VA Tech Wabag (NSE:WABAG) Q2 2027 Earnings Call

0:02 Good evening, and welcome everyone to this earnings call post announcement of q two and h one FY twenty seven results of VA Tech Wabag Limited. On the call today from the management team, we have mister Rajiv Mittal, chairman and managing director mister Bupesh Chaudhry Nagini, deputy managing director and mister Skanda Prasad Sitharaman, group chief financial officer. Kindly note that during this call, the company may make certain forward looking statements concerning the business prospects and profitability, which may be subject to risks and uncertainties, and the actual results could materially differ from those in such forward looking statements. The conference call will be archived, and a transcript will be made available on the company's website. The company's results of their presentation has been uploaded on the website and stock exchanges, which provide an overview about the core offerings and analysis of the results of this period.

0:57 We trust that you had the opportunity to look through the same. I will now request Mr. Rajiv Mitul to take you through the key business highlights. Thank you, and over to you. Thank you. Good evening, ladies and gentlemen. A very warm welcome to everyone on this earnings call following the Q2 H1 FY twenty twenty seven results announcement of VA Tech Wabag Limited. I would like to thank our investors, analysts and other stakeholders for their continued interest, confidence and support in WABAG. And we very truly appreciate your presence this evening. Joining me today on the call is our Mr. Gupesh Chaudhry, our DMD and Mr. Sandiprasad Sitharaman, our Group CFO.

1:45 I'm pleased to share that the first half of FY twenty twenty seven has been a standout period in Wabag's growth journey, marked by significant strategic development, robust order intake, healthy execution and continuous improvement in our financial performance. We have achieved two distinct milestones in company's history during this period, the first time ever our order book has surpassed INR 20,000 crores, while our net cash position has surpassed INR 1,000 crores, achieving record levels in both parameters.

2:34 These milestones reflect the progress we have made over the years in strengthening our business model, enhancing our execution capabilities and maintaining financial discipline. Our growth has been supported by a combination of international expansion, repeat orders from established customers, technology led projects and continued focus on profitable and cash generative opportunities. During this current financial year, we have made a maiden entry into Kuwait, established our presence in UAE, secured significant orders from Reliance Industries Limited and expanded our presence in Europe.

3:24 Importantly, this strong order momentum has been accompanied by healthy revenue growth, improving profitability and further strengthening of our balance sheet. We believe that the combination of robust order book, strong liquidity and expanding international footprint places WABAG in a favorable position to pursue the next phase of growth. Let me now briefly touch upon some of the key developments during this period. The major takeaway during this period from an order win perspective was securing two mega orders from two different clusters. During H1, we signed and commenced the contract with the Ministry of Electricity, Water, and Renewable Energy Kuwait in partnership with HISCO for a 60 ms IGD or approximately 272,000,000 liters per day of seawater reverse osmosis desalination facility.

4:34 This project also comes with the five year operation and maintenance post completion of EPC phase. This maiden project gives us an important foothold in the market where water security is strategically important and built on our wider GCC track record. Our entry into Kuwait is validation of significant progress which we have made in one of our strategic objectives to expand internationally. In India, we strengthened our long standing relationship with Reliance Industries Limited, securing a mega order for desalination plant in Gramnaga with a capacity of approximately two zero one million liters per day, expandable to approximately 302,000,000 liters per day, and also a remineralization plant of approximately 72,000,000 liters per day.

5:40 In September, we had also received a repeat medium order from Reliance Industries Limited for effluent treatment plant at Dhirubhai Ambani Green Energy Giga Complex in Jammnagar. These wins reinforce our positions as a technology partner for a demanding industry water application and reflects the trust bestowed on us by the renowned customer. For O and M, we also signed a contract with one of the largest Indian coal government rate, Adani. We also entered UAE through the Ajman wastewater treatment project, further extending our regional presence.

6:30 Together, Kuwait and Ajman broadens our addressable market and demonstrates the relevance of our desalination, wastewater treatment and resource recovery capabilities across The Middle East. We also secured a large order for two projects from Bangalore Water Supply and sewerage board with a medium order from Delhi Jelbo. While in Europe, we announced a large order for expansion of waterworks in Vienna, Austria. These orders underline the breadth of our offering across multiple and industrial and advanced technology led projects across the globe, thus achieving a good geographic diversification.

