Thermax Limited
NSE:THERMAX
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Thermax Limited
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Ladies and gentlemen, good day, and welcome to the Thermax Q4 '18 Results Conference Call hosted by Motilal Oswal Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ankur Sharma from Motilal Oswal Securities. Thank you, and over to you, sir.
Yes, thanks, Ahman. Good morning, ladies and gentlemen, and welcome to the Q4 '18 Results Earnings Call of Thermax. With us today from the management, we have Mr. M. S. Unnikrishnan, Managing Director and CEO; and Mr. Amitabha Mukhopadhyay, Executive VP and CFO. As always, we shall begin with the opening remarks from Mr. Unnikrishnan and then open the floor for a Q&A. Over to you, sir.
Thank you, Ankur. Good morning, my dear friends. A quarter where I'm sure there was a lot more expected from Thermax than the numbers that are already in the market. Some good happenings and some things which didn't go exactly as what we planned. So let me start on with the good thing. The order intake for the fourth quarter also had been 37% better in comparison to INR 1,170 crore going up to INR 1,499 crore versus INR 1,600 crore order booking, taking the overall order intake for the group for full year to INR 6,380 crore versus INR 4,394 crore, an improvement of 45% and almost similar to an all-time high order intake for a year in the recent past we talked about.For the quarter, the revenues were lower. At the group level, in comparison to last year's INR 1,482 crore, we are lower by 4% at INR 1,417 crore. And including other income also, it is lower by 4% at INR 1,480 crore versus INR 1,449 crore. But this sales revenue number for the full year is INR 4,493 crore versus -- last year was INR 4,493 crore versus the current year, a minus 2% for the full year at INR 4,391 crore at the group level. Even after appointing for other income and other operating income, it has come down from INR 4,704 crore to INR 4,602 crore.The quarter 4 reduction, which we had certainly targeted a little higher number, there were 2 specific reasons. Number one being some of the projects where things are happening at a faster pace, in some consideration, related to the [indiscernible] introduction, we were unable to forfeit in the last moment because the suppliers were not ready for it since we are not given a clearance for it, but could have had an impact on it to INR 100 crore and overall inability to push things in that particular month for various reasons could have in that INR 100 crore. So we could have certainly been at INR 200 crores more than what you have seen for the quarter number, but most of that has already happened in the current quarter, in the last 45 days itself.At the profit level, for the quarter, in comparison to the last year of 12% PBT, it is 100 basis points lower at 11%. That's at Thermax Group level. However, for the Thermax standalone, which may not be known to you, I don't know whether to report it separately, our PBT has gone up from 12.4% to 13.1% for the quarter for Thermax standalone. And for the full year, the PBT has come down from 10.1% to 9.6%. If only we have had the top line improvement, as I mentioned about, it would happen certainly closer to effective 10%.Now what are the reasons for the reduction in profits for the quarter, which are also reflected into the financial year? First and foremost, the revenue reduction. Second is related to the overseas subsidiaries, starting with Danstoker Group, had a negative than what we expected for the quarter.In the China subsidiary of the company, we've had 4 specific litigations ongoing, where we've taken a prudent decision to keep a provision. These are, I mean, how do I put it across, poor certain relationships really between 2 of the countries. There had been an increased level of litigation. It has now come to a standstill. And the way things operate over there is that you might get an expat to order, which you're going to leave challenging later. So we thought knowing the way things are happening currently may be better to make a provision for it. And we also had to be booking the negative related to the operating expenses of our Indonesian subsidiary, which should be improving in the current quarter onwards. That's the second item.Our environmental business, water has certainly turned up from a low profitability to a decent-enough, medium-level profitability. However, pollution control on the back of the steel price increase, that's the only division of Thermax which normally takes a brunt of a conventional steel price increase. And they had reported low -- very low level of profitability. Whereas for the carryforward orders of the air pollution control, we are having normal profitability that Thermax is used to.Similarly, on the chemical business, we have had to be accounting for the entire depreciation for the new plant coming in. So these are some of the reasons where the Q4 performance -- even if our top line is lower, Thermax is normally used to delivering at double-digits at the group level. These are the reasons for that. One more information on to all of you via disclosure is about our agreement that Babcock & Wilcox to buy their 49% shareholding and take over the entire manufacturing facility, which, in our opinion, I'll tell you the reason for it. Our last boiler capacity that we created in India was way back in 2007 at Savli. As we're looking forward to betterment of the business picking up going forward, a world-class facility, which is designed by Americans, which is capable of making subcritical, supercritical and even captive power-sized boilers, this help -- we are able to widen the price very, very much on our -- favorable to our company.Because if you're going to recreate something like that, it would have been substantially higher. I'm unable to be disclosing any numbers or any terms of it at this point of time because we've signed an NDA. Only when the transaction is completed, certainly, we'll come back to all of you and inform you about the terms, the conditions, everything, everything put together. But be assured that this is very favorable to Thermax Group, the final deal that just struck.Especially, apart from the physical assets evaluation, it also gives us the technology for supercritical, subcritical and more importantly, the air pollution control-related NOx technology, which otherwise one would have had to buy from the very limited suppliers from the international market with their huge price. Here, we'll be getting it, and the technology transfer will be for a fairly large period of time, 20 years is what we are expecting to happen. So that's on more happening. Happy to inform you that the hedge is now stabilized. We had some hedges in the Q3 and, let's say, at the beginning of Q4. But last month of Q4, the hedge kind of fully stabilized, raring to go. I'm expecting that by September, October, we should be able to reach the peak capacity of that particular factory.Factory installation at the Sri City, the building is completed, the machinery standard installation. And this being a highly automated plant, I'm expecting the commercial production or trial production to start from the Q2 end of the forthcoming year. So that's about the overall performance. I leave it to all of you to be asking me specific questions, which I should be able to answer. Thank you.
[Operator Instructions] The first question is from the line of Venugopal Garre from Bernstein.
Unny, I just wanted to sort of understand the B&W transaction. I mean, I remember last year in one of the quarter conference call, you were more or less clear that you want to sell off the facility, and you had sort of indicated that investors should support your thought process on that. And now with regards to the earlier, we are looking to buy out the stake of B&W. So how has your thought process changed in the entire last 12 months on this line point, especially given that there have been no orders that the JV has probably won from India in the last 7 to 8 years? So that's my first question.
