratap Singh, CFO from Sterling & Wilson Renewable Energy Ltd. and SGA who are their IR partner. I now hand the conference over to Mr. C.K. Thakur for his opening remarks. Thank you and over to you, sir.

Thank you, and good morning, everyone. Let me begin with an update on our business operations and outlook. The most significant milestone of the quarter has been on the international front. In June this financial year, we received a letter of award for our 50-50 joint venture Vithasan Alam Construction, one of the leading construction companies in Egypt, and the wider MENA regions for the West MENA solar power project in the MENA government of Egypt. This is a landmark mandate, a 1,000 MW AC solar PV plant integrated with 600 MW battery energy storage system, valued at approximately 560 million U.S. dollars. Once completed, it will rank among Egypt's largest utility-scale renewable development. For us, it marks the third gigawatt-scale order win in the space of nine months, a clear signal both of the rising ticket size of the project and of the confidence that marquee developers place in our ability to execute complex storage-integrated solar at scale. The joint ventures will undertake the full engineering, procurement, and construction scope, spanning the photovoltaic general facilities, the battery storage infrastructures, grid connection, transmission wires, and all associated balance of the plant. The disorder win, we concluded Q1FY27 with highest ever EOV of NR13,000 crore, driving a strong visibility for revenue growth for forthcoming prices. At this point, I would like to draw your attention to the fact that current EOV comprises six turnkey projects, three each in India and international markets, which are yet to commence execution. The total value of these six projects is approximately INR 9,000 crores. These orders were won during the second half of financial year 26 and Q1 FY 27. We expect these orders to start contributing more meaningfully during the second half of the fiscal year. Since these are the large projects, we also expect the working capital cycle of the company to significantly improve as the customer's advances for these large projects start flowing through. Moving to the market outlook, the domestic solar EPC market remained a bit slow for a second consecutive quarters due to geographical tensions, volatile commodity prices, and high domestic module prices, which deferred new projects awards. The activity on the battery storage market has been increasing exponentially, with both standalone-based projects getting awarded and hybrid solar projects with battery storage. We believe there is a significantly large market. We remain patient to get profitable orders out of this. We continue to remain patient and are only pursuing margin-accretive projects. The bid pipeline continues to remain extremely robust at 27.7 gigawatt, of which almost 90% is in India focused. The current bid pipeline is purely focused on the solar PV market, also the best projects, which is another large opportunity in itself. In value terms, we expect the best market ordering activities to be almost equal to the size of the PV market. We anticipate ordering activity to pick up from this quarter in the domestic market, and we are confident of maintaining our market share, which, in our view, should enable us to deliver 10 to 15 percent growth in revenue this fiscal despite the high base of financial year 26. On the international market outlook, we continue to remain very optimistic on the Africa and Middle East markets and certain geographies in Europe. We currently have three ongoing projects in Africa and Middle East which should commence execution during this quarter. In all our international projects, we continue to judiciously evaluate the risk and rewards and are mindful of not being exposed to the commodities prices and equipment price increased risk. As I have indicated in previous calls, all international solar projects undertaken thus far have been completed successfully within the projected margins. Going to the operations and maintenance segments, we have now achieved a record of 18.3 gigawatt peak of peak capacities under operations. We anticipate this full portfolio to start contributing fully from third quarter to this fiscal year. The OMM business provides us a steady annuity stream and good growth and EBITDA margin due to a very low overheads. Our engagement with the Reliance Group continues to be deeper. As you have seen, the Reliance Group articulated at its recent Annual General Boarding Meeting an ambition to build one of the world's largest integrated renewable energy hubs in the Kach region of Gujarat, a development spread across 5.5 lakhs acres, designed to deliver round-the-clock power at Gidawad scale by integrating solar generation with battery storage, And targeted to generate in excess of 40 billion units annually, equivalent to close to 3% of India's current power demand. The Reliance Group has already commissioned its integrated new energy manufacturing ecosystems. And the first phase of its 40 gigawatt, our battery gigafactory is on track for commissioning this year with a stated pathway to 120 gigawatt hours. We are working very closely with Reliance Group on technical configurations and execution readiness. While the timing and quantum of specific orders will necessarily follow their rollout schedule, we remain confident of becoming large shareholders of Reliance Initiative. I want to close my remarks with a point of philosophy, because in this business, the discipline that matters is not merely winning orders, We continue to protect ourselves through back-to-back pricing arrangements with our supply chain. We remain deliberately selective, staying away from the mandates that carry land, major right-of-way or resource risk outside our control. And we run the business as we always have on the negative working capital model. That conservatism is, in our considered view, precisely what will separate the durable players from the rest as the cycle matures. With that, I'll hand over to Ajit to take you through the finances of the company.

