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Schneider Electric Infrastructure Ltd
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Ladies and gentlemen, good day, and welcome to the Schneider Electric's Q2 FY '23 Conference Call hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Harshit Kapadia from Elara Securities Private Limited. Thank you, over to you, sir.
Thank you, Chris. A very good evening to everyone. On behalf of Elara Securities, we welcome you all for the Q2 FY '23 and H1 FY '23 conference call of Schneider Electric Infrastructure Limited.
I take this opportunity to welcome the management of Schneider Electric Infra represented by Mr. Sanjay Sudhakaran, Managing Director; Mr. Mayank Holani, Chief Financial Officer; and Mr. Vineet Jain, Head, Investor Relations. We will begin the call with a brief overview by the management, followed by a Q&A session.
I'll now hand over the call to Mr. Sudhakaran for his opening remarks. Over to you, sir.
Good afternoon, everybody. This is Sanjay Sudhakaran, Managing Director of your company, Schneider Electric Infrastructure Limited. I hope all of you are doing well. .
And we will go straight to Page #3, where we have a small glimpse about the economic outlook for India. As you can see, India has been performing pretty well during these turbulent times. I think it's one of the most attractive economies, as you can see globally probably because India has managed to insulate itself from the energy crisis, which many countries like -- in Europe are facing. And at the same time, the prudent physical policies have also paid off in terms of a stable economy.
We feel that from the overall macroeconomic statistics that India will continue to have a good run going forward. However, these things are a little bit predictable -- unpredictable given the global economic situation that we are facing. There are talks of global recession in the U.S., there are talks of uncertainty in Europe. You've heard about the U.K. issue and things like that. And we need to be cautious about the fact that the economy cannot be decoupled from the world economy in general. So I think we should look forward to the next few quarters with cautious optimism.
We go over to the next slide, which is Page #4, taking off from the macroeconomic scenario into what it means for us for our core segments that we operate in. Power and Grid was looking to be a very promising story with the government-linked incentives towards modernizing the grid, et cetera. But there seems to be a little bit of a slowdown in the actual deployment of funds that one would expect into this segment given the mandate that was given to more or less privatized the power and grid utilities and also to modernize the grid in that process. However, we feel that even with the time lag, there will be investments flowing into this sector in the next few quarters. So we are optimistic about the segment, though there might not be an upside that we have anticipated it to have.
On the mobility side, I think investments in infrastructure continue to grow especially on the metros that is urban transportation, tunnel projects as well as new airport infrastructure that are coming up. On the minerals, mining and metals, I think the story has been pretty good so far. However, we can expect some amount of a slowdown in the steel sector, primarily because of the incentives to the sector that were provided in terms of higher duties on exports out of the country.
There is consolidation also happening as you would have read about with Holcim exiting India and Adani Group taking over. However, there -- that seems to be sufficient CapEx that is flowing into the cement industry. So we expect cement to grow for some more quarters as we go forward. Industry and buildings has been kind of muted, especially due to the COVID. But we feel that investments in this area will come back strongly and vacancy rates are falling across the country in terms of commercial buildings. People are coming back to offices. So we would expect a rebound in the buildings industry as well.
Driven by the data loss, I think the cloud and service providers or the data center industry continues to flourish with more and more multinational players coming into the country. And also, we see good amount of interest among some Indian real estate developers also to capitalize on their land bank and their ability to develop real estate pretty quickly. So we see many joint ventures by real estate companies going into the cloud and service provider segment. So we expect this market to grow as well.
So overall, I think for our core segments, the outlook is positive. Just to give you some glimpse of the kind of orders that we have been bagging, I think we've got a pretty large order from Bhutan, where we are helping the country with its electrification needs. This is a repeat order, something of the similar magnitude, which we had last year. We continue to serve the customers in a very engaged manner despite all the challenges of supply chain as well as COVID. And we have managed to get a repeat order for 33 kV and 11 kV package substations.
