Inox Wind Ltd
NSE:INOXWIND
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Inox Wind Ltd
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Ladies and gentlemen, good day, and welcome to the Inox Wind Q1 FY '19 Earnings Conference Call, hosted by Axis Capital Limited.[Operator Instructions] Please note that this conference is being recorded. I'll now hand the conference over to [Bhavin Vithlani] from Axis Capital. Thank you, and over to you, [ Bhavin ].
Thank you, [indiscernible]. On behalf of Axis Capital, we welcome all the participants for the Inox Wind conference call. The call will be initiated by a brief management discussion on the earnings, followed by a Q&A. The management team is represented by Mr. Devansh Jain, Executive Director; and Mr. Atul Soni, Head, Investor Relations. Over to you, Mr. Jain, for your opening remarks.
Yes. Thank you, Bhavin. [indiscernible] A very warm welcome to all the participants of this earnings call. The Board of Directors of Inox Wind Limited have approved the Q1 FY '19 results in their meeting, which have recently concluded. I trust you all have had an opportunity to go through the results.Just to give you an overall perspective of the quarter gone by, Inox Wind turned back into profitability after a 4-quarter gap on back of the start of SECI-1 execution. The past 12 months have been a period of painful transition which the company has successfully weathered, and we now look forward to a strong execution and profitability in the coming quarters. Turning to the financial results. We ended the quarter with revenues of INR 430 crores as compared to 106 crores in the previous year quarter. We returned to EBITDA profitability with a profit of INR 70 crores as compared to an EBITDA loss of INR INR 13 crores in the previous year quarter. We had a PAT profit of INR 10 crores as compared to a PAT loss of INR 39 crores in the same quarter last year. We view this quarter results as we started in upward trajectory for the company post the turbulent transition period.Coming to the operational highlights, we have recommenced operations across our manufacturing facilities in Gujarat, Himachal Pradesh and Madhya Pradesh after a near 4-quarter gap. The quarter had delivery of 80 megawatts and commissioning of 22 megawatts.On the balance sheet front, we continued our focus on improving key balance sheet metrics, like reducing receivables, working capital and debt levels. I would like to bring to your notice Slides 6 and 7 of the presentation, which gives details of our quarter's [indiscernible] balance sheet improvement during the quarter and the past couple of quarters before that.Now during Q1, inventory is reduced by INR 150 crores on back of the start of the execution of SECI orders. We've reduced net receivables by INR 315 crores in comparison to 4Q FY '18. [indiscernible] closing, net receivable number is particularly higher, [ on back of the inclusion ] of quarterly sales of INR 430 crores.On the net working capital front, we have reduced it by INR 58 crores during this quarter. At the end of Q1 FY '19, in terms of working capital, inventory stood at INR 779 crores; net receivables at INR 1,175 crores; payables at INR 635 crores; and others is about INR 138 crores. This translates into a net working capital of INR 1,181 crores.Going ahead, we expect inventory levels to come down and execution picks up pace in the coming quarters. We also expect the working capital levels to ease going forward and stabilizing -- and stabilize going ahead in the auctioning regime as it ensures better coordinated production, inventory planning and execution of wind projects.On the debt and equity front, we ended the quarter at an improvement debt-to-equity ratio of 0.32 versus 0.35 in the preceding quarter. In terms of project sites, we continue to be amongst the largest project site holders in the states of Gujarat, Rajasthan and Madhya Pradesh. We have sufficient project site inventory [ established as ] of 30th June for the installation of an aggregate capacity of more than 5,000 megawatts.In terms of manufacturing capacity. Our blade manufacturing capacity stands at 1,600 megawatt. With minor CapEx, we can debottleneck our nacelle and hub capacity from the current 1,100 megawatts. Towers can also be expanded with minimum CapEx as towers at low technology items, which can also be outsourced. Hence, we are fully geared to manufacture whatever the market demands in this auction regime.In our view, the issuance of regulatory guidelines, auction pipeline and a renewed focus on increasing the renewable energy footprint in the country, all combined to provide an upward trajectory for the sector. Going ahead, we see a journey towards an exciting key results significant and sustainable growth for the Indian Wind power sector.So that is a broad overview of our operational and financial performance and how we view the sector going forward.I have with me our Executive Director, [ Mr. Devansh Jain ] to take questions.
Thank you. You may start the question-and-answer session now.
.[Operator Instructions] The first question is from the line of Mohit Kumar from IDFC securities.
