Techno Electric & Engineering Company Ltd

NSE:TECHNOE

Earnings Call Transcript 2022-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to the Q4 FY '22 Earnings Conference Call of Techno Electric & Engineering Limited, hosted by Asian Market Securities Limited.

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 excise 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. Thank you, and over to you, sir.

[Kamlesh Kotak, analyst]

Thanks, Steven. Good afternoon, everyone. On behalf of Asian Markets, we welcome you all to the 4Q and FY '22 Earnings Conference Call of Techno Electrical & Engineering Company Limited. We have with us today Mr. P.P. Guptaji, Managing Director and the senior management team representing the company. I request Guptaji to take us through an overview of the quarterly and the yearly results for the financial year FY '21-'22, and then we shall begin the Q&A session. Over to you, Guptaji. Thank you. Hello?

[Operator]

Mr. Gupta, may we please request you to proceed? Mr. Gupta, over to you, sir.

[Padam Gupta, executive]

Yes. Very good afternoon to each one of you to discuss our financial results for the last quarter Q4 ending 31st March and our financial results for the year ending March '22. Anything said on this call, which reflects our outlook for the future or that could be construed as a forward-looking statement must be reviewed in projection with which that industry faces and which then is applicable through the company too.

Let me quickly highlight our performance for the Q4 financial year '22. The total revenue stands at INR 307.5 crores, up by 43% year-on-year. And revenue for EPC stands at INR 304 crores against INR 212 crores last year, up by 43.32% year-on-year. EBITDA margin for the EPC division is at 13.13% compared to 15.12% last year. Revenue from wind segment is at INR 3.5 crores. EBITDA of the company stands at INR 29.20 crores compared to INR 18.96 crore in the same year last year -- same period last year. Operating profit in the EPC segment for the quarter is at INR 39.58 crores compared to INR 31.72 crores last year. We experienced some pressure in the EBITDA margins due to the building inflation and high quantity rating cycle and also higher overseas rate. The other income is at INR 3.08 crores. The profit before tax was at INR 31 crores, nearly again INR 15 crores for the last quarter. The PAT for the quarter is at INR 37.2 crores compared to INR 30 crores last year, that is up by around 200%. EPS is at 3.39%.

For the whole year, if we look on EPC revenue is at INR 1,074 crores compared to INR 889 crores, up by 20% -- 21%. Revenue from EPC is at around INR 990 crores compared to INR 790 crores, up by 25%. EBITDA margin is at 15.58% compared to 18% last year. Revenue from this segment is at INR 85.63 crores compared to INR 64.15 crores last year. But considering the adjustment for the one-time revenue of INR 36 crores because of the tariff order, the turnover in the book was around INR 100 crores. EBITDA for the company stood at INR 222 crores, up by 3%. As stated earlier, the same is also influenced by the one-time which segment income of INR 35 crores.

The operating profit for the EPC segment is at INR 153.5 crores compared to INR 143 crores last year, up by 7%. EBITDA for wind segment is at INR 68.96 crores. And the other income is at INR 150 crores compared to INR 84 crores last year, which includes a profit out of the sale of the JV company of INR 110 crores. Similarly, other income for the previous year too included a profit from the sale of transmission asset in Haryana of INR 45 crores. The profit before tax INR 326 crores compared to INR 250 crores last year, up by 30%. And the profit after tax stands at INR 260 crores compared to INR 200 crores last year, up by 30%. EPS is at 23.7% roughly. The current investment value and including cash and cash equivalents is at around INR 1,200 crores, that is more than INR 100 per share.

We have received various orders totaling to INR 800 crores in the current year up to March '22. We were L1 in 2 FGD orders worth INR 1,600 crores and also various transmission orders at INR 445 crores, which states as confirmed order as of now. And the indicated order book as of 31st March 2022, is INR 1,500 crores. This gives the visibility of order book as of today of more than INR 3,500 crores. We are further L1 in the business to the extent of about INR 1,000 crores. This is first time we are able to achieve an order backlog of around INR 4,000 crores after almost 5 years. This will help in doubling the top line in next 3 years and more.

