Triveni Turbine Ltd
NSE:TRITURBINE
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Triveni Turbine Ltd
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Ladies and gentlemen, good day, and welcome to Q1 FY '23 Earnings Conference Call of Triveni Turbine Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Rishab Barar from CDR India. Thank you, and over to you, sir.
Thank you. Good day, everyone, and a warm welcome to all of you participating in the Q1 FY 2023 earnings conference call of Triveni Turbine Limited. We have with us today on the call, Mr. Nikhil Sawhney, Vice Chairman and Managing Director; Mr. Arun Mote, Executive Director; Mr. S.N. Prasad, President, Global Sales - Product; Mr. Sachin Parab, President, Global Sales - Aftermarket; Ms. Surabhi Chandna, Investor Relations & Value Creation, along with other members of the senior management team.
Before we begin, I would like to mention that some statements made in today's discussion may be forward-looking in nature, and a statement to this effect has been included in the invite, which was mailed to everybody earlier. I would also like to emphasize that while this call is open to all invitees, it may not be broadcasted or reproduced in any form or manner.
We will start this call with opening remarks from the management, following which we will have an interactive question-and-answer session.
I now request Mr. Nikhil Sawhney to share some perspectives with you with regard to the operations and outlook for the business. Over to you, sir.
Thank you very much, Rishab. A very good afternoon, ladies and gentlemen. And my apologies for starting this call a little bit late. We had some technical issues. But I'm very pleased to report the results for your company Triveni Turbine for the first quarter FY '23. And we've had a very positive -- we started the year off on a very positive note. I'm happy to report that we have had another high in our order bookings for a single quarter at INR 3.6 billion, and this is also coupled with a very strong closing order book as well as the performance in terms of an all-time high EBITDA as well as revenue. It places us very well for the growth that we forecast for this current year, but also forecast for what we believe to be the growth in the next year as well.
Some of the highlights. On a consolidated basis, the revenue from operations in the first quarter of FY '23 stood at INR 2.59 billion, which is an increase of 40.7%. The EBITDA for the quarter was at INR 561 million, which was up by 35.8% with a margin of 21.7%. The profit before tax was at INR 508 million in the first quarter, which was an increase of 39.1%, with flattish margins of 19.6%. The PAT for the quarter was at INR 383 million, an increase of 37.8%. We also had the highest ever quarterly order booking of INR 3.6 billion during the first quarter and a record outstanding carryforward order book on the 30th of June of INR 10.7 billion.
Coming to some of the financial metrics. During the quarter under review, operations -- revenue from operations grew by 41% as compared to the previous year with the domestic sales showing an increase of 32% to INR 1.6 billion, while the export turnover increased by 59% to INR 966 million, reflecting both the post-pandemic macro recovery in the domestic as well as international markets, and the company's success in its international orders as well. As a result, the mix of the domestic and export sales changed to 63% and 37% exports in Q1 FY '23 as compared to 67% domestic and 33% export in Q1 FY '22.
The EBITDA increased by 36% to INR 561 million as against INR 413 million in the previous financial year of the same quarter, and while EBITDA margins declined by 70 basis points to 21.7% as against 22.4% in the previous quarter of the last financial year. The decline in EBITDA margins in the first quarter over the last year is largely attributable to higher raw material costs. But as you can see, our operating leverage, our change in product mix and our forecasted change in product mix in the quarters to come lead us to believe that we do not have a margin problem, and we will maintain our PBT for the full year as well as our future years at above 20%.
The profit after tax for this quarter grew at 38%, as I've already stated. Order booking, which is a record high for this current quarter stood at INR 3.6 billion as opposed to INR 2.7 billion in the first quarter of FY '22, which is an increase of 31%. The domestic order booking during the quarter grew by 26%, while the export order booking grew by 44%. I'm happy to share that in a short span of time of augmenting our capacity in the South African Development Community region with our acquisition of TSE Engineering in the last quarter, the company has bagged a significant services contract for large steam turbines in this region, which is for utility turbines. We've accounted for this for INR 190 million in this quarter, but we believe the size of this contract is far larger at approximately over INR 1 billion.
This is a new area for us to enter where we are going to be looking at expanding our servicing reach, which allows us to cater to the servicing and O&M requirements of large customers, but also allows us then to further sell on other parts and services, which are -- which could be at much higher margins. While this was not forecast in our budget, we believe that though this may be a slightly lower margin business from an aftermarket perspective, this will not impact our overall margins of the company, and in fact, would give us greater impetus for future growth, not only in the current region, but by expanding this service offering to other parts of the world.
We continue to see growth in our other markets of API turbines as well as the entire range of 0 to 100 megawatts steam turbines. This, coupled with our increased focus on the aftermarket leads us to believe that the coming quarters will continue to see growth in order bookings, and we are confident that by the end of this financial year that we will have a substantially higher order booking than we did starting in FY '23. The inquiry generation this quarter in the international side grew by 22% and are further confidence of the opening up of export markets, especially in Southeast Asia as well as some parts of North America and South America.
