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Schneider Electric Infrastructure Ltd
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Ladies and gentlemen, good day, and welcome to the Schneider Electric Limited Q4 FY '23 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. [indiscernible] from Elara Securities Private Limited. Thank you, and over to you, sir.
Thank you, Lizan. Good afternoon, everyone. On behalf of Elara Securities, we welcome you all for the Q3 FY '22 and FY '23 Conference Call of Schneider Electric Infrastructure Limited. I take this opportunity to welcome the management of Schneider Electric and co., represented by Mr. Sanjay Sudhakaran, Managing Director; Mr. Mayank Holani, Chief Financial Officer; and Mr. Vineet Jain, Head, Investor Relations. We'll begin the call with a brief overview by the management, followed by the Q&A session. I will now hand over the call to Mr. Sudhakaran, for his opening remarks. Over to you, sir.
Thank you [indiscernible]. Good afternoon, ladies and gentlemen. This is Sanjay Sudhakaran, here, your Managing Director and CEO for Schneider Electric Infrastructure Limited. As usual, I will get straight to the topic by talking about the economic outlook of the country. We'll go over to the Page 3, where we have outlined certain macro indicators. Clearly, the economy seems to be facing some headwinds in terms of growth projections, but this could be due to some base effect of last year and becoming fully out of the COVID impact and a year-on-year comparison.
However, we do see some headwinds in terms of the global situation, the recession fears, I would say, more fears that are looming around and the reductions in spend by certain IT giants, et cetera, you post some headwinds in terms of the projections for India on an overall basis. But what we feel is that the [indiscernible] story of electrification and digitization along with decarbonization will stay strong. And as we can look through in the future outlook that we present on some of our key segments, we feel that these things would somehow be deleted, and we should be in the range of -- we should -- we can expect a growth of around 6% to 7% of overall GDP in the calendar year 2023.
The industrial production forecast just seems to be a little on the lower side. However, things are expected to improve as we go forward. So going on to Page #4, which is the segment trends. We see continued interest in the government to invest money on modernizing the grade. This is, of course, linked to the organization that is happening across India as well we could see some moderation in terms of mineral mining and metals, which came off from a very strong year last year.
However, the trends on the mobility sector seems to be very strong, again, driven by urbanization and the need for more urban transport, primarily airports and metros and modernization of railways, which is the [indiscernible] platform could see some very strong opportunities which are presented towards us in the market. The Cloud & Services segment, which is primarily the data center market continues to be strong. We could see more investments coming on smaller data centers, which are the edge data centers. Along with the co-located large hyperscalers as well. The Industry and Building segments is also expected to pick up with vacancy rates dropping to a very large extent in all metros across India and rental rates firming up, we could see expansions coming in the building segment as well.
So overall, I think despite all the headwinds that we see on the global economy side, we do see some good prospects on the Indian economy. Certain sectors might perform a little lower than the others, but the negative impacts would be canceled out with the positive impacts, which will be driven by the government's push and drive to drive infrastructure growth in India to keep a lot of the growth curve. Going on to Slide 4 and Slide 5 and beyond. I will use certain examples to articulate our conformance to our strategies, which we spoke about previously. So here is one of the largest orders that we have won for smart RMUs, which from a discom in the south of India, which is clearly an indication of our strategy around -- being focused around our key accounts digitization with a smart RMU and partnerization program, which is leading to more and more transaction orders coming in and be enhancing our position in this segment with better and better cash flows. So this win clearly demonstrates our ability to execute on our strategy in these aspects.
I will go on to Slide 6. which is a repeat customer from one of the cement majors trying to put up a greenfield project in an already existing site and this was primarily a completely digital order with connected equipment and SCADA and solutions, which will lead to further life cycle revenues, which is again focus on our strategy to grow services and software.
We go to Slide 7. We are committed to our key focus segments and transportation being one of them and primarily urban transportation. We have won a very large order for the most rapid rail transit system in the north of India, we can expect this to be scalable with many more phases of this order coming in, in the future. Of course, we need to win these orders in a competitive manner but given the reference installation that we can have in this -- with this customer, I think this would position us positively. On the cloud and services provider, another repeat order from a Colo Giant in India. So again, a very strong pitch with data center customers with edge control software like SCADA, necessary digital communication and a very strong powertrain in terms of both medium voltage equipment and low-voltage equipment here.