I am PCKD, sir, and very good morning, everyone. Thank you. For Q1 FY27, our revenue came in at INR 1590 crore, and it was lowered both sequentially and year-on-year due to lower rate of execution, primarily in the international EPC segment. Due to the fragment of completion of four of our international projects in South Africa, Spain, and Italy, we were mindful in new international business due to earlier challenges faced in the international market. Now, with the success story of four successful international projects, we have backed three new projects, two in South Africa and one in Egypt, where the execution and revenue flow is likely to start soon. So, as CKT alluded to in his opening remarks, a significant proportion of our UOE is yet to commence execution, post which our top-line growth is also expected to pick up. A bright spot in our Q1 results was the performance of O&M segment, where the top-line grew around 40% year-on-year due to the significant increase in O&M portfolio size. We expect continued improvement in O&M top line as the complete portfolio is yet to contribute fully. We anticipate full contribution of 18.3 gigawatt to commence from Q3 FY27 onwards. On the gross margin front, our Q1 FY27 gross margins were around 9.9% compared to 10.5% in FY26. We expect the EPC gross margin to range between 8% to 10%, depending on the project mix of turnkey and BOS. On the O&M side, we expect gross margins to stabilize at around 20% level. Our operational EBITDA, which is operating its revenues, less recurring overheads, amounted to INR 78 crore this quarter, and the operational EBITDA margin was around 4.9%. Our reported quarterly EBITDA was also positively impacted by Forex gains and amounted to INR 96 crore. Our Q1 PAT grew 36% year-on-year to INR 53 crore, added by lower effective taxation rates. Now coming to the balance sheet, our net debt levels have remained largely stable this quarter. Our gross borrowings declined by approximately INR 130 crore this quarter due to scheduled repayments of thumb loans. Our net working capital was at negative INR 260 crore compared to negative INR 329 crore in previous quarter. As CKT mentioned earlier, with the improved collections from the new large projects, we anticipate the working capital cycle to continue to improve. We continue to make good progress on fresh limits on non-fund and fund-based requirement. We have cumulatively been able to obtain fresh trade lines to the tune of more than 3,200 crore to add the growth momentum in the business. With this, we can now open the floor to questions and answers.

Thank you. 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 remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Kunal Shah with Dan Capital Advisors. Please go ahead.

Yeah, I saw it. Now, you know, despite the order and flow momentum being strong, so the revenues have declined 10% by and we've not been able to achieve the targeted $20 to $25 billion run rate for revenues on a quarterly basis. Could you just explain what happened during the quarter? And, you know, versus the last quarter guidance of 15% growth for F27, now you're mentioning about 10 to 15%. So, is there some bit of miss that you're seeing in terms of execution?

We have given the guidance of growth of, say, around roughly 2 billion quarter-and-quarter doses, or 2.5 billion quarter-and-quarter doses. The adjunction was that revenue would be coming from the projects in hand, and the new orders where we were announced, L1, in Q3 and Q4. So, the NTP dates or LOA for these projects were delayed for the specific regions, and the contributions from those new orders could not add to this quarter's revenue streams. Also, the revenue and the UAV from the existing orders that we had, all those projects were during the advanced stage of the execution, and most of the supplies were taken into the previous quarters. And we were expecting that the revenue contribution from the new orders will come initially through the supply from here, and therefore our exemption was absolutely on the right track, and you could have got it. Unfortunately, all new orders launched were delayed, and therefore, I mean, this is a seasonal phenomenon that the revenue has dipped. So, I mean, in the subsequent quarters, we don't anticipate. Maybe the second quarters also would see the slight slow, but then third and second half of the years could be definitely very bright.

Understood. Also, secondly, with this mega order from Egypt, could you just explain the life cycle of this particular project and when will the execution start?

Yeah, so that's the landmark project for us, and the project is for 13 to 15 months' time after NTP, the two months LNTP periods, and the NTP of this project we are expecting in September. With this September NTP, we are expecting that the revenue contribution from this project will add to the last quarter of this financial year.

Understood. And just last bit, on the orders from Adani or, you know, potential parent orders or the Egypt one, none of the company-specific banking limits would be used for these three projects, right, Ami?

Thank you.

