Power Mech Projects Ltd

NSE:POWERMECH

Earnings Call Transcript 2024-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to Power Mech Projects Q4 FY '24 Earnings Conference Call hosted by Nirmal Bang Equities Private Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Ms. Natasha Jain from Nirmal Bang Equities. Thank you, and over to you, ma'am.

[Natasha Jain, analyst]

Thank you, Steve, and good afternoon to all participants. Nirmal Bang Institutional Equities welcome you all to the Fourth Quarter FY '24 Earnings Conference Call for Power Mech Projects Limited.

From the management team today, we have Mr. S.K. Ramaiah, Director, Business Development; Mr. Rohit Sajja, President, Business Development and Operations; and Mr. N. Aravind, Chief Financial Officer. I now hand over the call to the management for opening remarks. Post which, we can take questions from the participants. Thank you, and over to you, sir.

[Nani Aravind, executive]

Thank you, Natasha Jain. So this is Nani Aravind, CFO of Power Mech Projects Limited. I have with me S.K. Ramaiah, Director of Business Development; and Mr. S. Rohit, President, BD and Operations. I welcome you all to the earnings call quarter 4 and 12 months of operations of FY '24.

The reported total income for the quarter 4 financial year FY '24 is INR 1,312 crores against INR 1,183 crores in Q4 FY '23, an increase of 11% year-on-year. EBITDA is around INR 160 crores as against INR 140 crores, a growth of 14%. And PAT is INR 84 crores, which has grown by 12% compared to INR 75 crores in Q4 FY '23.

The revenue mix for quarter 4 FY '24 is as follows: mechanical business has contributed INR 176 crores versus INR 148 crores in Q4 FY '23, showing an increase of 19% year-on-year growth. Civil business, including railway water distribution, contributed INR 766 crores versus INR 761 crores, almost flat. O&M revenues of INR 350 crores (sic) [ INR 354 crores ] against INR 247 crores in corresponding period last year, reaching growth of 43%. And electrical business, INR 6 crores versus INR 18 crores, a decline of 66%. Other income, INR 10 crores versus INR 9 crores in Q4 FY '23.

So during quarter 4 FY '24, the distribution between domestic business and international business is 90% and 10%, respectively. Contribution from core sector remained at 49% and non-core contributed 51%.

Performance for the financial year '24. The reported total income for FY '24 stands at INR 4,234 crores against INR 3,618 crores reported in FY '23, showing a growth of 17%. The EBITDA is INR 524 crores as against INR 421 crores, growing by 25%, while the profit after tax came at INR 248 crores against INR 209 crores in last year, clocking a growth of 19%.

The revenues from mechanical business were around INR 692 crores versus INR 606 crores in FY '23, showing a growth of 14%. Civil business, INR 2,352 crores, including MDO revenue of INR 41 crores, versus INR 1,995 crores in FY '23, growing by 18%. O&M revenues rose by 18% to INR 1,109 crores as against INR 930 crores in FY '23. And electrical business, INR 53 crores against INR 69 crores in FY '23, a decline of 24%. And the mix between domestic and international business is 92% and 8%. And the power and non-core business contributed equally FY '24, with 51% and 49% contribution, respectively.

So with a better deployment of capital improvement in margins, the operating cash flow for the period is positive by INR 204 crores. Net current days have come down to 112 days in FY '24 from 131 days in FY '23 due to increase in the realization of bills.

The debt levels are in control. As on 31st March 2024, the gross debt is around INR 388 crores, and the net debt stands at negative INR 155 crores. The debt equity ratio as on 31st March 2024 stands at 0.21%. So order book status in the financial year '23, '24, the company has secured orders worth of INR 8,759 crores, as against the set target of INR 10,000 crores. The order backlog as on 31st March 2024 is around INR 57,053 crores. If we exclude the 2 MDOs, the unexecuted order book stands at INR 17,362 crores.

So margin profile improvement is also seen in overall margin profile. EBITDA margin has gone up from 11.62% in FY '23 to 12.37% in FY '24. So expectations for FY '25, our [ automotive health sector demand ] show execution conversion in the range of 38% to 40% in the opening order book. In addition to that, revenue from MDO business also ramping up. There is a little bit of slowdown in some areas due to [ Kuvan ] election schedule. We'll keep a conservative revenue growth target of 30% for FY '25.

On the margins front too, the direction is on the upside. We will witness further improvement in FY '25. We will be close to achieve our peak margin levels in this year. Once the MDO revenue peaks -- peak during FY '26, the margin profile will seek a market increase.

On the order book side, we have set a target of INR 12,000 crores for financial year 2024, '25. Our focus will continue to be in industrial plant operation and maintenance, railways and water. Going forward, O&M and MDO business will provide stability in revenues as well as margins in a significant way.

Now I request Mr. Ramaiah to update on the developments.

[Sudha Kodandaramaiah, executive]

Yes. [indiscernible] Good afternoon. As Aravind has give us the numbers on the revenue and then the present state of these operations, so we are happy to say the market is on bullish side and hoping the elections will take a positive turn. And in spite of the certain developments of the elections and all, we have done pretty well in the fourth quarter.