As committed in last quarter, we have been able to tide over the difficult times, I would say, have shown growth in this year. So this -- I would like to classify that this is a recovery year by and large and going forward '22-'23, we look upon as a growth year stabilizing cum growth years, but major growth will happen in the second half of the coming year. We expect large business growth in FGD segment, AMI segment, in data sectors. In the coming years, we see strong power sector reforms as power as energy coverage. Additionally, there is a significant focus and stress on efficiency, stability, reliability, power supply, cost of power, improvement of the financial help of the DISCOMs, but presently it continues to be a challenge. The focus will continue to be on the variable power and delayed transmission infrastructure and the energy storage infrastructure. The transmission infrastructure renewable power is required to be 500 gigawatt as committed in the last co convention by our Honorable CM and additionally 25 to 30 gigawatt of energy storage solutions at grid level RB, supposed to be developed over the next 5 years.

The FGD segment continue to be strong and focused in this year and in near future as we got the modification of Government of India all coal-fired thermal power stations segregating more than 200 gigawatt need to limit their sulfur emission, SOx, NOx both has notified by pollution department by December '24. We are in the considerable providence with CPSU and now we see more progress with this SCBs also. And in the coming years, we definitely expect more business from SCBs, CPSUs and private sector.

We have recently received 2 orders worth INR 1,600 crores, which were L1 last year. And we are, again, won an order with [ AVC ] of INR 700 crores, which got to be better after first -- about last year. This level of business will continue for the next 3 to 40 years -- 3 to 4 years as gigawatt is yet to be sorted out -- DotVision digital segment, we see a status quo in the transmission side because the sector is being manly lifted to near the power evacuation. The TBCB bidding of 66 gigawatt is in progress and out of that, about how the 175 gigawatts is in progress. We are happy to state that we have already received 2 orders in the last month or 2 from Adani for whatever concessions they won at Khavda as well as at Karur. And we also plan to bid in TBCB packages to the extent of INR 1,500 crores in partnerships.

The allocation for strengthening power system has been doubled to INR 29.8 million in union budget of the current year. We see good interest from large investors, [indiscernible] to participate in about its [indiscernible] and joint venture. This will enhance our excessive capital, and thus will also enable us to be competitive. The PMDP programs and metering AMI segment is progressing steadily. This segment will see a lot more interest in the coming years. The main aim of the government is to improve the efficiency and sustain losses so that the health of these costs could be improved. We aim to work and be busy in this segment more than as a [ supporting ] player because we are roughly at the moment that is working with these comps as counterparty is directly the experience by us as a telco.

We have been leading in the media and strongly believe that amendment to the electricity ad, [indiscernible] and elimination of gross subsidiary et cetera are in the pipeline, and they may happen soon. We do believe that that sector is at a critical juncture as definitely every sector may be in crisis, good things starts happening. So we should expect some good news here also.

We have received our payback up to June '22, and we have also been favored by Madras Highcourt order to claim our interest dues, all outstanding interest dues by the end of June '22, and we are hopeful of getting these payments now. The data center, I will say that the COVID has already stated, the COVID has impacted our life in multiple base, but one positive outcome is the growth in the digital space. With the growth of digital space backed by IT policies and all data privatization, it is expected that the third-party data sector in the industry unlikely to be around 5 gigawatt in next by 2030 and 2 megawatt by 3 years from the existing 500 megawatt distribution. Till date most of the data centers are located in Mumbai and Chennai. And we are also in Chennai, very close to Airtel, Adani, Equinox, Sify are already in the process of setting up the data center very close to our data center at Siruseri. This fundamentally validates our price of the location in the first quarter.

Our Techno -- we are in an advanced stage of setting up of these data centers of 40-gigawatt -- 40 megawatts of [ big load ] at 24 to 25 megawatt of IT Load and the ultra-scalable hyper density for which construction work has already started at site. And all statutory claimants for the project have been received. We are hopeful of getting first phase ready by June '23. We will also captively consume energy for this data center so that it's a great data center to align with the policy of major hyperscale customers because of their ESG commitments.

With CapEx of INR 1,200 crores to INR 40 crores per megawatt, of IT load, the 65% is almost in the domain of Techno Electric which is largely of a character of electromechanical works, energy source works, state by [ solutions ] which is the in-house capability of the company as we believe this could be used as experts. We have further been favored by allocation of land investment on at Kolkata in a place called Silicon Valley, along with TCS and Reliance to set up a data center. We also like to have a 250 megawatt capacity by 2030 as already committed.

