Inox Wind Ltd
NSE:INOXWIND
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
66.64
254.34
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Inox Wind Ltd
You don't have any saved screeners yet
Good morning, ladies and gentlemen. I'm [ Palcia ], moderator for the conference call. Welcome to Inox Wind Q1 FY '24 Earnings Conference Call. [Operator Instructions] Please note this conference is recorded.
I would now like to hand over the floor to Mr. Mohit Singh from ICICI Securities Limited. Please go ahead.
Thank you. Good evening, ladies and gentlemen. Thanks for joining us today for the Q1 FY '24 Earnings Call of Inox Wind Limited. On behalf of ICICI Securities, I'd like to thank the management for giving us the opportunity to host this earnings call.
Today, we have with us Mr. Devansh Jain, Executive Director, INOXGFL Group; Mr. Kailash Tarachandani, Chief Executive Officer, Inox Wind Limited; and other senior members of the management.
I will now hand over the call to the management to give their opening remarks. And after that, we'll open it up for Q&A. Thanks, and over to you, sir.
Good morning, everyone, Kailash Tarachandani here. Our apologies a bit of delay because of some technical issues. A very, very welcome -- warm welcome to all to the quarter 1 financial year '24 earnings call of Inox Wind Limited. The company announced the quarter 1 results at its Board meeting held on Saturday, 29 July. The results along with our earnings presentations are available on the stock exchanges as well as on our website.
Let me quickly take you through the financial numbers before briefing on the macro environment and business updates. We are pleased to announce that our manufacturing business segment has turned EBITDA positive after nearly 5 years. On consolidated basis, Inox Wind reported a revenue of INR 352.3 crores in quarter 1 financial year '25 (sic) [ '24 ] versus INR 213 crores in quarter 1 financial year '23.
Consolidated EBITDA was INR 34.9 crores positive in quarter 1 financial year '24 versus EBITDA loss of INR 25.7 crores in quarter 1 financial year '23. Overall, a strong macro tailwind presents a brighter outlook for the wind sector.
On the global stage, renewable capacity additions, including wind power continues to be strong. As per the Global Wind Energy Council, calendar year '22 witnessed wind capacity installation to the tune of 77.6 gigawatt to take the total installed wind capacity to 906 gigawatt. On the domestic front, Government of India has been aggressively driving the ramp-up of renewable energy capacity installation with an objective of reducing India's carbon footprint and dependence on fossil fuels. The overall target set by government is to reach 500 gigawatt of nonfossil fuel capacity by 2030, and we are making rapid progress towards these goals.
To achieve this, the MNRE has set up 250 gigawatts of renewable tendering trajectory over financial year '24 to '28. More specifically, the MNRE has set up the financial year '24 calendar for central auctions to be conducted by 4 renewable energy implementing agencies, which is SECI, NTPC, NHPC and [ SGBM ]. On the 50 gigawatt annual RE auction, target is to auction 10 gigawatt of plain vanilla wind and at least 10 gigawatt of hybrid RTC projects every year until financial year '28, which includes at least 40% of either wind or solar. Further, wind capacity installation through state auctions, C&I and retail will create additional demand.
In particular, there is a huge demand we see from the C&I market, and Inox Wind is in discussions with many such customers. Over the next 8 to 10 years, India plans to add over 100 gigawatts of wind power capacity on the current base of around 43 gigawatt. More importantly, the tariff discovered in the recent auctions are conducive for higher wind capacity addition as it adds discounts to get cheaper green power, developers to earn decent IRRs and OEMs to earn good margins. Wind sector in India is no longer supported through any kind of subsidies throughout the value chain.
Except for ISTS charge waiver applicable to both solar and wind power up to June 2025, after which it gradually tapers down. We believe that this will not have a significant impact and the chain charges may be offset by tariff reduction due to easing of commodity pricing, lower interest rate and improvement in technology. At a fixed tariff of INR 323.2 per unit for a period of 25 years, wind is amongst the cheapest source of power currently in the current -- country today and much lower compared to India's APPC of INR 3.75 per unit. While the positive economics are in favor of wind hence from grid stability perspective as well, India will require significant capacity addition in wind to balance the solar generation variability.
Among the primary factors driving the low wind tariff is the improvement in turbine technology over the past year. We are now shifting towards a much more efficient 3-megawatt platform, which has higher PLF, reducing the cost of power substantially over the 2-megawatt platform and helping developers earn higher IRRs. Inox Wind is also witnessing huge interest for our 3-megawatt WTG platform across PSU, IPP, retail and C&I customers. There are several such opportunities being discussed and at various stages of finalization.
I'll discuss some of the developments at Inox Wind over the past quarters. Inox Wind has started its journey towards profitability by being EBITDA positive in quarter 1 financial year '24 at both the stand-alone and consolidated levels. Our financial performance will continue to improve going ahead, backed by our strong order book, our strong balance sheet, lean cost structure and favorable macros. It gives me immense pleasure to inform you that we have received a Type Certification for our 3-megawatt wind turbine from TUV SUD, a leading global certification body based in Germany. The state-of-the-art 3-megawatt turbine with a booster capacity of up to 3.3 megawatt has been developed with globally renowned AMSC as our technology partner and designed especially for Indian wind conditions.
