Engineers India Ltd
NSE:ENGINERSIN

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Price: 180.88 INR 1.57% Market Closed
Market Cap: 101.7B INR
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Earnings Call Analysis

Q1-2024 Analysis
Engineers India Ltd

Company Seeks Revenue Growth and Margin Improvements

The company is striving to enhance profitability in its EPC business segment through change orders with clients, working to improve the margins which are already being maintained at around 25-27%. Looking ahead, they anticipate a turnover increase of 5-10% and are targeting revenues around INR 3,500 to INR 3,600 crores for the coming year with a focus on the international market to drive more revenue and business.

New Horizons in Energy and Infrastructure

Diving into the recent earnings transcript, it's clear that strategic initiatives are afoot to diversify and expand. One key revelation is the company's adoption of a dual-pronged growth model, balancing traditional energy projects with cutting-edge alternatives. Notably, a healthy 8% of the previous year's revenue emanated from new ventures into energy transition domains, precipitating a healthy INR 650 crores. This segment is poised for substantial growth, with the company aligning itself as a consultant for NTPC's carbon to ethanol conversion project, indicative of a broader ambition to transcend conventional energy paradigms.

Strategic Alliances and Technological Frontiers

Critical to this transformative journey is the company's readiness to align with international expertise, as exemplified by a soon-to-be-signed MOU with solar CSP, an Australian entity. While the precise impact on revenue cannot be guaranteed at this nascent technology's stage, it’s undeniable that such alliances forecast a more dynamic role in the global sustainability narrative. Additionally, defense sector incursions are being pursued, with specific modernization projects underway, albeit at an embryonic stage.

Financial Growth Trajectory and Project Execution Timeline

On the financial side, there is an air of cautious optimism. Revenue from energy transition jobs recently touched INR 63 crores, and the company is anticipating a revenue growth of 5% to 10% in the upcoming fiscal year. Moreover, with a standard project execution timeline for large endeavors averaging 36 to 42 months, the company's order book projections should be read with a medium-term lens in mind. Specifically, for the current financial year, the order book stands robust at around INR 4,000 crores, with hopes to secure revenue of INR 1,500 to INR 2,000 crores from the consultancy segment alone.

Market Expectations and Industry Evolution

Projection into the future hinges on the vast market opportunities brewing on the horizon. Interestingly, the company has navigated a recent uptick in international interest, a trend it aims to capitalize on. With INR 1,600 crores attributed to overseas consultancy projects from their INR 8,100 crores order book, future growth will likely have an increasingly international flavor, spanning emerging geographies like South America, Nigeria, and Algeria. This expanding global footmark is expected to rejuvenate order books and margins alike.

Earnings Call Transcript

Earnings Call Transcript
2024-Q1

from 0
Operator

Good day, and welcome to the Engineers India Limited Q1 FY '24 Earnings Conference Call hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded. I would now like to hand the conference over to Ms. Bhoomika Nair from DAM Capital. Thank you, and over to you, ma'am.

B
Bhoomika Nair
analyst

Thank you. Warm good afternoon to everyone to the 1Q FY '24 Earnings Call of Engineers India. We have the management today being represented by Mr. Sanjay Jindal, Director of Finance; Mr. Suvendu Padhi, Company Secretary and IR; Mr. R.P. Batra, Executive Director, Finance and Investor Relations; Mr. Sunil Saxena, Executive Director, Technical and Investor Relations; Mr. Amanpreet Singh Chopra, Senior General Manager, CMD Officer and Investor Relations; Mr. Vivek Midha, General Manager of Marketing, BD and IR; and Ms. Neha Narula, Senior Manager, Company Secretary and IR. I'll now hand over the call to Mr. Sanjay Jindal for his initial remarks, post which we'll open up the floor for Q&A. Over to you, sir.

S
Sanjay Jindal
executive

Thank you, Ms. Bhoomika. Good afternoon, everybody. We have declared results of first quarter of financial year '23 '24 on 2nd August, '23. As regards to financial performance for 3 months ended June '23, the company has raised a turnout of INR 800 crores -- INR 88 crores, vis-a-vis INR 805 crores during the first quarter of the preceding financial year. Turnout from consultancy and engineering segment stood at INR 345 crores from 20 segments, it is INR 463 crores. Other income during current year ended June 23 is INR 93 crores as compared to INR 27 crores during the first quarter of the preceding financial year. There is increase in other income, primarily due to settlement with one of the clients in consultancy and engineering project segment for an amount of INR 56 crores. During the current quarter, the company has recorded profit before tax of INR 153 crores and PAT of INR 114 crores in comparison to INR 68 crores and INR 51 crores, respectively, during the first quarter of the preceding financial year, showing an increase of 125% in PBT and 124% in PAT. And on the RFC front, during this quarter, the profit share is INR 22.49 crore as compared to INR 13.5 -- INR 13.85 crores in the first quarter of preceding financial year. On the consolidated basis, our PAT is INR 138.93 crores as compared to INR 64.81 crores in the first quarter of the preceding financial year. Notably, EPS for the current quarter has more than doubled to INR 2.02 visas quarter ended June 22 of 90%. The company has unexecuted order worth of INR 81.02 crores, comprising under [ convergency ] segment of INR 4,179 crore and under EPC segment of INR 3,123 crores. In the first quarter, we have secured orders of INR 1,265 crores. And this is the financial summary, which we have declared on the second [ letter ]. Thank you. I hand it over to Ms. Bhoomika.

Operator

Thank you very much. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Mohit Kumar from ICICI Securities.

M
Mohit Kumar
analyst

My first question is, sir, how do you see about the order inflow opportunity for the balance of the year? Are we seeing any traction in [ view of ] the refinery and [ competency ] projects?

