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Ladies and gentlemen, good day, and welcome to Techno Electric & Engineering Company Limited Q4 FY '20 Earnings Conference Call hosted by Asian Market Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amber Singhania from Asian Market Securities Limited. Thank you, and over to you, sir.
Thank you, Stephen. Good afternoon, everyone. I hope everyone is safe and sound in this environment. On behalf of Asian Market Securities, I would like to welcome everyone for 4Q FY '20 Earnings Conference Call of Techno Electric & Engineering Company Limited.We have with us today Mr. P. P. Gupta, Chairman and Managing Director of the company; Mr. Ankit Saraiya, Director of the company, along with their finance and Investor Relations team. We shall start with the opening remarks from the management about the quarter and the outlook for the year and so on. And then we shall proceed to the Q&A session. Over to you, sir.
Thank you, Amber, so much. Firstly, I wish each one of you to be safe, healthy. This year, we can all dedicate to our families more than business. So very good afternoon to each one of you, and welcome to discuss our financial results for the quarter fourth and year ended 31st March 2020.Anything said on this call reflects our outlook for the future or that could be construed as a forward-looking statement, and the same must be reviewed in conjunction with risk that the company faces.Let me quickly highlight our performance for the last year and Q4. For the last year, the revenue stands at INR 876 crore compared to INR 988 crore year-on-year. Revenue from EPC business is at INR 784 crore as compared to INR 879 crore year-on-year. Revenue from wind segment is at INR 91.8 crores compared to INR 110 crore last year. The EBITDA of the company stands at INR 216 crores. Operating profit margin for EPC segment is around INR 140 crore compared to INR 153 crore last year.Operating profit margin is at 17.89% compared to 17.5% year-on-year. Our operating profit for wind segment is around INR 75 crores. Profit before tax is at INR 213 crores, and profit after tax is at INR 177 crores.The EPS is at INR 16.04. The current investment value, which includes cash, cash equivalents as of March end stands at around INR 600 crores.Quickly looking on Q4. Our revenue is at INR 114 crores. EPC revenue is at INR 119 crores. Shrinkage is because of the wind segment, correction in prices of renewable energy certificates. EBITDA for the company is at INR 6.46 crores, and operating profit for the EPC segment is at INR 15 crore approximately. The operating profit margin is at 12.5%. The other income is around INR 9 crore approximately. And the profit after tax is INR 3.25 crores.Our total order intake for the last year is INR 1,600 crores and the unexecuted order book as of March end stands at INR 2,300 crores.Multiple factors have impacted Q4 performance and the overall year performance, which is largely because of the COVID-19 and ultimate lockdown -- unfortunate lockdown which happened on third week of March. And this still continues and impacting the business to a larger extent and in some states to a smaller extent, I would say.Our endeavor will be to convert this order backlog into execution this year as much as possible, which makes up for the lost top line of the previous year as well as we also achieved the desired top line of the current year. That will be our endeavor. We expect to make up at least INR 200 crore of last year's lost top line. Basically, this impacted for 2 reasons. Firstly, material worth almost INR 120 crore could not be built and the same was either could not be dispatched or whatever was dispatched remained on-road and could not be received at sites. So this impacted our top line billing.Additionally, our billing to Afghanistan project could not be made because of the closure of the projects as the material goes via Pakistan and the consignments were put on hold from the very end of February, I would say, which continued as late as mid-May. So these -- and thirdly, the materials which could not be inspected with the various suppliers [ watched ] also remained unsupplied additionally.So in all, I would say the destruction of the -- lagged the top line of last year was to the tune of about INR 300 crores in all put together. We were targeting INR 400 crore plus top line in the Q4, which ultimately narrowed down to only INR 120 crores. But gradually, our situation is partially opened up. We could achieve in Q1 of this year -- retrieve the lost sale of INR 150 crore of Q4 already. And I would say, rest of the 3 quarters, we will definitely aim to achieve additional top line of more -- less than INR 1,000 crore in EPC out of the unexecuted backlog. So we are very hopeful that if you take this INR 150 crore as last year sale, then definitely, we are able to regain our top line of INR 1,000 crores. But if you take this INR 150 crore as a part of current year sales, it's some relief.Additionally, we also expect to book a similar amount of business of INR 1,600 crore minimum, but we will know more precisely by the time we reach September end. Still a lot of uncertainty continues to prevail. We expect larger business out of the distribution segment and pollution control segment in generating plants. We do -- we expect that there will be a slowdown in the transmission side. It will be linked to the evacuation of renewable power. The present ongoing TBCB bidding for 50 gigawatt of renewable power, again, the bid submission dates have been extended to July end. So we don't see that -- in execution, these orders will happen prior to December end. So there was also a little setback in our case because of nonhanding over or delayed handing over of the site