I'll go on to Slide #9, which again demonstrates our ability to percolate solutions with customers, which will give us life cycle revenues. So on the left-hand side, you see an example of a major cement giant, which has -- which is now on the EcoStruxure asset advisor platform with our protection feature in [Indiscernible]. This is, again, our solution, which is predictive in nature, along with the EcoStruxure Transformer export, which is again a transformer solution, which is predictive in nature. With leveraging our ETAP acquisition that we made globally, which will provide them with a digital twin.
So these 3 solutions will provide the customer with a reduced downtime due to a solution that promotes proactive maintenance, reducing downtime and reducing failures. So this is going to be an example where a customer will real time see the benefits of these solutions. On the right-hand side, we are working with a major oil and gas public sector unit and retrofitting our old relays with the modern relays that we have launched in the market, which is the P3 and P5. This will again provide us with opportunities in the future for service retrofit and also new equipment which can go with the state-of-art release. So customer stickiness and over a long time and life cycle revenues. Again, one of the strategies that we have articulated in our previous calls as well.
So going on to Slide 10. Our basic philosophy behind digitization is to try and move towards 100% natively connected equipment. The impress upon customers the need for an edge control software, which will connect all their equipment together and provide them with monitoring. And finally, on a level Layer 3, we provide them with diagnostic software connected to the cloud that can boost their productivity and reduce their downtime. So the pillar of digitization rest on we trying to serve the customers on Layer 1, Layer 2, and Layer 3, which is articulated on the right-hand side in terms of what we call as connected products, edge control and apps and analytics.
We'll go to Slide 10, and this is how we are progressing on these initiatives. We have almost a 20% growth in terms of our edge control layer and the 50% growth in terms of our software and digital services, as we call it. And you can see that we are trying to percolate into all our key segments here, whether it is power distribution, automobiles, metros, refineries, and steel. So -- and being largely a key account business, we see strong repeatability happening once the customers adopt this technology and are comfortable with this technology, we see that they can be long-term attached with Schneider Electric for many years to come, providing us with life cycle revenues.
Also, slide 12, we spoke about a number of times about the fact that we are diversifying our portfolio, diversifying our portfolio into segments that we have not been strong before, some of these are emerging segments. Some of these are segments which have existed, but our portfolio remained largely on the power hundred side due to historic reasons, but you can see that the diversification is actually bearing fruit. The Industrial and Building segment is growing by 40%, which is almost 2x the rate at which the company is growing and the Cloud & Services segment, which was very small in previous years has now gaining contribution and contributing positively to our business, and it's growing at around 150% year-on-year. And with new -- more and more customer acquisitions in the space, we expect this business to be sizable in years to come.
I'll go to Slide 13 along with all this, we are making sure that your company is positioned very strongly in the minds of customers, as we call it, top of the mind recall. We have actively been involved with customers on the thought leadership side, collaborating along with customers to create forums that will create awareness around decarbonization, digitalization, and electrification, which are the pillars on which our strategy lies.
So you can read for yourself. There are number of events that we have participated. This is just snapshot of what's happened in the previous quarter. But throughout the year, we have engagements with the top leaders in the industry as well as decision makers. So going on to Slide 14. You would have got a glimpse of our financials. And I would like to say that we stay committed to our strategy, which is accelerated partner growth, more digital services and diversification of our portfolio. And along with this, the financials will follow. And I would now request Mayank Holani, our CFO, to lead you all through the financials and give you a glimpse of what's behind it as well. Over to your Mayank.
Thanks, Sanjay, and good evening, everyone. You can move on to the next slide, Slide 15. [Indiscernible] orders. [Indiscernible] orders for the quarter grew at about 10.6%. These are just the 4G outside group orders and not the [indiscernible]. And the orders for full year have grown by 10.3% taking it to about INR 15,376 million. We saw good momentum in orders in all segments and our backlog at the end of March '22 and March '23 [Indiscernible]. Now moving on to next slide on sales. This quarter saw a growth of about 20.7% on sales, and we ended at about INR 410 crores INR 340 crores in the previous year same quarter, while sales for full year stood at about 16.1% at INR 17, 772 million of INR 1,777 crores versus [indiscernible] in previous year. And this is once again the highest ever revenue in any financial year. So last year, we touched the highest number and this year, we have dropped it. So we see good momentum in sales quarter after quarter. There will be slight ups and downs, but we are in the right direction and implementing as far as strategy has explained.