V
Vartika Shukla
executive

Okay. We [ have on the way ] that we are bidding for it. We see one of the private refinery is going for the another expansion. So we are initially involved in the study stage. We see another -- if it is to get realized, it is cleared by the Board. They might go for the implementation of the same. So we see that opportunity coming towards the end of this year. Then there are many petrochemical compresses you must have seen the [ NGC ] is also going for the crude to chemical complex. It has been recently been published. We have been involved in the initial VFR for that. So we see that also coming on the way. And BRL is also going for the petchem complex. So we have been well in initial stages. So they are also going to come with their tendering activities in the course to come in this financial year. Then IOCL is also going for a [ deep ] petrochemical complex, which we see that their tender is inbound to come in future. So all these opportunities are underway where we are targeting. And there are many more which we are working. So this is there on the way.

M
Mohit Kumar
analyst

You say a tender which is floated -- footed by all the petchem companies and where we have already put in our bids?

V
Vartika Shukla
executive

No. In some of them, tender are expected in the course of the time. And in some of them, we are involved at this stage in the final stages of the study, which will in a few months' time, it will take a shape and go into a tendering process or with negotiated process.

M
Mohit Kumar
analyst

My second question is on the CPC and [ platinum ]. Is the project going way slow right now? Is my understanding correct? Does it mean that the revenue booking will be slightly lower in this particular financial year?

V
Vartika Shukla
executive

I think they had some land issues at their end. Those have been, I believe, resolved, and now the work is on, and tendering has started again. They have put it on hold because of some land issues and clearances. Now all those things have sorted out and block has already started and people -- our teams are working on that.

Operator

The next question is from the line of [ Raj Rishi ] from GCPL.

U
Unknown Analyst

Can you explain or elaborate on your competencies for new age business like you talked about, [ Mr. Klas ] talked about 4 into 1 green.

S
Sanjay Jindal
executive

Can you speak a bit louder, please?

U
Unknown Analyst

Could you elaborate on your competencies to back projects in new age areas like one green hydrogen and renewable energy. Mr. Vartika Shukla has talked about 4 areas of Engineers India into these high-growth areas. So what kind of edge do you see in Engineers India to bag the projects?

S
Sanjay Jindal
executive

Mr. Amanpreet he is going to take that question. He's going to respond on that, please?

A
Amanpreet Singh Chopra
executive

Yes. In case of renewables, if you talk about alternative fuels, if you talk, one of the major things we have been involved with this alternate [indiscernible] segment.

U
Unknown Analyst

I'm not able to hear you.

A
Amanpreet Singh Chopra
executive

So there are 3 broad areas which we are looking at. One is on the alternative fuel segment. Alternate fuel segment, we have been involved in the DFS the bio funded that was initially done during -- at the time of the biofuel policy. So again, we have been involved since beginning in this particular area. And moving forward, we are executing as we are executing the bamboo based refinery project, the Bio refinery for [ PRL ]. So that is -- we are as a technical company, we have been able to raise the level of -- like from lab scale, we are going directly into the commercial scale. So that's the level of competence that.

U
Unknown Analyst

Repeat the last bit I didn't hear to what you're doing?

A
Amanpreet Singh Chopra
executive

So see, that particular refinery, it's been going to the commercial scale, right from the labs from that scale to commercial scale, that's the lift of that refinery has taken up -- so all those technical aspects are being covered by EI, taking it from the technology level of 2 to right now its going at 8 and 9.

S
Sanjay Jindal
executive

So another thing I would like to add on this is like right now...

V
Vartika Shukla
executive

Also, we are doing various other projects in biorefineries like feasibility studies. We are right now executing one assignment as a project management consultant for HMEL for their rooftop solar projects. And then we have recently been appointed as a consultant for -- by NTPC for one of their projects wherein they are capturing carbon and to convert it into ethanol. And earlier we were involved in their methanol projects. So all these projects are there, we have been involved. So you can see that the changes are happening. We earlier had done a few hydrogen, one hydrogen plant for the BRL as well as for [ Adani ], we have done hydrogen pipeline. So all these areas we are focusing and to -- for your information, in last year's business, we had contributed around 8% from the new areas. The energy transition areas, which included coal gasification, hydrogen and all other areas and [indiscernible] INR 650 crores was a business which has come from the included biomass, by Bamboos, polysilicon, [indiscernible]. All these areas were there, the new areas. We are keeping a special focus on that separately.

U
Unknown Analyst

And sir, from this 8%, which you talked about from new age areas last year, in 2 to 3 years, what kind of percentage contribution would you just hazard at, I guess?

A
Amanpreet Singh Chopra
executive

See, what we meant to say that during the last financial year, the revenue that was generated from the energy transition jobs was around INR 63 crores. So out of the revenue that we were INR 63 crores [indiscernible] around 5% of the [ perfecting ] and the similar jobs we are getting continuously in this financial year, if we get them definitely, this particular proportion is going to rise substantially. Another aspect that we have covered that you have seen in our disclosures also that we have entered into a strategic alliance with solar CSP as an Australian group. So would be signing an MOU shortly with them, and we'll be kicking up this solar CSP projects in various segments in India and overseas along with them.

U
Unknown Analyst

And how big can this tie-up be for you for Engineers India?

A
Amanpreet Singh Chopra
executive

See, if we see that the solar CSP particular module, if you see, then around 35% of the total project cost is for a balance of plant for which services will be provided by ERS.

U
Unknown Analyst

Okay. So it can be a major contributor to your revenues?

A
Amanpreet Singh Chopra
executive

This is an evolving technology. So [ the niche ] technology is evolving. So we have to pitch this particular trend along with the technology providers with our clients because everybody is moving towards net zero and carbon neutrality. So this particular new technologies are going to come in future as one of the pathways to the energy transition. So having the right methodology, having the right approach to pitching to the clients will definitely -- we can able to secure some projection this year.

