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Schneider Electric Infrastructure Ltd
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Ladies and gentlemen, good day, and welcome to the Schneider Electric Q4 FY '22 Earnings 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, and over to you, sir.
Yes. Thank you, Ryan. A very good evening to everyone. On behalf of Elara Securities, we welcome you all for the Q4 FY '22 and FY '22 Conference Call of Schneider Electric Infrastructure Limited. I take this opportunity to welcome the management of Schneider Electric Infrastructure 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, after which the Q&A session will start. I will now hand over the call to Mr. Sudhakaran for his opening remarks. Over to you, sir.
Good afternoon, everybody. This is Sanjay Sudhakaran here. I'm the Managing Director of your company, and I welcome you this evening to have a brief overview about our organization, its performance in the Q4 of this year and the year that has gone by and also the full year financials.
So let me go directly on to Slide #3, which is Page 3, which is an overview of the economy of the country and its forecast. As you would all be reading about it in previous quarters, I think the economy is poised well in India for a rebound post coming out of a very difficult period because of the COVID lockdowns and things like that. However, we must admit that we live in very turbulent times. We have inflationary economy, which has been a result of solid demand coming back post COVID, also due to the Ukraine war.
Commodities are at all-time high, and there are severe shortages in the market. All this in context of the fact that governments across the world are trying to rein in inflation. We will probably see a little bit of turbulence as we go ahead. It's very hard for us to predict via crystal ball gazing as to what could be in the future, but I think we must be prepared for both some headwinds as well as some tailwinds without clearly being able to predict where the overall macroeconomic situation is heading.
Given all that, I would say that we have very a positive outlook as far as some of the end markets are concerned. Let me take you all through Slide #4, which is an overview of some of the end markets that we operate in. So I think on the power and rig side, we have seen various announcements by the government of India on modernizing the grid, improving the digitization in the utilities, reducing losses and also a thrust on to solar to try and bridge the energy deficit and also hedge the economy for -- against oil, which is a commodity that is very much under discussion right now in India.
So I think there is a solid runway for growth as far as both generation as well as distribution of electricity is concerned. The overall Indian market is poised to become more and more electric and more and more digital. There are no two things about this. And both these provide us with a fantastic opportunity to be able to leverage in the future.
There is positive momentum as far as the construction sector goes. We see that housing -- the trends of housing construction, the bookings, et cetera, are moving in a very positive direction. So there is good demand for steel and cement. And also we have seen continued investments by some of the large companies out in building CapEx into Minerals, Mining and Metals, which is one of our core segments [indiscernible].
On the other hand, we see these companies coming back with strong focus around sustainability. Sustainability means elimination of waste gases. [ Waste gas ] recovery, digitization around the plants to convert as well as to reuse energy, which is also a very positive sign as far as our segment and our products go.
Transportation, for sure, this is not a gamer, India lags in terms of infrastructure on the transportation side. So continued investments in metros and airports are going to be there for the next 3 to 5 years. The business is a little bit cyclic when it comes to execution because of the fact that there are a number of bottlenecks around acquisition of land and things like that, which makes it a little bit difficult for the sector to move in line with announcements. However, we'll [indiscernible] our pipeline 2 to 3 quarters going forward.
Data centers, again, on this side, I think the country is making a tremendous amount of progress. We see a lot of innovation coming out from India in terms of digital payments, like the UPI and the fact that data needs to reside in the country, and more and more adoption of digital whether it's for entertainment or whether it's for payments or education, we see that this is the future of communication and financial instruments. So I think this sector is going to grow as we go forward.
So I think all the end markets -- key end markets are poised very strongly for growth. We see robust investments by our customers. And we are closely engaged with these customers as well. So I think it's a situation where we had headwinds in terms of inflation, in terms of interest rates, et cetera, which we could see in the future, but we have strong tailwinds in terms of demand. So big thing is how do we prioritize and how do we make the best of this situation.