Venu, there is no change in what I have spoken or we aren't going back on what I spoke about. The facility fundamentally is a upgraded version of what we have at Baruda. So it has got panel-making capability, which is a, I would say, world-class facility; similarly, coal-making capability, [ hetero-making ] capability. If you look at component-wise, what is over there is a very high-quality manufacturing facility with 110 acres of a well-developed facility. Now if that could be purchased at a price, including the machinery, at a price which is not thinkable, well, it is worthwhile. So once you know the financial numbers of the deal, possibly all of you will support me, what Unny has done is right. Currently, there is no intention for us to be waiting particularly in India. I'm making it very clear. And if B&W were to offshore manufacturing of that, any orders that we receive in the future, we'll continue it in that way. Currently, [indiscernible] final extension of utilizing our facility over here. It's just -- and to share also that our facility in Pune, the main singe works facility, the first line would be almost 40-plus years of age. And the last that would have added was also maybe 20-plus years of age, and the [indiscernible] complex available in singe work. So if I am able to have a forward-thinking of a modern plant, other than whatever that we have for the long term of the company, provided the financials are okay, so that's where -- that's what I can disclose right now, given that they have to wait for the entire transaction to be over. I believe it would have solid open capital -- maybe taking the money in. But if they are getting it at that price, which is far beyond those, I think it's better. And there are some other benefits also which Thermax will be getting because the company had been in operation for 4 years, and actively dealt with its losses. So let's stop at that level and continue with the transaction. Is that okay with you?
No, I think outside the rates, but I think from [indiscernible] is not really a transaction price because more -- what is on the [indiscernible] facility since you seem to be clear on the usage of the facility now, so that's I think the main area that we would focus on, rather than whether you get it cheaper or costlier. The second question on me is more to do with understanding the daily losses. I think you also mentioned something in the opening remarks with regards to China. I'm sorry, couldn't really hear that. If you could just divulge some understanding of Danstoker for synergy and adoption of cooling business in China, at the same time comment around the increase in loss in JV from associates, that would be great.
Yes, of course, I'll do that. Danstoker for the quarter reported losses. And also, for the full year, it has become a loss. And this is a one-off on account of 2 of the cost-over incurred by Danstoker and, of course, anticipated losses, which is already known of the Polish facility, which we have taken over. It has now been pollinated with a marketing mentor, which is our intention to take on the Eastern European market. So those are anticipated. Even with that, we should have a breakeven plus. But there were main Danstoker company lost more than what we would normally have incurred. That is why Danstoker has reported a negative. Second is about China, what I mentioned is we had all of a sudden 4 cases of, not really performance, let me say, that the back charge is equal and coming from 4 of our customers. It is not something that is going on for, say, years together. It really started in the last year. And this is something like a non-thing that you operate in China from 2008 onwards, the first time we are facing this kind of a situation. And the way litigation happened in that part of the world is you will come to know about it when a judgment is class -- or passed. Unlike in India, where a notice is served to you, you represent your answers in the court. Such kind of things don't happen in that part of the world. In fact, it hasn't even gone to the extent of one of the local courts sending an account freezing notice, so simple under that. So those are the kind of levels it can go to. And there is some amount of relationship breakage between 2 countries which [indiscernible] as well as speculation as I don't speculate beyond that level. So wherever the claims where that amounts a claim amounting to around INR 17 crore, INR 18 crore -- Amitabha, do you remember the total number approximately? INR 17.7 crore, we provided on the balance sheet over there because it's prudency demand that there are profits available. And it is better that you provide for it rather than wait for the reverse to happen, though we have contested each of them. Once you contest a ruling over there, you'll have a hearing available. That's the next level upper court. Until that end, there's no hearing or [indiscernible] what we heard. Let's wait things to happen over there. I mean, there's no point in complaining over any of that. So we have decided at this point of time not to sell anything further in China. And we are utilizing it as a manufacturing facility, which, in any case, a modern facility. It's a robotic-oriented facility. And we do have orders coming from the rest of the world, and we can utilize that also. And that -- there is a strategic decision. We already have all the chiller factory remaining in our Pune facility, the new facility coming in Sri City. So certainly, we can have 2 facilities, one in India and one in -- I mean, outside India. So China, for the time being, will be utilizing their own manufacturing facilities until we settle these kinds of issues. That is about China.
And then for synergy?
For synergy, there is an improvement in performance overall. After the last quarter and the oil price have started improving, we had started to see -- we had 3,000 customers when the oil price was in the range from 80 at first. It has come down to less than 1,000 in the last year when we have taken over the value shares of the company because incomes have really dropped. I'm happy to say that it started increasing. Currently, we are operating at 1,000 or 1,100 tonnes per month of pellet sales that is -- pellet is what we -- the revenue comes from sale of pellets only. It is expected to go to around 1,400 by -- if the prices were to remain the same. We have first $55 to $60 per barrel for oil prices. Then we are expecting that it should reach to a breakeven level in the next 2 quarters period of time. And apart from that, we also start the -- facility will be operating independently as a company. They were having only customers in the commercial sector, hotel sector and maybe hostels of the colleges [ we pull in ]. And most of them were cooking directly from the gas. But as we've introduced a steam-based cooking, which will reduce energy consumption by approximately 27%, 30%, I'm happy to say that we have been able to pick up a fairly large number of orders, new contracts of that kind, where the per customer consumption of the fuel will be almost 2.5 to 3x. So that the lesser number of customers will be able to serve, and with themselves, will be able to reach a break-even level. Current year that you're operating, we should be reaching breakeven of our synergy. I don't want to comment on which quarter. But looking at it, certainly, we'll be hinting a bit at year-end that is a break-even plus is what I'm looking forward in personally.
The next question is from the line of Mayur Patel from DSP BlackRock.
Sir, if you can just -- it is always very helpful to take a comment from the sector. Given that we are still consistently seeing weakness in execution in energy and even in environment and chemicals, which was supposed to be on a good traction and supposed to be a new growth driver, there, also, we saw a little bit of weakness. Can you just talk a bit about outlook and what you're seeing? Given that your order in first, has been very good, and that gives a good amount of visibility in the near term, how do you see the outlook in all these 3 segments? Just want to take your comments on that first.
