Inox Wind Ltd
NSE:INOXWIND
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Inox Wind Ltd
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Good day, ladies and gentlemen, and a very warm welcome to the Inox Wind Limited Q2 FY '19 Earnings Conference Call hosted by Axis Capital. [Operator Instructions]Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit Shah from Axis Capital. Thank you, and over to you, sir.
Thank you, Ali. Good evening, everyone. On behalf of Axis Capital, I would like to welcome all of you to the Q2 FY '19 earnings call of our Inox Wind Limited. We have with us the management represented by Mr. Devansh Jain, Executive Director of Inox Wind and Mr. Jitendra Mohananey, Chief Financial Officer. We'll start with a brief presentation from the management post which we'll open the floor for Q&A. Now I would like to hand over the call to Mr. Jain for his opening remarks. Over to you, sir.
Yes. So good evening, everyone. I'm Jitendra Mohananey and I'll take you through the presentation. So first of all, I welcome the participants of this evening's call, the Board of Directors of Inox Wind Limited has approved Q2 FY '19 results in their meeting, which has recently concluded. I trust you would have had an opportunity to go through the results. Just to give you an overall perspective of the quarter gone by, Inox Wind has continued to be profitable in the 2nd consecutive quarter after a year long gap on the back of ongoing SECI-1 executions.The company is back -- the company is back to normalized operations and is ramping up execution each quarter. In terms of financial results, we ended the quarter, which is quarter 2 with a revenue of INR 437 crores as compared to INR 80 crores in the previous year for the same quarter.We have returned to EBITDA profitability with EBITDA of INR 58 crores as compared to an EBITDA loss of INR 13 crores in the previous year of the same quarter. We had a PAT of INR 2 crores as compared to a PAT loss of INR 46 crores in the same quarter of the last year.Inox Wind continues to be profitable during the quarter on the back of ongoing delivery of our SECI-1 orders. This is the second quarter of profitability post a turbulent FY18, which was affected due to transition to an auction regime in the wind sector. Coming to the operational highlights, we have continued operations across of our manufacturing facilities in Gujarat, Himachal Pradesh and Madhya Pradesh. We delivered 90 megawatts and commissioned 16 megawatts during the quarter. On the balance sheet front, I would like to bring to your notice, Slides #8 and #9 of the presentation, which give details of our quarters on balance sheet improvement during the quarter and the past couple of quarters before that. Now during quarter 2, inventory stabilizes on the back of continued SECI execution where we've moved to efficient working capital cycle under the auctioning regime. This is demonstrated by the fact that working capital level remains the same even during the ramping up of the operations. The net debt to equity. The ratio remains at a healthy 0.36x versus 0.49x in Q2 FY18. The closing net receivable number is optically higher, but it includes the quarterly sale of INR 437 crores as well as significant portion of quarter one revenues. At the end of Q2 FY 2019 in terms of working capital inventory excluded INR 764 crores, net receivables at INR 1,305 crores, stable at INR 838 crores and others are above INR 52 crores. This translates into a net working capital of INR 1,179 crores as well as -- as the execution picks up pace in the coming quarter we expect the inventory levels to be stabilized. We also expect working capital levels to ease going forward -- sorry, stabilize further on the back of better coordinated production, inventory planning and execution of wind service. 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 as of September 30, 2018, for installation of more than 5000 megawatts. This almost 9 gigawatts of auctions conducted in past 12 months and various auctions lined up over the next few months. There is a very strong visibility on order of inflows for the Indian wind power sector. This, coupled with winter being lower than thermal prices, we expect the sector to see a robust sustainable growth going forward. So that is the broad overview of our operational and financial performance and how we see the sector going forward. I have, along with our Executive Director, Mr. Devansh Jain, and we are open to take questions now. Thank you. You might start the question and answer session now.
[Operator Instructions] The first question is from the line of Mohit Kumar from IDFC Securities.
Sir, a couple of questions. First is on, sir, you've executed near around 170 megawatts in first half. Given the [ COGS, ] you've started with an order book of 950 megawatts. How do you see H2 FY '19 panning out, can we see -- slightly higher volume execution,[ basically ] FY '19, especially of SECI-1 and SECI-2 orders?
