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Skipper Ltd
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Ladies and gentlemen, good day, and welcome to the Skipper Limited Q2 FY '23 Earnings Conference Call, hosted by Arihant Capital Markets Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. [ Meraj Shah ] from Arihant Capital Markets Limited. Thank you, and over to you, sir.
Yes. Thank you. Thank you, ma'am. Good evening, everyone, and welcome to the conference call of Skipper Limited Q2 results. On behalf of Arihant Capital Markets, I welcome you all. Today from the management side, we have Mr. Sharan Bansal, Director; Mr. Shiv Shankar Gupta, President of Finance -- President of Finance; and Mr. Aditya Dujari, Deputy General Manager of Finance and Investor Relations.
Now without further ado, I would like to hand over the call to Mr. Sharan Bansal. Over to you, sir.
Thank you, [ Miral. ] Good evening to you all, and thank you for your continued interest in Skipper. Please take note that any forward-looking statements made during this call must be reviewed in conjunction with the risks that the industry and the company faces.
It feels great to interact back with the investor community over quarterly earnings call formally after such a long gap, probably with the worst behind our back. Company is now confident of delivering strong performance going ahead on back of improved business environment and strong business execution of engineering contracts and strong Polymer business performance.
Over the past 2 years, the company concentrated its efforts towards transforming its engineering business from domestic market at its [ core stay ] to a more focused international player with exports at its mainstay and has achieved reasonable success. The company has established strong working relationships with over 100 global EPC players and utilities and is witnessing a surge in global business.
Skipper of now is looked up to as a serious player, armed with complete R&D center and tower testing station, thereby further strengthening its brand equity in the global market. The company's in-house design team adds meaningful value to the project lift with innovative and cost-effective design solutions, and helps in cost reduction and savings to our customers.
Massive global and domestic focus and investment on building T&D infrastructure catering to renewables is driving up the demand for setting up new transmission networks. As the global focus on renewable energy continues to grow and more and more countries move towards their goal of reducing their carbon output, many countries will require new transmission lines to be built to cater to a new green energy network. Our global presence puts us in an advantaged position to act upon such opportunities in the coming years.
Further, the company is getting benefited from China Plus One trend. The global supply chain actively scouting to minimize its dependency on China is a great positive outcome of this crisis. The gradual decoupling from China is also causing many projects to seek alternate supply chain, giving further fuel to business potential coming our way.
Also, the retail rupee depreciation and improvement in fee container availability has made us more competitive and is now bringing more opportunity to work. Taking advantage of the market conditions over the last 2, 3 years, Skipper has successfully transformed itself from a predominantly domestic player to a company with significant export business as its mainstay. Today, Skipper boasts of over INR 5,400 crores of international bidding pipeline and is well positioned to grow exports to over 50% of engineering revenue in current year FY '23 and to 75% by next year FY '24.
The same are now getting reflected in our performance, too. The engineering export for the quarter stood at INR 161 crores and INR 325 crores for the half year period. Export share in overall engineering revenue increased to 43% in Q2 FY '23 and 47% in H1 FY '23. This is a growth of over 40% over previous year quarter and 103% growth in the H1 period over previous year.
Also, our Polymer segment is now attaining scale and size and will now get benefited from fixed cost getting rationalized over a larger revenue base.
The company has achieved its highest ever annual performance -- revenue performance in polymer business in FY '22 at INR 320 crores, registering a staggering growth of 48% over previous year FY '21 and expect this trend to continue in the ensuing quarter through FY '23.
Now coming back to current business performance, some of the key operational and financial highlights in comparison to previous year corresponding quarters were as follows. I'm pleased to inform you that we have delivered yet another good quarter with strong revenue performance across our major business segment in spite of inflationary cost push and geopolitical-related challenges while maintaining healthy operating margins of 11% plus.
