EKI Energy Services Ltd (543284) Q4 FY22 Earnings Concall Transcript

EKI Energy Services Ltd  (NSE:543284) Q4 FY22 Earnings Concall dated May. 18, 2022

Corporate Participants:

Manish Dabkara — Chairman and Managing Director

Mohit Agrawal — Chief Financial Officer

Analysts:

Shubham Jain — HEM Securities Limited — Analyst

Meet Sangoi — Prabhudas Liladher — Analyst

Nitin Mehta — Twin Earth Securities — Analyst

Nilesh Maurya — AMSEC — Analyst

Neerav Dalal — MIB Securities India — Analyst

Venkatesh — Introhive — Analyst

Yash Choudhary — Param Capital — Analyst

Kamlesh Kotak — Asian Markets — Analyst

Presentation:

Operator

Ladies and gentlemen. Good day and welcome to half-year and year ended 31st March 2022 earnings conference call of EKI Energy Services Ltd. organized by Orient Capital. [Operator Instructions]

I now hand the conference over to Manish Dabkara, Chairman and Managing Director.

Manish Dabkara — Chairman and Managing Director

Thank you, and over to you, sir. Hi, good afternoon, everyone. I’m happy to welcome you all today to our H2 and the full year for financial year 2021-2022 earnings conference call. Before we begin, on behalf of all of us at EKI Energy Services Limited, I truly wish that you and your family has been staying safe. Please take good care of yourself, specifically for the worsening heatwaves across the country.

We are here with you today to share details of our commendable performance for the H2 as well as full year of financial year 2021-2022. It is my pleasure to be briefing you all on this today. Joining me today is, Chief Financial Officer at EKI Energy Services Limited, Mr. Mohit Agrawal and our Investor Relationship partner Mr. Jinal from Orion Capital. Details of our financial results and investor presentation is now live at BSE as well as our website.

I will share with you key highlights of our performance of the H2 and year ending March 31, 2022. We are happy to report another set of robust result for H2 and full year for financial year 2021-2022. We have created history yet again in the international carbon markets industry to decarbonize atmosphere, with our stellar performance. In 2022 we witnessed a strong business momentum driven by higher demand and increasing carbon credit prices, which resulted in year-to-year stellar growth in revenue by 844% EBITDA by 1,937% and PAT by 1,951%. Our EBITDA margin have more than doubled for financial year 2022, now when compared to financial year 2021, due to the following reasons, which is the first one is a higher demand in carbon market on account of voluntary pledges by corporates, commitment of governments across the globe for reduction of greenhouse gas emissions, industry specific mandates like Coesia, which comes from international aviation industry and awareness programs that have been conducted at various nations [Indecipherable] and further local laws and regulations.

The second reason is geographical expansion done in last 18 months, started generation of business from the countries like Turkey, Brazil Kenya, Bangladesh, Sri Lanka and Indonesia and other. The third reason is price hike of carbon credits on account of high demand and limited supply.

Quarter four performance was phenomenal due to the reason, because the buyer community, which are located in the developed nations. The last quarter that is starting from October to December is the last quarter for the financial year. And now, which is a common industry trend that the number of credit requirement to buy — to meet the carbon neutrality of net zero emission goals used to be higher, while the quarter one, as per our Indian financial system, used to be the weakest one.

I am pleased to announce that our Board of Directors have approved the issuance of bonus shares, in the ratio of 3:1. These shares are on bonus for every one share held. The Board has also approved the migration of the company from SME segment to the mainboard on BSE, subject to approval from concerned authorities. With an objective to create value for our company’s shareholder, we have declared and paid interim dividend of INR20 per share for financial year, ’21-’22. Few deals of quarter four had got delayed due to the impact of Russia-Ukraine war at European Union nations, since they are the major buyer of voluntary credits as compared to other developed nations. Now, the market is coming again back on track. Our stellar performance is the result of team ECI, who strive every day to ensure the best for the planet, and for our customers and shareholders, with a deep passion for climate, we have driven targeted efforts for climate actions in year gone by and now geared up to accelerate climate action to full throttle and step-up strategy efforts manifold.

With a renewed vision for strong focus on climate action, we have embraced a new brand identity that brings together the sky, nature and ocean to steer the planet to a net zero future. Our new logo has a leaf at its heart, and forms a globe to symbolize our efforts to restore nature and rehabilitate the planet. The Zero made by the globe together, symbolizes zero for our strive to Net Zero. We are committed to become a Net Zero company by year 2030, and will also aim to significantly contribute to offer to [Indecipherable] global temperature to mobilize up to 1 billion carbon credits in next five years, that is by year 2027.

In line with our vision to uplift the community, we have enhanced our green cooking initiatives manifold. We have order book of around INR200 crores from global energy giants, for implementation of Improved Cookstoves in rural and tribal communities of India. From order in hand, we are expecting to generate around 40 million plus carbon credits in next five years, resulting in win-win situation of the community and environment at large. This count is expected to grow on multiple basis of future orders.