Well, we certainly would look forward to a stronger execution in Q2. I think one of the factors which have to be kept in mind is that we're also executing in sync with the readiness of the central grid. So while you have a connectivity in place, the central grid has to be ready for us to connect with [ providing ] we keep directing and executing to the central grid for us to be able to commission them. And naturally what has been happening is the customers have delayed, our ability to supply these turbines also to a certain extent simply because nobody wanted to incur interest during construction for turbines which should have been supplied or erected if the central grid was not ready. As the central grid is now picking up pace and so is our common infrastructure, we will be ramping up supplies and commissioning as we move forward. So you'll have a bunching up of the commissioning, which will happen towards year-end or beginning of the new calendar year depending on when the central grid connectivity would be ready. We would see certainly far more stronger execution as we move forward over Q3 and Q4. But from a manufacturing perspective, I think to a great extent, while we have limited quantity for SECI-1 now, which we will supply over Q3 -- over Q4, is when we'll start supplying more quantities towards SECI-2. To some extent it's also driven by the fact that the central grid, as I mentioned the central grid connectivity needs to be in place.
Is it possible to guide some number, if possible to execute 500 megawatts in the entire year?
I think Mohit, you don't need very forward-looking statement, But I think what we've maintained in the past, I think it's surely, very rational to assume SECI-1 will be completed and a significant part of SECI-2 should be completed over the course of this financial year.
Okay. And second, similarly on this auction. Secondly, in the guidance of 10 gigawatt of [ auctions ], supposed to be done in FY '19. You're already in October now, and we have done near 1.2 gigawatts. How do you see -- how much quantity do you think you'd be able to do in the balance of the year?
No, Mohit. I'm getting worried, I'm not sure, where this number came in from. We've never guided or we never said that --
It is the Government of India guided us.
No. See, what the Government of India is guiding for 10 gigawatt of auctions per annum, please get that right. The implementation period is 18 to 21 months for this [ period ]. So what you auction is -- so we've got about 9 gigawatts of auctions done in the sector so far. You'll see implementation of this over the next 12 to 18 months.
We do understand, but to be sure that the -- when the, I think by the [ 1.5 years ] I think somewhere in September-October [ 2018 ] the government has given the guidance that they will do 10 gigawatts, each of auction in FY '19, FY '20 so that we achieve 50 gigawatt by end of FY '22, which is their target.
Mohit, I think there are 2 parts. One is the Government of India guidance of auctions per annum. And that is, so for example, if we look at it broadly, we've done about 9 gigawatts in the past 12 months. Now, whether it's 9 or 10 it's not that big a difference, number one. Number two, we're not saying that this execution of this auction will happen at the same pace. Execution timelines for this are 18 to 21 months. Please keep in mind, what they guided also for this year, the government was guiding for 3 to 4 gigawatts. What Inox Wind maintained in the market was, we believe it will be closer to 3 gigawatts. Simply because while we have the connectivity for SECI-1 and 2, first and foremost the central grid needs to be ready. We did build our substation and transmission lines, but if the physical grid and substation will be ready only in December or January. What do you do? You can't erect all the turbines and keep line, none of the IP group -- IPPs will pay us and incur interest during construction, number one. Number two, those who don't have connectivity yet, who are going to be given connectivity in the next financial year, are obviously not going to start supplying and erecting turbines from today. because the cost of doing that and the interest which will be incurred that during period is tremendous and IPPs are always trying to minimize this expense. So what you're going to see is this 9 to 10 gigawatts which has been auctioned in the past 12 months play out over FY '19 and FY '20. The auctions, which will take place going forward will be implemented over there in '21. We're at about 40 -- the industry is at about 38 gigawatts today, right? What do we have, we have the whole of FY '19 -- the half of FY '19, '20, '21, '22. So it's 3.5 years. If you put 3.5 years, and you add 18 months to already what is being done, 10 gigawatts and add another 10 gigawatts in 18 months, doing 60 gigawatts by 2022, it's a fairly -- comfortably achievable goal.
