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Power Mech Projects Ltd
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Ladies and gentlemen, good day, and welcome to the Q3 FY '23 Earnings Conference Call of Power Mech Projects Limited, hosted by Nirmal Bang Institutional Equities. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Prasheel Gandhi from Nirmal Bang Institutional Equities. Thank you, and over to you, sir.
Thanks and good afternoon everyone. Nirmal Bang Institutional Equities welcomes you all to 3Q FY '23 Earnings Conference Call from Power Mech Projects.
On the onset of the call, I would like to thank the management team for giving us the opportunity to hold the call. Today from the management team, we have Mr. S.K. Ramaiah, Director, Business Development; and Mr. Jami Satish, CFO. I would now like to hand over the call to management for opening remarks, post which we can take questions from the participants. Thank you, and over to you, sir.
Yes, yes. Thank you. Good afternoon, friends. This is Satish here. and I have with me Mr. SK Ramaiah, Director, Business Development. I welcome you all to the earnings call quarter 3 and 9 months FY '22 and '23. The performance for quarter 3 and 9 months for this financial year continued at set targets for the entire year. The reported total income for quarter 3 is around INR 912 crores. Again this is all-time high in terms of execution for Power Mech in its journey during quarter 3 of any financial year.
The EBITDA is around INR 106 crores, and the PAT is INR 51 crores. During quarter 3 of previous financial year, the reported total income was INR 650 crores. EBITDA was INR 72 crores and PAT was INR 33 crores. On a year-on-year basis, total income has shown a growth of almost 40%. With the growth of revenue, the growth in EBITDA is around 47% and growth in PAT is almost 54%. The revenue mix for quarter 3, which is as follows. Erection business contributed almost INR 144 crores. Cable business, including railway, water projects, it's around INR 492 crores. Operational maintenance, both the domestic and international put together is INR 260 crores. Electrical business is around INR 12 crores and other income close to INR 3 crores. During quarter 3 of last financial year, the same numbers were like Erection business contributed INR 127 crores. Civil business around INR 268 crores, operational maintenance INR 226 crores, electrical business INR 25 crores and other income, it was around INR 4 crores.
During quarter 3 of FY '23, domestic business has contributed almost like 89% and the balance 11% has come from the international market. Similarly, power sector has contributed 55% and non-power sector, it's almost like 45%. There is a mix for FY -- quarter 3 FY '23. We have seen growth across all the segments, except the electrical business. In Electrical business, the company is very much selective in its approach and not intending to expand its space in Electrical business. O&M business has grown by almost 15%, and it has contributed 29% of the total revenue for this quarter. Similarly, the total reported income for 9 months FY '23 stands at INR 2,435 crores. And for 9 months, the EBITDA is close to INR 281 crores and PAT is INR 134 crores. Whereas during 9 months of last financial year, the reported total income was INR 1,822 crores. EBITDA was INR 206 crores, PAT was INR 91 crores.
On a year-on-year basis, for the 9 months, we have seen a growth of almost 35% in revenue and with the growth of revenue, the growth in EBITDA is almost 36% and PAT has grown by almost 47%. And the dividend mix for 9 months is as follows. Erection business contributed INR 458 crores; civil business, including railway and water projects, it's around INR 1,235 crores, operational and maintenance INR 682 crores, electrical business INR 52 crores and other income, it's around INR 8 crores. Whereas during 9 months of last financial year, Erection business has contributed INR 370 crores. Civil business is around INR 775 crores; operation and maintenance INR 587 crores; electrical business, it was around INR 76 crores and other income, it was around INR 15 crores.
And the mix between international and domestic -- the domestic business has contributed 86% during 9 months FY '23, and the rest have come from water business, it's around 14%. And the mix between power and non-power business stands at 59% and 41% during the 9 months of the financial year. The company has always been conservative in its approach since its inception. And therefore, while building its business plan takes all suitable steps to retain the plan under control. In addition to the plan for sustained growth, the company's focus will also continue on cash flow and margin improvement. We are seeing the profile -- margin profile improving gradually, maybe by FY '25, we are expecting to reach to our earlier reported margin profile and move thereafter with some gradual improvement. This is mainly on account of the initiatives, what we have taken since the last few years.
Moreover, we are very happy to see our execution cycle improving each quarter-on-quarter. The company has set a strong bid in terms of resources, equipment, strong manpower base, leadership skill, both at senior level and middle and junior level engineering skill ETC to execute projects in the range of INR 400 crores to INR 450 crores per month, which is encouraging. If you see like a few years back, our execution range used to be around INR 400 crores to INR 450 crores plus in a quarter, but now the same level of execution is going to be done in a month. This was the transformation of the company that has been done to -- for sustained growth.