7:31 Our order book reaches a lifetime high of INR 20,207 crores at the end of H1 FY twenty twenty seven supported by order intake of INR 5,200 crores during the first half. At more than four times annual revenue. This diversified backlog provides strong execution visibility, combining medium term EPC opportunities with long duration O and M revenues.

8:16 We remain selective in pursuing projects with continued emphasis on technology differentiation, margin, payment security and execution risk. Now I would request our DMD, Mr. Bhopesh Chaudhry to provide you with a project specific update and business outlook. Thank you very much. Good evening, everyone. I'm excited to join my first conference call at WABAG with all the investors and analysts. Across our three operating clusters, execution and operational excellence remains our central priorities. And I'll briefly highlight selected milestone with the three project specific progresses that we have made.

9:08 To cover the India cluster part of it, the 10 Metro 400 MLB in Peru desalination plant has been progressing pretty good. We have done about 90% concreting, poured over almost one lakh cubic meter of concreting. And we also closed 7,000,000 safe man hours on the project, which is significant in terms of the standards. Mechanical equipment direction is progressing very well, and I'm sure the project is taking its schedule to complete in the coming year. At Bangalore Water Supply Sewerage Board, Gommen Delhi project, the engineering and procurement are at advanced stage and civil works are also progressing very steadily. Delhi Telgour, Mithron project, engineering and civil works are also progressing very well.

9:57 And the outfall pipeline supplies expected to commence from this month to match the schedule requirements. Now to the near region, Middle East and Africa, the few projects that we are executing also has reached a significant milestone. The one Al Hayer previous treatment plant, the execution is progressing well despite the recent challenges. The commissioning is expected and targeted for quarter four of FY twenty twenty seven. For the Anbu desalination plant, basic engineering is substantially ready and long lead equipment and procurement has been initiated ahead of formal commencement of the project itself. And the Rastanura mechanical project is concerned mechanical construction work also has been completed.

10:46 The pre commissioning activities are underway and the hydrotest testing targeted for by this normal end. In Africa, in Zambia, at Lusaka, the Nguari and Chunga, the steel raised treatment plants are also progressing well. The civil works underway and major equipment orders are also finalized that would get in place for installations. In Nepal, as part of the our Southeast Asia, the projects are also progressing well and a couple of projects there where we are doing on the multilateral fund projects. The procurement has been completed to almost 100% and civil concreting has been done to the next 10 of about 70% and we are expecting the liquid stream commissioning by end of this financial year.

11:41 In terms of business outlook, the recent political developments you know, in Middle East as well as in US is concerned. It is also significantly helping us for moment of various business opportunities. We are also witnessing in lot of inquiries coming in and we are working in Africa, some of the opportunities and that seems to be under sold market and in our favor it will be much better in the years to come. From a strategic perspective, we are pleased to have achieved the exceeded most of the numbers as part of our strategy plan, which we call it as RIDBI-one-zero. And as we approach the combination in this financial year, the RBI one-zero, we have also seen that and we have started working and formulated the RBI two-zero, which is the strategy plan for the next five years, which is also in advanced stage of working.

12:42 Alongside defining our strategic priorities, growth roadmaps for the next phase of our journey at WABAG, we are aligning our organization business structure, strengthening capabilities and capacities within us, see that required skills are upgraded in a way to execute the strategy, and we look forward to unveiling this RUDI 2.0, our strategy plan for five year in the coming annual investor meet in May 2027. Looking ahead, demand from water scarcity, urbanization, industrial water requirements and wastewater reuse continue to support our priority and opportunity pipeline going forward. We remain focused technology led growth, disciplined execution and efficient capital deployment, while selectively pursuing opportunities in desalination, reuse and digitalization and and resource recovery areas.

13:43 With that, I would request our Group CFO, Mr. Khandra Prasad, to take you through the financial performances for the quarter on behalf year. Thank you all. One second. Over to you, sir. Thank you, Mr. Bupesh, and good evening, everyone. This was a landmark quarter for Wabag. Our order book crossed INR 20,000 crores, H1 order intake crossed INR 5,000 crores and net cash crossed Rs. 1,000 crores, all at record levels. In Q2, revenue crossed Rs. 1,000 crores and PAT crossed Rs. 100 crores, the highest ever second quarter results that we have reported.

14:35 These results reflect healthy execution, improved profitability and sustained financial discipline and profit growth again outpacing revenue growth in line with our mantra of profitable growth. Taking the quarter first, consolidated revenue from operations was up by 20% year over year and PAT was up by 23%. EBITDA was at INR145 crores at a margin of about 14.5%. For the half year, consolidated revenue from operations was INR1887 crores, up 20.3% year over year.