A large order from a global data center customer for 33 kV GIS package. This is the second order, a repeat order from the same customer in quick succession. I think our strengths here have primarily been faster deliveries and making sure that we execute the projects flawlessly so positive news here as well.
On minerals, mining and metals, we have a large order from the steel industry, a fully connected product with integration with software. So an intelligent solution in line with our strategy to digitize more and to be able to deploy more and more EcoStruxure solutions to customers.
We go to the next slide, which is Industry & Buildings. This is for a government establishment building, operating good infrastructure. And again, in terms of digital and connected where we have transformers, HD panels, Ring Main Units and package substations, all connected products, and we will be able to leverage cloud analytics here as well as we are creating a road map for that as well. So this is a good win in the building sector that we can be proud of.
Another area which is of keen concern -- keen interest to us, I would say, is a centralized building management where we continue to deploy our software assets like advisory layers on clouds to be able to move buildings from being managed, building by building into more of a central command center. This will help organizations and the building industry to move towards their objective of net zero, being able to manage their assets proactively with predictive maintenance, et cetera. So this is a huge step forward with one of the IT companies that we have done in deploying our asset advisory solutions onto other solutions as well from the Schneider basket, including building management and connected products.
We'll go to Slide #10, which is on -- again on services. Here is an acquisition that we -- Schneider made globally, which is for a transformer analytics company. It's not a transformer manufacturing company. It's a purely analytics company with sensors and software, which will help customers predict the life cycle of their transformer assets, be able to take proactive actions and extend the life of the product as well as make sure that the transformers perform to better uptime and efficiencies. So this is a global acquisition, which we are actively working in India for pilots, et cetera, to be able to deploy quickly in the country.
Let's go to Slide #11. I think we are at different maturity levels as far as our accelerating digital is concerned. This includes digitizing our products, being able to connect it to cloud and being able to provide a CapEx to OpEx conversion. So we see that the power and grid sector continues to be highly regulated because it's a national infrastructure. So there are restrictions on connecting to cloud. So our deployment has been slow here, but we have many other edge control solutions, which need not be connected to cloud, so which we are deploying with these customers here.
On the transportation side, we are working with key metro customers to be able to provide them with more and more digitized solutions. We have spoken about certain reference projects that we have won on the steel side, minerals, mining and metals where we are digitizing the entire powertrain. Of course, industry buildings and cloud and service providers also remain our focus as far as digitization is concerned.
So EcoStruxure Asset Advisor, which is a primary software layer, which is on the cloud which is what provides us with the service stickiness and life cycle revenues with our customers, which is profitable and accretive to the company as well as helps our customers in bringing down their operational cost and better efficiency. And asset productivity is the key thing that we are trying to promote and provide in the marketplace.
Going to Slide 12. All these initiatives on the digital side should be able to take up our revenues in terms of maintenance and digital contracts, which we call as recurring revenues. So recurring revenues we expect to move from 12% in 2020 to around 22% in 2025. This is key to executing our strategy on digitization. This will enable us to be associated with our customers across the life cycle of the product. It will provide us with better stickiness in terms of customer relationship and also pull-through business that will come through from the customer in terms of space, modernization and other greenfield projects, which will follow through our satisfied customer base.
Going on to Slide 13. What we want to do here is that on services, we want to reinforce the core that is being able to get more and more service contracts modernization projects and spare parts with special emphasis on maintenance contracts. We also want to accelerate the growth on digital and consulting services, track our installed base more carefully and also grow our business through partners to be able to cater to a larger geography within India.
So I think these are the 6 strategic pillars that we are trying to work on, on the services side. This is the fundamentals for our pursuing digitization and cloud services to customers. Your company has been pretty much active in the mind share with key customers. We have held a number of events with key accounts with the Ministry of Civil Aviation, many power and grid customers such as Ministry of Power, Ministry of Energy Department in Karnataka, strong even in Katmandu, our event in Dhaka and also a number of events with the airport infrastructure that is coming up with GMR, et cetera, we have been kind of very active in our thought leadership, trying to build a good positioning for ourselves with our innovative solutions and what we can do to decarbonize and digitize the powertrain as we go forward.