Coming to priorities. As I would say, if we go to the next slide, which is Page #5. Our priorities have not changed, and we have been consistent through these priorities in the last 4 to 5 times that we have spoken about it. The idea is to leverage detail -- digital in more and more of what we deploy with our customers, more of life-cycle revenues through services to have a predictable revenue line as far as -- and profitability as we are concerned.
Increasing our coverage because we cannot do it alone. We are building a network of strong partners and a little bit I'll speak about this as we go forward on the traction we are building here. And also key segments, which I already spoke about. And also keeping an eye on shaping the future, that is working with the governments, et cetera, to see how we can build a future greener product, which will help us extremely -- which would help India achieve the objectives as well as we go forward.
So I'll go to the next slide, which is Page #6, talking a little bit about our wins and how they tie up with our strategic priorities. So here is a win in a cement firm, which is a pretty large cement firm. And here, we were able to leverage our credit sale products, which is our medium voltage switchgear and transformers, along with the [ EPAP ] [indiscernible]. [ EPAP ] is now a Schneider company, which belongs in the Schneider portfolio. And we were able to kind of leverage both these competencies to be able to serve this customer in a very positive way. So this year also, we have potential enough to bring life-cycle revenues as we go forward.
If we go to the next slide, Page #7. This is how we are leveraging our install base. This is one of our prestigious projects, which was deployed with Schneider voltage products supplied from our France facility. The customer came back to us for retrofitting these electrical equipment as we have gauged and we won a pretty large order of large magnitude with this customer, and this helps us kind of tie in with our strategy to leverage our install base for our life cycle of revenues.
Going on to the next slide, which is Page #8. We are also increasing coverage with our customers, along with partners, one of the key distribution entities in south of India has placed a very large order with Schneider and one of its partners to supply connected products and to digitize its entire network. So 80% of this install base is connected with SCADA and digitally enabled products. This should also be hopefully a win, which will take us towards our [ objective of digitization ] and engaging with the customer for a very long period of time through uninterrupted power supply and leveraging the install base.
Let me go on to Slide #9 and give you a little flavor about how we are doing with our partner network. So if you see across the board how we are doing business with our partners, it's continuously growing. It's growing at a pace faster than the organization. Some are doing a little bit -- there's a little bit of lag, but we are doing our efforts to catch up, and this is a very strong initiative. You can see that the breaker business through panel builders, that's growing around 30%.
The circuit breaker through licensed partners, that's also going very well. The [indiscernible], which we are trying to sell through our licensee partners for the secondary GIS, that has also shown a very good offtake as we are continuously working on various approvals with the government agencies to make sure that our partners are able to participate at a level field -- level playing field in [indiscernible] that are opening up for secondary distribution as well.
So I think this is how we are executing on our priorities. I'll take you to the next slide, which is Page #10. So we have spoken about it in the past, we have a set of strategic priorities and we have certain financial priorities. The key thing that I'd like to give a message to all of you is that we are working in a very disciplined manner. Disciplined execution of the entire cycle from order to cash is what we are focusing on. So we feel good traction from the top line. As you can see, the lead indicators of orders, which is up 44%. Sales are up 18%. Profitability was up. And also, we have improved significantly on cash, which I think Mayank will take you through more as we go through the slides on the financials.
So the average receivables in the market that we have with customers that has gone down by [ 16 days ], [indiscernible] overall on inventory as well and all this with good customer satisfaction. Customer satisfaction is the cornerstone of our strategy. We must remember that we live in very turbulent times where we have shortages. Despite all these issues, we have stayed very close to customers, finding them alternate makes, alternate approvals to be able to service them better.
We have sacrificed at times on profitability to ensure that customer commitments are maintained and we are able to supply them even if we need to air freight certain components or we have to go for alternate makes that are more expensive. But we have continued our focus on customers through these turbulent times. I'm sure this focus will pay us dividends as we go forward and the situation in the market normalizes as well.
With this, I hand over to Mayank Holani, who is the CFO of the organization, to talk about the financials [indiscernible]. Over to you, Mayank.
