CG Power and Industrial Solutions Ltd (CROMPGREAV) Q3 FY23 Earnings Concall Transcript

CG Power and Industrial Solutions Ltd (NSE: CROMPGREAV) Q3 FY23 Earnings Concall dated Jan. 24, 2023

Corporate Participants:

Natarajan Srinivasan — Managing Director

Susheel Todi — Chief Financial Officer

Ranjan Singh — Executive Vice President, Railways Business

Mukul Srivastava — President, Power Business

Analysts:

Bhoomika Nair — DAM Capital Advisors Limited — Analyst

Sandeep Agarwal — Naredi Investment Private Limited — Analyst

Charanjit Singh — DSP Mutual Fund — Analyst

Renu Baid — IIFL Securities — Analyst

Mahesh Bendre — LIC Mutual Funds — Analyst

Rahul Gajare — Haitong Securities India Private Limited — Analyst

Harshit Patel — Equirus Securities — Analyst

Dhavan Shah — AlfAccurate Advisors — Analyst

Vikas Srivastava — RBC Financial Services — Analyst

Amit Mahawar — UBS — Analyst

Jitendra Sriram — Baroda BNP Paribas Mutual Fund — Analyst

Mayank Chaturvedi — Equirus Capital — Analyst

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Presentation:

Operator

Good day, ladies and gentlemen, and welcome to the Q3 FY ’23 Earnings Conference Call of CG Power and Industrial Solutions Limited, hosted by DAM Capital Advisors Limited. [Operator Instructions]

I now hand the conference over to Ms. Bhoomika Nair from DAM Capital Advisors. Thank you, and over to you, ma’am.

Bhoomika Nair — DAM Capital Advisors Limited — Analyst

Thanks, Jenny. Good evening, everyone. On behalf of DAM Capital, I would like to welcome you to the Q3 FY ’23 earnings call of CG Power and Industrial Solutions Limited. We have the management today being represented by Mr. N. Srinivasan, Managing Director; Mr. Susheel Todi, CFO; Mr. Ramesh Kumar, President, Industrial Division; Mr. Mukul Srivastava, President, Power Systems; and Mr. Ranjan Singh, Executive Vice President, Railways.

I’ll now hand over the floor to Mr. Srinivasan for his initial remarks, post which we’ll open up the floor for Q&A. Over to you, sir.

Natarajan Srinivasan — Managing Director

Yes. So thank you, Bhoomika. Let me extend a warm welcome to all of you. Since I have a throat infection, I will request my colleague Susheel Todi to summarize the performance for Q3. We have already released the press release to the exchange this morning. Thank you. Over to Susheel.

Susheel Todi — Chief Financial Officer

Yes. Good afternoon, everyone. Just to start with our Q3 FY ’22/’23 performance, our Y-o-Y sales grew 14% and PBT grew by 70%. All because the company performed significantly well in the quarter three of FY ’23. It is almost registering a growth of 70% in the PBT. Sales and PBT recorded in the quarter were highest in the recent times.

Aggregate sales for the quarter were higher at INR1,645 crores, recording a growth of 14% Y-o-Y and 4% on quarter on-quarter. PBT were INR274 crores, which is coming around 16.6% of the sales in Q3 FY ’23, as against INR161 crores, 11.1% of the sales in the quarter three of FY ’22. INR237 cores, which is 14.9% of the sales in quarter two of FY ’23.

Margins were higher on account of better price realizations, higher volumes, favorable product mix, moderation in input cost and the procurement efficiencies. Our ROCE on an annualized basis for the quarter three was 55%, against a 42% in the quarter three of FY ’22. During the quarter, we have generated free cash flow of INR202 crores. Our order intake for the quarter three was INR2,219 crores. We grew around 21% of Y-o-Y basis and unexecuted order book as at 31st December ’22 was INR4,136 crores, 34% higher on a Y-o-Y basis.

Now we come to the segment performance, Industrial Systems. Aggregate sales for the quarter were higher at INR1,162 crore, recording a growth of 14% of Y-o-Y basis and 6% on a quarter-on-quarter basis. PBIT was INR213 crores, it comes to 18.3% of the sales in Q3 FY ’23 as against the INR144 crores, 14.2% of the sales in the quarter two of FY ’22 and INR195 crores, 17.8% of the sales in the quarter two of FY ’23. Margins were higher on account of the better price realization, higher volume, favorable product mix, moderation in input costs and the procurement efficiencies. Order intake for the quarter three for FY ’23 was INR1,357 crores, it was 24% growth of Y-o-Y and unexecuted order book for the Industrial Systems for 31st December ’22 was INR1,824 crores, 17% higher on a Y-o-Y basis.