U
Unknown Analyst

And you foresee more such tie-ups in other areas in energy transition, like the 1 year recently.

A
Amanpreet Singh Chopra
executive

There are a few that are going on, but it's not the right time to declare them. So as and when they are getting mature, we will definitely let you know.

U
Unknown Analyst

And sir, another -- just one more point. This -- you talked about some defense foray also. Is there any movement in that regard?

S
Sanjay Jindal
executive

We are working with one of the companies for their modernization projects. These are still in the initial stages and let us see if [ equalizers ] will declare it, but we are working on that.

Operator

The next question is from the line of Dikshit Doshi from Whitestone Financial.

D
Dikshit Doshi
analyst

My first question is, if you can give a broad timeline for the current order book execution, both consultancy and [ time key ]?

A
Amanpreet Singh Chopra
executive

Yes, between the period of 3, 3.5 years. 3, 3.5 years.

V
Vartika Shukla
executive

Generally, a project took 36 to 42 months for the completion from the date of alloy for the mega projects, mega and big-sized projects.

D
Dikshit Doshi
analyst

Okay. Now my second question was regarding -- so let's say, so I wanted to understand the opportunity size of, let's say, all the OMCs are raising issue and planning a big CapEx over the next 2, 3 years, be it petchem or hydrogen or any new age businesses. So according to your estimate, what would be the opportunity size for Engineers India? And let's say, what kind of success rate we can have in terms of order.

S
Sanjay Jindal
executive

There are a number of projects which are on the [ anvil ] and there are a lot of investments as you have already said, we are targeting all of them, and there is definitely a competition, and we have been striving to work out and have been able to secure many of the assignments. Many of the projects we are already involved in the initial studies as the consultant, as the CBT consultant or study consulted. So we are working towards them. So saying that what would be the success, it depends on the market and how it is going to work and how many builders are going to be. Some of them, we can even realize on a negotiated basis. It all depends. We always work in various methodologies. So nothing can be concrete said that this means how much we can secure and what percentage will be the success rate. So that really -- I mean we'll have the target all the projects, and we'll definitely be able to secure many of them. You have seen the results earlier also and the improvement in the results. So yes, we are adopting a regressive strategy on this.

A
Amanpreet Singh Chopra
executive

But we can say that the opportunity size is quite significant, yes.

D
Dikshit Doshi
analyst

So let's say, it's not the success rate, let's see if some -- let's say, INR 50,000 crores of CapEx happens in petchem or somewhere, then how much could be the opportunity for Engineers India.

S
Sanjay Jindal
executive

Any of the petchem the number of petchems are there. Most of the petchem starts from INR 25,000 crores to INR 40,000, INR 50,000 crores. So you can see 4 or 5 projects coming on the way vis-a-vis mega investments in the petchem primarily, it is going to be in the petchem only. Refinery could be there, some investment could be there in the refinery. But mostly, it would be either petchems or crude to chemicals.

D
Dikshit Doshi
analyst

Okay. So yes, so what I was asking is, let's say, INR 25,000 crores of petchem CapEx happens, then how much would be opportunity for us in Turnkey and how much opportunity in consultancy?

S
Sanjay Jindal
executive

We are very specific in the Turnkey. We don't go for all these projects on a turnkey basis, primarily, we focus on the consultancy. Turnkey, we generally grow on the OB basis, and that's a specific area. It all depends where we can negotiate OB contracts. So this is the opportunity I can see telling you at this stage [indiscernible].

D
Dikshit Doshi
analyst

What I was asking, so out of INR 25,000 crores of CapEx, consultancy opportunity would be, what, 20% of that entire...?

S
Sanjay Jindal
executive

No, no, no, not at all. It is for this kind of 2% to 3%.

D
Dikshit Doshi
analyst

2% to 3% understand that.

S
Sanjay Jindal
executive

It's a competition. You never know what market alone.

Operator

The next question is from the line of [ Anik Mitra ] from Venata Research. [indiscernible]

U
Unknown Analyst

Sir, my first question is what is the order expectation from ONBC in FY '24 and FY '25?

S
Sanjay Jindal
executive

We cannot tell you on that ground. We are targeting a few of the projects. What is the target? It depends what projects we are going to have. We are bidding whatever the business which is coming from them, we will be targeting specific target giving target for ONGC is very difficult. It's a competitive mode altogether. And since we have the MOA with NHC, so whatever is their planning, we will keep getting something or other assignments to that. Some smaller assignments keep on coming on a real basis. So we have already started and some more will continue to flow in, in our fitting.

U
Unknown Analyst

Okay, sir. Sir, my next question is hydrogen gas opportunity sounds to be a big opportunity going forward. So sir, can you quantify what sort of hydrogen opportunity we can like may be possible in upcoming maybe 2, 3 years?

S
Sanjay Jindal
executive

That's very difficult to say because the hydrogen thing is still evolving. It has not matured so far. So there are a lot of developments happening. So it all depends on the time we can't quantify right now give our biggest opportunity. So this definitely is a muting area and a lot of work is being done by many companies in this area. So these 2 count things are going to emerge clearly, and then we will -- we see a big market in that area also.

U
Unknown Analyst

Okay. And sir, so far, what amount of order has been booked by Engineers India in this particular segment? Green hydrogen?

A
Amanpreet Singh Chopra
executive

Greater there earlier also, we did assignments for [ Vale ]. And currently, we are doing an assignment for BRL for the electrolyzer implementation in their refinery. And there are certain other segments in the green hydrogen part of us. See green hydrogen is not a very different thing from what we do. Yes, in the last 35, 40 years of working in the refinery sector, [indiscernible] the hydrogen that we are going to take up the process plant. So we have very well positioned ourselves in this area. But technically, we know what goes into it. So you see the competitor in that. I think he has set a very good competitive advantage in this particular area because we are very well connected with our refineries, we know the process flows and how this hydrogen is going to be generated and how it's going to be used. So I think we stand a good chance, and we are in a good position to leverage our past experience in this particular area.