We believe it will provide significant growth opportunities for us. We will commence [indiscernible] supplies from next quarter, quarter 3 financial year '24 onwards. During the quarter, we have also announced the merger of Inox Wind Energy Limited, the holding company of Inox Wind into Inox Wind. The merger simplifies and streamlines the structure of our wind energy business segment, and we believe that the swap ratio approved by the Board is in the interest of minority shareholders of both the companies.
We expect the merger to conclude within the current financial year, subject to various regulatory approvals. Our robust net order book of 1,327 megawatt gives us execution visibility over financial year '24 and '25. In quarter 1, we have won 2 more orders, follow-up orders of another additional 150 megawatts from NTPC and 100-megawatt order from ABEnergia renewables. While there are significant order intake opportunities, we'll be pacing our order intake focusing on 3 primary aspects: number one, profitability; number two, derisking our supply chain; and third, the ease of execution. On the execution front NTPC first and second phase of 150-megawatt and 200-megawatts as well as other retail orders are in full swing.
Our O&M subsidiary, INOX Green Energy Services Limited has delivered another successful quarter of operation with continued healthy margins. We believe that INOX Green IGESL is progressing well in its journey towards doubling its wind turbine O&M portfolio over the next 3 years as committed at the time of its IPO. With a strong and complete support of the promoter, the strengthened operations projected strong cash flows, strategic actions and relationship with customers, Inox Wind is on the path towards becoming a net debt-zero company in the near future. We believe that our growth journey will create value for all our stakeholders.
I would now like to hand over the floor to Mr. Devansh Jain for his remarks, post which we will take the question and answer.
Thank you, Kailash. Good afternoon, everybody. The past year has been quite eventful for the wind sector as well as Inox Wind. I extend my congratulations to the team on becoming EBITDA positive in the first quarter itself. I'm sure that the performance will continue to improve on all fronts in the subsequent quarters. I believe both the macros and the micros are finally aligned with the tendering trajectory in place, huge demand from the C&I and retail customers, cost economics favoring wind power and the various strategic initiatives undertaken by Inox Wind over the past year, which includes capital infusion, Type Certification for our 3.3 megawatt turbine, approval of the merger of the holding company, IWEL with IWL, execution of a strong order book and our strong balance sheet, which we continue to strengthen as we move forward.
IWL is now strongly positioned to create value for all our stakeholders over the course of FY '24 and beyond. With this, I would now like to open up the floor for Q&As. With me we have Kailash and other members of the team.
[Operator Instructions] The next question comes from Shubham Sethi from Logical Investments.
So my first question is basically, whenever we sell a wind turbine, how much warranty do we give to the customer? And during the initial -- like let's say, it's a 1- or 2-year warranty, during that period, like INOX Green, does it get any revenue from Inox Wind or from the customer for maintaining -- for the maintenance of the wind turbine?
Thank you for your question. So typically, we give a warranty for 2 years. And in the 3 O&M period, as we call it, which is also 2 years of free O&M period, we don't get any revenue at the INOX Green level. However, year 3 onwards, for example, we start getting the revenue. Having said that, that's the cost, which Inox Wind technically bears in terms of doing O&M for the first 2 years to ensure it gets the right to charge revenues for the next 8 to 25 years, depending how long the contract period is.
Okay. Understood. So another question I had was like have we received any order for the 3.3-megawatt wind turbine or anything is expected like in next few months? Another thing is like what is the price difference per megawatt for the 2-megawatt turbine and the 3-megawatt turbine? So like I think it is INR 6 crores to INR 7 crores for the 2-megawatt version. So is this one expensive?
Thanks, Shubham. I think just to answer your first part of the question, yes, we have already received 3.3-megawatt orders. We have received as announced NTPC 150 megawatt or 3.3 megawatt and also, we received another Ad Energy order, which is again 100 megawatt, which is again the 3.3 megawatts. We also have a few numbers of retail orders from 3.3 megawatt and further in advanced stage of discussion.
Just to add to it, obviously, we've just launched the turbine in discussions with multiple customers, and I think they have a very sizable order book at this point in time. So I think, as Kailash also mentioned, we'll be pacing out our order intake. We have a fairly strong visibility, and I think we'll be pushing that out driven by profitability, ease of execution and derisking our supply chain.
Okay. Understood. Sir, what is the -- like I also wanted to know about the -- like what is the per megawatt cost for the 3.3 gigawatt?
That's not a question of -- I mean it's not question of is the 3-megawatt platform more expensive. And at the end of the day, something called cost of energy. The cost of energy keeps declining. And the best way to answer this would be typically on an apples-to-apples side, our 3-megawatt turbine is about 35% more efficient than the predecessor, which is a 2 megawatt, 113 turbine. So to the extent of 35% cost additions naturally a certain part of the price goes up because we increase our profitability. Not possible to share exact numbers, but after all I would say, turbine sales for about INR 7 crores to INR 8 crores gigawatt now a days -- the new technologies.
Yes. Understood, sir. My final question is about the merger. So like I just want to understand what is the expected time line for the merger to complete like approximate would be fine?