So have you heard anything on the SECI-6?
Again, Mohit, I think you are jumping -- this is not a casino or a slot machine, which every month you put in a coin and you win a lottery. We've already got 9 gigawatts of tenders done, in fact 9.95 to be precise in the past 15 months. We need to execute those -- the infrastructure for that needs to be increased. There's no point SECI-6, 7, 8, 9, 10 continuously happening whereas any connectivity not keeping pace with that, number one. Number two, the government has already announced the 2.5 gigawatts, wind, solar hybrids in the public domain which kind of got delayed because [ of connected people ] as well as connectivity in place. The central grid needs to catch up with that. There's another with Gujarat 1 gigawatt tender coming now. There's another NTPC tender coming out, 14-15 megawatts. So I think the order inflow and visibility is very strong in the sector. But yet, the grid needs to catch -- if we catch up pace, which is now happening. Of course, there's a lag between auctions and transition period and the grid infrastructure is ready. I think SECI-5, 6, 7 is honestly not a point of concern now. Please do keep in mind that the tariffs have become so competitive today. They are lower than thermal cost of power, 2.6, 2.7, 2.8, 2.5, that all the states are more than willing to come in and close to buy this power.
Next question is from the line of Vinod Chandra Agarwa, an individual investor.
My question was on the follow-up for that [indiscernible] discussing that, the central grid line. So is that -- the central grid line is now in [ sector ] which only support the SECI-1, or is it they are implementing to support the SECI-1, 2, 3 and 4, all the, [ let's say that ] around December, January, if it will be ready? So will it be ready only for SECI-1? Or will it be ready for SECI-1, 2 and more also?
I think what I can answer is that what is being ready at this point in time is the central grid, which we would be connecting on SECI-1 and 2 too. I can't answer before other people who have connectivity there because I am not privy to that information. But yes, from our perspective SECI-1 and 2 would be connected to this transmission line, which should be ready probably in January. And then we will plug and play all the turbines, which we'll keep erecting and supplying on to the central grid.
The next question comes from the line of Raj Sha, an individual investor.
So, sir, your -- our margins are too low, any comments on that?
It's a very subjective point to raise. I think if you look at FY '17 when people were on negative margins, of course this [ comes ] positive, if you look at Q2 numbers our EBITDA margins are [ 12.1% ]. And if you look at our H1 result, that will be our EBITDA margins are extremely healthy, at 14%. I mean, probably -- these are probably the highest EBITDA margins in the entire sector globally. So I'm not sure, where you've come back with a statement that our margins are too low.
Okay, okay. How about employees getting suicide in - at your Himachal plant? So any updates on that?
We are not aware of these things.
The next question is from the line of Sourav Kumar Singh, an individual investor.
Hi, Devansh. Nice to see you recently on TV. And so we're all really excited about wind power and big money is coming in. Warren Buffet has invested, and Google has bought Makani Power. And with all this money coming and there's lot of technological development. And these companies like, Makani were – they're now funded by Google. They've got very good ability to hire and retain good employees. Lot of technological development means we need very good employee. So how well are we placed in attracting talent and retaining them? Also, we don't think you have much of social media presence. Almost all big companies, they have a big social media team, because a lot of investors who are investing in the stock, they are foreigners, FPIs, they do a lot of research on social media. They're looking to all these things. So one is about how well -- how good is our HR policy to attract and retain employees?The second thing is, research and development, how focused are we on that? And the third, can you come up with a small team that even 1 or 2 people to create a social media presence?