15:26 EBITDA grew by about 21% to INR261 crores at a margin of almost 14%. PAT grew faster, up by almost 30% to INR195 crores and PAT margin expanded to 10.3% as against 9.6% in the same period last year. This reflects our continued focus on profitable growth. At the stand alone level, H1 revenue grew by 19% to INR $15.87 crores, EBITDA rose 20% to INR $2.27 crores and fat increased almost 29% to Rs. 169 crore.

16:21 In short, our core business continues to deliver both growth and improved operating profitability profiles. The revenue mix remained in line with our strategic targets, international markets contributing 54% of H1 revenue and India 46%. By business, EPC accounted for 82% and O and M for 18%. O and M adds a high margin asset light recurring revenue stream alongside our EPC execution pipeline and we remain focused on building this business out for the future. Turning to the balance sheet, net cash excluding HAM reached an all time high of over INR100 crores as compared to INR950 crores at the end of FY 'twenty six.

17:20 Including HAM, net cash stood at INR1036 crores. So net cash either ways crossed INR 1,000 crores. This is the fifteenth consecutive quarter of positive net cash and the seventh consecutive year where we have delivered positive net cash position. Consolidated operating cash flow for H1 was INR225 crores, over 1.1x our PAT for the same period. Net working capital also improved to one hundred and one days from one hundred and four days as of March 2026. Returns continued to strengthen supported by our asset light model and efficient execution.

18:12 Return on equity improved to 16.3% in H1 as against 15.7% in March 26, and return on capital employed improved from 19.5% in March 26 to 20.5% in H1 FY twenty twenty seven. This reflects better profitability and a sustained emphasis on and improvement in capital efficiency. The order book closed the half at an all time high of INR20207 crores, supported by H1 order intake of over INR5200 crores. Our focus is on converting this visibility into profitable revenue and healthy cash generation.

19:03 We reiterate our medium term objectives, revenue CAGR of 15% to 20%, EBITDA in the 13% to 15% band, ROCE about 20%, ROE about 15% and O and M progressing to 20% of revenue and a sustained positive net cash position. Our performance over the last several years and also in H1 shows a strong progress against our Vrddi 1.0 targets, and we have achieved or surpassed them on most of the key parameters. ROCE at 20.5% and ROE at 16.3% are above their thresholds, and EBITDA margin of 13.8% is well within the range with our net cash positive position continuing to be so.

19:59 O and M is building steadily towards the 20% objective on the back of a historic high order backlog in O and M of 6,500 crores. Our priorities remain disciplined execution, healthy margins, efficient working capital management and robust cash generation. Before we conclude, we would like to thank our bankers, investors, customers, vendors, subcontractors, partners and our fellow WABAG guys for their trust and continued support. With this, we can open the floor for questions.

20:46 Over to the moderator. Thank you. We will now begin the question and answer session. Participants who wish to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Please note, participants are requested to have finally added to two questions per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have the first question from the line of Mohit Kumar from ICICI Securities. My first question is, can you talk about activities in The Middle East, especially from execution point of view and the headwinds you are facing and margin pressure?

21:42 And how are you mitigating it? Thank you for your question, and very relevant to what is happening in... As you rightly termed it as headwind exactly from a commodity pricing and the disturbance in that region is affecting the supply chain management. But luckily for us, as you can see from our results, this has not made a big dent in our execution timeline or in margin. Luckily, we have been in a status of a project where most of the work has shifted to site.

22:33 We are in the final stage of mechanical completion for Alhair project. Raj Panurai is completed, waiting for pre commissioning. Other projects are yet to start at site and deliveries, they're still on the engineering drawing board and the O and M projects are moving well. But what we are facing other than the commodity price pressures is a huge delay in shipments. And this is something we have taken it to the client and they have recognized the issue and told us to go ahead with taking a longer route, though it may take a longer time, ultimately it will reach site or some of the critical component even to air freight it.

23:27 So as of now, it has not impacted us, but we are keeping a close watch as our new projects will start. We have to find a strategy if by that in next three to six months if the situation doesn't improve, we'll have to find a strategy of delivering the equipment to site. Once we are at site, luckily for us our project sites are not affected. The work is as normal at our project sites, It's only we have to get our material to site. Hope we answer your question. Yes, sir. That's very clear. My second question is, can you talk about pipeline in Middle East? Of course, a lot of order which came in the last twenty four months was from that geography.