No. I think from what we understand from our lawyers and advisers, it should be done within this financial year. The scheme is already uploaded on the stock exchanges. I mean, we see no other hinderance. So frankly speaking, as I believe it should be done over the next 6 to 8 months.
Next question comes from Nikhil Abhyankar from ICICI Securities.
Congrats on a good set of numbers. Sir, my question -- first question is, what kind of execution target are we looking at in FY '24, given we've got an order book of 1.4 gigawatts?
Look, actually we've said multiple times, we mean to supply and execute close to 500 megawatts over the course of this financial year. And I think that's in the public domain.
Okay. And sir, how much was done in Q1?
We did close to 60 -- we did about 66 megawatts in Q1.
Megawatts, okay. Sir, you also mentioned about the C&I segment. So what is the portion of the C&I segment in our current order book? And can you guide us on the pipeline on that -- for C&I side?
No frankly speaking, I think we don't go by those segments. I think we have a large PSU order book. We have IPPs, we have retail. Naturally, one of them, which is very specifically C&I, EV Energy, I believe, for example, in NTPC, whether they do C&I or SECI. It's the prerogative, but I understand that some part of that is also going to be C&I. Kailash -- and I see they are talking more and more on C&I. So I mean, we really don't care whether they're doing captive or C&I or SECI. So it's a very, very large pool. In terms of trajectory, I think as Kailash mentioned, we have such a large visibility of SECI tenders, PSU tenders, auctions in the public domain, multiple C&I orders. I mean all I would say is we have a very, very robust and large order book. So I don't think -- I don't think it's a question of feasibility and how many more orders. It's a question of we can take as much as we want, but I think we are pacing ourselves up. And I would rather give to profitability than
[Audio Gap]
Understood. And sir, just a final question. So what is the status of our working capital and our relationship with the banks, given our like a couple times in the recent past?
So I think that's a very interesting question. I think what is very important, I think we have very, very strong relationships across banks. What is very important to note is that we're the only OEM who survived 5 years of pain without a single rupee of a cut to any vendor to any creditor. The promoters are back to the company, the group is back to the company. So I think we enjoy very, very strong relationships with banks. Not just at the group level, but also at Inox Wind level. And as we're ramping up, all the banks are supporting us more and more with nonfund-based facilities because increasingly, we need only nonfund-based facilities as we are moving up. So it's a very, very pertinent question. I think that differentiates us from a lot of other competitors in the Indian market.
Next question comes from CA Arun Maroti from Subh Labh Research.
Am I audible sir?
Yes.
Sir, I would like to know that when the 3.3 megawatt turbine we will like to deliver, the expected time line?
Yes, I said in my opening statement, we will start delivering from the next quarter, which is quarter 3 onwards to the market.
Okay. Okay. And do we face any impact of the departure in Gujarat?
Of what?
Cyclone departure, which came in last.
No, no, no, it has no impact.
We haven't. Okay. And my last question is on the O&M business that -- in our presentation, we are saying that we are looking for some inactive and stressed player to take that one. So have we did that in this quarter?
No, I mean we're seeing that's part of our growth strategy. We've already acquired one of the players called I-Fox and we continue to negotiate with multiple players to potential acquisition targets.
Okay. Okay. And my last one is that, sir, at what time we expect that we will be a debt-free company?
I think we've said over the next 12 to 15 months, our estimated debt-free company. And I think we're very, very comfortable at where we are. I think we have a strong balance sheet. But certainly, what we've set out is over the next 12 over months we're going to be become net debt-free. And I think we're well on track, given some of the strategic actions, operating cash flows, our asset monetization plan, I think we should be able to achieve that well within the time lines.
[Operator Instructions] Next question comes from Vineet Gala from Xylem Investments.
It's Vineet Gala. Sir, as you mentioned that we intend to deliver our 3-megawatt turbines in H2, like Q3 onwards. Sir will it be fair to assume like our entire 2-megawatt order book will be up for deliveries this year only?
No, I think it's not fair to assume that. I think we will be a significant part of the order book this year with -- in terms of supplies will be 2 megawatt, but we will be keeping a certain part of the 2-megawatt supply chain intact for delivery in the next financial year.
So how would we go about like how are -- like our capacity is right now like the tower capacity is around 2-megawatt platform. So if we are pivoting to megawatt platform. So what kind of capacity change and feeding period would that require?
No, I don't think it requires any changes, if I may explain the nacelle tower and assembly shops, whether we make 2 or 3 or combine them in the facilities, requires no change. It's only the blade facilities where new molds come in for our 3-megawatt platform. So we have massive capacity. We'll have a 2-megawatt mode running in some plants. We'll have 3-megawatt modes also running concurrently. With respect to the tower plant, it's a fabrication job, whether I make a 2-megawatt tower or a 10-megawatt tower or 3-megawatt tower, nothing changes.
Fair enough. And sir, as far as our capacity expansion plans are concerned, given the kind of demand that we are looking in the sector. So over the next couple of years, how do we go about capacity expansion, where do we start? Because if I see our nacelle capacity and hubs capacity that is far higher than our tower and blade capacity. So where do we start expanding the capacities? And how do we go about as far as the money committed towards CapEx for this are concerned?