Congratulations on earning profitable for 4 quarters. [ And -- ] through the year, the [indiscernible] 80 megawatt in this first quarter Q1 FY '19, and I believe that SECI-1, the deadline is September -- September, October of FY '18. Does it mean that the Q2 could [ receive ] 220 megawatt of volume of execution? And can you also [ disclose ] the timeline on the SECI-2 order when it is supposed to be executed?
Okay, so first and foremost, with respect to the SECI-1 original timelines are to suggest that they are to be completed in October 2018. However, given the [ time of ] the connectivity guidelines were announced only in May, and this have been allotted from June onwards. The decision [indiscernible] result continue to be expected to be completed in the next 2 to 3 months. As a result of which, there is almost a virtual automatic extension for all the SECI-1 projects. I believe you will start seeing commissioning of the SECI-1 projects in Q3, which are at end of October to December period. And that will be followed by the SECI-2 projects because the deal is a combination of SECI-1 and 2, specifically in our case are [ coming ]. So I -- in our view, I think, over the next 2 quarters, we should include SECI-1 and then follow it up with the SECI-2 execution.
[indiscernible] regarding execution is FY '19?
No, I don't want to make forward-looking statements, but our aim be able is to finish SECI-1 and a significant part of SECI-2, fortunately.
My second question regarding the industry. Three of SECI-5 have canceled the NTPC. The NTPC tender came in today, but we, on our own balance sheet, have not participated in either SECI-5 or SECI or in NTPC. Need any reason? And what is the status of all the other orders, which are still pending, roughly 20%, we believe, is still to be tied up.
So from our perspective, as [indiscernible] already checking on the 950 megawatt order book, where we bought -- well, at this point in time, we are focused on executing SECI-1 and 2 and then followed up with SECI-3 and 4. We have virtually tied up almost all of this capacity to a great extent. And we are in advanced stages of closing a very significant megawattage with one of the largest IPP in the market, who is one working in terms of the auctions. Given the visibility of our existing order book as well as the potential orders pending in the market, we don't think it's the right time to go in and bid for more projects. Because as you may be aware, we typically get 18 to 21 months to execute these projects. So if you look at our 950 megawatt [indiscernible] '18, '19 volume, which we expect to pick up, I think we're virtually tied into the next 2 years. As and when we came, the time is right, we will certainly go ahead bidding, take up additional quantities to [ downsize ] to third parties.
Does it mean that you're now going to participate [ at positive ] SECI-5 and SECI-6 [indiscernible]?
Look, SECI-5 has already been annulled. I think that's one of the other auction in the next 2 or 3 months. But we will now be very selective in terms of where we participate because like I said, we already have a virtual tool visibility in front of us. So -- And there are enough orders out there which potentially are still available for OEMs to pick up. So I think at this point in time, given the significant visibility we have, I think we can take more than the volume we already have in hand.
The next question is from the line of Chetan Gandhi from Gandhi Securities.
Can you please [ provide the ] net and gross debt log?
So our net debt is 638 crores if you look at Slide 7. And gross debt would...
Only be [indiscernible].
Gross debt would be about [INR 800-odd crores]...
It's around [INR 800 crores].
Approximately INR 800-odd crores.
Okay. So if you look at the financial results, there is a finance cost of around INR 40 crores. And if we have a gross debt of INR 800 crore, how come finance cost could be so high?
There are three parts of the finance cost. One is the term loans and the [ SECI ], which we have, which contributes a significant part. Second is all our LC and BG charges, which, to some extent, given the fact that we were rated AA- and now are A-, and given the environment in the country for the wind sector, some of the banks increased our [ rates ] over there. The third piece is some onetime charges, which have been paid to various banks for various limits, which have been reinstated for the country. Please understand that over the past 12 months, which are a very painful periods of the sector, the banking community, on a larger basis, have completely turned away from the renewable sector. Given the strength of Inox Wind as well as the group's strength, I think a lot of the banks have stood with us and have supported us. And now, to some extent, as we are moving into a phase of rapid execution and manufacturing to get various limits in place, some of the banks have taken some various onetime charges, which are reflected in this. And fourthly, which is a minor component is also, to some extent, the ForEx losses are reflected in finance costs as well as in the net gain loss on foreign exchange. So because of accounting standards, how we need to publish the data, both need to be offsetting each other. So there's roughly INR 2.5 crores of ForEx gain [ as well as ] there's about INR 2.5 crores of ForEx loss which needs to offset each other. Those are four areas under which we are paying finance charges.
Okay, so it is safe to assume that in future, or if net debt level remains the same, our finance costs will be significantly reduced?