U
Unknown Analyst

Okay, sir. And my final question is, sir, what was the revenue from the [ airport ] division in Q1 FY '24?

V
Vartika Shukla
executive

From which division?

S
Sanjay Jindal
executive

Division means we have 2 business segments. One is consultancy, engineering and consultancy in...

A
Amanpreet Singh Chopra
executive

Right now, we don't have the figure for that particular [indiscernible] that is part of the consultancy segment.

S
Sanjay Jindal
executive

Part of the infrastructure business, and it's assessments we are doing. There is no specific segregation for the [ airport ] segment. It's considered as part of [indiscernible].

Operator

The next question is from the line of [ Venkatesh Subramanian ] from Lager.

U
Unknown Analyst

So I just wanted to check with you on the [ Ramagundam ] fertilizer project where we invested some funds. How is the project doing? Is it making operating profit, sir, at the moment?

S
Sanjay Jindal
executive

Yes. As I have already told in this quarter, El has 26% share, and we had a profit of INR 22.9 crores in comparison to INR 13.85 crores in the first quarter and in the first quarter of [ visiting ] financial year. So plant is already operating at 100% capacity and doing well.

U
Unknown Analyst

Right, sir. So second question is on operating margins. So just looking at the last few years of the thing. And our -- in terms of revenue to operating margins, we are at about 9%, 10% now. Do you see a scope for improvement here over the next few years?

S
Sanjay Jindal
executive

Definitely, we are trying to improve our operating margins also. And if you see, we have already a segment margin of 25% in the consultancy segment, and we are able to retain it. But we are trying hard to increase our EPC margins so that our operating margin could move.

U
Unknown Analyst

Okay, sir. And the latest joint venture with concentrated solar, what is the size of the opportunities there? What does this Intel, how big can this be?

A
Amanpreet Singh Chopra
executive

First of all, it's not a joint venture. It's a strategic alliance that we have entered into. Clearly, we are in the solar CSP would be providing the patented technology and EI will be doing the [ individual ] management services for the balance of plant. So it's a static alliance. It's not a joint venture. In terms of the opportunities, see that lets earlier that because everybody wants a renewable part of their portfolio. So going forward, we are just approved. So we are in the process of mapping all the industries right from [indiscernible] industry and other sectors. And as part of the strategic alliance, we've got some exclusive territorial rights and sectoral right from the technology partner. So like in India for all the India sectors, we will be the partner it exclusively, they will come to EI. And similar thing that we have secured that put right for other sectors as well. So right now, we are -- started making all the sectors and [indiscernible] offers a huge opportunity not only in oil and gas, but in other economic sectors as well.

U
Unknown Analyst

Okay. Great. And this polysilicon opportunity, I know that we are executing a project for the Adani Group and a lot of news on semiconductors, fabs, a lot of things being set up in the country today. So would we have a chance to participate in some of these projects?

A
Amanpreet Singh Chopra
executive

On that sense, but we are definitely having studying all these opportunities as part of our research and development and technical group. So as and when -- and we are a very initial stage of studying these opportunities and definitely, if some things come up, will definitely be a part of this particular evolving sector as well.

U
Unknown Analyst

Sir. My last question is on the financials. Compared with last quarter of last year, we obviously have shown a higher revenue, but a lot of contribution from the other income side. How does the -- where does it come from, so the money, the other income, basically?

S
Sanjay Jindal
executive

Sir, as already told in my earlier statement, we have done settlement with one of the clients, and this total settlement was about INR 71 crores. And out of that, INR 55 crores is towards seeing interest on the claim side and balance 16% has gone to consultancy business segment.

Operator

The next question is from the line of [ Bafna ] from Sunidhi Securities.

U
Unknown Analyst

Sir, congrats for a good set of numbers. Sir, just if you could guide us, I have joined a little bit late, so pardon me if my question is repetitive. If we see the consultancy part, which is the major margin driver for the company, we have an order book of close to INR 4,000 crores. So how do you see that order book kind of intake in FY '24 and '25 because there are a lot of opportunities which are coming up with a lot of participants have already asked about hydrogen and all and the new energy segment. And the execution also we have done close to, I think, INR 1,400 crores kind of revenue and consultancy. So both on the order intake side and the execution side maybe for FY '24 and FY '25 will be really helpful, sir.

S
Sanjay Jindal
executive

This is like you must have seen that last year, we had the order book of INR 9, INR 80 crores. We are definitely going to either achieve that or improve upon that. That is the target for order book position. With respect to the order inflow, it was around INR 4,400 last year, INR 4,500. We try to meet that and we'll try to secure more than that.

A
Amanpreet Singh Chopra
executive

We are cutting around INR 4,000 crores in this financial year also, more than that...

U
Unknown Analyst

Yes. On the consultancy side, sir, this INR 4,000 crores?

A
Amanpreet Singh Chopra
executive

This is overall -- this is overall.

U
Unknown Analyst

Yes. So if you could just give us some sense on the consultancy side will be helpful, sir.

S
Sanjay Jindal
executive

The ratio will remain the same ratios are available. It's normally 50-50, it's almost 40 to 43 50. It remains in this range only.

A
Amanpreet Singh Chopra
executive

Now we'll be targeting between INR 1,500 crores to crores INR 2,000 crores... Selling the car. Maybe on there.

U
Unknown Analyst

Got it, sir. And the growth on the execution side on the consultancy book?

A
Amanpreet Singh Chopra
executive

We are expecting a total growth of between 5% to 10% here in the next financial year.

Operator

The next question is from the line of Arvind Joshi from Bateleur Advisors.

