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Key Topics Discussed • End of Depromoterization Plan • GE Steam Power International BV decided to halt its plan to depromoterize.
• Sale of Hydro and Gas Business • Approval for selling hydro and gas business to related parties.
Financial Stability Concerns • Deteriorating Net Worth • Current net worth is Rs 57 crores, significantly low. • Slump sale expected to positively impact net worth by Rs 296 crores.
• Challenges in Hydro Business • Project delays and rising costs affecting profitability. • Negative EBITDA levels for the past three years. • Future cash flows projected to remain negative for 2025 and 2026.
Management Insights • Working Capital Cycles • Long cycles with significant upfront investments and delayed returns.
• Performance in Steam Business • Strong order intake and improved margins in the steam segment.
Investor Concerns • Impact of Demerger • Concerns about loss of intellectual capital and order book. • Management reassured that underutilization due to delays is not factored into valuations.
• Offshore Service Offerings • Lack of current demand; reliance on GE technology for execution.
Strategic Proposals • Sale to GE Vernova • Proposed sale of hydro and gas business to GE Vernova to address financial issues.
• Long-term Strategy • Focus on improving net worth and securing funding rather than preparing for a sale. • Emphasis on four key business areas for stable growth: service core business, service upgrades, FGD, and non-coal operations.
Conclusion • Future Viability • Proposed carve-out of hydro and gas business aimed at improving net worth and steering towards sustainable profitability and dividend payments.
Submission Details • Date of submission: July 24, 2024 • Earnings call date: July 18, 2024 • Participants: Managing Director Mr. Prashant Jain, CFO Mr. Yogesh Gupta • Format: Listen-only mode with Q&A session
Company Strategy and Financial Challenges • Shift towards high-margin, cash-accretive projects. • Recent slump sale of hydro and gas businesses due to: • Financial struggles since 2019. • Significant losses and deteriorating credit rating. • Depletion of net worth.
Hydro and Gas Business Overview • Hydro business challenges: • Project delays and high working capital needs. • Significant cash consumption affecting balance sheet. • Gas business downsizing: • 48% reduction in headcount due to declining demand. • Non-strategic segment contributing only 5% to revenue in China.
Focus on Service Business • Emphasis on service business growth since 2019-20. • Key initiatives: • Services for thermal power plants. • Retrofitting and modernization projects. • Leveraging Durgapur factory for exports and non-coal projects.
Financial Projections and Goals • Targeting double-digit EBITDA margins by 2026-27. • Aiming to become debt-free within two years. • Projected market potential of ₹18,000 crores.
Valuation and Future Outlook • Valuation process involving Grant Thornton and RBSA. • Expected net reduction in liabilities post-slump sale. • Retained revenue projected around ₹1,000 crores.
Employee and Financial Concerns • 49% of employees linked to divested hydro and gas divisions. • Interest costs expected to decrease; current costs around ₹66-67 crores. • Total liabilities projected between ₹1,000-1,100 crores post-divestment.
Conclusion and Shareholder Support • Urgency in improving balance sheet to avoid negative net worth. • Request for shareholder support to enhance financial health.
Conference Call Details • Date: May 22, 2024 • Submitted to: National Stock Exchange of India and BSE Ltd • Key Participants: • Prashant Jain (Managing Director) • Yogesh Gupta (Whole Time Director & CFO) • Other senior executives • Format: Moderated presentation followed by Q&A session
Financial Performance Overview • Mixed Results: Challenging global economic environment impacted performance. • Global Growth: Expected to slow to 2.4% in 2024; India shows strong infrastructure investment. • Energy Demand: Indian power sector grew by 7%, driven by thermal power; need for renewable energy enhancement.
Financial Challenges • Net Worth Decline: Dropped from INR 226 crores to INR 57 crores. • Losses: Incurred losses for three consecutive years; reliant on promoter support for working capital. • Service Segment Growth: 40% increase in core services despite a 20% decline in overall orders.
Quarterly and Annual Results • Q4 FY 23-24: • Order bookings increased by 15% to INR 262 crores. • Revenue rose to INR 391 crores (13.6% increase YoY). • Profit before tax of INR 23 crores, recovering from a loss of INR 128 crores in Q4'23. • Full Year: • Revenue fell by 9.5% to INR 1,625 crores. • Total order bookings decreased by 19% to INR 1,319 crores.
Strategic Focus Areas • Project Categories: • Hydro projects (high risk, long gestation). • EPC FGD projects (derisking for better cash conversion). • Industrial services (consistent growth). • Core Services: Focus on spare parts supply and efficiency upgrades in thermal power.