Now the order backlog has gone up from INR 13,733 crores, which last year INR [indiscernible] crores. This is a growth of 26%, mainly driven by the civil side. The backlog increased from [ INR 7,036 crores ] to INR 7,814 crores, an increase of [ 21% ]. But what is very interesting in this, the O&M side has taken a quantum jump. From a backlog of INR 600 crores last year, it has gone up to [ INR 2,197 crores ], almost 266%.

And electrical also has come to life in a big way, mainly in the many jobs taken on the railway electrification jobs. The backlog has gone up from [ INR 118 crores ] to INR 930 crores. So that is a very positive thing in terms of the overall growth. Of course, mechanical, there is a dull de-growth, [indiscernible]. But in the case of the power and non-power, the backlog is INR 11,145 crores for power. Non-power is INR 6,217 crores. That ratio will continue to be on the -- slightly in favor of the power side as on today.

Now what is important is that the -- we expect positive things in terms of investments and then a lot of projects are coming. In fact, we expect at least INR 60,000 crores to INR 70,000 crores of opportunities to be focused on this year on a regular basis in various sectors. And some of the positive things can be the power sector is taking a quantum lift in terms of the gaps we filled up in investments and installation are adding about another [ 60,000 ] megawatts from 218 gigawatts to say 280 gigawatts.

Already, BHEL have got a lot of orders in terms of now, there were INR 70,000 crores of orders with a megavoltage of 10,640. Now the ongoing projects are about 25,000 megawatts. Now if that has to be bridged, at least 40 -- another 40,000 megawatts of priority offering has to be done, particularly by developer, by the utility companies like NTPC, DVC and private companies also. Therefore, that is where we expect a lot of the flow will happen in the power sector is going to be renewable.

And if we're under, then there is another important development that has happened. To just see how it can happen, apart from the identified projects in various power plants, NTPC plan for more than 30,000 megawatts. Another utility plant is DVC, then this one, [ MPGC ] as well. Uttar Pradesh [ Regenerative ] Board, then the NTPC, apart from NTPC, then this one, [ GSE ] as a [ Buddah ] Electrification Company. All these companies are also planning capacity expansion including Coal India.

For if these things mature, maybe the investments can go up to INR 3 lakh crores to INR 4 lakh crores additionally for the power side investment, and that should give a lot of [indiscernible].

We have got a lot of say in power sectors with our end-to-end solutions in civil, structural, mechanical, electrical, and we're all in them also because that is what we expect is that.

Now apart from that, the other infrastructure projects, what is very important is the railways. In fact, railways, we have done extremely well. In fact, presently, we are expecting projects of INR 2,500 crores. And now we can create new projects of INR 1,280 crores in Southeastern railway and the Central railway. That has got both the civil and they're tackling, and also electrical component to the business. And then the new maintenance depots and infrastructure to be developed with various railway projects and then even for the metro projects also. Because now we have got experience of doing the metro project, it's going pretty well in Bangalore, INR 427 crores. And that type of projects, more and more projects will come up. In railways, we have seen last year the government allocation of budgets at INR 2 lakh crores, and they will make a huge jump in the investments for the railway and the roads also.

For railways, growth balance of the drinking water still report 15 crores households have been penetrated as of today. We are doing a major job in UP of INR 2,726 crores, and we continue to have opportunities in Madhya Pradesh, Maharashtra, Karnataka and Kerala also. That is also there. Railways, then water systems, then urban renewal projects and investing in plants.

Then, apart from this, there is a major opportunity coming up in the private sector also in oil and gas sector and other sectors also. Therefore, and there is one more area in the power sector what I would like to say. About 11,000 megawatts of plants are getting revived. We have seen already the ongoing 540 megawatt -- going to 540 megawatts where we have taken some jobs.

Now [ Hammerson ] said that will be revived to have that [ 1,320 ] megawatts. And then KSK, that is Mahanadi Project, is also 3,600 megawatts. For all these projects revived, that also adds up to the opportunity apart from the new capacity additions, what is expected.

Now on the O&M side, the product mix has improved for the better in terms of O&M order backlog -- in the order backlog. In the orders we have taken [indiscernible] INR 249 crores. And then INR 674 crores in the revived projects in [ Mirasiti ] [ 26,000 ] megawatts. And they have got a -- the customer has favored us in these 2 projects. And then the new projects, which are going to be [ set up for us ], and the rise of 200 to 800 megawatt [indiscernible] increase to megawatt.

Therefore, as the new projects get commissioned, the opportunity not only in the installation side and construction side is going to be one where the offer will come up. And the present -- unless the capacity addition goes up to 10,000 megawatts, they cannot [ revive ] to 280 gigawatts by end of this decade to have a grid stabilization.

So overall, what we can say is that last year, order booking of INR 8,500 crores, we are aiming at nearly INR 12,000 crores. And then that should be seen in the context of the new government coming up and the more focused investments in infrastructure and also private sector investments. And it's expected, a lot of private sector investment also will come up in various sectors. And now Power Mech is a highly diversified group in various sectors, infrastructure, in construction, EPC jobs.