The net revenue of the company stood at INR 462 crores against INR 479 crores. The segmental revenue breakup were as follows. Engineering, INR 380 crores; Polymer, INR 71 crores; and Infra segment, INR 11 crores. ForEx derivative M2M loss arising on account of sharp depreciation of rupee has resulted mainly in decrease of profitability of the current year quarter by INR 12.16 crores and a simultaneously increase or gain in profitability number of the previous year corresponding period by INR 6.1 crores. The nature of impact is largely notional. Thus, all comparative growth numbers are required to be calculated, excluding this effect of ForEx adjustment for better operational performance understanding and analysis on like-to-like basis.
Our quarterly operating performance, excluding the impact of notional ForEx gain were as follows. Operating EBITDA rose by 45%. The EBITDA increased to INR 51.97 crores against INR 35.82 crores with stand-alone operating margin increasing to 11.2% against 7.5% over last year corresponding quarter. The margins of Engineering business are back to their normal historical range of 13% plus, achieving this for the past few quarters with current quarter rate at 13.3%.
Operating PBT increased to INR 19.2 crores against a loss of INR 0.32 crores in quarter 2 of last year, with operating PBT margin at 4.2% for the current year quarter against negative 0.1% last year quarter.
Gross debt level is at INR 585 crores as on 30th September against INR 628 crores last year, September '21 and has seen a reduction of INR 43 crores in spite of higher sales during the H1 period on account of net working capital utilization. Efforts continue on cash flow and balance sheet consolidation, and we are targeting significant debt reduction by March '23.
On the order front, I'm happy to inform you that the company has yet another good quarter of inflows. We secured new orders worth excess of INR 460 crores for Engineering products. And these are supply orders from Power Grid Corporation, domestic state electricity boards and private utilities as well as for various supplies across international customers across Southeast Asia, Africa, Asia Pacific and Latin America and Middle East as well.
The YTD inflows stand at INR 863 crores with international share at 42%. The closing engineering order book as on 30th September stands at INR 2,163 crores and is well diversified across sectors and segments. The tender pipeline for us to participate looks deep and the current bidding pipeline remains strong at INR 10,500 crores, highest ever in the company's history, spread evenly between domestic and international.
Sector continues to witness uptick in both ordering and execution, and the company expects growth to gain further with increased participation opportunities across the globe.
Just to inform, we already are in advanced stages of negotiation to secure good-sized international contracts. I would also like to inform our investors about increasing opportunities in the telecom space with the upcoming 5G rollout as well as investments into BSNL by Government of India, which will open up further opportunities in the telecom sector for the company.
To summarize, we are confident of profitable revenue growth of high double digits with a consistent margin in the current year. A strong order book plus robust bidding pipeline gives us good visibility and confidence of achieving the growth. Thank you, and I'm happy to take your questions now.
[Operator Instructions] We have the first question from the line of Abhishek Jain from Arihant Capital Markets.
I just want to understand on the PVC side, how the things are shaping up, how is the demand environment [indiscernible]? And have we taken any inventory hit in this particular quarter? And what should be the stable sales margin going forward?
Yes. PVC business, we are seeing good growth opportunities because of various government-run schemes like Jal Jeevan Mission, et cetera, and also the company's sustained focus on brand building is giving results. Our dealer and retailer presence has crossed about 26,000 across India. And as I mentioned last year, our revenue was a growth of 48% over previous year. This particular quarter, quarter 2, we have faced some challenge in hitting our growth numbers because of the sharp decline in the PVC commodity prices, which has led to unsettling of the market. And there has been some inventory losses as well. However, largely, the impact is covered in this quarter. Quarter 3, we expect minimum impact. And since the working season is now here from quarter 3, quarter 4, we do expect growth numbers to come back from next quarter.
Sir, any guideline on the margin and how we see margins going forward, sir?
Margin this year -- just 1 minute. Q3 margin guidance will also be muted due to overhang of inventory loss. However, the revenue growth will be good.