So with this, I hand over to Mayank Holani, your CFO, to take us through the financial update.
Thanks, Sanjay, and good afternoon, ladies and gentlemen. Operator, please move on to Slide 16. So on orders for the quarter, we -- the slight drop in orders, about 3% over than the same quarter previous year, owing to the shift in some of the orders, major orders finalization to the next quarter. But if you look at the half year or 6-month period, we have a good growth of 11.6% in the outside group orders for this financial year.
And next slide please. Moving on to sales. Continuing with the momentum we had seen in the previous quarter, this quarter, also, we have about 39.5% growth in sales. We're at about INR 420 crores or INR 301 crores in same quarter previous year. And with this, the sales for half year stands at INR 792 crores, which is about 34% growth versus same quarter previous year. And we see a good momentum in almost all the segments in that sense.
Next slide, please. Now moving on to the P&L for the quarter. We still see continued inflation in the raw material prices, some of the commodities keep going up and down. So at the overall quarter level, if you see our gross margin is 31.1% versus 32.4% in previous year. And also the mix also plays a role here. And the profit after tax, as you will see, is about INR 87 million versus a loss of INR 87 million in previous year, which is a data of about 500 basis points. And there is an exceptional item, which is a gain of about INR 33 million, which is due to the sale of -- we had some assets in nonoperational leased land in Naini which was the plant closed long back that has been disposed of and this exceptional gain is coming due to that.
Next slide, please. For half year, our gross margin has improved to 32.4% versus 32.1% in the previous year. And profit before exceptional items of INR 193 million versus loss of INR 248 million in previous year first half. And if you look with the exceptional items, the profit after tax stands at INR 352 million versus a loss of EUR 248 million in previous year. That's it from the P&L side and on the finance side.
I will close here and open it for question and answers. Thank you.
[Operator Instructions] Our first question is from Rajesh Kothari of AlfAccurate Advisors.
Really good set of numbers. Is it possible for you to give a little bit more insights into which are the segments where we see strong traction from here on? And how do you see the order win over next 6 to 12 months?
So on the segment side, as I mentioned, I think mobility and -- mobility, data centers and a mix of, I think, certain portions of the power and grid and cement should be strong as we go forward.
Okay. And in terms of the -- if you look at the next 12 to 18 months kind of an opportunity, how do you see that from the order book perspective?
So as we went through the presentation, I have been articulating that the markets seem to be doing well. And despite the turbulence in the global economy, I think India should be able to tide over it. And given the fact that we also are well positioned with a solid product offering with adequate digitization content, et cetera, I think we should -- we have every reason to feel positive about that.
So recently, I think 1 month back, there was an announcement of INR 80 crores kind of a CapEx for increasing capacity. And I think it is more of a -- the parent company probably trying to shift from the Germany to India manufacturing plant. Can you a little bit further elaborate on that? And do you see more such opportunities?
Yes. So I think there is a factory which is based out of Calcutta, which is primarily making vacuum interrupters. And this is a factory that caters to -- as a core component factory, which caters to India as well as for many countries across the globe. So I think the rationale behind the investment is primarily to increase our exports out of India and to cater to more and more geographies as well as to cater to the growing demand in India as well. So it's a futuristic investment that we're doing given the strong demand that we are seeing across many global markets, and this is an additional infrastructure that we have announced.
So how is this to be funded, sir?
The funding will be built through partly borrowings and partly through internal accruals.
I see. So this will be spread over...
And also just fundamentally, this INR 138 crores CapEx is not going to happen in one go, maybe in next quarter or next 2 quarters. It is -- I don't know if you heard the announcement about 3 years. So that will be fully functional by 2026 and right kind of through to the financial year 2027. So it will be a phased investment.