Let's not jump the gun. It's been 5 years of pain in the sector. We've got enough manufacturing capacity I mean we are north of 2 gigawatts. The tower a lot of fabrication job. New localize towers, if you're in Tamiladu, will pick up local towers. They are not going to send towers from Gujarat, the logistic cost of sending towers will be more. So frankly speaking, Inox Wind is capable of delivering north of 2 gigawatts at this point in time. We foresee no major CapEx for the next 2 to 3 years, let the market move towards 8 to 10 gigawatts. And at that point in time, we will need to -- we'll do it with CapEx. I think at that point in time, our profitability is very, very significant.
As you know, we are very, very efficient in our CapEx program. We've probably spent about INR 600-odd crores in terms of gross block in building this close to 2 gigawatt capacity. So frankly speaking, adding another gigawatt is a cost us more than 300-plus-minus. So it's not rocket science. Let the market moves towards that. We use internal accruals to expand capacities at the right time.
Next question comes from Krishnakumar Srinivasan from Lion Hill Capital.
Congratulation on a great turnaround that you are building there. Sir a question in terms of the 3-megawatt order book. Is it...
Can you just be a little clearer, please, your voice is cracking?
Yes. Just give me a minute. Yes. So is it possible to give some color in terms of whether a 2-megawatt orders that you have can be committed to a 3 megawatt at the option of the client. Is that something possible? And would you encourage that?
We have those flexibilities in some of the contracts. And I think Kailash logically speaking, some of them would like to do it. But as I mentioned, as Kailash mentioned, we are focused on profitability, de-risking the supply chain and ease of execution. So to some extent, we have derisked ourselves, and we like easier by carrying on to and gradually ramping up towards 3 megawatt. So as we get to full scale 3 megawatt, maybe a part of our 2-megawatt order book, we'll convert to 3 megawatts. We have that option. And I think it's a win-win for us as well as the customer. So I see no reason why everyone would -- why anyone would have an issue with that.
Sure. Sir. And sorry for this question, maybe I joined the call a little late. Sir the wind sector being gone through lot of pain, and there is a recovery that I think you've been alluding to. But solar still remains much preferred option from a cost perspective across the value chain. So what do you think will actually convert or have wind be getting a better market share of the green energy going forward compared to what it did in the last couple of years? Other than the growth option going away, is there anything else fundamentally that has changed? And also -- I also read about the grid balance particularly for using wind. So could you elaborate little bit on that, sir?
Look, fundamentally, I'm not going to get into the past 5 years what happened. I'm sure everyone is well aware about that. I think -- but if you go back to Slide 10 of our presentation, that very, very clearly demonstrates what the cost of solar is and what the cost of wind is. In terms of all imported solar, it ranges from INR 2.4 to INR 3 with certain pass-throughs and wind is between, say, INR 2.6 to INR 3.1. Having said that, domestically, bid-out solar is north of INR 3.5 plus C&I. So frankly speaking, those days of renewables versus nonrenewables are over, then we shifted to wind versus solar, that's all c***. Those data are well behind us. I think in majority of the transactions, wind is actually far more competitive than solar.
Having said that, it's no longer a question of 10 or 20 paisa. It was also very, very important, which the government has realized and which they are pushing very, very strongly in our RTC hybrid and plain vanilla wind because in the past 5 years of the painful transition, there was barely 5 years of wind which came up or whatever, 5, 6 gigawatts. And you still have significant amount of solar win. So from a grid balancing and a grid stability perspective, you need wind and solar. It's mandatory. It's technically not possible to have only one fuel source if they're going to set up 350 gigawatts or 300 gigawatts of renewables, both have to coexist because they are complementary to each other.
So frankly speaking, not just cost economics, where wind is very, very competitive. It's also a technical requirement that for grid stability, you need to have more and more wind coming into the system. I assume that answers your question.
Last question, sir, is there any further plans to infuse equity into the company from the [ founder ] side to deliver further or you think the operations will take care of the delivering part going forward?
Look, I think we've put out as a company, we put it out very, very clearly that we want to be net debt-free over the next 12 months. And we have this asset monetization plans, we have strong operational inflows expected to kick in as we keep ramping up. And there may be some kind of strategic option as well at any point in time. I think we'll keep all our options open. We're very clear. We want to be net debt-free. We want to have -- as we scale up, we don't want to have any discussions around that. So we have all options open. I think we are very, very strong promoter holding in the company. We have very strong skin in the game from the promoters. But let's see, we'll keep all options open.
Next question comes from Rishikesh Oza from Robo Capital.
The first question is with respect to the execution front. Do we see any impact on execution in Q2 due to rains?
Naturally, to some extent, Q2 is a little slower compared to Q1. But I think we're in a ramp-up mode. And frankly speaking, compared to Q1, I would tend to think every quarter should get better and better. But naturally, in a normalized year, Q2 is always going to be a little slower than Q1 because of monsoons.
Okay. So with respect to the execution indication that we'll be executing 500 megawatts this year. So a major portion of execution to start from H2 onwards, Q3 onwards, right?
I think, as I mentioned, we're ramping up quarter-on-quarter. Kailash mentioned that as well every quarter should be better than the previous quarter. And we are aiming for 500 megawatts this year. That's our goal, that's our target. And I think that's a 7x which will multiply with respect to what we did last year. So I think it's a significant jump. Quarter-on-quarter, we should keep improving, but I won't get into the specifics of every quarter. But yes, I think every quarter should be better than the previous quarter.