Okay. And second thing, sir, on the international export side, what is happening right now at this point of time and going forward, if you have, what is your outlook on the export side?
As I mentioned in my comments -- opening comments, international -- both sides, there are plenty of opportunities. A lot of -- almost all countries have renewable targets to meet. And for that, investment in T&D is quite prominent. Telecom investments are also happening in various 4G and 5G networks. So both the sectors are doing very well for the company. As we can see that in the order inflow for the quarter 1 and quarter 2 combined for H1, basically, we saw that exports were almost 42% to 43% of the total order inflow.
If you remember about 3 years ago, the company had approximately 80% domestic and 20% export sales ratio, which is now gradually moving towards 60%-40%, 60% domestic and 40% export. The target will be, as I mentioned, to move towards 50%-50% by the end of this year. And a higher number for exports next year.
Hello? Hello?
Can you hear me?
Yes, I can hear you. Sir, third question just what will be the -- like we can talk about PVC service. We have large [indiscernible] player especially in the Eastern market. What is the current market share? And can you throw some light on the current utilization on the CapEx side also?
I'm sorry, I'm not able to hear your question clearly. Could you please repeat?
What is our market share in the Eastern market in the PVC segment at this point of time?
I don't have those -- we are still...
Hello? Okay. And -- hello?
Yes, hello.
Yes, sir. And sir, second question on the under...
Mr. Jain, I'm sorry to interrupt you, but your audio is breaking. If you could adjust it a little bit?
Okay. Just a second.
We can hear you, Mr. Jain, please go ahead.
Yes. So one question on the domestic side, how the ordering from Power Grid is happening? And what are the other companies like [indiscernible] -- or what is the other -- how the order pipeline at this point of time?
There is a lot of bidding going on in domestic, but the ordering has been muted, especially in the large transmission line projects, which generally we are -- our focus area. However, there's good opportunity on the telecom side and domestic sector. Because of 5G rollouts, a number -- almost it is expected that 200,000 to 300,000 new telecom towers will be installed for the 5G rollout. And also, government has taken an ambitious investment plan into BSNL. So I'd say that domestic is -- domestic should be strong as a combination of transmission and telecom opportunities.
[Operator Instructions] We have the next question from the line of Sachin Kasera from Svan Investments.
My first question was if you could tell us a little bit more about your plans to deleverage in the second half? You mentioned briefly in the opening remarks that you are seeing some reduction in the overall debt level. So if you could tell us what type of debt reduction we are looking at? And more from a [indiscernible] perspective, what type of reduction we are looking and the reduction in finance cost we're targeting?
You're asking about the plan for debt reduction and?
The reduction in finance costs.
Reduction in finance costs. Okay. So as you might have noticed that we have done quite well on reduction of finance cost with -- about achieving 1 basis point -- 100 basis point reduction in finance cost for the quarter as compared to previous quarter. And in terms of debt, we have brought down our absolute debt number from 5 -- sorry, 1 minute. Yes. The earlier -- last year, September was INR 628 crores. And this year, September is INR 585 crores. So despite the increase in sales, we brought down the overall debt number as well.
So this trend will continue as the improved profitability and -- of the company keeps improving quarter-on-quarter. Of course, the -- we are also targeting high revenue growth. So the short-term working capital requirement will be proportionately going up. But I'd say that overall efficiencies will see that, okay, we launch -- if at all, the debt number should either remain flat or we may see some reduction in that.
So the way to summarize that is that the interest cost may remain there itself and the EBITDA overall could go up and debt remaining at the same level. That's what you're trying to tell?
That's right. Absolutely.
Okay. Second thing was in terms of your polymer business, what type of plans we have for the next 2, 3 years? We went through this TOC implementation because of which -- our overall reported revenues took some sort of, you can say, correction over 2, 3 year period in the time we implemented it. The market itself has grown a lot since then. So if you could tell us some we can [ adjust our expectations ] of market share, both firstly in the Eastern India basis and secondly all India basis in the next 2, 3 years? I'll be following your side.