With this, I will say, now I open the forum for any further details, clarifications, you're welcome.

[Operator]

[Operator Instructions] The first question is from the line of Sandeep Tulsiyan from JM Financial.

[Sandeep Tulsiyan, analyst]

Sir, first question is on the order inflows, mainly if you could give a little bit more color. Basically, our order inflows were close to INR 500 crores in first 9 months and the way our order book has declined on a year-on-year basis from INR 1,950 crores to INR 1,500 crores. We are not able to concile -- reconcile it with this INR 800 crore order inflow. So does this INR 800 crore include some L1 orders that you have stated?

[Padam Gupta, executive]

No, no, no. These are all orders received in hand by now as of 31st March '22. And thereafter, we have further received orders were INR 2,045 crores in the last 2 months. So the order opening for the year was at INR 1,600 crores. We booked new business worth INR 800 crores and executed around INR 1,000 crores. And closing is as of March end, the closing is at almost INR 1,400 crores.

[Sandeep Tulsiyan, analyst]

INR 1,400 crores or INR 1,500 crores, sir?

[Padam Gupta, executive]

INR 1,400 crores or INR 1,500 crores whatever you take, INR 1,400 crores, INR 1,500 or in between INR 1,450 crores to INR 1,500 crores. But thereafter, we have further received business worth INR 2,000 crores plus. So the total order backlog as of date is INR 3,500 crores.

[Sandeep Tulsiyan, analyst]

Understood. Sir more so on that, I just want to understand from a pipeline perspective, say, we have received orders of INR 2,500 crores in addition to INR 800 crores what we have bid. Now going forward, how should we look at the further orders which are there in the pipeline and which can get booked in the balance of FY '23 and '24? And if you can give more color on what should be the portion of T&D, FGD as well as the smart metering, broad guidance on those lines, please?

[Padam Gupta, executive]

That, I've already border let made some statement that transmission status will continue, and this will continue to contribute a top line of about INR 600 crores for us year-on-year. Another INR 300 crores to INR 400 crores, we should see out of our AMI and PMDP that is the system strengthening solutions year-on-year. And additionally, we should see a top line of another INR 1,000 crores out of the GT segment now. So in the next 3 years, we definitely see our top line doubling and our aim is to, I -- should we say wish or play the mark whatever 3 years we lost, I think we have lost now we have to make up. So in the next 3 years, we see our top line definitely doubling. Order intake will continue to be at no less than INR 3,000 crores a year. And I just -- by the time we close this year, the order backlog may be INR 4,000 crores and next year, it should be INR 5,000 crores plus. So major growth in business will have to be in FGD. It will happen in data centers as well as it will happen in the metering side.

[Sandeep Tulsiyan, analyst]

So -- okay, understood. Second question, sir, is on the data center side. We highlighted earlier that the CapEx is going to be INR 1,200 crores for the data center as well as there will be a separate battery storage system, which would probably require some additional CapEx. So if you could highlight how much additional amount that will be that the company will be funding towards this battery storage systems?

[Padam Gupta, executive]

See, please do not confuse. What need is a battery storage solution to be deployed within the data center and one means that as a grid backup solutions. Additionally, like transmission on a good route basis in the country. So as far as our data sector is concerned, there will be no increase in CapEx because it will be by and large replacing the some portion of the UPS side and some portion of the captive power side, because this will be acquiring a power layer in between 2 of them to stabilize the power supply to the data management, data load basically. So we would like to squeeze these with no additional CapEx as well as data center come. The counter solutions that wider and we have that we are hedged by a margin. That is what we -- to get what it does, affordability improves over the time in next 6 to 9 months then maybe we can think of even a little bigger as against decisions additionally. So we will do some technology balancing as we go along. But I can assure you, it will be a data sector, futuristic data sector for tomorrow and stay technology for relevant 5 years from now. It will be a predicate data center.

[Sandeep Tulsiyan, analyst]

Okay. So what is the CapEx that we are wanting to deploy in data centers in FY '23 and '24? And also separately on battery storage, the grid back up battery storage, what will be the business model there? And what can be the CapEx that we deploy over there?