24:18 So my question is, is that pipeline conversion into orders? Is it is it something which is very uncertain right now? And we expect that to continue a very, let's say, a a lower conversion as we... For the next... For for h two and and going forward till the time where the the war will be over. Is that a fair assumption? I think to some extent, it's a fair assumption that there will be some delay because the the comments are also waiting for the investment strategy, what they will have, what they will put in which basket.

25:04 At the moment, the infrastructure projects are receiving their funds for whatever projects are started and on the execution. The new projects are little bit slow to start, but we have seen, like you would have seen that in Kuwait, we just signed in last quarter a large, almost over $400,000,000 project with our consortium partner or a joint venture partner. So that has moved. You have seen in UAE, we have signed and the execution has started for Ajman project. So things are happening. Yes, a little bit Saudi has been little slow and little cautious, but we again understand some of the projects where we were a preferred bidder.

25:55 That is also move... Started moving. So we expect in next quarter or so, we should have that also moving ahead. So, it has little bit slowed down, but it has not stopped. Understood. Thank you and all the best. I'm very happy, happy Diwali. Yeah. Thank you. Thank you. Thank you. We have the next question from the line of Wabag Shah from GM Financial. Please go ahead. Yeah. So firstly, on the bid pipeline, so how is it looking both in international and domestic market?

26:53 I think we've been extremely busy, to say the least. And as usual, we have a huge inquiries and these are big ticket orders, which we are working on. Some of them... We are working on the bids and some of them are under evaluation. But it's very heartening to see the Europe cluster, which had very subdued activities in the past. In the last couple of quarters, we have seen some activities in the European cluster, and we have also got two contracts in European cluster. So overall, we are at a peak in terms of the bidding activities.

27:43 So we are very bullish about future. Sure. So can you quantify the the pipeline in terms of next twelve to eighteen months? How is the number in both domestic and international markets? I mean, particularly in domestic, there were some announcements in Tamil Nadu as well for some water seasage and diesel projects. So how are we placed over there as well? See, it's a home market for us. Anything on the home side, we fancy our chances. And, yes, you're right that something has been announced and a very large desalination plant, similar size to what we are executing in Peru, a 400 MLD on the North Chennai has been announced.

28:32 And they also announced one more river cleaning program. So, yes, I think Tamil Nadu has always been in the forefront of alternate water sources, and I think that will continue. But other than Tamil Nadu, if you see even Bangalore, Delhi, and other states in MP, Rajasthan, there is enough inquiries there. There's also enough inquiries in the industrial side. We have seen, we have got Reliance, we have got VPCL on the refineries, Petrochem. So there is all around bullishness is there. Middle East is very, very... We are very busy. We're submitting some large ticket inquiries which we have got. We are working on it. Some of them we have submitted.

29:24 So we are very hopeful the next twelve to eighteen months is going to be a bumper order intake for us. We are just trying to establish that we reach a preferred bidder status. That is what our team is working and I'm sure in next one or two quarters, we will reach a substantial size of order pipeline, which we will be a preferred bidder. We have the next question from the line of Selesh Raja from three sixty one Capital Market. Please go ahead. Yeah. Thank you. Congrats for the strong set of performance in these challenging times.

30:15 So my question is, in the outstanding order book pertaining to municipal and the industrial portion, which is 13,500 crores, so what is the mix between EP and EPC for the first half and also for the last year's? How much it is? Shailesh, for the first half, if you see the order intake that we have taken, just the top two large ones, Kuwait and Reliance. Both are there, of course, in Kuwait, we also have a five year O and M after the EPC phase, but both Kuwait and Reliance are in our sweet spot where we are going to do everything other than the civil, either the customer does the civil or our partner does the civil.

31:06 So our focus on taking EP projects continues to remain and this is clearly demonstrated in just these two, which will account for almost 80% of the first quarter order intake. This mix, as we've spoken many times, varies over a period, but on an average, we would like to see at least anywhere between 20%, 30% of our orders coming from EP. That is why we go more for the international and industrial orders, which allow for the EP mix as against the EPC mix. But for the first first half, you can already see the two orders that booked both are in this industry.