Thank you. The next question comes from the line of Yash Jurani with Code Advisors. Please go ahead.

Hi, sir. So, how much of our 13,000 crore UOV is exposed to, say, the ALMM list to sell, and with domestic sell being like at around 130-160% premium and a six-month certification backlog, what is the risk of that our execution ramp slips off into, say, the next few quarters?

Yes, so basically, the Coal India orders that we announced last time, well, we are L1, the NTP, or this is a turnkey project. And here, and you know that as per the policy guidelines, any project which were bidded after 1st September 2020, they are all under the DCR category. So the Coal India orders is one that is under DCR category. Interestingly, we have already locked the price, the price at which we have, I mean, submitted our bids. So, despite the fact that the market is not stabilized, the DCR market, there are a lot of speculations all around, but the coal India would be the first order, first orders, where the DCR model's demonstration will come. And fortunately, we have locked the price and we don't anticipate any impact onto the model price increase because of the market upsets.

Understood, sir. Just a follow-up for that. So, for future orders and tenders that we will bid, the DCR cost tariff shock, will it break any project IRRs for you guys?

Not really. Not really. Our margins are, I mean, as you have given the guidelines, that it depends on the mix of the orders that we are getting. So, either full turnkey or BOS. Some seasonal impact in one quarter could happen, but overall, at the end of the year, if you see, then our margin will remain in basically 8 to 10%.

And for BESS, it has its own, say, localization pressure. So, how exposed is your BESS margin to the duty charges on the imported cells?

No, no, I could not really get your questions. Can you come back again, please?

So, the BESS projects have their own localization pressure in terms of the cells that are currently being imported. We just wanted to understand how exposed is our best project IRRs or the orders, say, on the duty charges which are put on the imported cells. What kind of margin do we expect from that segment if any, say, regulations come into place?

Yes, absolutely. I got it. Yes. So, this is basically what you're talking about the best project. So, basically, we are currently executing one best project, which is the best supply, not in our scope, which is being supplied by the client fee of cost. So there is no impact of such regulatory changes and all. We are doing only this project. In futures, if the best project comes with the turnkey orders, including the best supply in our scope, so whatever price we'll consider, kilowatt-hour price, we'll consider then the current market scenarios and all. As of now, in the existing orders, we are not exposed to any such risk.

Okay. Thank you so much. Thank you. The next question comes from the line of Faizal Hava with H.G. Hava and Company. Please go ahead.

Sir, are we going to work on any kind of projects over the sea in this financial year or any orders coming up for that? And secondly, sir, did you say that the second quarter will be also slow because of revenue not being recognized and execution being slow? The first question is over the sea. Are you talking about the floating solar plants?

Yeah, great. You may be aware that we are doing one of the India's largest floating plants with NTPC and DVC joint venture as a client. And after that, I mean, there was one more tender in the market that we lost to somebody, maybe KPI in Gujarat, through Sekhi. These quarters, there are a few tenders which are coming, right? And there's large size, including again the NTPC, DVC Ventures, and plus some of the state governments. And having executed on large projects, we are well positioned to participate in these centers, and we are expecting, yes, some portions of the orders definitely will come to us. Second question, that we have the revenue in the second quarter. So, yes, what I say that in second quarter, there will be two factors. One, that the new orders that I have mentioned, even if I'm expecting the LOI to come in this quarter, This, yeah, these quarters, but then their revenue realisation will happen in subsequent quarters only. So on the existing UB in the hands, to that extent it will be impacted, and plus the rainy seasons, the monsoons, right? So that also will slightly attain. But nevertheless, the number that we have achieved in these quarters, I'm confident of achieving, I mean, in the similar range for the next quarter as well. Q3 and Q4 would definitely be very, very high, because by that time, all the new orders will come into the execution stage, and I am expecting that the significant contributions from those orders will come too, whatever new. Sir, what are the efforts that we are making to reduce the central office expenses and the overall fixed costs that we are having? And second is, sir, is there any way that we can mitigate the risks of this international order that we have also got? So, no, the first part of the question, again, I just missed, the fixed costs. Yeah, fixed costs, particularly our central office expenses, because that is what… Okay. So, with all these order increase, see, whatever manpower strength and the other things are being augmented to take up these kind of new orders, they are all costed into a project. And miniscule augmentations happen at the head office, and if you see our energy and power strength and other things, and the number also, so this quarter's overhead is also, I mean, lesser than the last quarter, in fact. So we are pretty well on to managing the overhead at the company levels. On the international side, the risk, I don't foresee because all the market surge and everything, and the items which we believe that could be getting impacted were all tied up back to back. So there is no risk of, you know, and having executed, you know, the four projects in international markets, as we have been telling in the previous calls also. So, the team is in 12 positions to understand the market risk before times and position themselves to take care of all those. So, both the projects in Africa, Europe, I mean, successfully have completed within the prescribed journals and above, or you can say, above the targeted margins. So, we are very confident that there should not be any miss on the new projects that has come to us now. And sir, what is the hit rate in this quarter for us out of total amount of projects that have been vetted out in India? How much have we won? And what is the kind of wait pipeline we see for the coming year in India

in terms of INR crores?