From an outlook perspective, we believe that our capacity expansions, which we had started in last financial -- in the last quarter of the financial year and the quarter before that, would be complete by September of this year, and our augmented capacity would be sufficient to cater to the demand that our order book is creating. We believe that our expanded capacity of about 200 to 250 turbines per annum will be sufficient for us in the short to medium term. This, coupled with our supply chain initiatives do not lead us to believe that execution would be a worry.
The pandemic has expanded and opened up different markets for us. And as you can tell from the -- in the recent war in Ukraine, that energy markets are at an all-time high, which is leading to confidence for power generation, both in upstream and downstream oil and gas markets. This, coupled with a historical push on the renewable energy markets leads us to have increased confidence for sustaining demand throughout this current year, but also stemming into FY '24.
The company continues to invest in technologies at the higher end of the spectrum, which not only allow us to improve our efficiency and operating conditions so that we can provide a better value proposition to our customers, but we also do longer-term R&D initiatives, as I've spoken to you about in the previous quarters, such as our initiatives in both supercritical as well as transcritical carbon dioxide, which has a variety of different applications, and we would be working to speed up the piloting and commercialization of these technologies in the near future. The company has a healthy treasury management system, and we have expanded the cash in our books to approximately INR 853 crores.
So ladies and gentlemen, with that, I'd like to open the floor up to questions.
[Operator Instructions] The first question is from the line of Ravi Swaminathan from Spark Capital.
Congrats on very good set of numbers. My first question...
Sorry to interrupt you, Mr. Swaminathan, your audio is not very clear.
Is it better now?
I can hear you, Ravi.
Sir, congrats on very good set of numbers. My first question is with respect to the domestic demand environment. So we have seen a reasonably good growth in the order inflow in the domestic market. Can you throw more color on, say, what is the nature of these orders? From which sectors is it coming in? Which fuel source from which it is coming in, and the sustainability of such kind of momentum over the next 12 to 18 months?
Okay. So before I get in Mr. Prasad, who is our Global President for Products, I have to tell you that, Ravi, we're seeing very robust ordering environment, both in the domestic as well as export market. Given our high market share, we play in every different market segment. And as you know, from quarter-to-quarter, it changes. We have -- we continue to see robust demand in the Indian -- in the domestic market from the distillery segment, from other renewable-based projects such as paper recycling as well as some projects in the municipal solid waste as well. We think that the demand for waste heat recovery is there, it did not contribute significantly in this current quarter, but we believe that it will continue in the coming quarters. But let me get Prasad in right now. Can you give some color to Ravi on the domestic market?
Yes. So domestic market, so especially distillery segment is one of the key segments for us and the process co-generation. These are the 2 segments which are leading the show, so as far as the Q1 booking as well as the inquiry pipeline, where it is coming, followed by steel and cement, these are the 2 segments. Even in process co-generation when we are seeing, so pharmaceutical is a major segment followed by food processing and pulp and paper. So that way, domestic spread is quite well spread in process co-generation covering all the industry segments.
But Ravi, I have to tell you that we see this demand sustaining. We're seeing a growth in the overall market. This is being led on a megawatt basis as well as on an absolute [ rookie ] basis also.
Okay. Any sense on what would be the domestic market size? So maybe will be 1,000 megawatt or probably even more than that?
No. We'll come to the domestic market by the end of the year, because it -- but it's a fact that it has grown quite substantially in Q1 over Q1 of the last year also. Last year had some difficulties in terms of the pandemic. So it's not appropriate to compare, but there has been substantial growth in the market. But I have to say that, in general, we are still a way from the highs and peaks that we have seen in the market of 2007, 2011, which were the last 2 peaks that we saw in the ordering cycle in the domestic market.
Got it, sir. And with respect to the 30 to 100 megawatt range, so basically, have we started seeing orders there? So basically is there any order sitting in the current order inflow on the 30 to 100 megawatt range or are we still in the process of taking and gaining traction? How is the traction there?
So as you would imagine, Ravi, the orders in the 30 to 100 megawatt segment, because they're larger value, they'll be more lumpy in terms of how they contributed to our order book. So they have not been part of our Q1 order book, but having already well into Q2, we can say that we have good success already in that market segment. This is in the international market, and they will be from areas where our historical strength lies, which is in the renewable -- thermal renewal segment.
Okay, sir. So can we expect some order over the next 2 to 3 quarters, say, by the end of this financial year?
Yes, like I said, we're already in Q2, and we're already seeing success. So yes, we'll look for more success in the quarters after that.