Our subsidiary GHG Reduction Technologies Private Ltd. has also commenced its plant in Nashik to manufacture 1.2 million cookstoves, improved cookstoves every year and we have further plan to increase this to 3 million improved cookstoves per year in a phased manner, with the aim to empower more homes and also enlighten the backward integration of the carbon credit supply chain. We have grown as a team to tune to 200 plus employees and have also moved to a new corporate office. We have also extended ESOP benefits to our employees, in recognition of their hard work and commitment to the company.

Our team is our backbone and greatest asset. We have a dynamic team of climate experts who are passionate to help restore planet. We now also have a new sustainability arm that caters to the unique requirement to our customers. We have also renewed the structure of our service offerings in line with market dynamics with unique requirement for object plan of action. The new business verticals, are community based projects, which includes water filters, LED, biogas projects apart from improved cookstoves.

And the second one is the nature based solution projects, which includes forests, wetlands, mangroves, and sustainable agricultural practices. Now consultancy for this project will be provided by our subsidiary company Amrut Nature Solutions Pvt Ltd., for which we have partnered with Shell Overseas Investment BV, Netherlands. Next 30 to 40 days, we are going to sign our first project around INR150 crores plus net investment.

Net Zero, the third service is Net Zero services and ESG services. Companies establishing a methodology under International Carbon Credit program for our green hydrogen projects and other innovative technologies, which as of now, they are not able to get the registration, because of the absence of the methodologies available to get the projects registered. [Technical Issues] to continue our endeavor to steer the planet to net zero and to aggressively drive our vision to build a greener tomorrow. We are geared up for yet another super year ahead, we will continue to restore the planet, while also aligning economic recovery with long-term sustainability, to help develop a climate resilient level economy.

With this. I now hand over the call to our CFO, Mr. Mohit Agrawal who will discuss the financial performance in detail with you all. Over to Mohit.

Mohit Agrawal — Chief Financial Officer

Hello. Yeah. Thank you, Manish ji for your kind information. I would like to say thanks to all stakeholders for their support guidance and mentorship.

To get a start on financial results for second half of financial year 2022, we posted revenue of INR1,163 crore, which is an increase of 83% as compared to first half of financial year, ’21-’22 EBITDA stood at INR359 crores, which, which is an increase of 130% as compared to first half of the financial year 2022. EBITDA margin stood at 30.9% versus 24.6% and the profit after tax for second half stood at INR266 crores versus INR117 crores in first half of financial year 2022, resulting in growth of 128%. PAT margin for second half of financial year, is 22.9% versus 18.4% in first half of financial year 2022.

Now coming to the full-year financial performance of the company, we posted revenue of INR1,800 crores, which is 844% increase as compared to the last period, which was a INR191 crore figure. EBITDA is stood at INR516 crore, which is an increase of 1937% compared to same period last year. EBITDA margin has doubled, that is 28.7% as compared with last year 13.3%. Profit after tax for the year stood at INR383 crores, resulting in a growth of 1,951% as compared to last year. PAT is in the similar line, that has been increased to 21.3% versus 9.8% respectively.

With this I would request the moderator to open the floor for question and answers.

Questions and Answers:

Operator

[Operator Instructions] First question is from the line of Shubham Jain with HEM Securities Limited. Please go ahead.

Shubham Jain — HEM Securities Limited — Analyst

Hello, good evening, sir. First of all thank you so much for giving me the opportunity. Sir, I just wanted to know what is the main reason for this quarter, why our revenue is coming down? I’m talking about, especially only quarter four?

Manish Dabkara — Chairman and Managing Director

Can you please repeat, what are the numbers that you are asking about?

Shubham Jain — HEM Securities Limited — Analyst

Sir, I just wanted to know about quarter four, why our company revenue was coming down in this quarter four compared to quarter three, [Indecipherable]?

Manish Dabkara — Chairman and Managing Director

Yes, so I already covered during the speech, like the quarter four was a phenomena — given the phenomenal performance as compared to other quarter one and quarter two, while quarter four, the numbers as compared to the quarter three are obviously — used to be low because, usually if you see the developed nations, who are the major buyer of such kind of voluntary carbon credits, which are the kind of — the voluntary carbon credits…

Hello, can you listen me?

Shubham Jain — HEM Securities Limited — Analyst

Sorry sir, your voice is not audible.

Manish Dabkara — Chairman and Managing Director

Yes, yes, yes. So I’ll just I’ll just repeat the same. So the numbers, the top line during the quarter four is less as compared to quarter three; because quarter three used to be the most strong quarter since the buyers which are located in the developed nations. Their financial year ending used to be the quarter four that ends, which is the quarter three for — as per the Indian financial system. So the demand for the carbon credits to meet the Net Zero emission targets and to carbon neutrality targets, and used to be high during that particular quarter, as compared to other quarters, that is quarter one, two, and four, as per the Indian financial system.

So that was the one reason and another reason is the war, the Russia-Ukraine war, because of which various companies majorly for our carbon markets, European Union nations. The other major buyer of such kind of voluntary carbon offsets, and because of the impact of high prices, oil and gas and other issues for which they were sustaining, because of the war. Few deals had got shifted from quarter four to new financial year, as per our Indian financial system. So that was the few of the reasons because of which — and that is quite natural for our industry. Related to the demand, used to be there — the maximum demand used to be there during quarter three, while during quarter one, two and four, it used to be [Indecipherable].