Oh, we appreciate your feedback. I think we will certainly work towards improving our presence on social media. I think that's something which we honestly would have focused -- we kind of our marketing team and our PR time would have done that, but I think over the past 15 months, with the sector shutdown, honestly there was nothing much to look forward to or talk about. But as the sector revives and gets back, we will certainly increase our presence in that. Coming to technology and our team, I think we were at the forefront of launching the double fed induction generator in this country. In fact, it would [ have been ] the first double fed induction generator which was launched in the country then others followed. I think, even at this point in time, over this quarter, the quarter gone by, [ 30th of September ] we've actually done a lot of work and readied ourselves and are virtually on the cusp of launching the next generation multi-megawatt wind turbine platform, which will probably be the largest wind turbine in the Indian market. And again, again, again, whilst this is probably at the lowest cost of electricity per unit generated from an Indian market perspective. So I think we are cognizant of the fact that we need to keep pace with technology. We've always done that and I think we are virtually at the cusp of launching a revolution in the market, number one.Number two, with respect to employees and the team which we maintain, to be honest, I think the entire top team of Inox Wind is, I would say about 75% to 80% of the top team of Inox Wind has been with us virtually since inception of this organization. I think they're all driven and motivated by the fact that in a span of 5 years, we went on to become the top 3 wind turbine companies in this country from 0. We had one of the most successful IPOs of all time. And then of course, there has been a very painful period of transition over the past 15 months, but we've come out stronger. We've survived. We've seen a lot of companies fold up, a lot of companies go bankrupt. Yes, we've had our fair share of problems in these 15 months. But we are now standing strong and I think with every passing quarter, we should only become stronger. As we get stronger, I think the employees also feel proud, motivated and obviously they get their fair share of returns.
Thank you so much for the positivity, again please keep in mind, that wind power, as investors we are looking to invest money in wind power, maybe in the long run. No one's expecting a lot of profits immediately, like e-commerce. So there are lot of companies who can create good value for shareholders even if they are not making profit. So we should not be so focused actually always about -- I mean people are calling in. I've seen analysts talk always about profitability, but I think we need to build a foundation for long-term success, and you're doing that well. So in many aspects you're doing that well, let's please keep up the focus and let's make this a huge company in the years to come.
Thank you for the encouragement. We will do that, absolutely.
[Operator Instructions] The next question is from the line of Manish Kamakia, an individual investor.
I would like to know, is this connectivity grid issue, of a particular state or how is this --
Well, honestly, all the wind projects presently under auctions, under the central auctions are virtually being implemented only in Gujarat and Tamil Nadu. So it's -- what I think most people who wants SECI-3, 4 onwards, don't have the connectivity been allotted to them or have the connectivity now allotted to them for which the connectivity is being constructed and would be ready some time middle of next year. What we are implementing on the SECI-1 and 2, is something where we already have connectivity, but the transmission line and substation for the field will be ready probably in January, that's what we meant.
Yes. And you have one 200 megawatt in SECI-3 and 100 megawatt in SECI-4? Well, how is the connectivity issue over there?
Well, we would be using same connectivity to be honest. So we have 1, 2, 3 and 4. We have connectivity allotment for the same, so I think we would be implementing it on the similar -- on the existing substation and transmission line, which will be built. We'd like to build a smaller transmission line for the same as we move forward, but that's very far away. Both SECI-1 and 2 execution we'll build another transmission line to connect it to the central grid.
Will we get an extension in case this connectivity is not there, if you have already [ 113 now ] ?
Well, I think the stock of what's happening in SECI-1 so a couple of - a few of the winners of SECI-1, who were not given connectivity have been given extensions. Some of the other players in SECI-1, there, for example, even in our case where the connectivity itself is not ready, the grid is not ready by the central grid. I think the government is cognizant of the fact, and we expect that everybody will be given an extension.
And 600 megawatts, where we are expecting advanced stage of closures. So there also -- what about the connectivity issues there -- issues are there? Or do you think that only once the connectivity is there these order will be finalized?
No. This connectivity is being readied by middle of next year, as we said. And these are for implementation over the next financial year. So we have enough time. The connectivity would be well in place for that. While they have the connectivity but now the infrastructure is not in place. So the infrastructure is being readied towards the middle of next year. And these would be implemented from next financial year. The 600 megawatts is also implementation in the financial year.
The next question is from the line of Chetan Gandhi from Dundee Securities.
Are we kind of fully tied up with SECI-3 and SECI-4?