All the existing projects are on track and moving as per the schedule. The execution plan for the year and for the next financial year, remans on track, and we do not see or anticipate any changes in our business plan. Similarly seeing the present opportunity side, the order book target for the current and next financial year looks to be comfortable. Each month, the business development team review is done based upon changes to see that the overall target of the company is intact. The company is also expecting good amount of order booking and execution cycle at international market. The team is strengthened even at international market, especially, we are expecting good amount of addition in the operational maintenance for the Nigeria market.
Moreover, the company has set a strong risk management policy and team to review each project progress and identify associated risks, which is helping us to proactively mitigate at early stage for any associated risk if any. The initiative that the company has taken few years back is helping now for a sustainable growth across vertical.
Coming to the next line item. Depreciation as a percentage remained on lower side. As we have said -- even stated in the last call, because of controlled CapEx, this line item is kept more or less flat. Cumulative finance cost as an absolute number remain controlled. There has been some increase in the nonfund utilization because of the order book increase and execution cycle improvement. Now this as a percentage, we are expecting it to come down further. The overall working capital cycle is improving for the period due to change in the customer as well as the business mix. The net current debt, excluding cash and cash equivalents, it's ranging in the range of 145 to 146 days during the period. And as stated earlier, this is expected to improve further. As you all know, like this used to be 153 days 31st March 2022 and 205 days 31st March 2021. So there has been significant improvement in the working capital cycle.
Moreover the operating cash flow, we have seen positive, it's around INR 45 crores plus during the period. And more importantly, we are seeing that the average monthly collection improving each month, which used to be INR 300 to -- which used to be INR 250 crores to INR 300 crores. Now it has gone almost like INR 300 crores to INR 350 crores plus. And we are expecting this to go up again to INR 400 crores to INR 450 crores per month with the growth of the business. And coming to the debt line item, the gross debt, it stands around INR 535 crores, and the net debt is almost like INR 336 crores, whereas FY '22, it was INR 527 crores and the net debt was INR 320 crores. So in spite of the growth in business execution cycle and all, this number, we have kept flat. And we are working to bring it down. So this shows the improvement in the working capital and the cash flow.
Coming to the order book. The backlog as of 31st December 2022, it stands around INR 24,200 crores. And the plan we have set close to INR 10,000 crores for this year. We are trying to move towards that line item. We have done so far INR 8,500 crores. Apart from that, we have projects which are L1, close to INR 970 crores. So we are comfortable to reach to the closer number, the target what we have set for this year.
Now I request Mr. SK Ramaiah to say few more developments before we get into question-and-answer session.
Ramaiah here. Good afternoon to everybody. Thanks, Satish, for your update on the various numbers. I think we continue to be bullish on our approach in the new opportunities and the various development activities and marketing from the variety of customers base and the investments, which are taking place in all the sectors of the economy.
Basically, there is a substantial growth in the order backlog compared to March 2022, INR 8,854 crores. Now it has reached almost INR 50,000 crores as Satish has told. That is almost 90% -- more than 90% growth in order backlog that has been propelled by substantial opportunities in FGD business in various infrastructure projects and then other key opportunities.
And for the quarter 3, the total order booking has been INR 1,531 crores compared to INR 1,628 crores compared to last quarter. And of course, in the second quarter, there was bulk orders on FGD particularly. And our expectation is that in the balance of things, over INR 8,500 crores is there, INR 9,500 crores to INR 10,000 crores should be a reasonable possibility at the end of the year. That should help us to build up a backlog of nearly INR 10,000 crores by end of the year, which stands as on today also near that figure.
Now the key segments as I already told you that mechanical, the backlog has gone up from INR 1,650 crores to INR 8,260 crores. Civil [indiscernible] INR 5,842 crores to INR 5,663 crores. This is from March '22 to as on December '22. And O&M INR 1,240 crores to INR 850 crores and electrical INR 118 crores to INR 130 crores. And then the domestic, there is a substantial growth because of more of the opportunities. And we have -- obviously, we are focusing on the domestic market because of all this market available. And then the power sector continues to give a fillip to the backlog based on the FGD opportunities and a few of the other installation opportunities coming up. That comes to INR 9,638 crores versus non-power of INR 5,268 crores. Apart from the MDO, this is a backlog.
Now coming to the key orders backlog, apart from what we have had in the first 2 quarters.
BMRC, Challaghatta, Bangalore workshop depot around INR 427 crores. And then on the [indiscernible] workshop evaluates INR 250 crores until other FGD jobs are there. And then the L1 status is there more than [INR 70] crores. Therefore, with these opportunities, obviously, what we are targeting for nearly INR 9,500 crores to INR 10,000 crores would be a possibility.
And then next coming to the next year, 2023-'24 we are already mapping some of the opportunities and as we have seen, the investment in the current budget of infrastructure and capital investment of INR 10 lakh crores and the major investment is coming in the railways, about [indiscernible] energy sector and other miscellaneous various other areas also. And therefore, we are in line with these opportunities brought up by the government investments and then particularly in drinking water schemes then energy sector, oil and gas sector, mining and minerals apart from the roads. Therefore, these opportunities will be -- continue to be aggressively pursued by us. And our estimation is that we can target nearly opportunities wise over INR 30,000 crores to INR 35,000 crores.