Operator

Thank you. Next question is from the line of Meet Sangoi with PL. Please go ahead.

Meet Sangoi — Prabhudas Liladher — Analyst

Thank you so much for the opportunity and congratulations on a good set of numbers. Sir, if you can just break up the revenue for me in terms of the number of carbon credits sold, the volume of carbon credits, along with the carbon credit purchases, that’ll be very helpful? That is number one. And also if you can give any guidance that you would have for financial year ’23 for the volume of carbon credits?

Manish Dabkara — Chairman and Managing Director

Yes. So during last financial year, the volume that we have supplied, is around 55 million credits. During the quarter — up to quarter three it was around 70 million, and during quarter four. It was around 17 million. So around — during last financial year. So 55 million was during 2020, 2021, and during ’21-’22, it was around 87 million, that is around 60% growth was there in terms of the volume. During next financial year, we are expecting that 20% growth you should be able to achieve, as compared to 87 million achievement during last financial year. And since the pipeline of the projects that we’re executing is very strong, so we are anticipating that it should exceed 20% growth, as compared to last financial year.

Meet Sangoi — Prabhudas Liladher — Analyst

Right. So if you assume a 20% growth, so for financial year ’23, we are expecting close to around 110 million, 120 million credits?

Manish Dabkara — Chairman and Managing Director

Yes.

Meet Sangoi — Prabhudas Liladher — Analyst

Got it. And in terms of — if I just break this down, I think Q3, you had mentioned that you had sold to close to 20 million, 25 million credits. So in terms of volume that has come off by maybe around 30%-odd. So the pricing more or less has remained the same for carbon credits, is that assumption correct?

Manish Dabkara — Chairman and Managing Director

Yeah, so the prices used to vary based on the vintage country of origin program, technology and various other factors are there. So we would not be able to comment over the prices, because different set of credits originated from different country from different technology, used to be having different prices. So averaging — calculating to the averaging of the volume as compared to the turnover, would not give the correct figures. But yes we are having strong focus on the numbers, that means, on the volume numbers and the value growth shall automatically, again will get from the volume growth, based on the international carbon market prices.

Meet Sangoi — Prabhudas Liladher — Analyst

Got that. Thank you. And my last question is on the cooking stove subsidiary that you have. So if you can just break down the realization of the 1 lakh units that you are selling — distributing per month. What kind of realizations and margins are we seeing in the cooking stove subsidiary?

Manish Dabkara — Chairman and Managing Director

So, cooking stove, like as of present business model, we do have, we used to sign contracts with our parent organization, EKI Energy Services Limited, and the manufacturing on cost plus a small margin basis. We used to give orders to the subsidiary company. So most of the value used to get captured within EKI only, since we have to give comprehensive end-to-end services, starting from manufacturing to distribution to getting the project registration, then verification and then supplying the credits or selling the same in international central carbon market.

So overall accountability used to be there over EKI only and the majority of the value creation used to be there into the EKI Energy Services Limited only.

Meet Sangoi — Prabhudas Liladher — Analyst

Okay, got it. And the additional capex that will be needed to increase from 1.2 million to 3 million for your guidance, for the booking starts?

Manish Dabkara — Chairman and Managing Director

Mohit, can you please cover?

Mohit Agrawal — Chief Financial Officer

Hi Meet. Good afternoon. As you have asked and we have already told, as and when our order book will increase, we will increase the capacity of the cookstove manufacturing unit also, and that will come around INR5 crores to INR10 crores, which includes capex as well as opex also. It will range between INR5 crores to INR10 crores.

Meet Sangoi — Prabhudas Liladher — Analyst

So that will be for additional 1.8 million units?

Mohit Agrawal — Chief Financial Officer

Yes. Additional for 1.8 million. You are right.

Meet Sangoi — Prabhudas Liladher — Analyst

Okay, got it. I’ll come back in the question queue. Thank you, so much.

Mohit Agrawal — Chief Financial Officer

No issues. Thank you.

Operator

Thank you. Our next question is from the line of Nitin Mehta with Twin Earth Securities Private Limited. Please go ahead.

Nitin Mehta — Twin Earth Securities — Analyst

Yeah. Congratulations, Manish and Mohit for the great numbers.

Manish Dabkara — Chairman and Managing Director

Thanks for the appreciation sir.

Nitin Mehta — Twin Earth Securities — Analyst

And most of the questions. Of course, you have already answered. I just wanted to understand, do you give any guidance for margin for the coming year? Will you be able to maintain the growth in the volume, as well as the margins, or you will surpass that?

Manish Dabkara — Chairman and Managing Director

Yes, thanks for your question. So margin is going to sustain. We do not see any pressure and the 20% growth, we are targeting internally in terms of volume and obviously based on international carbon market prices, our topline will then get yielded. So the situation is quite attractive during this new financial year also.

Nitin Mehta — Twin Earth Securities — Analyst

Right. Thank you very much.

Operator

Thank you. Our next question is from the line of Nilesh Maurya with AMSEC. Please go ahead.