[Padam Gupta, executive]

By and large, you can say coming to data center side, we have by now spent about INR 50 crores already on acquiring land and the detected approvals, consultancy design, specialty approvals and whatever construction work it has already happened. '22-'23, we plan spending up to INR 500 crores and another INR 500 crores in the year '23-'24. But that may be advanced depending on the industry and occupancy levels of the data centers as well as the grid backup is concerned, this business is still, I would say, in the evolving stage as well as the grid backup is concerned, but we see a great future going forward in this business.

At the moment, this grid large-scale solutions are still not very affordable, I would say, like public solutions or hydro solutions or even gas-based power genetic solutions to create a kind of a big load stabilization solutions. So we will wait and watch at the moment in next 1 year, we are not advertising any CapEx or grid to back the battery storage resolutions. So our focus will be mostly on data centers. In '23-'24, we may have one more data sector in construction in addition to the one already in construction. So that will be additional CapEx. So '23-'24 the ongoing data center, the CapEx is INR 500 crores plus if we a new data center starts, that may also have a CapEx of another INR 300 crores, INR 400 crores, INR 250 crores to INR 300 crores.

[Sandeep Tulsiyan, analyst]

Okay. So what is the equity commitment because our understanding was that we will probably wait for a partner to come in place and only then start deploying this money because the equity commitment, you had mentioned in earlier calls will be restricted to INR 250 crores or INR 300 crores in that ballpark?

[Padam Gupta, executive]

You're absolutely right. It will be like that only. We have strong interest already from the few ready entities rather on this partnership and we are very hopeful to crystallize it by September. Otherwise also, we have to fund from our own resources, which will be up to INR 500 crores of this year, which comprise of INR 250 crores of equity and a balance through the loans that are short-term loans to be replaced by the partner where they [ want ].

[Sandeep Tulsiyan, analyst]

Understood... And one last question from my side is on this cash balance and the capital allocation policy of the company. You had mentioned that now INR 1,200 crores is the total free cash that the company has, and it can generate at least INR 100 crores of other income every year. So how much of this cash do you plan to deploy in existing business, which is predominantly data centers? And how much do you plan to pay out to investors in whatever form, a dividend or buy out?

[Padam Gupta, executive]

You can allocate it like INR 500 crores for data centers, INR 500 crores for investors over the next 2 to 3 years and another INR 200 crores to the EPC business.

[Operator]

The next question is from the line of Rishab Garg from [ BP IBL ].

[Unknown Analyst]

Sir, I wanted to understand that in FY '23, sir, in the EPC division, sir, what kind of top line are we looking at?

[Padam Gupta, executive]

Without considering the data center, EPC work, which that may perform. On the conventional side, you can expect about INR 1,300 crores, a growth of INR 300 crores over last year.

[Unknown Analyst]

Okay. And sir, also you mentioned in the last call that very soon, we will hear something about the share buyback. So is that still under consideration?

[Padam Gupta, executive]

Share, did you say?

[Unknown Analyst]

Sir share buyback, share buyback.

[Padam Gupta, executive]

You will hear very shortly, sir. I had just now answered to Mr. Tulsiyan that INR 500 crores is allocated to the investors. That will go mostly in the form of buyback only. Year-on-year, we intend letting-out buyback for next 2, 3 years.

[Unknown Analyst]

Right, sir. And sir, even though last year our EPC income increased from INR 790 crores to almost INR 1,000 crores. Sir, our operating profit in this segment was almost flattish, around INR 152 crores versus INR 145 crores a year before. So going forward for FY '23, sir, can we expect some margin improvement or margins will continue to be under pressure?

[Padam Gupta, executive]

I will expect you to get it, we are still outperforming the industry with given inflation level, commodities, all-time high. They are all impacting the cost with us also. And definitely, we are seeking some kind of relief with our customers in passing on some part of the cost to them. as PV or the reveal ending prices. So this is an ongoing challenge between you and me, already steel prices have softened a bid after government had a week back by INR 10 a kg. We further expect softening happening. But this global inflation slows down, I don't think that is going to happen in the future, at least not for a year more. So I think this year, we should not expect a very high rise in EBITDA, which may be at around 13% to 13.5% by and large or maybe 12.5% to 13.5%. I think we are able to pass on more cost to the customers.