Absolutely.
Okay. And sir, I believe I've read from today that SECI-5 has been downsized to 1.2 gigawatt? And SECI-6 merely [ 2.5 gigawatts ]. And one more condition, [ they'll ] say that the scope of work including this, I think, of the wind power project as well as the transmission network of [ project ] delivery point. Can you help us understand this if possible?
First and foremost, SECI-5 has been annulled. It was not downsized to 1.2 gigawatt but also bidding that [ took ], basically, 2 gigawatt tender. The total bidding that took place for [indiscernible] been submitted [ was for ] 1.2 gigawatt. Given the [indiscernible] uncertainty around some of the connectivity issues and so on and so forth and various other players aren't having connectivity. There was not too much into the other at that point in time because [ it ] was taken out much earlier. Having said that, while we've annulled SECI-5, SECI-6 will now be called SECI-5 on that term. [ With that ], they're contemplating to reduce [ some ] 2.5 gigawatts to 2 gigawatts. I don't have the final confirmation for that at this point in time, but it will be [indiscernible] from 2 to 2.5 gigawatts. Given the fact that margin also started, the connectivity guideline was finally put to rest [ -- [indiscernible] ] was finally put to rest in May. I think there's a fairly clear visibility with respect to why connectivity already exists, and then future connectivity is coming up and [ when -- we're ] sure it will be ready. So I think it's nothing, but some of the guys decided to not take part, so on and so forth. But I think given this huge structure and pipeline going forward, which is the NTPC businesses, [ which has ] recently been included. SECI 6, there's another Gujarat tender which is expected to come out in August. I think there's [ such ] a huge pipeline of vendors coming up. Yes, so one auction getting canceled, I mean, that's [ why ] it's not something which is offsetting. With respect to your second question, that the wind turbine developer has been told to complete the lineup in the delivery point. That's part of all the SECI auction or any of the [ statements ], what we're supposed to do, that developer or the manufacturer supposed to help the turbines and build a [indiscernible] in front, connected to the point of the PDCL substation. So this is not something different from what already existed in all the other tender and SECI options.
So there is nothing new, basically?
Nothing new.
The next question is from the line of Dixit Doshi from Whitestone Financial.
Firstly, you've given net receivable numbers for Q4 and Q1 also, INR 1,060 crore and INR 1,175 crore. Can you give a gross receivable and the advance number?
We couldn't hear the last part of the question. Can you [ repeat, then we will answer it ]?
Hello? Can you hear me now?
Yes. Can you repeat your question?
Yes. So can you give the gross receivables and advances numbers, advance from the customer?
Well, advances from customers are about INR 300-odd crores, but that's more of a technicality, which will get offset with the inventory that we carry. And hence, the net receivables [ is the ] best way to look at.
No, I mean, is the gross advances also end up quite significantly in Q1 over Q4 last year?
I'm sorry because the way the SECI projects are structured where we've got -- where -- and how we've down-sold the SECI projects. Some of those advances will be marked off against receivables in the coming quarter also.
Yes. So can you help with the advances number in the Q1...
INR 300-odd crores.
Sorry?
INR 300-odd crores.
And currently in Q1 FY '19?
The total advances are at about INR 300-odd crores at this point in time.
Yes. But I wanted was in Q4 FY '18.
Almost INR 280 crores.
INR 280 crores? Okay. And can you give how much was the O&M revenue in Q1 FY '19?
We don't specify that on a quarter-on-quarter basis.
But I suppose that as part of the accounting standard now, we have to post the entire 2,500 megawatts revenues [indiscernible]. I mean, you went for that or it's...
Revenues are [indiscernible] And that is what is being done, but we break it up only in annual results, which if you see, our annual report is [ we have to take ] [indiscernible].
The next question is from the line of [ Ahman Sancadiya ] from A.J. Securities.
My concern is regarding the [indiscernible] [ when are you going to install your thing ]. [indiscernible] install around 4,000 megawatt in the current year, but the given [indiscernible] it is possible to install. It's a huge quantity?
What number are you saying?
[ 4,500 ] megawatt distributed for 2018, '19.
[ Where did you come up with ] that number? Where is also that information?
Previously, I've seen many -- the presentation also [indiscernible] other industry expert, it was...
First of all, we can't comment on what other people are doing or are committing out there. And Q1 is relevant from our perspective with what we are expected to do over the coming financial year, and I think we'll...
In our presentation, we have figured upwards of 3 gigawatt, but that is actual power, you don't guess on this. And it should be 3 gigawatt plus commissioning for this year.
