Techno Electric & Engineering Company Ltd

NSE:TECHNOE

Earnings Call Transcript 2023-Q3

[Operator]

Ladies and gentlemen, good day, and welcome to Q3 and 9 months FY '23 earnings conference call of Techno Electric & Engineering Limited, hosted by Asian Market Securities Limited. Please note, this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual results may differ from such expectations, projections, et cetera, whether expressed or implied. Participants are requested to exercise caution while referring to such statements and remarks.[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Kamlesh Kotak from Asian Market Securities Limited. Thank you, and over to you.

[Kamlesh Kotak]

Thanks, Reshmi. Good afternoon, everyone. On behalf of Asian Markets, we welcome you all to the 3Q FY '23 earnings conference call of Techno Electric & Engineering Company Limited. We have pleasure in inviting Mr. P.P. Gupta, Managing Director; and Mr. Ankit Sarayia, Director from the company. I request Sri. Gupta-ji to take us through an overview of the company's quarterly results and then shall -- we shall begin the Q&A session. Over to you sir, Gupta-ji, thank you.

[Padam Gupta, executive]

Thank you, Kamlesh. A very good afternoon to all of you, and I welcome everyone to discuss our financial results for the quarter ending -- third quarter ending December and 9 months, results for the time period ending 31st December, '22 and the future potentiality of our sector and company, in this sector. Anything -- before I go with the details, I would like to say anything said on this call, which reflects our outlook for the future or that must be construed as a forward-looking statement. First we review this in conjunction with the risks that the sector faces and in turn your company faces.It is to bring to your knowledge that we have sold all the wind assets in the state of Tamil Nadu aggregating about under 10 megawatts and -- with regard to this, the operation of this segment has been disclosed as discontinued operations in the result as per accounting standard 105.Let me take you through the highlights of our performance. The most important, again, to repeat is to bring to your knowledge that we have gainfully sold our major or all the capacity of the wind assets in the state of Tamil Nadu and have already realized around 50% of the money against the assets transferred as reported in the exchange and also advance received from various MOUs which has to be paid out by the end of this quarter.With regard to this, the operation for the same has been disclosed as discontinued in our results in compliance to the accounting standard 105.The total revenue for this quarter stands at around INR 119 crores. The revenue from EPC is around INR 185 crores that delayed -- this decline in revenue in EPC is purely incidental, which are largely because of the delay in handing over of the new sites by [indiscernible] at Goa and by Sterlite and the supply chain remains a bit disrupted due to non-availability of semiconductor electronic components and particularly 765 kv GIS modules from non-Chinese manufacturers who are eligible to supply the same in India.The FGD execution has just picked up and its impact will be felt in the coming quarters. Due to above levers, we missed the revenue by around INR 100 crores, which will be largely made up this next quarter as the outgoing quarters. This is one time blip due to the above-mentioned reasons. The results do not reflect our outlook for the future as we continue to remain [indiscernible] for the 30th as well as for the coming years.The EBITDA for the company stands at INR 24 point -- around INR 25 crores, the operating profit for the EPC segment is around INR 23 crores. We have mediated some pressures in the EBITDA margin due to high commodity prices, which are lately correcting and also high overseas [ debt ] for our export corporate.The other income for this quarter stands at INR 20 crores compared to INR 120 crores for the last year. The last year income has included the profits realized out of the sale of our joint venture company with KPTL, the assets at Kohima, Nagaland INR 110 crores. You may expect this to happen now in Q4 out of the realization.The profit before tax for the quarter is at INR 41 crores. The parity is at INR 31.5 crores approximately the difference in bottom line was majorly due to other income as taken earlier. The EPS for this quarter is at INR 2.9 crores. Coming to 9 months results, our top line is at around INR 600 crores, which includes EPC at INR 510 crores. The EBITDA for the company stands at around INR 145 crores and EPC segment is at around INR 72 crores and operating profit margin as for the EPC segment is at INR 14.2 crores, which is INR 14 crores plus. The other income is for 9 months we were at around INR 52 crores as against INR 148 crores last year, the difference continues to be basically because of the profit booked in Q3 last year out of the sale of Kohima asset which -- of under INR 10 crores, which this year will happen in Q4 by exit of EBITDA share.The profit before tax is at INR 168 crores and profit after tax is at INR 146 crores. EPS is at around INR 11.65. The total cash in hand after meeting expenses of [indiscernible] as well as other diversifications, is at INR 1,200 crores that is more than INR 110, which is around INR 110 per share.The wind power asset sale will further add up to about INR 450 crores of cash surplus in our books, which will strengthen us to bid for our smart meter projects on TOTEX basis on DBFOT model and our data sector projects. During this quarter, we have booked further business worth about INR 500 crores. And major orders are from Sterlite Power at Goa, part about INR 113 crores and from REC Power Distribution Company to install 2.5 lakh smart meters under the TOTEX model or the DBFOT model for INR 338 crores. But to achieve this, we have quoted [indiscernible] of subsidiaries [indiscernible] to do in transmission and sales [indiscernible] we have solutions [indiscernible]. The order intake over the 9 months is approximately INR 3,000 crores and unexecuted order book as of this upper end is at around INR 4,000. We have built in the pipeline for over INR 5,000 crores, which are yet to be opened, and we are hopeful of bagging at least to INR 2,000 crores business out of the share.The outlook is extremely positive, as I have been sharing with you. I trust the difficult times are behind us, and we have shown growth in business bookings, and we foresee significant growth in our top line and bottom line