[Operator]

The next question is from the line of Akhilesh Bhandari from ICICI Prudential AMC.

[Akhilesh Bhandari, analyst]

You mentioned that in the smart metering side, you're looking more at now the EPC route rather than investing yourself. So can you give an idea about what sort of tender pipeline is there? Or what sort of bids are expected to come out in this space?

[Padam Gupta, executive]

Well we are expecting almost about tenders over next 2 years for about 15 million meters in EPC space by power grid and REC, basically, by and large power grid will be coming out with 8 million to 10 million. And RDC should flow tender starting itself 8 million to [ 11 million ] in EPC routes. So we will be aspiring to acquire at least 0.5 billion meter work out of this pipeline as power grid is our old customer, well not to us by processes. So we are hopeful of achieving more success. And if government mandates more CPSU to carry out metering work, that will be very exciting opportunity for Techno.

[Akhilesh Bhandari, analyst]

And post -- given that you have -- you're executing the JMK order, you have all the necessary prequalifications, right?

[Padam Gupta, executive]

Absolutely. We are fully qualified. Even otherwise, given our background in power sector, each customer is willing to follow what Techno can mean QR. QR is not a challenge anymore in any aspect of the power business.

[Akhilesh Bhandari, analyst]

Sir, one more question from the -- about competition, which will come. Given that there will be perhaps be multiple companies which would be looking to work with PowerGrid and REC on this metering side given that you will not rightly be interfacing the states and the payment risk will reduce. Do you think that you can achieve your normal margin range of around 14%, 15% in this business?

[Padam Gupta, executive]

A million dollar question, but let me be honest. It depends on the mix of the program to be carried out if metering plus some power strengthening solutions are integral part of the package then yes. Only meter also, I will say that most of the non-metering companies are clearly booked today with the states already of the [ DT FOT ] model. So there will be a space for us to work with a little less known retail manufacturers or solution providers in this space and that market should be available. We should have a space to add value. You see in EPC space, you please understand, the margin do not come out of the -- basically what bidding you have done in the pricing. It more comes out of by your efficiency and avoiding wastages. But we get the order, it all becomes a loss management game more than profit management game to us. As little loss you incur more profit you gain at the end of the day. That is how this business grows and we have successfully practiced over the last 20 years. So I say it all why we should not be able to look into in metering also.

[Akhilesh Bhandari, analyst]

Okay. And sir, one last question on the FGD orders which you've recently received. So these would be at the current commodity price levels, right? There will not be any thing which you'll have -- loss, which we'll have to take for the price increase which has already happened?

[Padam Gupta, executive]

Absolutely, sir. You are perfectly right. Rather market and most of our investors have not understood our strategy of not picking up business last year. It was only this fear of watts uncertainty challenged conditions and so much of economic issues prevailing all around, that the business was -- EPC business is a very, very challenged business in any uncertainties. So definitely, you are perfectly right sir, our new business sees quality prices. And no hangover of the past and it is almost based on no less than INR 1 crore per megawatt now. That is the cost of executing the solutions, not INR 60 lakhs, INR 70 lakhs anymore.

[Operator]

The next question is from the line of Deepak Poddar from Sapphire Capital.

[Deepak Poddar, analyst]

I just wanted to understand something on the revenue mix side, now over next 2 to 3 years, how do you see your revenue mix changing, especially from the data center side? How -- so some trajectory on the revenue scale up in data center side over the next 3 to 4 years. Yes, that would be quite helpful?

[Padam Gupta, executive]

Yes. You see data center is a little bit of business, I will say. You have to create a capacity. It works more like a rental proposition like unitary charges in case of transmission assets year-on-year. The prevailing rate is $90 to $100 per kilowatt or it can be charging business. So I will say that this top line will start getting influenced only from '23-'24, but it will be more strongly visible from '25 and '26 onwards when this income may be almost around 20% over bottom line or top line sorry. And maybe almost, you can say 30% of the bottom line, as you are seeing in our wind segment or transmission assets.

[Deepak Poddar, analyst]

FY '26, 20% of the top line, also slightly INR 500 crores by FY '26. Data center...

[Padam Gupta, executive]

'25-'26. We can expect INR 500 crores.

[Deepak Poddar, analyst]

By FY '26. Okay. Yes.

