Release Date: November 09, 2023
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GE Power India Ltd (BOM:532309, Financial) received orders worth INR671 crores in Q2 FY23-24, a significant increase from INR248 crores in Q2 FY22-23.
- The company secured a major order of INR444 crores from GSECL Sikka power station.
- Order backlog as of September 30, 2023, stands at INR3,699 crores, indicating strong future revenue opportunities.
- Core services segment continues to grow, with a 40% increase in orders quarter on quarter.
- The company has optimized capacity at the Durgapur factory, with new products like pressure vessels and oxygen lancers expected to add significant hours and improve utilization.
Negative Points
- Revenue for Q2 FY23-24 decreased by 17% compared to the same quarter last year, primarily due to lower orders and project delays.
- Cost escalations due to project delays and execution challenges have led to lower margins for the quarter.
- The company reported a loss before tax of INR62 crores for Q2 FY23-24, although this is an improvement from the loss of INR113 crores in Q2 FY22-23.
- Receivables as of September 30, 2023, are high at INR1,950 crores, indicating potential cash flow challenges.
- The conversion of FGD and hydro PSP opportunities into orders is slower than anticipated, impacting overall business performance.
Q & A Highlights
Q: Can you provide an update on the depromoterization of the parent company and its impact on GE Power India?
A: The transition from GE to GE Vernova is ongoing, with a timeline of 36 months for depromoterization. Currently, there is no further update. The focus remains on services for coal-fired power plants and evaluating opportunities in hydro and hydro pump storage, though these are converting slower than anticipated. β Prashant Jain, Managing Director
Q: What is the current status of receivables and net debt?
A: As of September, receivables are approximately INR1,950 crores, down by INR40 crores from March. Gross borrowings are INR380 crores, down from INR473 crores in June. Net borrowings, after accounting for cash, are around INR228 crores. β Yogesh Gupta, CFO
Q: What is the status of insurance claims for the fire incidents?
A: Insurance claims for incidents like the Sipat fire typically take a year or more to recover due to their complexity. β Prashant Jain, Managing Director
Q: Can you provide details on the new pressure vessel production at Durgapur and its impact on capacity utilization?
A: The Durgapur factory has optimized capacity to 280,000-300,000 hours. The new pressure vessel project could add 10,000 to 80,000 hours, depending on market acceptance. The goal is to ramp up to full capacity in six to eight quarters. β Prashant Jain, Managing Director
Q: What are the future projections for material consumption as a percentage of revenue?
A: Material consumption fluctuates due to the mix of long-duration projects like hydro and FGD. The focus is on growing the services segment for more stable margins, but significant impact will take four to six quarters. β Prashant Jain, Managing Director
Q: What is the outlook for the pressure vessels opportunity?
A: The pressure vessel project is in a pilot phase to evaluate margin attractiveness. It has the potential to support the Durgapur factory significantly if successful. β Prashant Jain, Managing Director
Q: How is the company addressing the lower revenue and order inflow?
A: The focus is on increasing volume through fresh order intake, claims settlement, and cash collections. The company is also optimizing capacity and exploring new product opportunities like pressure vessels and oxygen lancers. β Yogesh Gupta, CFO
Q: What is the impact of the GE Vernova transition on GE Power India?
A: The transition to GE Vernova is part of a global strategy and does not affect the previously announced depromoterization plans. The focus remains on services and evaluating new opportunities. β Prashant Jain, Managing Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