And what about next year, sir? Is everything good then?
If you look at our presentation, there's a slide in the presentation, which talks about the range. So the range for next year, I think, upwards of 6 gigawatts.
6 gigawatts?
Yes.
And sir, [indiscernible] minor problem, or it will be a long-term problem?
Well you're right. I think that's a question, depends [ on ] people, people who were proactive in the beginning and are sitting on connectivity, clearly, sort of problem for them. Those who are waiting by the sidelines and are now jumping and to try and grab that. We must understand infrastructure and connectivity is not something which can be built within 1 month. So going out and crying that infrastructure is not ready, and it is going to take 2 years, blah, blah, blah. I mean, that's why the tariff has a live [indiscernible] project site in [ 1Q ]. I mean, [indiscernible] keeping that and building that and writing that helps us stay ahead of competition and [indiscernible]. Again, having said that, I don't think it's a rocket science or a long-term problem. I think the government realizes that infrastructure and connectivity needs to be made available for the large projection they set out. So they're going 10 gigawatts per annum of building plans. Obviously, it was connected, which is to that extent. But having said that, you can't expect everybody to want [indiscernible], so for example, in SECI-5, the guidelines are very clear that SECI tenders have less connectivity [indiscernible] and so on and so forth. People chose not to build there. I mean, [indiscernible] as I answered in the previous question there, we now have visibility for the next 2 years, and the timeline to execute these projects ranges from 18 to 21 months. So we can't go out and build a 3-year or a 4-year forward order book. But other players who've been lagging behind [indiscernible] [ a lot ] of connectivity clearly are going about crying and blaming the government and so on and so forth. I don't think it's a long-term problem, and I think this is something that the government is aware of, and I think they are being friendly to work through [indiscernible].
And so our installed capacity is around 1,200 megawatts, so does that mean you expect that [ in ] the next accounting year [indiscernible] percentage level?
No, installed capacity of [indiscernible] machine is 2.4 gigawatt. Is that the number that you're looking at? Or are you trying to ask something else?
I am talking about the company's installed capacity, which is, I think, 1,200 megawatt [indiscernible]?
1,600 megawatt of blades. It's 1,100 megawatt on nacelles and hubs and [ slightly lesser than that ] for towers.
But overall, yes, with the minor CapEx of the third party vendors, we could have about 1,600 megawatts per annum.
So we've been looking at [indiscernible] company installed around [indiscernible] in the next accounting year?
The company has clearly no intentions on getting to that volume. I think that we have a fairly pragmatic and rational volume target in mind. And I think that's kind of reflected in the order book that we have as well as the potential to [indiscernible], which gives us enough profitability for the next 18 to 24 months. We were driven by bottom line and cash flow, we're not driven by being the largest in terms of top line.
The next question is from the line of [indiscernible].
I would just like to understand what exactly the outlook, given that scenario, what we are seeing exactly this year [indiscernible] volumes sort of expectation. So what are the given outlook you have for FY '19? And given [ this with ] SECI and non-SECI?
Well, I think with respect to what's already in the public domain, we had a SECI-5, we had a SECI-6. We have NTPC and we have Gujarat. While SECI-5 has been annulled, we believe it will come back in some other form. And while Gujarat has been [ scheduled ] into August, it should produce 3 capacities together, that's close to 7 gigawatts. And that's just sort of already in the public domain being vetted out, so on and so forth. What's already been vetted out in this financial year is close to about -- SECI-4 -- SECI-4 go on 2 gigs.
[indiscernible] 7.5 gigawatt as an auction in the past 15 months.
And then we had 2 which was not in the financial year plus 7.5 in the public domain. So I think over the course of this financial year overall, I think we should see [indiscernible] about 10 gigawatts been vetted out.
So this [ 7.5 ] included the 2 gigawatt of NTPC, 1 gigawatt of Gujarat and 2.5 and 2 gigawatt of SECI. That's the breakup?
That's right.
Okay. And my next question is, what is the CapEx number guidance we're looking for this year now?
We don't have a major CapEx guidance. It's going to be regional and operational CapEx. We don't have any significant CapExes going forward.
Okay. And in terms of working capital, you make some of the old receivables, which [ we have seen ]. So [ where did the ] -- which part do you see should be able to recover that money back like [indiscernible]?