The other important development is taking place. This is the EPC sector because what the government is feeling is that, particularly, we have to see that what the power sector jobs should go in a faster development mode. And now we have no bid recently for the [ Singareni ] job, a balance of plant -- complete balance of plant based on the qualification BHEL has provided. And BHEL will give a complete back-to-back into this [ flagship on highway ]. And then there are a couple of other projects also will come up. Even NTPC is planning a change in the contract structure between [ DOP ] and the main plant work, so that they can have better control and execution to the subcontracting more. And many other customers also like DVC also is planning. And then with these opportunities for us, bigger size of the project -- our projects can come up that also include the opportunities for us.

Thank you very much. I request Mr. Rohit, President, BD, to give an update on the mining and other sectors.

[Sajja Rohit, executive]

Thank you, Ramaiah, sir. Good afternoon, everyone. I'll give a quick update on our mining activities. Coming to the 2 MDO projects that we're executing currently, the first MDO we have, in terms of -- there were a lot of developments that took place over the last 1 year.

The first MDO project, which happens to be Kotre Basantpur. We have achieved forest clearance -- stage 2 forest clearance on the 14th of March this year, and we have already obtained a clearance to take possession of lands over the next 3 months as well. So the request letter has been submitted to CCL for the declaration of the appointed date, which we are expected to receive by end of this month also. And we anticipate the mining activity starting from tree felling and overgrown removal to start somewhere in the month of September. So we have the first revenues from this mine are going to start flowing in from Q3 of this financial year as well.

Coming to the second MDO, Tasra that we won with SAIL. We have achieved a production of around 2.88 lakh tonnes, and we have dispatched the same to -- the dispatch of the same has started to SAIL. And the target for next year is around 1.45 million to 1.5 million metric tonnes, which is which is pretty achievable. So these are -- and we have also made a lot of progress with respect to the R&R Colony in the second mine.

Phase 1 of R&R Colony, we have to construct 190 units in 4.5 acres of land, and we are 70% through this process. And Phase 1 should be completed over the next 3 months. So this is an update with respect to both the mines. And I would also like to take this opportunity to summarize and highlight a few of our achievements over the past financial year.

So this year, we have entered into our Silver Jubilee, and our Silver Jubilee year has also coincided with PMPL achieving highest ever revenue, highest ever EBITDA and highest ever PAT. And we have also achieved the highest ever order booking this year. And the international business has shown strong growth, and it also looks promising. International O&M has grown by 55% compared to FY '23 to FY '24. And we have successfully raised funds for our mining projects by way of QIP, and our credit rating has improved from A to A+.

Thank you. Yes. And we can go ahead with the Q&A.

[Operator]

[Operator Instructions] The first question is from the line of Mohit Khanna from Purnartha Investments.

[Mohit Khanna, analyst]

I had a question regarding the O&M segment. Your O&M order book has reduced to 3.5 percentage, if I consider the MDO contracts as well. So what gives you confidence that the margins improve -- should improve from here? This is my first question.

And secondly, what are the margins on the [ solid ] MDO contracts? If you could just give me a ballpark, that will be helpful.

[Sudha Kodandaramaiah, executive]

Yes. On these, the renewal of the projects that is going on, whenever it comes. But what is important is that the -- how the new projects, new O&M projects, what we have taken, I told you. That will have a better subsidy, better margins [indiscernible] INR 229 crores, then [indiscernible] INR 674 crores, [indiscernible] and then KPCL. [ Format ] has got a huge expertise and experience developing over the years, for more than 10 years in O&M. And that should help us in seeing that the improvement. Actually, O&M is a good business for us and it improved more order bookings. And with better orders taken, the margins profiles would improve. And one more thing, important thing, is that the drinking water scheme, what we're executing, we have done -- out of INR 2,726 crores, we have done about INR [ 8,300 ] crores.

Now once these villages are getting 100% completed, there is a separate order, which is the part of the original order, which were not captured. Now we have captured it, effective on growth. That has got an installation facilities. And then with that, that also will come as a revenue stream for the next 10 years. So the first full return is around INR [ 2,526 ] crores budget as completed. But at annually, we can expect about INR 60 crores to INR 70 crores with better margins.

And therefore, and there's new projects, which will be commissioned. Perhaps today, almost [ 25-person ] ongoing projects in the power sector will come from commissioning. Therefore, that also both -- we are also targeting many projects in there for overall. And then more than that, the shutdown jobs and then the international business also is looking up for the O&M. Rohit is concentrating a lot of that. That will add up to substantially the AMC jobs.

[Mohit Khanna, analyst]

For FY '25, what should be our target for order bookings in the O&M segment?

[Sudha Kodandaramaiah, executive]

O&M, you can say, I think around plus INR 2,000 crores, we can keep it.

[Mohit Khanna, analyst]

Fair enough, sir. And what are the ballpark margins for the MDO segment?

[Sudha Kodandaramaiah, executive]

Rohit?

[Sajja Rohit, executive]

MDO, so we have 2 mines here. The first mine, Kotre Basantpur, which doesn't include a washery. We are expecting an EBITDA of 18% to 20% once we reach peak rated capacity. And the second mine, SAIL 1, we are expecting to do an EBITDA of 27% to 30% once we reach peak rated capacity, which is 2 years from -- 2 financial years from now.