at Lakadia by Adani. That also deprived us of a top line of almost about INR 30 crores, which was planned in the month of March. It is expected to be handed over any day, and we expect to work on this project in the current year.Apart from this, obviously, you are reading in media that government is utilizing this opportunity also as reforms which are overpending, overdue in the disguised name of Atmanirbhar Bharat, so which is holding up the amendment to the electricity and amendment to the tariff policy and elimination of cross subsidy, payment of subsidy directly to the power consumers, and a lot of planning is being made by CA to give a visibility over next 5 years. But at the end of the day, what gets rolled out will be more important to all of us than plans. But we are very hopeful that this sector -- power sector is at a very critical juncture and something good should happen going forward.Coming to the wind segment. We are, again, facing headwinds because of the[Audio Gap] being poorer every passing day and not having money to pay. It has impacted not only the tariff, but also the payments to us. We hope to realize our pending payment of last 2 years out of the INR 90,000 crore package expected by the finance minister through REC, PFC to the DISCOMs to pay to the generators of their use. And additionally -- unfortunately, CRC has amended the REC policy also where there is no more floor price at -- [ for PFCs only ]. We will definitely be legally contesting this policy both as the association as well as a group of major power generators in the REC policy. And we are hopeful of favorable reviews at Supreme Court level as in the past.The only positive side this year, as we can see, has been income tax sides, where tax rates have been moderated and we could -- despite all this destruction of business in Q4 due to COVID-19 and lockouts and differentially practiced in different parts of India, our bottom line is more or less close to the previous year. That is mainly because of the tax rates being lower. We almost suffered in realizing wind power revenue of about INR 20 crores as well as other income, which we booked last year out of [ Patra ] is off the books, which is another -- about INR 25 crores. And similarly, EPC business, we lost about INR 15 crore. So all this put together, we lost EBITDA of INR 60 crores, but we made up in income tax a gain of almost about INR 30 crores. So -- and we are very hopeful to recoup, revive faster than many others because of many merits with your company. We have dedicated manpower at different buckets. All of our project sites are back to full life. We are employing about [ 1,250 ] people now in different project sites, so we are hopeful of -- progress in the last 2 months or 1.5 months is very encouraging. Customers are highly satisfied and that is -- our office is presently operating at 50% capacity level, which we hope to improve to further 70%, 80% as the local transport improves initially.So we are -- this is the worst result of my career of 40 years in any given quarter, but I'm very hopeful that this will be -- remain a memory only down the year, but definitely, I'll be able to share with more authenticity, the actual status by September end. But nevertheless, we see this year acting as usual.In balance 9 months, we should be executing at least 50% of the order book in hand with us. All projects are in execution and are in full steam, in field execution also. But challenges are there. And we -- our team is very agile, very experienced in this business. And cash is very supportive to us, liquidity in hand with us. We are very hopeful that all this setback will be forgotten or a memory of the past only, and we'll be back to healthy operations and performance.With this, I now invite questions. I'll be happy to address if anybody has any concern with this.
[Operator Instructions] The first question is from the line of Sandeep Tulsiyan from JM Financial.
Sir, my first question is pertaining to some clarification on the order book, order inflow numbers that you gave. So our order book is INR 2,300 crores and inflows stood at INR 1,600 crore for last year, which means we did not book any order in 4Q, correct?
No. We booked only INR 100 crores, sir, mainly from Africa in Togo; and also from Adani's balance, INR 30 crores; and Togo is $10 million.In first quarter, we have booked business for about INR 150 crore now already, which we discussed while discussing first quarter results. This is from Power Grid. Technically, again, a high-end solution project to make northern grid fault free. And also we are in the -- in Ladakh area now. We are going to provide power in the Ladakh, doing transmission work there. So we backed the contract from REC who are -- REC PDCL who are coordinating a project there. So we are hopeful of about INR 1,500 crore, INR 1,600 crore definitely, but I'll be able to further improve on this number by September end.
Okay. Okay. And in terms of our revenue and margin target for FY '21?
It will remain more or less intact because whatever orders we have in hand, if execution happens with no further COVID impact in future, which we hope is behind us -- all of us, it should remain at 15% on a ongoing basis. And we should be able to execute at least 50% of that lock this year, out of which INR 150 crore we have already done in Q1. And the INR 1,000 crore we'll be attempting in next few quarters as situation is getting normal.
So revenues of about INR 1,150 crores in EPC and margin roughly about 15%?
Absolutely. Yes, yes.
Also sir, if you could share some numbers. Number one is on the wind business side, how much loss did we book in 4Q on this? And what is exactly the downward revision of REC price -- REC inventory that you're holding, right?