It's a – well, the answer would be a yes and a no. In fact we will take this question offline. There are certain strategic things we are doing. But yes, I mean, with the new technology, which we are launching the multi-megawatts turbine, which is virtually on the cusp of launch, I think, there is 3 and 4 out of the way, not a rocket science. So what we've done at this point in time is 1 and 2, which we're implementing because 3 onwards, we have the flexibility to use products, which are new in the market. Under 1 and 2 what was the norm was we had to use products, which already existed under the RLMM. There's something called RLMM, where you've got certain wind turbine models. But for 3 onwards, you can bring in new products. So while we have access to being able to use it under 1 and 2, but I think the tariffs and the product, [ 2 megawatts ] at that point in time will not make too much sense. So we'll be using our new multi-megawatt turbines for SECI-3 and 4.
So do you think we'll get those certification in that -- or if the process will be over by that time?
Oh, well in time, well in time. For SECI-4 the deadlines are ahead of March 2020 and for the SECI-3, the deadline is some time around November 2019. We're looking at doing it even -- much earlier, fairly early of calendar year 2019.
So we have around INR 1000 crores of borrowings and the interest cost around INR 40 crore per annum -- I mean per quarter. Last two quarters we have paid almost INR 70 crores to INR 80 crores. I have failed to understand how much -- why so much high interest?
I think there are 3 parts to it. I think one, our overall interest cost would be at about 10% to 11%. I think what's happening is the resurrection of the sector, we've been paying banks a lot of these onetime charges for the enhancement of limits and for the restoration of limits, number one. Number two, we've got generally worldwide financing float for it. [indiscernible]
Yes, some Forex charges are also [ committed ] in financial charges. So precisely because of that the financial costs have gone up. But it came in line with previous quarter. But going forward, we expect that this will further get rationalized and we expect we'll have hand over to [ reduced ].
So next half, you think will -- it could be between 11% to 12%?
11% to 12% of?
Total.
Of total loans. If you look at it from a net debt position, our net debt is about INR 718-odd-crores, this is in the presentation as well. So to that extent, obviously the increased cost has to continuously go down. I think what has happened is over the past 15 months -- because virtually all the banks withdrew from the sector as well as Inox Wind, and so on and so forth. I think it kind of getting back banks into the system, getting back banks back into the wind sector, another task which we've spent a lot of time on over the past 6 months. And I feel happy to inform that a lot of our banks have now started supporting us. We've got a lot of our limits back in place. I think banks will realize and there was a very painful transition period. And I think given what was happening in the country and large economies, banks were getting scared and kind of pulling out from any sector, which showed the least -- with the slightest sign of pressure. I think given the fact that both -- with our Q1 results, the company has turned around and our execution is back, and we've continued in Q2 and obviously this keeps increasing and our order book is -- there's a fairly strong order book visibility. I think the banks are now gradually getting comfort and coming back again and again. So I think in due course of time, these onetime charges will come down to great extent. And obviously, as we keep reducing our net debt, this would naturally come down. I'm sure you would have noticed that over the past 5 to 6 quarters, we reduced our borrowings by almost INR 400-odd-crores. So, even in this painful period our net debt has been continuously coming down.
Right. And your thought on rupee depreciation, I mean how much will be impacted by us -- to us?