too in the coming quarters. We expect this growth momentum of business as well as execution to continue for the coming 3 years at least for the year '24, '25 and '26. We expect larger business at present out of FGD segment, AMI segment and data centers and status quo in our transmission and distribution business. As you are all aware that power sector demands have been strongly pursued by government. And additionally, the Electricity Act running for last 3, 4 years has been approved as of December end '22. This will bring new opportunities to the company. As the consumer now stands provided with a choice of the multiple power suppliers as in case of mobile or Internet services and also ensure [indiscernible] repayment to the generators and also adequate tariff for reasons to ensure financial viability and help of the discoms.On the business side, I will take you through each segment we are catering to. The FGD segment is -- continue to be focused as the notification of Government of India, all coal fired thermal power station need to limit their sulfur and nitrogen emissions as notified by the pollution department. There is a considerable progress already as involved by CPSUs, and we see now strong direction by the solutions by the private sector and SMEs. We have already got orders worth INR 14 crores INR 15 crores, and we expect this level of business to continue for next 3, 4 years.In the transmission sector, the renewable power target of 500 gigawatt by 2030 is strongly in place. And I expect this quarter, this -- the execution or transmission network to -- for which the bidding is in pipeline for about 60 gigawatt should be completed by 2023 and now think that going at a faster pace and with more extensions.The interstate transmission system for this execution and within the integration of 13-gigawatt renewable energy from Ladakh has been progressing and we are already part of it. [technical difficulty] involved in this is about 207 million [indiscernible] 83 million. [ AFI ] is the segment, apart from our DSS, the major element of the power sector reforms is installation of smart meter solutions to contain the losses, metering on proper -- power properly and empowering the consumers to view their power consumption, quality of our supply to them, and also regulating their total power consumption and tightening the amount of bills.The budget 2023 provides for all these incentives to the SEBs and discoms. We are witnessing strong focus on distribution network strengthening and making them more smarter and intelligent through RDSS scheme for which government has allocated INR 3 lakh crores for the next 5 years to be funded by [ RBC ] of the PSC.The main maim of the competition now to improve efficiency, contain losses, improve the financial health of the discoms. And out of this, we have already got one order from J&K for 2.5 lakhs smart meters for INR 338 crores under TOTEX model.The Electricity Amendment Bill 2022, which is already in place and which we'll see the implementation. It will facilitate non- discriminatory [indiscernible] to the generators as well as multiple power suppliers/consumers. This may open up new areas of power distribution, licensing and private sector investments in distribution as it has happened in generation and transmission in every way. This is -- scheme -- the act provides for the use existing networks by new licensees also and has a fee to be provided by -- to be decided by the regulators. Even the power -- the tariff of the power can be upgraded, not once in a year, but maybe more than once in a year going forward. We are very, very hopeful that power sector is now at a very critical juncture, and only something good should happen going forward.The wind segment. We have taken a generic resolution to sell our wind assets in the state of Tamil Nadu. We have already told that by announcement and has transferred and sold 37.5 megawatt of this wind asset out of under 10 megawatt situated in Tamil Nadu, at a contribution of INR 159 [indiscernible] and entered into MOU with commitment to buy and with the advancement of 25% for another 71.4 megawatt. This will add around INR 415 crores to our balance sheet with the date similar to late year as we done in Kohima exit.The sale of wind power assets announced today like is our strategy to exit the generating business and is resting our high-rewarding growth areas, which grew like data centers, AMI as well as our overseas businesses. Techno remains focused on executing this strategy of pursuing growth in targeted core efficient businesses and also developing new capabilities in areas like -- or improving our capabilities in areas like that of smart meter, power distribution, et cetera.Now the third segment, where we are present is data center now. We have already stated that data center business, we see multiple growth in coming 5 to 7 years. The capacity in next 3 years is likely to grow from 500 megawatt and over the next 7 years to 5 gigawatts. The data center, we built -- most of the data sectors are located in Mumbai and Chennai. Airtel, Adani, Equinix, [ G3, ] STT are already in the process of setting up of data center at [indiscernible] Chennai, where we were the first mover and this also validates our choice of the regulation. Techno is in advanced stage of completing this data center of 24 megawatt at [indiscernible] a first class scalable hypertext signature. We have already achieved the progress up to the casting of the slab on second floor and we have spent around INR 100 crores on this project by now on a pro forma net cost. The long-lead equipment already stand order to the extent of 50%. The core shell of data center building will be completed by May '23, and we are hopeful of commissioning the first phase of the data center by September '23.We are seeing aggressive interest from strategic partners to enter into a JV with us for developing data centers in India. We are evaluating the available options and we'll be concluding the same so forward.With CapEx of around INR 1,400 crores that is 45 -- that is around INR 15 crores per megawatt about 60% to 65% CapEx is involved in electro mechanical work, which is our in-house expertise and we'll be able to [indiscernible] on the same for executing the works. With EPC capabilities that drive experience of developing infrastructure projects, we are in a unique position, compared to the industry, and are being approached by other developer now to take up EPC for them for data sector works.With this background, I would like to invite you [technical difficulty].