We do have ambitious plans in the PVC business. The TOC implementation has been very successful for us and has helped us achieve retailer growth of 25,000 tonnes -- 25,000 retailers plus. So certainly, barring this quarter 2, where the impact of the sharp decrease in commodity prices has hit us -- otherwise, the growth last year was quite robust, as I mentioned. And we expect similar growth to achieve a top line of INR 1,000 crores in the next 2 years' time.
Sure. And just [ for emphasis ], can you share the volume numbers? What type of volume [indiscernible] -- because the PVC prices are volatile, right? They move from INR 90 to INR 170 back from INR 170 to now INR 70 a kg. So just for us to understand the perspective of the polymer business, can you share with us the volume, the type of volume numbers you had done last year and what we are looking at this year in the next 2, 3 years? Because this INR 1,000 crores number could vary depending on the price of the PVC.
I don't have the volume data readily available, but we can check and Aditya can come back to you on this later.
Sure. Secondly, in terms of the product mix, what is the share of fittings today? And how do we see that ratio moving up?
What is the mix of fittings?
Yes, fittings, yes.
The current mix is about 70% of the plumbing side and 30% agri, which plumbing would be something around 40% of that would be fittings.
Okay. And lastly, if you could tell us your plans in terms of one of the things that you addressed, the increase of the share of exports? But in terms of the non-T&D, what type of targets are we looking at so as to reduce the overall risk from the domestic T&D in the next 2, 3 years?
As I mentioned, telecom is looking like a very strong opportunity, both on the 5G rollout as well as the BSNL expansion plans. So telecom is definitely a strong area. Railway continues to do well for us. So these 2 are the promising non-T&D sectors. Apart from these, of course, there are solar and highway barriers for us also, but also these are relatively much smaller portions of our order book for us.
So in 2, 3 years, what could be the share of the non-T&D revenues that we could look at?
We can look at about 20%.
Sorry?
About 20%.
2-0, 20%, right?
Yes, 2-0, 20%.
And just one last question in terms of the raw material. In the presentation, you have mentioned that in the previous quarter, the profitability was impacted because of the sharp increase in raw material prices and now it should improve now because the new contracts are at prices when the prices were high and now the prices have come down.
But from a little medium to long-term basis, for example, if the raw material prices start going up again, is it that for a couple of quarters, we see improvement in margins and again from Q1 we start to see impact? So how are we looking in terms of using this entire model so that the volatility in the [ added ] price either going up or down does not impact our margins beyond a point, and we are able to consistently report stable and good margins?
Yes, it's a good question. So definitely, what we are doing, we are adopting multiple strategies, and some of them are detailed in the investor presentation. If you go through Slide -- it's not there. Okay. In the previous investor Q1 presentation, it was mentioned. So we are adopting various strategies for covering ourselves better for the firm price contracts. And these include strategies like hedging as well as strategies like having a larger share of inventory to cover those firm price contracts.
So certainly, we are conscious of the fact that a company needs to protect its margins in the event that prices go up again sharply. So -- but I think definitely with these strategies, we are in a much better position for the future contracts. We are also able to negotiate better contracts with our customers and in the case of abnormal price increase, et cetera, have those clauses in our selling contracts that customers will renegotiate in the case of abnormal price movement.
[Operator Instructions] We have the next question from the line of [ Sanket Goradia from RS Investments. ]
To start with, can we get some sense from management on how we should look at the business 2 to 3 years out in terms of revenue mix?
In terms of between -- are you asking between exports and domestic or revenue mix across segments?
Across segments.
Yes. Across segments, currently, we are roughly 15% is Polymer and about 80% is Engineering with Infra being about 5%. We expect polymer to be a greater share of the revenue, growing up to 25% in the next 2 to 3 years. And Engineering may be making about 70% to 75%. We don't have any particular growth guidance for the Infra business that will -- because the company had a policy of selectively bidding for key projects as we go along. Yes. So if you look at Engineering and Infra together, you should be looking at 75% there and 25% for the Polymer business. This should be the revenue mix 2 to 3 years from now.