You mean December 2026, the CapEx will get...
Yes, March '27 financial year.
But the factory will start -- is like Phase 1 factory will open or the full entire CapEx will come on stream only from Jan 2027?
No, no, it will be -- the CapEx will start probably from next financial year. And partly, some operations may start in, say, '24, '25 type of -- but it will take time moving because the operating the factory, there will be some movement from existing setup also. So the fully functional will be by '27, FY '27.
And sir, do you see any more such opportunities because there are many companies particularly in Europe, they are basically making more investments or more sourcing from their Indian subsidiaries because energy costs definitely is becoming a little bit a pain point for the global companies. Are you seeing such opportunities apart from the Kolkata what we are looking over the next 6 to 12 months?
See, the company is in a constant evaluation phase on their supply chain. So as and when they find something viable in terms of investments, I'm sure they will consider that.
I see. But I mean, like from a global perspective, can you share in terms of the competence of the -- our company when they look at the other subsidiaries across the globe, which are the areas where we believe that Indian companies are one of the most competitive when it comes to the reliability of supply as well as the cost competitiveness?
I think across [Audio Gap] at what point in time we need to trigger a capacity expansion and what form the capacity expansion could take it can be in terms of certain amount of outsourcing to certain amount of in-sourcing, plant and machinery, people, et cetera. So this is a very robust process, which is followed by the company every year where we plan 5 years in -- for plus 5 years.
Understood.
And if I may give some extension of that question slightly, given the demand it has revived quite a bit in that given the fact that we are already at 80%, 85% capacity utilization. Do you see like near to midterm major expansion plans? Or do you I think as you mentioned earlier that in December quarter, you just extending shifts to make up for the increased demand. So measures like that would open up...
does not show any immediate trigger to do something that is adequately different. We have a road map to be able to cater to the demand to adjusting various other parameters.
The next question is from [ Raj Harishi of BCTR ].
I would like to know the digital offerings of Schneider, your parent, is it all in this listed entity?
So as you know, we have an execution arm which is in terms of projects and in terms of services. Now all digital offerings are accessible by the execution arm as well as the services of the company. So we have the ability in terms of products and the capability in terms of integration to be able to deploy these products and services primarily focused on digitization of the powertrain.
I didn't get you. Primarily focused on?
Digitization of the powertrain. You see digitization can be processed, digitization can be building automation. So we stick to our core, which is digitization of the powertrain.
Okay. Okay. Okay. And any conflict of interest between say, the listed entity and other subsidiaries of the parent in India? Or it's clear to define what each will do.
I think it's pretty much clearly defined.
Okay. And how do you see data center as a business opportunity for you? People are talking about like massive growth potential over a period of time. It seems to be energy-intensive and labor, both of which should be good as far as India is concerned.
Yes, I think that's a very -- it's a good opportunity for the business as far as medium voltage and solutions are concerned. And I think I spoke about it at length both in terms of the segment dynamics as well as the digitization opportunity there.
Okay. And sir, any time frame to retire the borrowings which you have from the other subsidiaries or parent? Do you have any like strategy space or something?
See, we are -- as you see, we have started to getting into a profitable June from last financial year. This quarter is the fourth consecutive quarter, right, where -- otherwise, we used to have -- in between you will see the quarter, some quarters with profit and again nothing. So once we are back on a profitable road in terms of -- on a consistent basis, then obviously that will help reduce the borrowings when we generate the cash from operations.
Okay. But sir, you also said that the CapEx, which should be done would be from internal accruals plus borrowings. So the internal accruals will go for the CapEx and how would you retire the borrowing.
Yes. So see, there are -- I mean, there are different things we are working on. And the CapEx is also, as I mentioned, not going to happen on day 1, right? It will be spread over the next 3 to 4 years.
[Operator Instructions] We'll move on to Viraj Mithani of Jupiter Financial.