Okay. And sir, with respect to the interest cost, what would be the interest cost for FY '24?
How do we -- I think all the -- give us a second. So I think the numbers we put out in the public domain, we are down from INR 95 cores to INR 69 cores to virtually INR 50 crores, excluding onetime expenses. And I think quarter-on-quarter, they should keep declining. It's very difficult to give you an exact number what the full financial year numbers would be like. But I think what we're targeting is to be net debt-free by the end of this financial year. I think -- and every quarter, the interest cost should keep declining.
Okay. If you are expecting to be debt-free after 12, 15 months. So are we saying that interest costs would be virtually like almost towards 0 after 12 to 15 months?
When debt-free, interest cost should be 0 for us.
Okay. Okay. And with respect to the EBIT margins, last quarter, you had indicated around 15% of EBIT margin. So are we still sticking to that 15% for FY'25?
Let me be very clear. We never guided for 15%. What we said in the full and financial year, which is FY'25, our aim is to get back to our historical profit margins, which used to be 15% to 16%. We did not guide for 15% this year. We simply guided that we intend to become profitable in this financial year, and we are very well on track to be profitable this financial year.
Okay. Okay. And just one last question. What kind of order inflows do we see for this financial year '24?
No, I don't know why there's so many -- I think we have such a large order book. We've launched 3 megawatts now. We are discussing with so many customers. Frankly speaking, our order book is more than sufficient to take care of the next 2 financial years. You don't get order for the next 5, 6, 7 years. Those may be LOIs, MOUs. And I think we can take -- there's no limitation to the number of orders. We are pacing out our orders. So I don't think that's a cause of worry at all. Frankly, we can take as many orders as we want at this point in time. It's the market is just overflowing.
Next question comes from Anand Trivedi from Nepean Capital.
I have a question regarding the hybrid power projects. Just want to understand in the hybrid power projects, does the wind and the solar, both have to be the same site. And if that's the case, how many available interesting wind sites are available, which also have capability for solar?
No. So typically, what happens in a hybrid side. It's not specifically the same site. So it doesn't need to be within the same location. What you're really doing in a hybrid project is they're using the grid of a certain area. So your solar plant maybe say, 100 kilometers away and your wind plant will be another 50 kilometers away, but you're connecting it at the same grid point. So in that sense, it could be a fairly diverse. So for example, you have Gujarat sites and you have Rajasthan site. Certain places in Gujarat, we've got our wind farm, which is 20 kilometers from the grid and solar sites about 150 kilometers or 75 kilometers from that spot. We're just using the same common infrastructure not the same locations necessarily.
Next question comes from Amish Kanani from JM Financial.
Congrats on a good set of numbers. Sir, I understand we are booked for 15 to 18 months and based on the historic experience, very long orders. They really also give us some risks in terms of hedging and all. So that I understand. But if you can give us some sense of what is the sweet spot as of now in terms of inquiry? How big is this inquiry and whether we'll be kind of taking our market share there, some sense there in terms of where the sweet spot because I see our order book, we have SECI and NTPC and Adani, which looks like a larger customers, in terms of order. So how are we at margin, retail versus C&I versus these large companies?
Look, frankly speaking, this is not about C&I versus SECI versus NTPC. Frankly, as a company, we are driven by certain pricing and certain profit goods. Now whether you use it for captive, whether you use it for C&I or SECI, we're frankly indifferent to that, number one. Having said that, I think we've been focusing more on PSUs because we believe they are far more stable as the transition was coming to an end in the sector, we wanted to be absolutely secure rather than betting too much on IPPs and so on and so forth. That does not mean we don't take them. I think we've taken a very, very large chunk of PSU orders from NTPC, which probably the strongest player in the Indian market compared to any other private sector corporate.
And as we are moving forward, we're now diversifying time to more and more private sector to more and more PSUs I mean, Kailash please add, from what I understand, they're almost 1.5 gigawatts of PSU visibility in the next 6 to 9 months, which we are -- which we potentially will participate in. We are talking for more than 2 gigawatts of IPPs at this point in time. The retail orders are something which keep coming in on a quarterly basis. But having said that, we have such a large order.
Like I said, there is no [indiscernible] for us to take orders. We are ramping up we will phase it up. The next 10 years are very, very strong for the sector, potentially more than 10 years. So it's not a 1-year story or a 2-year story
[Foreign Language]
And then game is over. This is a 10-year story here. SO I think , Kailash, anything else?
No, I think the market is blunt, as all of us know, the option -- software options are coming from SECI side. There are a lot of discussions happening with, as I said and Devansh said that under 1 gigawatt plus tenders I see from PSU alone over the next 3 to 6 months to 9 months that kind of time line. And we will keep participating as over the last couple of years, we have built up the common infrastructure. We have those kind of capacities available along with and relationships along with major oil customers.
Apart from that, as the C&I market is very, very active right now. And a lot of people are trying to take advantage of interstate charges till 2025. The inquiries are huge. But as between me and Devansh said, we are just placing the orders based on how I see the profitability, how I see the -- in terms of execution fees, otherwise, in my view, we don't have any challenge in terms of what I -- from the execution point of view. So we'll continue to build up order book and you guys will keep hearing new month after month, yes.