Moving on to the next Slide 17, you see P&L for the quarter. We saw a growth of 20% of sales, slightly higher other income. So as gross margin is 37.6%, which is an improvement of about 840 bps on conversions last year. This is due to a couple of factors. One, the one is being the raw material cost normalization, which has been going normally up in the previous few quarters. And also, to some extent, a better mix of the portfolio, which has led to this higher gross margin. EBITDA, if you see, it's about 15.8% versus 5.9% to growth of about 990 bps. Profit before exceptional items at 454 million, 11.1% of sales versus 27 million at 0.8% of sales. So that's a very good growth of about 103 bps and exceptional items, so this might be a few small item, which is -- so you see a net profit after tax of about INR 448 million, which is 10.9% versus last year what we had about profit for the quarter.
Moving on to the next slide, slide 18, you see the full year financial results. Sales, as I mentioned earlier about 16% higher other income at a single level and the GM has improved to about 32.7% versus 30% in the previous year. And you see that it is last year, there was a debt in GM because of the raw material inflation and supply chain constrained. So we have clients bought back to the normal level and weather improved from the year before debt as well.
So now we are at the right level of GM in a way and recover whatever dip of the decline we had seen in previous year. EBITDA at 10.1% was 6.3% in previous year. And the profit before exceptional items of INR 108 crores, 6.1% versus 2% in previous years to about 410 bps improvement. And exceptional items, if you will recall in the quarter 1 and 2, we had reported some profits due to the reclassification of interest from front of loan. And during the [indiscernible] of loan and also the profit due to sale of some land at many. So after debt net profit is about INR 123.6 crores versus INR 276 crores in previous year. And that's it from my side, we can now open for questions. Thank you.
[Operator Instructions] the first question is from the line of Amar Mourya from [indiscernible] Private Limited.
So a couple of questions. Firstly, if you can give the order book closing order book, what is the closing order book for Q4?
So our backlog of the OD other backlog at the end of March 23 to about INR [indiscernible] million. Last year, December 22, it was INR 817 crores or INR 8179 million.
Okay. Okay. And secondly, sir, in terms of our revenue growth on a year-over-year basis, full year basis, what would be the growth in this transaction services and transaction services and systems. If you can give the breakup of that.
The transition of [Indiscernible] higher about 40-odd percent. You are asking about orders of field.
Order book breakup of the transaction services and systems and also the sales book, if you can give the breakup.
Order book. you are asking the order booking breakup, right?
Yes, order booking break up.
In order booking in the full year, the breakup is about 48% equipment, 10% projects, 27% transaction and 15% services.
And let's say sits would be -- what would be the mix of less order book for the end of FY '22?
That was March '22, right?
Yes. March '22?
Or 51% [Indiscernible] project. 21% transaction and 14% services.
So basically -- so why basically this transaction, I think, I believe transaction reduced, right?
So last year, it was 21%. This year, it was 27%.
Okay. Okay. And services, you are saying...
14 to 15 provisions improved.
Okay. Okay. And sir, similarly, if you can give the breakup of revenue as per FY '23 transaction services and systems.
So revenue is 69%, transaction 20% and services 11% . [Indiscernible] 72% systems, 17% transactions and 11% services. mainly the 3% change between term transaction.
Okay. And that led to the profitability improvement?
So there, it's not as simple as that is one of the factors, but it's not as simple that okay, just to go so there are multiple factors, right?
So sir, basically, now if you see the mix is moving more towards the high-margin business of transaction and services. And I believe the order inflow, which you are going to see in FY '24, that would also be more skewed towards the more connected products, services and transitions. So basically, under this slide, how do we see FY '24 profitability? Like do we see that -- I think 10% EBITDA margin we close this year, what should be the profitability we should look for FY' 24.
We don't give any guidance as such on the number.
But I'm just asking, structurally, should we see the reach up given the mix of the order book which you have on the kind of order inflow and pipeline which you are seeing?
Structurally, we should -- currently we our ambitious to continue improving on this side. We will continue improving the performance and the quarter year year-on-year. There may be some movements between even quarters because it's a different project linked business. So there may be mix changes quarter or even quarters or something. But on a long-term basis year-on-year, we should continue to improve.
Okay. Okay. And secondly, sir, this revenue growth, you are guiding for 6% revenue growth, right? That is what you- did I heard correctly?
No revenue growth I said 16%.