[Operator]

Mr. Poddar you have any other questions?

[Deepak Poddar, analyst]

No, that's it.

[Operator]

The next question is from the line of Rahul Modi from ICICI Securities.

[Rahul Modi, analyst]

Sir, one question I had on, how are you seeing the market in transmission ordering picking up for the green energy corridors? Because last 2 years, due to various issues such as inflation and commodity, the bidding pipeline, which was already there, almost INR 40,000 crores, we saw that not being materialized meaningfully. So how do you see that over FY '23 and '24 coming through? And secondly, sir, on the FGD orders, I believe the Power Ministry is again requesting to push the date further in terms of implementation. So do you see any slowdown due to that? Or you are confident that the balance 80,000 megawatts will come in over the next couple of years?

[Padam Gupta, executive]

You see as predicted earlier discussions also our many calls, defining a date definitely helps us because business becomes more spread over normal period for us, and we expected that this market should stay until '27, '28 and '24 will not be the end of it, as we also cannot deliver more than 3 to 4 solutions at a time. So this helps us also. And the total business has projected, as I stated earlier also, which is left over this 80 gigawatt which is roughly around INR 80,000 crores in our perspective. And if we take it as INR 15,000 crores every year, Techno will be keen to book a business of around no more than INR 1,500 crores every year out of this launch.

So we definitely see this business to carry on for the next 5 years as we are planning and it should continue to give us a top line of INR 1,000 for next 5 years. And similarly, over the next 3 to 4 years, data center will start adding another INR 1,000 crores. Whereas transmission distribution will also continue to add another INR 1,000 crores. So in the next 3 years, we definitely see our dotnet growing to double of what we are now. And we -- what we supplied if that's INR 5,000 crores by 2030. That will be our initial statement.

[Rahul Modi, analyst]

Sure, sir. Sir, last question from my side. Do you see margins in FGD we've seen across board margins being very low, do you see we bottomed out as a sector for the FGD execution in terms of margin overall?

[Padam Gupta, executive]

No, sir. You see, the question is like your stock market when you enter and when you exit that we find in the market sir. So in FGD, the entry point is very important. And doing a job in time is very important so that your costs are properly hedged debt protective, which is relevant in any EPC business, of course. You cannot lose out your value-added to losses or inefficiencies. So we will like to type -- generally, Techno have never believed in carrying order backlog more than double because generally, our each project takes around 2 years, 2 years, 2.5 years to complete. So our order backlog will never be more than 2x to 2.5x of the top line. That's how we plan. This 3-year stagnation has definitely pushed us back, but the order backlog has shrunk to no more than 1x to 1.5x. But in the inside, it looks it was a blessing that [ books went ] because of this inflation and commodity cycles. So going forward, we will restore this 2x to 2.5x, entering at the peak of the commodity already in 26 years to the efficiency players because you are always safe from the future threats.

[Operator]

The next question is from the line of Abhishek Poddar from HDFC Mutual Fund.

[Unknown]

Sir regarding data centers, on the EPC side, some more clarity, whether you have already started bidding for work outside your own data centers? And then on your own data centers, you highlighted about work going on in the first one and second one possibly coming in. So what is the plan there in terms of how much EPC work should we expect in '23-'24? And beyond 2, would you also go for third or fourth or how capital allocation will be decided there? And the last question on your tender is, if you get a profitable exit would that be the case or you would want to carry it on your books?

[Padam Gupta, executive]

Let me restate my position as of today. Of course, it can be proved if it improves rewards which is part of our business to deliver better rewards to our stakeholders, investors. Firstly, we intend doing 250 megawatt as of today as our target by 2030. That is what we have put target versus. So 250 megawatt will also mean around 5 to 6 stations by and large. And firstly, 1 year, we will definitely like to invest and perfect our concepts and technology in our own data center before we go to the park. So definitely up to June 23, we are not going to remarket for any basic work. So only post June 23, have we made on data center operation, and we will start looking for third-party business also in addition to work of our own -- developing our own data centers. It will be like a transmission business of ours by and large as a middle [ image ].

We have been developing and acting as EPC to state utilities and government utilities, private utilities and also developing assets of overall and once in every street, we stabilized taking acetate in it. So that has entered the trajectory, although we have big, but how it will get navigated, I do want to be very, very precise on it because we will try to do our best as a trustee what to buy investors. At the moment, we are only looking on investor at a given data center basis. Not at a world level.