Well, I think going forward, again to the extent that there is a committed price and committed plan of -- committed agreements in place for this financial year, there's nothing we can do. We can't pass on anything. And obviously to some extent there has been such a tremendous [ decline ] in Europe that there will be some impact on us, which is reflected in our -- if you look at from an EBITDA perspective, you can see that there is a INR 7 crore to INR 8 crore impact due to the fall of solar this quarter. But going forward, I think there is no rush. I think business are also realizing what's happening on street pricing, what's happening on dollar, what's happening on euro. Manufacturers who have to get rid of old inventory have to kind of – have [indiscernible] of assets. That's done and over with. None of the manufacturers can now make turbines to lose money. I mean, you can lose money on old inventories. So in forward SECI-1 and 2 to a great extent, while we had a fairly profitable sales in SECI-1 and 2. Most of the other manufacturers were [ choosing ] dumping and when just to survive and get rid of old assets. Going forward, all the new [indiscernible] which are being produced, while we have more efficient turbines, nobody is manufacturing turbines at marginal cost on not to make money and you might as well not produce anything. And that's also reflected and there has been a visible more [indiscernible] in terms of [indiscernible]. We now see tariffs closer to about [ 2.75 to 2.77 ]. And as we move forward, maybe tariff will reflect the [indiscernible] grade 1 [indiscernible] kind of diminished [indiscernible] tariffs will reflect that it includes [ dollar euro will depreciate ]. That would reflect that. What we could do as a company is hedged that. So we've got a fair amount worldwide. We can localize and domesticate most of our supply chain. There are certain components which have to be reported, both for quality reasons as well as competitive reasons. And in fact, we've got a mix of borrowings, so we've got a mix of dollar, we've got a mix of euro, and we've got a mix of yuan . I think that kind of -- that thing that we could do to hedge our exposure on that front. But yes, I think that would have a tremendous decline into dollar euro, there is bound to be some impact on us and that is kind of reflected in our Q2 numbers.
And when can we hear for new technology announcement? Next half or next year?
Well, I think we -- I think we are on the cusp of launching our next-generation multi-megawatts wind turbine, and I'm hopeful that in the next few weeks, you'll be getting them back.
[Operator Instructions] The next question is from the line of Vipul Shah, an individual investor.
So your working capital -- net working capital has stabilized from March onwards. So if you're around INR 1,200 crores, so can we expect any further reduction in this?
Well, I think to some extent, as we said as we increase our execution for SECI and that's also keeping in mind that we have to keep it in sync with the readiness of the central grid. Otherwise, IPPs are not willing to get supply [indiscernible] construction. I think going forward, what we're going to look at in terms of inventory levels, inventory levels stabilizing to some extent given that the fact that a lot of old inventories continue to [ reconvene ]. With respect to our old receivables, we continue to collect a lot of the old receivables, but with more and more sectoral grid readiness and our common infrastructure being ready. I think the connection of the new supplies will be much faster. There's a very [indiscernible] and you keep connecting to the central grid then people are obliged to pay. Otherwise to some extent, everybody wants to delay acceptances, dispatching and so on and so forth to save interest. But I think from an overall perspective, we will continue to see further improvement in net working capital. Having said that, please do keep in mind as sales ramp up, as actual sales ramp up, our absolute net working capital will be a function of that. So from a percentage point of view, yes, we will continue to see more improvement as we move forward.
So next, what should be our quarterly run rate for maintenance income or [indiscernible]?
We're about, I think going forward from that quarter we should get approximately IND 20 crores but that's something maybe we can work out the number and share with you offline.
Approximately, you said, sir, INR 20 crores?
[indiscernible] this quarter. We could keep increasing as we move forward as more and more of the [ fleet ] gets off the [indiscernible] in Q1 and Q2.
And lastly, sir, what is the import going to increase percentage terms as far as the raw material goes?
Well, in terms of sales price, our imports would be at about, I would say 23%. In terms of sales price, imports would be at about 23%.
23%?
Yes.
So in both currencies? Dollar or…?
Only in euro and yuan [indiscernible].
So we must have some loss on product so can you quantify...
That's reflected in the quarter.
So what would be the products [ loss ]?
[indiscernible] of about INR 89 crores in this quarter.
You elaborated that we are about bank charges over and above this interest cost so what should be the bank charges?
Bank charges around INR 39 crores.
Yes, INR 39 crores includes your Forex, bank charges and interest, right?
So it's all-inclusive. So in case you need a breakup then certainly you can e-mail us.
E-mail to whom sir?
If you see the presentation, it's the last -- the e-mail ID is given. I think it's investor section. You can e-mail your query. We'll be happy to address it that way.
And lastly, sir, what we're paying for technology in terms of the percentage of sales we are paying or any lump sum amount? Or how it works?