Mayur, it's a 1-quarter affair. Don't get disappointed beyond the level. Last year, the initial quarter has no orders to execute. Now there are orders to execute. And we are very particular about where we execute orders, that if those are reasons, which I will not disclose beyond the level. However, accelerating execution means it's actually matching with the cash flow requirements for that also. Bear with me. So all the projects currently are going on there, nothing that is -- other than some slackening, which could happen, and it's also called back now. So I don't think there is any concern related to execution going forward. We are fully geared up for all the orders to be executed, both in energy and environment area. So it will be good numbers from the coming year. Next should be the cost factor in all 3 of them. Yes, there had been an increase in commodity prices in the last year. We have been able to overcome part of that. Barring the ordinary IS 2026 normalcy where you do buy spot -- on spot prices, speciality seeing it for the volume, making any of them be booked well in advance, so we don't have any impact of the cost going up in that. So air pollution control with the environment sector of that business had, had an impact on that count for the year. Going forward, we've been able to increase the prices to a certain extent. See market has not turned in any of the sectors into a sellers' market. Even today, it's a buyers' market. There aren't enough and more orders where everybody to have their coffers full. So we'll have to be very cautious moving forward. If you look at the middle line of the company despite the bottom line -- sorry, the top line coming down, we have been able to retain, barring some expenses increase in the employee cost, which certainly we have to be having more people taken onboard, looking at 45% more orders on hand. So I don't find any challenge in that count. Chemical, we had stabilized it very well, the manufacturing plant. There is no problems on that count. Current quarter, we had styrene prices going up also. The moment crude petroleum prices go up, the next impact is on the styrene price. But my recent contract, I mean, which I do bake in the ration orders, these are for minimum money and contracts. So I cannot overnight, just because [indiscernible] have gone up, I can demand, but they will not pay me unless I start negotiating. So with the rupee having again now gone down, we haven't started rating for India and for overall economy, we are very happy when it goes to succeed in my committee because I'm an [ ethics sport ], though I'm excited. And important, my price realization will improve going forward. So if you looked at it that way, only in the last quarter at the PBT level there have been reduction after capitalizing a factory of that kind and charging of all the expenses for running the new factory, which is a -- sat it over there, very low production level. As you rise up a factory of that kind, certainly very big expenses, that would all be gone once you reach a 50-plus percentage capacity. Currently, we're almost reaching an output of 47%, 48% of the rated capacity. So next year, by the current year that's ongoing, by Q2, we should be reaching 70%, 75% of the rated capacity for the various factory, then we come back to the normal profitability that we have been operating on. Which you will see in the coming year. So in the coming year, you will certainly see that. So I don't think, execution-wise, one should be worried about. What one should worry about going forward, any order getting into difficulty in execution, thankfully, we're clear in giving the numbers that we are reporting, if you really go to the arithmetics of that, carryforward orders are after we knocking off the orders, which we feel may not go through at all. So that is why the arithmetic, you have to add on what are the orders which we have canceled on our own or removed from our order carryforward. Unlike many other company, we give a gross reporting, we do a net reporting only. That's point number one. So it's quite safe. But beyond that, my challenge will be to ensure that I can -- we'll be getting similar kind of orders in the current year so that I have the securitized session in the future then because current year is quite securitized in terms of my orders available and the inquiries available. But further conclusion of tenders on the future, like the way we've been able to do in, say, the last 2 or 3 quarters, in the first quarter, we've put the [ foundry ] order for a refinery from Nigeria. Then we had the orders coming from 2 fertilizer companies, fairly large in size, we're getting it. Another one from Gujarat, getting an EPC order for 120 megawatt kind of an EPC order. So those are our tenders where we have been successful. Now replicating that in the market in the coming year, we'll let it happen from, first and foremost, there will be 2 steel factories coming in India, which all of them reporting good results. So I will have to play that in the bucket to pick the orders for fairly large-sized boilers for the blast furnaces, one from JSW and second from Tata. These are the 2 which are all will be coming in the current year. Refinery expansion, I spoken about, I have not seen it at inquiries in my hand, though in the recent they eliminated already with the inquiry, they have not cleared it so far. The moment it happens and they have the next opening of happening of O&G industry, and with the crude prevailing at this kind of price levels, the refinery expansions abroad also are on the cards. So second about the current year, I am looking on O&Gs, oil and gas sector, also helping me to get larger orders. Captive power, well, I mean, all of a sudden, similar companies have also started talking about [indiscernible], plus 1 or 2 greenfield capacity additions also. So overall, the sector which give me the project orders selectively should help me in the current year to be at least matching up with the kind of order intake that we had last year, and if that prevails, improve it beyond what we have done last year. That's the challenge that I have got. Execution won't be a challenge in Thermax in the current year, and we should be able to do better numbers both on top line and bottom line in the current year. Is that okay, Mayur?
No, this is helpful. I'll come back for more questions.
The next question is from the line of Kirthi Jain from Sundaram Mutual Fund.
Sir, on chemical, when do you see the profitability and turnover really kicking up, sir?
Profitability improvement you'll see -- in Q4 of last year was -- and Q1, there'll be an improvement, the start with year also, there'll be an improvement. Turnover pickup will be on 2 counts. Number one is resin factory picking up, as I mentioned, when I can start taking orders. So resin -- the way we will take international orders are not for 1 container, 2 containers. It will be multiple containers and the orders will be lasting for 1-year, 2-year, 3-year, 4-year equivalent. So we were waiting for the plant to stabilize before we concluding contracting instead IT company is doing contracting. So now there are inquiries generated and they themselves come and certify the plant and then we do a piloting. So I would expect Q3, Q4 onwards, you should be able to see resin turnover increasing and the real improvement will be next year.
Sir, on subs level, when you -- when will -- we had seen a loss of around INR 10 crores, INR 12 crores. So when do you see a turnaround in subs levels? Or -- when you will see improvement in subs level?
Currently recent we had improved subsidiaries last year also. Current year, Danstoker will certainly do well. China will continue to be a pain, but I mentioned about China is being converted into a manufacturing facility rather than a fully operating, including sale. Because I don't think we may be able to improve the selling in China, but I don't think it is advisable knowing the current situation prevailing over there as an Indian company. So we would utilize the manufacturing facility. Then I think when you set up a factory in Indonesia, I never expected it to be making profit in the first year, second year, third year. As for my commitment, it has to reach to a profitability level in the fourth year of operation. So that will continue, but it's not a big deal. It is going to be. It's a build-up of a market. So you'll be investing in capacity and that capacity in the manufacturing facility can't be 1/3 capacity going to 100% capacity in 3, 4 years. It will be on full capacity starting at capacity utilization of 10%, 20%, 30%, 40%, rising to 60% and above where it will become breakeven and above. That's the way we are planning on Indonesian facilities going ahead with. So that is [ the term ]. I don't think overseas subsidiaries, other than China, will have a problem going forward.
Sir, last question on the large order visibility. This year is -- was a year of large order visibility like -- around 5 large orders we had announced in the public domain. So for FY '19, what is the visibility you have, sir?
Not as many under tendering now, but there are equal numbers available at various levels of inquiry generation and discussion, budgetary level, both on the domestic and international market. I need to be admitting that I don't have a 1,000 crore inquiry right now with me at the negotiation level. I've got inquiries which are 100 crore to 300 crore available, which are in negotiation both on the domestic and international market. Normally, registration there for such large orders are anywhere from maybe 3 to 4 months going all the way up to 8 to 9 months. So there are possibilities that we should be able to conclude those similar kind of orders in the current year also. But the overall inquiry level even from domestic and international market for conventional medium-size project, which is a sweet spot for Thermax is also not bad, in fact is better than the last year.
Sir, on FGD -- from -- with the Babcock facility we've been acquiring, will that technology we can use for FGD, sir?