Sir, we -- as you know, Techno underwent a merger process -- reverse merger process. And in the new name, the registration took a lot of time, and we could get our REC physically issued to us only in the month of February. Till December, we were booking the revenue as per the market rates on the stock exchange -- on the power exchanges realized by the other dealers, REC entities, which was on an average INR 1,500 REC.But in contrary, when we went to sell, we realized that about 4 million -- 40 lakh RECs have been issued to AP Discom. The total overall market size itself is no more than 6.5 million to 7 million in India as of today. So with that pressure of selling coming in the market, rates crashed to the floor price. So we provided for that correction in the last quarter from INR 1,500 to INR 1,000. And we could sell that INR 1,000 also in February and March the RECs, which was allotted to us. And we were also successful in getting -- this also became possible only by getting a stay order against AP Discom that they have not been complied with the REC issuance process properly, which need to be renewed by the issuing authority namely NLDC. So it is sub judice at the moment.
So sir, what is the number, if you can share? How much loss did we book? And what is the current inventory of RECs that we have?
Sir, we have REC left in hand for about 20,000 as of now. And loss booked will be about INR 10 crore out of REC. And also another -- during the year over previous year if you compare, there is loss also of INR 1 a unit, so -- which also bring the amount to about INR 20 crores. So in all, you can say there is a drop of about INR 30 crores. But that tariff order also is being contested in APTEL for which relief is expected, but all these takes time, sir, in our country.So someday, that relief will come as it came last year for us. We got a relief of INR 54 crore for last 5 years pending revenue, which is still contested in Supreme Court by TANGEDCO, and we have not taken it in the books. So there are lot of -- similarly the issues, the DISCOMs always remains in dispute at -- or sub judice, what I will say. But at the end of the day, I would say that is still a struggle. But we will not be loser. That's what I can assure you.
All right. And my last question, sir, is on the BOOT project deals that we have done. If you could share now what is the cash that we have been able to realize. And what was the profits that we have booked as onetime gain from these 2 deals?
Sir, still, it is only agreement to sell. So it is still not part of the books. We have signed one agreement now with InvIT of Sterlite to sell our Haryana asset where we are 50-50 with Kalpataru. Our realization will be around INR 85 crores, my part, Techno's part I'd say. Our investment was about INR 40 crores in that. So that way, we'll get a cash of INR 85 crore, and gain will be around INR 45 crores out of this investment, which will happen in the third quarter of this year.
Okay. And at Kohima?
Kohima asset, I'm doubtful now with a lot of restriction on Chinese happening. So the agreement with CLP may not go through or may not receive the government approval. So as it happened in case of Kalpataru's Eastern sector asset also, both were sold to CLP earlier by them. There, we are only 26% partner and 74% is with Kalpataru. So -- but project is now under commissioning, and it will be over in July. And now turning the tariff down. Despite all odds, we are able to achieve COD on scheduled date. Both Kalpataru and Techno has worked hard of retaining the scheduled date and containing the IDC costs. But we are sure some healthy partner will be able to buy it out like Adani bought out the Eastern project of Kalpataru post failure of CLP. But let's see, by the time we get into the approval stage, it may be around November, December. But our full equity stands deployed in that project already by Techno, which is roughly around INR 74 crores.
The next question is from the line of Bhavin Vithlani from SBI Mutual Fund.
Hope everyone is safe and healthy at Techno family.
Absolutely, sir. There is no COVID issue so far. No COVID case in any of our sites as well as in our office, sir, branch offices, head offices. Blessings of yours are there, sir.
So my question is more on the investments. And when we look at -- the current investment has risen from INR 450 crores to INR 518 crores. It will be helpful if you could give us some breakup and especially with respect to Dewan bonds, and there was -- the other investments in the bonds. The bond portfolio was about INR 300 crores.
Yes. Sir, we are out of Dewan Bonds. As I told you that PMS is done through a third party, where we are not directly investors in these bonds. They are formed with us under PMS. So Dewan, we are out already. And in the first quarter, we have further liquidated [ Apex Homes ] also. One more investment was there about INR 25 crores. So by end of this year, whatever money is coming back to us is being found in liquid funds.And as of today, the money in liquid funds is almost INR 400 crores now with us. And total cash and cash equivalent is INR 600 crores as of 30 June, I would say. And we hope to end the year with -- better than this. As we liquidate the bonds, money will come back to the liquid mutual funds. No more bond business, sir, either you have AAA in this country or default, that is a learning, so lesson learned, as this is not our forte, sir. So we value money of investors that might be utilized more for our business of the company or keep it as safe as possible.
So which means the bond portfolio, which was INR 300 crores, is down to INR 120 crores.
Now it is below INR 200 crores, sir. Below INR 200 crores now.
Okay. Below. Okay. Understand. And the other part is, if you could give a 2- or 3-year perspective on the business. So T&D business, what kind of projects that we are looking at 2- to 3-year perspective? We also highlighted earlier that we have aspirations for international expansion as well and the opportunity that we are seeing in smart meters as well as FGD?
