Hitachi Energy India Limited (NSE: POWERINDIA) Q2 2025 Earnings Call dated Oct. 29, 2024
Corporate Participants:
N. Venu — Managing Director and Chief Executive Officer
Ajay Singh — Chief Financial Officer
Analysts:
Subhadip Mitra — Analyst
Mohit Kumar — Analyst
Parikshit Kandpal — Analyst
Dhavan Shah — Analyst
Vinod Chari — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good evening, and welcome to Hitachi Energy India Limited’s Q2 FY ’25 Analyst Conference Call. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]
I now hand the conference over to Mr. N. Venu, MD and CEO, Hitachi Energy India Limited. Thank you. And over to you, sir.
N. Venu — Managing Director and Chief Executive Officer
Thank you very much. Good evening, ladies and gentlemen. Thank you very much for joining us for the analyst conference call. I hope you’re all doing well. And today we announced our results for the second quarter of financial year ’24-’25, and over the next 20, 25 minutes, I will take you through our performance during the period ending September 30th, 2024. And for your convenience, I will read out the slide numbers. We have just uploaded the slide deck on the website. So I will refer the slide numbers for easy of reference to those of you are attending on the phone. And today with me in the room have our CFO, Ajay Singh; and Poovanna Ammatanda, General Counsel, Company Secretary; and Manashwi Banerjee, Head of Communications and Investor Relations.
So during the quarter, we have focused on improving our overall operational efficiency, which has helped us in achieving a sustainable flow of order intake, pushing the order backlog to a record high for the second quarter of FY ’24, ’25. The growing urgency to accelerate energy transition in India and globally has significantly boosted investments in the energy sector. We expect this momentum to continue in the coming quarters, creating more opportunities in the energy segment, especially in the renewable space for our portfolio.
So moving to the slide number three, at Hitachi Energy India Limited, people have been always in the center of our strategy. They have been its core strength and we have been powering for the last 75 years. We are committed to delivering meaningful employee experiences and their safety and well-being are paramount to us. During this quarter, we implemented key initiatives to strengthen safety practices across our offices and factories. It helped us to achieve 100% on-time closure of high-risk hazards situations. There has been continuous effort towards reiterating the importance of reporting safety incidents at working sites. Furthermore, we refreshed our health, safety and environment policy to ensure positive health, well-being and safe working conditions. We organized multiple awareness training sessions and health camps across our offices, facilities, project sites for the well-being of our employees. To mention a few, we had sessions on health precautions during monsoon, lifestyle diseases, mental health, yoga and manual handling ergonomics. Also, we had multiple health camps for diabetes, on pulmonary health, and held a blood donation camp [Indecipherable].
Moving to slide number four, we at Hitachi Energy placed sustainability at the heart of the Company’s purpose of advancing its sustainable energy future for all. In line with this purpose, we — Hitachi Energy is committed to drive business in a sustainable way. Our sustainability plan focused on four key areas, planet, people, peace, and partnership with a specific target for respective heads to be achieved by 2030. As the numbers come in, I’m happy to inform you that we closed FY ’24 with achieved targets of reducing CO2 emissions and waste by 88% and 97%, respectively. We also reduced freshwater usage by 18% vis-a-vis the target of 25%. Diversity is an integral part of our work culture and we have set ourselves female diversity target of 8% to 10% by 2025. It is noteworthy to mention that we are almost touching 8% mark of our given target. Our constant endeavor toward sustainability has been recognized as we are conferred with the prestigious Business World’s India’s Most Sustainable Companies Award.
Moving to the next slide, slide number five. In keeping with the rapidly evolving environment and technologies, we are globally realigning our sustainability 2030 program to be more measurable and impactful. Changes are aimed to maximizing its positive impact across the value chain and through co-creation of environment, social, and economic value. To maximize the positive outcomes, now the focus on three key strands of planet, people, and principle, which covers all earlier post sustainability pillars. Under the people strand, we are supporting a safe, inclusive, equitable and just energy transition by focusing on three areas, health and safety, diversity, equity inclusion and human rights and social contributions. Under the planet strand, the focus is to accelerate the clean energy transition with a particular focus on three areas, that is climate, circular economy, and biodiversity ecosystem. The principle strand emphasizes on taking responsibility of the Company’s governance and employee behavior and are focusing on the following areas, that is ethics, integrity, sustainability supply chain, and behaviors and values. The core idea is to move beyond the realm of our products and services offering and deliver for a greater good of the society.