Well, I think, at this point in time there's, I think, the 2-megawatt product which is -- about under the royalty on a [indiscernible] certain number of turbines which is also being finished. For the existing platform, there's no technology fee. So, as we move forward, with respect to the new technology platform which we are on the cusp of launching, we will discuss it at that point in time. It will be similar to our -- some kind of [indiscernible] already --
Next question is from the line of [indiscernible] from GHP Securities.
Sorry, want to know about the hedging policy. What quarter of our inputs are hedged in terms of dollars, euro and yuan?
Overall point in time continues, in the parts, we used to maintain [ 60% ] hedging policy that as soon as the foreign exchange just increased, we have 50% in point and time simply because it could go either side and we have seen this over the past 7 or 8 years. [ 50% ] policy kind of works both ways. Kind of -- it means you have losses but on an overall basis, Inox Wind [indiscernible]. I think for the only recently in these common production figures very insignificant amount of foreign exposure at this point in time. But yes, I agree [ it went up ]. We will look at -- we will relook at our hedging policy whether we need to increase it from 23% given the [indiscernible] we've seen on Forex side in the past 6 months and whether you kicked off 50% hedging policy.
Okay, sir, that's it. And other expenses is expensive significant right and other expenses you can provide on the [indiscernible] and explanation for the same?
Just give us one second.
Yes.
I think there are 2 parts to it. I think the increase in our expenses, one is a certain amount [indiscernible] which we have picked up. [indiscernible]. So to that extent, expenses has come in for that. And I think the other chunk of royalty, past royalty payments paid out in this quarter. I think that is approximate [indiscernible] so that would be an 8 to 10 figure..
Sorry, sir, I couldn't get you. The [indiscernible] expenses you put in here?
No, no, no. The royalty and charges put together is about 8 to 10 figure.
Okay. Okay, sir. And so the 4 megawatts you mentioned, will be around what sir? Because I don't know how to calculate...
On some people turbine costs [ 6 megawatts ], for example. About 75% of that is in supply, about 25% is commission of the turbine. So to that extent, you will not be able to see those commissioning revenues because we recognize commissioning revenues only – I mean, we recognize on top of the EPC revenues only once commissioning it done. So otherwise on a typical after [ INR 6.5 crores to INR 6 crores ] turbine you see about [ INR 4.5 crores ] of revenues But yes, mainly [indiscernible] INR 6.4 crores [indiscernible] turbine.
Next question is a follow-up from the line of Chetan Gandhi from Dundee Securities.
How much you've received money which were pending more than 365 days in the first half?
During the first half? This is about INR 250 crores to INR 300 crores.
So out of INR 500 crores, around INR 300 crores [indiscernible]?
No. Hold on one second. What we have at this point in time, is I think Q2 to Q3, were included in the significant part of our [ Q1 ] [indiscernible] we recommend about INR 150 crores to INR 200 crores [indiscernible]. But do keep in mind, that we still have all turbine we should be continuously completed, we now consuming whatever was left, [ 200 megawatts ] when we had 200 megawatts we consume and then the consumer another 50 megawatts. We're down to about 100 megawatts of inventory, which is being consumed under the SECI projects, so we still otherwise getting recovered over Q3 and Q4.
Next question is from the line of [indiscernible] from [indiscernible].
Just a clarification. You mentioned about are there any [indiscernible] [ INR 20-odd crores ] around INR 160 crores. So you already have run rate of more than INR 40 crores for the quarter.
That's in Q4 [indiscernible] collection of about [indiscernible]. I think we can answer this offline. That's under [indiscernible] straight-lining policy. Otherwise, [indiscernible] about 20-odd crores.
[ Conditioning there? ]
Correct.
Okay, understood. And then second question [indiscernible] in the research. [indiscernible] What should be I mean, if you can give numbers for number there? Or what's the amount of auction we can have in FY '19?