The coordination in good and recommended. Am I audible?
Yes you are.
So first 2 accounting questions. One is that our employee cost has been constantly high between 15% on quarter-to-quarter, 18.5% half year, coupled with 70% of material cost. I don't understand why our employee costs are so high? Are we expanding? Or is that -- is it we're the only company having such a high employee cost?
See, Viraj, the employee cost for the quarter, if you see is high because this quarter, there is the cost of employee share option plan, which gets booked in this quarter. So on an absolute number, this is you will already seeing the September quarter and employee cost going up from the previous quarter. But -- and I mean, if you see year-on-year, the increase is due to the normal inflation. Well we continue to work on optimizing and restructuring based on the business evolution.
So what would be the idea that employee costs will be working in future with like just for the -- just to get some fair idea into that?
Viraj, actually, our business is on the cyclic and the actual is usually lower than the S2. So if you are looking at the percentage and that's why it's looking a bit high. But our year-end level, if you see, it's not 15% or 17%, it's around in between 12% to 13%. So looking at the current opportunity that we are seeing in the market. So as of now, we are not seeing any much decrease in terms of the employee cost number. But yes, definitely, it will help us to increase the sales volume. I hope that way I'm able to answer your question.
The next question is from Nikhil Jain of Galaxy International.
I just had one question. So I just wanted to get a view on what is the kind of EBITDA margin that this business can actually deliver right? So it has been quite very well and we have been improving. But what will be like a sustainable EBITDA margin that the business can actually deliver over -- or will be long term. So can you say think to turn something like that if you can give a view, what do you think about that?
See, I mean, we -- if you look at the numbers for the last few quarters, and the P&L has been impacted a lot by the fluctuations which we have seen in the commodities, right? So which has made it a bit unpredictable and sometimes going up and down. So while we -- our focus is to continuously improve and that's where we do a lot of selectivity in terms of what kind of orders we pick up and the focus is always on picking up orders with better margin than with the focusing just on the top line.
So our focus is to consistently improve EBITDA margin on a year-on-year basis. Quarterly numbers may vary based on the mix of different products and projects because that's something which you can't manage on a quarterly basis exactly to the number. But our focus is to improve it on an ongoing basis. But yes, last few quarters, if you see the last 2 financial years, obviously, these are impacted by the supply chain challenges, whether it's economics or raw material prices and even the freight. So the debt has impacted EBITDA margin and that's why on a quarterly basis, you will see very big fluctuations. Though I would not quote any number, but we are working on consistently improving and get where if you see the numbers for last 2 financials also -- financial years also -- it has improved in last financial year also by about 0.7% in spite of the raw material and supply chain issues. But...
So can we say so in a normal world, right, which is difficult to predict. But in a normalized world, we can, let's say, look forward to at some point of time, an EBITDA margin of 10% to 12% kind of a rate, which is -- or we will be working towards that.
From today, where we are 10% to 12% is quite a distance. So yes, we will continue pushing for a better margin and focusing on it. But yes, it will take time. It's not going to happen, say, in 1 year or a few quarters right 1 year, 2 year.
The next question is from Sanjeev Zarbade of DreamLadder Investment.
Sir, my question was again on the debt side because if you look at our debt compared to other category, we are much on the higher side. And if we want to grow, then our working capital will also increase and we also have a CapEx plan going ahead. So I would like to know what kind of vision we have, where we want to see this debt 3, 4 years down the line? And the second thing is -- another way to reduce the debt is if we can increase our margin. So on that already, to some extent, you have answered, but I would like to know to what extent the material prices have to go down or something, or where do you want our execution to reach so that our margins reach somewhere around 10% to 12%, still lower than the current margin, which is around 15%. So some thoughts on that.
You rightly mentioned that our margins are on the lower side in comparison to the parent side. So yes, we are working of course to minimize the gap as much as we can do given the Indian market.