Understood. And from a return, do you have specifics on what would be, say, the ROCEs for the Polymer business and for the Engineering business?
I will not be able to give guidance on the ROCE, but on the operating EBITDA side, our Engineering business has consistently been in the margin range of 12% to 13%. So we continue with that guidance. Because even in the last couple of quarters, we have started delivering numbers, operating EBITDA in the Engineering business of 12% to 13% plus. In terms of Polymer, we understand that right now, our EBITDA is low because we still have high fixed costs and marketing expenses which are getting absorbed over a lower revenue. However, as the industry average is about 14% plus, we do expect to hit double digits very soon in the polymer business.
Understood. So just a few questions on the Polymer business. Do we kind of -- rather, can you elaborate more on the split that we are having between UPVC and CPVC? Segmentally, how will -- kind of the focus area is going to be on the CPVC side? And if so, I mean, how are we kind of looking at penetrating this market?
Focus continues to be on the plumbing side -- it is about 70% of our revenue is coming from plumbing side on an average...
Sorry, I'm not able to hear you.
Focus continues to be on the plumbing side of the business. So almost 70% of our current revenue is coming from the plumbing side, which is much more margin [ dilutive ] with the fittings element fitted into it. Agri will -- share will be about 30%.
And CPVC will be how much percent of the total that we are selling through?
CPVC would be something around 15% to 20% of our current revenue mix.
[Operator Instructions] We have the next question from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking.
I just wanted to know, how is the Transmission Monopoles business doing right now? And if you could share what is the current order book?
You're asking about Transmission Monopoles?
Yes.
Sorry, could you repeat your question, please?
Yes, how is the Transmission business doing right now? And can you share the current order book?
Yes, sure. So the Transmission business is doing very well internationally and domestically. Domestically, the large ordering is slow. However, the total order book of the company currently stands at approximately INR 2,100 crores. Out of that, exports make up approximately 45%.
Okay. And is it possible to share what is the current utilization in both these segments?
Both the segments meaning? Polymer -- Engineering and Polymer?
Polymer and Transmission.
You want capacity utilization?
Yes. Yes.
Mr. Gandhi, does that answer your question?
Yes, I couldn't hear it.
The utilization is approximately 50%, 55% in engineering presently and in Polymer is about between 35% to 40%.
[Operator Instructions] We have the next question from the line of [ Subramanian ] from [ Alpha Capital ].
I want to understand about PVC and CPVC realizations, what is the difference between PVC and CPVC? And what is the market size right now? And what kind of growth we may expect in going forward?
The market size for total polymer is about INR 35,000 crores approx. The CPVC and -- basically, CPVC is largely used for hot water application plumbing side, while PVC has a general usage.
Sir, like which are the states that we are experiencing more demand for PVC and CPVC?
We are right now focusing -- getting major demand from the Eastern India state, Jharkhand, Assam, Bengal and Bihar.
And sir, what kind of opportunities we have on Philippines [ credit, ] Malaysian [ credit ] and Australian [ credit, ] like in outside India?
You're asking about export opportunities?
Yes, sir. Like in terms of power utilities and international EPC player side.
Yes. So company is getting a lot of export business in the Engineering business. But in Polymer business, there are not really any export opportunities. But in engineering side, we are getting a lot of export business.
Okay, sir. Sir, on the monopole side, like what is the difference between the normal pole and the monopole, what kind of opportunities you have? What is the transmission capacity?
In monopoles, Skipper is one of the peers in this product. Basically, the purpose of the monopole is to reduce the footprint of the transmission tower on the ground. Now with the increased right-of-way problems, with more and more lines coming under urban and semi-urban areas, there is a need -- plus there is a lot of diversion works going on because of the highway construction. So which is why monopole is a fast and efficient system for replacing those lines as well as planning new lines with a lower footprint on the ground compared to large transmission towers. So we are getting business for monopoles in a number of areas in India as well as export, including North America in U.S. and Canada market.