We can use it, but we don't want to use it. Because Babcock technology is a little more expensive than the Marcellus technology. So -- since we already have the Marcellus technology based on which you already prequalified assets and have started bidding in the country. And frankly speaking, the first order whichever got finalized in India for a supercritical dealer of the L1, but the order couldn't be taken for various external reasons. So now we started selectively bidding for [indiscernible] in the country who have got some balance sheet worthwhile or NTPC. These 2 we are getting into. See even if it is going to be a dog-eat-dog game and you're going to have a top line and no bottom line. Certainly, Thermax does not record it despite having technology. So coming back to that, we already have the Marcellus technology, which is again American origin, available to us to bid for it going forward. Whereas NOx technology which is available, it is a very rare one and a good one, let me say it that way. And that's why we would want to continue with the B&W technology for NOx. When Venu asked me the logic of having kept this with us, if somebody were to get B&W equivalent technology for NOx control, it will be very rare to find because there are more than 90,000 megawatt of NOx plants running in the world using the technology. And in our discussion with NTPC in the past 3 years, where a trial needs to be conducted, we've always bid with B&W technology. And one NOx plant top line can be equivalent to maybe more than what I will pay for buying that company itself, including the facility. So in my understanding, nothing is going to happen for the next 2 to 3 years. The way air pollution control for power plants are going to happen in India is first there will be a duty, which just started moving. With that train is going to start moving and getting to traction level, which should happen in the next 2- to 3-year period of time, and come toward execution. NOx will start once the trials are completed in the coming next 1 to 2 years' time. And then as for health of the electricity generating companies improve, they will be comfortable one by one to NOx control. So at that time, we will be one of the companies having one of the proven and best technologies available. And we have sufficiently good balance sheet to execute such complicated order from the future. That's why it made sense for us looking at that results possibility.
Sir, lastly, any new other CapEx plant other than B&W, sir?
Not -- okay, we've gone ahead with Phase 2 of the Dahej factory, which will become -- because we need to be having capacity created an extra 20,000 to ensure that we don't need our -- we will not be needing our Paudh facility, the old chemical factory. So that Phase 2 is already there, but that's only some INR 50 and odd crores. It's already ongoing. Machinery is ordered for. We are waiting for the initial manufacturing to be stabilized to go for the Phase 2 that is already on. Second, in Indonesia, also the original investment is supposed to be $25 million, of which we only spent $15 million, $16 million. The balance Phase 2 is also ordered out so that we are ready with the Indonesian factory in all respects also in the next 1 year. Thermax is very overcautious, I mean, the way we take decision. We'll go with the stage ways and see if it's really happening as we planned. Then we go with the full-fledged implementation. These 2 are the ones which we've already gone ahead with. We are looking at what is going to be the cash generation for the next 10-year period, 5-year period and where are we going to be investing that money to have stability for the values it brought in and retain. It is what we are currently working with the board. And in my opinion, we will be able to declare where we are going to be heading in the next 6- to 8-month period of time.
We have the next question from the line of Nitin Arora from Axis Mutual Fund.
Just wanted to know that how much of our order book as of now has a fixed price contract, Unni?
Nitin, in the area that we belong to, there is hardly anything which we will get a relatable contract. Because when you sign and seal a contract of the kind that you do, any contract upwards of maybe INR 10 crore, it is a fixed price only. Unless otherwise I take an order from maybe NPTC or some state enterprises where there is a price variation clause standard available. There are some orders, very limited ones. Otherwise, all -- most of them are fixed-price contracts for us. And that had been historically true for the past -- I mean, that I have over 20 years of working in the company, it is always a fixed contract.
So what's your outlook on the margins now, given the commodities is not coming down? So how are you looking your margins going forward?
First and foremost, only way to retain whatever margin one has budgeted at the time of taking the order is like placing the orders for all the commodity items which are of specialty nature within 1 month, which is something which Thermax does. Next is we've got annual rate contracts for the components that we purchase, like motors, pumps, valves that also secretize by having the rate contract. Area where we cannot control is, as I mentioned earlier, about the normal steel that goes into structures, ductings, casings, which are the normal steel that we do buy from the open market, where nobody gets the rate contract. Unfortunately, in our country, nobody does that way. So there, the price has already gone up to almost 40-plus percentage in the last 1 year. I'm not expecting it to be strengthening any further because the minimum import price that is supporting the steel industry with -- itself is a -- I mean, already played the game. And I don't think the government is in the mood to even extend it or maybe even increase it any further. So that -- with that I think whatever margins I have as booked will be retained, improving the margins -- because many times when you take a tender -- not a negotiated order, a tender, you have to quote aggressively to become L1 to take order. In such orders, to get a double-digit margin, it can only be done by having a very strict disciplined execution, so which is something which we are quite good for. So my take is, yes, a quarter-over-quarter once in a while you may have a reduction, but on an annual basis, the kind of portfolios that we have, we should be aiming for a double-digit margin in the current year also.
Now Unny, coming back to your global subsidiaries, I understand this year is a loss write-off and the next year looks good because there is a write-off in the base. It's a -- I'm talking about specifically China and First Energy. Is it -- isn't it in your opinion becomes more viable to shut down the China absorption cooling subsidiary being an old facility from last 10 years, still struggling? And I just want to know what the future of the First Energy is? Those are my last questions.
China, we can take the decision that you mentioned at any point of time. In any case, impairment which is needed is already almost that is taken care of. But there are hopes that, that facility may help me in case of price variation and there are some markets which may prefer -- and even today, the cycle time for production in China for -- just to give you an example, ADANI needed 10,000 tonnes of chilling for their new solar facility, which has come up in Gujarat. And they wanted [ the India ] will be supplied exactly in 3 months' period of time. There is no way that the Indian logistics, one would have been able to make it in the 3-month period. I've been able to manage it only because I had a factory in China. There are global orders, which you get in a short cycle. And the Chinese ecosystem is -- we could place an order for tubes to get a day after tomorrow delivered to your factory covered [indiscernible]. In India, you place order, you may get it after 2 months. So short-cycle order execution of larger capacity, with the kind of massive capacities available in China would be a better option. So we'll have to evaluate for -- should we be very clear about should you really want to shut it down. There is nothing as -- I mean, that factory produces world-quality absorption chillers. And -- but there are some countries that do not even accept from China, but there are many countries where they love items coming from China. So since it's not going to be beyond the level here afterwards because earlier there was -- see, on EBITDA level, we were almost closer to breakeven for a couple of years over there. But all of a sudden, things did change. And I cannot talk on a recorded call as to what does it mean for relationship and the Indian plan that you could keep that particular country. And I'm sure you should be able to imagine that. So we have to weather it.
And what's the future you see for the First Energy?