You are perfectly right, sir. COVID has taught us many new things, number one. And number two, I will say that power still continues to be strongly state-owned and regulated business. So it has its own challenges. But it will continue to move to be cost competitive as well as more efficient towards losses containment by DISCOMs. So we have yet to see concrete things happening in the sector, to be honest. A lot of announcements. Announcements are -- the work is going on, on the announcements. Let's hope this -- now the new announcement of the government as Atmanirbhar Bharat brings strong reforms in power sector, which are sustainable and pro consumers, as I have always been saying. So far, the -- none of the regulations are pro consumer, sir, in my perspective. So I see going forward, I've been hoping for the last 2 years. And more so, I think we are at the right juncture now where we hope these changes will be a way of life, and that will drive the opportunities. Unless power demand grows, industrialization grows, Make in India grows, we will be short of realizing our planning projects or processes. That is very important. So power demand has to grow in the country, which is stagnating or at minus as of now. A lot more demand from the captive power has to move to a grid by taking away cross subsidy from the system, which is going to be a part of the new tariff policy now as announced by the government, that they will not allow regulators and states to have as much cross subsidies they wish, like 100% or both. It will be contained to 20% only, no more than that. And that also will be paid out directly under DBT scheme.So we are keeping our fingers crossed. But coming to your issues, specifically, there will always be a transmission demand for evacuating the renewable power. Whatever new capacities we are building now in renewable power, which is approximately 50 gigawatt, that will continue to meet the evacuation. Number two, additionally, sub-transmissions will also have to respect that so that more power can be delivered at the consumer end efficiently and without -- and reliably. So that no backup of power is required. Number three, the tariff must also come down so that it becomes affordable to the consumer. Today, we procure power at INR 2.5 to INR 3 a unit. But ultimately, by the time it reaches consumer, it is no less than INR 7 to INR 10. So a lot of inefficiencies are integrally part of this sector, which has to be looked into by the government. Then only they can realize the true dream of Bharat Atmanirbhar unless power is supportive. Did I address your questions, sir? Or I have taken into new milestone?
No. No, sir.
The next question is from the line of Ankur Sharma from HDFC Life Insurance.
Just continuing with Bhavin's question, one, over the next 1 year, if you could just talk about what are the kind of FGD tenders which are there in the pipeline. And how much of that could actually get ordered out? And how much are we looking to win out of that? If you could share some color there.
Sir, to our perspective, almost about 25 gigawatt to 30 gigawatt capacity is yet to be ordered out for FGD fixing in the process. We take it around INR 50 crore a megawatt. This business will be worth about INR 50,000 crores in totality. We are hoping to book 2 orders more during the year, which will be approximately around INR 750 crores to INR 800 crores around. We'll be more keen for small capacity projects than large capacity projects so that all eggs are not put in one basket. So we'll be aiming any project less than 500 megawatt only. So more of -- one of high vendors or 2 of 215-megawatt like combination we'll be looking for.
Okay. And sir, on the competition, on the FGD side, how would that be right now? Obviously, I'm assuming Chinese players will not be allowed. So how's that kind of faring in terms of the number of bidders for these kind of projects now?
We expect there should be about 7 to 8 bidders. And they are -- 4 or 5 are the old ones only and 2, 3 new may come in the process. So -- but we are having a very proven technology with us from South Korea. They are one of the leaders -- market leaders in their own country. And an ongoing project is progressing very smoothly. And we are confident of doing projects, time bound and within cost. So I think we'll be better placed than the new entities coming in this segment.
Okay. And sir, on the -- similarly, on the transmission side, what would be your expectations in terms of how much could be the industry-wide on the TBCB, the renewable-related orders, how much could be done? And therefore, how much could come to players like Techno and other EPC players? If you could give us some numbers there as well.
So Techno is only in substation business, and we don't do lines as many of you know. The total business under bidding now for 50 gigawatt is worth again INR 12,500 crores to INR 15,000 crores as a CapEx and in which the substation CapEx is around -- no more than, you can say, INR 3,000 crores to INR 3,500 crores. And there are about 6, 7 players. This is largely high-end business of 765 KW and 500 KW segment. So we will be hoping to win a total business of about INR 500 crore out of this approximately.So we will see -- Power Grid CapEx is also shrinking in transmission, which used to be INR 20,000 crore, INR 25,000 crore a year. We see no more than INR 10,000 crores, INR 12,000 crores for the next 2 years, per year basis, going forward. So we may find some business out of Adani as we already have. We are doing about INR 400 crore business for them now. Similarly, with the new players also, we'll be, at least, if not preferred, we'll be kept in the race by other players also keeping our track record in view in the past of timely and quality delivery.So in totality, we are not hopeful of growth in transmission side, sir, as I shared with you. It will be more out of distribution and sub-transmission and metering business, valuation business. These will be the new areas. Our grid stabilization business, like interestingly, we have won a package from Power Grid now to make northern grid fault free. So it is a unique package of its own time. So we enjoy our passion of technology unlocking on this like we did -- as we did in the STATCOMs, we did in our GIS packages. Similarly, this is first of its own kind we'll be doing. So we are very -- looking for more grounds like this.