Now we come to the Power Systems. Aggregate sales for the quarter were higher at INR484 crores, recording a growth of 13% Y-o-Y basis. However, there is a little decrease on a quarter-on-quarter basis, which is around 2% on quarter-on-quarter basis. PBIT was INR57 crores, a 11.7% of the sales in quarter three of FY ’23 as against the INR51 crores, 11.8% of the sales in quarter three of FY ’22 and was INR55 crores, a 11.2% to sales in quarter two of FY ’23. Order intake for the quarter three of FY ’23 was INR862 crores, 17% growth Y-o-Y basis and unexecuted order book as at 31st December ’22 was INR2,312 crores, which is 50% higher on Y-o-Y basis.

Now we come to the consolidated performance. The consolidated results include the performance of the operating subsidiaries, based out in USA and the Sweden, Germany and the Netherlands, which drives an automation task and other non-operating subsidiary and the holding subsidiaries. Aggregate sales for the quarter were higher at INR1,775 crores, recording a growth of 14% Y-o-Y and 5% on a quarter-on-quarter basis.

PBT was INR282 crores, 15.9% of the sales in the quarter three of FY ’23 as against the INR174 crores, 11.2% of the sales in the quarter three of FY ’22 and INR241 crores, 14.2% of the sales in the quarter two of FY ’23. Unexecuted order book for our Sweden entity, it works out to around INR146 crores, which is around 48% higher on Y-o-Y basis.

Now the major events in the Q3, we now operate our non-convertible debenture worth of INR200 crores, now both with the company has become debt free. The Board of Directors has also approved a proposal to expand the manufacturing capacity of transformer aided plants in Bhopal and Malanpur with an investment of INR126 crores. Unaudited financial statement with the detailed notes are available as part of the stock exchange filing in the company’s website. Between myself and the colleagues, we’ll be happy to answer the questions. Thank you.

Questions and Answers:

Operator

Thank you very much, sir. [Operator Instructions] We have the first question from the line of Sandeep Agarwal from Naredi Investments Private Limited. Please go ahead.

Sandeep Agarwal — Naredi Investment Private Limited — Analyst

Hello. Sir, thank you for the opportunity. Sir, my first question is, what is our railway business mix in total turnover? And what opportunity we see in the recent orders and developments?

Susheel Todi — Chief Financial Officer

So Industrial Systems mix is around — if you look at, we do every, I think we have been saying about that, we have a INR1,000 crores total revenue which is coming from the railway side. So overall INR250 crores to INR300 crores, which is coming from the railway business in the industrial division business.

Sandeep Agarwal — Naredi Investment Private Limited — Analyst

Okay. And what opportunity you see in recent orders?

Ranjan Singh — Executive Vice President, Railways Business

The railway business, part of the industry portion was about INR282 crores and some power business was —

Susheel Todi — Chief Financial Officer

No, no, what are the opportunities he is talking about?

Ranjan Singh — Executive Vice President, Railways Business

Opportunities, we had the orders for traction motors, we had the orders for propulsion systems, we had the orders for the diesel electric tower car electrics, worth about INR453 crores in the last quarter.

Sandeep Agarwal — Naredi Investment Private Limited — Analyst

Okay. And sir, my next question, what is our — the current tax rate and when we have to pay normal tax rate, sir?

Susheel Todi — Chief Financial Officer

No, we are at a normal tax rate only, at current tax rate 25% which we are opting today.

Sandeep Agarwal — Naredi Investment Private Limited — Analyst

Okay. Thank you.

Operator

Thank you. We have the next question from the line of Charanjit Singh from DSP Mutual Fund. Please go ahead.

Charanjit Singh — DSP Mutual Fund — Analyst

Yes, hi, sir. First of all, congratulations on good set of numbers. Sir, my question is, first, on the industrial segment margins. We have seen in second quarter of very strong margin versus what we have seen historically at around more than 17% levels. Can you tell us how sustainable these are and what has led to this significant bump-up in the margin for the industrial segment? That’s my first question.

Natarajan Srinivasan — Managing Director

Yes. See, what has happened in, in quarter two, there’s a sudden range of the commodities, okay. So we are also accordingly pass it on to the market. Then in — we have couple of orders which we have booked in quarter two, which were executed in quarter three, then in quarter three, the commodities have softened. So that is one advantage we had. And also little bit of a product mix in looking at the long-term sustainability, we had changed a little of product mix, so that also added to these margins.

Charanjit Singh — DSP Mutual Fund — Analyst

So depending on this better product mix, is the new products which we added. So what could be the sustainable margins which you could see on the industrial segment?