First Energy certainly will be -- one of the initiatives initially surfaced now got into the market, which is in the annual for the past 2-plus years is we making an entry into the commercial segment. We are a B2B company. And we've seen in the last cycle -- number of cycles faced by the Thermax, but specifically between 2010, '11 till last year, the negative cycle for the capital goods industry. So being a B2B capacity building-oriented organization has taken a beating, though we are one of the rare companies who retained the balance sheet strength with no debt and still almost a double-digit profit maybe 20% reduced top line. And I'm sure one did even a case study, but -- which is the other area that we can make a play. It is a commercial segment, which I've been continuing to be investing even in the down cycle. And there, we got -- another day a hotel also buys a boiler, not 1, maybe most of them buy 2 boilers. They will be buying water treatment plants. They will have requirement of a sewage treatment plan. These days many of them are looking at solar as an option. So the products which are currently sold by Thermax for the industry with minor tweaking and with high level of automation, but not so highly performance-oriented or not so efficient. They don't need such efficiency are salable to the commercial segment for the mall. So there we want to be a player. That is the purpose we're looking at personally at an investment level. Unfortunately, it was a mistimed investment. When -- because the entire thing is on fuel shift, means somebody who's buying LPG cylinder in maybe a college or hostel or in a restaurant or a Sodexo cooking place, who would be paying maybe INR 600, INR 700, I don't know, I don't remember the value of each of the LPG cylinders. There is a 20% cost arbitrage by going for a gasifier -- gasified cooking from the wooden pallets. So the entire gasifier of the cooker was supplied as item without any capital repayment is like when a lease is given to the kitchen. And on a monthly consumption base, they were paying. That is the way First Energy is configured. Now as crude prices came down from $70, $80, $90, $110 to $25, $27, LPG price also crashed in the country. And at that point, many of my customers shifted back to LPG. Now since -- at the same time, let me say that. And unfortunately or fortunately either way, the existing players also, [indiscernible] shareholders had to give to Thermax their balance shares up to [ 77% ] at a very -- even INR 1 price equivalent. So we took over that. We also issued preference shares to support their company to deliver cash on hand available. And we have seen the reversal started happening with the crude pricing having tempered back to $60, $70. I don't expect -- the world doesn't expect it to come back less than $50. And I only need a 4-year play available for it to come back to the normalcy. And in the meantime, with our knowledge and capability, as I mentioned about, if you're going to open stove cooking, the way the gas cooking is versus if you were to go for indirect heating using steam-based cooking for larger kitchens, you can certainly have an overall fuel consumption reduced by 27%, 28%. So with that also introduced, we just tried it out after we buying the balance shares. And I'm very happy because I've got 100 inquiries on hand right now. At least 10 of them are converted into, by which only my India pallets sales have gone up by almost 30% now. And I'm expecting it to reach to a breakeven level of 1,400 to 1,500 tonnes per month of sale of pallets will be a breakeven for the company, which I'll reach in the current year. Now once it reaches over there, I have an access to all those commercial establishments. 3,000 was the peak number of customers, which I've gotten 24 months back. If I'm able to catch back to the 3,000 customer access for my rest of the products the company, well, certainly, the investment plus will payback. That will be a vehicle used by the company for commercial market entry or various products of the country -- company, the benefits. So there is a strategy behind all of this, Nitin. But it's a wrong time entry. Imagine that if you were to be enter in today, I wound up with this kind of a price where the company is to start with. And in any case, what I've been talking about how things have improved after the buying. So whereas in the other case, we bought things went wrong, but we are not going back on that. See there are -- like the way somebody asked me China, can you not close it down? Immediate reaction to start what we should do, because we would thought about a strategy, you certainly will face headwinds. You've got to measure the headwinds is a permanent death or it is a disease which can be cured. So my way of thinking is that if a strategy was right to enter, stay put, so long as you can afford it. And certainly, it will play in the long term. That's the way we're looking at it right now.
The next question is from the line of Ravi Swaminathan from Spark Capital.
Sir, you had seen quite a few orders from the PSU side in the last year, that is FY '18. So are there few more orders, which are there from the fertilizer or chemical or any other sector, which is there? That is question number 1. And from the private side, you had mentioned JSW, Tata Steel. What is the potential size of these orders? And will it have a cascading effect on the smaller steel, billet plants, et cetera, which will lead to order inflow for you over the next 1 to 2 years?
First and foremost, fertilizer, there may be one more in the immediate future. And if coil steel vacillating should they go ahead with that. So that's something which you'll have to wait for the second one. Can one would happen in the current year? Not from [indiscernible] that will be decided later only, but certainly. And next to talk about the steel, yes, both those projects, which I mentioned about. JSW is already ordering. I think they almost completed the ordering for most of the steel plant to China, 78-odd person, including China. And blast furnace based power generation items are under negotiation right now. So once that is through -- I mean, we are one of the major players in that area. So in any case, in blast furnace firing, gas firing, we are the #1 in the country, involving technology, capability, everything put together. So I stand a better chance to be concluding that. Tata Steel were to be concluding the order in the H1 of the current year, but -- I mean, their attention got diverted to Bhushan Steel. So since the deal is through, we need to really wait for what are their plans related to Kalinganagar expansion. Will it happen in the current year or will it get into the next year? So those are things which we cannot predict right now. Now really the next question about the downstreaming impact of that related to the feed supply of [ Spungen ] Thermax will certainly be getting benefited. We already got some orders in the last year. There are inquiries happening. And for the part, we'll wait and watch anything on that count. See, there is no turnaround in investment cycle in the country for the larger commodity sectors. But there are hopes that it may happen going forward because -- say like cement plant -- and I'm very quiet, continually talking for the past 2, 3 years. I mean, I hope all of you will remember that I told that all cement companies are having excellent balance sheet, highly nonleveraged balance sheet, with a lot of cash available. So once capacity utilization crosses certain percentage, I always told 85%. But I am seeing people who cross 75% also today started looking at greenfield expansion. And there are not too many consolidation possibilities remaining over here. Let's say you would have read in the today's newspaper about the largest Indian cement maker buying his own company -- I mean, group company to consolidate further. That means there's nothing available in the market any further. So greenfield capacities will have to happen. So I'm hoping that sector-wise turnarounds are going to happen. The way things are happening in the country related to steel production, [indiscernible] follow, not a single aluminum smelter or factory got commissioned after Aditya Birla Group's, 2 of them who got commissioned 2 years back. Of course, I had at least some orders come from there. Going forward, I'm sure about that -- see the consumption of metal is -- there is an equation available. Normally, steel companies lead and then comes copper and aluminum. So there will be something more to happen in the next year, 2 years. So my expectation is very selective investment happening in the core sectors, barring one that is a power sector for the next 2- to 3-year period of time. So I should have some -- I mean, a positive coming from each one of this. So currently, the expectation that I have is the steel 1 at least I should be, fertilizer of the 2 I should be able to pick up because I've been successful last year, so I should continue with my success.
And how large would that kind of potential order be? At least if you can give a broad range, it will be helpful.
Like whatever has happened in the past, you've seen the numbers.
Okay. And how intense -- I mean, intensity of steel aluminum and copper, so basically aluminum, will it go for larger IPP range plants or how do you see that?
Aluminum is there to go for -- they're almost like -- if you look at BALCO, they're about 8 numbers, 135 megawatt. BALCO -- sorry, Hindalco has got similarly 150 megawatt into a couple of numbers. So we have gas mass or electricity. So it will be fairly large, medium size. So you have 200, 300 megawatt in multiple numbers is normally what we go for.