Sir, on the static -- on the STATCOM side, remember, on the Q3 call, you said there were a couple of these that were to be ordered out. Is that still there in the pipeline? I think…
Absolutely. 3 packages are in the pipeline now. 2 mandated with Power Grid and 1 under TBCB. So we'll see this, yes.
And you expect this to come through in this fiscal year, in FY '21? Is that…
They will be -- they should be ordered out by October to buying that.
Okay. Got that. And sir, lastly, on the distribution side, I remember, we had won a couple of orders on the smart metering side as well. So how is that project going? And are there any new opportunities you see there as well?
Actually, we see more opportunities in this segment. Our existing project is progressing very, very smoothly and we should be able to complete it by March this year. It's a 2 lakh meter project and our partners are extremely good like Oracle and Dell and we have state-of-the-art suppliers with us in this package. And we expect to book business for another at least 0.5 million meters during the year, if not more, out of the government program of at least ordering out almost about 100 million meters. We want to hugely equip the DISCOMs with smart metering, pre-paid metering. So we expect to begin this year with 0.5 million meters out of this 100 million that we've got. Even if say, if not 100 million, say, 50 million meters are ordered, so we will look for at least 1% of it.
Understood. And sir, on the debtor side, if you could just break out your total debtors of -- the INR 570 crore, INR 580-odd crore number into -- how much is for wind and how much is EPC? Closing the margin…
Last 2 years, we have got more money for wind power. So it is about INR 150 crores. And rest is the EPC, you can say. EPC, we could have realized, as lockdown had happened in March, almost about INR 90 crores, which we got no sooner it got relaxed in April, but government modified many things, extended dates, deemed extended dates, but nothing that they did in the accounting standards. So auditors were very fussy that the money received in April cannot be accounted as of deemed March received. So they were shown outstanding. So you can easily knock off by INR 100 crores. So you will find they are very reasonable other than wind power. Now wind power, we are hopeful out of INR 90,000 crore package the government has announced to DISCOMs, it is being directly paid to the generators by REC and PFC. So hopefully, by September, you will find our cash position to be stronger than now also. The INR 600 crores should improve to INR 800 crores by September.
The next question is from the line of Mayank Bhandari from B&K Securities.
Sir, I just wanted to understand as part of our substation work, do we import anything from China?
Sir, you cannot imagine any Indian power sector without China. Let me first tell you that, honestly, however difficult it may apparently look to you, first of all, this country has imported 100 gigawatt of power generating stations in this country. 80% of GIS substations are from China. But most of these companies today have factories in India as Make in India initiative of the Government of India. So all these equipments are today imported as components. And again -- and locally source a part of it and then assembled in India. So now I should call it make in China or India, I don't know much, but I like to call it rather Make in India only with a -- because China anyway is world's factory in terms of the equipment component suppliers. So that way, it will be really difficult to quantify in numbers. But there is a huge Chinese investment in India in power sector today as it is in other sectors like auto or pharma or even IT as [Audio Gap]
Okay. And sir, a couple of foreign projects were on horizon in the last -- or highlighted in last presentation for HVDC in Afghanistan. Is there any status on that?
Sir, it was in suspended animation in Afghanistan. But now the new government and new chairman is in place. He has again revived the project. We are not sure which way it may go because it's a large value project of almost $250 million. But in the meantime, we have got the order from Togo for $10 million. And Kenya project has also progressed. So our footprint in Africa should grow in years to come, sir. And we are already doing, as you know, a project of about $30 million in Afghanistan, which will be completed this year.
And sir, how is the situation in terms of execution in the foreign geographies that we are present in, like Afghanistan?
It's okay, sir. Good. You have to be low profile, not to be very strongly visible and nobody is against the infra projects. Like we have done so much of infra projects in Jammu Kashmir also, North East also. Any political movements, we have never seen that against infrastructure because ultimately, it helps them only. So as long as you are low profile and are not any way politically active in their activity, you are safe. But sometimes you get caught in crossfire, which you need to be very, very safe and secure but we normally use local partners, and they are good at it. Our project is progressing very smoothly in Afghanistan, and we hope to commission it by March '21.
Okay. And lastly, sir, we are also looking for more tie-ups in terms of our technology for FGD. So is there any further discussion with any other global player like from KC Cottrell?