U
Unknown Analyst

I had a very specific question on potential in cold methane, hydrogen you just explained, and we were delighted to hear that this is what you have been doing all along. So it is a kickoff for you. So with the increasing emphasis on the energy security of the government, I am reasonably certain that you will be getting your fair share of hydrogen. And any other newer initiatives because even coal bed methane, I'm made to understand with your skills and already perhaps one other project under your bag. The other projects, what are the prospects of getting the other projects of coal bed methane? And what can be the potential size of this? My question -- the first question is this.

A
Amanpreet Singh Chopra
executive

So one project that we are executing on the [indiscernible] is coal to ethanol, is converting coal in valuate chemicals. And that sort of projects, that's the first that we are doing and we are expecting the similar type of projects from the other clients as well. Regarding the coal bed methane. So you're talking about coal bed methane, specifically. So that's -- right now, it's a very high CapEx intensive area where there's still a lot of forced development efforts are required because it again depends on the quality of the coal that is going into that particular conversion to guess. So being a capital-intensive and being a results-oriented area, right now, the clients are looking at it, but at a very initial stage. So EI definitely is well positioned to be part of this particular CBM initiative. And in case for future this type of opportunities arises, then we will be happy to take it up.

S
Sanjay Jindal
executive

And right now, we are focusing more on a very promising opportunity [indiscernible] to ethanol and within all of derivatives, which directly opens up sort of scope for many petrochemical feedstocks. So there are a lot of work again with one of the clients, and we foresee that -- many more set projects will be coming to us.

U
Unknown Analyst

Okay. And what shall be the time frame for this?

A
Amanpreet Singh Chopra
executive

So right now, one that, as you are aware, we are educating Rest other products in fact a very different stage of their life cycle, initial it cycles. So some of discussion stage and some at a very preliminary feasibility stage. So once those particular things will be comes up like on a feasibility part, then the decision will be taken by the client to implement those projects. So quite a set very initial steps to say so.

U
Unknown Analyst

Okay. And in case of a related question is the overall size of the coal-related energy, the thing which you could be executing or which is available as the opportunity size? Can you throw some light on that?

S
Sanjay Jindal
executive

You can't exactly can...

U
Unknown Analyst

Very roughly.

S
Sanjay Jindal
executive

Yes, I can say is that it is a huge potential exist only that once this the project, what we are doing is comes into a real success story. There will be a chain of such projects. But we cannot right now quantify how much opportunity sizes there.

U
Unknown Analyst

That in and huge would be the size of your current order book?

S
Sanjay Jindal
executive

[indiscernible] Not business ration because India is -- India has doubled [indiscernible] that the Ministry of Environment and unconcerned for environmental condition, et cetera. People are trying to find out the better use of the coal. So the project, what we are doing actually opens up an opportunity to really convert it meaningfully into more value-added products instead of really generating more pollution. So that creates a big success. I mean, can open up a very big success story for us.

U
Unknown Analyst

And I'm really delighted to hear about that, both in terms of environmental benefits and the potential. And a very simple question is, recently, Mr. Puri has been -- has talked about revival of West Coast refinery. Any update on that?

S
Sanjay Jindal
executive

With regard to the refinery, nothing much has been heard as of now. We are involved in that in the size selections as a consultant. We are still there. But we have not seen anything coming as of now. Let's see, it must have flown from the government side, but it will take some time because they will have to find the investments in all and then realize because it's been going on for a long time.

U
Unknown Analyst

And then just a related question. He's also talking about the smaller refineries. -- instead of mega ones, but several of them. So you would be as monopolistic in executing them? Or will it be only restricted for the large ones?

S
Sanjay Jindal
executive

We are a consultant, we would like to go for any kind of projects, the small size, bigger size anywhere we would like to bid more. We don't work on the restrictions. We don't have restrictions for that that, we do smaller jobs, the we do mega jobs also. All kind of there jobs are in our portfolio. [indiscernible] One of the smallest refinery in Mongolia, which is only 1.5 million so no restriction or no such change. [indiscernible]

U
Unknown Analyst

No, no. And indicate together, they constitute a very significant -- it's a very smart thing and that instead of really getting involved with an and so many other half land acquisition to all other clearances. If you go for the smaller ones, perhaps the execution is faster [indiscernible]. We hold you as our leading [ Navratna ] company and truly believe that you would be pathbreaking. It is very heartening to hear that hybrid is like the [indiscernible] wonderful.

Operator

The next question is from the line of Amit Anwani from Prabhudas Lilladher.

A
Amit Anwani
analyst

So my question, again, is on hydrogen. You have already highlighted your progress on hydrogen side, but would like to be -- to understand more specific what exactly our scope of work will be consulting Will it be turnkey? Are we planning to explore the electrolyzer manufacturing also? Or are we trying to a technology tie-up since this is pretty initial stage in India on Green hydrogen and so many companies are exploring technological tie-ups. And how we are exploring with respect to progress, are we going to see meaningful contribution in FY '25 FY '26 if you could highlight more on this.

S
Sanjay Jindal
executive

Fastest with respect to the role of ER, we are very clear that we would only be working on. This is a new area. We'll be working only as a consultant. Right now, we are doing various studies on this, and we are also involved in the implementation of COB projects, which is not directly hydrogen. It has basically you read the green ammonia UDIs, these kind of its hate hydrogen is also used for the green resources. So these kind of projects will be involved as a consultant. So this is the opportunity we see.

A
Amanpreet Singh Chopra
executive

And in fact, we would like to be associated in every section of the in utilization in production, whether it's the balance of the plant or whether it is the hydro generation and all the ability of the being alert as a sector. So taking over needing strength in past experience, as my colleague has already told you, we are -- we have already positioned ourselves to really the consultancy in all sections, except for the hydrogen manufacturing hydrolyzed manufacturing, what you told, we have not still thought about it.