Nilesh Maurya — AMSEC — Analyst

Hi, sir. First of all congratulations for a good set of numbers. My first question is with respect to the JV that you have announced, could you give a little more highlight on what the role between both the parties are? Because in terms of — what would be our role in contributing towards that JV?

Manish Dabkara — Chairman and Managing Director

Yes. So the name of the joint venture company that we have formed with Shell Overseas Investment BV Netherlands is Amrut Nature Solutions Private Limited, and EKI is having 51% shareholding while our Shell overseas investment will be having around 49% shareholding. Our main focus of this number of this Amrut Nature Solutions Private Limited is to invest into the forest, and that it would be nature based solution projects. Since you know carbon sequestration technologies are not taken — are not economically feasible or viable as of now. So for the whole world, nature based solution is the best option to remove carbon dioxide or greenhouse gases from the atmosphere.

So this nature based solution projects includes, forestry projects, installation of new forests, saving the degradation of forest, reforestation activities, then wetlands installation of mangroves over the seashore, adapting sustainable agricultural practices. So these are the kind of projects have — which are specifically focused through this Amrut Nature Solutions Private Limited.

So we will be doing two activities. One is giving advisory services to the other investors either in India or abroad. So we have geography — we do not have any geographical boundaries for giving advisory services, and how to put all such kind of projects, if some other investors are there, which brings their own projects, along with their funds. So we would be able to help them to put all such kind of nature based solution projects on ground, and then apply for the registrations, apply for the verifications, who want carbon credit from such kind of business activities.

While this is the one activity related to the advisory services. As you know, there are different kinds of projects and that can be developed in our carbon credit industry. One sector is, the renewable energy sector with technologically driven projects. Another one is renewable energy, third one is waste management projects, electrical vehicle projects. So these are all the technology we studied. So while the other, and we call them as well carbon avoidance based projects, while the carbon renewable based projects comes from the nature based solution.

The other set of activity that we would be doing is, to identify new projects and new investment opportunities, so that will be the responsibility of EKI Energy Services Limited and our JV to identify such kind of projects, specifically in India and nearby nations. And then showing the same to Shell through their Shell team, through their internal criteria, to approve the project to invest. Shell would be having 93% investment rights, while EKI Energy Services Limited would be having 7% investment, rights. While the whole implementation of the project, including quickly putting projects on ground, [Indecipherable] registration, verification and then generation of carbon credits will be the accountability of our joint venture company. So these are the two different activities, we will be doing through this JV.

Nilesh Maurya — AMSEC — Analyst

Sure. Understood. So Shell’s major responsibility is about project financing. Yes. So follow-up on the description that you just gave right now, getting these new clientele or the new projects, is it EKI’s role or this is Shell overseas roles? And where could — I mean, if we look at the clientele that we are trying to look, because the operations of the JV and our operations are very much similar, how would you differentiate that who brings in the client and which goes under the JV and who finances it? So I’m a little confused on that.

Manish Dabkara — Chairman and Managing Director

So the second activity that I have mentioned, which is related to the identification of the projects, are for getting the investments. So that is the accountability of EKI. So all three different individual entities can do such kind of activities, So shell would be — Shell can also identify the project and can bring it on — and can bring it to get invested. EKI can also do similar activity, and JV could also do similar activity. While the exclusivity, whosoever either EKI, JV on Shell whatsoever business activity that they will do, identify and does it under NBAs regime, need to be exclusively executed through joint venture company only. So that is the exclusivity binding contract we do have between Shell and EKI, that each and every activity related to the NBAs central agency and investment, and finding the investment grade projects, will be executed through JV only.

Nilesh Maurya — AMSEC — Analyst

Okay, understood. And just, I mean just a common question towards, since Shell Overseas Investment sounds like a investment vehicle, the promoters that are part of this company, do they come from carbon training background or they are just the financing guys or people with experience of project finance and banking?

Manish Dabkara — Chairman and Managing Director

So the team with which we are in touch with, they are having, yes, such kind of experience related to the structured financing into the carbon and credit industry, related — specifically related to the NBAs mutual solution projects. So while Shell do various business activities, like overall group do various business activity related to trading our various environmental commodities and other oil and gas commodity. So that business vertical is quite different from this business vertical, with which we used to handle — with which we used to work on day-to-day basis.

Nilesh Maurya — AMSEC — Analyst

Okay. Okay, understood. And my final question on this is, I mean in terms of carbon credit, we haven’t seen — not seen much regulation coming in India. So do you foresee any regulatory changes that might — like the ESG space is just building up. So do you see any regulatory changes that might be coming in, which would kind of give a boost to our business, as well as you know, the whole sustainability space?