In terms of the debt, you are saying currently, the management has agreed to reduce the debt from our operationals and if we find any other further opportunity to optimize and do the rest definitely, we will work on this and at appropriate time, we will communicate it to the market.
And regarding the order intake, is it possible for you to quantify roughly the amount of orders that you have filled over in the current quarter?
Close to the [Audio Gap] INR 450 million to INR 500 million would have spilled over to this quarter.
The next question is from Sanjaya Satapathy of Ampersand Capital.
Sir, in this quarter, your raw material cost went up compared to the June quarter and despite the fact that raw materials like [indiscernible] and most other things, they went down, so how do you really explain this, sir?
Even in the last quarter con call also, we have specifically mentioned that the raw material cost for the last quarter was abnormally low, just because of a few of the orders are mixed. And secondly, the impact of the raw metals up and down will not immediately impact on the quarter because we are in a business where at least you need 3- to 6-month period to actually adequate order and to convert it into sale.
So in this quarter, when we have purchased the material was on a higher side, and of course, that this impact is coming. So definitely, in the future quarters, we will see the impact of downside of this raw material or the all that matters that's going down. But because there's a cyclical business, this impact is coming. And secondly, it's also mixed with some of the ForEx side because some of the product material [indiscernible] side, which has further impact on the raw material side.
Sir, on the ForEx side, I assume that you import mostly from Europe, right, sir?
Not mostly, but yes, the majority is signal product from Europe, but we have imports from China as well, China, U.K., other parts no.
Our next question is from Manish Goyal, an individual investor.
Sir, like we have been talking about adopting digital offerings. And in today's presentation, we have spoken about our vision 2025 on the services. So would it be just possible to give us perspective like how is the journey like in terms of how the revenue contribution has increased probably in recent past? And how do we see it going forward? Because we have given a breakup about maintenance and digital contracts revenue increasing from 12% to 22%. But I believe that is part of the overall services. So maybe if you can give us a perspective how do we see this revenue share going -- increasing going forward? And what does it imply for our margin valuation? That's the first question, sir.
So I think the information that is there on the actual data and the vision that we have, we have shared with you, I'm not able to understand.
Like in overall revenues, what could be our revenue from both digital offerings and services, what we are aiming to grow? As a layman for the shareholder, how should we kind of bench fund this or we should see this?
So the idea is to grow services share in the overall business to a better contribution. And within that to grow digital and recurring to a higher contribution within the services mix. So both of these fixes because of the higher operating margins should be accretive to the gross margin story.
Sure. But any aspirational numbers sir, say, by 2025, what should we kind of expect services revenue to be.
So we don't want to give a forward-looking guidance and that with so much of granularity. So please excuse us.
Okay. And on employee costs, ESOP, see, last quarter, I believe we had a INR 8.1 crores as a ESOP cost. So what would it be in the current quarter? .
It's in the same range, Manish, around INR 8 crores.
And how do we see the supply chain challenges on, say, like availability of other semiconductor chips? And has it eased out? And do you see that it probably not hamper our revenue growth going forward, and we probably have our peak December quarter coming up. So just want to get a perspective.
So if I've been managing this crisis all throughout now for almost 6 to 7 quarters. I think with the support of our global parent, we have been kind of being able to manage our global relationships with suppliers to be able to manage that. The challenges are real we have been supported by our customers as well in this journey. So I would like to thank all our stakeholders, whether it is our customers, whether it's our suppliers, and everyone for supporting and making sure that we are able to kind of continue to deliver on the top line that we have been projecting.
The next question is from Jatinder Agarwal, who is also an individual investor.
Moving onto the next question, which is from [indiscernible] of -- sorry, Jatinder, can you hear us?
Yes, I am on the call.
Would you like to ask a question, sir? You were in the question queue.
I'm sorry, my network is a bit patchy. I have just one question. and this is related to Schneider Electric, India Private Limited. Can you please explain me in the metals, what is the big difference in terms of the business of the listed entity and this one?