No, guidance for FY '24, I think so [Indiscernible].
I did not see any revenue growth.
Okay. Okay. So revenue growth would be like 12%, 15% revenue growth, we do.
As I said, we are not giving any numbers for the next year. You have seen last 2 years, so you can make out what we should do, but I am not giving any numbers.
Thank you. The next question is from the line of Apurva Bahadur from Goldman Sachs. The line for the current participant has dropped off. We'll move on to the next question. That is from the line of Dhawan Shah from AlfAccurate Advisors.
I have a question on the gross margins front. You already mentioned that some part of the benefit came because of the lower raw material cost as there were some changes things in the product mix. So can you please share the difference that how much it came from the easing of the raw material front and how much it is because of the improvement in the mix because there is roughly 800 to 900 basis point improvement. And the raw material easing, do you foresee that this is sustainable? I mean in terms of the pricing scenario; how do you see do you have to pass on the benefit for FY '24? Or this benefit can be expected to continue for this fiscal [indiscernible].
See, we are into a [indiscernible] business where you do costing for each project individually based on the tender requirements and then you get an order, right? So it's not a fixed price is kind of difference. Now on the -- another question on the mix and -- mix [Indiscernible] mix also plays a big role. And next year, if you see historically also, quarter-on-quarter, sometimes you see very big variances in the gross margin because if you have a few big orders of [indiscernible] projects, of the [indiscernible] product, it can bring your GM.
As far as maintain, obviously, the Q4 GM percentage is stand-alone, if you look at it, it's not representative. And as you said, 36% GM is representative of fourth quarters to come. Obviously, it is not, right? We have to look at the GM for the full year. And if you see the past from 2021 to '21, '22, we dropped the GM because that year, there were, again, raw material, a lot of unexpected movements for there on the [indiscernible] side, and then we had supply chain challenges also. So now we -- this was a more of a normal year, much normal than that. So it's kind of a normal level. So obviously 36% is not something which will continue.
Okay. But on a Y-o-Y basis, also if I look at, it's roughly 300 basis point improvement versus the last year. So can you share the breakup? I mean out of this in business point, is that largely trained because of the lower raw material costs? Or is there any part of the increase in the product mix also.
We can our mission not extrapolate everything but got a number of reasons associated. Sorry to interrupt.
You're right.
Business in mix, there is more of transactionalization happening more of better projects, as we call it, driven by digitization. So it's a contribute to order business, right? So it's not always easy to measure that how much came from pricing, how much came from raw materials, et cetera.
The mix of a lot of factors, right?
And the last one is in terms of the order backlog, like we are segregating the segments between total 5 segments are there. So is there any possibility like we can get the order book breakup into these 5 segments? And because I think in 1 slide, it is mentioned that the industry and the building order book is up by roughly 40 percentage Y-o-Y. The Cloud Services, order backlog is also up by 150% Y-o-Y. So is there any mix can we get based on these 5 segments in terms of the order backlog? And the GP margin for this 5 segment?
See, obviously, quarter-on-quarter, your backlog or order book mix, we will keep on wearing different segments may have different growth in that particular quarter, but we cannot go in backlog or order book as such by segment or by industry.
Thank you. The next question is from the line of Viraj Mithani from Capital Financial.
So my question is that -- does this mean that we are shifting to us more and more towards the EcoStruxure platform and our vision has changed from being a product comment a full solution company or something?
No. I think, Viraj, good questions. So software and which is primarily EcoStruxure, as you rightly mentioned also pulls products in. So there is no strategy to be focused on products. Products is always at the center. The way you pull products can be through a pure product play. It can be through digital products. It can be through edge control software or it could be through [Indiscernible]. So primarily what software does it, it provides a very strong stickiness between the customer and the organization because it's not just the product features that matter. It's the overall experience that the customer gets spent.
Okay. And sir, does it mean that over the period of time, we should see the improving margins because of the initiative we have taken in last 2 to 3 years, changing the -- is going towards more software side, give me a more solution. Is it still fair to think.
So that is the intent, as we have always articulated in all our strategy presentations that the idea is to move towards more of services and back to more of digital services. And more of recurring services, right? So that is what gives you a very healthy organization in terms of top line.
The next question is from the line of Alisha Mahawla from [indiscernible].
A little like what is the order backlog number as of 31 March?
INR 10,735 million.
And this will be executable over [indiscernible].