31:57 Yeah. Yes, sir. Sir, as you mentioned, fortunately, we have managed to deliver the equipment to the project site in Saudi Arabia. So how is the civil work of the Alhair project progressing, and how do we plan to manage the civil construction aggregation given the current situation? The... I'll have the civil treatment plant. Actually, the civil works are majority has been completed. Okay. In fact... Yeah. So major part of our progress on the civil works are more than eighty eighty to 85%, actually. So we already started the mechanical direction and the equipment direction works. So that also has taken care of that.

32:43 Okay. Okay. It comes in The Middle East, you know, the water water authorities, they're relatively quiet on new project tender due to macro reasons. And also Middle East water sector increasingly shifting towards PPP model. So how are you seeing the overall competitive landscape? Given the PPP project, typically, they require stronger financial capabilities and risk bearing capacity. Could Wabag's strong balance sheet and net cash position that could provide competitive advantage over European and international PC players? So we certainly play a very vital and very important role in this. We are keeping, you know, a watch on the PPP model and not necessarily we are not participating.

33:32 We are also discussing and engaging with the developers. So the developers are... Who are basically investing into the water assets, be it is Aqua, be it is the six, or be it is... It's all in, you know, the the company which is taking those kind of PPP projects, we are basically going with them as part of an EPC player. So we have inherent strength, a, in terms of the competitiveness, plus our local presence in comparison even to be competing against the... Any of the European or any of the, I mean, outside country operator in in the same thing. Sir, one last question. Regarding the Indo solar project, could you please share the latest stay... Status of the project and execution progress?

34:24 See, Indosol project, you know, when there was a change of government in Andhra, some reallocation of land took place at site. As a result, Hindustan lost some of the land to some other organization. Now they have managed as of now to get 90% of the land which they need to set up the facilities and also for future growth. Okay. So I think a lot of thousand acres, they have already secured 900 acres, another 100 acres which they should get pretty fast. So one would expect that in a quarter from now, they should be able to get this balance 100, and then they'll kick start the mega project. But in the meantime, the smaller one, the one gigawatt, they're almost ready, and they will commit that. So that will also build some confidence that they can build the plant and commission the plant, and then they will go for multi giga project for which they wanted this land. So I think it's very imminent in maybe next few months that we should see them getting the balanced land.

35:47 Right. Okay. Yeah. Thank you, sir. Thank you. We have the next question from the line of Mohit Bhandari from IFL Capital. Please go ahead. Yeah. Thank you. Congratulations on the excellent quarter, sir. Firstly, in terms of our gross margin, it's abnormally high if we look for the last few quarters. So, generally, if we see most of our projects have completed civil commissioning, and it will then come to procurement stage. So any one off impact in 2Q? Or how should we see gross margins coming ahead? See, Buddhist, margins are always a reflection of two things.

36:34 One is the mix of projects that we have and second is the quality of execution. You have seen us that we have consistently improved the gross margins, EBITDAs over the last five, six years and we have stayed in the range of 13% to 15%. So from that perspective, I would say this is consistent. And also it goes by the project mix, the phase of the project. So there is no one off. It is a structural improvement that is there. But again, don't measure us by quarter by quarter. Always measure us on annual basis, and that is why we have given this multi annual guidance of 13 to 15% within which we have remained very steady and consistent.

37:27 Got it, sir. And when we say 13 to 15%, we are taking into account the commodity price inflation that we will be taking. Yes. We... And and we have contracts which clearly have this pass through to the customer through the formula, and and and that is also included here. Got it, sir. And secondly, we have very good order book for most of 20,000. So in terms of visibility of execution, how how to look at in terms of other time period or in terms of quality of execution? Like you said, in terms of Indosolar, there were some land acquisition issues.

38:12 So any particular things that you would be taking care in terms of risk of execution or how to look at it? See, as an organization, we have a demonstrated track record. We have gone through various challenges, whether it was COVID, whether it's geopolitical situations in Russia, Ukraine, whether it is now The Gulf situation. We have demonstrated that we have a very robust model because we have distributed our risk over various geographies. So one geography will not pull the company down. That has been our strategy and also our contracts are in various currencies also. So that is a very conscious effort to distribute our risk.

39:04 So these things will happen. We cannot say it's happening now and it will not happen in future. We are prepared to handle this in future also. That's the reason we always say that we work on projects which are cash accretive and which has a full payment security. I repeat, full payment security. We don't take projects which does not give us a payment security. What we mean by that? We get contracts with a sovereign guarantee, like Saudi, it comes from the Ministry of Finance or Ministry of Water. So it's directly ministry in India. If we go to Namami Ganga, again, it's a sovereign guarantee by the government of India.