[Operator]

Should we begin the question-and-answer session, sir?

[Padam Gupta, executive]

Yes.

[Operator]

[Operator Instructions] We have our first question from the line of Sandeep Tulsiyan from JM Financial.

[Sandeep Tulsiyan, analyst]

So first question is on the revised revenue guidance. You said it is started by INR 100 crores. If you could also share the absolute numbers, what you are expected to do close FY '23 by? And also, what is the expected number for FY '24 in terms of revenue?

[Padam Gupta, executive]

Sandeep, I trust this year, we should conservatively INR 2,000 crores to INR 11,000 crores in EPC business and another INR 100 crores will come out of the wind business, which we are exiting and built already. As regards '24 -- '23-'24, you can safely take a top line of INR 1,600 crores, at least INR 400 crores per quarter.

[Sandeep Tulsiyan, analyst]

So sir, we have not done such high execution in any of the quarters of INR 500 crores. So we are targeting INR 500 crores to INR 600 crores in the fourth quarter. So based on the current employee strength and the contract workers that we have at various sites, you think we can ramp up revenue so sharply in the fourth quarter?

[Padam Gupta, executive]

You see, let me first highlight to you what happened in Q3. You see we are ahead in the field progress, where there is no decline in work. Our teams, all sites are ready to receive equipment. But somehow, we could not match up the supplies with the site requirements. So our field progress of INR 250 crores is intact for the year already, out of which we have already built about INR 175 crores by December end. Where we lag this by supply content. The supply of INR 50 crores, we could not take delivery because they were [indiscernible] projects where sites were not handed over to us promising, "Next week, next week," by [indiscernible] at Rajasthan, in [indiscernible] as well as by Sterlite at Goa. In Goa project. So -- and another INR 50 crores got suffered because of the varied components not being there with the -- because of the semi conductors, our electronic components, procurements of GE or there maybe all of them raise their hands stating we are -- still scarce supplies, which these as you can also collaborate with them. Thirdly, some GIS modules, which were expected to be delivered -- you see after Chinese are out, the suppliers left for 765 kv countries is only 2 now. One is GE and other is [ Hershall ], which is acceptable to the government. So these are all overloaded and their modules are also not complete because of, again, electronic components not being there and they are not able to make ready their LCC panels than others despite promises. So supply side has let us down in Q3, not the field side. Techno has always been strong in the field, as you know, I'm a services company. I'm not a manufacturer of any equipment. So supply is from that point is all sourced whereas feed is our porting. We have the capability to do work at 30 sites at one go, and we have sufficient manpower for that, which are always underutilized over the last 2, 3 years. So whatever growth is coming sir, is mostly out of the component of the solution as a know-how, capability, component design component or your supply component additionally with it. So we are not ready to achieve -- we could have easily done if you include free supply materials from the customers. We are very happy with like transformers, powered or any other pilots are banning they prefer to supply transporters. So we prefer that. Why have that in the top line unnecessary with low margins. So even if past starts so the top line has never been our belief sir, nor we have bothered to be the largest in the country. My belief is to be best in the sector, which I have always been claiming in terms of technology, solutions, later solution for anticipating what our requirements is the emerging solutions. We want to be there. We want to be the lead clear in those areas and ahead of others. That is where Techno is always there over others. So bottom line is my key sir, which we must achieve. And that is why we are to the share. If I can deliver the bottom line with lesser risk and with a lesser top line, I don't think it should worry my investors.

[Sandeep Tulsiyan, analyst]

Also, a last question is on the margin side. You have been guiding conservatively that your margins will be lower in future as SGD execution picks up and you have guided ahead that there is some cost, commodity cost pressure as well on the company because of which margins are trending downwards. So how should we build in the margins? And if you look at margins for 9 months, they were at 14.5% in EPC, but we were 12.2% in third quarter. And your guidance in the past has been somewhere about 12.5%, what I recall from earlier calls. So should we still stick to this 12.5%? Or do you think because of this commodity price pressure become further trend downwards in the future?