[Mohit Khanna, analyst]

Fair enough, sir. But when I see the numbers for Triveni, [ Senic ] and other guys, those margins look quite low as compared to what you just quoted. So is there anything that I'm missing over there?

[Sajja Rohit, executive]

No, no. I'll tell you. I tell you because we have -- if you look at our pattern in taking both of these MDOs, we have only focused exclusively on coking coal. These are both coking coal MDOs. All the other MDOs, that mostly is the coal MDO, which is [indiscernible] in ratios, usually have EBITDA of 15% to 20%. People play around that region. But since, one, we have a high stripping ratio here and also, there are some risks with respect to R&R, which automatically -- innately get added to the margin profile. That's the reason to have better margin.

[Mohit Khanna, analyst]

And any target revenue on the feed capacity for MDO business in FY '26? What should be our revenue from the MDO business?

[Sajja Rohit, executive]

FY '27 is our peak. FY '25, '26 -- yes, FY '27 is our peak, and peak revenues will be...

[Nani Aravind, executive]

4 MTPA, actually. 4 MTPA roughly around translates into...

[Sajja Rohit, executive]

Translates to INR 1,800 crores to INR 1,900 crores, sir. Both MDOs booked together with the washery area. [ Station ] will come to INR 2,000 crores.

[Operator]

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

[Pritesh Chheda, analyst]

A few clarifications from your comments. So the MDO revenue booking on Coal India will start from quarter 3, right?

[Sajja Rohit, executive]

Yes.

[Pritesh Chheda, analyst]

And the sale, you have given a 1.5 million tonne target of production. That is also for FY '25.

[Sajja Rohit, executive]

FY '25, yes.

[Pritesh Chheda, analyst]

So both these MDOs will start generating revenue this year?

[Sajja Rohit, executive]

One already started.

[Pritesh Chheda, analyst]

One already started. Yes, yes.

[Sajja Rohit, executive]

For the last year, we booked around INR 45 crores. And this year, we will do this 1.45 million to 1.5 million metric tonnes in FY '25. And KBP, the first MDO, is also going to start generating revenues from Q3 onwards.

[Pritesh Chheda, analyst]

Then you mentioned 30% revenue growth for FY '25 as your company target?

[Nani Aravind, executive]

Yes.

[Pritesh Chheda, analyst]

That includes this revenue coming from the MDOs?

[Nani Aravind, executive]

Yes, very much.

[Pritesh Chheda, analyst]

How much have you assumed there on the MDO?

[Nani Aravind, executive]

INR 300 crores, we assume, sir, from both the mines together.

[Pritesh Chheda, analyst]

Okay. Will you make any EBITDA at this INR 300 crores?

[Nani Aravind, executive]

We -- because the other mine is only newly starting, so initial overheads will be there. But the Tasra, we can generate EBITDA margin in the Tasra.

[Sajja Rohit, executive]

Yes, we can expect some EBITDA as well from both of these mines. But not the PRC, not the peak rated capacity EBITDA. Definitely, I think it will be -- the EBITDA is also going to ramp up with the ramp up -- ramping up of capacity. So initially, I think the first 2 years, KBP, you cannot really -- it will be in the range of 11% to 13%. And Tasra will be in the range of 14% to 16% EBITDA.

[Pritesh Chheda, analyst]

So I was just wondering whether you're mentioning margins will expand this year. So there is some EBITDA margins on this MDO business. And on the mix side, you will see some improvement coming from the O&M, right, in your overall revenue mix?

[Sudha Kodandaramaiah, executive]

Yes. Because of the better backlog of order.

[Pritesh Chheda, analyst]

Because of the better backlog. Will that push up the margins?

[Nani Aravind, executive]

There's slight improvement in EBITDA margin, sir, not a big way, because right now, in the current year also, we are having 26% mix of O&M. So we are expecting the same O&M mix and the projected turnover also. And being MDO from mix will be varying from 1% to 5%, so overall, there is a slight increase in the EBITDA margin, maybe by 0.3% to 0.4% [ percentage ]. At probably around 12.6%, we will achieve the EBITDA during the FY '25.

[Pritesh Chheda, analyst]

And my last question is on the Adani order progress FGD. What is the progress there? Because that's a INR 5,000 crores backlog in your INR 17,000 crores.

[Sudha Kodandaramaiah, executive]

Yes, I think the [ Murti ] project is taking shift well. Already, revenue has started coming in. [ We care about ] any substantial progress. About INR [ 1,200 ] crores of ordering has been done up on the [ Murti ] project. And there, the work have also started and [ the height ] also. It has been pretty good since we started. We expect at least INR [ 350 ] crores of revenue in that.

One more thing, the other projects, there are, as usual, maybe issues, local issues, and then local resizing issues and then fitting of the [indiscernible] retrofit jobs. There are other layout issues changing there. Apart from that, some [ KP ] effects also can be there. I think there -- it can be some as well. But Udupi is going to take up. Perhaps the end of third to fourth quarter, things would improve for the other projects also. Other portion of the jobs -- to other projects.