Operational Challenges • Durgapur Plant Underutilization: Operating at 80,000-100,000 hours capacity; aims to improve utilization. • Trade Receivables: INR 1,170 crores in retention money expected over 2-3 years. • Project Delays: Significant incidents and lack of order intake during COVID impacted performance.
Market Competition and Cost Efficiencies • FGD Systems Pricing: Increased prices complicate realization timelines. • Cost Efficiency: Operating below breakeven; breakeven revenue estimated at INR 2,000-2,500 crores. • Backlog Composition: 70% related to FGD and Hydro projects; 15-20% from services.
Conclusion • Future Focus: Margin-focused and cash-accretive deals; growth in services business. • Engagement: Participants thanked for their involvement in the call.
Earnings Conference Call Overview • Date: February 13, 2024 • Submitted transcript to National Stock Exchange and BSE on February 19, 2024. • Managing Director: Prashant Jain
Global and Indian Power Demand • Global power demand growth slowed to 2% in 2023 due to economic challenges in developed countries. • Future projections indicate a surge in demand, especially in emerging markets like India (expected growth of 6.5% from 2024 to 2026). • India's power demand reached 1,221 billion units in the first nine months of FY 2023-24, with a peak demand of 243 gigawatts.
Operational Challenges and Financial Performance • Need for flue-gas desulfurization (FGD) systems in coal-fired plants; currently, only a small fraction is equipped. • Revenue decreased by 14% from the previous quarter, but service business orders increased by 56%. • Q3 FY 23-24: • Order bookings increased by 28% (INR 195 crores). • Revenue decreased to INR 456 crores from INR 533 crores year-over-year. • Backlog declined from INR 3,699 crores to INR 3,437 crores. • Loss before tax reduced to INR 2 crores from INR 30 crores in Q3 FY 22-23.
Strategic Focus and Portfolio Diversification • Emphasis on claims settlement and cash collections, particularly in FGD projects. • Management acknowledges the need for strategic adjustments to enhance operational efficiency. • 92% of the current quarter's order bookings (INR 195 crores) were services, with a focus on diversifying the portfolio away from EPC projects.
Stake and Depromoterization Strategy • Inquiry about GE's stake in the business; no changes to the depromoterization strategy since 2021. • Ongoing evaluation of options regarding depromoterization, with no definitive decisions made.
Claims and Financial Pressure • Claims related to ongoing projects, including the Solapur fire incident, are complex and slow to process. • Financial performance may face pressure in upcoming quarters due to a depleted backlog.
Conclusion • The call concluded with Prashant Jain thanking participants for their engagement.
Q2 FY '24 Earnings Conference Call Summary - GE Power India Limited
Global Energy Landscape • Challenges of increasing carbon emissions and rising electricity demand, especially in Asia and India. • Continued strong reliance on coal in India despite clean energy transition efforts.
Financial Performance • 17% decline in revenue compared to the previous year due to lower orders and project delays. • Secured orders worth INR 671 crores in the quarter. • CFO Yogesh Gupta reported a reduced loss before tax of INR 62 crores, an improvement from the previous year.
Transition to GE Vernova • Ongoing de-promoterization process expected to take 36 months with no new updates. • Challenges in converting hydro and pump storage opportunities into orders; a previous order is suspended.
Investor Concerns • Concerns raised about sales de-growth and the company's future direction. • Questions regarding receivables, net debt, and capacity utilization at Durgapur. • CFO reported INR 900 crores collected in the first half of the financial year; gross borrowings reduced to INR 380 crores.
Insurance Claims and Material Consumption • Recovery from fire incident insurance claims may take over a year. • High material consumption as a percentage of revenue noted; decreased from 90% to 80% year-over-year, but further improvements desired.
Strategic Focus • Emphasis on growing service offerings, currently less than 30% of revenue, to stabilize margins. • New opportunity in pressure vessels mentioned, still in testing phase.
Conclusion • Call concluded with thanks to participants and well wishes for the festive season.