Manish Dabkara — Chairman and Managing Director

Yes. So, as you know in India, Ministry of Environment, Forest and Climate Change is the nodal agency for dealing with all such kind of issues, at the national and international level. So Bureau of Energy, this MoEFCC has given their mandate to Ministry of Power through the specific department they do have under Ministry of Power is of Bureau of Energy Efficiency. So we Bureau of Energy Efficiency has got the mandate to establish a domestic carbon market in India. They are the nascent stage. They had published view of the white papers and now they have floated a tender for the policy formation, stapler engagement for establishing such kind of domestic emission trading scheme. So initially for first few years, we foresee that it will be voluntary in nature while it will get converted to the mandatory nature via [Indecipherable] to the other big emitters which they do have like the European Union Emissions Trading Scheme is one of the example, South Korea Emission Trading Scheme is another example. China is also having their own emission trading scheme, then South Africa, US, Canada, everyone. That means a few states that used to be in countries such kind of activities are at the mature stage like the formation of emission to do the same and the operationalizing the same while few other nations like us we are in the nascent stage of ambition of such kind of activities.

So in future as of now from last 2012 year — 2012 to 2022 for example only the market that do exist or the credits originated from developing nations are the voluntary carbon markets. We call it as VCN or international voluntary carbon markets. So this is the only market we do have and if the growth that had been anticipated during year 2020, it was around 0.4, the market cap of voluntary carbon market was around $0.4 billion during last 2021, calendar year 2021, it was around $1 billion. During 2030, it is anticipated through the market research company called Clove Research. They had done research that by 2030, the market size only for the voluntary carbon markets international voluntary market, it would be around $10 million to $25 million. During 2040, it would be $40 million to $115 million by 2050 mid of the century, it would be around $90 million to $142 million. So this is the only market cap which may come from international voluntary carbon markets while as you know each nation is planning to have their own domestic market, which initially during initial years it may be in voluntary nature, then it may get converted into the compliance emission trading scheme similar to the Korea or similar to the European Union.

The other carbon markets which are arising through the Paris Agreement Article 6 is Article 6.2 collaborative approach in carbon market and Article 6.4, which is quite similar to Article 12 under critical protocol, so called clean development mechanism. So these are five different segments. So four segments are at the nascent stage. One is the domestic voluntary market, domestic compliance market, then Article 6.4 market, Article 6.2 market and then international voluntary market. So as of now only international voluntary market for the countries like us for the developing nations, which is the only option we do have to sell the credits in the international carbon markets while these four different markets are quite upcoming in its two to five years, they will do come into the existence and whatever the $1 billion market cap, which may come from the international voluntary carbon markets. There is new core markets which will add market cap. So it will be the — immense development opportunity would be there for our organization. Yeah.

Operator

Thank you. Our next question is from the line of Neerav Dalal with MIB Securities India. Please go ahead.

Neerav Dalal — MIB Securities India — Analyst

Yeah, hi. Thank you for the opportunity. First, one clarification, you spoke about cooking stove, we have INR200 crore order book and you said carbon credits of $14 million, more than $14 million over the next five years. What was that number. Just want a clarification, $14 million, right?

Manish Dabkara — Chairman and Managing Director

Yes. $14 million revenues would be generated from this INR200 crore investment. So each cook stove used to generate around four carbon credits. So if you divide $14 million divided by five, it comes out to be around 2.8 million credits per annum and divided by four would be around 7 lakh cook stoves order we do have all out of the numbers that had been covered during my speech. So these are the numbers.

Neerav Dalal — MIB Securities India — Analyst

Got that sir. My second question is, see broadly, if you can give us a thumb rule in terms of if a customer pays, so if you realize, say, INR100 on selling or you realize INR100 from the customer, how would it be split between say services and the carbon credit for you. Is there any ballpark number that one can work on in terms of what would be your split of services in carbon credit.

Manish Dabkara — Chairman and Managing Director

So yes, actually we do give comprehensive advisory services to our clients wherein we do not charge anything upfront. We do work on the revenue-sharing model. So whatever the investments, which are required for our working capital financing costs are the fee that we need to pay to third-party inspection company, then travel expenses, the fee that we need to pay for getting the project registration for getting the project verification and then the other associated costs. So finally, once the credits will get issued, we do sell the same in the international carbon markets and based on the revenue-sharing model that we used to sign with our project owners, we get the revenue. So we do not do different bifurcation of cost versus revenue. So yeah, and that is the only one, you can say one line through which the revenue used to come and then expenses we used to reduce. So we do not give such kind of bifurcation.

Neerav Dalal — MIB Securities India — Analyst

And we book on gross basis, not on net basis, right. So gross realized from selling of the [Speech Overlap] would be what [Speech Overlap] and then our expenses and sharing with the customer will be in the cost side.

Manish Dabkara — Chairman and Managing Director

Yes.

Neerav Dalal — MIB Securities India — Analyst

My third question is regarding — now for us we will always be playing in the voluntary carbon market, right. We will be able to play with the ETS market. Is that a right assumption.

Manish Dabkara — Chairman and Managing Director

Yes. Because the credits which are originated from Indian territory or majority of the developing nations like China or Brazil or maybe Southeast Asian countries or LatAm countries or African countries. So credits so we do have only three, four established compliant southern markets or emission trading scheme. One is European Union ETS and another one is South Korean ETS. At some party, we can consider in Singapore also we do have one, carbon test mechanism is here, not exactly the ETS while in South Africa we do have mix of ETS plus tax. So any credits, which are originated from developing nations like that used to not get directly consumed under such kind of compliance market which was the scenario during 2005 to 2012. So as of now, yes, we do work under only voluntary carbon markets because the credits are distributed from the lesion like in which we are operational. It used to not get consumed under the compliance carbon markets. So that is the international carbon market barrier within.