A
Amit Anwani
analyst

Right, if any project content, our role right now would be consulting. So maybe we will be earning maybe 2%, 3% is my understanding right?

A
Amanpreet Singh Chopra
executive

So we are not able to quantify that in the opportunity depending on the size of the project, we'll be able to arrive at that point in time.

V
Vartika Shukla
executive

Number of times, it happens that in what mode of execution clients grows for that project. So that also defines how much percentage of revenue will be getting from that. So as these things are in a very primary stage, but as the opportunity to become not only the process plant and in other stand-alone also, so we'll be picking up those opportunities in any one of execution that are sufferable to the plant.

A
Amit Anwani
analyst

All right. Sir, second question on margins. We did about 2% and 27% Turnkey and Consulting. Any outlook for FY '24? Are we looking forward to improve further? Or will it remain the similar rate?

S
Sanjay Jindal
executive

We are already maintaining our segment in the conference segment. That is about 25% to 27%. And definitely, we are working with our clients for the issue of change orders to improve our profit segment in the EPC business segment because some of the change orders are under process with our clients, and we are working hard on that part to improve our margin in this segment. And we are definitely -- we are sure that we will have to change order from our clients.

A
Amit Anwani
analyst

Sir, my last question on the order intake. We announced around INR 1,265 , but and the orders announced by the company from June 1st week, total comes to more than 3,000. Would you like to clarify on that?

S
Sanjay Jindal
executive

We could not get your question. What you are asking?

A
Amit Anwani
analyst

By the order intake, which is announced is around INR 1,265 and our BSC filing, starting from June, which I said my total was coming to more than INR 3,000 crores for order intake.

S
Sanjay Jindal
executive

As of now what we are sitting today, it is around 2,200. Some of the projects more are in the process. 2,200 have been booked.

A
Amit Anwani
analyst

And then you suggested that INR 1,800 to INR 2,000 more can come in H2?

S
Sanjay Jindal
executive

Been realized, which was shown earlier have been not realized. So now a little amount more is there. So as of now, it is INR 2,200 and some more orders would be in the advanced stage of like awarded. So we will be considering that value later on. As of now, you can consider it's 200, which is booked in the business.

Operator

The next question is from the line of Saket Kapoor from Kapoor & Company.

S
Saket Kapoor
analyst

[indiscernible] Net of the other income component for this quarter, which was the element part. So our margins were lower. So is there any one-off item or any increase in provisions that we dose systematically as a prudent way? What has led to then the lower margin is the net of the other income that is not -- that is not going to be -- it's a nonrecurring item?

A
Amanpreet Singh Chopra
executive

Margins are more in comparing to the June quarter, June 22 quarter. In the June '22 quarter, the margin was 5.1%. And now we are creating oil [indiscernible] . So there is a substantial increase in the margin in comparison to the June '22 quarter. Regarding the March '23 quarters, we had a settlement with one of our clients, and that had contributed to the additional margin in the March '23 quarter.

S
Saket Kapoor
analyst

Sir, if we take the net off of other income also -- is it June versus June also, there is also in the line item other expenses. Last year, in the June '22, it was INR 91 crores. And here, we are at INR 57 crores with almost the same top line. So what...

A
Amanpreet Singh Chopra
executive

Margin is sales minus cost. So during the current quarter, the operating margin is INR 597 crores during the June '22 quarter it was INR 40.9 crores.

S
Saket Kapoor
analyst

Come again... If you can...

A
Amanpreet Singh Chopra
executive

During the front quarter, we are having an operating margin of 7.4% in the absolute term, it's around INR 60 crores. During the June '22 quarter, we had the operating margin of 5.1%. And in the absolute terms, it was INR 20.8 crores.

S
Saket Kapoor
analyst

Sir, but when we are comparing your revenue in both the segments, consultancy as well as turnkey projects on a year-on-year basis, they are almost at the similar level. But the other expenses line item has been significantly. Do you have expenses of INR 91 crores for June '22 and for June '23 to INR 57 crores. So what led to this reduction in the the other you're...

A
Amanpreet Singh Chopra
executive

Talking about the expenditure basically.

S
Saket Kapoor
analyst

Yes, sir. The other expenses, I think to that other expenses is the one that has led to the increase in the...

A
Amanpreet Singh Chopra
executive

Specifically, we had certain write-back during the current quarter. That has basically gave to the reduction in that '23 also the operating activity. In every quarter, there are certain retract. In one quarter, there may be more write-back and another there may be lesser write back. So going forward, we are expecting that we'll be able to maintain these margins.

S
Saket Kapoor
analyst

So can you quantify the number, sir? How much has been the write-back?

A
Amanpreet Singh Chopra
executive

Right now, I don't have the figure, right? But... It's a part and portion of every quarter, -- in the end quarter, it may be more in the it will be less...

S
Saket Kapoor
analyst

Okay. So sir, we have investment in 2 other verticals and [indiscernible] as well as in the refinery. The Fortier segment, you have said the attribution has been INR 22 crores. How has the [ Nomaligas ] refinery contributed sir? How are the operations there?

S
Sanjay Jindal
executive

Sir, from the [ Nomaligas ] refinery, we are receiving dividends, and the dividend is also being counted in the other income part. And in the first quarter, there is no such dividend is declared by the NRL. And in the last year, we got the dividend of about INR 55 crores on the investment of INR 700 crores. So it was more than 7.5%, which was tax-free also. Not tax fee, but it was in the hands of a, it was 3.

S
Saket Kapoor
analyst

And sir, any listing program for digital refinery going ahead unlocking the value or it will remain in the units? No, no, so for the also from the parties a in order to unlock the right venue or to divest your stake because EI is a strategic partner here?