Thanks, Sanjay, and good afternoon, [ good ] ladies and gentlemen. So will you please refer to Slide 12 [ on order ]. So the markets are now looking quite strong and recovering. And our OG orders intake for the quarter stood at INR 5,040 million, which is a growth of 46% from last year same quarter. And if we look at the trend from over the last financial year, this is the fourth successive quarter where we have strong order growth in the succession, so which shows the good momentum in orders. And this will come from almost all the segments. So there is not a single segment where there has been a drop.
If you look at the full year numbers, our orders for the year stood at INR 13,938 million. And again, these are all outside [ growth ] products, so close to INR 1,400 crores with a growth of about 44% versus previous year. And in the last quarter, if you look at the major customers from where we had orders are like GE T&D, Bhutan Engineering, [indiscernible], Linxon, Tata projects, et cetera, in this last year. As the result of this good order growth, our backlog at the end of March '22 or at the end of financial year has increased by about 24% versus same period last year, so which shows a good pipeline for sales in the next year.
Next slide, please. So on sales, our sales for the quarter is 3-4-0-0, INR 3,400 million, which is about 37.6% higher than same quarter in previous year. Sales for full year stood at INR 15,303 million, which is a growth of about 18% versus our previous financial year. And this is the first time in maybe [indiscernible] kind of record sales for the entity. So this is the first time we have crossed INR 1,500 crores landmark in the country.
And this sales have been held by liquidation of finished goods where there were some issues with customers due to site readiness or the liquidity issues. We have been able to follow it and that had helped us in maximizing the revenue. And the immediate customers have been Bhutan Engineering, BSES, GE T&D, Torrent Power, [ Humboldt ], et cetera, and the list is quite long.
In terms of quarter end close, sales is another factor which I would like to re-emphasize and we have been [ sitting ] in every quarterly call that we continue to be cautious on order booking or even on sales in terms of cash security and margins. So first and foremost priority is to ensure that we don't move from the overall, recovering the sales in terms of cash. So that remains our top priority.
Now moving on to next slide, Slide 14, please. So our overall P&L, if you see it is aligned with our strategy. We are focused on cash and margins and we'll continue this churning. Now gross margin for the quarter is about 29.2%, which is minus 6.4 points versus last year. So last year, as you can see, there was a big value in other income, which was coming due to some of the recoveries from the old provisional debt, so which is not the trend. There were some insurance claims also for previous periods. But without that also, there is an impact on margin, which has been due to the raw material inflation, which partly we have been able to pass on to customers. But since this is a long-cycle business, the impact remains.
Employee cost is -- and other expenses are in line with the numbers. So you will see that at EBITDA level, we have a growth of about 3.4 points versus previous year. And EBIT is about 4.3 points higher than previous year. And all this has resulted in a profit -- net profit of about INR 1 million versus loss of net INR 13 million in previous year, which is a delta of 4.6 points.
And this -- the raw material inflation impact, whatever has been coming, we have been able to -- partly we have passed on to customers. And then due to the other actions on our overall structural cost [indiscernible], we have been able to mitigate that and improve profitability, while hedging has also helped a bit.
Next slide please. Now moving on to the full year P&L. You will see the gross sales growth is about 18%, that is the gross margin is again 2.3 points lower than this. And the material cost impact has been about 1.6 points, which is the material cost as a percentage of sales and remaining in the other income, similar to what you saw in the last quarter -- this quarter's explanation.
EBITDA level, we are at almost same level as previous year for full year. And at EBIT, it's an improvement of 0.5 points, which is the depreciation has reduced. Profit after tax, we are at INR 276 million for the year against INR 10 million loss in previous year. And you will see that the fiscal first year after the gap of 10 years in 2011, '12, we had profit [ and income ] we have been -- last year, we were at a margin at just INR 10 million. After 10 years, we have a profitable P&L. And that's a very good thing to have.
And we'll continue this journey. So I'll leave at this and open the floor for Q&A. Thank you.
[Operator Instructions] Our first question comes from the line of Viraj Mithani from Jupiter Financial.
Hello?
Yes. Hello.
Mr. Mithani, you can ask your question.
Hello?
We can hear you. We can hear you.