Susheel Todi — Chief Financial Officer

So I can’t think so that we can give any guidance about the margin, but you know that the margins of — mix of many things about what kind of orders we have in the quarter four, what we are going to execute and going forward. But always we keep on saying that these margins are coming because of many reasons as explained by Mr. Ramesh, softening of the commodity prices, product mix and all those things, but whether these margins are sustainable or not even we always keep saying that couple of percentage here and there could be. So that’s the way we have been guiding so far.

Charanjit Singh — DSP Mutual Fund — Analyst

Okay, sir. Sir, on the industrial motor front, if you could highlight how is the overall market momentum right now? And going forward in Q4 and in the subsequent next financial year, how do you see the market growth rate and subsequently the growth rate for our industrial motors business?

Natarajan Srinivasan — Managing Director

Generally, we follow the [Indecipherable] data for understanding what is the market growth, but quarter three data is yet to publish, they are not yet published. But definitely, because of the — this sudden increase in the prices, quarter two, there was flat — almost flat, but quarter three, we are yet to wait — we are waiting for the results to come. But internally, we have done much better than quarter two, our growths are much better than quarter two in volume wise.

Charanjit Singh — DSP Mutual Fund — Analyst

Okay. Sir, lastly on the railway side, earlier we had highlighted that we will be doing some technology tie-ups and participating in some of these large tenders. If you can touch upon the status of those tie-ups and timelines for these large tenders of Vande Bharat and others which are in the pipeline? That’s my last question.

Ranjan Singh — Executive Vice President, Railways Business

I think we had explained earlier also that we have been working on trying to have the tie-ups, but the timeline was very short in terms of the tendering times. So it was not possible for us to participate. We had explained that we would wait for anybody who wins and then we’ll try to associate with them for being as a player [Phonetic] for them, it is a win-win situation for both of us. While our endeavor for having a partnership with another technology partners for any future tender that will come would be MD&A.

Charanjit Singh — DSP Mutual Fund — Analyst

Okay, sir. That’s all from my side. Thanks for taking my questions.

Operator

Thank you. We have the next question from the line of Renu Baid from IIFL Securities. Please go ahead.

Renu Baid — IIFL Securities — Analyst

Yes, good evening, team, and congratulations for a very strong performance this quarter. My first question is, can you throw some inputs in terms of — qualitative inputs in terms of the demand drivers and demand outlook, both for Industrial as well as for Power Systems? And have you seen any need in the relative competitive environment or the market looks reasonably tight in today’s perspective? So which are the key end markets driving growth key customer and which have been helping a strong growth in [Indecipherable] execution?

Natarajan Srinivasan — Managing Director

See, generally, most of the core industries like cement and pharma to some extent and the infrastructure especially this year because of the good rains and ethanol demand, so even the sugar and ethanol. So all these sectors are doing very well. And except for, little bit on steel, which is flat or maybe slightly improving. But otherwise, most of these industries are doing well. So we anticipate that going forward, the growth or the demand will be better.

Renu Baid — IIFL Securities — Analyst

Right, sir. And between the LT and the HT, how has the market been — now that capex across manufacturing sector is seeing quite a bit of activity. Have you seen the demand for HT motors, seeing growth coming back? And on the latest [Phonetic] scale, how is now CG positioned in this space?

Natarajan Srinivasan — Managing Director

HT, yes, obviously, HT is doing the growth wise and even in our order intake wise, HT is doing much better. That always happens, HT being a long delivery times. Generally, any capex, the first finalization will be HT, then the LT will come. Say, for example, whatever cement industry expansion is going on, they will finalize the orders along with their power equipment, the HT motors first. Then maybe after six months, the LT will follow. So, since HT is good, hoping that LT also will follow in the same route, but HT is much better I can say.

Renu Baid — IIFL Securities — Analyst

Okay. Sir second, can you share some updates on the B2C, the consumer business, which we had kick started last year, progress in terms of fans and pumps portfolio or other products which were launched? So some color or shade in terms of where are we in terms of investments in distribution, product reach, etc.?

Natarajan Srinivasan — Managing Director

So the two products, which we have launched, pumps and fans and we are definitely doing slightly better than what we anticipated. And their [Indecipherable] little bit, overall consumer itself is a little bit down trend, if you see the overall fan industry is not doing well for last two quarters. Quarter one was very good of this year, quarter two and quarter three has been very, very, low. That is because of two reasons.

One is the overall market itself is consumer buying itself is low. The second one is, even the stocking has been gone down because from 1st January, the star rating is implemented in fans. So the stocks, people are not stocked it, very big stocks for the coming season. So obviously, we are hoping that the star establishment will happen, star rating establishment will happen this quarter. So the first quarter of next year should be much better.