Not at the moment, sir. We had with 1 or 2 Chinese players. So we would like to be on back foot as far as Chinese are concerned. But Cottrell is good. We -- in the meantime, our relationships have further matured and deepened. Respect has grown more between us. So we trust it is good timing.
The next question is from the line of Renjith Sivaram from ICICI Securities.
Sir, what should be the order intake for FY '21?
As I said, INR 1,500 crore to INR 1,600 crore, but I will be more precise by September. Let's see how next 3 months roll out, but we should -- we are very sure of INR 1,500 crore, INR 1,600 crores. But whether it can be better, I will come back by September.
Which are the major orders in that you told this Power Grid INR 500 crore?
No, sir. Transmission. I said transmission, INR 500 crore, in which Power Grid may be around INR 300 crores, INR 350 crores; another INR 150 crore, INR 200 crore from private sector. So -- but more business should be from FGD, smart metering, and sub-transmission, like we have got a breakthrough in Ladakh now from RECPDC (sic) [ RECPDCL ]. We are doing INR 200 crore package for them. We got -- about INR 100 crore package from Power Grid also making northern region fault free. So some technology, some contents will always be part of our system. STATCOM, 3 numbers are in tendering, in process of revaluation. We are hopeful of at least securing 1, if not 2. So high end solutions will be there for us. We are hopeful transmission business may not grow, but we'll hold onto it. But growth will come more out of the smart metering, FGD and sub-transmission.
Okay. And was there any impact because of this migrant labor? Is that the reason why the margins were low?
No, sir. Rather, it turned out to be a boon because Techno never use migrant labor. As I was mentioning earlier also, we have almost 1,500 workers on our permanent contract payrolls, where we carry them from site to site. We take care of their full health, safety and income. And they are loyal to us. So this has helped us a lot in the present crisis. Now more of our competitors are adopting this policy like Techno. Whereas we don't see more problem out of migrant labor as far as power side is concerned.
Because you are confident of 15% margins, while this quarter, the margins were low…
It is because of the top line, sir. If top line is low, then overhead do not shrink proportionately. So that impacts a bit. But still, EPC has shrunk 12.5%, despite top line being 50%. So that resilience is very much in place, sir. So you can trust us if we are able to achieve INR 1,000 crore and above top line in the current year also which we are confident, 15% is achievable.
Okay. And anything regarding the FGD market? What are the -- of this INR 1,500 crore of order intake, how much will be from FGD?
We are targeting about INR 750 crore, sir, from the FGD segment.
Are we participating in that NTPC new lots bid?
We have participated already, sir. Absolutely, lots bid. We are part of it.
So apart from NTPC, which are the big opportunities in FGD?
Rajasthan is there, sir. Haryana is there. And DVC is there.
Any private sector?
No, we are not keen to be with that, sir. We are very shy of private sector.
The next question is from the line of Gautam Gupta from Nine River Capital.
A couple of clarifications. One, on the power -- the wind receivable. So I remember from our last call, the tariffs has fallen from about INR 3 to INR 2.15 order in Tamil Nadu, and we got to stay on that. But in terms of our receivables, are we -- have we taken a write-off for this? Or are we still valuing it at -- is there an impact on our receivables?
No. Receivables were always created at INR 2.15 only because if you bill at any different number, bill is not accepted by the utility.
Okay. So have you contested? We have been booking our receivables at INR 2.15 only.
We are billing at the moment at INR 2.15. So is the receivables. So we get a better tariff order, differential will be billed accordingly.
Fantastic. That's great to know. That makes life easier. So no worry on that. Sir, you mentioned 20,000 RECs is what we have in hand as of now. Am I right? 20,000 was the number?
Right.
And we would have valued this right now at the same INR 1,000?
INR 1,000, sir. That's right.
Okay. And we will look to liquidate this in the coming quarter? Or will we hold on and wait for the situation to clarify?
Yes. Let's see, we are doing an appeal to the CERC order. Hopefully -- we are hopeful of getting a stay because they have provided no floor, but they have provided a forbearance number. This is constitutionally wrong. Either both should be without or with. You cannot have one way. A lot of lobbies work that way. It happens, no doubt. But in higher courts, more sense prevails, legality prevails also we have seen in the past. So we are very hopeful of getting a fair justice in the matter.
Okay. So we -- I just heard that we have booked about INR 10 crores of losses on account of the REC, right? Because of floor price and the overhang of AP…
Yes. Because we had earlier booked till December at INR 1,500. When we sold, it was INR 1,000 only.
So that INR 500 crore auditor approved?
[ The rupees are to be written off ].
Written off as a loss on sale. Okay, okay, okay.
The next question is from the line of Bhavin Vithlani from SBI Mutual Fund.