Neerav Dalal — MIB Securities India — Analyst

Correct. So but as you said the voluntary carbon market is there for us to play with and it is going to be a big market. So who would then be the players if all the countries have their own ETSs then who would be the people who would be wanting to do the voluntary carbon market, if you could just give a brief explanation in terms of that.

Manish Dabkara — Chairman and Managing Director

Yeah. So let us take example of a company which is situated in Germany that is regulated through compliance emission trading scheme called [Technical Issues]. So every year for example that particular company is emitting 100 tons of CO2 and every year ETS used to cast their emissions that they are doing during year zero for example, they are doing which is now 100 tonnes, meaning year one they may get the target to reduce 5 ton CO2. So net emissions they can do is 95 ton, maybe by next second year it may be around 90 tons. So these are the cash used to be given by the emissions or the compliance regulations to reduce their emissions with expected. It is not possible under the ETS therefore example ETS can give the emission reduction target of all 100 tons CO2 during years zero or during year one only. It is impossible because if that is possible that means they must have 100% renewable energy. 100% renewable energy or whatever the emissions that they are doing because of their business operations. It should be made zero and that is impossible. And that is the only reason why our carbon industry came into existence. So one company, which is not able to reduce emissions it can buy the credits from, originally from the other company which is able to reduce the emissions through different tools and techniques. So yeah.

Neerav Dalal — MIB Securities India — Analyst

So what you’re trying to say is that there will always be, so the ETF market would not be able to fulfill all the demand. So they will always be a voluntary market that would —

Manish Dabkara — Chairman and Managing Director

Yes. So the nations — so the country — so the companies, specifically the products or services that they are offering domestic or international markets, once they declare that they want to become carbon-neutral, they want to achieve net zero emissions whatever the emissions that they are able to achieve through compliance ETS they would be able to do the same. Otherwise, if they are not able to meet, then they have to buy compliance speculative only like in ETS we are calling European Union allowances. While, for example, since the baseline emission is around 100 ton and ETS they are allowed to reduce only 10 times. So remaining 90 tons we used to buy from the voluntary carbon markets and that is why the voluntary carbon market is going to survive till we will not be able to achieve net zero emission goals. So as you know, most of the developed nations they do have declared that they want to become net zero by 2050. Chinese government have declared by 2060. Indian government had declared for 2070. So once we will do achieve net zero emission goal, then that means the compliance emission trading will do cover 100% sector 100% emissions till the date if they are not able to achieve the same. So voluntary market is going, it’s going to be in existence of the compliance carbon market across the world.

Operator

I am sorry to interrupt Mr. Dalal.

Neerav Dalal — MIB Securities India — Analyst

Yeah, sure. I will back in the queue.

Operator

Thank you. Next question is from the line of Venkatesh with Introhive [Phonetic]. Please go ahead.

Venkatesh — Introhive — Analyst

[Technical Issues]

Operator

We are not able to hear you.

Venkatesh — Introhive — Analyst

Hi. Am I audible now.

Operator

Yes.

Venkatesh — Introhive — Analyst

Yes. First of all, congratulations for the exceptional results for the financial year ’21-’22. And my question on the company subsidiaries. So far we have invested around INR100 crores in the subsidiaries. And there is no revenue streams is not yet generated from this company and the revenue streams and how to do the actual revenues and will it be a carbon credit temptation or are they selling the product [Indecipherable] or LED bulbs like that[Technical Issues] the revenue streams.

Manish Dabkara — Chairman and Managing Director

So if I understood your question correctly, the main revenue stream for us is giving the comprehensive advisory services to our clients whomsoever heading this and it will be renewable energy or the projects which are eligible to get the registration under different carbon credit mechanisms like clean development mechanism or carbon standard gold standard or global carbon council, [Indecipherable]. So there are various plethora of international emission carbon offset standards are there. So we do give comprehensive advisory services and most of the revenue, majority of the revenue, more than 95% of our revenue used to come from giving such kind of comprehensive advisory services to the project investors not only in India while in other 40 nations we do have clients which avail our services. So while the recent development related to formation of two subsidiaries, one is Amrut Nature Solutions Private Limited and another one will be Reduction Technologies Private Limited. So the contribution from these two companies is, you can say around 1% to 2% as compared to the parent company. The other numbers that we are going to achieve the parent company comprehensive services. So this is I hope I would be able to answer your question that you asked.

Venkatesh — Introhive — Analyst

Yes, Manish. Thank you. And one of the final question is like and what are the opportunities that will get opened from the COP27.