Well, I think over the next 2 to 3 quarters, I think the entire past receivables should be [ virtually ] with us. I think we began with about 2,400-odd crores of old receivables. We're now down to about 600-odd crores out of that. And I think, on a continuous basis, that's coming back into the company, and I think some of the most stranded assets because being deployed in various cases, some of them are being deployed at this point in time, so I think over the course of this financial year, the entire past would have been cleared up. We've cleared up, in many case, [ 75% ] to a 2% of the past. So I think we'll have [ a ] very small piece which we will clear up in the next 1, 2, 3 quarters.
And the last thing is that like next year, will we be able to make [indiscernible] industry, should [ we ] be able to see both pending kind of bidding, given the resources, what we have in terms of transmission network and the sites availability?
I think [ you ] have to appreciate the fact that if the government wants to do that bidding, they can go ahead with that. At the same time, there are other factors that [indiscernible] which ranges from the price which is coming into auction and it changes from the capacity of the IPP in terms of their capital, adjustment from OEMs. So I think it's a very -- it's a fluid situation. We have seen in the past, when the government wants to do auction, they can go ahead and do like 4 or 5 gigawatt of auction in a matter of months. So it really is a fluid situation, and we have to see how it develops. But we have given the intention of the government, we think it's a strong probability that they will [ see ] very strong levels of [indiscernible].
The next question is from the line of [indiscernible].
So my question is that in the presentation, you mentioned about 3 to 5 gigawatt of [indiscernible]. So if I understand it, the bond that SECI-1 and SECI-2 industrial make about 2,000 megawatts. So what are the additional investment that can be diluted and how much [indiscernible] this current financial year?
This is our expectation, but if you look at it, look at the original final [indiscernible] in the last financial year, including SECI-1, SECI-2, 500 megawatts of Gujarat, 500 megawatts of Tamil Nadu, 500 megawatts of Maharashtra. [indiscernible] let's not forget that a lot of the Gujarat, Tamil Nadu and Maharashtra assets are [indiscernible] virtually [ stronger ] asset, so that was virtually [ planned ] clearly. You could just commission them within the span of 2 or 3 months. [ So I think ], partly, you will see SECI-1, I think, to a great extent of what [ you -- ] all of SECI-1 barring groups who still don't have connectivity will get commissioned. SECI-2 to some extent will get commissioned. Gujarat, Tamil Nadu and Maharashtra assets will get commissioned. Over and above that, we have some figures used and some capital projects of high 700, 800 megawatts here and there, that is what gives us about 3 to 5 gigawatts availability.
And this transmission evacuation issue, so it has been result for all SECI-1, 2, 3, 4?
No. Well, I can't answer this [indiscernible] SECI-1, 2, 3, 4. What we can just say, we don't have a problem around [indiscernible] we have our connectivity in place. I'm not in a position to answer everybody and say problems have been resolved. So for instance, if people are [indiscernible] out of the blue without any connectivity and are offline for connectivity, there is a process, and there's a timeline, after which there will be [indiscernible] and connectivity. So it's not something [ that ] could happen overnight, but [ yes ], at least in our case, we have connectivity, and [ these are working to us ].
So most of our pipeline, Gujarat and the other sites and most probably the Tamil Nadu, so eventually, this evacuation issue is primarily in Tamil Nadu.
Well, from what I understand, almost 65% to 70% of SECI-1 to 4 is being implemented in Gujarat, and only about 30% is being implemented in Tamil Nadu. So it's a problem in Gujarat, not specifically Tamil Nadu. Although Tamil Nadu also has some problem.
Okay. Okay. [ So -- ] And should we [ also ] be looking at this like [ next ] [indiscernible], I mean, is SECI-1 and SECI-2 actually the entire team [indiscernible] gigawatts, what the industry installation should be?
No, [ I mean, we are not ] so concerned about the industry. I don't know why we're keeping on giving answer this question. I mean, those who have connectivity will broaden and execute. Those who don't have connectivity will keep waiting for connectivity to come. Like I said, from a [indiscernible] perspective, for the next 2 years, we have, up here, visibility for the others, we need to execute. [ So honestly], when someone is sitting on connectivity on result [ one in order ], on result [ one in auction ], eventually he may then execute and so on and so forth. Or someone is running auction but has not enough connectivity but eventually get connectivity. There are connectivity guidelines in the public domain, and there is a process which is being followed to give or cancel connectivity for people. So I mean, like I said, we've already -- we've given you, to the best extent, what we expect the sector will do at FY '19 and what the sector will do at FY '20. Now [ if ] that is a mix of SECI-1 or SECI-3 or NTPC, Gujarat. I'm not sure where you are headed with your question.