Yes. You can hear me? My question is related to this transformer segment. Are we doing good in transformer segment also? I hear the industry is reviving. So that is question number one.
Question number two is, every year, we have some expansion, like now restructure. That is happening since last 5 year. How many years of restructuring sir? That's the second question. That's it.
So I would say that the transformer segment is doing pretty well, you are right. The order growth in transformer segment is slightly above the overall order growth that we have seen in the numbers, which Mayank shared on certain orders.
In terms of restructuring, I would say that restructuring is an investment for the future. So in line with the transforming market and the transforming skill sets that are required in the organization, we do invest in restructuring to make sure that we build a stronger company going forward.
No, I understand that, but we have been doing this since last 5 to 6 years. So like can you just guide through that what has changed now because every year, there is one of the exceptional items? So sometimes I don't understand what are we doing with it. Like, are we going with some predefined path for it or how does it work?
So I think what happens in an organization is that you have a certain skill set, which you need to invest in. And you have a certain skill set or certain areas that have become redundant after a period of time. So the idea is to be able to restructure the ones that are -- do not makes sense for the future and to invest in areas which are making sense for the future. So we're doing both at the same time to build a more sustainable organization.
And sir, our employee cost despite being so much restructuring has been constantly going up. So is it that because the business is growing, we are adding more and there is some balancing happening there?
So Mr. Viraj, the reason for employee costs going up in this financial year, if you look -- is due to the technical actions taken in previous year when the COVID came in, right? So there was [ no ] salary cut and some of the benefits were cut down for employees, so which have come back, so that's why you see more than normal employee cost increase.
Our next question comes from the line of Nikhil Jain with Galaxy International.
Just two questions. One, I just wanted to understand, let's say, Schneider has many entities -- hello...
We can hear you.
There was a lot of disturbance. Your voice is not clear.
Okay. Are you able to hear me now?
Not very well. Maybe -- I don't know if you are outside or something. There is a lot of second noise coming.
Okay. Hello, is it better?
Yes. Please go ahead and ask your question. We'll try our level best to...
Okay. So what I actually wanted to understand was that Schneider has so many entities in India and some of them are only on subsidiary and while this is ours internally listed entity in India. So I just wanted to understand what's the kind of breakup that we have between the work that we do and what they do? And is there, let's say, some kind of a clarity that is there for everybody that, okay, this is the path that we will be taking. And is that path good enough and a big enough for us to actually grow and continue to make to do well?
So I think to answer your question, I would say that Schneider has many entities in India primarily because Schneider has different, different product lines in India. So if we look at this particular business, which we are into, we are primarily the flag bearers for the medium voltage technology in India. And I would say that as far as medium voltage technology and its products and its M&A is concerned, I wouldn't say so that there is a significant overlap with other entities. It was actually zero. There might be some things which have been created through recent acquisitions. And the company is working on a strategy to address that as well.
So would we be the only company who is actually handling this medium voltage business? Or do you anticipate that there is still, let's say, possibilities of other entities also handling?
So I would say that these matters are under discussion right now. And to be rest assured, we are very clear that we do not want to create competing entities within the Schneider Group. That does not work well for any one of us, right? So that is not the purpose behind it.
All right. Right. Okay. My second question is with respect to the smart meter. So I understand that you are the entity who is actually working on the smart meters and supporting the industry for smart meter. So can you give some lowdown or some views on how the industry is doing and what is our strategy for smart meter implementation given it's a big opportunity.
So if you see the manufacturing and marketing of smart meters does not reside within this entity. So this entity is not responsible to make those meters or to market those meters. What it represents as an opportunity is for us to digitize the network, right? Because smart meters is an end result of you digitizing the entire network. So this entity has the capability to do projects which can digitize the network. That is what represents an opportunity for this particular entity.
And also, we need to be very selective about it because this is an activity that could burn a lot of cash if not managed very clearly because these projects tend to run over 5 to 6 years of time. So selectivity in projects, being able to supply digital -- digitally enabled products on the medium voltage side and to be able to integrate them to SCADA and be able to leverage multiyear of services revenue, that's the focus that we will be having with this particular entity. The manufacturing of meters and its sales is not the primary objective of this entity.