Renu Baid — IIFL Securities — Analyst

Got it. And in the industrial segment, just coming back to the previous question, you had mentioned that quite a few new products were launched to help improve the long-term profitability of the segment. So any comment to elaborate on this? What type of product, meaning, is either — was it rating, range or new SKUs been looked at?

Natarajan Srinivasan — Managing Director

See, we are focusing more and more on energy-efficient products, so initially, it was IE2 to now we are moving towards IE3 and also we have developed a complete range of IE4 for both hazardous and non-hazardous. So — and also we are focusing on the alternator business, which it was not doing well earlier. So now it is slightly retail genset demand is increasing. So there also we have done quite a bit on the new product development for both the sustainability or and to be a more cost competitive in the market. So, that’s how so we are focusing on this business, especially.

Renu Baid — IIFL Securities — Analyst

Sure. And one last question on the power segment. The capex of INR126 crores which has been announced, these are largely on power transformers, distribution, any specific color that we can share, what type of transformer range power distribution and what is the kind of capacity expansion that we are targeting from this? Thank you.

Natarajan Srinivasan — Managing Director

Mukul, you can answer this.

Mukul Srivastava — President, Power Business

Yes. See, this is [Indecipherable] existing gain of the products. We already made the entire range of power transformers and [Indecipherable] transformer going from 11kv right up to 25kv. The demand is growing so we also want to increase the capacity in the power transformer factory of Bhopal from 17,000 MVA to 25,000 MVA and in Gwalior from 6,000 MVA to 9,000 MVA.

Renu Baid — IIFL Securities — Analyst

Sure, thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Mahesh Bendre from LIC Mutual Funds. Please go ahead.

Mahesh Bendre — LIC Mutual Funds — Analyst

Hi sir, thank you so much for the opportunity. Sir, what was the contribution from fan and the pump business in the last nine months to our sales — standalone sales?

Natarajan Srinivasan — Managing Director

No, it’s not very significant, sir. So we are not disclosing these numbers separately as of now. So once that numbers are reportable, then we start to reporting to everybody.

Mahesh Bendre — LIC Mutual Funds — Analyst

It will be less than 5%.

Natarajan Srinivasan — Managing Director

Yes, definitely.

Mahesh Bendre — LIC Mutual Funds — Analyst

Okay. And sir, secondly, you said that the railway business was INR282 crores. This was for three months or nine months?

Natarajan Srinivasan — Managing Director

This is for three months.

Mahesh Bendre — LIC Mutual Funds — Analyst

And what will be the contribution for nine months?

Natarajan Srinivasan — Managing Director

So you multiply by three, it’s around INR830 crores.

Mahesh Bendre — LIC Mutual Funds — Analyst

Okay, okay, sure. And sir, we are at the fag end of this financial year now. I mean, we have grown — both businesses have grown in the last nine months, so what is the outlook for next two years for our business?

Natarajan Srinivasan — Managing Director

So, Mahesh, this is actually earnings call for this quarter. How do you expect us to answer this question?

Mahesh Bendre — LIC Mutual Funds — Analyst

Sorry, come again.

Natarajan Srinivasan — Managing Director

Outlook is good. That’s all I can say. This is the earnings call for Q3.

Mahesh Bendre — LIC Mutual Funds — Analyst

Yes, yes. No, I was just hoping we are in the month of January, so I’m just thinking that —

Natarajan Srinivasan — Managing Director

Outlook is good, sir. So we see a very good outlook, sir. No issue about the outlook side.

Mahesh Bendre — LIC Mutual Funds — Analyst

So in terms of, I mean, we have two businesses like industrial and power, so where do you think the growth prospects are much better in terms of growth?

Natarajan Srinivasan — Managing Director

So I think, we generally don’t give any guidance. We don’t give any guidance, but both the businesses will grow in double-digits, I can definitely say that.

Mahesh Bendre — LIC Mutual Funds — Analyst

For next year?

Natarajan Srinivasan — Managing Director

Yes.

Mahesh Bendre — LIC Mutual Funds — Analyst

Okay, sure. Thank you so much, sir.

Operator

Thank you. We have the next question from the line of Rahul Gajare from Haitong Securities India Private Limited. Please go ahead.

Rahul Gajare — Haitong Securities India Private Limited — Analyst

Yes, hi. Good evening, sir. Thanks for the opportunity and congratulations for a very good performance in the — for the quarter. I’ve got two questions. Building on the earlier question on transformer capacity at Bhopal and Malanpur. Given that you are specifically expanding this capacity. What are the — what is the thought on getting back to the export market? So any thought of adding capacity on the coast, so as to cater to the export market. That’s the first question.