Moving from our license to operate what we call that is safety and sustainability, then we go next slide, that is slide number six, is our business performance. As you can see here, the quarter ending September 30th, orders totaled around INR1,952 crores, up 11.7% year-on-year, where renewable led to change from studies across utilities, power quality, and substation projects. Expansion, upgrade and improved efficiency also resulted in orders from existing power plants. Key large orders of transformers and power quality solutions from industry, transportation, utilities, and data centers include 400kV Central Transmission Utility for a petroleum product company in Dahej, and transformer order for a national transmission utility and the EBOS solar projects in Fatehgarh and Bhopalgarh, respectively, and LOT transformer for our locomotive engine product [Phonetic] factories and there are several other data center and software-related things in that.
Revenue for the quarter is INR1,553.8 crores, showcasing a strong revenue growth of 26.5% year-on-year on the back of favorable mix and good order execution during the quarter. Profit before tax for the quarter was INR70 crores, up by 118% year-on-year and profit after tax INR52.3 crores, up by 111.4% year-on-year, whereas quarter-on-quarter growth was up by 369% and 402%, respectively. Operational EBITDA for the quarter stood at INR126.3 crores, resulting in a margin of 8.1%, reiterating our continuous efforts towards improving margins and enhancing overall operational efficiencies. At the end of the quarter, the order backlog stood at a record high of INR8,910 crores, providing revenue visibility for the coming several quarters. Our continuous effort — efforts toward enhancing overall operational efficiency has helped us in improving our overall performance, including margins.
Moving to the next slide, slide number seven, where you see that as a pioneering technology leader, we are committed to the energy security of the country. So various projects undertaken by us. During the quarter, we have commissioned several projects and here I will highlight a few of them. We commissioned 400kV, 600-megawatt substation at Jaisalmer, Rajasthan, which include design, engineering, manufacture and testing. We also completed supply installation testing and commissioning of 110kV transformer base for an industrial plant in Trichy and also commissioned 220kV, 130kV, and 33kV substation for intra-state transmissions projects in Madhya Pradesh. The scope of work includes design, engineering, supply, installation, testing of the substations in that.
Moving to the slide number eight, we also continued to invest in our capacities and capabilities. This included starting expansion work of our transformers and interrupter facilities in Maneja to strengthen our operational infrastructure. For our teams, we had our — this year also, we have celebrated our 75-year celebrations for both internal stakeholder as well as external stakeholder. For our internal stakeholders, we had our first family fiesta engaging the families of our employees to visit and celebrate our workplaces, our factories, our project sites. Also, we organized energy run in Bengaluru for our employees, customers, and partners, which saw a huge participation, almost 2,000-plus running enthusiasts. Both events are part of our efforts to commemorate our 75-year celebrations, 75 years of our existing in this country.
In parallel, engagements with our customers continued. For example, from organizing an extensive five-day training program for our Mumbai HVDC project customer team, which was attended by 20 participants [Phonetic] from the customer side to hoisting a senior delegation from Delhi Metro Rail Corporation who are provided an extensive tour to our factory, showcasing our comprehensive product manufacturing and quality assurance process for dry and traction transformer factory at Savli. These are all just a couple of examples of our various capabilities building exercise with our stakeholders, both internal and external stakeholders.
Moving to the slide number nine. The Company has adhered to a principle of collaboration and co-creation with those most familiar with the challenges. Hitachi Energy worked closely with our customers, partners to foster a sustainable energy future for present and future generations. As part of this ongoing effort, we conducted our multi-city flagship customer event series called Energy & Digital World with the sessions in Jamshedpur and Pune, respectively. On the similar lines, we launched a new initiative called Technology Colloquium, technologies for energy transition and sustainable grid for engineering students across India. So this new platform, we reached out to engineering students to talk about one of the most important and urgent issues of our time, the energy transition and net-zero targets.
The platform facilitates meaningful conversation and exchanges of ideas on energy transition among young minds, subject matter experts and Hitachi Energy leaders. The first segment of the Tech Colloquium was kicked-off from BVM College in Gujarat, then moved to IIT Delhi and culminated in NIT Warangal. Engagement with key industry bodies and platforms were also leveraged through sharing leadership views and opinions on topics like innovation to net-zero to making India a global manufacturing hub at CII India Innovation Summit, Innoverge, CII Annual Karnataka Energy Transition Conference or Economic Times Energy Leadership Summit, just to give examples of that.