Manish Dabkara — Chairman and Managing Director

Yeah. So during COP26, the majority of the confusion had been cleared related to the existence of emission trading scheme or you can say the carbon markets which will do derived from Article 6 of the Paris agreement and the existence of the voluntary carbon markets. Now during COP27, the major thing that can happen is related to the operationalization of Article 6.2 and 6.4 what are the modalities, which kind of can get registered under that particular Article 6 of the Paris agreement. So all those modalities will do get cleared during COP27. And in fact, I think it will take another one year, during COP28 we will be able to get all the modalities farms, procedures guidelines everything related to the getting the project registration issuance and then supplying of the carbon credits. While the voluntary market do coexist along the different markets that may come in next one to three years timeline. So during COP27 we’ll do bring good progress to the Article 6 carbon markets while we do anticipate it will take another one year by COP28 we will be able to have a complete guidelines on how this Article 6 carbon market will do bring more business opportunities to the international carbon markets.

Venkatesh — Introhive — Analyst

Okay, Manish. Thank you for the answers.

Operator

Thank you. Our next question is from the line of Yash with Param Capital. Please go ahead.

Yash Choudhary — Param Capital — Analyst

Hi Manish, I would like to know what exactly is the current pricing trend of carbon credits.

Manish Dabkara — Chairman and Managing Director

So before — during quarter three of our financial year, the prices were in the — so as you know during May actually the rise of the carbon markets had happened and during up to December, it was there at the peak. After that during January, you will see exactly during February, because of the prices, if you see in the voluntary carbon markets as well as into the EU ETS, European emission trading scheme earlier to that the prices had reached more than EUR100 per European Union allowances and then because of the war, it came up to EUR60 and now again it is around EUR90. So that was the impact that we had observed at EU ETS and similar division we have found probably for the voluntary carbon market. So ETS market they are at the uptrend or you can say at the positive trend. Similarly, the voluntary market is growing at a similar pace.

Yash Choudhary — Param Capital — Analyst

Okay. So basically like the pricing trend again recovering from these holes, which were there in the Q4. Am I right?

Manish Dabkara — Chairman and Managing Director

Yeah.

Yash Choudhary — Param Capital — Analyst

Okay. So like due to Russia-Ukraine war, [Technical Issues] as well as the pricing.

Manish Dabkara — Chairman and Managing Director

Pardon.

Yash Choudhary — Param Capital — Analyst

Due to Russia-Ukraine war, there was an impact not only on the demand but also on the pricing, right?

Manish Dabkara — Chairman and Managing Director

Definitely.

Yash Choudhary — Param Capital — Analyst

Okay. Secondly, I would like to know like this INR150 crore what we are getting into the Amrut subsidiary. So what exactly will be like, what exactly are we going to do next quarter, just leave there would be on [Technical Issues], but what kind of revenue generation do we expect from such kind of projects going ahead. [Speech Overlap]

Manish Dabkara — Chairman and Managing Director

Yeah. The contract there will be finalized in efficiencies and once all the numbers, we’ll get fixed. We will be able to give you the correct number. So we need to wait for some time to get the clear picture about that particular project. So there are many projects are there at the finalization stages during this financial year and we do foresee that number of projects will be there. We would start those projects as soon as possible and as you know the technology filings can be limited in six to 12-smonth time period whilst nature of installation projects used to take too much time around two to three years will be the period under which only the investment will go and then the carbon credits will do come or when the carbon credits will do start yielding after three years, the technological base should credit, the technology projects used to get apply for the registration or verification for the period in terms of seven years to 21 years, while for the nature based solution projects they are allowed to claim credits or minimum 30 years up to 90 years. So such kind of long-term sustainable supply is going to definitely help our sustainability.

Operator

Thank you. Our next question is from the line of Kamlesh Kotak with Asian Market. Please go ahead.

Kamlesh Kotak — Asian Markets — Analyst

Good evening, Manish. Congratulations for a good show Sir. Firstly, can you just help me again understand the number of units you sold. You said [Indecipherable] how many units we sold this year and last year.

Manish Dabkara — Chairman and Managing Director

So during 2020-2021, it was around 55 million. During last financial year, it was around 87 million figures.

Kamlesh Kotak — Asian Markets — Analyst

And Q3 and Q4, how much.

Manish Dabkara — Chairman and Managing Director

During Q4, it was 17 million and up to Q3, it was around 70.

Kamlesh Kotak — Asian Markets — Analyst

Okay. And we already have inventory of INR140 crore. So what number of units are lying there?

Manish Dabkara — Chairman and Managing Director

Around 8 million.

Kamlesh Kotak — Asian Markets — Analyst

8 million. Okay. Another question, Manish I wanted to understand that, how that we have a sizable amount invested in the receivable and inventory. So is it going to be the new norm now that if you want to grow the business, we will have to invest this kind of money in terms of securing the inventory fast and then monetizing or raising it, how do you see the working capital cycle will play out.

Manish Dabkara — Chairman and Managing Director

So actually the buying market I used to work like whenever the demand used to come with us, we must have some good portfolio readily available with us to supply. So during [Indecipherable] it’s three-day cycle during the one for example buyer used to come during the — they do say yes or no related to whatever the volume inventory we do have. During the three months, they used to decide signed contract and supply the credit. So for that particular purpose, we must have some good volume readily available with us, so that we’ll be able to supply the same. While we do have internal metrics, how much credit we should keep within our inventory and how much credits we should get hedged depending on the procurement price. So these are few metrics with which we used to work on the basis.