And then, international also, because of our domestic bullish market, we were not focusing much in the last 1 or 2 years. But Middle East, it will be opening up in the Middle East market, plus 300 gigawatts of opportunities and then West Africa is there; Nigeria, we are already working there. And we are also undertaking a O&M job for the [indiscernible] job which is just now completed. And then other countries in the Western Africa. And then domestic, obviously, there is going to be continued scope potential for the FGD about 80,000 megawatts. Then some of the new plants are also expected to come in [Neyveli Lignite] in Orissa about 2,400 megawatt. Then NTPC is planning to add additional capacity Singrauli, Lara and other projects also.
Therefore, there is going to be some additional opportunities, which is expected in the thermal sector also. And then infrastructure, particularly mining, minerals and then coal mining, then material handling, railways. Railways is going to be a substantial opportunity. In fact, already, we are doing about 6, 7 projects. And there are a lot of opportunities in maintenance of repair shops and then these Metro projects, Metro projects, they -- this one we have made in Bangalore for the Challaghatta project, similar projects we can take up for the new Metro projects because wherever metro projects are coming, there are maintenance shops are required, and that is our focus on the new opportunities.
Therefore, all these things, combined together, it is not a challenge to target opportunities to INR 30,000 crores to INR 40,000 crores. And with a hit rate of 20% to 30% -- 25% to 30%, I think our next year targets of about INR 7,500 crores to INR 8,500 crores, that should be a reality. And this growth story should be continued to be maintained in the coming 2 to 3 years. Apart from the new opportunities, which will come up. And one more, I think what I can say is that there is going to be a huge investment which will come up in the private sector, particularly in the minerals and metals, steel, et cetera. The total investments like ArcelorMittal is going to make major expansion then JSPL is coming with expansion. JSW is coming with expansion. Apart from that, minerals and coal mining, a lot of expansions are expected. And these opportunities will grow both for EPC jobs, then erection, testing & commissioning jobs and many of the other civil works, et cetera. For that also, we have -- if we factor it, these opportunities will further go up. That is what I would like to say, and then we can now wait for your questions.
[Operator Instructions] The first question is from the line of Mohit Kumar from DAM Capital.
And congratulations on a very good set of numbers. First question is on the revenue guidance for FY'23. I think you've given a guidance of 36 billion. Are you maintaining that number? And how do you see FY'24 on this pace.
See, FY'23 is -- we are on track. Normally, like if you take 9 months, first half and the second half, second half which is significantly high compared to first half, okay? So the targets and execution cycle more or less on control. So we are confident that number will continue. '24, is like -- we have kept -- water will play a significant role. And of course, O&M will continue to be around INR 150 crores to INR 200 crores. And water business, because the order backlog, what we have taken is close to INR 2,800 crores to INR 3,000 crores. And the calculation is per village. It's working around INR 1 crores. Now post detailed project report DPR, the value is going up almost like 20% to 25%.
So now the order book, we have taken the original contract value. Once the few villages, it's been divided and almost like 20%, 25% is yet to revise, okay? So maybe FY'23 31st, during quarter 4, we divided [indiscernible]. So this will throw a huge backlog for us even in terms of the execution. The water itself now on average, it's working almost like January -- post December. January, it's almost like INR 120 crores to INR 150 crores. So this cycle is expected to improve to INR 150 crores to INR 160 crores. So maybe INR 1,400 crores, INR 1,500 crores, our execution cycle we can expect next year. So the single order backlog now, okay, on average 42% to 43% it's quite comfortable to take it next year.
You're talking about number of [ 43 billion. ] Is that number?
Conversion is 40% plus -- 42% plus conversion to the opening order book, okay? It's quite comfortable. On top of that, the temporary shutdowns and any new orders come to the next year, that will also add to the kitty. So if all goes well, the weight looks like FY'24, we should cross almost like INR 5,500 crores plus.
Understood. And sir, have you started executing Adani FGD project? And has it started contributing? Or do you think it will take some time to takeoff?
I think we have had a thorough review on all these projects of Adani and 15 plants of 6,000 -- 8,460 megawatts. And reasonably, the first is the ordering status is back around INR 1,100 crores have been ordered. Another INR 100 crores is expected by end of March. And next year, by second quarter, and maybe beginning of the third quarter, most of the orders we completed except for the last segment, electrical [indiscernible] for that should give a good track in terms of execution of this because there are commitments of this one. All these projects are committed projects, and which are local regulator in place to sanction the -- approve these projects for the [HPP] and other things. Therefore, we are on track on all these projects as on today.
Lastly is around the Talabira, Singrauli, Lara, what are the kind of opportunities we can cater to? And are you seeing the tenders from these -- the companies for where we will be eligible? .