39:53 We go to multilaterals like World Bank, Jaika, ADV, KFW. All these projects, if you see on our order book, these are the quality of projects. And some of the projects, we even ask for letter of credit. So from that point of view, we do not see a risk of payment or much delay of payment. There can be a few weeks or a month of delay, but that's okay. That's in our business. This is provided for. And same is with the commodity pricing. As Skanda said, most of the Indian contracts, we go for the escalation formula. Internationally, we immediately hedge as we get our order within a few months. We also place some of the major orders so that future commodity price is fixed, is locked.

40:47 So that has worked for us in the past. I'm sure it should work for us in the future also. Got it, sir. All the best. Thank you. We have the next question from the line of Shivam Bouradi from ICH Securities. Please go ahead. Hello. Yeah. Hi. Thanks for the opportunity. I'm from good set of numbers. Just wanted to update on Bangladesh project, which we had secured in March 23. So how much progress has been done there? So that... Thanks. I think Bangladesh, you know, there was a disturbance about a year back. But as I just said, because it is a full security, because this project is funded by World Bank.

41:38 Okay? And when it is funded by World Bank, we have nothing to worry about our payment security. Yes, because of the disturbances and change of government, change of bureaucrats, there is some delay, but that is not going to affect our margin other than there will be maybe six months of delay in the project. That that is probably we'll have to absorb it. So I think the progress is happening well. Engineering is more or less complete. Ordering is also 90% done. About 30, 40% of the material is this... Dispatched and the civil works are also at about 30%, 40%.

42:28 So the project is moving. It could move little faster, but it's moving steadily and we are receiving our payments on time. We have the next question from the line of Vinit M from Ashikha IE. Hello. Congratulations on good set of numbers, sir. Sir, I wanted to further ask on order book. So, basically, I wanted to check which states or region in India are currently witnessing a strong traction in ways to water projects, like desalination or industrial projects, which we are looking into. And second, you have been always been paying in... Across past few calls about Sunrise Industries. Like, we are getting traction over there. So I wanted to understand opportunities in Sunrise sector, like semiconductor, solar manufacturing, data center, green hydrogen. Have you witnessed any pickup in all the pipeline from this segment over last, like, last quarter or something? Or are you seeing an active bidding happening going forward to end this segment?

43:42 So India is growing. I mean, in terms of economy plus the growth of each state is opening up new opportunities also. Amongst that, we also see a lot of inquiries coming in from Gujarat, Maharashtra, and also Andhra Pradesh and Tamil Nadu from the desalination to the sewage treatment plants from the municipality and industrial zones part of it. And that's where it is throwing open a lot of opportunities for us both in terms of diesel, reuse, and sewerage as well. And also on the industry front, I mean, we are also focusing on the industrial side wastewater treatment plants.

44:27 That sector is also is opening up in Gujarat predominantly and also in particularly in the central part of India. Some of the large projects are opening up in the power sector and the steel sector also. And the other part of the question that you asked regarding the high-tech industries or high-tech factories, primarily the semiconductor data center. So we are also identifying, which is in terms of the utility of what kind of reuse water that goes for the chilling or the ultra pure water. So for that also we have already started interacting with the potential clients, be it is the Google or Adani or in terms of Reliance.

45:16 Lot of things are happening in that sector, but actually physically need to take a shape. So we are also seeing the economics of it so that we give a one stop solution for them so that they could able to utilize our technology, which is primarily in the reuse and the ultra pure water segments and well placed on that sector also. So based on these things that you are seeing, can you make or give a guidance on how order intake if you're on your, next year, how we will see or, you know, maybe you're a period of that, how much order intake will be across because we are seeing some slowdown in The Middle East. So I just wanted to understand, overall, if other geographies trying to mitigate for the recruiter in Middle East or we we see a slowdown in order intake compared to last year or maybe now.

46:18 See, we have told you and now also, Buffesh has reinforced that this is an interesting sector for us. Whatever you are talking about is this new energy, whether it's semiconductor, whether it's EV solar or data center, it is of interest. Regarding order intake, I would just like to mention that this is not a top line segment. Okay? These order sizes are never going to be a INR 5,000 crores or a 1,000 crores a single order. They are going to be much smaller. But the point is they are modular in nature. Each organization is going to put a number of units as they grow.