So, unfortunately, this quarter, we were expecting that the order in the tune of over 20,000 crores could have been finalized, right? And those were the spill over the order from the Q4. Unfortunately, the total orders that were completed was only 6,400 crores, including both the PSU and the ITT. Some of the new trends have gone aggressive, and we remain present to see the profitable orders. And since we had already very great visibility of the revenue streams out of the new orders that we got And the UAB that we have from the existing one. So we definitely have not gone that aggressive. And that's basically we decided not to go that aggressive. But since these two quarters have been sluggish, the projects that have been announced in the quarter three and the projects that are anticipated to be announced in quarter four, overall value, if you say that, is still, I can clearly see that the order worth of around 45,000 to 50,000 crores, right? So, let's say around 25 gigawatt on the utility scale and around 35 gigawatt hour on the best side. So, those kinds of orders pipelines are still at the same. So, I'm expecting that this quarter and the next quarter, our shortfall will be definitely catching up. So, with a huge pipeline, significant orders is seen, and we are anticipating our share to remain intact. Okay. Thank you very much for answering my question so well.

The next question comes from the line of Jayesh Rauf with Cask Capital. Please go ahead.

Hi. Thanks for taking my question. My question is, now that you have already reduced the top line guidance from more than 15% to, you know, 10 to 15%, and you're also alluding to the fact that second quarter, of course, because of monsoon and other factors are also going to be as low as the first one. That means that your execution in H2 will need to be greater than maybe 26, 2700 crores, or maybe around 2600 crores. And on top of it, you will have Reliance starting their projects, which will also demand faster execution. So, are we geared up for such kind of execution scale? I mean, won't that be a bottleneck going ahead?

No, absolutely not. So, in fact, as per our guidance, we were geared up to achieve over 2,000 cores of revenue in this quarter, Sandal. Unfortunately, the market scenario came into the play and we could not get the support from the orders that we had, right? But then the team was absolutely in place, and we are completely geared up for even reliance initiatives. Also, we are in the process of augmenting the team. We have more than the core team strength that we have in place. So we are absolutely, I mean, fine-tuned to take up this kind of, you know, and we have no other options also. We have to achieve, I mean, the kind of the revenue in the second half of the years, as you have explained. So we have no other options. We have to.

Okay. Just one more clarification. This order, I mean, top-line guidance of 10 to 15% is X, right?

Yeah, that's right.

Yeah. Okay. So, that means that we have to do maybe around 3,000 crores, around quarter four times. So, that's what I'm saying. See, you guided for execution of more than 2,000 crores, But here we are talking of close to 3,000 crores. So, that is why I asked that question that will that not become a bottleneck in execution?

Our point well noted and we are mindful of this point that our target for quarter three and quarter four is going to be heavy. We are mindful of this. So, we are well prepared for that.

Okay, so that, I mean, management is confident and reassuring on that, that will not come as, you know, an excuse or whatever, I mean, a bottleneck to downgrade the top-line growth any further.

First, we have no option. I mean, we have to perform at that level.

In Q4, I think we did more than 2,500 crores.

Yes, we have demonstrated in FY25Q4. And then the significant contribution will come in Q3 and Q4 from international autos also. So, with the domestic and international mix, so achieving the target of over 2,500 crores, I don't foresee any challenge in that. Okay.

You, I mean, we've at least stabilized on the operational front and, you know, gross margins also closer to 9.5%, 10%. Now, we are talking of the guidance between 8% to 10%. So, is there some downgrade there or why we are talking of 8% to 10%?