Yes. you mean to say for the power plants?
Yes.
Yes. See, Talabira that 300 to 800-megawatt and in this case already implemented bids BHEL and L&T are there. And they are yet to take a decision maybe by end of this year, perhaps they will take a decision that will be opportunity will be there. And of course NTPC, I told you they have to -- they are inviting bids for the Lara project also 200 to 800-megawatt [Singrauli] also. That is an additional opportunity. Therefore, next -- all these projects will come up possibly for the next year in terms of the power sector business.
And there, I told you about the FGD business. And there FGD is substantially what we are doing is that. Now Udangudi, we have already provided an offer. And then JSPL is coming with the FGD conversion for all their plants around Karnal then in Orissa that is in Chhattisgarh, Orissa. There should be substantial opportunities in terms of roughly around 4,000 megawatts. And we have got a good relationship with JSPL [indiscernible] and various other projects and that should show up opportunities at least over the INR 2,500 crores to INR 3,000 crores. Apart from the other government tenders and utilities tenders are expected to be completed.
[Operator Instructions] The next question is from the line of Dixit Doshi from Whitestone Financial Advisors.
My first question is on the status of MDO project. So is it online? Is it on stream? Like earlier, you were guiding that by Q4 FY'24, it should start generating revenue?
Yes, I missed to update the one update, one good development. See, for starting this MDO project, the critical milestone is stage 1 forest clearance. And we have got it. So it's in terms of approval is now in place, the next 2 months, the environmental clearers will follow because Stage 1 FC is important for environmental clearance. So by June, we'll start ground activity. So this project is completely under control and is as per the plan. So we had planned close to INR 50 crores plus FY'24, and that is in control. It's possible. The slight improvement because of the escalation, we have taken the price as we quoted. So probably maybe second half or quarter 3 of next year we will review the numbers and will come up with the revised number, sir. So the number is going to INR 50 crores plus.
My second question is just to understand. So whenever we execute any particular work after completion of the work at every month, we must be generating the invoice to the client. Let's see some clients don't pay and till what level we work or we stop the work?
So normally, our being a cash contractor, it's all cash contracts, the payment cycle is normally 30 to 60 days. But as a practice, it's going almost 70-75 years. So existing customers, wherever we understand we go up to 60, 65, 70 days also. But new customers, we don't work beyond 40, 45 days. So we see that the payment is well protected otherwise. So we'll end up incurring additional cost.
But -- so in the past, have you done like, let's say, some payment is not coming beyond 70 days also. We stopped the work typically?
Sir, this cases been in multiple instances. We have to build a pressure, okay? Because our like 50%, 55% in some of the projects, even 65% is manpower, okay? So we have to build that payments. My payments are linked to our collections. So we have done it across -- in multiple cases.
Okay. Okay. And my last question is on this Adani FGD order. So earlier, you have mentioned that we are going to receive the advancing, we will not require to deploy our own funds in this project. Is it resolved?
Even [indiscernible] remains the same. It's a complete -- the plan is to have a cash neutral project. So we will not invest anything in terms of working capital except the equipment of INR 25 crores to INR 30 crores, which we have already done that. So we have taken almost INR 100 crores of advances for this project. We have already availed this. And we're expecting -- last 2 days, we got some amount and maybe next one week, we'll be getting another INR 25 crores, INR 30 crores. So net bids we're driving because interest free. And our progress is again aligned to the receipts. So it's on track, yes, you're right. It is going to be a cash-neutral project.
Okay. Okay. That's it from -- and just one last question. So in terms of margins across the segments, we generally have a similar margins or it varies like erections, civil work, O&M?
The margin [indiscernible] changes or actually O&M that's where we command more, okay, that's where we command more. And compared to domestic and international, it's likely higher, side. And mechanical, it works around 11.5% to 12.5%. Civil, it's working now 9% to 10.5%. The reason being we have spent in terms of royalty to build the credential is since 4 to 5 years now. and we are getting that fruit now. So what will happen is the projects which we have quoted paying the royalty now that's getting over maybe next a few quarters, we'll see that margin profile improving. So we are targeting that FY'25, at least, we should reach to our normal reported higher margins, which used to be 13%, 13% plus. So that's where we are working towards.
[Operator Instructions] The next question is from the line of Pritesh Chheda from Lucky Investment Managers.
Sir, I joined the call a bit late. Maybe it could be a repetitive question. I'm sorry for that. I just wanted to check what upgrade did you give on the INR 6,000 crores of new order which has come from Adani Power on the FGD side in terms of execution, in terms of the time line and will it, by any chance, change the initial expectation of revenue that we had for the '24 and '25, which I think in the last quarter, you mentioned that we'll do about INR 3,800 crores to INR 4,000 crores revenue this year and about INR 5,500 crores next year. So does it change anything? Does it change in terms of the order inflow advances, if you could comment on that side. And I'm sorry if this question was answered earlier.