[ That's fine ]. And sir, any comments you offer on this offshore regarding anything, any development, especially in the government?
Well, I think the government has been proactive and forward-looking in terms of announcing an offshore policy and getting expression of interest from various players. But in our humble [indiscernible] [ basically ] with the limited knowledge that we possess, we believe offshore is way too far away, barring demonstration projects. Simply because some of cost are relatively perspective, offshore will be double the cost of onshore. So we can get onshore of INR 2.5 to INR 3 [ today ]. Offshore would be up to INR 5. Barring the demonstration project out of [indiscernible] government mandate. I don't think, commercially, it could make any sense at this point in time.
Okay. And sir, finally on this, so there are no real legacy for this [indiscernible] I mean, something to do with the old [ DFID ] that give audits there. [indiscernible]...
We have about 30 megawatts of legacy projects, which are PSU projects which are under implementation at this point in time.
Oh, okay. So those are PSU projects?
Correct.
And how would be [indiscernible] PSU projects? [indiscernible]...
The PSU responsibility, they already have the 2 [indiscernible] in place now.
Oh. So nothing to be -- nothing in the DFID, which is...
[indiscernible] 0 in the last financial year because no, FIT won't be honored by any street.
The next question is from the line of Chetan Gandhi from Gandhi Securities.
So a lot of competition has come out with a new [indiscernible] new turbines like 2.6 to 2.8 to 3 megawatt. What are our -- where are we in terms of 3 megawatt, which we have announced in 2015?
So we are working on it with our technology partners, I'm sure all of you are aware, we have a long-term and a strong relationship with the MSC. We are one of the leading technology providers globally. We're working with them on upstreaming our product and hopefully, you all should be hearing from us in the near future about that.
So are we on track -- I mean, we shouldn't be left out with the competition?
As you all know, we will not be left out. As you can see, we probably have the largest order book in the sector at this point in time.
I understand. Yes. I'm talking about the future technology because that is the most important thing. We don't have technology, we have [indiscernible], so I ask this question.
Even the technology is there, we have our tie-up in place. And we will be coming out [indiscernible] at the appropriate time. I mean, that's all -- we have recognized the need for technology upgradation, and we have covered our bases in terms of our partners, and shortly, we will be getting that to market.
The next question is from the line of Mohit Kumar from IDFC Securities.
I have 2 questions. [indiscernible] out of 950 megawatts, which we are building, are all of this largely closed?
Well, SECI-1, 2 and there was -- SECI-1 and 2 was financially -- financial closure has been done from what we understand from -- with this customer [ regarding this ], we have to give that to SECI as well. And from SECI-3 perspective, there's a fairly long time before which we could summarize our financial closure. I think we are right on track to achieve them.
What are the timelines [indiscernible]...
For SECI-3, it's November 2019. Implementation time line.
[indiscernible] financial globally, no? [indiscernible]...
In financial globally, we have up to 12 months, I would say, [ could be ] sometime around, correct me if wrong. If I'm not mistaken, will be around [ Feb ] 2019.
Second question is about all the SECI is conducting auction, NTPC conducting auction. Do you think at this state if part of Gujarat will conduct auction going forward or will all of them will participate though SECI?
It's a kind of [ SECI ] tough question to answer. So we've seen tenders come out. We've seen tenders from Tamil Nadu, Maharashtra and Gujarat. Let's not forget that was [indiscernible] loads of wind capacity coming up in Andhra and [indiscernible] in the past 2 years. What that leaves [indiscernible] Madhya Pradesh. I think the various state government [indiscernible] I think a lot of them do understand that either they need to take out street vendors because there are factory, there are jobs which need to be treated. There's a lot of local employment which happens. But yes, the foot side to that will be, of course, all the states do not have the same [indiscernible] as some of the other states which are [ far bigger than ] some of these states. So what shall we do? How can we consider [ that we're going to be able to see all ] [indiscernible] take out vendors? The [indiscernible] that all of them should be taking out vendors, but you may have a situation where one of you are lagging behind, and eventually, they come out with numbers.
Okay. So last question. Have you participated on offshore wind [indiscernible]?
So we have given our interest, but we do not intend to participate in the [ offshore ] auction.
[ But ] we've given our interest, but at this point in time, it's still premature. So we will -- it's 4 years, 5 years ahead and depending on the size and what the benefits are. We'll take a look at what we need to. But we're not [indiscernible].
The next question is from the line of [indiscernible].