No, so why you are talking is basically, I mean, in the beginning I have told you, sir, the margin basically comes from the mix of orders that you get. So the 20 orders gap in terms of absolute numbers for 20 orders, while the percentage margin will remain low, but then absolute numbers will be high, right? Right? Whereas we have the best project, now it's for BOS project. On the BOS project side, we have margin of, let's say, around 10%, correct? So it all depends on the next few quarters, the kind of orders, the percentage are huge for even both the turnkey and the BOS. But at this moment, I can't tell you that, I mean, all are through the RA process and all. So, it will all depends on the kind of order mix that you will have, and that would be between 8 and 10 percent. That's what you have.

I mean, I'm sorry for asking this, maybe a very dumb question, but will it have any bearing on our EBITDA margins also, I mean, because of maybe a lower gross margin?

So our overheads, in terms of absolute number, will not increase. In terms of percentage, it should come down a little bit from the current number, because we are growing in terms of revenue. And of course, if the gross margin is getting impacted negatively, there will be some impact on a bit of margin.

Margin on impact, yeah.

Okay. Otherwise, in case of If you have a stable margin, your operating leverage scenario should play out.

Absolutely. That's right. All right.

Thank you so much.

Thank you. The next question comes from the line of Adaved Javkar with Equipoise Capital Management. Please go ahead.

Thank you. Thank you for taking my question. So, now you explained that revenue was impacted due to delays in the project. So, do these delays increase the risk of bank guarantee invocation or contract termination? If yes, what is the maximum financial impact in the worst-case scenario?

No, not really. So, since the new orders that we said that have been delayed, so those orders, contract date itself has not started because we are anticipating the LOA to come. Now, the project timelines will start from the date of LOA. So, there is no question of, you know, the bank guarantee invocations or any further risk on such orders.

Okay, and the second question is, there are total claims are around 1800 crores. So, realistically, when do you expect a meaningful portion of these claims to be resolved or recovered?

Indemnity?

Not indemnity, basically you claim some, you have done some claims. So, basically, there are some claims related to arbitration, then some 508 crores of wrongfully invoked bank guarantee claims, and there are two international customer claims. So, at what time you are expecting that this will be recovered?

Yes, so basically, if you see, out of this claim, so last claims are from the U.S. two projects, right, two orders, and they are in the court. The settlement of this case in the court will take, let's say, two to three years' time. I mean, conservatively, I can say minimum two years. It's going to go up to three years' time. So then, and the rest, others are basically, I mean, could be settled much earlier, either through supplement or through the arbitration process being concluded. But the two claims will go longer.

Yes. Okay. Thank you.

The next question comes from the line of Sukhrik Patil with iSight FinTrade. Please go ahead.

Good morning, the team. I have two forward-looking questions. Maybe these questions would have been answered back also. I just want to have clarity on this. The first question to Mr. Thakur is, beyond the headline order book growth, how are you planning to structurally reposition the company's ETC and OM portfolio over 25-28 financial year to defend margins in a rising input cost kind of a scenario, While ensuring the performance against execution DJs and battling the competition in your space. First question, I'll ask you the second question after. Thank you.

So basically, as you have been telling you that from the project side, we are anticipating the margin in the range of 8 to 10%. And on ONM business, so this time on the top line in the ONM has been the massive addition. That is largely from the gigawatt levels of the project that we completed in the last couple of quarters. So those have come into the operation stage, and their revenue streams will start from the subsequent quarter. So on an average, 20% margin on the O&M size will continue to be there. So that would be the kind of scenario. Because of any uncertainty at this stage, either in the O&M or in the project, I am not anticipating a margin to dip down from the level that we have now explained to you earlier and now explaining to you in this call.

Thank you. My second question to Mr. Ajit Singh is, again, along the same line, you want to understand, you know, with working capital intensity rising and financing costs also being volatile, What frameworks are you putting into place to sustain the profits and fund global expansion and maintain your regular dividend commitment, just in case if any project delays or regulation increase comes in this course? I want to understand your view on this. Thank you.

Thank you. In fact, the lead bank also has increased the limit from existing lenders, so we are seeing good response and they are increasing the limit. So that's on the credit line side. In terms of term loans, we have significant term loan which will get repaid during the current year and next year, and post that will be almost delivered in terms of fund base required. We continue to operate in negative working capital cycle, considering the advances, what we receive from the customers and overall payment portfolio from customers and supplies under LCs, which is basically from 90 to 120, 180 days, up to 180 days also in certain cases. So, we will continue to leverage that position in terms of managing working capital.

Thank you, and best wishes.

Thank you.

The next question comes from the line of Anirudh Singhi with Dalal and Brosha PMS. Please go ahead.