Natarajan Srinivasan — Managing Director

So, right now, the domestic demand is strong, so we want to cater to the domestic demand first.

Rahul Gajare — Haitong Securities India Private Limited — Analyst

Okay. Sir, and what would be the capacity utilization of your transformer factories right now?

Susheel Todi — Chief Financial Officer

It’s around 55% for both put together for power transformer and the distribution transformer.

Rahul Gajare — Haitong Securities India Private Limited — Analyst

Okay, okay. Sir, my second question is on the EV side, is there any traction on tie-up for the EVs with auto of players or what is the any — what is the movement on that particular part of the business?

Natarajan Srinivasan — Managing Director

Nothing has been tied-up so far. If there is anything tied-up, you’d have reported know.

Rahul Gajare — Haitong Securities India Private Limited — Analyst

Sure. Okay, sir. Thank you very much.

Operator

Thank you. We have the next question from the line of Harshit Patel from Equirus Securities. Please go ahead.

Harshit Patel — Equirus Securities — Analyst

Thank you very much for the opportunity, sir. Sir my first question is on our power segment. You have previously mentioned that you were working on developing the 400 kilovolt GIS. So could you share any update on the same? And also by when you think we will be able to see commercialization of this product line?

Natarajan Srinivasan — Managing Director

So Mukul?

Mukul Srivastava — President, Power Business

Yes, sir. See we have started our work on this last year and on a complete GIS, there are almost 10 major components like disconnector switches, mechanisms, but all that parts we have to develop. So we are in the process of [Indecipherable] components of this and this will take another two years time. So hopefully by the end of FY ’25 or in the beginning of FY ’26, we should able to commercialize this.

Harshit Patel — Equirus Securities — Analyst

Sure, sir. This will be up to 400 KV, right. There will be still some time to go before we reach 765 KV, right?

Mukul Srivastava — President, Power Business

See, 765 KV is [Indecipherable] are far less, I mean, the — I think that most of the investment is happening in this 400 KV [Indecipherable] range. So we already make this GIS up to the 45 KV [Indecipherable] 400 KV [Indecipherable] because of 765 KV as [Indecipherable] absolutely.

Harshit Patel — Equirus Securities — Analyst

Sure. Sir, just a follow-up to that, in terms of overall HV switchgear market right now, what would be the split between AIS and GIS at the industry level? I’m not asking for earth fleet [Phonetic] but what would be that at the industry level?

Mukul Srivastava — President, Power Business

See, the spilt will get approximately. I mean, there are no published numbers for this, but approximately we can say the split is between 70 and 30, so 70 would be AIS and 30 would be GIS.

Harshit Patel — Equirus Securities — Analyst

Sure. And sir my second question would be on our industrial system, since you have already elaborated quite a lot on the railways business. If you can just give the order intake number for the railways business for the first nine months, that will be very helpful? And this INR830 crores number that you have mentioned, is it entirely booked in the industrial system or there will be some portion of power systems as well into that? That will be my last question.

Natarajan Srinivasan — Managing Director

INR830 crores was part of the industrial business and as for the order intake is concerned, the cumulative order intake is about INR900 crores.

Harshit Patel — Equirus Securities — Analyst

Sure. And what would be the revenue portion in the power systems business for renewal?

Natarajan Srinivasan — Managing Director

So that is approximately around INR20 crores every quarter.

Harshit Patel — Equirus Securities — Analyst

Okay, understood. Thank you very much for the —

Natarajan Srinivasan — Managing Director

Sorry, INR80 crores every quarter.

Susheel Todi — Chief Financial Officer

It will be around INR240 crores by this time.

Harshit Patel — Equirus Securities — Analyst

Okay, understood sir. Thank you very much for answering my question.

Operator

Thank you. We have the next question from the line of Dhavan Shah from AlfAccurate Advisors. Please go ahead.

Dhavan Shah — AlfAccurate Advisors — Analyst

Yes, thanks for the opportunity, sir. So, I have question on the railway side for the industry business. So you mentioned the order inflow of roughly INR900 crores for the nine months. So can you mention the order backlog from railway as on third quarter?

Natarajan Srinivasan — Managing Director

It could be in the range of about 950.

Dhavan Shah — AlfAccurate Advisors — Analyst

950, okay. And in terms of the HT and LT, would it be possible to share the breakup of the revenues order income and order backlog for this third quarter in the nine months?

Natarajan Srinivasan — Managing Director

That, we don’t give a state of this.

Dhavan Shah — AlfAccurate Advisors — Analyst

Okay, okay. And the last one is on the capacity, while I think capacity utilization rate for the power business, you mentioned the 65% utilization, right?