See, typically, some orders would be going to next year, some would be in this year. So typically, we -- our backlog is about 7 to 8 months of sales. And based on products with changes from some products may be deliverable in [Indiscernible] , some may have 6- to 8-month segment.
On an average of 6- to 8- months, is the kind of number? -- execution Okay. And at the start of the call, you mentioned that only expecting the [indiscernible] to take of 6%, 7%. So do we have the aspiration of 1.5x percent of GDP growth is what we believe is achievable for our kind of business. We mentioned that we're expecting the GDP growth at 6% to 7% for the current financial year. Just wanted to know that as our business, can you assume like a 1.5x in a GDP growth for our business.
It's difficult to comment aspect of giving a forward statement, which I said, as I said earlier, we don't give.
Okay. Sure. And just sort of something the earlier participant was asking. The gross margin for the year to be [Indiscernible]. This is not sustainable. Is that what you mentioned earlier?
No. I said gross margin for the year is get averaged out. But for the quarter is something exception, right? So if you say [indiscernible] sustainable in the next quarter after quarter. And you have seen in the past also quarter-on-quarter gross margins can vary based on the sector. But obviously, full year gross margin definitely is sustainable, and we need to maintain that and improve.
And going forward, this number can improve incrementally, do you think in mind that our order book mix is also changing towards -- or tilting towards transaction services, et cetera.
See in principal, there is no way other than improving the sales and improving the margins, right? There is not that you can continue to maintain things real process user to may improve the profitability.
Thank you. The next question is from the line of Apoorva Bahadur from Goldman Sachs.
So I wanted to know your thoughts on the RDSS scheme. What's the update over there? Are we seeing any pickup in the ordering? And what could be the opportunity size for [indiscernible]?
So I wouldn't want to put a number on the opportunity size because of numerous reasons. But the money, I would say, the investments are trickling in. Obviously, the government had challenges in terms of coming out of COVID, the huge spend on the health infrastructure that happened during that period, et cetera, slowed down the intent of RDSS as a thing, and there are regulatory approvals, which are also required for each of the investments. So there's a bit of lag in what I call as intent and action. But you -- we do see those investments coming in gradually.
Sir, by when can we expect this ordering to pick up a year really this year or next year?
I think it should pick up towards the later half of this year. then my guess is a good as yours.
Understood. Sir, secondly, if you can please share the export revenue for the year '23. And also, where do we see over the long term. Is there any percentage you are targeting for exports?
See FY '23, the export sales as went INR 1,985 million. Last year, it was INR 2394 million. So there was a slight drop in the export sales for the year.
What would cause this?
Again, as I mentioned, we extra project business. So sometimes last year it was big as a just on upside because of a couple of big projects, which we had, so it keeps some in and sometimes like that.
Okay. And are we targeting the specific share away of the overall revenue ex percentage you would like to be exports?
Yes, we see we are expecting a good increase in the export business from definitely the one is the normal business in use from the current operation, but also from the new factory, which is coming up in color, that will lead to a good export to additional business from FY '24, '25 once [indiscernible] operational -- so that factory will lead to a lot of exports.
How much would that be, if you can share the number?
I mean I will not put a number right now because the fact will obviously lead better to both domestic demand as well as export as well a big part in the exports. So we're [indiscernible] to start coming from '24, '25 financial and the [Indiscernible] to right now.
Okay, sir. Sir, and also if you can share the intergroup sales number for the year? And also, the order flow.
In terms of group sales for the financial year '23 was about 19%. And the orders intergroup was about in terms of venue, it was about INR 3798 million in FY '23.
The next question is from the line of Rajrashi of Private Investor.
Can you just repeat the export number which you just mentioned.
The export number is INR 1985 million for this financial year.
Okay. And in 2 to 3 years, what do you think the export possibility is as a percentage of sales?
It has to grow further overall business to that is familiar. And then additional big volume will come from Kolkata new plant. We are pretty to work in public construction plan.
Okay. That is entirely for exports, right?
Sure. That will be domestic as well as export [indiscernible].
Okay. Okay. And how big is the railway opportunity for you? Like whatever products you have in your offer, how we to railways, how big can it get in 2 to 3 years?