[Unknown]

Understood, sir. Very clear. Just this 250 megawatt target by 2030. So does that mean that we would be building 250 megawatts by 2030 and maybe all of that will be not in our books.

[Padam Gupta, executive]

Absolutely, right, sir. We'll be developing that. And maybe in books, maybe at that time, 150, maybe 160 like that. The half of that we must, 100 megawatt we will definitely have exited out.

[Operator]

The next question is from the line of Tejas Mehta from Omkara Capital.

[Unknown]

Sir just wanted to understand the cost economics of data centers that you are putting out? If you can help us understand that?

[Padam Gupta, executive]

Yes. What precisely you want to understand?

[Unknown]

No. So as in the CapEx cost is about INR 45 crores per megawatt or not?

[Padam Gupta, executive]

INR 40 crores to INR 45 crores you can take.

[Unknown]

Right. Right. And then how much revenue and EBITDA do you think you can make from this data centers in case you're not able to upload it, then how does it fit into the business parameter for you?

[Padam Gupta, executive]

Sir, you can take roughly around INR 10 crores per year per megawatt.

[Unknown]

Okay. That will be the revenue you mean to say.

[Padam Gupta, executive]

Revenue, that is our rental charges, rental cost you can say.

[Unknown]

Right, INR 10 crores per megawatt hour.

[Padam Gupta, executive]

Center of 25 megawatts say INR 250 crores.

[Unknown]

Okay. Okay. Got it. And EBITDA would be approximately how much of this? Or this is automatic?

[Padam Gupta, executive]

EBITDA will be almost 80% of it sir.

[Unknown]

Right. And...

[Padam Gupta, executive]

Power remains a pass-through cost in operations.

[Unknown]

Correct. Okay. Got it. And the other question which I had was, like you mentioned that you've been looking out for the EPC work on the data center side outside after June '23. So how much work would you expect that it can get in that part of the market?

[Padam Gupta, executive]

Sir, if the target of the country is to have 5 gigawatt by 2030. So even if I aim for 5% of it is good for us, that itself will be no less than 250 megawatts. By EPC even if I take as a INR 20 crores per megawatt it is INR 5,000 crores contract from that parties. Apart from our in-house work of no less than another INR 5,000 crores, 100 megawatt going at a time down 3 years.

[Unknown]

Yes. So 250 megawatts at a INR 40 crore run rate is about INR 10,000 crores. And about -- of this about INR 6,500 crores to INR 7,000 crores is what we can do internally, right?

[Padam Gupta, executive]

IT sector company works no less than -- but it will be ambitious to say if I had a power sector company to expect 20% plus return, but definitely, we like to have 15% plus/minus EPC margin.

[Unknown]

Sir, the other question which I had was on smart meters, okay? So if you read international articles on this, the lifetime of a smart meter is very short. It's not more than 5 to 7 years is what you read online. And the CapEx cost per meter is also pretty large. It's about 9,000 to 10,000, which include all the services and infrastructure. Do you think a smart metering is viable in a country like India, given the replacement will keep happening after a few years? And do you think because of this, the project can be very slow and will be spread over more than 5 or 10 years?

[Padam Gupta, executive]

Sir you want my opinion as a power professional or as a EPC company.

[Unknown]

A power professional sir.

[Padam Gupta, executive]

You see, if you ask my view, I have always held a view that it is not a desired CapEx by Government of India because they need to classify the type of consumers. And if a human is paying a bill of less than INR 10,000 a month, don't deserve a smart meter. You can have a device which can be supplied at a cost of no more than INR 1,000 and which can have all features of a smart meter other than the remote control. You have to only the mode of communication which cannot be [indiscernible]. So it can be WiFi, it can be WhatsApp, it can be email, you can use any other mode of communication, maybe telephony, 5G if it happens, then you have a lot more choices to communicate. And that is what comment should think of. Ultimately, a smart neither required by those who want to monitor the quality and uses of their power, but lot of consumers INR 1,000, INR 2,000 he hardly understands quality of power or users of power or uses of power. That is the missing substance he needs.