Sure, sir. Sir, and second part of the question is, what will be the current gross debt and net cash on the book on a net debt situation. And in that context, how are we kind of funding our working capital, you did say that we don't need it only funded will be required. So if you can give us some sense of what is -- how is the customer advances versus situation of the working capital is for...
31st March, the net debt was broadly about INR 1,250-odd crores. I think we're fairly comfortable. I think we have announced that over the next 12-odd months, we want to be net debt-free. I think we have an asset monetization plan. We have strong inflows from operations as we ramp up over Q2, Q3, Q4. And there could be some other avenues where we will raise capital to get to a net debt-free position. So that's number one. Having said that, naturally, we are a ramp-up mode after 5 years, we've readied our supply chain, as we've said. We've had to give advances for various things because actually, for many of our suppliers after 5 years, they're carrying inventory, and they know that we've picked up everything. We're not defaulted on anything. But for them to carry larger inventory after this 5 years of pain. Some of them requested for support over this financial year and gradually they will taper it off.
So I think to that extent, we view some part of inflows and advances and borrowings to give advances to our suppliers and vendors. And I think -- but as we keep moving forward, I think we should have fairly significant free cash flow, number one. Number two, I reiterate, I think as a group, we have very strong banking relationships. As Inox Wind, we have very strong credibility with bankers. We're probably the only OEM which is not defaulted on a single rupee or taken any haircut from any banker in the Indian ecosystem.
Having said that, we only need primarily nonfund-based limits as we keep moving forward. And I think we have a very, very clear visibility and goals in terms of how we are getting to that.
Sure. And sir, one last booking question, sir. Do we have a share count of the number of outstanding share post the merger that will help us to understand the diluted market cap, sir or maybe I can take it offline from Anshuman.
You can take either offline from Anshuman or the post merger, the number of shares would remain broadly in the same range as of now, which is held by the Inox Wind Limited.
You can get offline and [indiscernible].
Next question comes from Kaushik Mohan from Ashika Institutional Equities.
I hope I'm audible. Congratulation on a good set of numbers, and I'm happy to see this kind of turnaround. Sir, I just -- most of my questions have been answered, and I have a simple question on the full year basis on FY'24. What kind of EBITDA margins are we targeting on this year? I understand that we are looking for a PAT positive number. But what could be our efficient EBITDA margins?
Look, I think just to thank you for your feedback. I think we're excited as well about the turnaround and the growth opportunity and the track of profitability, which we are on. I think broadly speaking, I think we should get about 8% to 10% in this financial year, simply due to the fact that we are using a significant chunk of our 2-megawatt platform and a chunk of our 3 megawatt or as we ramp up over Q3 onwards. What we've said publicly is in the next financial year, we expect to get back to our historical profitability levels because there'll be more and more 3 megawatt. So I think that's broadly what we set out for ourselves.
Okay. Sir, just one another question to be answered. This is on the -- can I get the price per unit, what you are selling to your clients?
Sorry, can you repeat?
Price per unit?
No, I don't think we can share those numbers. But broadly, the 2-megawatt turbines go between INR 6 crores to INR 7 crores and the 3-megawatt turbines go between INR 7 to INR 8 crores.
Okay. Okay. Got it, sir. And the last and final question. Just on the -- you told this is a structural story which is coming for and being excited for next 10 years. What makes you to tell this big statement? Can you -- some light on this?
There's no rocket science. Renewables is the cheapest form of energy globally. So it's not about 5 years or 10 years or 50 year. I can't crystal ball the eventually -- what will happen for the next 30 years. But for the next 10 years, we've a very, very clear trajectory from the government. Having said that, don't forget fundamentally what is driving is the fact that renewables is now the cheapest source of power. There is no subsidy element, there is no support element or if there is anything that's akin to all power fuel sources and so on and so forth.
Globally, everyone's investing in renewables for climate chain for future generations. But from an India perspective, it's a cheaper source of power for future generation green climate, blah-blah-blah, it's all lovely and that adds to the cherry on the cake. But fundamentally, the cake is the cheapest cake. So that's what's driving the whole story. It's pure cost economics.
Got it, sir. The last and final question on cash conversions. Sir, how long will it be taking? And what can be your cash conversion cycles in the coming years? How long will it take to convert your cash -- operating cash flows to be positive?
I think it would broadly -- let's get to a full year of stable operations, which is the financial year we began Q1. But I would tend to think it should be 90 to 100 working days in terms of full cash conversion cycle. And I say this with -- I would go on the side of caution as opposed to any aggressive goals.
Next question comes from Vikram Sharma from Nivas Vale.
Sir, I wanted to understand like what is total fixed cost for the Inox Wind Limited? And what is -- like what kind of contribution we generate per megawatt? So I wanted to understand, like this year, we're planning 500 megawatts if we go from 500 megawatts to 1 gigawatt then what kind of operating leverage we can get?