[Prem Thakur, analyst]

So I didn't understand, sir, out of INR 5,000 crores, how much is executed? How much will get executed this year?

[Nani Aravind, executive]

So the FY '25 is projected around INR 305 crores from the Udupi. So far, we have recognized INR 157 crores revenue, we have done. Another INR 300 crores, we are projecting from Udupi.

[Pritesh Chheda, analyst]

Then is this project now become a 5, 6, 7-year execution project of INR 5,000 crores?

[Sudha Kodandaramaiah, executive]

It depends -- see, FGD has got -- we know -- right in the beginning, we had other interference issues and also -- particularly only the PPA is an important ingredient of the input required for -- if just the PPAs are properly in place, then I have to take a call on that -- that is where -- this thing will be there.

And then second aspect is the layout issue because of the law this has to be [indiscernible] limited layout -- just outside the boiler and it is the [indiscernible] plan for [indiscernible] designed for FGD. Therefore, they will decide conventionally. Now when they put a new system, which is the whole layout, obviously, they can commission -- that is where they are more cautious and taking some time.

And then perhaps once the elections are over, new government comes in, there is more push to come on that for the new investments also because 104 megawatt -- gigawatt ordering has been done. Further a [indiscernible] gigawatt ordering has to be done that also will get revived based on that on that. And that we have to see -- we have to see there can be some aspects, we have to look into this.

[Nani Aravind, executive]

It won't -- I'll just add to what Ramaiah, sir, said. It won't be a 5-, 6-year window. If you look at Udupi, what we are executing currently. We are on track. There's only a delay of 6 months, I think, initially because of engineering approval delays from the client side. But otherwise, once we have proper clearances in place, it's just a matter of 22 to 24 months of execution cycle.

But naturally, I think there is this slowdown in terms of FGD across the country. So we can expect, we'll get better clarity, still clouded, but we -- around Q3 this year is when we'll get to know what's going to happen to the engineering we did for these plants that we have been asked to slow down.

[Operator]

The next question is from the line of Rajesh Kumar from Right Shopping Private Limited.

[Rajesh Kumar Rathi, analyst]

Can you hear me?

[Sudha Kodandaramaiah, executive]

Yes, yes.

[Rajesh Kumar Rathi, analyst]

Yes. My question was on your annual revenue. Annual revenue jump over last year over March '23 was around 18-odd percent. So what is the reason, actually, despite all the orders which are in hand, why there was lesser execution on the ground?

[Nani Aravind, executive]

Can you just -- repeat?

[Sudha Kodandaramaiah, executive]

No, no. Can you say...

[Unknown Executive]

Repeat the question again?

[Sudha Kodandaramaiah, executive]

Yes, yes. Can I hear the question again, sorry?

[Rajesh Kumar Rathi, analyst]

Yes, yes, sure. I just -- I was comparing your annual revenue over '23 to '24, there is a jump of 18-odd percent only. Despite so much of orders in hand, what was the reason of less execution on the ground?

[Sudha Kodandaramaiah, executive]

Yes. One is the -- we have seen the -- there were some issues on the FGD front. That is a major portion of it. Second is the UP Water [ scheme ] also. It is working on well, but what is the -- problems are like -- I won't say the problem, the issues there locally is bad. We are very [indiscernible] that project management structure center is there. And then it is village-centric development, even though the -- a lot of push is there, the capital is there and funding is there. There can be small local issues and all. There are some gap in this. But bearing these two in mind and the rest of the teams on the O&M and other projects we have done quite aggressively. That is a major factor.

[Rajesh Kumar Rathi, analyst]

Okay. Okay. Well, in current year, what are you targeting the FGD order? How much FGD conversion would be there in the current year?

[Nani Aravind, executive]

Around INR 300 crores, we are projecting to the FGD for current year.

[Sajja Rohit, executive]

Sir, we have only considered the current Udupi project that's under execution and for which we have full clearance to execute. So we have only considered INR 300 crores -- out of Udupi. But if anything -- any other clearances, we get in Q3, will be a bonus.

[Rajesh Kumar Rathi, analyst]

But only till now out of INR 4-odd thousand crores of order, what is the total billing done already?

[Nani Aravind, executive]

See, out of the only one Udupi product only, we started building, sir, we are actually doing work. Around INR 157 crores, we billed so far. And we are targeting INR 300 crores during the current year. So we have already issued a lot of work orders to our procurement vendors and also we're expecting that billing will happen -- INR 300 crores during the current year.

[Sajja Rohit, executive]

And all of the projects put together, we probably did around INR 10 crores only for engineering and all of the expenditure we just billed for the engineering, sir, but nothing significant.

[Operator]

The next question is from the line of Riya from Aequitas Investment.

[Riya Mehta, analyst]

My question is, will we see a resurgence in the electric works order intake. So where is this coming from?

[Sudha Kodandaramaiah, executive]

Yes. That has some [indiscernible] in the -- because we have taken INR 1,250 crores of railway jobs, this is a combination of civil track working and also railway electrification. And the substantial portion of the jobs is the railway electrification, that's what I told you. There is a jump in our overall backlog of the orders for the -- this one, O&M, it has gone up substantially, that is the main reason.