So there are 2 opportunities that you can -- 2 to 3 opportunities that you can see on the railway side. One has urban transportation, which are the metros, which are greenfield construction that are happening. So here, you have a scope for your products such as air insulated [indiscernible] should you give us generic. A little bit on the transformer side, not too much. SCADA and software. The other opportunity is on the one-day [indiscernible] trains where we have out of our Kolkata factory, we supply them with a pacific breaker, which is called a locomotive breaker. And you know the expansion plans of [indiscernible] in public domain, I need not talk about it. Very clear. And we are one of the preferred suppliers there as well.
Thank you. The next question is from the line of Manish Goyal from [indiscernible] Wealth Managers.
Yes. And congratulations to entire team on strong progress on turnaround of the company and reporting historical high margins and also reducing the borrowings to some action. Very heartening, sir. Sir, a couple of things on our CapEx, what we have seen is that in the current year, we have spent INR 38 crores. So was it for our new facility in Kolkata or it was for our accretion facility to increase capacity, if you can highlight that? And second, on the CapEx for FY '24 going forward, how do we see that?
Manish, so this CapEx for the new factory in the financial year was negligible, not very significant. This was mainly towards the edition of a couple of machines is lifting and as well as some of on which we had to do of firefighting to that is the big one which we had done in the plant. So it's related to the existing set of not to the new [indiscernible] -- we have decreased for datacom.
So has it led to some capacity expansion as well for us for switchgear and transfer?
No, not too differently.
Sorry.
Not too any significant. There was a bit of one big one was a safety setup with a firefighting setup and so get was the kind of nonnegotiable thing rate, and it was required. And another one, there was a of machines, which were quite old and completely breaking down, which we had to recast results we have been kind of deferring to utilize as much as possible to operate the CapEx. So that has taken -- so not a capacity increase as such on due to the CapEx.
And how much do we intend to spend in FY '24 towards Kolkata and other CapEx?
So Kolkata, I mean a big part of the CapEx, which we announced in the major from this year only because we expect to start production in next year.
Okay. So roughly INR 130-odd crores what you have announced will happen?
Not definitely 100-plus still coming this year on the year. So we no 100 plus will be in this year.
Okay. And ideally, how do you see getting it funded because we saw some increase in your working capital also in the current year. And as we go forward, we will have -- I believe we'll continue to grow double digits. So do you think we can fund it through internal accruals, so we need to borrow.
So firstly, an internal accrual, obviously, as now is from last 2 years, consistently, we are [indiscernible] cash. And so -- and just watching capital increase also has been, to some extent, a timing issue because you saw we had good sales in this quarter and the last -- even in the last quarter, it was that has led to increase in kind of debt and all, which is reflecting on the working capital increase. So overall, I mean, partly due internal accrual and maybe some borrowings as well for which we have reduced currently. So that's how [indiscernible] what we announced when we announced the CapEx as well, right?
Right right. And sir, what we see is that there is an increase in inventory, particularly in this quarter, we see that INR 42 crores increase and for the full year, INR 63 crores. So is it that there has been some delay in dispatches, or we are building up inventory for future the status that we have good orders.
So if there any inventory buildup as such for raw materials or any significant delay in the project is the usual finished goods and WIP to lead to the demand of the group projects, which have to be supplied in current quarter, the June quarter and early part of September quarter, so which should normalize. I mean, yes, this has been high, but it's mainly WIP and the [indiscernible], which will normalize. But no real project as such where you have a very big delay in the inventory as a step. There is nothing like it.
And a couple of questions more on the traditional product side, how is the progress on empaneling new licensing? And how is it back progressing? And what is the traction you are seeing there? That is one question yes.
Sanjay, you want to answer that?
You are asking about the entitlement of the partners?
Yes. yes.
Yes, that's -- like I mentioned, it's progressing very well with state utilities. And the acceptance is going, and we see a fairly good amount of shift happening from direct servicing model to an indirect subsidy.
Okay. Okay. So ideally, the reason I was asking is that directionally as we intend that we probably move towards at least 40% of the revenue from transactional products. So we'll probably move on that journey.
Yes, we will definitely move on that journey. Because you see the more references that you build up, the more acceptable gets you in the market.
Sure, sir. And again, on a question on the forward-looking -- in terms of -- I just want to get a sense that, particularly, Mr. Sanjay is like if you probably see what we have seen a couple of years back and now, would you probably like to put some -- or give some perspective in number that in terms of inquiries or in terms of order pipeline, what is that growth you are seeing?
So order pipeline, you can get a measure from the backlog number that Mayank mentioned. So you can see the backlog order growth.