Moving to slide number — next slide number 10, Energy & Digital World 75, and thank you for some of you attending to this event on the second day of the Energy & Digital world. We at Hitachi Energy are proud to be part of various nation building projects over the last 75 years. In culmination of this milestone, the Company organized two-day experiential technology symposium called Energy & Digital World 75. Mr. Amitabh Kant, G20 Sherpa joined us as the Chief Guest for EDW75. During the inauguration of the mega event, he emphasized on the need for collective action towards the bigger energy goal and spoke about how India is an exemplar with its stride in the road to net-zero. He also lauded Hitachi Energy for its contribution towards achieving the goal.
The event encapsulates technologies and discussions towards advancing energy transition for India’s net-zero journey, which was attended by over 2,000 customers, policymakers, academia, think-tank, regulators, supply chain professionals, etc. Over 30 nationalities were also present and over 25 technology sessions by global industry experts, product launches and many more. The experiential exhibition was the main attraction of the event, spread over 1,000 square meter, showcasing our state-of-the-art technologies and products and giving a chance to our customers and partners to have a feel and look of our product portfolio, which are crucial for solving customers’ challenges. During the two-day event, we also had a closed-door meeting with several CXOs of various companies and many of you also joined us and provided a deep dive into technologies enabling the future energy systems.
Moving to slide 11, I think this slide you know better than me, the Indian growth saga continues as the country is in the right track for a $5 trillion economy in the coming years. According to government reports, India’s GDP is growing, growth was 8.2% for FY ’24 vis-a-vis 7% for FY ’23. India’s IIP growth for July-August stood at 5% year-on-year basis and IIP index for the industry stood at 149.6 during August 2024. The ongoing effort from government to boost the renewable sector has augured a good result as we witnessed a 50% year-on-year growth in FDI for FY ’24 with INR31,600 crores vis-a-vis INR20,700 crores in FY ’23.
Furthermore, green hydrogen market expected to attract investments of INR10.6 lakh crore as country gears up to produce 5 million ton of hydrogen by 2030. Also, the Indian data center market is estimated to reach INR85,000 crores by 2027. With India’s ambitious plan to increase power transmission capacity by 35% by 2032, expert expects an investment of INR9.15 lakh crore in state and central network. Indian Railway, as part of its capex plan, have allocated INR2.62 lakh crore budget for expansion of rail network. Also, considerate efforts were made to reduce distribution losses through upgradation and modernization of discounts.
Moving to the slide number two [Phonetic], as you can see here, the strong growth in the transmission, industries, data centers, and renewables. To provide more color, this quarter, data center segment emerges a high-growth segment with year-on-year growth of 346%, followed by renewable, which is up by 135% year-on-year, and industries and transmission segment saw a year-on-year growth of 78% and 34%, respectively. Whereas railways and metro due to the — due to — we saw a year-on-year decline of 11% in rail and metro segment, but the electrification of railways and growing metro network across the country will push these segments in the near future. On the right-hand side of the slide, you see that order mix product took the lead in the segment, whereas utilities and direct end users are cleaner winners for sectors and channels, respectively.
Moving to the slide 13, which are our growth levers, service and exports. The growing urgency to accelerate energy transition across the globe, there has been a constant endeavor at Hitachi Energy to enable many pathways to energy transition across geographies and segments. For quarter two, the service portfolio witnessed a substantial growth with contribution of 12% to the total order received. Stemming primarily from industries, renewable and transportation, including restoration and service of service level agreements. To mention a few key orders, we received transformer service CoreSense order from a steel major, GCB and GIS unique spares requirement and transformer repair in renewable and railway sectors, surveys and commissioning of various systems in Rajasthan solar and restoration of 220kV GIS at Gorai substation of a private T&D company.
On the right-hand side of the slide, you see the exports accounted for 22% of total orders. Booked in Q2 FY ’25, the significant share from a high voltage products and grid integration orders from European and African market. Some of the key orders include the C&P system in Yanbu, 145kV GIS for REE Red Electrica, 330kV AIS package for Azerbaijan, and 145kV GIS for Electron Data Center. So just to name a few in that.
I’ll now hand over to our CFO, Ajay Singh, to take you through our financial performance in the next two slides. I’m moving to the slide number four
Ajay Singh — Chief Financial Officer
14.