47:05 So if you got the first one, there's a good chance that the other orders which may come in a year, two, or three, you will get the repeat orders. Plus, being a technology company with more than one twenty five patents and trademarks, we would like to explore this sector because it demands high-tech. And as a company, as your company, Wabag, is into high-tech, we want to play a role in this to give to the clients our best of the technologies for this sector, which is the Sunrise sector and it's growing. Now, Mupesh also talked about data centers. There was one trend that they were all going for air cooled air conditioning system.

47:52 Now with our reliability in the technology and the economics of the water, we could convert them into a water cooled, which from a capital cost point of view and operating cost point of view, it's definitely much better as long as you have a reliable and affordable water supply. And this is what WABAG is providing this. So I would say with the kind of data centers and the energy reliability in India, India is going to be a capital for data centers. We are already seeing a lot of activity of PV solar.

48:37 Semiconductor will pick up and next, maybe in couple of years, hydrogen will pick up when the scale of hydrogen production will go up, the cost will come down. So these are the new sectors which we are focused and we have a separate team and a vertical which are focusing on it because they are comparatively smaller ticket size orders. So we need to have a specialized team who focuses on it and also executes this order because this gesture and period of these orders are very small, generally twelve to fifteen months. So we'll have to turn around these orders in about twelve months. So that's our input to your question. Thank you, sir. That was very insightful.

49:27 Happy, and happy Diwali. To you also. Thank you, sir. Thank you. We have the next question from the line of Wabagya from GM Financial. Please go ahead. A couple of data points. Employee expense were on the higher end at INR99 crores in 2Q. So was there any one off in the quarter or this is a recurring number in the coming quarters? See, on other expense... On employee expenses. Sorry? Employee expenses. On employee expenses. No. Employee expenses, there is no one off. This is in line because we give the increments in this quarter.

50:14 So with the performance and also the wage code change impact also you would see in full state now whether it is peer, whether it is Graduity, all of those. That's the change that you're seeing. There is no other one offs that we have. And also with performance, you'll have also performance pay that year over year will be better. So there is no other one offs in that number. So it will come down in coming quarters next year? It will stabilize. And of course, the wage code change it on. Okay. And on other expenses, it was on a higher INR60 crore. So anything over there? No. These are regular provisions that we generally have to make as part of our policy on a consolidated basis.

51:11 This will normalize over the year, and then there are no normalities over there. Okay. Secondly, what will be the share of Middle East and Chennai in the overall order backlog? Chennai would be really about more than 10%, much more than 10% because we have Cordoblywood, we have Chennai Ring Main, so both of them itself would be and payroll balance. So it would be easily in the EPC itself, would be 15%, 20% almost of the EPC. And Middle East in the international mix would be about 60, 70%.

52:03 So the overall book, 55, 45, we are the mix. So if if Chennai is around 15, 20%, then what is the remaining 3540%, 35%? You have like you have Reliance in India, you have BPCL, you have Bangalore, you have Delhi Jailgourd, you have Maharashtra, you have O and M, all of this. And for same for the overseas markets other than Middle Yes, East, the bigger majority will come from Middle East, the rest will come from Europe, Africa and the sea and sun. We have the next question from the line of Mohit Bhandari from IAFL Capital.

53:01 Yes, sir. Just one thing. When we look at the order book for the last quarter, one third of twenty seven, and include the order inflows that we took and exclude the execution, our entire order book is little different. So any change in scope of the current order book? See, usually, when we have a large order book mix, there is a backlog restatement that comes out of the forex movements. So that we don't include as order intake. It only moves in the order backlog. So the order intake is what we have absolutely taken. That is the only difference that you will see. But I'd be glad to have our IR team explain to you in case you need any further information on what we have. Yeah. Sure.

53:46 Thanks. We have the next question from the line of Manish Maheshwari from Equity. As there's response, we move on to the next question. We have the next question from the line of, an individual investor. Please go ahead. Mr. Vishveshwarar, do you have a question? As in response, we move on to the next speaker. Our next question is from the line of Raja Gopalan Raghunathan, an individual investor. Please go ahead.