Kamlesh Kotak — Asian Markets — Analyst

Which means that if you’re targeting 20% higher volume next year, we will accordingly sizably have to invest in inventory as well as receivables, right?

Manish Dabkara — Chairman and Managing Director

Yeah. At some point of time, so we may be able to say yes. But at some point of time, that may not be the situation. So the situation used to change based on different market dynamics around the year.

Kamlesh Kotak — Asian Markets — Analyst

Sure. Okay. Secondly, can you separately let us know how much investment has been made in the two entities GHG carbon and Amrut separately. How much investment till now we have made?

Manish Dabkara — Chairman and Managing Director

At Amrut, whatever the seed capital is required or authorized capital is required we are going to invest the same because the company had got recently formed. And then the new contracts we do start over the same, contracting over the same. So I think position we do have with Amrut and while for GHG Reduction Technologies. Yeah.

Kamlesh Kotak — Asian Markets — Analyst

How much [Speech Overlap]

Mohit Agrawal — Chief Financial Officer

Yeah. For GHG reduction, we have invested at somewhere around INR70 lakh equity to get the stake in that company and rest the company itself generating a profit for [Technical Issues].

Kamlesh Kotak — Asian Markets — Analyst

So the INR100 crore investment, which is shown in [Speech Overlap] what is that sir.

Mohit Agrawal — Chief Financial Officer

INR100 crores investment in current assets, that is which we have to pay on RTM and out of that INR100 crore I can see in last 45 days, we have already realized INR60 crores from GST department. We have received the refund of around INR60 crores in last 45 days. It’s normal business activities where we have to pay the RTM on import of services or any carbon credits being purchased or services which we have taken from outside, on that portion we have to pay the GST in India. And then we [Speech Overlap].

Kamlesh Kotak — Asian Markets — Analyst

Then you can claim the refund.

Mohit Agrawal — Chief Financial Officer

Yes. And the claim period is itself somewhere around 60 to 75 days in GST.

Kamlesh Kotak — Asian Markets — Analyst

Okay. Secondly sir, can you help us understand your geographic revenue mix, which geographies contributed this INR1,800 crore of revenue, if you can just get some sense on that.

Manish Dabkara — Chairman and Managing Director

Yeah, I can give you. We have now at present in 15 countries across the world right now and we have done geographical expansion in last 12 to 18 months. Every country and every place are generating a revenue for us. As of now, the biggest contribution is from Turkey, then Bangladesh we have received our business in last quarter itself, but we are expecting that major contribution will be from Latin America and Africa down the line after 12 to 18 month and we are expanding our team and we have a plan to have a presence in more than 30 countries down the line in next 12 to 18 months. We are hiring people and we are establishing our companies as well as offices across the globe. [Speech Overlap]

Kamlesh Kotak — Asian Markets — Analyst

So Europe is not your major country contributing —

Mohit Agrawal — Chief Financial Officer

Sorry. Manish, you can answer.

Manish Dabkara — Chairman and Managing Director

So actually, you see the whole world is divided into parts. One is the buying nations and other ones are selling nations. So the sellers — the project owners to whom we give advisory services, we are looking at developing nations and the buyers are looking at the developed nations and European Union is the major contributor. Apart from that Russia and Japan, they do have very less contribution to the international voluntary carbon markets as of now. So the first thing we can say is Europe, European Union. Second one is USA, third one is Australia, New Zealand and the smaller part, also some smaller nations in the smaller developing nations like in India are now slowly and slowly the buying community is bidding on [Indecipherable] like the airports are buying better rates. Now few food delivery companies are also buying the credits. The companies which are majorly proposed on the ESG or net zero emissions or carbon neutrality goals and developing nations we are also [Technical Issues]. So there are few companies which are based in Middle East, we are also feeling responsibility by which to make their business operations carbon-neutral on emission targets. But majority of the whole worried and the whole developed nations and especially European Union is a major buyer while slowly and slowly it will be other developing nations, you can say the other developed nations you can see it comes under the second position, that third position comes [Indecipherable] like India and China.

Kamlesh Kotak — Asian Markets — Analyst

Okay, fine. Finally sir, any funding plans over the next one year, what kind of investments you will make and how you’ll fund it. Can you help us understand that sir across the three entities.

Manish Dabkara — Chairman and Managing Director

Yeah. So the internal whatever the funds we do have, we are trying to deploy to get the maximum return on investment either to develop more and more projects to take more and more advisory services to work under the regulatory model. The second one is to develop cook stove or community-based project and third one is insurance solution. So we do have plan to mobilize our internal funds which are there with the significant numbers. So this is the plan on and if we get good opportunities in the future, then we will also look for collaborations from the team.

Kamlesh Kotak — Asian Markets — Analyst

Any numbers you can put it to in terms of the investment amount.

Manish Dabkara — Chairman and Managing Director

So that is not being managed as of now within the organization. We are trying to use internal financial resources at its peak.

Kamlesh Kotak — Asian Markets — Analyst

Okay. Thank you, sir.

Operator

Thank you. Ladies and gentlemen, in the interest of time, this was the last question. [Operator Closing Remarks]