And that will -- we expect the electrical business also can have some improvements with the more of the railway jobs and then transmission and distribution projects coming into the business.

[Sajja Rohit, executive]

Riya, yes, just add to what Ramaiah, sir, said, so we are still sticking to our strategy and objective of not aggressively expanding or tapering down our transmission and distribution in the electrical space. We are only focusing on these railway composite jobs that have some electrical and signaling and telecommunication components. A skill we have built over the last decade in executing various railway projects or standalone electric or SMB projects. So that's the only revenue increase that we have seen because this team -- we'll be assisting a civil team in executing the overhead electrification and the SMB part of the railway projects.

[Riya Mehta, analyst]

And in terms of the order intake for the quarter, are you seeing a little decline around INR 3,000 crores -- on a quarter-on-quarter basis it's a little bit -- INR 3,460 crores around. So is this on account of election or you're seeing a general time of declining order?

[Nani Aravind, executive]

This is because of the conduct. So we are not getting much of -- new tenders are not coming, and we are waiting for the -- we were declared as L1 in a couple of the projects. So -- we're waiting for the railway authorities to resume them.

[Riya Mehta, analyst]

[indiscernible] that should be helpful.

[Sudha Kodandaramaiah, executive]

The two L1 project status is there. One is for the mega nuclear projects on the [indiscernible] side, that is the steam turbine side, about INR 570 crores, and then there is the on...

[Nani Aravind, executive]

Foot over bridge, we were L1 and...

[Sudha Kodandaramaiah, executive]

Yes, that both of them will come around -- nearly INR 700 crores both the orders together.

[Nani Aravind, executive]

I think we can...

[Sudha Kodandaramaiah, executive]

INR 700 crores yearly.

[Riya Mehta, analyst]

INR 700 crores?

[Sajja Rohit, executive]

For the current year, we are L1 in INR 700 crores worth of projects, and we have bid for close to INR 4,600 crores worth of projects that are yet to open. So that's -- we're expecting all these things in a gradual pace manner to open up after starting from first week of June.

So a couple of them have opened. We were L1, but we are waiting for the LoI copies, again, expecting in the first week of June, and the other orders are expected to open in the first week of June as well. You'll see that inflow -- the spillover of Q4, you'll see that inflow in the month of June.

[Operator]

The next question is from the line of [ Bapodara Mayur ] an Individual Investor.

[Unknown Analyst]

Congratulations on good set of numbers. Actually, my question was around FGD project. So the slowdown we are witnessing, it is due to any technical issue or it is from the client side or it is from our side? That I wanted to know.

[Sudha Kodandaramaiah, executive]

No, there is no delay from our side per se. There are -- say all these things have [indiscernible] to have -- I think I had told you earlier also. One is the engineering setup, which is required in an existing plant with an old design that has got challenges.

The second thing is that the additional investment, any customer makes, he expect a revenue stream. For that additional PPA has to be [ work out ] with the local regulatory commission and then the local distribution companies and all. That is the main thing. Therefore, they have committed already [indiscernible] of ordering has been done for Udupi -- and as we said, the third or fourth quarter, the other projects also took [indiscernible].

[Unknown Analyst]

Okay. And the -- are you willing for any other FGD projects? How FGD tendering is going on in other areas -- other power plants?

[Sudha Kodandaramaiah, executive]

Yes, -- it has to come because 104 out of 169 gigawatts of the planned FGD, 104 gigawatts have been ordered. And then the total commission is about 10,000 -- sorry, 10 gigawatts as of today. Now there is a general -- little bit of slowdown of so many things are there in this because it is a new technology and then retrofitting, then so many other aspects are there. But now as a learning process is done and more [indiscernible] are getting commissioned. Perhaps it should improve. And then balance 54,000 megawatts ordering they have to push it up, now. Maybe that should take some sort of a push now after the -- after this -- in the current year.

[Unknown Analyst]

And what is the deadline from the government for this FGD?

[Sudha Kodandaramaiah, executive]

I think this is the international commitment. All the latest international limit is Scope 2, 2026, earlier it started in 2015 and that continues to be there to reduce the emissions, both in the SOx and NOx and there's no delaying there and in fact, when we have a net zero commitment -- national commitment by 2070. These investments have to happen. Only the typical of this type of [indiscernible], the investments have to be matched by the revenue stream also. That is where -- after all, the power has to be sold to the public and somebody has to pay for that. That is where the -- these things have to be sorted. And the government will definitely have to push for that.

[Sajja Rohit, executive]

Yes. And the Indian deadlines are for Class A cities, it's 2026. Class B cities, it's '27. And Class C, it's '28. So we are expecting, I think, probably after elections, there may be a push up by a year more of these headlines. So we are just -- we have to wait and watch.

[Unknown Analyst]

Okay. And sir, regarding the MDO projects, 2 quarters like -- we are not planning for any new MDOs. So right now, are we planning for any new MDOs to participate in?