54:44 Mister Rajaro calling, do you have a question? Hello? Yes. We have a question. Am I audible? Am I audible? We can hear you now. Yes. We can hear you now. Yeah. Yeah. I... I'm a recent investor in your company. I would like to know the succession plan which you have which you have in mind for your company. And, also, I would like to know if all the knowledge which is there in the company, is it... Is there a sentence repository for that and which can be accessed by the other people in case of in the deals and goals, or is it institutionalized in a structure? Very good question and very relevant question.

55:33 And for companies like us, which is a knowledge based company, I think it's an excellent question. We we have been always talking about this succession planning, and I think not only our HR, but our top management is very focused on it. Some of the actions are already taken. We are grooming some people. We are taking some lateral entrant. So it's a combination of homegrown talent plus a natural talent which we are bringing in to make sure we have a backup for this sufficient planning available. But this kind of exercises are continuous and ongoing exercise.

56:18 This will continue to happen, but there is a full focus of the management and HR to make sure we address this. Second question on your knowledge repository. We are already having a knowledge management software where all these are put into the software, and we are making that more and more user friendly. So it's not about only putting the knowledge into the software, it's also making sure they are easily available to the users with minimum of effort. That is where today we are spending lot of time and also we are inviting lot of new agencies in view of this AI support.

57:07 We are exploring various AI platforms which can help us to not only get the knowledge into this platform, but also to get it out as and when we require. So you will see this in next few years. There will be a focus on these two subjects. What about the family members of the promoter? Have they come into the business or we are we are still into it to come into it? No. No. My son has been... Rohan Mitchell has been into the business for last nine years. He's handling the Middle East, the GCC, and Africa region, and he's doing well. He's being groomed by the seniors.

57:58 I'm sure he will definitely grow to take up some position in the company in the coming years. Thank you very much, sir. Welcome. Thank you. We have the next question from the line of Manish Maheshwari, Equity at Work Family Office. Sir, for the current fiscal, would it be fair to presume and extrapolate that we'll exit this year with a pretax operating cash flow of about 6 and... About 5... At least crores, INR600 crores on a consolidated basis? The question you are asking on an on terrorist day, how can we say no to you? We'll try our best.

58:53 Given our cash flow momentum that we are seeing, at least 500 crores is something that we... That is an endeavor. Right? Why not if we have so much wish from you, prayer from you, company will achieve. Okay, sir. Thank you, sir. Happy to answer, sir. Happy answer. Happy answer to you, Mubagak. Thank you, sir. Thank you. We have the next question from the line of, an individual investor. Please go ahead. Good evening, sir. I joined a bit late. Might be you have covered or not. I'm not sure. But is there any challenge in current geopolitical scenario?

59:40 Are we facing any issue in executing the orders in Middle East? That's what I'm saying. A while ago, mister Mitchell has already briefed. There was a question on this. Three years, East, you know, in the past, I mean, I would say about a year ago, one and a half year ago, there has been certain disturbances and it gradually, I would say it is reducing in terms of any difficulties. We had challenges on the seat right, I mean the shipping of the supply chain of the goods going there. But later we overcame in terms of shipping through even by air freight some of the equipment that can move.

1:00:26 And latter we have found the alternative routes and then started supplying those materials. So majority of the equipments have also reached into the site that the project requires. And hopefully, I think in the coming months, I thought also we will be able to completely overcome as things are stabilizing now. I'm sure we are well taken care in terms of controlling on that. That's good, sir. It's improving. So one more thing, if you allow me. Yes, please. Yeah. So right now, we are in b two b business. So is there any plan to, like, hotel water supply or something like that? Because we already have ultra clean water facilities and all.

1:01:15 It's a good question. See, we have done some assessments where we need to position ourselves in terms of as a as a service and as a technology company, we see a great opportunity is what we are good at, number one. Getting into the retail business as a water supply company possibly that would be an area which goes to the B2C level. So we are comfortable in managing to the B2B and to the greater level to the industry and then the municipality part across the globe. So we would definitely would look like what we can do. And if at this point of time, we are very, very well positioned what we are actually giving a business to the industry.

1:02:04 Thanks a lot. Yeah. And happy. Thank you, and same to you. Thank you also. Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Rajiv Nitel closing comments. Thank you, friends. First, let me wish you before you sign off a very happy Diwali and a prosperous Diwali to you and your family for a great year ahead. And also happy Dansaris.

1:02:52 Thank you for joining the call today. In case you have any further clarifications, you can get in touch with our investor adviser agency, AdFactor or with us directly. Thank you very much. Have a enjoyable long weekend. Thank you. Ladies and gentlemen, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.