Okay, sir. Got it. And with respect to the South Africa, the AMC orders, so we believe you had mentioned about profit margins being slightly on the lower side. So is it relative to the regular African margins that generally we get? And is it above the company level -- overall company level margins? Or should we look at it at a below company level margins? So if you can give some reference, it will be great.
As you would imagine, that parts is a much more lucrative segment. And when we look at aftermarket, that is disproportionate to its contribution towards margins. When we look at servicing as it is, it's on a slightly lower end. And when we go to the lower end of servicing such as O&M, it is at slightly lower margin than that. But having said that, this is not a constraint when we look at our entire overall portfolio. We would be maintaining the overall margins as a company. And I think that, that is what -- but what's more encouraging about this is that this opens up a very vast revenue field for us and much, much more rapid revenue growth. The possibilities for us to leverage our capabilities of handling large utility turbines can be leveraged in many parts of the world. And we believe that we're adequately poised to capture this market.
I'd like Sachin Parab, who's our President, Global Aftermarket to just comment a little bit about where this can go. Sachin? Hello? Okay. But suffice to say, Ravi, that once we are with the customer, we think that we would be able to -- given our quality systems and the fact that we have an increased use of digital tools in terms of being able to assess the current status and life of turbines, that we will be able to push our upgradation cycle, which would then be quite lucrative for us on the parts business. We can also leverage the credential and capability of having done large utility turbines in the domestic as well as other Southeast Asian and North American markets. And so we believe that this opens up an entirely new revenue stream for us. But regardless of that, we are seeing enormous growth in our order booking, which will translate to a sustained 35%-plus revenue growth for the next couple of years.
The next question is from the line of Ahmed Madha, Unifi Capital.
I just wanted to understand the margin bit. So there is some decline in the gross margin considering the increase in the raw material prices. Now post the correction, do you see any upside in the margins from the current base?
What is important, I think, to remember is that we operate in a globalistic market -- domestically and on a globalistic market internationally. So margins -- and then when we work with our customers, we like to work with our customers for the life cycle of their product, which is 25-plus years. And so therefore, while we have the ability to increase prices and we have the ability to expand margins, we believe that it's more important to take our customers along with us. And so what -- so when you see our margin profile of first quarter with a higher raw material [ existential ] sales at nearly 57%, [ consequently ], that is when we look at our own supply chain base, and that is not something that, that will come down over the coming quarters, both because the product mix will change increasingly towards export as well as a higher degree of aftermarket, but secondly, we would also absorb the raw material prices, and there has been a reversion in raw material prices also.
So we see the longer-term contracts that we have would not -- would then get revised downwards. Secondly, now to what extent will that lead to margin expansion versus us transferring that to our customers, I think that we are happy and sufficient with having margins at least at 20%. We would be upset when margins go below that. So our attempt will be always to maintain margins at a higher level than that. And when I mean margins, I'm talking about PBT. So we have possibilities to expand margin, and they may go up in the top, we should, in terms of the fact that we have a better revenue mix and declining commodity prices as well as higher aftermarket sales. So I gave you a roundabout answer, but I think we do have confidence, but I wouldn't like you to project that.
Got it. And one question on the -- what previous participant was asking about the large turbine, more than 30 megawatts. So what is the percentage share of that segment in the current closing order book? Is it negligible?
No, it's actually quite -- it's upwards of 10% of the current order book, and we believe that it will increase in the coming quarters.
Did we recognize any revenue from large turbine in the Q1 quarter?
Yes, we did.
Okay. Can you tell me what percentage -- broad range?
I don't think that's necessary to go into details exactly.
The next question is from the line of Ankit Babel from Subhkam Ventures.
Two questions from my side. First is, historically, you have mentioned that in your segment, there are no big inorganic opportunities. I mean big in the sense, from ticket size point of view. So -- and technology-wise, as you mentioned, that we don't -- so in technology-wise, you said that you people are amongst the best, so though you don't need that. So just wanted to understand the reason for increasing the cash balance in the balance sheet and not paying it as a dividend because one more thing which you had mentioned was that you will take care of the capital allocation policy and the return ratios of the company, so if you have no other options for the cash, you will distribute it.
You bring up a very good point. But I think that as you look at our -- I'm sure you may have got our annual report by now already. You've seen from our annual report that a lot of the cash pile that we have is driven by negative working capital as well as high customer advances. These are technically liabilities that we had to do or fulfill at some point in time. Now if we take the fact that we are operationally efficient as an operation and exclude that from our cash pile, I think we are well positioned right now. Also, while we have talked about expansion of capital pile, the dividend, of course, currently, which we had announced in -- at the end of the financial year FY '22, has not been paid. It will be paid only after the AGM. And so therefore, the cash pile will decline post payment of that dividend.