I just have one question, and that is [ around ] [indiscernible] commissioning like in the [ indiscernible] presentation, which you normally provide every quarter. So at what time [indiscernible]?
So we just had one line statement to add there in terms of number of commissioning and the number of [indiscernible] quarterly highlights.
I'm talking about nacelle, hubs, blades, towers, all these stuff.
[indiscernible] complete sets in any case.
There are complete sets.
So [ that ] clarification actually doesn't [indiscernible] anymore.
Because you are -- you have provided [indiscernible], you [indiscernible]...
They are complete set. So that's a complete set of nacelle, blade and tower. So they are not ex nacelle, [indiscernible] and [ blade ] tower. It's all the same. [indiscernible] nacelle, blades and towers have been shipped out.
And if I look at the order backlog in Q4, FY '18, [ also ] you had provided [indiscernible] and in this presentation also, the order backlog is still the same [indiscernible]. So can you please [indiscernible]...
So we -- so from the pipeline as we were looking to execute, we've added about 75 megawatts of orders from another IPP, so we were supplied early in turbines, too. So that's target reduced. So broadly, it will be 945 megawatts, which is 950 megawatts.
The next question is from the line of [ Ankush Gupta ] from [indiscernible].
Sir, my question is regarding the last year balance sheet. There has been an addition of INR 247 crores in additions to plant and equipment. So sir, can you tell us where we have invested this amount of [ INR 247 ]...
Talking about last year's balance sheet right now?
Yes. This is in the March 2018 we have seen.
That is because of [indiscernible] development. But I will say that if you want to have a separate call with me, we can have a chat. But [indiscernible] for this particular call.
Sir -- because I was wondering that how much -- how can we [ find ] return on this amount of spend which we...
I think we can take this offline [indiscernible] this call as well. This is common in terms of [indiscernible] and also receive from the customer. So [indiscernible] balance sheet, this is not CapEx [ which is ] incurred by the company. And this will continue through the time we keep building [indiscernible] customer [indiscernible] capitalize on our balance sheet. So that's not something which we are [ hiding ].
I think it's better if I have a call with you later, and I can explain it to you.
The next question is from the line of [indiscernible] from JHP Securities.
My question was under EPC, O&M and common interest [indiscernible] facility expenses, we've seen a lot of savings there, so it's countdown from 71 crores to around 37 crores. I just want to know how that has happened on such an high volume that we executed this year.
Well, not really, it's not high-volume. We only commissioned 22 megawatt in the quarter. So to the extent that this commission [indiscernible] in the quarter, this reflect expenses of 22 megawatts. [ Had ] we done 100 megawatts and so deflect the cost of 100 megawatts and [indiscernible] 0 megawatts, [ this would ] [indiscernible] 0.
Okay, sir. And my second question was on the utilization. If I take the volume at 80 megawatts and [ the sale ] is around 430 crores, I come to a realization of 5.37 crores per megawatt. Is this what are we going to be working with going forward?
Do realize that this is [indiscernible] EPC revenue, and the EPC revenue is only for 20 megawatts, so [ if you add up EPC revenue ] for the full 18 megawatt, that would be the realization: 4 megawatts on a blended average basis.
Okay. So that would be around 6 crores? That's what [ we ] had guided earlier?
Possibly slightly higher.
Okay, sir. And the margins of 16%, 17%, we are confident of maintaining that going forward?
It's not guided for any margins. As we've mentioned many times in the past, our historical margin is [ only ] about 15% to 16%. We believe that in the auction [ regime ] as well, our margins will be in double digits. But to what extent it will be, we will not make any forward-looking statements, not give any guidance. But I think what is more important is the absolute profitability for the company going forward should increase, given that the market itself is becoming larger and larger, number one. And number two, given that working capital cycles [ are become ] more and more efficient, which [ it continually is ] as we get into a full-fledged auction -- full-fledged year of auction business, I think interest cost will go down, which would add a lot to our absolute profitability [ book to this ] EBITDA.
The next question is from the line of [indiscernible].
Do you think that [indiscernible] around 25 megawatts worth of contracts you contracted last quarter. So I mean, I just wanted to understand, I mean, where is that from? Is that from state electricity or...
That's from [ state electricity board ].
Which one?
That's from a state -- it's a contract which has been [indiscernible] [ state electricity board ].
[indiscernible] Maharashtra or...
Maharashtra.
[indiscernible]?
No, no, no. That's just [indiscernible] 75, so the 75 was supplied to these [indiscernible] earlier, which is now been put under the Maharashtra order book. So 50 is what we have [ bought ] ourselves.