Sir, can you help us with the terms of trade in terms of payment or the milestones when we go to a Power Grid or when you go to Adani for a TBCB? And how is it for the FGD projects?
Sir, these 2 segments are not comparable firstly. In transmission, we -- I will say it's a very standard set of solutions. So the terms of payment are a little more liberally practiced. Power Grid also pays 90% progressively and 10% on completion or commissioning. Whereas in FGD, there are difficult milestone-based payment because it is more like a process plant. So unless performance of the process is established, they are not comfortable in paying you. So your tail end paybacks are no less than 20%, 25% in any FGD project as compared to 10% only in transmission projects.
I understand. And how about the TBCB, like when we do business with, say, an Adani or -- are the payment -- terms of payment better or worse off?
It's the same, sir, 90-10 by and large. It is more or less same practice. Adani, et cetera, do business purely out of TBCB. That is their business as of today. Whereas Power Grid has more sub branches of business mandated by TBCB, but modality is same, except that in TBCB, the prices are paused, no PV. In mandated business, they keep the PV clause if the duration of the contract is more than 12 months.
Understood. And so as the share of the FGD goes up, would it be fair to assume that our receivable days can inch up a bit?
Absolutely. It may go up, sir. But that is where Techno has a merit of liquidity that operationally, we won't be worse off. We are not to borrow to meet those kind of obligations. So we are well prepared for it.
Sir, one last question from our side. I mean assuming the Kohima project sale goes through, we'll have about INR 200-odd crores of fresh cash flows from the sale of BOOT assets. Along with that, we'll have INR 150-odd crores of cash flow which we'll generate from our existing businesses. What is the thought process on capital allocation? What percentage you would want to retain and what percentage you would want to distribute it back as dividends?
Sir, we have a policy to distribute dividend to the extent of 25% of the bottom line. We are a bit hesitant in this COVID period. But we may come out with interim dividend going forward. So -- and out of the sale of asset also, we will be getting some dividend from the next new buyer. So it will be paid back -- back to back I will say. So cash is always king, sir. It is good to have it. But nevertheless, we like to definitely give -- pay handsome dividend to our investors, stakeholders with us. You can expect good dividend in the coming year, sir. Last year, it was a buyback. Now it will be dividend because buyback has become taxable and divided is tax free as far as company is concerned. So it makes sense to pay out more dividend than buyback.
The next question is from the line of Rohit Balakrishnan from VRDDHI Capital.
Most of the questions have been answered. Sir, just one question on the overall environment right now. So sir, I understand right now, things are quite unpredictable. But sir, any -- before this -- before -- during the Q3 con call and even in the last -- earlier con calls of Q1 and Q2, you were quite hopeful that FY '21 would be like one of the best years for Techno, given what we were seeing in terms of the ordering in Green Energy Corridor. So -- I mean while I understand that would have -- that has definitely impacted because of this COVID issue but am I -- so are you saying that, that whole opportunity is now sort of in abeyance now because this crisis has sort of impacted that entire opportunity? Because you mentioned that transmission is -- you are seeing slowdown in that. So is my understanding correct? Or was I'm missing something earlier? If you can please clarify.
You see, question is, a COVID-type situation is definitely unknown, uncertain, and it took most of us by surprise, sir. And the fear is larger than the impact of the opportunity. Let me be honest. That is how I'm taking in my stride. But our -- we are operationally disrupted, and it is differentially disrupted countrywide. That is a bigger issue. What Tamil Nadu does, Delhi does not do. What Delhi do, Bengal does not do or North East does not do. These are -- keeping track of this impact differentially in different pockets of India is causing more stress than the very stress out of the situation, between you and me, like Nagaland. They are so fussy over the rules that anybody flying to Nagaland from Dimapur have to be quarantined institutionally for 15 days, then home quarantined for 15 days. Who will like to go there? Now you tell me. And I have a deadline to meet. The problem is businesses are deadline-based. Now people get so much slowdown that nothing is -- like ports or even customers like Power Grid or state utilities. Guests are, as a customer, are not allowed to visit there. Everything is happening on virtual platforms. So these are very, very disruptive moments. And how much time it may take to get normal, I don't know. You're right. Till December I was so upbeat and hopeful that we had definitely planned last quarter to be one of the best quarter of the company, sir, in last 40 years. But as usual, everything becomes last moment and with so much of uncertainty, slowdown started happening from mid-February itself. Somewhere something is happening. And why -- what impact it will bring, nobody knew. And ports were not fully operational. Factories were differentially operational. A lot of drivers left the material on the highways and left, went back homes. Materials could not be inspected which were in the pipelines because the inspectors could not reach the spot as usual. So, so much of disruption I had not experienced in my life in 40 years. This was -- I never -- I think this will be -- in my dream also, it will be horrifying me at any moment. But nevertheless, life is larger than all the setbacks. You have to move on, keep moving on towards betterment. And we have definitely prepared ourselves to be better off. So whatever we lost, we had to make up this year. That is our commitment as a company. And that is what we will be trying for.