Got it. Got it. And with the rise in crude oil prices, do you see any further ordering opportunity from Middle East and Africa, so basically...
Yes. There are -- the Africa may not bit right now, because this refinery has got to be commissioned before another one to happen in Africa. Middle East, I think, there will be. There will be investment happening because they don't have any other option right now. What only raw material available to them very cheap is crude petroleum. And only value addition they can do the refining that. And of course, they can of course [indiscernible] petrochemicals also. So that's the only area that we look forward to. And one thing which you should have noticed is in the last maybe 2 or 3 years, a movement which is happening across the globe is to have gas as a fuel for captive power, wherever it is available. And that's an area where we really focus because we didn't have any capability to be building gas with a captive power plant. We started off with that with -- one is OMPL, which -- [indiscernible] I mentioned, we commissioned the plant 1.5 years back. Based on [indiscernible] prequalification, we got the RCF order and NFL order. Then for open cycle to be converted into combined cycle one and pick up the order from northeastern power company NEEPCO, which is also commissioned. So with that, today I got prequalification and capability both. One is application. Second is capability to satisfactorily execute captive power plant based on gas, which is a rare thing. Not everybody in the country has got all, not all my competitors barring maybe [ DHL ] may have that kind of a capability. Even in [ DHL ] case they may not be very competitive and nimble and quick in terms of turning around. So this is an area where shift is happening in the global market. See, I am expecting that many coal-based existing captive power plants in advanced economies, where they can afford it, may shift to gas if gas is going to be available. So in that I want to be ready because of the qualification I already got. Up to 100 megawatt captive power plant for gas fires, I'm prequalified to do that. In India, I make the [indiscernible] I'm sure both the companies who are making gas turbines in the world are aware of Thermax's capability and both the companies are averse to doing EPC. I'm happy to do EPC at this particular size. So that is also -- so I'm expecting that should give me an impetus the same day we did coal-fired captive power plants in India, then moved into the rest of the world. I mean, in Southeast Asia and Africa, in the last maybe 6 or 7 years' time, I should be able to make a move, go out it in terms of captive power based on gas. I may not attempt to do that in the developed world, but developing world, certainly, we will be a major player in that part.
[Operator Instructions] The next question is from the line of Salil Desai from Premji Invest.
Sir, this is just a clarification on your chemicals business. So you are saying that raw material cost hits you immediately but the pass-through in the finished product side takes time and you have to negotiate with your customer to do that. So what is the time frame that you're looking for in terms of the lag between the cost?
Most of the contracts will have a fixed-price proportionally for the current year contract. So whenever the year of that ends, next year, automatically, I can get an increase. So imagine there is a contract that is only having one more month remaining for renegotiation, it's only one month. But if the contract has just ended within 3 months' time, if the costs were to go up then 9 months we have to wait for. But in the resin sales, this kind of medium- to long-term contracts are only, I would say, 40% to 50% of my total output. The balance is retail sales, where I can increase. But there the competition will have to be considered because how fast -- if something like, I mean, auto industry, who are the first one to increase car price when the steel price has gone up? It's only the highest of the brand. Mercedes can afford to do that. Smaller companies like, I mean, Hyundai couldn't be able to do that. So I'm not a large player. So I got to be waiting for a LANXESS or may be a Dow Chemicals to increasing the prices, then immediately I jump. That way it has to be looked at.
Because on a, say -- if I assume that's on an average it takes 6 months for any contract to come for renewal, then how do you manage? In the sense that as -- when you think of a business plan then is there a way you can hedge your risk of commodities spiking up or not? Or you just have to go with how the market behaves?
No. There are some forward contracts to styrene also possible to a certain extent. That we are already a part of that, not on our own. We may have to do it -- because we are not buying in bulk of that kind. So we do a bundled buying along with other major buyers, adding our quantity along with them, that will protect us to a certain extent. But otherwise, it's only -- costs already considered to a certain extent. Otherwise, we would have plunged into loss. That doesn't happen that way. This increase had been very steep in the recent past. See, a normal increase, beginning of the year to end of the year, is there an increase of maybe 10%. It -- that shock absorber is already available. You are back on train. But if an increase were to happen by 40% from beginning of the year to end of the year, certainly, I'm in back in lead because that shock absorber is incapable of taking that kind of a shock. So that padding is only done in the pricing, which is good enough for it in the normal circumstances. Whenever a spike happens of this kind, which I think is we are already almost through or unless, otherwise, there is another prediction, which, like, the last cycle people spoke about crude will reach to $200 a barrel. Well, if something like that were to happen, then all of us are going to be in pain for some more time. Then of course, you may have to renew your contract. Nobody would do, including my large competitors will never do any business on loss making. Many are foreclose/preclose contracts. It could happen. I'm not expecting something like that to happen. I think crude petroleum is going to be ranged around within maybe 10% to 15% in the current year, it's my belief. If that is the case, we are sufficiently covered.
[Operator Instructions] The next question is from the line of Aditya Bhartia from Investec.
Sir, my question again is on margin sensitivity to raw material prices. Specifically, I wanted to understand for longer-execution orders, like, let's say, something like Dangote, are we completely covered from raw material cost fluctuations? And also, you mentioned that rupee depreciation hits the chemicals business, how does it exactly impact the businesses?
Aditya, Dangote, thankfully, our ordering is over by almost 90 plus percentage. It's only the last nuts and bolts which are the last moment ordering, which are not going to be impacting, the COD category items in the entire cost structure to be ordered. So that's already covered, nothing to worry on that account. And any important component on that with the Indian rupee diluting also, it's all with forward cover taken care of. So no worries from Dangote order. Similarly, on any large project orders that you do get -- we already placed the order for all the major components and the raw materials, barring the convention steel, preferably within 30 days. In fact, alloy steel and all, we place order on the day when we conclude the contract with the customer and advance is received. Same night, our purchase order will be sent by wire to our suppliers. So that advance actions we do take. And some amount of bulk buying also in anticipation of the shortage of cues has also taken place. So that is fairly well covered for majority of the larger orders on hand. Yes, but there are times when if the supplier is from China, I mean, I want to be honest about that, even after having an LC open, we can go back on the commitment. Those kind of things will have to be managed. Otherwise, we are quite nimble and very agile to ensure that cost coverage is done very quickly. And they are reviewed also at very senior level, including Amitabha getting into, I mean, a review of our cost structure on that, that is taken care of. And then chemical as I answer to you, in the chemical business, don't get carried away beyond the level by what I spoke about because 50% of my sale is resin, balance 50% is performance chemicals and construction chemicals. There this styrene impact won't be there. So half of what is there is what one has to worry about. The current quarter that you see is because I'd been continuing to be running our Paudh or Maharashtra factory and the new factory at Dahej. So expenses are, but still when you commission a plan, all the manpower are going to be there to run the plan. I can't ask maybe 1/3 of the human beings, operators and managers, being present to run 1/3 capacity. So the overheads related to running the entire Dahej factory is incurred. So as the capacity picks up to the full level or 60% level, which I'm anticipating to happen by end of Q1, beginning Q2, it will also turn around. That is only the current read. Otherwise, there is -- and styrene, of course, is an impact, which I did mention already.