N. Venu — Managing Director and Chief Executive Officer
Slide number 14.
Ajay Singh — Chief Financial Officer
Thank you, Venu, and good evening, everyone. Hope you are all doing well at your end. Well, our focused and proactive approach has helped us to maintain the order growth momentum carried from the last quarter. During the quarter, the Company booked orders worth INR1,952 crores, which is 11.7% growth Y-on-Y. Revenue, if you see, INR1,553 crores, which is up by 26.5% Y-on-Y and 17.1% quarter-on-quarter, which is on the back of the favorable mix and the good order execution during the quarter. Profit before tax for the quarter was INR70.6 crores and profit after tax was INR52.3 crore, both up by 118% and 111% Y-on-Y, respectively, whereas both PBT and PAT quarter-on-quarter grew by 3 times and 4 times, respectively. If you see the operational EBITDA for the second quarter, it is INR126.3 crore, resulting in an operational EBITDA margin of 8.1%, and which basically see this is reiterating our continuous efforts towards improving margins and enhancing the overall operational efficiency. Even if you see the H1, the six months columns also clearly demonstrate the growth trend across parameter from orders till the operational EBITDA. We closed this particular quarter with a, I’d say, one of the highest-ever order backlog, INR8,910 crores which is providing a visibility of approximately 26 months for the execution.
If I move to the next slide, where I’d like to share an update on how the numbers fared during the last three months. So let me take a moment and walk through little specific details in this particular slide. If you see the table, it gives a clear picture of how the relentless pursuit for improving the bottom line and the progressive margin is basically recovery that we are able to see. You can see Y-on-Y revenue improvement of 26.5%, that is INR1,553 crores in this quarter as we discussed because of the relentless operational efforts. The material cost, if you see, is 61.7% compared to the last quarter’s 62.8%. Personnel expenses from the percentage terms, if you see, it is lower than the last quarter, 8.8%. Operational expenses are also in line, 20.9%, compared to the previous quarter, 23.6%. And then there is exchange rate variance that is 1.5%. Depreciation is consistent. Interest cost is slightly higher in this particular quarter compared to the previous quarter. So overall, you see we are well progressing in that direction and our efforts is to ensure that, going forward in the coming quarters, we continue this particular trend.
With this, I hand over to Venu.
N. Venu — Managing Director and Chief Executive Officer
Thank you, Ajay.
And if I go to the last slide before we open out for the Q&A. Our priorities for the remaining fiscal year, we remain steadfast to our bigger goal of 2030 strategy. Our singular focus of cementing our leadership in core segments continues. Our core segments are our renewable, our transmission, our utilities, our industry, our data center, our rail, etc., continues with the strengthening of our capabilities for growth, not only — it’s called trinity of service, export, and digital, along with harnessing maximum potential from the high-growth segment, I just described those things. Keep continue our focused approach toward improving the overall operational efficiency to further boost productivity and keep rising quality levels.
On the business front, consolidated effort will be made to leverage the large order backlog for revenue accretion and also margin improvements. To capture the maximum business potential arising out of the energy transition, we will continue to invest towards increasing our existing capabilities through up and cross-skilling of our existing human resources to address energy needs of today and upcoming time. Safety will always be paramount for us as it being entrenched in our DNA of our organization. We will continue to approach every day as a day one in terms of implementing safety work culture across our functions. And last but not the least is investing capacities for future growth capacities, our manufacturing capacities for our workforce in that.
With that, I close my presentation and open the channel for questions. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We’ll take our first question from the line of Subhadip Mitra from Nuvama. Please go ahead.
Subhadip Mitra
Good evening, sir, and thank you for the opportunity. Firstly, congratulations on a good set of operational numbers.
N. Venu
Thank you. Thank you, Subhadip. Thank you.
Subhadip Mitra
So given that we are seeing good operational performance, both in terms of top line and margin recovery, and you have maintained that you would be looking at double-digit margins by end of the year. Would you have any change to that guidance or any further clarity in terms of range of margins that we can look at, let’s say, over the next one year or so?
N. Venu
No — thank you very much for your question. No, at this point in time, no change in our thing. So what we stays — what we said previously stays.
Subhadip Mitra
Understood. Secondly, in terms of the large HVDC order potential and we have, I think, one which is where the L1 has already been announced and probably two more which are coming up. Are you already part of these — some of these orders, would you already be L1 in some of these bids?