[Sajja Rohit, executive]

No, sir. No, no. No new MDOs. Until we reach peak rated capacity of these MDOs, we don't plan to bid for any new MDOs.

[Unknown Analyst]

Okay. So no new until 2027.

[Sajja Rohit, executive]

Yes.

[Operator]

The next question is from the line of [ Khadija Mantri ] from Capri Global.

[Unknown Analyst]

Am I audible?

[Sudha Kodandaramaiah, executive]

Yes.

[Unknown Analyst]

Yes. Sir, my first question is regarding the FGD system. So I was wondering that if more orders are awarded in FY '25 for FGD. But when you already have an order book of INR 5,000 crores for the states. So do we have enough resources to take on more orders in the FGD segment? Or we will be confined because you already have large volume and addressing the [indiscernible]?

[Sudha Kodandaramaiah, executive]

I think as far as the resource is concerned, but [indiscernible] we've got 32,000, 33,000 [indiscernible] based. In the latest [indiscernible] ample space in civil structure or mechanical and engineering coordination. [indiscernible].

Now, as far as the plant construction and other aspects is concerned, procurement, we are strengthening those groups also. And then in plant construction, we are perhaps, a leading player in the country. And we have delivered projects after projects on time. And that's why we are getting repeat orders from many of the customers, our valued customers, it's only because of this. Recently, some of the orders on the power sector side has come specifically [indiscernible] because of our standing in the market of our ability to complete the projects in time.

I think that is not a constraint at all of Power Mech. We're well equipped with all the resources and equipment and also the expertise what we have developed in diversified segments and then that is well in place.

[Unknown Analyst]

Also, have you received any orders from BHEL or the [ Singareni ] plant in NTPC?

[Sudha Kodandaramaiah, executive]

Yes. BHEL recently [indiscernible] we take a INR 355 crore order. That is the NTPC job 2X660. Then in Mahan we have taken INR 825 crores, that is a BHEL supply order on the -- supply order has been got from the Adani group, whereas the site work of INR 825 crores, civil and mechanical work they have given to us.

And BHEL has -- in fact, Madam, I can say BHEL is standing with a new order of INR 70,000 crores for 10,640 megawatts, as I told you. All these things will come for tendering in terms of Lara, Talcher, [indiscernible] recently. In Talabira also they got recently INR 19,422 crores. Yamuna Nagar, they got recently INR 5,000 crores, then Raigarh and then Mahan. And then new orders also expected [indiscernible] and other jobs also, [indiscernible] , perhaps BHEL is in the front line, unless the tendering structure changes. Therefore, we are quite bullish on the power sector and also BHEL.

[Unknown Analyst]

Okay, sir. And my last question would be regarding this [indiscernible] project for the order size [indiscernible] it, does it consider all the price escalation? Any risk [indiscernible] for long-term projects. How do [indiscernible] which is the order size? And what kind of IRR that you are looking for in these 2 projects?

[Sajja Rohit, executive]

Ma'am, this price doesn't naturally include price escalation. This price is exclusive of price escalation, whatever we have set, the INR 30,000 crores of the sale projects that we won and also in the first line. And see these tenders are usually based on a per tonne of coal basis. So all the -- we have to initially -- There's going to be a development phase of 2 years.

And -- Yes. Can you hear me?

[Unknown Analyst]

Yes.

[Sajja Rohit, executive]

So there's going to be a development phase of 2 years, and we'll be progressing with some interim mining during the development phase. We have to slowly ramp up the production facility to deliver this much amount of coal on a year-on-year basis until we reach PRC, after which, we reach the steady state operations, and we have to produce and gives that amount of coal for the rest of the life of the mine. That's how the pricing in mining work.

[Operator]

The next question is from the line of Dinesh from RDST Capital.

[Unknown Analyst]

Sir, can you hear me.

[Sajja Rohit, executive]

Yes.

[Unknown Analyst]

First of all, congratulation on good set of numbers. My question was related to MDO. So when we say we are going to reach peak operations in [indiscernible] like 2 years or 3 years. So what kind of revenue then margins you'd expect from these 2 MDOs?

[Sajja Rohit, executive]

So both MDOs put together, Dinesh, I've already mentioned earlier, I think, in Q&A, INR 2,000 crores without price escalation as of today's price and EBITDA of 17% to 20% in the first mine and EBITDA of 27% to 30% in the second mine. This is starting FY '27 onwards.

[Unknown Analyst]

Just another question related to this. Do you have any consortium here or like the whole project is carried over by Power Mech Company?

[Sajja Rohit, executive]

No, no. We had to form a consortium to bid for the project since we were -- we didn't have the credential -- all the credentials to participate. But execution-wise, both the projects are completely being executed by us with technical support from our partners in both the consortiums.

[Unknown Analyst]

Okay. So do they also share some of the revenues there in that project? Or is it like 100%?

[Sajja Rohit, executive]

100% our revenue. They don't share.

[Operator]

The next question is from the line of Natasha Jain from Nirmal Bang Institute.

[Natasha Jain, analyst]

Yes. Sir, most of my questions have been answered. Just these 2 questions. One is can you give us the breakup in terms of the order inflow for each segment for fourth quarter?