Okay. So in your order book, current order book, so is there any business that you have from the smart meter or, let's say, the digitization of the smart meter and the entire grid network kind of a thing?
Yes. There is a mix, but there are no meters in this particular thing right now.
So that resides with Schneider entity, right?
Yes. Because the decision-making, if you see in the market is agnostic, people buy meters separately and people buy their integration separately.
Our next question comes from the line of Aditya Soni, an investor.
So my question is the growth which we have seen over the last year, right? So that is because of the increase in the price or increase in the volume?
It's a combination of both. If you see the lead indicators, which is the order booking, you would see a fairly equal distribution between pricing and volume growth.
As far as sales is concerned, I think sales does have a lag impact. So you would say that the composition would again be slightly tilted more towards pricing than towards volume.
But then the delta fee, which we have seen because of the cost margins of the last quarter has been impacted so that we are not able to recover. So are we planning to have a further price increase also?
You see, we are planning -- we are increasing price as far as possible in line with the commodity increases. But the fact of the matter is that we have a certain duration of the contract validity. In that period, there is not much possibility to take up pricing further up. And the market has been very volatile. For example, there could be a situation where we take an order today and we execute it, say, next month, and you could still have inflationary pressures happening because of the unnatural circumstances around the globe. So it's a catch-up which has become very, very steep even in very short period. So you can imagine the complexity of managing projects in such an environment.
No, I totally understand. But the lead since -- due to the supply chain issues, the lead time of the product have been increased, right? And due to this volatility, probably you may book the order investment and you may be able to deliver after 6 months. Then in between if the prices increase, then your margins may drop, right? Then how do you like address this?
Correct. Correct. So we try to build safeguards. We try to build contingency. But unfortunately, we are also in a competitive environment. So the fact of the matter is that. And the situation is not completely predictable. We thought that we understood the impact of COVID on supply chain and then the war happened. So there are certain things that fell off the cliff post the war situation as well. So it's been a kind of a challenging time, if you look at it from that perspective to exactly predict how commodities would behave.
[Operator Instructions] Our next question comes from the line of Anurag Patil with Roha Asset Managers.
Sir, for FY '23 and next couple of years, how do you see the revenue growth and order booking momentum going ahead?
See, we -- normally, we don't provide any guidance for subsequent periods [indiscernible]. But you can -- I mean, you see the backlog which we have and the order growth, the way it trended, but we don't provide any guidance.
Okay. Okay, sir. But directionally, you see the positive momentum in revenue and order booking that -- can you assume?
I mean that's a matter of fact. It's available on record itself.
Yes. And sir, one accounting question. Out of INR 152 crore other expenses for FY '22, how much would be the fixed cost as a percentage? Just the approx number will be fine.
Pardon?
Sir, in FY '22, our other expenses stood around INR 152 crore. So out of that INR 152 crore, how much would be variable cost and how much would be fixed? The approx number is fine.
Approximately 50% is fixed, 50% is variable.
Our next question comes from the line of Nessa Parekh with Natus Capital.
My question is can you give some broad split for the top products which contribute to the maximum [ revenue ].
You are talking about product or the business mix that we usually disclose?
Our business mix also works, but within that if you can talk a bit about which segment is top product catalog side.
I'm not -- your voice is not clear.
No, I'm saying if you can give the business mix. But also along with that, just talk a bit about the top products within each business segment, that would help.
Okay. So we are not reporting any in the product segment, the business mix that we are disclosing full year.
Full year, you want for full year, right?
Yes.
Yes. So systems is about 72%, transactions 17%, services 11%.
And when you say systems, can you just talk like, which are the top -- what products or projects kind of contribute the maximum to this so that we just get a sense of...
But that also now -- these 3 are available on the website in the Presentations business area, we have captured all the details about what are the products are available on each of these category.
See you can see the mix also. Large -- a major part of our business falls in the systems because we are into a largely [ ETO ] business.