But suffice to say, your point is well understood that what will we be doing with our cash pile. I think that -- we think at this point in time, it's really not a problem for us that we are constraining either our return metrics or that we are being -- not complying with our dividend payout ratios, et cetera. So I think that we will continue to maintain the payouts to our shareholders. But at this point in time, given the fact that what our customer advances are, given the fact that we do have liabilities attached to that, we think that we are sufficiently poised in our cash balance.
But I believe you people will maintain this negative working capital kind of a scenario going forward also. So every time you will have cash flows.
But that's what I meant. We'd like just to be prudent. It's not for any other reason. And so when we believe that it becomes a problem, then we will take appropriate action. And of course, this is something that is subject to the Board's decision.
Okay. And my second question was that there is a big overhang of the supply from Triveni Engineering, I mean the stock sales, which you people had announced. So just wanted to understand, can you expedite that process of selling so that there is no overhang on the stock price?
You bring up a point which is not in my control or in the control of Triveni Turbine. This is Triveni Engineering selling. But I will pass the message on. And I think that you bring up a point that I may not have been aware of as which is this overhang. But okay, I'll understand a little bit more from you as to what you mean by this, so I'll ask our Investor Relations Manager to be in touch with you.
The next question is from the line of Mihir Manohar from Carnelian Asset Management.
[Technical Difficulty]
Mr. Manohar, your voice Is breaking up. In the meanwhile, we'll move to the next question, which is from the line of [ Himanshu Patnaik from o3 Securities ].
See, I had a question on API turbines. We had a business -- hello, am I audible?
Yes, sir, you are audible.
So my question was on API turbine. We had entered the business 2 or 3 years back. What needs to happen when that business becomes quite large, let's say -- where are we stuck and what is the CapEx happening on that part of the industry, which is refinery and fertilizers and petrochemical? So do we -- any CapEx happening and what more we need to do to get a bigger share of that business?
No, see, you bring up a very good point, which is the fact that we have not historically had any large contribution to our order book from the API market segment. As we see our product development and our approach to market in terms of qualification in this segment, it has opened up a very large market for us. How is Triveni Turbine related to this, very frankly, these turbines have become a little bit more standard. So they're actually easier to make from our perspective. And so it's less customized to the extent that we had with our regular power-generating market. So it is easy to execute. They're smaller in size and capacity. So from an execution perspective, it's really not an issue, and we've catered to that through our expansion in terms of capacity.
Now executing is not a constraint. The issue would be more in terms of winning orders where we think we have adequate cost -- an adequately-priced solution for this market, both at a higher efficiency level so as to provide better economics to the customer, but also benchmark versus our competition. And so when we see that the market is opening up quite considerably for us, we are quite hopeful that this market will contribute meaningfully for us in terms of growth. But it will never replace the growth that we are seeing from the overall renewable energy market in the short term.
Okay. So I take your point. But just the first thing in a new product is getting -- or in oil and gas basis, getting product approval. And so that product approval, we have figured across all the continents and from all the engineering companies, designers. Now to win the orders, that is where we are working on. But -- and what type of CapEx are we seeing in that side of the business?
So we are seeing extremely large CapEx in this market, this means in both from the domestic market, which is not only from downstream, but also upstream oil and gas in the domestic market, but increasingly so from the fertilizer segment. We also see very large investments internationally coming from a variety of different large utilities, be it from [ steel and gas ], all the way up. So there's a lot of CapEx happening in this market.
One thing, which is our domestic market in India, see, who you'll be competing -- is there local manufacturers or their product is completely imported turbines -- smaller turbines, can you just give some idea on that?
This is -- it's an import substitution market.
Okay. And one more thing. So in government contracts, there was this thing that below a certain price point, domestic manufacturers should be given a preference and many of the fertilizer and petrochemical companies and refineries are government companies. So do you get any preference in those businesses? Or there is yet no preference in the -- [ satisfying the ] -- where you are operating in API grade -- these turbines?
I'm almost certain -- I don't know if Prasad is back online. Are you there, Prasad? Can you answer this question as to whether we see any price preference for this market with domestic PSUs in the oil and gas segment?
Yes. So there is no price preference for domestic suppliers as of now. Even our competitors who were offering, they also produce these -- they also manufacture the turbine in India. Even if PSUs comes with any price preference, so that will be equal to both the parties. So we are not looking forward to that. We'll be competing based on the technology merit and delivery [indiscernible].
See, earlier when it was stated then that API oil and gas were import substitute. So when it was stated that it is import substitute, that's why this second question came.
Yes. You are right for some cases. But in some cases, there is local players, our competitors, they also have some manufacturing facility. So even right now, there is no -- even those cases wherever the import is happening, so there is no subsidy for domestic manufacturers as of now for this rotating equipment of turbines.
And what percentage of products would be import substitute, let's say, number of turbines which are used or what percentage...