A
Amanpreet Singh Chopra
executive

Right now [indiscernible] space. So we will be able to capitalize the maximum acuity and at the right time, the decision will be taken. Right now, there a...

Operator

The next question is from the line of Pritesh Chira from Lucky Investment.

U
Unknown Analyst

Sir, what would be your market share in the refining and the marketing company, capital expenditure that would have been incurred in about 6, 7 years, any ballpark market share that you would have a number?

S
Sanjay Jindal
executive

We cannot go on the market share, but our major contribution of our business comes from the hydrocarbon. So you can see that whatever business we get, most of the like hydrocarbon has a good [indiscernible]

U
Unknown Analyst

So that I understand. In the refining companies, CapEx that we have done, HBP or India or industry, whatever what would be our share of -- what would be your market share there in the engineering port?

S
Sanjay Jindal
executive

That we can say that we'll try to get the maximum from that.

U
Unknown Analyst

Okay. Okay. And any change in the competitive landscape in the past 7, 8 years, any new players would have come and bid for those projects?

S
Sanjay Jindal
executive

Petition has been there. You can see that here we have grown. There are many companies are there in the play. So we have been competing now and we have been getting business out of it. And in the past, you would have noticed that we have maintained our position as a major player in that area. So we will like to continue our solution in that. That's a key strength area.

U
Unknown Analyst

And my last question is, sir, in terms of the project pipeline from these companies. What you see in the next 2, 3 years, how big it is versus the last past 5 years that you have seen. So in past 5 years, you have seen a pipeline of, let's say, INR 100 worth of projects. This next 3 years, do you see what is it 150, INR 200 crores, INR 250 crore, INR 300 crore, if you could share a number this...

A
Amanpreet Singh Chopra
executive

If you look at in a very different perspective of India has the target of increasing the refinery capacity from the front level to INR 430 -- so that is the max use, that would be added in the times to come. So 5 to 7 years around 180 to 190 [indiscernible] refinery being added. So that's a huge amount of business opportunities that are available in coming 4 to 5 years for us.

U
Unknown Analyst

So you're saying 150 million to 170 million tonnes in the next 5, 6 years.

A
Amanpreet Singh Chopra
executive

That's the government of India is planning to do.

U
Unknown Analyst

Can you tell me what this number was in the past 5 years?

S
Sanjay Jindal
executive

[indiscernible] You can see it on the Government of India's MoPNG website, it's available. So what investments and what is their future plans. We -- I do not have right away at this point of time

Operator

The next question is from the line of [ Viraj ] from Jupiter Financial.

U
Unknown Analyst

Could good sort of numbers. I have only one question. When I look at your 10-year data, sir, in March '12, you had operating margin of 19%. Now with so many opportunities coming, we are diversifying. Can you give me... Be able to reach those operating margins in the next 2, 3, 4 years? Do you think that is it possible to reach those numbers?

A
Amanpreet Singh Chopra
executive

Yes. At that point of time, basically, over a period of time, there has been a substantial increase in the cost, and there is a competition over a period of time. At that point of time, we were doing the process plants where the margins are very much in comparison to the margin what we are getting. So over a period of time, a lot of [ water edge ] loan. So going forward, we will try to maximize the margin. But I cannot say that we'll be able to achieve a margin of 20%. But definitely, we'll try to improve our margin going forward.

U
Unknown Analyst

And sir, how would you look -- how should I look Engineers India 3 years from now in terms of growth and net margin?

A
Amanpreet Singh Chopra
executive

Definitely, improvement whatever we are doing right now, definitely, there will be improvement. We have the vision to execute that part we think. Going forward, definitely, we see the improvement in our turnover [ gradualize ] margins.

U
Unknown Analyst

Any ballpark number you can just say, just not to hold you term...

A
Amanpreet Singh Chopra
executive

That depends on the order book basically how much order we get and accordingly, the orders are limited and property generated. So right now, I cannot give the projection for the next 3 to 4 years. We are having basically a projection for around 1 year that we have told that we are expecting an increase in the turnover of between 5% to 10%. Going forward, whatever opportunity has been captured, that will be reflected in the margins. We are working on that and definitely will be will succeed with the grade of the [indiscernible].

S
Sanjay Jindal
executive

And you would have noticed that we have increased our share of getting the international market. Many projects have been won in the past few months. So we are trying to maintain our larger business in the international market. So that will earn us more revenue and business in future.

U
Unknown Analyst

Is it fair to assume top line of INR 4,000 crores in next year, is it possible to achieve?

S
Sanjay Jindal
executive

In the next year, we are targeting around 10% or maybe INR 3,500 to INR 3,600 -- in the coming in this year.

U
Unknown Analyst

Try to assume that net margin margins would be improving, right, from more than 10%?

S
Sanjay Jindal
executive

Sir, we are trying for that, and we are working on that. In order for the -- with the clients to maintain and improve our margins, sir?

Operator

The next question is from the line of [ Bharat Jain ] from ICC Securities.

U
Unknown Analyst

Sir, can you give us an update on our [ gold gasification ] projects, specifically the one we are doing for NLC and Western coal, please?

S
Sanjay Jindal
executive

The NLC 1 is still in the tendering process. I believe they are evaluating their bids. Some of the bids have been received. So that is a decision to be taken by NLC and thereafter, they will go for the second phase of implementation regarding the WCL study is almost in the process. I do not have the exact details of right now what is going on. This is the broad dates I've got it a few days ago. So we can check and always update you on this.

U
Unknown Analyst

Okay, sir. And what is the status of the [ Rani ] project, the polysilicon plant?

S
Sanjay Jindal
executive

That is -- I think it's been put on hold for some time from their side. Let us see when they started.

Operator

The next question is from the line of Dikshit Doshi from Whitestone Financial.