Broadly at Inox Wind consumer level over fixed cost is around INR 130-odd crores a year. What we believe is that our O&M EBITDA would generate more than that. So in that sense, our breakeven is negative. As far as the manufacturing business is concerned, we cannot give any numbers in specific, but we are the most leaner structure in the sector and we our EBIT -- our breakeven levels are much lower than the competitors' number.
Just to add to it, broadly speaking, given what our fixed costs are what our O&M EBITDA is, it will be -- we'll be throwing up cash net of fixed costs. Of course, the caveat to that is being debt-free. Having said that, because we have interest costs but as we mentioned, over the course of the financial year, we intend to be net debt-free. Once we get there, frankly, our breakeven is going to be negative.
And sir, I also would like to know about our raw material procurement process, including the source of procurement, like what is our dependence on import and what is our -- procure domestically?
I think we have a very, very globalized supply chain. I think we have -- from an [ opposite web ] perspective, we can source virtually everything in India, but keeping in mind cost economics, supply chain, a ramp-up with such and such, I think about 30%, 35% of our products imported and about 65% is domesticated. But as I mentioned, we could potentially domesticate products up to 85%.
Okay. And sir, one, what is our current finance cost, like if our current debt is approx. INR 1,200 crores. But if I compare with finance cost, which is INR 70 crores. So I wanted to understand why the finance cost is very high if I compare to total debt?
If you see our financial presentation, it talks about the fact that the Nani Virani numbers are beyond that, we generate far more capital, EBITDA in terms of what the interest is. We have onetime charges of about INR 11 crores. So we're at about INR 50 crores and that's also because various banks have absurd charges at this point in time, which are continuously being paid down. And hence, I think over the course, we've come down from virtually INR 100 crores to INR 50 crores in 2 quarters. I think that's I mean to be fair, I think the team has [asked] phenomenal job. And I think over the next 3 quarters, this should considerably keep coming down, it will become zero.
And the last, like, is it possible for you to break down and explain how we will achieve net debt 0 in the next 12 to 15 months? Like what is our current plan?
No, I don't think we can share that. As I mentioned, we have 3 strategies. One is asset modernization. Second is strong operational cash flows. And third, we have various strategic options always available at our end. So between these 3, we should become debt-free.
[Operator Instructions] Next question comes from Amal Kotak from Tecpro Ventures LLP.
Good afternoon, my question has been answered, thank you.
[Operator Instructions] Next question comes from Mandar Sabik from S Logic Investments.
Frankly, I don't have a question. Just wanted to say that as a shareholder, I'm very happy to see the progress finally after a pain period of so many years. So last 7 or 8 years since the IPO, most of that period was spent in a negative territory like loss making. And now I hope to see that next 7 to 8 years will be highly profitable going ahead. I just wanted to say I'm very happy to see this progress finally, thank you.
Thank you, Mandar. We appreciate your feedback, your comments and your support and God willing, I think the next 10 years should be phenomenal for us.
The next question comes from Pradyumna Choudhary from JM Financial.
Congrats on turning EBITDA positive. So my first question is regarding the SECI options. So what is the amount of write-off which we had recorded in the current quarter and what would be the potential future write-off remaining balance post like -- and over how long are we anticipating these provisions to be made? That's the first question.
Actually, we've had 0 provisions in this quarter. We've had no write-off. So please get your facts right. Second, going forward, we don't see any write-offs at all. Of course, if we saw right-off we'd have provision for it, I think we've provided for virtually everything over the past 4 to 5 years.
Okay. Like this is regarding the SECI too, where we had given up around 200 megawatts. So there's no need for any provisions or write-off, right?
We have not provided anything in this quarter.
All right. And -- okay. And secondly, post the capital infusion, what kind of interest cost per quarter are we expecting maybe on the upper limit side?
No, I don't think we're going to guide for that. I think we've put out very, very clearly. We are not going to straitjacket ourselves into INR 1 crores or INR 2 crores, we are very, very clear what the larger objective is, what the volume objective is for the company. Our interest costs, as I mentioned, and I reiterate, it has come down for virtually INR 100 crores a quarter to INR 50 crores now, and they will keep declining quarter-on-quarter. We've also mentioned that over the next 12 months, we intend to be net debt-free. And I think that's large enough for shareholders and analysts to get a sense of where we are headed.
Next question comes from [ Dhimant Shah ] from ITI Mutual Funds.
Yes, 2 or 3 questions, if you can. The -- structurally, we have moved even our competitor have I believe, offering in the 3.3 megawatt machines. So can you enumerate -- recently got to hear that in China, they have already moved to 16 megawatts. Now is there a possibility of some redundancy going forward? Or you feel the market will take a reasonably long period of time before there is move towards the higher megawatt machines, number one. Number two, in terms of O&M, how will that line of income move for us -- or is it that post the 2-year warranty period, it is our sister company, which will take care of the O&M. So -- or how is the O&M kind of divided between us and our sister company, if you can just give us to understand that?
And lastly, you mentioned that the incremental CapEx required would be very low. And also the replacement of some of the older machines also throws up a reasonably strong opportunity. How is the competitive intensity overall? If you can help us understand that?