As we get into this market, we'll have more information, and we'll get that out to you. But I think the fact is that the market is quite large. And as we are seeing our approvals from the OEMs, we see this contributing to our inquiry book substantially and will eventually form a part of our order booking in a meaningful manner going forward. But as you rightly point out that we do see demand coming from a variety of different segments, and this is just one segment.
Okay. And earlier when we entered this business, the thought was this can be a pretty large market. But the thought remains the same or the probability of this business also becoming very large is high. It means that we are -- we remain confident now also as we were earlier when we entered the business?
No, you're very right. We do -- we are confident about this business line.
The next question is from the line of [ Tushar ] from [indiscernible] Management.
Congratulations for great set of numbers. Sir, I have a couple of questions. My first question is on the CapEx. In the last call, you said like you'd be investing INR 35 crore to INR 40 crore in expanding the facility to 200 to 250 turbines. So it's fair to assume that considering your asset turn of near to 3, we can get incremental revenue content to INR 120 crore?
No. It will be more than -- the asset turn may be more, but Arun, I think [indiscernible] can you give some visibility as to how much capacity utilization you may see off the facility and when may [indiscernible] ready?
Yes. As you know, we are building one more bay in our new Sompura facility. We already have most of the CapEx done and it will be complete in Q2. We'll be able to capitalize all the capital expenditures, which is required for expansion. The capacity will be flexible. It will be somewhere between 250 numbers to 350 numbers, depending on how much outsourcing we are able to do and what our subcontractors do because that would also determine the capacity. Whatever CapEx we have indicated to you in a prior meeting, we are not exceeding that. We are continuing with it. And we expect that by Q3 mid, even our subcontractors expansion will be complete and will be fully operational. It would definitely mean additional revenue in the current year, which we have already planned for and in the coming years also. And this will be -- this capacity, what we are building, is likely to be sufficient for a couple of years for us. There is not expected any way in capital expenditure for this. Does it answer your question?
Sir, actually the incremental revenue, I was trying to get some color on.
Look, the main thing is that we -- I think what Arun is saying and what I think we've said in our previous calls is that we're not a capacity-constrained company. And the fact that our capital employed may be used for capacity expansions, but our supply chain initiatives in terms of actually having a vast degree of outsourcing also does add amply to our capacity. So very frankly, if you look at what is a greater indication of our asset turns and ratios like that would be by just looking at our revenue growth, which would be the commitment that we have to fulfill the orders that are part of our order booking. And so the fact that we are seeing 35%-plus growth in the next couple of years can give you an indication of whatever turns you want to see in our assets.
Fair enough, sir. Sir, my second question would be, how do you see -- hello, am I audible?
You are audible.
Can you comment, 2 to 3 years, where do you see the top line growing like? [indiscernible] product is customized earlier or different plans. So any idea on -- in coming 2 to 3 years on the top line?
Yes, I think I alluded to this already. I think that we are quite confident of our growth for the next couple of years in terms of both being reflected tangibly by the order booking that we have. This current year's revenue is pretty much locked in the bag. We have all the products that we need to do including our book and bill, gives us sufficient visibility towards our growth through this current financial year. Our aftermarket, which will contribute all the way up to Q3 is also well planned and well forecasted. The inquiry book that we have also seems to suggest that the growth that I talked about would continue into FY '24. Our inquiry book also does suggest that our FY '24 order booking should be [ fine for us ], given the expansion in the markets that we already spoke about, which is about 30 megawatts as well as API as well as a continued focus on fixed capital formation in the below 30-megawatt segment. So we're quite confident.
The next question is from the line of Mihir Manohar from Carnelian Asset Management.
Congratulations on a good set of numbers. I mean you did allude to some line on FY '24 also. I mean just wanted to get an understanding. I mean, this demand environment that you are seeing, what is the longevity of that? And my second question was on the margin profile. I mean, is the 0 to 30 megawatt, are the margin profile [indiscernible]?
No, the margin profiles don't change substantially with the capacity of turbines. It depends on competitive intensity, but more than that is the specifications. The higher the specifications, the higher the margins. There are certain historical markets, which give you lower margins and certain markets, which give you higher margins. As you would imagine, markets where customers are concerned more on price, they give you lower margins and markets where customers are concerned more about efficiency and robustness and other features, which are important to the industrial process, those give you higher margins. And this is consistent through the entire range. So we don't see margins changing specifically.
For example, the API segment, which has much more focus on health and safety and other constraints in terms of fire, et cetera, is a much higher margin business. Aftermarket, as you know, is a higher-margin business for us as an entirety. But you have the entire spectrum within it. You have servicing, which is slightly lower. You have refurbishment, which can vary in terms of the scope, and parts, which is a very high margin business. But in all, when we calculate our growth and we look at the margin profile of the company going forward and like I stressed a couple of times, we don't see margins as being a problem for us. We aim and are confident of maintaining a PBT margin in excess of 20%.