Natarajan Srinivasan — Managing Director

Yes.

Susheel Todi — Chief Financial Officer

That is only for the power transformer and the distribution transformer.

Dhavan Shah — AlfAccurate Advisors — Analyst

Got it. Yes, that’s all from my side. Thank you.

Operator

Thank you. We have the next question from the line of Sanjay Kumar from I.BMS [Phonetic]. Please go ahead.

Unidentified Participant — — Analyst

Hello, sir. Thank you for the opportunity. My only question was on the capacity expansion. So the distribution, we are adding 3,000 MVA. Is it specific to solar inverter transformer or is it for traction transformer or is the capacity kind of fungible so that we can cater to any kind of demand that comes up?

Mukul Srivastava — President, Power Business

Yes, it is for all types actually. We already make the inverters with transformers that is IDT for the solar segment. I mean, they have come in the range of [Indecipherable] power transformers from 10 MVA to 60 MVA, say, this is the capacity expansion for all types of transformers.

Unidentified Participant — — Analyst

Okay. And how is the outlook for solar given the government’s focus on renewables and you might even be adding 20 gigawatts or 30 gigawatts of solar power every year going forward. So is that capacity enough for us to supply?

Natarajan Srinivasan — Managing Director

See, as you have rightly said that there is the outlook is there. There are so many players coming. And definitely, we are constantly monitoring our capacity, where there is the demand in the market and in coming time, if required, we will further expand our capacity.

Unidentified Participant — — Analyst

Okay, sir. Thank you. That’s it from my side.

Operator

Thank you. We have the next question from the line of Vikas Srivastava from RBC Financial Services. Please go ahead.

Vikas Srivastava — RBC Financial Services — Analyst

Yes. I apologize if this question has been asked before. Just wanted to know, get a flavor of how the consumer product, what are the markets you’ve entered? What are the products you’ve launched and how do you look at it in the next two, three years, the consumer products?

Natarajan Srinivasan — Managing Director

No, we cannot share so much details. We have entered into only two products as of now, but beyond that, we cannot share these details.

Vikas Srivastava — RBC Financial Services — Analyst

Okay. So absolutely, regions, size of the market, where do you see it two, three — anything at all, which you’re willing to share, just to get a flavor to the investors as to where we’re headed on this. And I understand for business reasons you can’t talk much, but whatever you can, if you can, whatever your business compulsions permit you to?

Natarajan Srinivasan — Managing Director

So for next three to five years, we are looking for at least four-digit numbers, so this is the way we can talk.

Vikas Srivastava — RBC Financial Services — Analyst

Yes, sure, sure.

Natarajan Srinivasan — Managing Director

This is the maximum we can share.

Vikas Srivastava — RBC Financial Services — Analyst

We look forward to four-digit turnover in the next three to five years.

Natarajan Srinivasan — Managing Director

Five years, yes.

Vikas Srivastava — RBC Financial Services — Analyst

Yes, okay. Thank you.

Operator

Thank you. We have the next question is from the line of Amit Mahawar from Mumbai. Please go ahead.

Amit Mahawar — UBS — Analyst

Yes, hi sir. This is Amit from UBS. Sir, I just have two quick questions. First on the power portfolio, am I right in understanding that the capacity expansions in the export target should help the company beyond FY ’24 only in terms of export revenues for power product and not before that? That’s the first question.

Natarajan Srinivasan — Managing Director

See, this capacity for the transformer, the capacity is for the [Indecipherable] transformer, we have seven years exports, even today from both our factory at Gwalior as well as Bhopal. Going further, as explained earlier, we are focusing primarily first on the domestic demand and as and when the demand rises, we we will also keep looking at exports.

Amit Mahawar — UBS — Analyst

Okay, okay. And maybe second question on the industrial side. So in the current portfolio, how should we think about the export business again on the LT motor side? And if you can also throw some light on what is the mix of LT and HT in terms of exports that we do or largely these are LT motor that we export?

Natarajan Srinivasan — Managing Director

So far, largely we did the LT motors only. And we have said in the last meeting — last call, we are going for an expansion, basically for meeting the local demand as well as because we are not being much focusing on the export. So now we will be focusing more on the export also, obviously on the LT motors.

Amit Mahawar — UBS — Analyst

LT motors, fair point. Very helpful. Maybe the last quick question. On the entire power portfolio if we assume around 140 billion, 150 billion worth of annual equipment market for the next five to six years, if almost a third of that goes in HVDC or a re-based product portfolio which is electricity, etc. We are relatively not present, can I assume that roughly 60% to 70% of the annual 150 billion, 140 billion market is the addressable market for CG? That’s my last question. Thank you.