The next question is from the line of Sujit Jain (sic) [ Sumit Jain ] from ASK Investment Managers.
My question is that in the B&W JV, was there a put option to B&W?
No, we didn't have a put option.
I mean, they did have or did they have?
No.
Okay. And one question, if I may, is that in the wake of MNCs putting up microgrids in their own captive factories in India and then demonstrating to their customers, what is the threat to captive power business in the long run?
See, if India were to have created a much larger capacity of generation than what we have, captive power would have been in threat and will be in threat. Some numbers I do understand, I don't know how to translate that. China, at this point of time, has got a little over 1.1 million megawatt installed capacity. Our country with all surplus power being touted for almost a similar size of population is 3.4 lakh of 340,000 megawatt. Now we want to be an economy as good as at least China, some day. So the gap of power is so high, how can you, I mean, the companies depend upon, I mean, power coming from the wire. My understanding is that, fortunately or unfortunately in India, genset and captive power, based on solid fuel, will continue to be remaining for a considerable period of time. Once when we have a per capita availability of electricity in the country, touching 3,500 to 4,000 units of electricity per person per year, we may say that captive power can take a negative dive. India's number is just about touching -- I mean, the last number I heard was 1,000, but the population is increasing by the day. So now per capita, how much is it, became maybe lower than 1,000. China, for information, is touching 4,000. So that's the kind of power requirement that's going to be emerging. As affluence catches on in India, cost of power will become not an impacting factor for steel or power. Even today when we say there is surplus power or maybe people aren't buying, fundamentally -- I mean, you go to the rural areas in the peak of the summer, there will be power cuts, not for 0.5 hour. 0.5 hour and 1 hour is for Bombay and Pune and maybe Delhi and cities. The rural India will not have power for the day, because what they pay is something like maybe INR 1.5 if at all if they pay. And the purchase cost of electricity is already -- you guys know it better than me, ranging between INR 4. Maybe peak hours, they will charge you INR 8 or INR 9. So it is not possible for any electricity board to supply at a subsidized rate to the rural area. As the rural economy picks up better and they pay ability -- see, like, if somebody who can afford to be using a mobile for and pay maybe INR 300 for the mobile charges, he will be willing to pay INR 300, INR 400 for electricity and have at least a fan running and in a shade to remain in the day time. So that is the way things have to be looked into. To give answer to the question a number of times, somewhere, I mean, our growth rate as of today, that is where one has to be literally understanding. With all -- I mean, touting of various things happening, in the last 4 years, which part of the Indian economy has grown? It is service industry. Service industry doesn't consume electricity. If you believe that India is going to be Singapore all through, that is service economy all together for what Britain is trying to become, 100% service economy then you'll be bypassing the Indian manufacturing. Because as I understand, in economic development of countries or civilization to be precise, Agro economies become manufacturing economies to service economy, okay? We are actually building -- our Agro economy may shift, I think, it is almost reached a peak, only mechanization is going to happen over there. And manufacturing economy is yet to be picking up in the country, and then we will move the service economy. See manufacturing were to be picking up, has to pick up one day. Otherwise, there will be so much of unemployment in the country, I don't know how will we be able to run this country; the kind of chaos that will be prevailing over there. So we got to be forced to encourage manufacturing in the country. As the manufacturing picks up, per capita electricity consumption go up. So I am very confident in that way. Why I'm giving you a philosophical answer is that many will think that the suspicion will captive power survive in India. It's got to survive for a considerable period of time till such time we reach this kind of power availability in the country. And I don't think solar is an answer for it all of a sudden. Though solar will grow in the country, wind will grow in the country, and I'm sorry to say coal will restart in the country. Whether we will feel super critical that time, it's a decision that we will be taking. We will have technology, we will have a factory. Be mentioned of not to be doing that.
The next question is from the line of Renu Baid from IIFL.
There's 2 questions from my end: a, you mentioned that the current backlog for the year-end includes some projects which have been canceled. So if you can briefly elaborate on that? And Amitabha, if you can also share with respect to details on order intake and order backlog for energy, enviro? And my second question is, you did mention of a much healthier backlog and execution momentum sustaining. So does that give us confidence that your -- despite missing revenues last quarter and the last year, this year we should be closer to 20% kind of growth rate, given the strong backlog with us on the EPC side?
Yes. First and foremost, maybe I misspelled it or you didn't hear me properly. One of them has happened, I don't remember. But what I told is that in the statement related to the carryforward orders is after considering orders which may not move. That is why I spoke about the arithmetic. Opening order of the last year plus the new orders received, minus revenues, exact may not be matching that is after adjusting if there is a new order which we would love -- insignificant, that's the way -- Amitabha is saying insignificant. So I'm handing it over to him to give you the numbers of energy, environment. Chemical, normally, doesn't have too much of carryforward. Amitabha, you can give Renu the numbers?
Renu, the consolidated level, the order intake for the quarter: energy is INR 1,349 crore; enviro, INR 161 crore; chemicals, INR 88 crore; total, INR 1,599 crore. And order balance: energy, INR 5,042 crore; enviro, INR 612 crore; chemicals, INR 34 crore; total INR 5,689 crore.
Okay. Renu, the number let me give you. If I open the last year with INR 3,976 crore carryforward for the group, we book 6,380 in new orders. We executed INR 4,391 crore, leaving the number should have been INR 5,965 crore, as such we are reporting a number of INR 5,689 crore, which means the orders which are cleaned, not canceled, let me clarify to, is INR 276 crores of carryforward orders are the cleansing done by Amitabha and team after going through each order is it moving or not moving. So that's the number. Now second thing that you wanted to ask is about growth. Yes, if you do arithmetic, whatever you ask, maybe very close to reality. Now as we move, be assured of the fact that my factories are waiting for this kind of orders. So all of them are now doing quite well. Customers, most of the customers -- I mean, the numbers which we're reporting are none of them are having any NCLT or maybe CDR difficulties, the orders which are there. So it should move. See, sometimes what happens is customers will -- when I say delay the project in our kind of orders is by a couple of months only. Not that, I mean, we may not want to take a depreciation of particular quarter, let's say, goes slow for. So all the orders are executable, which are reported over here. So we should be able to manage it well.
[Operator Instructions] We have the next question from the line of Renjith Sivaram from ICICI Securities.
Just in the previous question, you gave the consolidated breakup. So can you help us with a stand-alone breakup of order intake and order book?