Hi, good morning. So, this recent arbitration that we entered in Australia, is that covered under indemnity? So, there are two questions. One is liquid damage under this contract. It's a contract with a part in shell, and that is covered under indemnity. We are expecting the amount to get realized in the current fiscal, and the balance amount will be a very strong case because for the same LD, the customer cashed bank guarantees. They levied LD also, and they cashed bank guarantees. So, there can't be two claims, and they without our receivables and payments. So, we have a strong case in that case.

Okay, so the hotel arbitration amount is about 200 crores. Of that, how much is covered by the indemnity?

Around 110 crores is covered under LTE.

Okay, and in our annual report, we mentioned certain cases

which we think are not tenable, but the amount about 3,800 crores.

How much of that would be covered?

Hello? Yeah, we'll get back to you on this. So basically, these are frivolous kind of claims laws from our customers. And there is no cash out as of now. So it is difficult to quantify the amount at this stage. Okay, but I just want to understand if any of it is covered by the indemnity or not. So one large claim is covered that is from a customer where we have not taken the project. We bid the project, but later on that was cancelled. So that's covered. But to quantify the exact amount, because these kind of frivolous claims and without any basis as of now, so to quantify the amount is difficult, but we don't foresee any likely impact on the company because of these claims.

Okay. Thank you so much.

Thank you. The next question comes from the line of Bala Subramanyam with Arihant Capital. Please go ahead.

Good morning, sir. Thank you so much for the opportunity. Sir, on that battery side, the opportunity side, we have mentioned about 50 to 60 gigawatt hours. Gigawatt hours. So, our order backlog is around 300 school change. I'm trying to understand what are the big pipelines in the best segment and what are the government target or ticket pipelines for the next two, two, three years. And then we can expect a size-free company contribution in the best part.

Also, I mean, you know the government of India's target of achieving this 500 megawatt by 2030 is well on track. And contribution from solar is close to 200 megawatt as of now. So I'm expecting that in the next two to three years, the opportunities to be made available in the market will be in tune of, let's say, 35 to 40 gigawatt, right? And enough opportunities are there. So when you say that, so how our business philosophy operates is that whatever UAV we have from the projects that we have in hand, that we commit to the market that from there we will be getting the revenue. And any orders, new orders coming before the quarter one, let's say 20 to 30 percent would be coming as a part of revenue in the subsequent quarters. Any orders which will come in the quarter three, particularly quarter four and all, that will spill over to the next quarter. So that's how basically we forecast the revenue streams and accordingly the other financials on that.

Well, the best margin, it seems like a full EPC margin, 8% to 10% kind of cross margin. I'm trying to understand that EPC best size, which are the battery chemistries, key of currency, procuring, whether it's LFP, NMC, ODM, and what is the current trend, and what is our coaching Because in Indian market, it's not that much mature. Right now, it's an evolving stage. So you could explain your sourcing strategy and what kind of batteries we are looking on. If there's any changes in technology, whether it will improve our margin side.

Yes, right. If you see the margin in the DOS is same as the PV plant, 10%, around 10%. And on the battery side, in fact, market could be turbulent, and that also can go sometimes even lower than the PV modules margin that in the turnkey project you consider. But at least you can consider a similar amount. On the technology side, yeah, so we are also geared up. We know that having distributed around 28 gigawatts around the globe, so we are well positioned to take care of any kind of technological development that is happening in the industries. So, we can see much ahead of the times, and the market pressures is also, I mean, basically leading us towards the more innovations and innovations and innovations and optimizations in the, I mean, area. So, you are right, the pressure will come from the other uncertainties in terms of technological development and in terms of other things.

But there are world What is the sourcing strategy for batteries or sourcing strategy for batteries?

Sourcing strategy, you see, currently, I mean, we don't have Indian market matured enough to get the battery in India. And now the government, I mean, the criteria for the tender is that it should be making India programs. So most of the peoples, there could be Muslim groups in time to come, but currently all those players, they are getting the sale, the containers, the rack, all other components from outside, and they are just assembling in India, and they say it's making India products. So, we are very, very carefully evaluating that who all could be our partners in the future, particularly looking at their performance and all. Because as a company, the performance criteria comes on our head. So, with all these, I mean, these kind of uncertainties, if you have, I mean, we were just trying to understand, that's right, it is there. But then, we being leader in the industries, we are trying to evaluate all those kind of things, and then accordingly, we will go for the tires. So we are evaluating, we are still in the process of evaluating, I mean, from the markets, all those who are trying to integrate the battery supply from India. And for international points, for international projects, whatever the best will come, they are all from the report suppliers, I mean, their product is proven, there is no such conditions of, you know, making specific country programs and all, so there we don't see any problem. But for India, the market will be getting matured. We have to move carefully, we have to evaluate all these things, and then we have to take a call.