[Nani Aravind, executive]

For the Q1, we received -- for fourth quarter. Okay. Mechanical, we received around INR 525 crores. Civil around INR 1,360 crores, O&M INR 739 crores, electrical INR 702 crores, and overseas around INR 218 crores, total together, INR 3,546 crores.

[Natasha Jain, analyst]

Understood. And sir, lastly, now that you've answered all about all these segments and how the order book is looking like. So at a consolidated basis, can you tell us what is now your revenue guidance stands in the medium term, maybe FY '25 and '26?

[Nani Aravind, executive]

so the '25, we are projecting around 30% growth around maybe around INR 5,500 crores range. FY '26 after that, we may project -- because we are -- our order inflow, we're expecting INR 12,000 for the '26. So most likely, we may plan again 25% growth on the FY '25 numbers, maybe around INR 7,000 crores, we can target by '26.

[Natasha Jain, analyst]

Understood. And sir, lastly, any CapEx that we are looking to do? Or just the maintenance CapEx?

[Nani Aravind, executive]

Yes. In PMPL regular equipment and all around INR 100 crores CapEx, we are doing in Power Mech and [indiscernible] of around INR 240 crores. So around INR 340 crores we are planning in Power Mech CapEx during the current year.

[Operator]

The next question is from the line of Mohit Khanna from Purnartha Investments.

[Mohit Khanna, analyst]

Yes, sir, I had a follow-up on MDO. So when you just mentioned that these contracts don't include any price escalation. Does that mean that our EBITDA margins are -- would likely to go down as the contracts age? Because -- or how does it work?

[Sajja Rohit, executive]

No, no, sir. I said this -- the value that we have declared doesn't include the price variation. It's unaccounted. But there is a price variation clause in the contract. So whenever there is an increase in diesel price, whenever there's an increase in the consumer price index, we naturally get a price valuation based on a formula that's set out in the contract.

[Mohit Khanna, analyst]

Understood. And you get paid as per the quantity of coal that you mine?

[Sajja Rohit, executive]

Yes. The quantity of coal that we mine and we -- given the delivery point in a prescribed size, according to the contract.

[Mohit Khanna, analyst]

Okay. And this pricing is dependent on the coal price?

[Sajja Rohit, executive]

No, no, no, not at all. There is an offtake risk here. So irrespective of the coal price or the general economic scenario, they'll still have to compensate because we are building our extra effort to achieve PRC. They have to take this from us. If they don't take this from us, there are other clauses that will kick in, compensation clauses.

[Operator]

The next question is from the line of Sunil an individual investor.

[Unknown Analyst]

Sir, a small question, the CapEx, since you have mentioned for the maintenance and all, will be funded through internal approvals or?

[Nani Aravind, executive]

This INR 340 crores of CapEx -- regular INR 100 crore of routine, INR 140 crores is through term loans. We will raise around INR 60 crores to INR 70 crores of term loans, balances through internal accruals. And washery, we have earmarked funds we raised for INR 240 crores earmark funds are there for washery investment. So we are using that funds of the washery. [indiscernible] from debt, we'll raise, balance will be internal accruals.

[Operator]

The next question is from the line of Satyan Wadhwa from Profusion Investment Advisors.

[Satyan Wadhwa, analyst]

Could you guide us to what the tax rate is likely to be in FY '25 and FY '26?

[Nani Aravind, executive]

25%, sir, as of -- during FY '26 and '27, we are projecting around 25% -- 25% to 26% will be the tax.

[Satyan Wadhwa, analyst]

And even in FY '25 as well?

[Nani Aravind, executive]

Yes, sir.

[Satyan Wadhwa, analyst]

And overall margins will be similar to what they are now? Or do you expect some uptick going forward, based on the current order book and execution plan?

[Nani Aravind, executive]

[indiscernible] slightly, there's a 0.3% improvement, sir. The PAT rate will improve compared to the last year because of the tax rates. So there will be improvement in the profit margin during FY '25.

[Satyan Wadhwa, analyst]

Sorry, I was asking about EBITDA margin not PAT margins.

[Nani Aravind, executive]

Yes, 0.3% probably will be -- improvement will be there in FY '25 compared to the FY '24.

[Operator]

Thank you. As there are no further questions, I would like to hand the conference over to Ms. Natasha Jain for closing comments.

[Natasha Jain, analyst]

We would like to hand over the question to the management for closing comments.

[Sudha Kodandaramaiah, executive]

Yes. Thanks, everybody. Thanks for the participants. I think we have seen a significant improvement in the previous year in terms of overall order bookings. And with the new policies of the government and the focus on the investment coming in the private sector and infrastructure continue to push and power sector opening up and then exports also, we are looking at new opportunities.

Perhaps we should look at improved order booking and also the largest [indiscernible] has been expanded. And we should reasonably do well in -- this year, and we have got a strong base of INR 17,000-odd crores that should help us to achieve the revenue, what has been projected and with the margins, what has been informed by Aravind. And we look forward that the Power Mech's growth score will continue to maintain in the coming years also.

[Natasha Jain, analyst]

Thank you, sir. On behalf of Nirmal Bang Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.