Stand alone, energy, INR 1,231 crore; enviro is INR 161 crore; and chemical is INR 80 crore; total INR 1,473 crore. And order balance, energy, INR 4,659 crore; enviro, INR 612 crore; chemical, INR 31 crore; total INR 5,302 crore.
The next question is from the line of Nilesh Bhatia from Macquarie.
This is Inder here from Macquarie. Unny, you talked about opportunities potentially coming in from steel and cement for the captive orders, what do you think about competition in that segment? Is there a likelihood that some of the other established players in the BTG segment starts to also participate in this low-end segment, given that the utility in BTG order is not available in the market? And have you seen that happening in any of the bids right now? And what is it doing to the pricing?
Yes. See there are only 2 established players or 2.5, let me say, of the super critical range in the country, one is the public sector company and the one is a private sector joint venture. The public sector company is always there for the past, maybe, I'm seeing it for the past 3 years. They are participating in most of the smaller capacity, but they have not come down to a 20, 25 megawatt. They normally -- I mean, once in a while they put a bid for that also, but they are unable to pull it through. I have not lost a single order to them in the recent past that I can think of up to 100 megawatts size, either in oil or -- gas is something which they do, especially since they have designs of GE available with them for gas surveys of smaller capacity. But they have not been able to be successful because, after all, planned engineering for an oil and gas based -- oil-based or gas-based captive power plant is something which we have now understood very well and we are able to optimize on that. Not that they can catch up, but not seem so far. The other joint venture of the multidomestic private sector company, I don't think they have to compete with us because they are very busy with very large contracts. These are very small in size. I don't think -- I'm not expecting them to be coming in. But the other -- our regular competitors in the coal side or solid field or biomass site area, 2 of the main competitor, at least one of them is trying their level best to getting into that. Will they make an entry? Can make an entry. I will not write off any competition from there. But we have an advantage of having completed multiple projects and the knowledge gained out of there. But are we able to kill the price and maybe kill the margins? Certainly. Maybe able to. So we can have a free run available to make great margin. We will have to ensure that we are able to get decent enough margins by executing on time and without having cost troubles. That's only way to manage it. Next introduce using the experience and the registration to move into the global market in the developing world and possibly make a go at it in the European market one day, not immediately, because we got to have the capability to be managing the European standards of engineering for a project of that kind to execute locally, which I would say that will take time to reach over there. Products are capable, but projects we'll have to -- have partnerships to do that.
The next question is from the line of Bhavin Vithlani from Axis Capital.
Unny, 2 questions, quickly. On chemicals, you mentioned that you are going ahead with the Phase 2 expansion. So could you now give us what is the capacity now? Utilization now? And what is the investment you're expecting for the new phase and when would that be complete? And what gives you the confidence of expansion into next phase? That would be helpful. The second question that I have is, on the balance sheet that I see, your working capital levels have been going up, especially when I look at your debtors are up by 20%. We also see a commensurate increase in the liability side, but could you give us some color on the working capital? These are my 2 questions.
Yes. First is about, we have 10,000 metric cube per annum capacity existing at our old factory in Maharashtra. And the new one, which we commissioned, the hedge is 12,000 metric cube per annum, which means 1,000 metric cube per month. It will reshuffle around 500 metric cube per month in Dahej right now. My demand for the year -- next year, FY '20, is going to be between 18,000 to 19,000 metric cube per annum. So once Dahej plant reaches 12,000, I see to running the Maharashtra capacity, the old facility, to take care of my FY '20 demand also, unless otherwise I have the Phase 2, which means additional 10,000 metric cube to be added at Dahej. So Dahej Phase 2 is at 10,000 metric cube. So Phase 1 is 12,000, Phase 2 is 10,000. But for the initial plant itself we have gone for all the common facilities, utilities and everything, everything is already designed and executed for 22,000 because of which at an expense of only INR 60 crores, we will be able to complete the Phase 2, which is ordered out. And I'm expecting that we commission ideally by December, but let's say that normally chemical plant commission get delayed a little more. Come what may, June 2019, that will be up and going, which will possibly liberate my full capacity in Maharashtra, and we'll take certain -- there's an independent chemical factory with 70 acres of land. What do we do with that? Let me not declare, but there are portfolios in our mind what we need do with that. The second is -- Amitabha, he wanted some clarity related to capital.
I think, Bhavin, on the receivable side is whatever the increase you're seeing, a little more than half of it is relating to 2 particular contracts, where the receivable increased which is secure receivable has been extended for a particular contract or 2 contracts. And the increase in liabilities what you are saying is that, yes, advances from customers have gone up significantly. So these are the 2 factors which have contributed to the 2 aspects [indiscernible].
Is that okay, Bhavin?
The next question is from the line of Ankur Sharma from Motilal Oswal Securities.
This question was for Amitabha, actually. Sir, could you please share the stand-alone segmental sales and EBIT numbers, if you have it on you? We typically give it in our annual press releases. So if you could please share that for the full year FY '18?
Okay. Energy, environment segmental?
Yes, please, for the full year.
Yes, he's giving you.
So I think, Ankur, I'm not giving the stand-alone segmental separately. And this is now almost last 6 quarters we haven't given that. But I can give you the stand-alone revenue-wise. Energy segment, revenue for the -- you want for the quarter?
For the full year, sir, definitely.
Full year is INR 931 crore. Environment segment is INR 640 crore. Pardon, sorry, environment segment is INR 636 crore, and chemical is INR 326 crore; total INR 3,889 crore. There will be certain intrasegment revenue.
Okay. And the EBIT number would not be available at this point, right, sir?
No, we would not share EBIT number for the last 2 quarters.
Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments. Thank you, and over to you.
Thank you. Thank you, Ankur and team also. I'm sure there would have been a sea of, I would say, disappointment in all of you, related to the Q4 performance. Take it as one quarter, but look at the positives related to the carryforward. And we should be able to pull-through a good year in the current year. As I mentioned earlier, execution is a challenge, but it's not such a challenge, so Thermax would have done much, much better. We manage much bigger carryforward. We fully -- we will automate it better and systems are far superior. And the overall ecosystem is also in a better condition in the country in comparison to the great days when we did maybe INR 6,000-odd crore turnover some time back of what India was that time, 2011, versus today it costs us far superior. So I don't think there should be a worry related to that. Margins, certainly, will depend upon -- if there's any substantial change in anything. And in any case most of the raw material price are covered. Labor charge increase can happen, in fact, not only for me, for everybody in the country. And if the populistic move were to be made by the current government of making minimum wages something like skyrocketed level then there could be some impact but those are all manageable. There is nothing that is worrisome for us at this point of time. What we are working on is my team is working on executing orders, and me and other set of people are currently working on how do we ensure that order booking can be sustained or improved in the current year. Looking forward to your continued support and advice. Thanks a lot once again for having interest and being with us all this while. Thank you.
Thank you very much. Ladies and gentlemen, on behalf of Motilal Oswal Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.