D
Dikshit Doshi
analyst

Sir, one question is out of the INR 8,100 crores order book, how much would be export? It would be... International orders?

V
Vartika Shukla
executive

Out of INR 8,100 crore, we have foreign consultancy job of INR 1,587 crores. about INR 1,600 crore order book is from the foreign to.

D
Dikshit Doshi
analyst

Okay. And how do you see the export market going forward? Are any big orders or anything in the pipeline?

V
Vartika Shukla
executive

With respect to the overseas, we are targeting overseas. We are expanding our overseas operations, and the last year you would have seen that we had got one of the projects in South America. This year, we had bought [indiscernible] Nigeria. Last year, basically, we got the job in Nigeria. We got the second train of that, we are targeting some more of the projects, Petchem projects, which is coming in Nigeria. We are targeting some of the projects in Algeria also. We are saving one of the projects we here already, got the [indiscernible] letter of award. So we see that the contract signing in the next few days, and then we'll be officially declaring that. And then we see more projects in Algeria also. We are bidding for them. So these are 2 of the countries we were targeting 2 countries in Africa. So that's why we are expanding our global outreach. [indiscernible] -would like to -- [ Sakanagi ] would like to update you. Middle East, we have already made our good progress in getting the projects, and we are targeting to enhance not in terms of getting the major projects there but also to increase our outreach to many other Middle East countries. So efforts are on well we like to see more success there also.

Operator

The next question is from the line of Dan Boricha from Skin Investment.

U
Unknown Analyst

First, I just missed the number you have given to the earlier participant. You mentioned currently, the capacity of the Petroken is 430 MP. And we are like -- the industry is adding 150 to 170 Mt in refinery, is that correct?

A
Amanpreet Singh Chopra
executive

That's the refinery capacity addition plan that government put up and that was done right now.

U
Unknown Analyst

And what is the current capacity sir? You mentioned somewhere around 400?

A
Amanpreet Singh Chopra
executive

No, no, no.

S
Sanjay Jindal
executive

It is around 250 something. 250 MMTPA in the next 10 years, likely to -- it is likely to increase to 450. That is what the government target is.

U
Unknown Analyst

Okay. And sir, sir, I have one question. Just wanted to understand, and this CapEx cycle is going on. You mentioned the [ Petroken ] and the refinery, the government is very like going to spend on this case. Just want to understand when was this CapEx cycle happened like a couple of years back, just want to understand if you can give the year after how many years is CapEx cycle is coming? -- and to understand the data.

S
Sanjay Jindal
executive

So first, the CapEx cycle if you see company has got their own all short-term and long-term CapEx plans. So on a yearly basis, they had their own CapEx spend, which includes the CapEx in the existing projects also and for our future projects also. So this is a continuous process for each and every process company that we deal with. So going in that 5 to 7 years, both in the Hydrocarbon and both in the refinery and petrochemicals, they have their own set of plans, which we are going to execute in that particular phase in the next 5 to 7 years. So that's what we are talking about.

U
Unknown Analyst

So let me reframe my question. I want to understand what is the difference between the last CapEx cycle, which has happened and this CapEx cycle, which is happening.

S
Sanjay Jindal
executive

If you want to say that -- starting from the visibility to the initialization of the project, thanks to the acquisition of the project, it's around 4 to 5 years that it's going to take.

U
Unknown Analyst

Okay. So you mean to say this CapEx as the industry comes every 4 to 5 to 7 years?

S
Sanjay Jindal
executive

Some of the projects are already visibility being done and it's going to be on execution in for some of the projects, the visibility is under process. So as we project life cycle is at a different stage of connect life cycle.

V
Vartika Shukla
executive

So it depends on company to have investments, like many of the projects which are under execution, their CapEx cycle started earlier because they must have started 2, 3 years ago. So now they are execution. So this is a cycle because the initial study will be prepared, they will go for their board approval and they will take the investment decision then they go for execution. Any execution will take 40 to 45 months, 36 months, depending on the size of the project. So it takes around 4 to 5 years. That's what we are talking about.

Operator

The next question is from the line of Pritesh Chira from Lucky Investment.

U
Unknown Analyst

Sir, I have one more question. From the free cash flow that you denied, would you continue to do these equity investments in these projects just did in [ Numaligarh ] or one of the fertilizer project?

S
Sanjay Jindal
executive

As on it, we do not have any such proposal for further investment. Right now, we have received a right issue from the NRL, except that we do not have any such proposal for the investment.

U
Unknown Analyst

But if you get a proposal, what is usually the benchmark for investment? Or would you continue to divert this capital -- the cash flow that you get in all these equities?

S
Sanjay Jindal
executive

As on... Is under consideration by management.

U
Unknown Analyst

So as on date, right? It is not a stated process stated procedure... Yes, that you will not invest, right? If it comes on your table, you will...

A
Amanpreet Singh Chopra
executive

That state, we cannot make. It depends on the opportunity in case the opportunity is very good, definitely will be going for that. But we have not -- as of that, we don't have any intent plan. So going forward, incase opportunity comes, we'll review that -- review that and accordingly, decision will be taken.

U
Unknown Analyst

[indiscernible] you will pay out to minority what you will use for such projects, you'll keep it in cash. Any such process put in place or [ intracity ]?

A
Amanpreet Singh Chopra
executive

No, no, we don't have any policy like that basically...

Operator

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for closing comments.

S
Sanjay Jindal
executive

We would like to thank you, everyone, for participating in this. And we see that you must have seen that performance has me performance has improved, and we were working towards it, and it will definitely improve further. And in the next call, you will see that what all we are doing and the future results will show our efforts, which we are doing. So we really thank everyone for this. Thank you very much.

Operator

Thank you. On behalf of DAM Capital Advisors, we conclude today's conference. Thank you for joining. You may now disconnect your lines.