So have you checked the transition carrying capacity for monopole?
Monopole can be designed for any voltage [ line And -- ] SO the voltages can be anything starting from 33 kV up to 765 kV. So Skipper is the first company to design and test 765 kV poles in the world. So it can be really up to the line requirement of the customer. It can be designed for any voltage level.
Sir, what kind of margin difference between monopoles and the number transmission lines?
Monopole certainly come with a much better margin. Of course, the volumes are lower. But if normal engineering products margins are in the 12% to 13% range, monopole would be about in the 16% to 18% range.
Sir, what kind of opportunities we have for 4G and 5G in telecom side for monopoles?
For monopoles, there will be opportunities on the telecom side. However, overall, telecom is mix of telecom towers as well as monopoles. So there are good opportunities that I mentioned earlier in the comments that we are looking at about 300,000 new towers and poles for the 4G rollout and also a significant amount of new towers for the BSNL expansion, which the Government of India has planned.
Okay, sir. Sir, what kind of logistics advantage we have on that plant? Because we have 3 plants in Eastern India only. So what kind of logistics advantage do you have?
Yes, logistics advantage on the raw material side because Eastern India is the main hub for most of the steel production in India. Most of our products are made of steel. And also, we have the additional advantage because of being close to port. So our exports, we get the advantage of lower inland transportation costs.
Okay, sir. Sir, like in ForEx, like what kind of hedging activities we are doing right now? Like we are doing like the OTC markets or derivatives like how the mechanism it works?
In general, the company is taking forward contract for our export orders in order to book and hedge ourselves against currency risk. So that is what the standard policy of the company is.
Okay, sir. Sir, on the EPC projects, like what is the average execution period for the EPC projects and what kind of order book we are giving right now? And is there any opportunities for renewable side?
Yes. So a number of the -- overall T&D projects are being catered for renewable projects, renewable generation projects. On the EPC side, there are opportunities. However, currently, the company does not have much of an order book in this business. Our order book is roughly about INR 200 crores only for the EPC business.
[Operator Instructions] We have the next question from the line of Sachin Kasera from Svan Investments.
Just one question on the CapEx side. If I can see for the first 6 months, this one cost around INR 56 crores on the CapEx. And you mentioned that your utilization is like 50%, 55% in Engineering and in the 35% to 40% in Polymer. So it's a -- if this was a special R&D or some modernization [ of relations -- ] could just tell us what is the type of area in which we have spent this INR 56 crores? And secondly, what is the full year guidance you would give on the CapEx?
Yes. So Sachin, basically, our normal CapEx is in the range of INR 40 crores to INR 50 crores a year, and this is predominantly made up of capacity optimization where we need to expand range in certain products to cater to the changing market requirements, especially the export market. A significant part of this is also maintenance and replacement CapEx. So I'd say that this is a standard guidance, which we have been giving for a number of years, and this is the standard CapEx that you can expect from the company. It's not really for capacity enhancement, it's more for optimization to cater to the ever-changing market demand requirements.
Okay. Secondly, could you give us some sense on the margins in domestic versus exports? And in export, especially -- because we are seeing some reported ForEx, which is having notable [indiscernible]. So how should we read including this ForEx loss in the margins on exports versus the domestic market? That's the first query. And secondly, on the working capital cycle, is it the same in both of them? Or is the working capital cycle different in domestic vs exports?
In terms of margins, you can expect exports to be close to about 150 to 200 basis points higher than domestic margins. Of course, these are inclusive of the ForEx gain or losses that we have. The ForEx losses that you see in the current quarter are largely notional because of the sharp depreciation in the rupee that has taken place. Because, as I mentioned, the current company is in the practice of hedging its entire export order book, which is to be executed over 5 to 6 quarters. So -- but the execution of 1 quarter is not enough to absorb the entire M2M loss of the entire order book. But the realization of the orders which we have taken a hedge, those realizations will come at a higher value. So which is why that loss today will get offset by the higher realization in the subsequent quarters. So that from the realization front. And your second question was, sorry?