[Padam Gupta, executive]

No,sir I will say, sir, that you keep 14.5%. This 12.5% has happened only because of our overhead appropriation over lower top line. With the commodity compression, our margin at 14% is already assured for you and we've entered that. And next quarter, it will be again restored because we have built up the organization; overheads are -- we are transforming. We are evolving in new segments. So a lot of new people are joining our company as a manpower resource, both at Delhi and Kolkata. Delhi has been, wherever IT and power are bunching together, we are undertaking more growth in Delhi office now. So this compression in pressure is basically because of our [ headcount ] and other expenses. It has nothing to do with the commodity side in the third quarter. Yes.

[Sandeep Tulsiyan, analyst]

In the past, you have guided actually for 12.5%, 13% margins. So I was just alluding to that for FY '24 also or FY '25. So maybe that is being conservative on your side, but this 14.5%, is it your guiding it from next year now? So is it like an upward revision in that margin guide?

[Padam Gupta, executive]

Yes. This quarter -- this year also, we take 14% if not better. We have tied up all the supplies and our field costs, we are very confident to be at 14% this year also.

[Sandeep Tulsiyan, analyst]

And one more question from my side. Sir, is on this wind power asset sale. In the past, you had guided that we'll resolve some 15 megawatts for in-house captive consumption for the data center. But now it seems that you have offered almost 80% of your capacities only 20 megawatts will be left with the company. So where will that captive power requirement will come from. And also, in terms of utilization of the funds, we'll, of course, spend some INR 200 crores, INR 250 crores each year on data center and maybe another from INR 300 crores to INR 500 crores amount on distribution projects. Still, there will be a substantial amount, which will be there on the balance sheet out of the INR 1,500 crores balance. So what is your payout policy going to be? Is it going to be stepped up? Because right now, payout is still very low, include in terms of yield, but of the INR 1,500 crores balance sheet, you are still paying less than INR 150 crores a year to the shareholders. So where do you foresee that amount going, even -- last question.

[Padam Gupta, executive]

So firstly, I would like to answer your 3, 4 questions in equal steps. Firstly, I could not have got a better time than now to exit my wind assets. You see due to energy crisis and change of government in Tamil Nadu and this business has been so local we are able to realize now almost 80% of my purchase value. Having used these machines for 12 years. I could not have expected like that ever, between you and me. So #2, the renewable power in the country now is growing multifold and open assessing renewable power has been allowed by the Amended Electricity Act already. I can buy this power, power exchanges, I can get into a group model in intrastate with some generated there, who already are well known to us. So keeping your money locked in assets was no more making a sense with the present times, I would say. Even if I want to come back, I may again come back now with the solar, some joint venture with some generator taking an interest of 36% in solar capacity, or even in wind with the latest technologies, which has gone a long way in improving GUFs over what we had GUF with our machines where we [indiscernible]. So all those factors are properly taken care by us. Our data center will be in fact a more competitive by procuring power from other eligible means than holding on to your own generating assets. It was not making business sense any more given the present -- I would say the direction in the market in buying these assets by local industries market peoples; #1. Number 2, now coming to the cash in our books are, obviously, cash belongs to our investors. They are very valued to us. If the payout will also go up, buyback will also continue. And I can assure you our all investors will be [indiscernible] in the years to come. You see the more important part where I'm excited now, which I never see in my 40 years of career in this sector, sir, that we got -- this company was no more than INR 100 crores when Electricity Act 2003 happened. Today, we are at INR 1,000 crores plus. Now another amendment has come. So there is no reason why Techno should not be INR 10,000 crores top line and the bottom line of at least INR 1,500 crores by 2030. I see no reason. Every year we will see magical growth in this company now. In my lifetime, I have not seen these types, the kind of business available in the market, the kind of cash, eligibility we have, sir, which most companies don't have in our sector today. They are starved of their own capital, they have starved off their own execution phase, and they are starved of their own eligibilities to commit more in this sector. So it is a very exciting time now. And the Techno has all kinds of experiences, EPC, [indiscernible] what is required to be in this market now and play with so many technologies around us. We have been always up-to-date with the technologies or beyond. If any technology a multinational knows among EPCs, I can claim it with pride that it is only Techno who matches that.

[Sandeep Tulsiyan, analyst]

So I get that part. Sorry to continue, but the only question over there was we were always an asset-light company focusing on high ROICs. And with this DBFOT investment and the data center investment, we might become a bit more asset heavy in future. So I just wanted to get your more thoughts on this capital allocation because one thought maybe that these are temporary investments and you may monetize them or we may continue to run some of them for a longer period of time. So just wanted to get your thoughts on capital allocation part of it?