Sure and the longevity of this growth that you're currently seeing?
Yes. So there are certain markets which are new to us, where we have expanded the market in which we operate, One is that our direct focus in the 30 to 100 megawatt segment, which is a market, which is approximately on a global basis, 1.5x the size of the market below 30 megawatts, seems to suggest and already are the successes that we've had, that we will have a good growth in this market, which should sustain our visibility as well as in order bookings. Similarly, in the API market where we have low market share right now, as we see going forward that we will -- we should aim to get a better market share as we increase our presence and have to increase our reference basis with customers. So that, coupled with the fact that in the aftermarket space as well, we see a greater presence on the ground with our customers, which should aid in getting more revenue. We think that the order booking trajectory can be sustained for several years.
The next question is from the line of Payal Lad from Progressive Shares.
So I have a couple of questions, like, so these are basically a few of the extracts from the annual report. The first one being, how do you see the market in Germany in terms of waste-to-energy steam turbine generators that are already commissioned there?
No, I won't like to speak specifically about any particular market, if that's fine. But in general, Europe has a great focus in incineration of municipal solid waste and this is being driven by a variety of different impetuses. One is that regulation is not allowing for dumping of municipal waste into municipal dumps because of [indiscernible] and other carcinogens that are created in groundwater, also given the fact that dumps lead to the -- leads to emission of methane. And so therefore, the fact that a municipal solid waste incineration plant would generate carbon dioxide as well as [ opposed to methane is deemed a scale ]. And so therefore, it is -- it comes under the subject of certain CDM benefits and therefore, both local as well as country-specific grants. So we see this as a very large segment. Of course, Europe is a leader in the environmental sense and decarbonization has taken the lead and we believe that the economics of this will be true globally.
Okay. The second one will be could you highlight more on these newly developed sub-3 megawatt products that cater to demand for your PRVS in terms of market size or growth opportunities?
Yes. I'll let Arun -- can you speak a little bit more about this segment, which is part of our annual report?
Yes. These are turbines which are standard turbines, and these are made and stocked and stocked and sold. These are not against the orders. We are developing market. This is something which will go through not only our sales force but also through a distributor network. That's how it's coming. We are building the market. We should be able to give you a more size of the market in the coming years because this is something which is developing. And we see positive increase in the inquiries in almost each quarter.
Okay. And sir, in terms of the aftermarket business having -- laying its foray into new industrial segments, such as your geothermal and your compressors, so do you see any scale-up in the contribution to this division, along with the order wins that has come in this quarter from SABIC?
Yes. My colleague, Sachin, would answer, but I would like to tell you that we have very positive references on geothermal market, not only -- in almost all industrial area, which is in Southeast Asia and also in the Australian -- New Zealand, Australian continent. Sachin, please?
In terms of the geothermal market, we have good traction, and we are seeing continued inquiries in this segment. So our efforts in the geothermal segment are paying off. Mr. Mote had mentioned about some of the geographies and in all these geographies, we are seeing consistent business and repeat inquiries.
Okay. So have you seen any inquiries for the current quarter for this division?
Yes, very much.
I think let's not get into specific segments for inquiries and order booking. But suffice to say that on a year-on-year basis, our penetration to this market has improved. We're seeing not only greater visibility on an inquiry basis, but also as part of our order bookings.
Okay. And one last thing, sir, in last conference call, you had mentioned that you had to reduce the order book of about [ INR 400 million ] on account of the Ukraine invasion. So I understand you had even mentioned that the percentage contribution is not very large. So are these orders near execution or some part of it has already seen...
No, they are on hold.
The entire is on hold?
Yes. And I think that, to be fair, we don't see this coming back into the order book very soon. So we will look to divert whatever that is part of our inventory. Arun, can you comment?
Yes. These orders were at different levels of execution, some in engineering, some were where the raw material has been bought. They are successfully getting diverted and we don't see any major impact of these orders which are on hold, which we expect eventually to get canceled. We won't be affected in our operations at all in this.
The next question is from the line of [ Abhilash Kiran ], an individual investor.
Am I audible?
Yes, you are.
Sir, just can you quantitatively express the cost benefit for a company who's putting up a steam turbine versus alternative competitive products?
You see in a variety of different applications in the steel industry, one is power generation that they need for their whole operations. And the second is capturing heat as part of -- from their furnace, et cetera. Now the capturing heat as part of this from their furnace is -- I don't think there exist alternate technologies apart from it being captured through a boiler steam basis at this current point in time, where of course, our solution of concentrated -- of super-critical carbon dioxide [Technical Difficulty]
Ladies and gentlemen, we lost the line for the management. Request you to please hold while we reconnect. Ladies and gentlemen, we have the lines of the management connected. Over to you, sir.