N. Venu
No. I think, as you know, there are three HVDC tenders which are come for bidding. And as you rightly said, one of the HVDC tender has been LOI received by our customer, PGCIL. That’s what we have also read from the public information and we are bidding, as we speak, so we are bidding to our customers.
Subhadip Mitra
So the equipment-related tendering is currently on. That’s what you’re saying?
N. Venu
No, the HVDC-related — HVDC is a related thing. The PGCIL has won the entire transmission system, right, the transmission system, which includes HVDC, terminals, the power scope and the transmission lines, etc., including land and development, all those things, the whole transmission system, what I understand is they won — they received the LOI or something like that. So our portion, we are bidding it to our customers, which includes PGCIL.
Subhadip Mitra
Right. So just trying to understand that for this particular Khavda transmission line, which PGCIL has won, would you be supplying the equipment for this piece or is that something that’s yet undecided?
N. Venu
No, it is still — that’s what I’m saying. We are still — that is under bidding. We are bidding it to our customers, that’s what I said.
Subhadip Mitra
Oh, understood. Understood. And for the rest of the two lines, any timelines in your opinion by when we can see the equipment ordering on the other two HVDC?
N. Venu
I think our view is that at least one or two at least, if not two, at least one for sure, it will get finalized in this financial year. One of these three [Phonetic].
Subhadip Mitra
So that’s — understood, sir. Perfect, sir. That’s it from my side. Thank you.
N. Venu
Yeah, thank you.
Operator
Thank you. We will take our next question from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Mohit Kumar
Hi, sir. Good evening. Congratulations on a great set of numbers, sir. Good to see improvement in gross margin, EBITDA margin. So my question is on the HVDC, Leh-Ladakh. What is the status? I think the bids were supposed to be submitted in October. Has there been any update?
N. Venu
So Leh-Ladakh, I think the bid is not submitted yet. So there will be again discussions are going on, what will be suitability, etc., all those things — kind of things. It’s not submitted, answer to that.
Mohit Kumar
Understood. Sir, my second question on other expenses. I think last quarter it was high. Again, this quarter it persisted, right? I think I mentioned last quarter there are some one-offs. Is it fair to assume that this — there are some one-offs again in this quarter and which will go away in the next fiscal year?
N. Venu
Maybe, Ajay?
Ajay Singh
Yeah. So if you see in the current quarter, the other expenses, as I told you from the percentage terms, that it has come down rather, which is the 20.9%, right? So I don’t see that there is any other one-off in this particular other expenses. So clearly, it will be more or less consistent in this particular range.
Mohit Kumar
So there is no one-offs which can go away in the next fiscal year. This is the trajectory, right? We should assume.
Ajay Singh
Yeah, this is — it will hover around this particular range depending upon how we should look at it [Phonetic]. Wherever some expenses which are variable in nature, that will vary depending upon the growth.
Mohit Kumar
Understood. My last question is, sir, are the conversation on orders from high-speed rail is still going?
N. Venu
Yeah, it is still ongoing. It’s not concluded. It’s still ongoing.
Mohit Kumar
Understood, sir. Thank you, and all the best, sir. Thank you.
Operator
Thank you. We’ll take our next question from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Parikshit Kandpal
Hi, Venu. Congratulations on a decent quarter, sir.
Operator
Sorry, can you use your handset mode, please? Your line is not very clear.
Parikshit Kandpal
Is it better now?
Operator
Yes.
N. Venu
Yeah.
Parikshit Kandpal
Yeah. Hi, Venu, congratulations on a decent quarter.
N. Venu
Thank you.
Parikshit Kandpal
So I think initially in the call, you said that you are bidding for the clients. So I mean, have you entered exclusivity with the client or it’s again an open bid and where other peers are also giving their bids or it’s just that you’ve already been finalized and just some commercial negotiations are going on before the project — LOI gets issued?
N. Venu
It is open bidding.
Parikshit Kandpal
It’s open bidding, so all the participants are there.
N. Venu
Yeah. Yeah, yeah, yeah.
Parikshit Kandpal
Okay. And second question is on other expenses again. So if I compare with some of your peers, so they report about 11%, so I understand royalty will come on top of it, 5% to 6%. But still if it goes to, 16% 17%, but still there is almost 500 — 400- to 500-basis-point difference. So why is such a big difference? And is it because we are running again the parallel IT cost because we have our own ERP now operational. So I think last time, I think Ajay said that we’re still bearing — operating on dual IT systems. So what would be the contribution of shared IT with ABB and when do you expect it to go away from our books? And what could be the savings from that?