[Padam Gupta, executive]

I'm coming to you, sir, my capital allocation in this business will never be more than INR 500 crores, even if it is DBFOT whatever any model, there is a concept called securitization on the deferred bids. Once the project has achieved the COD share, you can securitize your bids. That is what we intend to do. We already have to [technical difficulty] to securitize our bids of this particular order also. Because there are many financials who want to wrap up the book. There are many PE funds who are approaching us to invest in our AI subsidiary to scale up their books. Like -- funds like [ NIR ] and others. So there is no dearth of funds now to fund these kind of operations. And definitely, I'm going to keep my balance sheet asset light. We are not -- that's why we quoted a subsidiary and let that subsidiary take care of its business in its own merit.

[Sandeep Tulsiyan, analyst]

And that's very helpful.

[Padam Gupta, executive]

Always welcome. Please, visit us and to know our mindset. It is not going to change.

[Operator]

We have a next question from the line of Ashwani Sharma from ICICI Securities.

[Ashwani Sharma, analyst]

My first question is again on the revenue. So Q3 was impacted because of the supply chain, as you mentioned. But what gives us the confidence on the supply chain that we will be able to do INR 500 crores in the Q4?

[Padam Gupta, executive]

First of all, I'll say that in EPC business quarter-on-quarter, and it is very -- it's a very big puzzle, #1. And #2, definitely, you can appreciate that not being getting supplies in Q3, definitely, we called for our intensive meetings with the -- all reputed vendors have definitive progress with them, have backup [technical difficulty] with them from us. Now the priority programs are all fully committed tied up in whichever form they support our projects and how much they mean as a value to us. So definitely, you cannot give a homework to the market for this anymore. In Q3, we were believing in the normal course things will go. So slippage has happened, but we cannot continue to happen. So now all programs we are committed and tied up with them, sir.

[Ashwani Sharma, analyst]

Sir, my second question is on the data centers. What is the update on the JV partner that we have been scouting for quite a bit some time now?

[Padam Gupta, executive]

Ankit, will you like to answer this question?

[Ankit Saraiya, executive]

Yes, sure. So as far as JV partner is concerned, we are in active discussions, as mentioned earlier. We are already in receipt of a term sheet from one of the JV partners. With confidentiality obviously, we cannot disclose right now each of the details. But we are in progress, and we are finally in discussion with at least 2 or 3 more data center operators, one based off in Singapore and a couple of them based off in U.S., while we have a term sheet from another JV partner based in Singapore itself. That said, we're quite confident that we should be able to close something over the next 6 to 8 months time.

[Ashwani Sharma, analyst]

Thirdly, similar, again, one more question on the data center. The CapEx is INR 100 crores. I think it's been there for a couple of quarters. How is the construction or execution is happening at data centers at Chennai?

[Ankit Saraiya, executive]

Currently, the CapEx will obviously take time to build up because most of the purchase orders or [indiscernible] awards which have been given out to various suppliers, vendors or contractors on field do not contain heavy upfront payment to them. Therefore, the CapEx is now building up. But today, as we speak, we have completed construction up to the spin floor of the data center, 2 more floors are left to go. They should get completed by mid-April or end of April. So the core in shell of the data center will be completed by end of April. And we should start the architectural commission works from mid-March onwards. Procurement of equipment are almost completed up to 50%, 60%. And these equipments will start getting delivered in the next 4 to 6 months time. And the remaining portion of equipment should also get ordered out within the next couple of months. So we are hopeful that we'll be able to bring this project into commissioning around the month of August.

[Padam Gupta, executive]

What I mean by INR 100 crores is the spend money paid out in cash and committed CapEx already by ordering is around INR 400 crores by now, as well as commitments are concerned to the [technical difficulty] arrangements. So it is going on track, and the first phase of our project is around INR 650 crores, phase 1, which we tend to making it ready by this September this year. Another INR 200 crores will get settled by March end. So that is the update. But payouts will happen by September only, progressive payouts.

[Ashwani Sharma, analyst]

And sir, coming back to EPC revenue guidance for '24, the INR 1,600 crores revenue guidance that you gave, how much can -- will it be from the data center EPC? And from the metering and the FGD, if you can just give us some sense.

[Padam Gupta, executive]

Yes. By and large, I gave this breakup last time also, you can take FGD around INR 500 crores to INR 600 crores and transmission and other around INR 400 crores and another data center will be another about INR 350 crores. And you can say another INR 250 crores to INR 300 crores will be [indiscernible].

[Operator]

We have a next question from the line of Keshav Garg from Counter Cyclical PMS.

[Keshav Garg, analyst]

Sir, I wanted to understand your view on, sir, we have over INR 1,500 crores of net cash. And sir, there is a company GE Power India. So you must be knowing that company in and out. So the promoter wants to exit that business. And so the share price has fallen below 2005 levels. So is there any opportunity for us to acquire that asset at a throwaway price and turn it around? So what are your views of the now?

[Padam Gupta, executive]

Sir, I've not examined the company numbers -- if GE Power, you are meaning the company of U.S. GE, I don't if it's some Indian company, I have no idea.