Look, I'll try and answer some of your questions, Kailash please jump in where relevant. First and foremost, with respect to 16-megawatt turbines or higher multi-megawatt turbine, from an Indian context, I think for the next several years, 3-megawatt platforms, plus/minus are going to be the main stream. Simply because we have low wind sites. The cost of energy is what is most relevant. So for example, we're launching 3.3 with 146 rotor diameters. You could be 150, you could do 160, but logistically, you cannot transport them. So for the cost of energy to decline, if I was to move to say a 5-megawatt platform, I need a rotor diameter, which would be more than 160 and that's not possible. I mean you could have 2 or 3 sites or just are shed locally for 2, 3 sites for 1, 2 gigawatts, but that's about it.
So fundamentally, I believe, for the next several years, the 3-megawatt platform will be the mainstay for the Indian market. I mean...
And there is some action -- there is -- is there a chance of the efficiency of these machines to move up as you also kind of increase the [ nasal ] height? Is that a possibility?
So I will just come -- so first and -- so with respect to the blade, that's point number one. 10 years down the line or several years down the line, you may have segmented blades, which means blades in parts, which can be joined and destruct, there have been developments to -- it's not commercially approved or commercially deployed globally. Once that happens, then potentially a big revolution would be larger blades being joined on sites in parts. But once that happens, then you can use smaller megawattage turbines, you still don't need to go higher because we put up 200-meter blade on a 2-megawatt or a 3-megawatt platform.
With respect to going higher, that's a fairly normal job. That depends on the air density. So you could go to 100, 120, 160, 200, 300. At the end of the day, it's a question of what the air density is, what the incremental generation is, this is the cost of going higher in terms of making the [indiscernible] tower. I think, broadly speaking, 120 is a range, we believe, is primarily optimum for the India market. But yes, you have certain areas where you could even go 160. So that's point number one.
Point number two in terms of our relationship with the sister company and so on and so forth, it's pretty straightforward. Whenever I'm not -- since as a combine, there's a back-to-back agreement for O&M, which is signed by Inox Wind with the customer. And barring the 2 years of 3 O&M, which is taking care of -- the warranty is taking care of my Inox naturally, the 2-year or 3 O&M services is taken care of by Inox Wind and thereafter, it has the right to make revenues for the next 18 to 25 -- years 8 to 25 years. depending on what the O&M contract period is. And that's how this relationship will keep functioning.
With respect to your third question no, I didn't talk much about repowering. We formally -- it's an opportunity, but I don't believe much in that. We've been -- various competitors may be talking about that. But globally, the repowering market is sub 150 megawatts out for 110 gigawatt ruble market. We would rather spend our energies building 500-megawatt sites, 1,000-megawatt sites as opposed to approve 20 turbines of 200 kilowatts and putting up 1 or 2 turbines. Sure, if people want to do it, we are happy to supply turbines, but that's not our focus, point number one.
With respect to the competitive intensity, look how I would answer it, the market is getting larger and larger. So there's fees for competitors. Having said that, there has been such tremendous consolidation in the past 5 years. We've seen almost 30-odd players go bust. Of the 5-odd key players who used to operate in '15, '16, '17, 2 have gone bust. Of course, we are 1 or 2 domestic players who've come back, some of us with restructuring, some of us with promoter infusion and so on and so forth. And I think keeping that in mind, I think everyone is focused on profitability. But I think what probably differentiates us is we are the highest promoter holding. We have very strong group backing. We have very strong banking relationships. And I think we have the leanest cost structure in the sector. And I think that bodes very, very well for us as we move forward.
We are running a marathon for the next 10 years. We're not doing sprint. So it's not all jumping 1 quarter or suddenly maximizing 31st March. The next 10 years, as I mentioned, possibly way beyond 10 years are a golden period for the sector. And I think we are primely positioned to be leaders profitability-wise in this sector as we keep moving forward.
Just as an associated question, so the annual size opportunity would be upwards of 10 gigawatts in your opinion?
'26 onwards yes. FY '26 onwards.
And do you think incremental market share for us will improve much more meaningfully?
We have agreements, as I mentioned. I -- historically, we've never been driven by market share. Yes, we've been 15% to 20% of the market but we've always been focused on profitability even in '15, '16, '17, while we were, say, the top 3, but we were the most profitable. So I don't think I want to be #1 and make losses or #2 and barely make money. I think what is most important for us is to be very, very profitable.
That would be the last question for the day. Now I hand over the floor to the management for closing comments.
Thank you, everybody. Thank you for your interest in the company. I would just like to thank you all for your interest in the company. It's -- it was encouraging to hear many people's comments. We appreciate everybody's feedback. I think I would also like to congratulate the management again. I think they've done a phenomenal job of weathering through the storm of these 5 years. We're very, very excited. We're very, very bullish about the opportunities. We are clapping ourselves for the next 10 years of running this marathon. And I think we've got all the building blocks. We've got the capital, we've got the banking facilities. We've got the balance sheet. We've got the technology. We've got the right mix of orders now. So I think we're very, very excited about the opportunities ahead of us, both at the Wind level and our O&M company. And I think we should keep seeing upward movements in terms of profitability, in terms of revenues quarter-on-quarter as we keep moving forward. Thank you and look forward to chatting with you guys in the next quarter. Thanks.
Thanks everyone.
Ladies and gentlemen, this concludes the conference for today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now. Thank you, and have a good day.