Natarajan Srinivasan — Managing Director

Yes, you are right.

Amit Mahawar — UBS — Analyst

Thank you, sir. Bye.

Operator

Thank you. We have the next question from the line of Jitendra Sriram from Baroda BNP Paribas Mutual Fund. Please go ahead.

Jitendra Sriram — Baroda BNP Paribas Mutual Fund — Analyst

Good evening. I just wanted to understand one thing from a capability standpoint when you’re mapping out your capabilities for a three to five-year timeframe. If you look at capex heavy sectors like railways, renewables, all that which is very active or Industry 4.0 and stuff, where would you think that you need to add some ammunition going forward, current transformers or IGBT compensators or what exactly would be the areas of focus going forward?

Natarajan Srinivasan — Managing Director

It’s very generic [Phonetic] question. See motors, I don’t think we have anything to be added expecting for technology for EV, if you want to serve the EV segment, we need some technology there, that is one. As far as railways are concerned, the products which we are doing, we continue to do, there is absolutely no problem. In projects — big projects like Vande Bharat or other the locomotives, etc. if you want to enter, we have join some consortium with some players that there is some similarly only — signalling side like T cars, etc., we need to acquire the technology. These are the areas in which we require as far as railways is concerned. And the power is concerned, whatever demand that is expected in the next three to five years, I think we’re — sufficiently we have the capability to manufacture and service the market.

Jitendra Sriram — Baroda BNP Paribas Mutual Fund — Analyst

Okay. And also if you could just talk about what exactly do you cater to on your automation side, what areas do you currently have product slate available in?

Natarajan Srinivasan — Managing Director

So this is not something which we are doing in India. Our overseas subsidiary, the traction automation subsidiary is actually servicing some of the customers in Europe and elsewhere. They have specific applications for many industries water, wastewater, irrigation, then energy efficiency, material handling. So right now, even they are getting into electrolysis, so like that there are — there is nothing is operational in India.

Jitendra Sriram — Baroda BNP Paribas Mutual Fund — Analyst

Fair enough. Okay. Thank you very much.

Operator

Thank you. [Operator Instructions] We have the next question that is a follow-up question from the line of Mahesh Bendre from LIC Mutual Funds. Please go ahead.

Mahesh Bendre — LIC Mutual Funds — Analyst

Hi, sir, just a follow-up question, you said railway business is around INR830 crores for nine months?

Natarajan Srinivasan — Managing Director

Yes.

Mahesh Bendre — LIC Mutual Funds — Analyst

And that is, I mean, included in the industrial business, right, including power business?

Natarajan Srinivasan — Managing Director

No, no, it is included in the industrial system.

Mahesh Bendre — LIC Mutual Funds — Analyst

And sir, what was this number for the last nine months?

Natarajan Srinivasan — Managing Director

INR830 crores, that is what we have been —

Ranjan Singh — Executive Vice President, Railways Business

And for the balance part, it was told it is INR200 crores odd it’s also in power. And since it is mixed in both industry and power, we don’t neglect separately.

Mahesh Bendre — LIC Mutual Funds — Analyst

Okay. So INR846 crores for this nine month and previous for nine months, what would be that number?

Natarajan Srinivasan — Managing Director

That would be about INR700 crores.

Mahesh Bendre — LIC Mutual Funds — Analyst

Okay, okay. Sure. Thank you so much sir.

Operator

Thank you. We have the next question from the line of Mayank Chaturvedi from Equirus Capital. Please go ahead.

Mayank Chaturvedi — Equirus Capital — Analyst

Hi, good evening, team. Thank you for the opportunity. Sir, my first question is on the industrial system side, on the HT motors. You said that the order intake wise, the volumes that you are getting are very good. So, I just wanted to ask, this is a result of any technology upgradation that you’ve taken in, because as far as I understand there was some product gap that we had with our immediate competitor. So any movement on that front in the product gap?

Natarajan Srinivasan — Managing Director

No, it is basically the market is doing very well. And also if you know these couple of years back, we have separate land for HT motors, so we have increased the capacity [Indecipherable]. So that is why, we are now utilizing that capacity what we have reached that time.

Mayank Chaturvedi — Equirus Capital — Analyst

Okay. So, it is something all the new competitors that we’re seeing in the market as well, so we are seeing Nidec, WAG Tech [Phonetic] going very aggressive. So even no challenges from that trend as well then?

Natarajan Srinivasan — Managing Director

There are — in HT there are more than 11 competitors, so they have been there for quite some time now, so —

Mayank Chaturvedi — Equirus Capital — Analyst

Okay, got it, sir. Sir, secondly on the power systems side, can you give us a split between the — revenue split between transformers and high-voltage switchgears for the first nine months?