The advances are on track, INR 100 crores and another INR 50 crores are also on the pipeline. And as far as the conversion is concerned, these projects are expected to be completed by '25, all the projects. Therefore, the most important for all these project execution is the ordering cycle. Now ordering recycle will be completed in the next 6 to 9 months. Therefore, the conversion should be on track. This year, we may get about INR 50 crores to INR 100 crores of turnover. The coming year about INR 1,500 crores minimum, we are expecting it and balance will be completed in the next 12 to 18 months.
Therefore, these projects are fully committed, and we are clearly following it up on all the aspects of that execution. And then major works will be on the civil mechanical supplies, structural and equipment supply. And as I told you, INR 1,100 crores ordering has already been done, and the balance offering will be completed by second to third quarter. And that should pave the way for a timely -- reasonable timely execution barring the local issues, whatever is there, that is a access availability, customer acceptance of certain things all those things and normal project issues can be there. Otherwise, we are very confident on continued tracking this project is reasonable.
And sir, this INR 3,500 crores, INR 3,600 crores, it's more or less in control because quarter 9 months. So we have seen the execution cycle improving, and it's going as per our plan. So this year, the guided number remains under control. And next year, even INR 5,500 crores plus, okay? And any improvement in the additions of next year, that may add up one more. But we'll come with that numbers maybe first quarter of next year. As of now, the number what we have given that remains intact.
You have got INR 1,100 crores of orders already issued on that INR 6,000 crores of order backlog that you have from Adani that's what you're mentioning, right? INR 1,100 crores [indiscernible] has been issued?
Yes.
And what is your revenue assumption from that orders for next year that is '24 in your total INR 5,500 crores revenue that you are thinking?
Our assessment is that around INR 1,500 crores.
It will range [indiscernible]
Okay. Okay. And sir, this being a more regulated nature orders, it was a compulsion to put up these FGD. Is there a time line issued for implementation of it by any regulatory authorities or anything?
I will tell you that. See the entire FGD retrofitting is guided by the [indiscernible] homes, that is '24 to '26. That is 3 categories of plants are there, Class A, Class B and Class C. And most of these cost come under Class C, therefore, '25 and '26. There is a reasonable time available to implement this project to meet the regulatory deadline fixed by the government. And accordingly, the ordering is being done, and that is how the EPC also has been placed by the Adani.
Okay. So in any situation, can this be canceled or postponed? Or it is a compulsion to implement?
No, no. It is part of the -- one thing is part of the national commitment. And second thing, all these FGD implementation of 1,69,000 megawatts is the total plant identified out of something like 2,10,000 megawatt. This is part of the mandatory incorporation committed to the COP 2026, whatever was the international commitments are there. And it is very important for this country to meet the sulfurized emission control, and there is no going back on this. And in fact, order is expected. In fact, a lot of inquiries are coming already more than 55% ordering has been done, another 40%, 45% has to be done perhaps in the next 1 year, all this ordering should be completed.
And sir, what is the progress on the balance, 80,000 megawatt of projects where the FGD order is yet to be placed and you were hoping for some order wins there?
Yes, yes. We are targeting nearly about 7,000 to 8,000 megawatts in that. I told JSPL is there. Vedanta Group is there. They are our favorite customers. And then private and public sector utilities also. In Tamilnadu we are targeting, already we have submitted the offer and other selected places wherever we are there, we can do that. Our plan is to at least see the opportunities for about 7,000 to 8,000 megawatts in this.
Okay. And my last question is, our MDO order execution will start in '25, right? That's how it is? Or is it in FY'24?
See, MDO, just before your question, we had that update. So MDO, we have cracked the first milestone, which is important to start the project. That's the forest clearance Stage 1. Now that Stage 1 clearance comes, then Stage 2 and environmental will fall in 2 months. So we have got that approval, sir. Now the approval part is in control. So the execution ground will start June onwards. So the INR 40 crores to INR 50 crores or maybe slightly this number may go up because of the escalation and what we have projected as per the time line.
So the execution of some business will be there in '25, right -- '24, sorry '24?
'24, we are expecting close to INR 50 crores and may slightly drop because of escalation figure [indiscernible] ramping up.
And on the margin side, do we expect any expansion in margin next year?
Sir, there is a gradual improvement because see last 4, 5 years, we are losing in terms of royalty in spite of our core business doing a good amount of execution margins. There is high probability that it will go up. But we are confident that now because of all these new initiatives, '25 at least we'll try to reach to a normal margin, that's in plan.
This is that 2.5% of order that you have to pay for...
That percentage is coming down, okay? Now slowly, the margin profile is improving. So we are seeing that by '25, we should go back to our normal reported margins of 13% at least.
The next question is from [indiscernible]
Sorry, this is a repetitive question, I think. This is regarding the Adani order only because of the Adani things order, I think our share got beating. Now how's the -- regarding the payment of Adani orders of INR 6,000 crores, how safe new place we are regarding the payments and the execution?