[Keshav Garg, analyst]

Sir, GE Power India, it is a listed company, so you can kindly check it out. And so the market capitalization is INR 800 crores as of now. And the promoter has stated that they want to sell off this company and they want to exit this line of business.

[Padam Gupta, executive]

What do they do, sir? Can you update us? I am not fully informed.

[Keshav Garg, analyst]

Sir, they are doing EPC work for thermal and hydro power plants in India. And they also do FGD, et cetera. So since it's a listed company and everything is publicly available, sir, you can kindly check it out if it makes sense for us to acquire it at a throwaway price.

[Padam Gupta, executive]

Thank you very much for bringing it to our knowledge we'll examine it, sir.

[Operator]

We have a next question from the line of Sarvesh Gupta from Maximal Capital.

[Sarvesh Gupta, analyst]

Sir, first question is on your revenue guidance of INR 1,600-odd crores. So I think earlier con calls, you had said that this INR 1,000-odd crores EPC -- INR 1,000 crores EPC revenue will scale up to around INR 2,000 crores in the coming 2, 3 years? Right. And this never included the EPC business from the data center business? And now in the INR 1,600 crores you are including that as well. So that was something that I could not understand because already you have around INR 4,000-odd crores of order book from the non-data center business itself. So why should this INR 1,600 crores sort of a guidance include that as well? Because then it means that the execution from INR 4,000 crores order book will be just INR 1,200-odd crores. So that looks like a very small sort of a number. So if you can throw some light on that, sir?

[Padam Gupta, executive]

You see here there is no specific trying to be communicated in this. Our target is to achieve INR 2,000 crores by '25. And definitely data centers will be a part of our business. It is quite likely in '23, '24 itself, we may exceed INR 1,600 crores also. But my nervous system says that presently I have to smoothen the nerves out of this quarter outcome. So market must believe that whatever INR 1,600 crores I'm saying has the scope to improve by another INR 250 crores but not go down by INR 250 crores. That's more important to all of us, Suresh -- Sarvesh. So that is the purpose I said that even if you take a worse scenario because we have to book that EPC also while commissioning stage 1. So whether it will be INR 1,500 crores plus INR 350 crores or INR 1,600 crores includes the INR 350 crores makes no difference as long as top line stands achieved by us. So what I want to communicate is the comfort that next year of '23-'24, whatever growth we could not achieve this year will definitely be made up next year.

[Sarvesh Gupta, analyst]

Secondly, so this wind power out of this INR 450 crores, the remaining INR 300-odd crores, INR 75 crores will be realized in month of February and INR 225 crores remaining, when can we expect to realize, sir?

[Padam Gupta, executive]

No, I said we have already realized INR 250 crores sir, and only INR 200 crores more to be realized by February end.

[Sarvesh Gupta, analyst]

So everything is coming in this quarter itself?

[Padam Gupta, executive]

Absolutely.

[Sarvesh Gupta, analyst]

And sir, last quarter, I mean, this partnership, JV partnership in the data center business. So that seems to be like -- we are always saying that we are getting something finalized. Even in last call, we said that we are in silent period and term sheet is getting finalized. Now I think the revised guidance is another 6, 7 months will take. So what exactly are we just sort of biding the time so that we get the sweetest deal? Or do we have -- are we not getting the deal from someone who really -- who we really want to quote for this business? Or are we not getting the required valuation. So where is it taking so much time because almost like last 8, 9 months, our commentary has been that we are going to be finalizing the deal soon, but it is never happening.

[Padam Gupta, executive]

Ankit, will you like to address?

[Ankit Saraiya, executive]

Yes, you see the reason why we've not been able to conclude even though we have said in the past that it is [indiscernible] because this industry is still very a very -- what do I say -- very, very new to the country. And there is a lot of activity around the industry, which is ongoing. So every day or almost every alternate day, we would new statements, some announcement of the other in regards to the data center industry. Now with this announcement, obviously, the quality of term sheets and quality of partnerships are changing along the way. There is more interest from many other data center operators, which were not looking into India earlier, but have started looking into India today. And very, very large data center operators, who we were in probably in discussion in the earlier days, who we were introducing the Indian market to, but did not take that interest. And today, they are looking to jump into it. And the time -- the second thing which has happened in our favor is that especially with this project is that the project has progressed really very well, whether it is the design engineering, whether it is the big progress that we've been able to make on the field. Because many industry players did not expect Techno to find success in execution or in design to begin with without a strategic partner, but we've been able to demonstrate that. Now this project is looking to get commissioned over the next 7 to 8 months time. Having said that, the confidence level in the market for Techno has improved, and therefore, the quality of investors chasing us or behind us has also improved. And the term sheets on -- along the way are also to that extent are improving. So this dynamic change in the industry plus newer interest that we are seeing come into the project and with the project progress, the quality of term sheets included. All of this is constantly making us look at the next best thing. Today, we are in discussions with, as I mentioned, a couple of data center operators from the U.S. and then a couple of them from Singapore. And none of these data center operators, I would say, at least 3 of them are sitting on a balance sheet size of more than $10 billion to $15 billion, which was not the size of operators that we ever targeted to begin with, though we hope for it. So things are looking brighter and better as project is progressing and as the industry is opening out more. So it's that we are just keeping patience to see how we can make better of the situation that we have.