Sir, when we can expect improvement in the Nigeria side? I think currently it's going through a slow phase. And what is our current exposure, and is there any bit of pipeline in the Nigeria market?

To Nigeria, Margaret, I'll say the, I mean, it's a slow procedural delay, I believe, I believe, I mean, delayed on to the procedure side. Thank you very much.

Sir, any reason for increasing in our O&M capacity drastically from 13.5 gigawatts to 18.3 gigawatts within one quarter, and where do you see the O&M capacity going to, 25 gigawatts by FF28, and as we have scaled up our O&M capacity, our revenue should shoot up in next few quarters of O&M from 90 crores.

So, thanks. Basically, it's very simple. So, basically, our O&M business model is that order additions comes from the EPC orders. So, that's the integrated O&M contract, basically. When the project is completed, it comes to the O&M phase, and equivalent to the O&M orders, I mean, this was to the O&M. So, that is from our own EPC addition. So, this is the last year. We completed around 5.8 gigawatt DC commissioning. So, and all those projects that you had commissioned, I mean, straight there come to the UNM stage because those orders were for two to three years of UNM in our scope. And the third one is basically the orders from the third party. So there had been a significant improvement in the orders from third party as well in the last quarters, around 1.2 giga, whatever the one single orders that we concluded, and then there were many few in the range of 200 to 300. But I say that if you have seen the market, how it is surging, Then the financial year 2425, let's say it was 17 gigawatt of additions. I'm talking about only utility scale, not the rooftop and the other. The 2526 was around 25 gigawatt. This year it could be around, let's say, 30-35 gigawatt. So all those projects when it is commissioned, it comes to the O&M stage. And subsequently, we are also raising our limit for the project exhibition. So those will come to the O&M stage. And the remaining from the third party, I mean, our efforts will grab some more orders from there. So, basically, putting together, so this kind of growth is seen, which is, I mean, quite logical and justified.

We expect a revenue of more than 400 to 450 crores in the current year from O&M business, which is around 268 crores in the last year.

Okay, so should we see increase in margin from 18% to 25% which we have seen in April 22?

Oh, and the margin we expect to be stabilized at around 20%.

Understood. And sir, what was the reason for increasing in our total employee base over one year, because technically it's double, based on annual report?

So, basically, as the project, I mean, you see the executions capacity you have to augment, right? So, earlier, let's say, we are doing 3 gigawatt kind of thing. This year, we have around 10.5 gigawatt under execution. So, on the project artistic manpower, you have to increase. And also, too, and then the large portions of the projects have come to the Wyndham. So, then the Wyndham manpower also getting added. Also, to see the market, since the manpower and the market is volatile, there are a lot of infrastructure projects coming in, so we also create the pipeline of our, I mean, GETs and all. So this year, we have had around 100 GETs to be trained in the next couple of years to take their positions and all. So they are all futuristic planned, and because of that, I mean, we have to take some calls, right? So then that's how it has increased, but they are all on to the project specific. They are not adding to the overhead.

Okay, so based on your commentary, the H2.27 EPC revenue will be way more higher than the H1, and it will cover the 15% growth we are expecting.

That's what I have told, yes, you are right.

And sir, on the reliance order, there will be, as we bid for the order, there is a delay in LOA. On RelianceFed, due to the parentage, there could be a quicker LOA acceptance given to you. Is that correct? That time to bid and win the orders and the time to execute will be way lower than the other orders?

Yeah, so project, the execution plan would be very, very intensive. So the time would be definitely lower than the markets because the time, But then, accordingly, Reliance is also preparing that kind of readiness, and we as an EPC company also are garing up to cope with this kind of, you know.

And in that, all the raw materials will be provided by Reliance, new energy only? We have to only execute on the EPC side?

At this stage, it's difficult to reveal all these informations, because the contract, The kind of contract that will be formulated with some supply in our scope, majorly maybe being supplied by them, but then what would be the composition of the contracting in terms of pricing and all is difficult to, I mean, reveal at this stage. But it will happen, I mean, with some supply in our scope maybe, majorly by them, and then, of course, the executions. But then exactly revealing the exact, I mean, the fundamentals on the exhibitors, The order composition is difficult at this stage.