Well, I think the government is talking about doing 10 gigawatts per annum. And as we see it, the past 15 months, we conducted about 9.9 gigawatts of auction. In terms of visibility, there's already a 2.5 gigawatt hybrid out there. So you can see 1.2 wind in there. There's another SECI of about 1.2 out there, which is around 2.4. There's about [ 1000 megawatts ] with the right option which is coming at 3.4. And I would assume if there is one auction comes up in the next few months, and that will be close to 4.5 to 5 gigawatt in your end. So in that sense, if you look at it from an 18 months period, that will be close to 15 gigawatts in 18 months. One fact [indiscernible] 10 gigawatts run rate. But having said that even if the market is at 5 to 7 gigawatts market per annum it is huge. I mean, there is enough for 3 or 4 large grid to kind of do [indiscernible].
[Operator Instructions] The next question is from the line of [indiscernible] an individual investor.
I have a question with regards to our new platform which is coming to like next year about 2 megawatts. So our current [indiscernible] change [indiscernible] megawatts. The target is 800 or [indiscernible] megawatt platform. So is it safe to assume that our manufacturing capital to be increased up to 2,200 megawatts?
Again, I cannot talk about the new technology. Once we announce it. But having said that, it's 3 parts to the grid [indiscernible] whether you have a 2 megawatt product or a 3 megawatt product or a 4 megawatt product, it's about how many [ parts ] you can assemble. Of the turbine and more complex, the problem is it's a little bit more of an assembly time, so to that extent what has increased, it will also decrease to some extent because of more complex SECI. So let's assume 3 megawatts maybe instead of 2,400 it could be 2,000 megawatts per annum manufacturing capacity. So I don't think that will come in the way of us being ready to take market share. But as we've said in the past as well, during the absolute market share. I think [ 700,000, 800,000, 900,000 megawatts ] is a very large sum to execute, it's a very large top line and a fairly large and significant auction profitability. We are not a company, which is driven by the 15%, 20%, 30%, 40% market share. No, we don't want that. We are only driven by profitability, which can be achieved in a fairly smooth manner without treating too many others. Because once again, this is not the turbine manufacturing business because of the end of the day depending on line connectivity. I mean, I can tell you today, I can do 3 gigawatts per annum. I can do more factory. I only told me the [indiscernible] turbine, and that's not how the engine market works. We need to take care of grid, lag, connectivity and lots of infrastructure issues. And I think the 700, 800, 900 gigawatt number a fairly large number. It will be too, very significant top line and profitability.
I see there are no further questions. I now hand the conference over to Mr. Ankit Shah for closing comments.
Yes. Thank you. On behalf of Axis Capital, I would like to thank the management for giving us an opportunity to host this call and also to all the participants for joining the call. Sir, would you like to make any closing remarks?
Sure. We thank everybody for being a part of this investor call. And we would like to wish everybody a very happy Diwali. I think the July, September quarter just to sum up a couple of key statements. I think the July to September quarter has been affecting consecutive quarter of profitability. After the very painful transition period of the past 15 to 18 months where we've seen a lot of players exit the sector as well as a lot of people virtually close down. We've had our fair share of problems over these 15 months, but I think we've progressively strengthened our position and are much stronger and I think with our ongoing supplies and execution of the SECI projects [indiscernible] as we keep going forward, I think the company will grow from strength to strength. We expect to continue to see more benefits of the auction and then flowing into our financials, which would reflect in fairly more efficient working capital parameters in terms of percentage as well as increasing profitability as we move forward. I think there's a fairly large chunk of auctions, which have been conducted over the past 12 months and have a very healthy pipeline visible. So, there's very strong visibility for [indiscernible] Indian wind power sector. A case in point also, we are in advanced discussion for a very significant number of additional orders, which I think if fruitful will add to us fairly significant order book at this point in time. What we've also done over this quarter as execution was still slowly ramping up, we've readied and focused a lot on our next-generation multi-megawatts wind turbine, which we expect to launch and announce in the next few weeks, which I think will be a very, very significant win for the Indian market. I think with that, we will sign off, and we look forward to catching up with all our investors in the next quarter. Once again, a very happy Diwali to all of you. Thank you.
Ladies and gentlemen, on behalf of Axis Capital, that concludes this conference call for today. Thank you for joining us, and you may now disconnect your lines.