On the working capital cycle.
Yes. Okay. The working capital in both export and domestic tends to be similar because the inventory cycle is higher for exports because there's longer duration time required for inspection and logistics requirements on the exports side. But the realizations are faster. So normally, the inventory cycle is higher, but the debtor is lower. So overall, working capital is similar, both in exports and domestic.
Okay. And just one more clarification and a follow-up on the ForEx thing that you mentioned. So assuming the ForEx closing as of 30th -- 31st December is the same is 30th of September, we will not have any ForEx loss, is that understanding correct?
Once again, can you repeat the question?
I'm saying if the closing currency as on 31st of December is same as 30th of September, then we will not have any ForEx loss? And because the currency would have remained high, we will see higher margins in the reported margins of the -- engineering business?
Yes, your understanding is correct.
Okay. Are we doing something in terms of being able to get more efficiencies and even better pricing in terms of our procurement costs, especially on the steel line?
More efficiency in?
In terms of procurement purchasing of the raw material, especially the steel that we use for the engineering business?
Yes. We have -- of course, we tried -- we are doing various strategies on the purchasing including, as I mentioned, taking long-term hedges wherever possible on the BSE as well as the LME. Also, we have been entering into, wherever possible, some long-term contracts with our raw material suppliers. And wherever the hedging and the long-term contract is not possible, we are entering into -- we are procuring the materials with -- for covering our firm price contracts. So as a combination of these 3 strategies, we are better placed to protect ourselves against future price increases.
So my question was more in terms of, at any point of time, if you see the steel price at INR 100. Can I today, say, for example, [ the profitability of ] buying from vendor at INR 99, are we trying to work on some efficiencies where instead of paying INR 99 when the market price is INR 100, we end up paying INR 98? And as we get scale because normally what we have seen in steel industry is that as your volumes keep going up, you start to get better discounts from the suppliers. So is it that...
That will be correct. So we are able to get efficiencies and reduce price by -- obviously, the market right now is much more stable. Steel prices have come down significantly from their historical highs. We are also getting a lot of import options now because the imported steel into India is cheaper than -- international prices of steel are cheaper than domestic prices. So we are getting a number of imported options -- import options also for steel, which are helping driving our price down. And because we are a large manufacturer -- so we are able to use our economies of scale to import significant volumes, which may not be possible for smaller manufacturers.
[Operator Instructions] We have the next question from the line of [ Sanket Goradia ] from [ RS Investments ].
Sir, could you give us a split between what the turnover -- the working level turnover and fixed asset turnover ratios for Engineering and the Polymer in particular? Hello?
Excuse me, this is the operator.
Just a minute, please. Presently, the net working capital for the company is 130 days.
130 days. Yes, sir. But at the segmental level, would there be a split that we could get a better understanding on the -- just to understand the working capital and the fixed asset turnover for these 2 segments?
[ It is ] available with me right now. Aditya can share that with you later.
Sure, sure, sure. So just another thing then on engineering products, I mean just to get a better handle on understanding the business model, could you kind of just give a brief on how we are sort of bidding for these projects or how the order placement happens to -- how we kind of end up eventually booking the revenue? And how are we anticipating the order book, say, for the next 2 to 3 years? Or rather, how do we sort of calculate demand internally?
So your first question is about how do we book the revenue in Engineering?
Yes, not from an accounting side, what I'm just trying to get at is that if you could kind of just give color on in the engineering products, what's the business model like? I mean, is there an order book that we sit on? Do we keep bidding for projects and we win and is that the way to look at the business?