Sure. Sure, sir. Just on this point, thank you very much, first of all, for being quite frank and open. So sir, we have lost INR 300 crores in this quarter, in the Q4, largely, that you've said that INR 150 crore we have achieved in Q1 itself and INR 150 crore over the next…
Yes. No, Q2 will be achieved easily despite slowdown generally in Q2. But this time, it will be a good Q2. That is what we are aiming for. Hoping no more COVID and the issues with us and normal -- yes.
So sir, this INR 300 crore, in addition to that, you were saying INR 1,100 crore, INR 1,200 crore, this is -- so you're saying the total…
Sir, INR 300 crore plus you can say another at least INR 850 crore, INR 900 crore which we achieved last year -- last to last year rather, which was the target. So in totality, it should be around INR 1,150 crores, INR 1,200 crores out of EPC only.
Out of -- yes, yes. Out of EPC, yes, right, which is -- so which will make us -- so out of the INR 2,300 crores of order book, you are saying about INR 1,200 crore will get executed in this year is broadly what you're saying? Is that right?
INR 1,100 crores to INR 1,200 crores. 50% we'll execute definitely, sir.
Sorry, could you repeat? I couldn't hear that, sir. Can you…
50% I said we'll definitely execute [Audio Gap] INR 300 crores.
We take the next question from the line of Keshav Garg from Counter Cyclical Investments.
Sir, first and foremost, you said that you'll prefer a dividend instead of a buyback, sir, but can you please appreciate so that tax payers have to pay 43% on the dividend, whereas company has to pay net 23% on buyback? And so taxpayer then has to pay no capitalization tax, nothing. Sir, so that's one thing. And sir, secondly, sir, dividend once given out, sir, that's the end of the story. But the buyback will reduce the share capital permanently and our earnings per share will go up permanently. Sir, so that also, sir, if you consider. And sir, secondly, sir, this -- so in our wind division, the loss that we have made, so you had explained it quite well, sir, but going forward in the first quarter, sir, are you expecting this loss to continue or otherwise, sir, for the year as a whole, sir, what kind of basically operating profit can be expected from the windmill division going forward?
Sir, I request you to please visit us. Firstly, as far as the -- what it may look like -- hello? What may look like a loss in the initial short term may not be a loss in the midterm. Let me tell you. We definitely understand the regulatory side of this business, and we'll definitely handle in a way like still by INR 50 crore. INR 54 crore is in last leg of approval in Supreme Court. So that is not part of my top line. Similarly, interest income, we have not booked which regulator is proposing at 6% and central government is talking of sanctity of contracts. If they all get approved, we'll be entitled [ INR 40 crores, INR 50 crores ]. So there is a lot of the books also simultaneously. So somewhere -- and as and when tariff will get revised, you will get the bulk of the past payment also. So this is a business where some struggle carries off which details of the deferred entitlements of the past. But of course, books are kept of the current entitlements only. We cannot imagine and give accredits or credence to the such possible income or deferred incomes. They are not part of the books as per the accounting standards, but in our business, they do exist as a part of the business.
Okay, sir. Sir, so basically, in the -- this financial year, FY '21, sir, when, sir -- what kind of, sir, PBT are you expecting?
PBT should be no less than INR 40 crore. And it may go higher also.
Sir, that's it from my side. Sir, one last thing I wanted to -- sir, that dividend and buybacks, sir, anything you want to say?
We'll examine. We'll take your -- note of your suggestions and we'll definitely examine it deeper and call for suggestion from our large investors also, what they all say.
As there are no further questions, I now hand the conference over to Mr. Amber Singhania for closing comments.
Thank you, Stephen. We thank everyone for participating in this call. And special thanks to the management for giving us an opportunity to host this call. We would again request everyone to be safe and take care of your and your families' health. Sir, would you like to add any closing remarks?
Absolutely. Amber, surprisingly, you did not ask any questions.
Sir, the time was already overshooting. So I thought I'll take it offline.
Okay. Thank you for -- thank you all for joining the conference. And we are grateful that most of you must have joined from your home and may not be part of the offices. I fully appreciate that part. Still, in case you have any query related to our business, performance or industry, drop a mail to us. And I will like to thank you once again. I will again request all of you to stay home, stay healthy, stay safe, look after your family. And this year, be dedicated to the family more than businesses. But nevertheless, we are there to take care of your business at our end. And with this, by thanking everybody by joining, I'll once again say thank you so much once again.
Thank you. Ladies and gentlemen, on behalf of Asian Markets Securities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.