[Operator]

The next question is from the line of Sandeep Tulsiyan from JM Financial.

[Sandeep Tulsiyan, analyst]

Sir, I had a couple of follow-up questions. Firstly, on these FGD projects, what we heard from some of the other players is that they had bid first orders? And because the finalization of orders was delayed and these were fixed price contracts, the final margins may not be coherent with what they had bid for initially. So if you can highlight whether our projects are also such nature or is there a price variation [ gloss ]?

[Padam Gupta, executive]

Sandeep, firstly, we don't take any order with a maturity of more than 1 year without giving loss as a way of life. So all our orders have to be loss and they fully compensate for any variation in the commodity cycles. Existing FGD order also and newly backed also between you and me. These fixed price orders only happen in private sector by and large between you and me. So we have been always discouraging engagement with private sector by and large because they have extra involvements in this price beyond that. So as far as we are concerned, we know what we have bidded for, and we will assume no risk more than that, but we are glad to be taken to stay fit in the business.

[Sandeep Tulsiyan, analyst]

Can you share more detail, sir, which state Genco these projects are for? What is the configuration and specific value of each of these orders?

[Padam Gupta, executive]

Yes, no issue. Why don't you really touch, while we answer that probably one of that.

[Sandeep Tulsiyan, analyst]

And one small follow-up is that -- so a lot of equipment manufacturing companies are seeing that these FGD projects will have a lot of recurring revenue because the [ warrant ] area is very high because they handle the slurry, which is take and call damage to the equipment. So from that perspective, will we also have a play in that or once that EPC income is booked, we don't have any play in the aftermarket side?

[Padam Gupta, executive]

Sir, firstly, Techno is a genco manufacturing company. We are purely a solution company on [indiscernible] basis. So if you are an outsourced by us number one. But definitely, the FGD project have an O&M enrollment for 3 years for the COD of the projects. But we'll be sourcing equipment, we also have these commitments back to back from the suppliers to provide these ONM services free of cost, which bears with inputs, whatever required. Secondly, I will also share with you that our technology is one of the most proven and best in the world, which is our Korean technology. And it started from America and now in Korea, and they have recently taken over -- they are all [ growing ] generally also. So they have become very strong source of technology, rather all our competitors want to pitch in to our technology providers. As a matter of fact because the world is phasing out. So we are very -- being part of this business for the last 40 years, we know what is what.

So we always engage in the booking companies, best of the best companies, companies of our size at scale, who are of course buying our services with partnership. And also, we are at DR our technology is no great than usual in any powerhouse. So our systems are lending linear. They are robust. They are stable in performance. So all these concerns are not relevant, I would say. Even a winning industry is based on experience where you can design a very fragile solution as well as you can have a very local solution. So it's a matter of your experience and knowledge, how you handle it?

[Sandeep Tulsiyan, analyst]

Right. And one final question from my side is on the receivables, which were under suspicion whether we will be able to recover that amount or not, we were sharing an update every quarter. How much of that is still pending in our receivable figure report? So where is that figure now in this INR 584 crores debtor? If you can just give an update on that?

[Padam Gupta, executive]

Sir we never had it, but for no better [indiscernible] what we had a concern on certain investments within [ you and me].

[Sandeep Tulsiyan, analyst]

Right, correct.

[Padam Gupta, executive]

So investments also we are more or less through, sir. If you could see our current year, balance sheet, it has come down to no more than INR 100 crores, and it will be out by that of this year. By March '23, we'll be out of it.

[Operator]

[Operator Instructions] As there are no further questions, I now hand the conference over to the management for their closing comments. Over to you.

[Padam Gupta, executive]

Yes. I will like to thank you, all of you for joining the conference and have a very frank and open discussions with us on all issues related to our business and financials. Still, if you have any query related to any issues of the business, we do all related to power sector now called energy sectors. You are welcome to drop us a mail or visit our office, and we'll be too happy to receive you and take us -- take you through our all processes of carrying out our responsibilities, assignments in a more secured manner with no great risk than normal in any business. With that, I would like to close the conference and thank everybody for joining it. Welcome, and thank you all of you once again.

[Operator]

Ladies and gentlemen, on behalf of Asian Market Securities Limited, this concludes this conference. Thank you all for joining us, and you may now disconnect your lines.