N. Venu
Maybe Ajay?
Ajay Singh
Yeah. So thank you for the question. So as I explained earlier also, if you see the other expenses in percentage terms, we are consistent, that is how I’ll say. So — and if you talk specifically about this particular quarter on the value terms, if you talk about the value terms, whatever the major incremental value is there, that is because if you see in this particular quarter, we have increased our revenues. So the production-related expenses is increased. But overall, if you see on the percentage terms, we are consistent.
Coming back to the IT cost with ABB. So again, if you see, we are — we have told earlier also that when we embarked into new company, we have taken support in the form of TSA agreement with ABB because at that particular point of time, we had to — we did not have our infrastructure, so to say. But as we speak today, we are basically at the end of that transitional service agreement, we have already set-up our own infrastructure and we believe that the IT cost that is factored in this particular, it will be in the same range. So that is overall setup. So our overall agreement, the TSA agreement, finally in a last leg of agreement, we’ll be coming out of that either by the end of this particular, let’s say, December next quarter.
Parikshit Kandpal
So how much would be that cost in absolute terms? I mean, is it significant or — so how do you quantify that?
Ajay Singh
As I discussed, we will be hovering around 3% — 2.7% to 3% range, overall IT cost that we are also today we are hovering around and going forward also it will be around the same range.
Parikshit Kandpal
So no savings as such from this dissociation [Speech Overlap]
N. Venu
Savings will happen out of — because we have implemented the new Rewa [Phonetic] system, right? So we’ll also get into a lot of other savings, including the productivities and those other things also part of that.
Ajay Singh
So yes, I think we have discussed earlier in the last quarter that we have implemented the new ERP system, S/4HANA. And there, with this, just now we have implemented in the previous quarter. So we expect to have an efficiency out of — we can leverage efficiency out of that and that will come with time. We’ll take one or two quarters, three quarters, to derive efficiency out of those new implementations.
N. Venu
Absolutely.
Parikshit Kandpal
Okay. And just last question, sir, on this battery storage. So now the battery costs have reduced significantly on the storage side. So any plans, do you think any opportunity for us to play out in the near-term? So how do you think the pathway towards introducing the battery storage for the Indian [Speech Overlap]
N. Venu
Yes, absolutely. Yeah, thank you, Parikshit. I think absolutely. As I said, we will see our 2030 strategies also. This is exactly on the edge of the grid where we have a play there, that is energy storage. So we have a complete portfolio, battery energy storage, and we do containerized, modularized, which is scalable battery energy storage supply. In addition to that — that tenure we had, our thing, in addition to that, Hitachi Energy globally, they acquired a company called eks. So eks is a company with Hitachi Energy globally they acquired. And that company has specialized in the battery energy storage applications. They have done a grid scale battery several countries in there. So we will be also leveraging that, offering that solutions and our products to our customers. So we are discussing with our customers as the market is getting mature.
Parikshit Kandpal
Okay. Sure, sir. Thank you, and wish you all happy Diwali. Those were my questions. Thank you.
N. Venu
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Dhavan Shah from AlfAccurate Advisors. Please go ahead.
Dhavan Shah
Yeah. Thanks for the opportunity, sir. So my question is on the renewal side of the portfolio. If I look at the order inflow growth for the first quarter, that was also more than 100% and around 500% in the first quarter. The same is around 135% in the second quarter. So can you help us to understand what is the scope of work in the renewal side of the portfolio? And out of the current order backlog of roughly 9,000-odd-crore, how much of renewable constitutes the overall backlog side?
N. Venu
So the renewable — our scope lies everything from the end terminal of the — from the inverter. We don’t do the civil, we don’t do the structural, we don’t do the panels, okay? So if you take rest of the things, all we do that, whether you’re talking about the grid connection of the renewable power, whether you’re talking about the transformers require everything, then you are talking about automation and also the system studies, system studies is a big thing. So all those things right from a planning stage to the building phase until maintenance phase is what we do that, except the civil, structural and the modules.
Dhavan Shah
Okay. And how much does this constitute to the overall backlog in portfolio?