And both the companies being or being a listed company, all those transactions will be on arm's length basis.

That's what we can do at this point in time.

Okay, understood. But do you think your OMM order book shooting up to, as we execute more orders, OMM orders shooting up to 30-35 GB box order book size, under mid, by 28?

Yeah, so you can, I mean, our business plan is, of course, yeah, if you see the five-year business plan, then from 18 to, we have, see, we have started 1.8 gigawatt of OEM orders in 2018, and from there, today, we are at 18 gigawatt in the last four years, right? 5 years, you can say, 18 to 26, no, 8 years, 8 or 9 years. So that means we have gone multifold, right? So adding even 5 gigawatt, 4 to 5 gigawatt per NM from our own EPC projects and 2 gigawatt from the outside, the ramp rate would be pretty high. I mean, we don't foresee the UNM business and see that we add value to the customer. So, having seen the kind of, you know, the operation maintenance to do for the customer, that also is stress. So, some of the customers who are pried with the other agencies, UNM agencies, and seeing the performance of the plant that we operate, and we add value to them during this stage, they come to us for the operation. So, this market is pretty robust, I think, in our opinion. So, I can't tell you that, I mean, 35 or 45 gigawatt, but then the CAGR for the UNM growth definitely will be going to add much higher, you know, the speed.

Understood. I mean, sir, on the arbitration side, if we lose, we have four arbitrations, one in the US, one in other geography. If we lose, then are there any chances of losing it on the 1,800 and 1,300 crore counterclaims filed by the party?

So, as you know, in some of the questions, our CFO has already addressed this question. So, there are two parts of any claim. One is the LD, right? Other is the operational frivolous claims or whatever it is from the crime side. And some of our genuine claims, so those are under arbitration. So, while the U.S. claims, the cases are under a court, which will take pretty longer times, maybe two to three years. So, the LD size is indemnified, and the others would depend on the court cases. In our opinion, all our cases are very, I mean, strong. So, we are not anticipating any impact.

I'm sorry to interrupt, Canon. I would request you to join back the queue. Thank you. The next question comes from the line of Shirish Waze with Alembic Pharmaceutical Limited. Please go ahead.

My question is regarding, you had mentioned that other receivables related to LC and DG locations were around 1054 crores from your annual report. So, just wanted to understand how much of these are covered under indemnity? We are cashed out and covered under indemnity for around 800 crores, which is likely to fructify over the next couple of years. Currently, we are expecting the range of 120 to 130 crore to get realized under indemnity, and based on the outcome of the litigations, amount will get realized from indemnity or from the customer based on the final outcome. We believe that based on the legal opinions, whatever we have obtained, that all those litigations will be a very strong case to recover the money, either from the customer or from the promoters. Got it. Second question is regarding your trade receivables. So, if I look at your undisputed trade receivables, more than three years, they were at around 145 crores as of FY26. And if I take more than one year of trade receivables, they are around 392 crores. So, are you expecting any credit impairment loss from these trade receivables? Not exactly. So, this trade receivables, you can say in three parts. One is normal trade receivables. Second is retention money, which is being logged post-completion of the project and get released from the customer as part of the contractual terms to completion of defect liability period. And third is under litigation, which outcome of final litigation will give the final cash flow to the company, either from the promoter or from the customer. So the undisputed that you have mentioned in my annual report,

so these would largely be pertaining to the retention money related to the project?

It has all components, that's what I mentioned. It has retention money also, it has the litigated receivables as well as, so, yeah.

Okay, got it.

Final question is regarding your, in the last one call, you have said that the order book as of FY27 end would also be at 15%. Considering that you have already achieved a 13,000 course of order book, so would you still maintain that guidance of 15% of order book growth as of FY23A?

Yeah, so that's why. So basically, last year, our progress run rate on the order achievement was more than the guided number. The base was really high. So, from that base, we are expecting the growth at least at 10% to 15%. So, yes, I mean, you can anticipate the additions of 10% to 15% over the last year.

Mike, I'm asking not about revenue, but about order book as a FY27. Would you have a number in mind that you can achieve?

So, that's what I'm just trying to say. So, we can say that the order book would be definitely more than 10,000 crores in this financial year. So, I start with the first quarter of the next financial year at maybe slightly higher numbers than this financial year we had as a UAB.

Got it. Thank you. That's what I'm saying.

Thank you, sir. Ladies and gentlemen, due to time constraints, that was the last question. With that, we conclude today's teleconference. On behalf of Sterling and Wilson Renewable Energy Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.