Sure. And separately, in India, how much business will Schneider do outside of this entity as well. We're just trying to understand from Schneider perspective how critical is this entity?
We can't comment about the other entities.
Our next question comes from the line of Rupesh Tatya with Intel Sense Capital.
Can you hear me?
Yes.
Okay. Sir, last quarter, I mean, you had talked about 2 substantial wins in data center, so if you can just talk a little bit about that. Where are we? And any other wins in Q4? And how is this business progressing from, let's say, FY '23 and FY '24 point of view?
So I would say that the traction in terms of -- we spoke about the opportunities and we spoke about the traction that we are making with customers. I think the traction continues. We're not that privileged to disclose the names of the customers and the values because of nondisclosures, which we have with those customers. But I can -- one thing we can say that the mix is steadily improving in terms of the data center mix.
Okay. Sir, I mean can you give some sense of opportunity finds in data center?
I think this is something that is pretty difficult to calculate in terms of what could be the potential in terms of -- because data centers are evolving market and evolving business. So I would say that it is a little bit too premature to put a number on it as to what could be a steady-state business of data centers. And right now, it has stood where it's just about to grow. So it's growing at a very double-digit pace. But what could be a steady-state business is something that is a little bit difficult to put a number on it. Can we have the next question, please?
Yes, sir. Our next question comes from the line of Dhiraj Sachdev with Roha Asset Management.
Sir, since you are involved in large projects and part of the projects, I guess, is tender business, so are you able to -- or will you be able to pass on the higher costs, its variable cost, et cetera, to the end client because sometimes what happens is the project business is fixed cost in nature or fixed pricing in nature and completely doesn't cover the price variation clause. Can you give some qualitative color that you'll be able to maintain the margin in this kind of higher raw material cost situation?
So you could see from our past track record that we have been able to kind of mitigate the risk on commodities to a very large extent or else the impact to the gross margin would have been much more significant. So there are price variation clauses in some of our contracts. Some of our contracts are fixed-period contracts in which you cannot pass on the commodity prices to the end customer. But the way we look at it is when we pick up projects, we also look at a kind of duration that we are agreeing to and there is some contingency on to it in terms of what could be the inflationary trend in the period going forward.
It's not -- as we have seen, the circumstances have been a little volatile and the predictability has not been accurate to kind of 100%. But we are pretty close. So I think that what could happen in the future is something that we cannot predict. We try our best to use our judgment in terms of what could -- what we need to bake in as far as contingencies are concerned, but it's not something that is entirely predictable.
Yes. So we assume that in the current order book you used to build sufficient contingencies to take care of new raw material cost pressure and you should be able to maintain the margins, right?
That is the intent. That is the intent, I would say.
Okay. On the other side, I've also looked -- we have also looked at your cash flows, which have improved materially because of better working capital management. Now we need to execute this incremental order book. Will you be able to generate similar kind of cash flows of over INR 100 crores? Is it payment terms and inventory, et cetera, would you be able to manage on a similar basis at a higher revenue level?
So see, our cash flow is a mix of kind of -- there are 2 factors. One is, [indiscernible] previous years. Because of your COVID situation, the payment and liquidity issues where there, so our payments were getting delayed. So one is that. And second is also the impact of our focus on cash and securing the payments where we have been continuously focusing on improving the payment terms, right? So both put together have shown the results. And we continue to make further in that direction.
My sentiment that we focus on disciplined execution. We do not change our strategy on that particular front. And one of the key parameters is to make sure that we do with on cash.
That's very nice to hear. So I think -- yes, so incrementally, if you want to grow at, say, 15%, 20%, I'm just giving you a hypothetical number, you'll be able to manage with cash flow without resorting to any working capital borrowings or incremental loans per se, right?
I would not like to comment on the future guidance. Sorry.
NO, it's not a future guidance. It's based on the current tightening of working capital that you have resorted to. You should be able to manage comfortably the incremental order book execution cycle through the internal cash flow that you are generating, right?
Sorry, can you repeat what you said?