My apologies about that. I did say at the beginning that we were experiencing some technical difficulties. So I apologize again. But like I said, the first application of waste heat recovery doesn't seem to have any alternate solutions. While for the steel industry in specific, which doesn't use steam as part of the process, their power generation requirements could be fed through other means, be it from the grid or a variety of different sources. But generally, because of the remoteness of steel plants, they do end up generating on site, also because they do end up importing coke for their current furnaces. So even if the furnace moves to a hydrogen base, the fact is it would still emit heat, and so therefore, we would still need a technology like the steam turbine to capture that heat. I don't know if that answers your question.
Sir, so could you just -- like, what my question basically was that if I'm using the steam turbine versus, say, a DG set, so -- or any other alternatives or forms of generating electricity, so then what would be the power unit benefit of using a steam turbine just across various industries, which, in the last call, you had said that you'll come up with some white paper for this, so which gives us a better understanding. So from that perspective, you could just share some broad numbers of the benefit of using a steam turbine.
Okay. And I think just to use [indiscernible] for sugar industry, where you have a cost of the gas somewhere in the region of about say INR 800 a ton, the typical cost of generation of power without counting the cost of heat because you're using steam as part the process as well, you have a cost somewhere in the region of between INR 1.50 to INR 1.80. Now if you include a margin on the heat transfer as well, you could probably get that cost down to maybe INR 1, INR 1.10. But of course, all of this is dependent on your cost of fuel. So I think you can calculate in a variety of different ways. But suffice to say, if there is a heating requirement as part of the industrial process, which would be there in industries such as chemicals, petrochemicals, agro, food, paper, sugar, rubber, textiles, et cetera, et cetera, it always makes sense for you to generate on site because your thermal efficiency is much higher.
Okay. And sir, at what scale does it make sense, like the industry has to reach a certain threshold to -- for them to install a steam turbine or from an economic standpoint?
Actually, the thing is, it may be -- it's basically when you are a continuous process industry, there it makes sense. The size and capacity would change depending on the size and capacity of the industry and its requirement. But as long as it's continuous, then it makes sense for you to go into this. If it's a discontinuous or a batch process, et cetera, then it probably doesn't make sense for you to have a steam turbine because for you to get it operating, it does take some time, and it's not the best solution.
Okay. And sir, coming to the waste heat recovery, could you give us a sense on what is the penetration levels in -- for waste heat recovery in steel and cement?
Yes, Prasad, can you give an idea as to what is the penetration?
Yes, sir. See, especially when it comes to cement industry, now majority of the cement industries are trying to tap the waste heat. Our penetration today -- as on today, based on our statistic, almost 30% of the steel -- cement industry, they have gone for waste heat recovery options and some projects are in the pipeline. Still, we feel that around 70% potential there on that. When it comes to steel industry, almost like sponge iron kiln, so 100% of the sponge iron kiln, when they are installing itself, they go for a waste heat recovery option. As this new sponge iron and pig iron plants are coming, there will be opportunity for that, whereas in cement, whatever the installed base, running cement plant, there is a 70% of the cement plant yet to tap this potential.
And sir, what would be that number for steel? You said 70% for cement and what would be the number for steel?
No. Steel, as they install the plant, parallelly they go with this waste heat recovery tapping because waste heat, whatever gets out of those kilns, that is a huge waste heat. So they get the permissions only once they show this tapping of this waste heat and converting into the power.
Okay. So currently, whatever steel capacity, they all have installed the waste heat recoveries. Is that the correct understanding?
Yes, especially sponge iron and pig iron plants. That is the segment. Otherwise, integrated steel plant, yes, everybody installed capturing this waste heat. Okay, sir. Sir, and in the annual report, under the inventory section, you had mentioned that the cost of inventory, which has expensed out is around INR 54 crores. So can you explain what is it exactly?
Lalit, if you're on the line, if could just explain what this means exactly?
Yes. So this INR 54 crore is nothing but the change in inventory which has happened during the year. So the overall inventory has reduced by INR 54 crore during the year.
Arun, I think you can give a better idea, so the operating, what has led to this has been a more efficient manufacture of -- through our modular systems that we actually had better procurement of inventory and we had better turnover of inventory.
Yes. We could manage the inventory well. We utilized the old inventory and also through standardization, we could decrease the WIP because quite a few assemblies could be used in multiple places. The number of turns on inventory also has gone up marginally. Totally, our working capital has improved substantially, and we are once again on a negative working capital with a very good number. And we hope that we will continue this.
Okay. And sir, what is our domestic market share right now?
It's in excess of 50%.
Sir, we have seen historically, the number at 60%. So why is there a fall from 60% to 50%?