[Sarvesh Gupta, analyst]

And then my final question is that you said that obviously, the opportunity that you are seeing, you are saying that it is probably the best that you have seen in your career. And now, of course, we have a very strong balance sheet also. But from an organizational perspective, sir, are we doing something every quarter to sort of strengthen our top level and senior as well as mid-level management so that we are able to -- because such a large scale, of course, if you're looking at 10x scale, cannot be achieved without the proper sort of management talent at every level in the organization. So if you can sir, update something that we have done because now we are seeing so many opportunities in multiple directions, but do we have that talent to sort of take advantage of this, especially given the changing scenario, Electricity Act and everything sir.

[Padam Gupta, executive]

I do appreciate your question and very, very appropriate in the evolving developing situation. To address -- you see no quality at quantum of manpower is ever complete in an industry like ourselves, sir, #1. Number two, to achieve this part, Ankit is now operating out of Beijing and not Kolkata anymore. And our daily office is getting strengthened by every passing day. And we want to build it more strongly, wherever IT and power combination is going to be a way of life. But regionally, building around conventional traditions will all be handled -- continue to be handled from Kolkata where manpower is already available. In last, I will say that last 2 months, we must have added about 30 people at senior and medium level in our company sir. So this recruitment really is very strong, and it is going on. But I will not -- I'd like to say at the same time, I've also seen some iteration, which I have never seen earlier also. So we have lost about 10, 12 people also from our team who are willing to be located outside our company. So this is a tailored happening with the ongoing requirement of our business, and it is going to be very specially performed. We have created a strong HR facility. We have engaged all good HR consultants with us, who are working in tandem with us. So your question is well taken sir, and I respect a very, very appropriate question.

[Operator]

We have a next question from the line of Deepesh Agarwal from UTI AMC.

[Deepesh Agarwal, analyst]

Most of my questions have been answered. Only 2 bookkeeping questions. Number 1, sir, what would be our equity investment in the smart meter subsidiary?

[Padam Gupta, executive]

Sir, firstly, you see the SPV will hand over EPC to Techno. So we are not going to invest much equity other than maybe INR 5 crores or so. Now if we see receivables will be there from the SPV which will be securitized with the one of the financial companies and all EPC business will be led off from the SPV. So we don't see much equity support to be provided from the parent company.

[Deepesh Agarwal, analyst]

So sir, but the receivables will be realized over a period of 6 or 7 years, right?

[Padam Gupta, executive]

No, I'm sharing with you Deepesh that we tend scoring -- what should I say, securitization, what you call in the financial market that some finance company will securitize those bills and pay us with the discom value today by rate of interest, whatever is applicable 8%, 9% out of that. So once we have our payments upfront made to the EPC the same will be paid out to Techno Electric. So in the intervening period, you could say the Techno's engagement or receivables will be lifted to INR 100 crores, no more than INR 100 crores. [indiscernible].

[Deepesh Agarwal, analyst]

And sir, second question is --

[Padam Gupta, executive]

Let me complete this way. Because 30% is a CapEx that utility is paying us. In a TOTEX model, it is a 30-70 model practice in Jammu and Kashmir. So 30% payment, they are paying us with every progress, every build progress like EPG. So what we are fronting is only 70% part of it. Paid over 9 years or so.

[Deepesh Agarwal, analyst]

Sir, the other question is, so we had a lot of wind receivables with us. Now when you are selling the wind asset, who did you get those receivables over -- would it be the new buyer or Techno will get the pending receivables?

[Padam Gupta, executive]

So those all belong to Techno, sir. Whatever issues until the date of sale that Techno has the right under the agreement to pursue this with the utility, with the [indiscernible] and any other jurisdictions. We have no bar on it. They all belong to us because the very bills are also lying in our name only with us. So generally, the utility pay to the very entity in whose names bills are outstanding with them.

[Deepesh Agarwal, analyst]

And what would be the outstanding amount right now?

[Padam Gupta, executive]

About INR 200 crores, sir.

[Deepesh Agarwal, analyst]

And is there any expectation by when do you expect this to be received?

[Padam Gupta, executive]

This is a million dollar question, sir. We are contesting with the utility to pay it up for us. We have all high court orders in our favor. We have all the regulatory orders in our favor. Utility is also promising us to pay us, day in, day out. But there is a [indiscernible] a scheme running in the country to pay in 48 installments. So we are already -- they are adapting to pay us under 48 installment, which we are getting regularly from them, about INR 2 crores per month. But we are protesting it. So hopefully, some success will come. We are hopeful to wind up this issue as fast as possible, sir.