I didn't get your question. Can you repeat your question?
Yes. So there is another listed company, which is Schneider Electric India Private Limited, right? Now of the group. Sorry.
Schneider Electric India Private Limited is not listed.
No, it is an unlisted company of the group, right? .
Yes. Yes.
Yes. And so my only question is I would like to know what is the differentiation in terms of business of the listed entity versus the unlisted? And if you could just explain that more in the mind of an outsider so I better understand the differentiation and the overlap, if there are any?
So Schneider Electric, the unlisted entity holds a number of other businesses, which are like the UPS business or the automation business, home and distribution business, low-voltage business, et cetera. So there are a number of entities in India which we launched to Schneider Electric, not just SCIPL. So there are a number of entities in India that cater to different segments of the market. This particular entity is focused on the medium voltage electrification needs of customers.
And there are no overlaps between the listed entity and the unlisted?
There would be a very small overlap between the company, between some of the portions that have been acquired under the -- from L&T, et cetera. There will be a very small overlap in that segment, but that's a separate brand that is not operated under the Schneider Electric brand.
Okay. And is that -- so when you look at some financials, obviously, you have taken this from third-party sources. But when I look at last 10 years, revenues in that business have almost become like 3x. And the listed entity, obviously has they've been managed about 1.5x in 10, 11 years. Over these 10, 11 years, are there segments that are about interchange or whatever in the entities?
No, the segmented -- segments interchange does not affect the business because the medium-voltage technology business rests entirely with this company, so it does not rest. But these things are not comparable because Schneider has had both organic as well as inorganic growth. And it has a number of product lines that are operating in India.
[Operator Instructions] Our next question is a follow up from Rajesh Kothari of AlfAccurate Advisors.
My question is the direction of the margin, you said that your efforts will be to improve the margins. If you have it like assume, say, 3-year kind of a road map that how do you plan to improve this margin? One you've talked about the services business is going to increase from currently, where are we. What are the other various steps we are going to take to improve the margins because your capacity utilizing is already 80% to 85%. So at 80% to 85%, if you are operating at 6% kind of a margin, then basically, I'm just trying to understand where the leverage will come from?
So there are a number of actions that one plans for this particular activity. One is to probably localize more and more in the country, reduce reliance on imports, enter new segments of the market with newer product introductions, business selectivity digitization, services growth, recurring growth, transactionalization of the business. So there are a number of such levers that are being applied along with the transformation that customers are going through. We must remember that the market is also changing. The market is also asking for more and more solutions, which requires decarbonization and electrification and digitization. So I think the needs of the customers are changing. And with the technologies that we have, we should be favorably placed in the marketplace. So that's about the factors that will contribute to the margin expansion.
Okay. So for example, the first driver is as you say, localization. So currently, how much we import versus localization?
So it's not just a matter of how much we import versus -- the market also will change, right? The market will be going for more and more high-end products. So when you localize those products in India and you transfer those technologies into India, the ability to have low margins improves. So the mix change also happens along with localization.
Yes. I'm just trying to see, I think everybody is just focusing on this call because everybody is after -- in the fourth quarter, and there's a really great job company management has done. So everybody just trying to understand that from here to your road map, and I'm sure you will be able to meet your target. What are the various things -- and a little bit if you can share a few details on that, that currently where are we, what are the -- directionally what we are planning to do with some probably hard facts, then that gives probably more as an external minority shareholder. We get a little bit more color into that.
So I'm not sure if I can provide you with more granularity than the overall strategic direction that we are applying going forward. Otherwise, it will look very specific in terms of forward guidance.
The next question is from Viraj Mithani of Jupiter Financial.
Yes, sir. I would like -- am I audible, sir? .
Yes.
Sir, I would like to review some color on this EcoStruxure platform in terms of EBITDA and price margin and growth. And your digital consultancy which you talk about in your slide something we [indiscernible].