So we're expanding our market as we speak. So we are capturing newer market in newer market segments. And so therefore -- but there is some competitive intensity in the market as well. So I think a lot of these factors are going in. Our focus is also more in the export market. The reason that we like to maintain a majority market share so that we are able to maintain our cost structures and that has been our real impetus rather than actually capturing more market share in India because India, as you know, is not a lucrative market for us. It's not what drives our profitability.
Right, sir. And sir, one last question was, sir, what will be our export market share?
We don't have full visibility into the export markets. So the fact is that, that's a very difficult question to answer. What we do like to look at and as a benchmark for our success in the export market is the growth of our inquiry book. The reason I say that is getting an inquiry in a sophisticated space like steam turbine is allowing the customer to view your offers. So he's ready to accept you. And so that is a very big win for us and our conversion from inquiry book when they do come up is high. I wouldn't like to share that number, but we do see a good conversion for our inquiry book to our order bookings and so I think that we do see increasing our penetration to the global market on an annual basis. Actually it's happening on a quarterly basis. Now that we're selling about 30 megawatts as well internationally, and having good market and having good penetration in that market, you'll see [indiscernible].
And sir, finally, could you explain a bit on this super-critical or CO2 turbine that you are working on? What is the progress? Where have we reached? And how is it globally panning out?
No. Like I said, this is a project that we first have to pilot and then we'll have to commercialize it. So it is -- a part of it is in development, a part of it is in engineering, a part of the entire train is in -- we have confidence in terms of the supply chain and manufacturers, some we have to develop. It's a little way away in terms of couple of years, but we think the solution, both on paper as well as testing is something that we're working aggressively on with our partners at -- in [ University of Science ] as well as with other academic institutions. We are optimistic that this can provide a much better economics to our customers. First, there are some other work that we're doing on the transcritical side, which is -- which has -- which could show a quicker results from piloting. But as and when that happens, we'll be happy to let you know. But I think let it first get into some commercial -- some degree of piloting before we give you more data on how it's performing.
Right. And sir, this type of turbine is nowhere in application in the world currently, right?
No. We have heard of Siemens launching this with a company that they call -- that they own called Echogen in -- somewhere in Canada. And I think that Mitsubishi has also done some development on this line. I don't know how well it's commercialized yet. But very frankly, what we feel is that Triveni Turbine's development in this space are being done at the same pace and at the same level that is being done by our global peers and so it's also a confidence in the fact that this technology will have more people promoting it. So that's also positive. We understand our cost structure and our cost structure is good. So ultimately, it's a question of market development.
[Operator Instructions] The next question is from the line of Amit Mahawar from Edelweiss.
Nikhil, can you hear me?
Yes, I can.
Congratulations on great set of numbers and the large service win in export market. I had 2 quick questions. First is on the hiring plan for -- what is the current strength for aftersales salesforce out of India? And how should it ramp up in the next maybe 1 to 2 years, that's the second -- first question. And second question is on breakup of API drive turbine servicing globally. How large is the market? And what percentages of total 30 to 100 megawatt market is basically aftersales for API turbines?
No, no. API turbines are all small. They're pretty much below 5 megawatts. So firstly, that's the -- that's it. But you do have the API power generation market, those are much more lumpy, and those are for power generation, not for drive. So nothing is driven at such a high megawatt capacity. On the recruitment, as you know, in the last financial year, we added nearly 10% increase to our workforce. Our plans in this financial year are quite aggressive as well. And from the aftermarket, in specific, as you talked about, I wouldn't like to give you a number of our service engineers and how many we're adding because, yes, it's a little sensitive. But suffice to say, our strategy is to be closer to our customers. And so to that extent, what's more important is for us to have a greater degree of aftermarket personnel internationally. Sachin, can you provide Amit some insights into how you're seeing the -- your recruitment?
Yes. So we will be definitely increasing our field force. We have been doing that consistently. And we don't just depend on our own engineers. We also have a network of trained service personnel in different markets that we have developed over the years, and we complement our own field force. There's a lot of supervision done by Triveni personnel themselves, and we are continuously looking at increasing our strength of our field force in services.
Sure. Can I have one more question? What is the current mapped market in India only on refinery like co-gen, maybe ethanol or otherwise? What is the current market mapping that we have for the India total opportunity, maybe 2, 3 years' total pipeline?
In the distillery market, Prasad, can you give an insight as to how many distilleries you have -- number of distilleries you have in your inquiry book?
Yes. Today, from the inquiry book wise, see, total permission of our distilleries were 400 distilleries got the licenses. Otherwise, today active inquiry book is closer to around 40 distilleries in our inquiry pipeline from domestic market.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.
Thank you very much, ladies and gentlemen, for participating in our Q1 FY '23 conference call. I apologize for our technical glitches. We will try to remedy them for our next call. Thank you. Goodbye.
Thank you. On behalf of Triveni Turbine Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.