[Operator]

We have a next question from the line of [ Akhilesh Bhandari ] an individual investor.

[Unknown Attendee]

Yes. Sir, we have some pending receivables from Afghanistan also. Has there been any update on that market?

[Padam Gupta, executive]

Yes. The update now is the local government has more or less accepted the situation that the funding body like ADB or World Bank may not come back to Afghanistan because of their issues on the human rights or other religious issues as practiced there. So they have lately approached us to take up this project, possibly as a rupee arrangement between the Government of India and Afghanistan government. So we -- they have started discussing with us 3 projects they have identified. On belongs to us, one to [ KEC ] one to KPTL. These 3 are important to the country because they cater to Central Asia and not only to Afghanistan. So hopefully, some settlement may happen in the next 2 months. So how to go about it. Because the best part is, 80% of the projects stands [indiscernible] built at paid part. So we are in a very strong position to that this project needs to be completed. No government will leave it half done by having spent 80% CapEx on it. And secondly, it is of strategic interest to them.

[Unknown Attendee]

And as on date the outstanding was around INR 45 crores. Right?

[Padam Gupta, executive]

Right.

[Operator]

We have a next question from the line of [ Karan Barma from Ping Full Investments ].

[Unknown Analyst]

My question was timely to do with this financial year's revenue target. So with the third quarter result, it kind of looks a little off versus the INR 800 crores you were supposed to kind of include in this quarter, in the last 2 quarters. So where do you see the final numbers for the last quarter of this financial year?

[Padam Gupta, executive]

I've already replied to this question to charge query that you can expect our top line to be anywhere around INR 1,100 crores plus by this year. And next year, it will be INR 1,600 crores.

[Operator]

We have our next question from the line of [ Sharan Katani from SG Securities ].

[Unknown Analyst]

My question is on the data center business. If I look at the website, you also mentioned about Mumbai and Kolkata data centers. So I just wanted to know what the strategy is there? Is it going to be EPC? Or because, as I understand, the first Chennai data center was like more of a pilot demonstrating Techno's capabilities. So we need more capital in there. So the next project, do you look at them as a capital-intensive projects? Or is it more on a lighter side, once we already have capabilities set up from the Chennai data center.

[Padam Gupta, executive]

Ankit will you like to answer this question?

[Ankit Saraiya, executive]

Yes. So basically, Calcutta most likely is going to be our next project after Chennai. And Calcutta is starting to see great potential for data centers because on that side, which is the east and the northeast side of the country is completely uncatered by data centers. As we speak today, over the last 3 months, Airtel and NTT, which are telecom companies from Japan have both broken ground and started construction of data centers in Calcutta, then Singapore Telecom, Adani, [ GPI ] also looking to come up with data centers in Calcutta. And we follow a very similar strategy in Calcutta as what we've done in Chennai, wherein we will develop a data center of a similar nature, most likely of a similar nature that is there in Chennai. And ultimately look for a strategic partner to come in and take over the data center for core operations and customer acquisition. So it might go on a very similar line with Chennai. And hopefully, the partner that we are able to engage for in Chennai, would show interest in Calcutta itself. With Calcutta becoming a very important market for data centers.

[Unknown Analyst]

So my next question is just on the order pipeline. So what kind of order book do you expect to close? And I remember you mentioned about INR 5,000 crores in the last con call. So I just wanted to know if that is unchanged or are [indiscernible] or any others currently?

[Padam Gupta, executive]

No, we still received 5 projects, yes. We have participated in this about INR 5,000 crores, which are yet to see a opening. We are hopeful that in the balance period, we will be able to book another [indiscernible] of INR 1,000 crores. So we may take [indiscernible] other order book by close of this year.

[Unknown Analyst]

And you expect to execute around INR 1,300 crores INR 1,400 crores out of the INR 5,000 crores is what --

[Padam Gupta, executive]

Not this year, sir, next year.

[Unknown Analyst]

Sorry next FY '24.

[Padam Gupta, executive]

Yes, absolutely.

[Operator]

Thank you. I would now like to hand over the call to management for closing remarks. Over to you, sir.

[Padam Gupta, executive]

Yes. I will once again thank you, all of you. I'd like to reiterate my commitment that this quarter is a one-time blip due to difficult supply chain challenges and also the delayed handover of the site from the developers. Also field work in other locations are in good progress. And there have been some time lag in take off of the projects, which have been awarded to us. From the current quarter onwards, we expect a top line of almost INR 400 crores to INR 500 crores per quarter, with Q4 ending with no less than INR 500 crores. And the bottom line of this year should be at par with the previous year with other income remaining alike. And definitely growing in future years with the growth in the top line. With this, I would like to thank all of you once again in joining the conference call with us. In case you have further any query related to our performance, please drop a mail to us. With that, I would like to close the conference and thank everybody for joining.

[Operator]

Thank you. On behalf of Asian Market Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.