So digital consultancy is all about certain acquisitions that have been made globally in terms of our ability to digitize the powertrain and provide customers with insights as to how to optimize the powertrain. So we are building that competency within the company to be able to use those -- leverage those acquisitions into value propositions for customers. So the idea is to have an agnostic consulting with customers to be able to help them optimize. And that increases the stickiness of the customers with us. So that is the idea of consulting. And what's the second piece of the question? I just...
So on the conceding, does it mean the margins will be on the higher side coming to the same question. Will we be having the much higher margins compared to our product than are right now?
So consulting per se, if you see as a product line might have higher margins. But it is not just the benefit of that, which accrues. It is also our benefit of increased customer loyalty, which would come. And then being a trusted adviser and having the first right of refusal in projects. So these are some of the benefits that come in terms of both top line and margin expansion on the existing products as well.
So my next question on the EcoStruxure. Can you throw some more light in terms of growth prospects there, margins which we can enjoy. I understand we were sharing realignment with the parent so...
So EcoStruxure margins are per se, not measured as a product or a product line. This is a bundled solution that you provide to the customer. And when you bundle the products, it is your ability to price up based on the value proposition that you have with the customer. So it is not a measure directly in terms of what is the margin on this product line and what is the cost that is associated with it and what is the drop-through that you get out of it. It's not measured that way. It's measured in terms of your ability to sell a project to a customer at a particular price and margin.
The next question is from Manish Goyal, an individual investor.
If I can get what is the outstanding order book and the breakup of the same? And also similarly for orders into and the revenue share for the quarter 2?
So backlog is around INR 1,000 crores and ratio is around 63% is the strong 21% is transactional and 16% in around services.
And on the order inflow, if you can -- like you can also give me the IG what was the order inflow and the breakup of directionally in close, please.
IG will be around INR 90 crores this quarter. And breakup is equipment 48%, project 12%, transactional 22% and the services around 18%.
And for the revenue breakup, please?
Sorry. Equipment is 43%, project 10%, transaction 40% and services around 8%. And IG will be around 19%.
Sorry, sorry, sorry. Can you please repeat again?
Equipment is 43%, project is 10%, transactional is 20%, services 18% and balance is IG.
The next question is from Akshay Kothari of Envision Capital. We move on to the next question from Sanjeev Zarbade of DreamLadder Investment.
Sir, I just wanted to know, were there any revenue mix changes in this quarter because of which the margins that declined on a quarter-on-quarter basis?
Yes. So there is a mix change impact obviously on last year, last quarter, margin -- June quarter margin was abnormally high, if you see it from any of the previous quarters also.
Yes, yes. Okay. So this time, maybe the services component would have declined and more of projects would have increased. Is that...
Yes.
The next question is from [ Bhavin Shah of Alpha Advisors ].
I have just 1 question, and that is related to that order flow, which is only spillover. So can you share that number again? Was that INR 45 crore, INR 50 crore .
Yes, it's in the range of INR 44 -- is an opportunity not that exact order number, it's a opportunity. .
It's opportunity, which were not closed in previous quarters.
Yes, that was INR 45 crore, INR 50 crore. My number is correct, right?
Yes.
[Operator Instructions] Ladies and gentlemen, I will now hand the conference over to Mr. Harshit Kapadia for some closing comments.
We would like to thank the management of Schneider Electric Infrastructure, Mr. Sanjay Sudhakaran, Mr. Mayank Holani and Vineet Jain for giving us an opportunity to host this call. We would also like to thank all investors and analysts for joining for this call. Any closing remarks Sanjay sir that you want to share.
I'd like to thank everyone for taking the time out and participating along with us in this discussion that we just had. Thank you, everybody, and have a good day, please.
Thank you very much, sir. Ladies and gentlemen, on behalf of Elara Securities Private Limited, that concludes today's call. Thank you for joining us, and you may now disconnect your lines.