Sir, as we said, okay, even we had the similar questions. As we said, this is a cash-neutral project. We have [indiscernible], we will draw and utilize need-base. So we have drawn INR 100 crores plus. We'll be drawing some more amount and almost INR 1,100 crores to INR 1,200 crores order being done. Now it's a global mandate and for them also there is as time pressure. So in terms of execution, it's on track. We are planning maybe INR 50 crores to INR 100 crores of turnover this year. Maybe next year, we have planned INR 1,200 crores to INR 1,500 crores. And this number may further go up because of time pressure, but that will come in maybe quarter 1 or quarter 2 of next year based upon the progress. It's more or less absolute under control, sir. There is no slowdown.
And to add to what Satish said, whatever projects we are doing so far, we have a reality check on that. There are projects and then the 2 infra projects -- the mining projects, what we are doing in Orissa and O&M jobs are also. And nowhere our bills are pending for more than a month -- 30 days to 40 days.
Sir 16 years of journey, sir, we understand the customer. So my maximum payment cycle is 30 days, okay. So now if you see today -- as of today, no due is actually pending. And this being a large contract -- risk mitigation we have -- we've ensured that it has to be cash neutral project except for CapEx of equipment of INR 25 crores, INR 30 crores. Of course, those are in-house equipments. Apart from that, there will be not be any working capital investment from outside.
In fact, we had a review with the Adani teams, and we are getting confidence about as far as these investments are concerned because they are very specific for meeting the regulatory requirements, and they are already committed on these projects. And then there are PPAs also in place. We have [6 to 7] projects, all the PPAs are in place.
So according to my understanding, this after completion of this project, maximum payment cycle will be 30 to 45 days?
No, no. This project -- yes, these all are 30, 40 days maximum. Beyond that, we cannot afford to wait.
In the case of Adani FGD job, our commitment for investment is working capital is only based on what we receive from them. So that's how we have structured. We have structured the entire contract. Our vendors will pay only once we get from them.
Okay. So once they pay you the advance, then only you will execute that order?
Today, it's surplus. It is almost like more than INR 100 crores plus, okay. What I really just hardly INR 60 crores, INR 65 crores are surplus cash.
[Operator Instructions] The next question is from the line of Anupam Gupta from IIFL Securities.
Sir, just one question. The mining MDO revenue for FY'24 is at INR 50 crores or INR 250 crores?
INR 50 crores.
Okay. And in FY'25, this number should ramp up to what level?
MDO this '25, let's take this base number. So without escalation, it will be in the range of INR 155 crores to INR 175 crores.
Okay. And escalation is approximately 40%?
Sorry, can you repeat again?
Escalation, and what is the base price is approximately 40% on current cost?
Yes, today it is quoted price is INR 886 crores. As per today, escalation it's working almost like INR 1,450 crores. Yes, as you rightly pointed, it is slightly higher side because diesels being given in the price escalation index have more weightage because of that, this price has significantly has gone up. So the cost is not proportionate, so the margin profile should also improve.
Okay. And in terms of when you consolidate it in your balance sheet, what sort of CapEx should we build in for FY'24 -- sorry, FY'23 and '24?
FY'23 maybe max of INR 15 stores because not much investment will happen. FY'24 -- see, we have planned a equity infusion of close to INR 100 crores plus. So 75% will come from our books. So maybe INR 150 crores, INR 160 crores, both the equipment put together, equity [indiscernible]. So it may range INR 150 crores to INR 180 crores. And the rest FY'25, '26.
INR 150 crores basically includes INR 175 crores of equity and balance of CapEx?
Yes, the INR 75 crores will infuse INR 24 crores, maybe INR 30 crores to INR 40 crores and '25 the rest.
The next question is from the line of Nikhil Abhyankar from DAM Capital.
I just have a bookkeeping question. So can I just...
We've lost a connection for Nikhil. We'll move to the next question from the line of Riken Gopani from Capri Global.
Am I audible?
Yes, yes.
I have three questions, sir. First one on the order book. So you've mentioned for next year that you might bid for about INR 30,000 crores, INR 35,000 crores of orders in the domestic market. And the 30% that could give you about INR 8,000 crores to INR 9,000 crores of orders here. But you're also saying that you would increase the focus on the international markets next year as well. So overall, what kind of order inflow do you expect in international and in aggregate, what kind of accretion do you see to the order book for next year?
The plan what we have kept INR 7,500 crores, INR 8,500 crores, okay. That includes close to INR 700 crores of international order book. That is the target. So that will be a combination of maybe 50% O&M and 50% will be the mechanical space.
Actually, our opportunity in domestic is substantial. Now whatever we get better opportunities there, there we'll target in international because India, there's a lot of domestic opportunities are available, if you have seen last year also the same thing.
Got it. So INR 7,500 crores is roughly what you're expecting is the domestic inflow. And in that, are you booking in any FGD orders as well? Or if this is outside of that?
