Key takeaways of the call

Order book as end of March 31, 2018 was Rs 708.9 crore (up 12% yoy from Rs 632.1 crore end FY17) and of which domestic orders were Rs 370 crore (down 1% from Rs 375.4 crore end FY17) and export orders were Rs 338.9 crore (up 32% from Rs 256.7 crore end FY17). The share of product order were Rs 636.9 crore (up 12% from Rs 567.3 crore end FY17) and after market order book was Rs 72 crore (up 11% to Rs 64.8 crore end FY17).

Order intake in FY18 was Rs 827.8 crore (up 17% to Rs 710.4 crore in FY17) and the share of export orders increased to 51% compared to 42% in FY17. Similarly the share after market orders to the order booking marginally declined by to 24% compared to 25% in FY17.

GE Triveni (GETL) received one order in Q4 FY18 for a 35 MW from the international market. The international order is from Bangladesh sugar plant. The JV has a strong enquiry pipeline and expects order finalisation in coming quarters. The execution and commissioning of large sized turbines in the export market is underway and GETL expects these references to help it to achieve enhanced order inflows in the future. GETL order book as end of FY18 was about Rs 165.4 crore.

The company also provided in one of the contracts of GETL and the quantum of provision is not public information.

The domestic market continues to remain subdued. This has led to considerable competition, which in turn resulted in lower prices and declining margins.

Even though the enquiry generation in FY18 has been quite good, the order finalization is still far from its expectations. Enquiry at domestic market in FY18 stood at about 1750 MW (up 10%) and order finalisation was at around 640 MW (down 2% from FY17 levels).

The enquiry generation has been wide spread from across all major user segments with majority coming from process cogeneration industries such as paper & pulp, chemicals, agro based, food processing including sugar etc. Similarly, FY18 also saw enquiry generation from both steel and cement segments which also witnessed some enquiries getting converted into orders as well.

Considering the current enquiry book which is at various stages of finalization, the company believe that the order finalization for the domestic market is expected to improve in the coming quarters.

Total enquiry generation from international market has been around 5 GW spread across the major markets across the globe, which will help the company to have more order booking in the coming quarters as well. There has been strong enquiry generation from Europe (34%), South East Asia (25%) followed by SAARC countries (15%) while the rest is from Africa, Central & South America etc. While the Company registered good order intake from Europe and South-East Asia, the spread of order booking from all major geographies was also good. In the export market, the renewable sector is driving demand specifically from the Biomass and Waste to Energy projects.

The Company has currently orders and installations from over 70 countries and will be focusing on new markets in the coming years. Some of the segments of focus are biomass, paper, process co-generation sugar co-generation and palm oil apart from the newly entered segments such as waste to energy, combined cycle, oil & gas segment etc.

Aftermarket operations -The enquiry pipeline for this segment shows good visibility and therefore, the company believe that the order booking should remain healthy going forward. The outlook on the overall aftermarket business is positive due to the company's foray into the export market with good number of refurbishment enquiries. Further, the company's overseas offices are expected to result in better market access and more orders in the coming quarters.

Not setting up any more new offices overseas. The expenses are going to be that of last year only.

CPP in fertilizer segment in India remains open cycle gas power plants rather than combined cycle (steam involved) which is picking up globally.

WHRS is installed in only smaller part of domestic cement industry that is less than 10% of total cement capacity. The opportunity is 1 million tonne cement/Kiln capacity could put up a 6-7 MW WHRS capacity.

Despite lower sugar prices, given higher cane crushing and resultant higher bagasse availability, the sugar companies are increasingly looking at cogeneration plant.

In April 2018 the company received about Rs 90 crore out of the Receivables outstanding as end of March 31, 2018.

Higher Inventory levels as end of March 31, 2018 to the extent of Rs 35 crore was largely due as despatch of one GETL order to Africa shifted to FY19 against scheduled FY18 despatch. The company expect the despatch is expected to happen in June/July 2018. The company will get some storage charges for this delay despatch.

Revenue in FY18 was driven by Domestic Orders and export sales were dull as the order book at the start of FY18 have higher share of domestic orders. This impacted margin quite substantially.

Due to change in accounting policy with adopting IndAS, there is change in accounting MTM gain of FY17. On account of this there is a decline of Rs 21 crore in other income for FY2018.

The company continues to retain the market leadership with a market share of 64% in domestic market.

The company has a strong focus on technology development through dedicated Design and Development team with the objectives of improving the efficiency of the products, making the product more cost competitive and also to meet the varying demands from both the domestic and international markets. Further, new generation blades, profiles and modules are under development which should also help the company to remain in the forefront of product development. The company's portfolio of IPR is building up on a consistent manner.

With a strong outstanding order book, together with a good pipeline of enquiries which are expected to be converted into orders in the coming year, the company is well positioned to maintain its leadership position.