I just said that based on your working capital tightening norms, payment terms, et cetera, going forward with incremental -- this incremental order book that you have or growth that you will have to incur, you should be able to manage through your internal cash generation without resorting to any incremental working capital borrowing?
See, that's what we can -- we will -- we may also expect. But sometimes there are short-cycle impacts also, right? So it's difficult to predict exactly. But yes, say in a normal scenario, we would also like to have that kind of thing.
Our next question comes from the line of Harshal Parekh with AlfAccurate Advisors Private Limited.
My question is on the medium voltage industry side. So I would like to know what would be our market share? So are we market leaders in the medium voltage segment? And what would be our competitive positioning in the industry in terms of our products?
So normally, we do not comment on market shares, whether we are #1 or we're #2 or #3. But what I could tell you is that in the addressable market, we are pretty decently poised. So I wouldn't want to put a number to it because the definition of market and market share is different for different people. But as far as the addressable portion of the medium voltage market is concerned, we are pretty decently poised. And we have a trend agenda. We are not just chasing market share and we are also chasing the right market share for profitability reasons.
So one of the reasons that we want to target is partnerization and digitization is to ensure that we have the right market share with the right set of customers.
Understood, sir. Sir, in terms of the addressable market which you mentioned, so is there any particular section of the market which we are not specifically catering to in medium voltage?
There is a large amount of market which is best addressed by our partners. So the pull-through that we get here is for your breaker and not your full equipment. So we have been kind of divesting a little bit of top line continuously to make sure that we participate more and more in the right markets on a complete project basis and address the markets which are at the bottom of the pyramid through our partners.
Okay. And sir, in terms of technology, if we compare with our peers like ABG and Siemens, are we technologically superior?
Yes, we are. We are -- let me put it this way. In places, we are superior. And in most places, we are equivalent. So I think it's a good position to be in.
Okay, sir. And sir, my other question is on the other expenses side. So if you see FY '21 and FY '22, the other expenses have remained flat in absolute terms. That is INR 152 crores despite our revenue increasing by 18%. So is this because of any cost-saving initiatives, et cetera? And is this sustainable?
So see, the impact in other income, other expenses is because last year, we had lost some major -- good amount of provisioning also for the old debtors, right? So which has gone out. And then some of the variable costs like repair maintenance, fuel, et cetera, have gone up to that kind of balance.
Otherwise, obviously, if your revenue -- your fixed costs remain the same and there is no abnormal impact, slightly the other expenses will go up. But last year, there was an exception kind of -- or you can say the one-offs that debtors [indiscernible]. So there was a debt of [indiscernible]. And what happens by way of accounting, debtors [indiscernible] come in other expenses. While if there is a recovery, it goes into other income. So you have a recovery also coming as other income from return of debtors, then you have a [indiscernible] below. So if you net it off, that was the reason.
Understood, sir. Understood. And sir, just last question, what would be our closing order book?
You mean the backlog at the end of March, right?
Yes, yes, yes.
So our backlog at the end of March '22 is INR 933 crores versus INR 750 crores in March '21.
[Operator Instructions] Our next question comes from the line of Viraj Mithani with Jupiter Financial.
Yes, sir. I was looking at your numbers, what is this benefit of -- which is there in the lower line, the remeasurement of defined plan and benefit plan, some INR 2 crores and fair value of the cash flow. This is our hedging income is it?
Yes. So there are 2 things in that. One is with the -- that you see, gratuity and that should be [ benefiter ] revaluation which is to be done on actuarial basis, right? That comes here below the profit earned. And then because we -- last year in, I think, Q2, we started the hedging process, so that hedging benefit also as on date based on whatever hedging we have done. And the impact which is notional impact as on date has to be provided as per accounting guidelines.
Yes. Secondly, this cash flow from the operating entity has actually gone up smartly. Is it because we are receiving orders, advanced cash and because for the orders booked?
More because of the last year -- one is, obviously, your profit has gone up. But also last year, if you see our day sales outstanding, outstanding is much more, right? So that too the market situation was a bit different. When this year, the sentiment has improved. So that has helped. And we were able to collect more than from the previous year. And this year, outstanding, which remains at the end of the year, was much lower than the last year in terms of the percentage, if you say.