So what I'm trying to understand, Mr. Sudhakaran is how is the like improvement in the environment, are you seeing a big shift in terms of sourcing or because for us, utilities is large customer base and probably see RDSS is not probably getting fully implemented. So still, you are seeing the momentum building up from one website and on...
Let me answer your question in a different way. You see the vintage on the power and grid segment has gone down because of our strategies of diversification. So at one point in time, it used to contribute almost 50% to our top line. Now it is contributing less than 40% to our top line. So on the other hand, you have growth prospects on the Power & [indiscernible] because of the RDS scheme. Even if it trickles in, it does -- it provides us with a good opportunity to grow over the [indiscernible]. And secondly, the diversification agenda still continues. So you can assess the risk of the portfolio by looking at the diversification strategy.
And sir, say, on the RDSS what we see...
So to interrupt Mr. Goyal, may we request for you to return to the question queue?
Sure.
The next question is from the line of Nikhil Jain from Galaxy International.
Are you able to hear me?
Yes.
I just wanted to understand, let's say, one was on the CapEx in the new facility. So once fully operational, what is the kind of asset terms or kind of turnover that this new facility can add to our current top line? So that was one.
So we don't want to talk about our business projections of the future right now. We have a robust business plan. We have an ROI attached to it, and we've gone through the process very thoroughly, but it's forward-looking. So -- and we don't want to get into a forward-looking this question.
So the only thing that I wanted to ask is what's in incremental. It's not in FY '25 or' '23. So whenever in it is to be implemented, how to be utilized, let's say 3x, 4x, 2x?
You audio is not clear. Can you use the handset?
Yes. The point that I was trying to understand was on full utilization, not in the EF. So it was not a let's say, later will happen in FY '25 or whatever. So that was the idea. If you can give some perspective because that is still only a factor year 3 year to year.
It's a component factory, and it's only a certain percentage of your overall sales. So it would not give you a perspective. And for that, if you want it to make sense, then we will have to go into the breakup and things like that, which we wouldn't want to do that, please appreciate that right now.
Okay. Fair enough. So the next question was I just wanted to get a sense on what are the key factors that our order book is comprising of -- let's say, in the last discussion, you said that power has come down to 40%. So what is the other, let's say, factors which are emerging as an important perspective for us.
See, we have time and again reiterated which are our focus in it's articulated in the presentation as well, which is mobility, which is transportation, emerging segments like Semicon, which are, again, very power-intensive minerals, mining, and metals. So we have articulated all that in the strategy document acted buildings and industrial now forms a pretty large substantial part of our overall portfolio.
The next question is from the line of Sanjaya Satapathy from [indiscernible] Capital.
Yes. Sir, and it is great to see significant improvement has been made in this year and several quarters of profitability now, which I'm assuming that we'll be giving the company the confidence to go ahead with the expansion plans which they have lined up. So my question is that you have reported this 10% kind of 11% kind of order growth, while the backlog growth is 15%. So can I just understand the reason between the two difference? Like is it because of some capacity considered or something.
Mayank, do you want to take that?
So see, backlog is what -- when we are seeing 15% growth status from the same period last year, same rate as an absolute value growth, right time, it's not just the order growth, which will related you have orders and then you sales number also. So it's not simply the -- just to how much your order growth rate of the back level. But if you are quite principally, I agree when order growth has to be more, probably -- but sometimes whatever it met some opportunities have slipped from March. It goes into next year or something which is [indiscernible] previous year and goes to next year at impact.
Now to answer your question more specifically, we do not see any concern on capacity to execute orders. We did have some issues with regard to electronic shortages, et cetera, which did slow down the backlog burning, but that situation is improving now. But there is a mix issue also. Sometimes you have infrastructure projects in your pipeline, primarily in the mobility sector, the transportation sector as we spoke about, which has a higher order to cash cycle. So that is one of the reasons by which you could have a larger backlog growth than your order booking.
Understood. Sir, if I can just ask a last question that the company had gone through a tough time primarily because of...
Sorry to interrupt. Sir, may we request that you return to the question queue there are participants waiting for their turn. The next question is from the line of Rahul Jain from [indiscernible] Investments.
I have a question regarding this bundle of train sets, which you're talking about supplying them. Currently, of the current revenue, what is the percentage that of revenues come from -- goes to these bundle of trains. Can you please tell me that?
So we do not provide granularity details on sales by segment or sales by specific opportunities. So we will not be in a position to answer that.