Date and Submission • Date of Call: August 11, 2023 • Submission: Transcript submitted to National Stock Exchange and BSE on August 18, 2023
Key Financial Highlights • Power Consumption: 1.8% year-on-year increase in India • Coal Production Growth: 8.5% • Revenue Decline: 14% decrease compared to the previous year • Order Intake: Rs. 191 crores this quarter vs. Rs. 1,008 crores last year • Loss Before Tax: Rs. 136 crores due to a fire incident and operational challenges
Operational Challenges • Material Costs: Increased from 76% in Q4’22-23 to 92% in Q1’23-24 • Net Loss: Approximately Rs. 65 crores for the quarter • Focus Areas: Increasing order intake, settling claims, improving cash collections
Strategic Discussions • Electricity Act's Section 11: Impact on service market and upgrades • Sipat Project: Financial impact on net debt could exceed ₹69 crores • Market Opportunity: ₹60,000 crore potential in Flue Gas Desulfurization (FGD) over 5-7 years
Future Growth Strategies • Target Areas: Developing services, targeting industrial segments, engaging private customers • Pumped Storage Market: Plans to work selectively with private developers • Hydro Equipment: Outsourced production; no plans to resume manufacturing in India
Receivables and Cash Flow • FGD Orders Receivables: Approximately Rs. 1,300 crores • Cash Flow Strategy: Selective new projects with lower retention amounts
Future Opportunities • Non-Power Sectors: Ongoing evaluations for growth • Integration of Renewable Energy: Adapting coal-fired plants for flexibility
Conclusion • Management's Focus: Navigating challenges while aiming for future growth and financial stability.
Conference Call Overview • Date: June 5, 2023 • Led by: Managing Director Prashant Jain and key executives • Focus: Financial performance for Q4 and fiscal year 2022-23
Economic Context • Positive global economic shift with easing inflation • Robust Indian economy despite tight monetary policies • Increased electricity demand driven by renewable energy focus and coal investments
Financial Performance • Q4 Highlights: • 70% increase in core service orders year-over-year • Revenue down 40% due to project delays • Orders worth Rs 228 crores in Q4 FY23 (up from Rs 138 crores in Q4 FY22) • Revenue for Q4 FY23: Rs 344 crores (down from Rs 591 crores in Q4 FY22) • Loss before tax: Rs 128 crores (improved from Rs 145 crores in Q4 FY22)
• Full Year Highlights: • Total orders grew by 116% to Rs 1,635 crores (up from Rs 765 crores in FY22) • Revenue for FY23: Rs 1,796 crores (down from Rs 2,620 crores in FY22) • Total loss for FY23: Rs 334 crores due to project delays and inflation • Healthy order backlog of Rs 3,615 crores
Strategic Focus • Emphasis on core services and cash-accretive deals • Targeting debt-free status by end of FY24 • Anticipation of improved order inflow in FY24, especially in FGD segment • Concentration on emission control technologies and service growth
Key Projects and Future Outlook • Key project completion expected by August 2024 • Significant market potential for Flue Gas Desulfurization (FGD) systems • Plans to optimize Durgapur factory capacity • Target to collect INR 1,300 crores in receivables by March 2024
Conclusion • Prashant Jain expressed gratitude to participants and anticipation for future discussions.
Submission Details • Date of submission: February 21, 2023 • Earnings call date: February 15, 2023 • Submitted to: National Stock Exchange of India and BSE Ltd. • Key participants: Managing Director Prashant Jain, CFO Yogesh Gupta
Economic Context • Global challenges in 2022: Commodity price volatility and inflation • Revised GDP growth forecasts: • World Bank: 1.7% for 2023 • India: 6.9% growth, resilient in the energy sector
Financial Performance Highlights • Q3 FY 2022-23 revenue: INR 532.7 crores (down from INR 757.1 crores YoY) • Loss before tax improved to INR 30.2 crores (from INR 46.2 crores YoY) • Loss after tax increased to INR 139.9 crores due to deferred tax asset review • Orders received: INR 152.1 crores; backlog: INR 4,020 crores • Service revenues: 23% of total revenue (up from 16% YoY)
Operational Challenges • Slower-than-expected turnaround due to: • Lower order intake • Project delays • Regulatory delays in FGD market (20 GW orders vs. 30 GW expected) • Ongoing restructuring and cost control measures
Future Outlook • Expecting double-digit growth in core services by fiscal year-end • Risks from commodity price inflation and supply chain disruptions acknowledged • Focus on maintaining business sustainability
Key Discussions During the Call • Order intake as a leading performance indicator • Confirmation of provisions made for the Solapur project incident • Potential for upgrades and maintenance in thermal plants due to extended retirement age • Government relief request for project delays due to COVID-19 and inflation
Investor Inquiries • Concerns about order inflow segregation and FGD order flow delays • Clarifications on trade receivables and retention money (80% of receivables) • Updates on project timelines and expected collections over the next two years • Transparency regarding MOU with NTPC and turnaround strategy
Strategic Focus • Targeting 10-12% market share in FGD orders • Actively bidding on various projects and collaborating with partners • Emphasis on cash-accretive and margin-accretive opportunities
Conclusion • Commitment to compliance with disclosure regulations • Positive outlook on core services growth despite some delays • Call concluded with gratitude from Prashant Jain to participants.