Susheel Todi — Chief Financial Officer

No, we don’t split that number. So it’s a combined number for both the transformer and switchgears. But the ratio remained between 45% to 55% So that is usually the breakup.

Mayank Chaturvedi — Equirus Capital — Analyst

So, 45% transformers and 55% switchgears?

Natarajan Srinivasan — Managing Director

Yes.

Mayank Chaturvedi — Equirus Capital — Analyst

Okay, thank you so much, sir. I’ll get back in the queue.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Dhavan Shah from AlfAccurate Advisors. Please go ahead.

Dhavan Shah — AlfAccurate Advisors — Analyst

Yes. Sir, just the last one on the capacity wise, so would it be possible to share the capacity and utilization number for HT motor?

Susheel Todi — Chief Financial Officer

It’s a 80%, 85%.

Dhavan Shah — AlfAccurate Advisors — Analyst

And the capacity, internal number or anything like that?

Susheel Todi — Chief Financial Officer

We don’t give — reporting this number, but our utilization today is stand around 80%, 85%.

Natarajan Srinivasan — Managing Director

80% to 85%.

Dhavan Shah — AlfAccurate Advisors — Analyst

Okay. And you mentioned that we increased the capacity for HT motors, so how much expansion was that versus the base number internally percentage-wise, also that is fine —

Susheel Todi — Chief Financial Officer

No, that was done in 2019, that is what Mr. Ramesh Kumar is talking about.

Natarajan Srinivasan — Managing Director

Yes, I said earlier, we used to manufacture railway and industrial motors in one plant. So we have separated that plant and we started more capacity, that is what I mentioned — that was done in 2019, the market was not good, now the market is good, so we are taking the advantage of it.

Dhavan Shah — AlfAccurate Advisors — Analyst

Okay. Got it. Thanks.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Amit Anwani from Prabhudas Lilladher Private Limited. Please go ahead.

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Hi sir, thanks for taking my question. Sir, I would like to understand your market positioning, are we gaining market share in each of the verticals, including transformers, switchgears, then LT, HT motors and any numbers if you would like to share?

Natarajan Srinivasan — Managing Director

No, we are gradually increasing our market share. So, motors, we are at around 33%, 34%. In transformer, we are less than double-digit, but what we were there, one year or one and a half year before now definitely the market share has gone up.

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Right. And my second question is with respect to transformer. And if you would like to share the competitive intensity there between nearest competitors with respect to pricing and products, anything which is impacting the market or making the market for transformers?

Natarajan Srinivasan — Managing Director

Mukul, sir.

Mukul Srivastava — President, Power Business

If I answer your question, your question is about the competitive edge we have got [Indecipherable] competitors, is that correct?

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Yes, sir.

Mukul Srivastava — President, Power Business

Okay. See, we are a player with large experience and good teams in manufacturing. But you know that transformers are [Indecipherable] items classified by [Indecipherable]. So normally all of us to meet this situation and quote the tender. So, generally these final items will not have a very distinct advantage with anybody, the manufacturing efficiency and what are the features that we can add, so that we constantly keep working and keep updating ourselves.

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Okay. Thank you, sir.

Operator

Thank you. We have the next question from the line of Janat Kumar H [Phonetic] from JLS Capital. Please go ahead.

Unidentified Participant — — Analyst

Thanks, sir for the stellar Q3 performance. My question is when do we propose to restart the lighting division, consumer lighting division?

Natarajan Srinivasan — Managing Director

Sure. It will take some time. No decision has been taken, it has been decided by the Board first — we came by the board, so we can’t say anything, there is also immediate plans now.

Unidentified Participant — — Analyst

Because, sir Crompton Greaves was one of the leaders in consumer lighting division. So like, especially in LED lighting. So better would be at earlier sir.

Natarajan Srinivasan — Managing Director

Okay, thank you.

Susheel Todi — Chief Financial Officer

Thank you for your suggestion.

Unidentified Participant — — Analyst

Okay, thanks sir.

Operator

Thank you. As that was the last question for today, I would now like to hand the conference over to Ms. Bhoomika Nair for closing comments. Over to you, ma’am.

Bhoomika Nair — DAM Capital Advisors Limited — Analyst

Yes, thank you. Thank you very much for giving us the opportunity to host the call, sir, and wishing you all the very best. Any closing remarks from your side, sir?

Natarajan Srinivasan — Managing Director

No, I think nothing special.

Susheel Todi — Chief Financial Officer

Well, thank you for all the participants for joining this call. Thank you.

Operator

[Operator Closing Remarks]