Okay. And so far, I was just saying this electric mobility these charging stations, where does the company stand with respect to the charging infrastructure scenario, which is in [indiscernible] state in India, where does our company stand as of now? So far as supplying of the starting stations or stuff like that. Can you please specify?
Yes. So as far as aside, as far as our strategy goes in this particular segment, we focus on primarily on infrastructure, which is behind the charges. That is the powertrain, the electrification of the powertrain, low-voltage, medium voltage as well as the digitization of the networks. So we have a very strong global line of business around mobility and [Indiscernible]. So we have some very good [indiscernible] examples from all over the globe that we bring to customers here.
So if I were to answer your question, we are tracking customers who are diversifying into EV charging. We provide them with architectures and the low voltage and medium voltage equipment, which is required to power these charging stations. The future opportunity, which I spoke about in one of our strategy calls is on the micro grid opportunity where these customers might want to use a mix of power generation sources, which is like solar and conventional generation put together, which will make the grid unstable and complicating. There we have solutions which are primarily software solutions, which will help the customer automate and digitize the grid and bring stability to the grid. So these are the opportunities that we are working on, again, connected to services and software. On the charging infrastructure side, we are in a wait-and-watch mode, I would say, no.
So right now, if I may ask, are we executing anything in this regard? Or is just that we have just applied something and stuff like that?
We are supplying electrification and the software solutions to the company's involved in EV charging.
Okay. Okay. And future is bright, right?
Future is bright. Yes. You're right.
Ladies and gentlemen, we will be taking the last question that is from the line of [indiscernible].
Thank you for the opportunity. Can you please tell me the current capacity utilization of your current facility.
See it's difficult you mean to put a number to it because it's being an ETO business, that takes a lot of factors. It's not a standard product, where I can see, okay, my capacity, 1 lakh units per month and 80,000. So custody is 80% utilization.
Just for the product business, is it possible to give me?
No.
Okay. Okay. And my next question is, is it possible for you to explain the -- like the cycle of how your sales are like is it that the first you sell your products? And after that, you sell edge control systems and then the SaaS and software or are there customers who don't buy products, but do buy the other services?
So good question. You can -- both models exist. You could have a customer, which is an installed base and you could provide these software's to them as installed these services, which would entail a little bit of more planning shutdown, et cetera, because then you would need to be inclusive, you would need to put in the sensors, et cetera, but there are customers who are looking forward to modernizing their factories and digitizing their factories. So this opportunity exists. Now once a customer has seen the benefits of this, he could say that in my new project, greenfield project, which is coming up, I would like to do this end-to-end. And that is where you supply natively connected products, as I spoke about earlier and the edge control software and the [indiscernible] takes all at one time.
Understood. But do you come across customers which haven't used your products, but yet would like to go for the other services we offer.
Yes. because some of the products that -- some of the software's and analytics that we have is also agnostic. So as long as the communication protocols can be managed by the customer through a converter or whatever it is, we can still provide the customer with those services. So on an open architecture and not closed architectures.
So is it fair to assume that only products comprises of maximum part of your revenue?
Yes, of course, that's reality today.
Right. And still, it's not possible to give...
Sorry to interrupt, sir...
This is a follow-on, please. So it's still not possible to give us a certain -- I mean, approximate utilization level, if I'm only talking about products.
So like Mayank mentioned, it is not about just products, right? These are engineered to order equipment. So a product could take 24 mandates to be manufactured. Another product could take 54 mandates to be manufactured. Based on certain design configurations that the customer needs. So you cannot calculate capacity in terms of units.
Okay. So capacity is limited by -- I mean, is the number of people as opposed to...
Sorry to interrupt but Mr. Somaya, this is the last question that we could take.
This is just a follow-on. But okay, if you could just answer that, it would be helpful.
I think let's stick to the protocol and the timing. So...
Thank you. Ladies and gentlemen, that is the last question. I now hand the conference over to Mr. [indiscernible] for his closing comments.
We thank Schneider Electric Infrastructure Management team for giving us an opportunity to hold this call. We also thank all the investors and the analysts for joining this call. Any closing remarks you would like to mention, sir?
I'd like to give a big thank you to all the people who participated in the call, and I thoroughly enjoyed the interaction and have a good day ladies and gentlemen.
Thank you, members of the management team. Ladies and gentlemen, on behalf of Elara Securities Private Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.