Now FGD total opportunities, we are -- we may be bidding for about INR 5,000 crores. Maybe we'll expect about 30% in that.
Okay. Got it. The next question is with regards to the cash flow that you've been able to improve the overall working capital cycle, as you mentioned, compared to last year as well. So what is driving this improvement? And in terms of next year, what's the direction that you would want to guide?
It's very simple. Like if you see, we have been working for 20 days in BHEL, okay? The experience with BHEL used to be slightly different 5 years back. But now since 5 years, we are seeing the receivable cycle going up to 80 to 95 days. And so that was one of the reasons. And some of the projects, BHEL -- when the project is about to complete, the final build certifications, they are taking slightly longer time. Now since 4-5 years, we have been working in various directions, various initiatives like railway, water, international and all. So now we are selecting projects where we see that the project is well funded and the working capital cycle is good, and our comfort in terms of the execution. So that is helping us to -- and bringing down the BHEL pie.
If you go -- if we go back 7 years back, the BHEL pie used to be almost like 65% to 70%. And if we go back to 2 years back, the BHEL pie used to be almost 35% to 40%, but now it has come down to 14% to 15%. So that is helping us to -- helping us in a lot to rotate the working capital and the returns in money which we had INR 250 crores to INR 280 crores plus, okay. Now in spite of growth we are keeping it constant. There isn't being like some of the projects we are negotiating especially the private customers that the returns and money comes with the support of FGD. So that will further help us to support in terms of the working capital.
Got it. So you're expecting this 138 days also further come down in the next year?
The idea is to bring it down to at least 135 days, first at least next 12 months. That's the plan. And with the new initiatives and all the new projects, there is a high probability that, that should further come down. So we are seeing the gradual improvement.
Got it. Got it. And just in terms of one clarity on the FGD you mentioned that there is a regulatory time line that needs to be followed. But just to understand this better, are there any requests that can be taken to postpone this? Or there is under no situation can there be any postponement to the time lines that are being currently outlined for FGD?
Yes. I think this deadlines are continuously monitored by the central government and see [indiscernible] There they had fixed '24 and now they have made '26. And looking at the -- because it's not only the main ordering is important, but the way it is implemented with the availability of the plant also for the [indiscernible] shutdown and the availability of some of the access there because they're all right, it will be retrofitted. Those factors will be taken and the availability of the equipment also from the -- where the resource [indiscernible] and all. For all these aspects. And then, of course, all the FGD investments is part of the tariff pass-through. And all these things also have to be like summed up with the tariff commitments from the DISCOMs and the electricity Boards. Therefore, it is a combination of all these factors, but the commitment to implement FGD is very clear, and that is what we've seen in the ordering also. A lot of ordering is continuously happening.
So it's at least fair to assume that the projects which you have on hand currently, there may be reasonable visibility that they are not being pushed any further, and it will be done by FY'25?
Yes, that is our optimism.
We are seeing that on the ground.
And we are also watching the way the ordering is being done because ordering is a most important thing for all these projects. And apart from that, we are executing two other projects for BHEL also, that is on the Civil side, they are also on track. Therefore, we don't anticipate huge delays or any delays on this because government itself is pushing for this completion. And there is a commitment from the developers also.
The next question is from the line of [Sheen George] from Geojit Financial Services.
Sir, can you give us the revenue forecast for like what is your estimate for '24 and '25?
Yes. See, '24 like as we discussed, okay, as we also stated, like see the conversion, 40% to 42% is very much likely. So INR 5,500 crores plus any upside on the FGD that will help us, okay, that's the plan. So we -- and for 2025 because the MDO is going to start, and we have even closed the water projects and all, okay? So there could be even some upside in FY'25 also, okay. So that should range maybe in the range of around taking MDO together, it should change close to INR 6,000 crores plus because we have to complete water projects also. We have kept a target of INR 7,000 crores to INR 7,500 crores, okay. And '25, we have kept the order book target of INR 8,000 crores, okay? So FY'25 order book, we are not taking any conversion percentage. I'm just taking the backlog.
Sir, can you come back again on the order book? You're voice was very feeble.
No. See, what I'm trying to say, sir, FY'24, we have kept a target of INR 7,500 crores plus of order booking. And FY'25, we have kept a target of INR 8,000 crores plus order booking. So taking 40% conversion to the opening order book, I'm not taking the addition for that year. So we should be able to cross INR 6,000 crores plus in '25.
Okay. And what about your order intake estimates are there?
In fact, for this year, we kept INR 10,000 crores, so we'll be close to that number. FY'24, INR 7,500 crores plus and FY'25, INR 8,000 crores plus.
The next question is from the line of Anish Jobalia from [Girik Capital].
Sir, you actually gave some numbers around the cash flow from operations in your initial comments. So if you could just -- I lost your voice during that time. But if you can give your -- the number for the 9 months? And what are your targets for the full year as well as for the next year? I mean, given the scenario of the improvement in the growth in the revenues and margins and also working capital that we are expecting. So if you can share some numbers, that would be great.