Okay. And what is our outstanding order book right now? And what is your capacity utilization? And can you give the breakup for the order book?
Second part, what you said, other than the outstanding order book?
Capacity utilization and breakup of order book.
So breakup of order book is about the INR 933 crores is our backlog.
INR 933 crores. And that will be broken into like systems, transactions...
So 69% is systems, and transaction 18%, services 13%.
Transaction 18%, and services 13%. And what would be intergroup orders?
Intergroup order for the year, right?
Yes, yes.
Intergroup order for the year is about -- just a minute. It's about INR 319 crores.
INR 319 crores. Out of this INR 933 crores of orders, is it? This is part of that order book or this is already exited orders?
No, that is only the outside group. INR 933 crores backlog is the outside group. Intergroup is separate.
What is intergroup? That's what I wanted to know.
Actually, we are not reporting on the backlog because it's only in short-term orders. So we are taking the order and we are....
Intergroup is not a long cycle, so we don't do report that segment.
No, no. What is the intergroup order in this INR 933 crores order book? That's what my question was.
INR 933 is only outside group.
It's The outside group. Okay. And is there an intergroup order book also in this, apart from this?
No, this [indiscernible] over and about this, but we don't report it because the cycle is [ 10 year ] short.
[Operator Instructions] Our next question comes from the line Rupesh Tatya with Intel Sense Capital.
Sir, my first question is a clarification. On Page 10 of your presentation, there is an order progress. It's INR 1,394 crores and what's in order book is INR 933 crores. So what is this order progress then?
You see INR 1,393 crores is the order booking during the year, right? And INR 933 crores is the backlog orders in hand, which are to be executed in future period as on March '22.
I see. I see. Okay. Okay. And sir, in last year's revenue, what would be the percentage of business from utilities?
So see typically, our business for utilities is about in the range of 42%, 45%.
And would it be fair to assume, sir, it is lower-margin business than rest of the segments?
Can you repeat?
Would it be fair to assume that this is lower margin than rest of the business?
No. In that rate, you can't assume that the utilities is lower margin.
Our next question comes from the line of Nikhil Jain with Galaxy International.
Yes. Are you able to hear me, sir?
Yes.
Yes. I just wanted to know whether you do any exports? And if you do any exports then what will be the percentage of exports in the current quarter and for the year?
We do also exports. So the export sales during [indiscernible] per year.
[indiscernible] crores, okay.
[indiscernible] million.
Sorry, for the year, sir, how much was it?
I said the export sales in the last quarter was INR 328 million.
Right. And for the year?
INR 1,459 million, so INR 145.9 crore.
And this is basically supplied to group companies across the globe? Or is it to other external parties, sir?
One can be to the group companies. But also there are many exports where you have, say, Indian EPCs executing a project in Africa or Middle East or somewhere. So those are also coming as exports, where you are exporting out of India. Maybe the customer may have some correction with India, but you are exporting, for the business it's coming directly from here, not through group companies, but there is as exports. Even like [indiscernible] so we have a lot of business.
Right. So is there any special focus towards exports that you want to grow exports to higher than your domestic revenue grown or any, let's say, a mandate from the group companies or the parent company that won't be purchasing some material from us, sir? Is there anything, any movement in that direction, sir?
[indiscernible]
Ladies and gentlemen, due to time constraint, that was the last question for the day. I now hand over the conference to Mr. Harshit Kapadia for closing comments.
Yes. We would like to thank the management of Schneider Electric Infrastructure for giving us an opportunity to host this call. We also would like to thank all the investors and analysts for joining to this call. Any closing remarks Sanjay sir, that you would want to give to investors?
I'd just like to thank you and all the participants for joining the call today evening and asking questions. I look forward to talking to you next time. Thank you.
Thank you. On behalf of Elara Securities Private Limited, that concludes the conference call. Thank you for joining us. You may now disconnect your lines.