So 25 has been supplied? I mean, you earlier received how much for the Maharashtra?
We received 75 over and above the existing, yes.
I didn't get it. [indiscernible]?
So we have 150 megawatts on our own, in that particular auction.
Okay. So [indiscernible] you could turn around [indiscernible] much?
No, I think [indiscernible] we run on our own account 50 megawatts. There is another IPP who has won something else which you [indiscernible].
Okay. I will let you [ do ] this offline.
The next question is from the line of [indiscernible], an individual investor.
My question is just, as you already said, that you have visibility for the next 2 years, and that's the reason that you have not going and bidding for the next SECI auctions. So do -- can we just [indiscernible] from then, we can start beating in the pipeline because in the next year, the next 10 developers [ are ] about to -- getting [ to ] auction. So if you don't participate in the 10 megawatt [indiscernible] we will not get rid of. So can you just give us some sort of timeline [ where ] after the [indiscernible] of SECI-1 or SECI-2 which you, again, will start participating in the auction? Can you just kind of clarify on that one?
So every auction [indiscernible] happen will be a debt reduction. We will be evaluating, at that point of time, working expense [ for us to ] do. I think you should not have an impression that we are not going to go in any auction in the next whatever, 1-month, 3-months, 6-month, 9-month period because it's not the case. All we are saying is that we have ample, robust order book as of now. We have [indiscernible] plus visibility of additional orders, which is there. So what it leads to is that we don't need to participate in every auction. This basically means that I can afford to choose which auctions to go for depending upon the market environment and depending upon the palette sense on other parameter which are there. So it will be a strategy [ comp], okay? So I can't give you a timeline of which auction I'm going to choose next in terms of picking my next order from, but obviously, every auction we evaluate, and we see what is the best fit for us. And do keep in mind, we will obviously be looking out at how the execution was for SECI-1, SECI-2 and other future orders that we have guarantees, and we will be building up our order book accordingly. It's not as if that if I have [ won this ] 90 megawatt order book now, I'm not going to do anything for the next coming -- next month. No, [ it's not it ]. So please keep this in mind, that we will be evaluating every auction as and when it happens and deciding what is the best course of action for us.
Okay. And the second question is that, can you do any updates on [indiscernible] auctions? Are you -- are we looking for participating in that one as well?
[indiscernible] couple of potential partners to participate along with them. The 2 types of hybrid, one is where solar already exists, where wind can be added and other is where wind exist, solar can be added. So obviously looking at the option where solar exist and wind can be added, and we're in touch with a few industry players to decide to move forward on that.
[Operator Instructions] .
If you have no further questions, then we can close the call.
Ladies and gentlemen, with this, I now hand the conference over to [indiscernible] for closing comments.
We have some closing comments. We will [indiscernible] before you close the call.
So to conclude, the quarter had a [indiscernible] including the company turning back into profitability on the back of commencement of execution for our SECI projects. The sector is turning around after a very painful period over the past 12 months with execution orders [ of now ] everything had come to absolute standstill. We are relieved [ but ] at the same time, very excited about the future. We are strongly pleased [ on that -- ] of our connectivity, that order book and then [indiscernible] execute our existing order book over the course of the next 12 to 18 months. As has been said in the call, we're also in discussions with various Gujarat, NTPC orders, which is huge [ for ] Gujarat order book in the coming quarters. Over the course of the last couple of quarters that you may have seen, we are focused under [indiscernible] improving our key balance sheet metrics, including cutting down receivables by reallocating them to various projects that are [indiscernible] using them partly in [indiscernible] bringing down our working capital levels which are [ virtually ] half from working capital level of execution about a year ago and cutting down our debt levels very, very significantly. Our debt-to-equity stands now at 0.32, which is a reduction of almost [ INR 480 ] crores of net debt over the past financial year. [indiscernible] 0.2 net debt-to-equity ratio, and I think that will hold good for us as we move forward under the auction issue. We believe that this, along with our inherent cost competitive advantage, [indiscernible] commission to benefit from the auction base market regime, which is also reflecting the fact that we have one of the largest order books in the sector. We continue to enjoy strong relationships [ within IPPs ] in the country and look forward to working with them in achieving India's target of 60 gigawatts of wind capacity by 2022.Thank you for your interest in our company, and we look forward to a solid execution here as well as a solid year of profitability after painful transition period. Thank you.
Thank you very much, sir. Ladies and gentlemen, on behalf of Axis Capital, that concludes this conference call. Thank you for joining us. And you may now disconnect your lines.