Yes. See, sir, for 9 months, it's close to INR 45 crores to INR 50 crores plus because that is a number. And this number is expected to go up because whatever is required to mobilize the projects, we have spent the money for all the new orders, including this recent Kazipet and Bangalore Metro. So whatever mobilization is required, initial mobilization, we have done that. So FY'24 year-end, it may be in the range of maybe close to INR 100 crores that is what our expectation. And '24 is the number should go up, maybe close to INR 180 crores to INR 190 crores.
Okay. So I mean, like if I see the half year -- so in the half year, I think, like we were -- we did already like INR 62 crores. So if you have done like INR 45 crores, it means like there was a negative cash flow from operations in this quarter. Is that correct?
Maybe INR 10 crores to INR 15 crores with the difference. Yes, you're right.
Okay. So -- but then we are still expecting to achieve the INR 100 crores CFO for FY'23? That's the target. Is that correct, sir?
That is the target, sir. So the reason being like the new projects at Kazipet and Bangalore Metro whatever mobilization required, okay, we have done internally. So the building starts so maybe 30 or 45 days thereafter Normally, it takes 30 to 60 days. So what are the projects we have on hand, it's all been spent now. So -- and quarter 4 normally, it's a good quarter for collections and in terms of execution there is as pressure from. There always used to be pressure from the customer during the quarter 4. And if you see in terms of quantum also, quarter 4 will be almost -- will be the high comparatively quarter 1, quarter 2 and quarter 3. So we are expecting good amount of collections.
The next question is from the line of Riken Gopani from Capri Global.
Sir, just one follow-up question with regards to FGD. So the current order win that we have, that is for about 6,000 megawatts. And the total order book reflects about INR 6,000 crores. Is it about INR 1 crore or so for megawatt that it works out to -- is that how it works? And in that context, when you said that you are targeting to make about 8,000 megawatts of additional ordering here then just help me understand why you're building in INR 1,500 crores in new order win expectations for next year?
There are two types of packaging there. One is if you complete [indiscernible] package is there, what we got from Adani around INR 73 lakhs per megawatt. And there are contracts which are awarded on a package basis, like severe mechanical supply and then a service job. That can vary between INR 20 lakhs to INR 30 lakhs per megawatt. It is a customer choice. Therefore, and then the orders which are in the pipeline from the CESC Goenka Group is based on that type of philosophy only, not on the EPC. Therefore it is a combination of EPC, then packaging-wise and all. But what I said on a ballpark basis, if we take the 7,000 to 8,000 megawatts, the opportunity, what we are going to target is around INR 5,000 cores, INR 6,000 crores. And then based on our past experience and the competitiveness in the market, that is what the figure I told about INR 1,500 crores.
Okay. But the total remainder of the power capacity, which needs to get the FGD retrofitting done, that is about 80,000 megawatts, is that correct?
Yes, it is around 80,000 megawatts. Now the rest of the private players, like Adani they have taken an advanced action. Now JSPL is there, JSW is there. Vedanta Group is there. And then various other private developers also have to do it. And apart from that, the state utilities also there. For example, Tamilnadu is coming with a lot of inquiries. And then Mahrashtra, then Gujrat state. Then the other -- most of the states, they will have some residual orders or bulk of the orders but only NTPC has done bulk of the ordering and then some of the private players. Therefore, all these things, they have to complete in the next 1 year because the deadline is 2026. On that basis, these figures will be INR 1 crore.
So you'll still be participating in that 80,000 megawatts as well. This is just based on what you have current visibility of?
Yes. What I'm trying to say is, these are all individual packages, individual parts are there. Therefore, about 10% of the available opportunity we'll participate. That is a conservative basis. Maybe we will exceed that also. But we are taking -- based on our present this one, we can do that much.
As there are no further questions, I would now like to hand the conference over to management for closing comments.
Yes. Ramaiah here again. Thanks a lot for your presence and all. I think Satish has given the numbers and the marketing and the opportunities available in the union budget of INR 10 lakh crores that we missed there as there is a 30% increase in the capital investment is offered by the government. And now private capital is coming up in a big way in infrastructure then capital equipment, steel plant, minerals, et cetera. I think the opportunities of INR 30,000 crores to INR 40,000 crores is not a challenge. And therefore, the targets that have been fixed for INR 7,500 crores next year and then continue to be maintained that reasonably possible. And our ordering -- the execution cycle also is improving it.
The better understanding of the business in various projects, what we have done, wherever we entered new business also in non-power. The execution cycles are improving it and the projects are getting controlled and with better execution and also cash collection. Therefore, we remain to be optimistic and our numbers have seen that in terms of the ordering execution and then other PAT and EBITDA margins. That is what I would like to say.
Thank you very much. On behalf of Nirmal Bang Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.