Yes. So although our -- we are predominantly a manufacturing company. So although we cater to projects, but our business comes from normally an EPC company or a utility purchasing the structure, the towers and the poles. So we get a contract. From the contract, then we get manufacturing clearances. And based on the manufacturing clearances, we create inventory and do sales, and that's when we book our revenue.
So our revenue bookings will depend on the project execution, although we are not responsible for the project execution. But if we move in tandem with the project execution, how the supply clearances and the manufacturing and the suppliers will take place, that will depend on the project progress that is made by the EPC contractor.
Sure. So sir, so when we have to win these contracts with, say, these utility companies, I mean we will be competing say with the peer set. And then we win the contract and then we get the revenue and then the rest follows, right, is that correct understanding?
Yes, absolutely. Of course, being -- the T&D projects normally have a long gestation period. So typically, what we find is that from the time the actual RFQ, the tender is out, it can take anywhere between 6 months to 1 year for the award to be finalized. And then after the award, normally, there's a 6- to 8-month period of engineering activities that go on and then the actual revenue manufacturing and the sales start happening.
Understood. So at all points there'll be something like an order book that we'd be sitting on?
Yes, of course. So the order book is the confirmed contract that we have received from our customers. So those are confirmed orders that the company has secured already. And the sales come from that. But then there is a bidding pipeline. So like, for example, the current order book of the company is about INR 2,100 crores. But the bidding pipeline is class of INR 10,000 crores. So every quarter, we secured new orders of approximately INR 500 crores.
Understood. Understood. And so -- again, would we be correct to understand that we wouldn't really be having any ready inventory? Inventory is only as and when, when we win the contract, that's when we do the rest -- inventory of the finished goods are only for contracts that we've already won?
Yes, you're absolutely correct. Our production is 100% made to order. We don't have any made to stock inventory, at least in the Engineering business. In the polymer side, we do have some made-to-stock items because there are a number of SKUs and it's not a customized product. But on the engineering side, 100% is made-to-order only. Even after we win a contract, we cannot start manufacturing unless and until the entire engineering, the design, load testing, et cetera, is over, and we get a clearance for -- from the customer for starting manufacturing. Only then we create inventory against that order.
Understood. And sir, just again, on the engineering side, in terms of customer stickiness. I mean, how do we kind of understand that or rather if you can kind of give color on how the...
[Technical Difficulty]
[Operator Instructions]
Good question. And I think Skipper with its cost competitiveness, its strength in engineering as well as service, has developed strong relations with over 100 global EPC contractors of large sizes -- large and small and mixed. And of course, these customers recognize the importance of a prompt and reliable manufacturing company because their project sizes will be much larger in comparison to the value of supplies that they take from us. And typically, towers and poles are the most important supplies to be going into a power T&D project or for that matter, even a telecom rollout project. So -- because of the nature of being a customized product.
So definitely, customers recognize the importance of a large, consistent and reliable manufacturer like Skipper and for that, obviously, we get a lot of repeat business from various customers of us.
No, that is...
[Audio Gap]
Again, in the engineering product side, what will be the concentration of the top 10 customers?
For us?
Yes.
I'd say that even the largest customer would not make up more than 8% of our order book. So maybe the top 10 customers will be making up approximately 30% of our order book may be.
Sorry, 20% did you say?
30% to 35% of our order book will be made up of the top 10 customers.
Top 10. Okay. And then I [indiscernible].
Ladies and gentlemen, that was the last question. I would like to hand the floor back to Mr. [ Meraj Shah ] for closing comments. Please go ahead, sir.
Yes, I'd like to thank everyone for participating on the call. I hope your questions have been answered. And I would also like to thank the management for having this conversation with the participants. I would like to hand over the call to management for closing comments.
Thank you, everyone, and we do look forward to engaging with you all at the quarter 3 conference call. Thank you for all your questions, and look forward to seeing you again.
Thank you, members of the management. Ladies and gentlemen, on behalf of Arihant Capital Markets Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.