N. Venu
No, we don’t separate the backlog by renewable and non-renewable, so that we are not given so far and we’d not like to give you also now in that.
Dhavan Shah
Got it. And just last thing is we are hearing some issues in the supply chain for the CI sheet for the transformer. So any issues?
N. Venu
Which one?
Dhavan Shah
Hello?
N. Venu
Yeah, can you tell me which sheet?
Dhavan Shah
Hello?
N. Venu
Yeah.
Dhavan Shah
The corrugated sheet for the transformers. So are you facing any issues in terms of supply chain for our portfolio?
N. Venu
No — not, I don’t think. Corrugated steel, no. You must be talking about our — this electrical steel, you mean?
Dhavan Shah
Yeah.
N. Venu
The CRGO?
Dhavan Shah
Yes, correct. Correct.
N. Venu
Okay. So electrical steel, as you know, we are Hitachi Energy globally. Now I’m talking about globally. We are one of the largest consumers of CRGO work globally because, by far, we are the largest capacity thing. So we have a definite frame agreement with many global suppliers. And that way we are able to secure the supply so far. We don’t see — we have not faced any problems so far.
Dhavan Shah
Okay. And we are not expecting any delays in terms of the requirements of those raw material also in the future quarter, right?
N. Venu
In the — yeah, we can’t tell forever, sure. But in the near-term, because of our robust frame agreements, globally, we do see that we have a robust supply chains in place. Of course, the prices are fluctuating, prices are varying, but barring that, we are able to secure the supplies.
Dhavan Shah
Okay. And pricing-wise, I think are we protected in terms of the end pricing or because the pricing has also been moving up. So how are we safe in terms of the overall contract pricing?
N. Venu
Most of our contracts, more than 60% of our contracts, do have price escalation formulas.
Dhavan Shah
Got it, sir. Yeah, that’s all from my side. Thank you so much.
N. Venu
Thank you.
Operator
Thank you. We’ll take our next question from the line of Vinod C. from PhillipCapital. Please go ahead.
Vinod Chari
Yeah. Hi, good evening. Am I audible?
Operator
Yes.
N. Venu
Yes, yes.
Vinod Chari
Yeah. So I had a question on your cash flows. So if I look at your operating profit have doubled from September last year to this year. But I think the entire cash flow is getting eaten up by working capital. There’s a big jump of the INR365 crores on your overall [Technical Issues], then that has also resulted in, I think, INR120 crore of short-term borrowing. So can you throw more light on what’s happening operationally there?
Ajay Singh
So thank you for the question. So you see, you are right, operational cash flow for this quarter, we are on the negative side, and our borrowings also compared to the previous quarter, they increased by roughly INR45 crores. So if you see, what I will say, this is a timing issue. In this particular quarter, I will say the collections were good, but the payouts were also very good in the sense, it was on the higher side. And why so? Because we are aware that we are running a large HVDC project for which in this particular quarter, the payouts were a little bit on the higher side. So that is just — it’s just a timing issue between the receipts and payments. Otherwise, I don’t see there is any major challenge in this particular aspect.
Vinod Chari
Okay. Thank you. Thanks so much.
Operator
Thank you. [Operator Instructions] We have a question from the line of Heet Mehta from Valuequest [Phonetic]. Please go ahead.
Unidentified Participant
Hi, sir. Congratulations on a good set of number for the quarter. Sir, my question is more on the CRGO prices and its movement [Technical Issues] how it is affecting our realizations in terms of who are we be supplying to, whether it be industries or the utilities?
N. Venu
So first of all, I just say, CRGO has two dimensions. First of all, it’s the demand — huge demand in the large power or overall power — overall transformer industry worldwide, so naturally, the demand is very high. As I said previously, Hitachi Energy is one of the largest buyers of CRGO globally. And by — we have a very robust supply chain frame agreements with most of the CRGO mill vendors directly. And we are able to — first of all, we are able to secure the supplies in line with our customers’ requirements. That’s the big thing. Our teams, globally, they are working to ensure that the commitments are met and we are able to get as of date the commitments in line with our commitments. That’s number one.
Priority for us is the — ensuring the supply chain — ensuring the supplies or factories. The number two is, yes, the prices are fluctuating globally and supply demand is there. So we are — as I said, we have a long-term frame agreements and which also allow escalations. And most — as I said, most of our contracts do have price escalations. So we are able to transparently pass on those price escalation. That way, we are able to mitigate the risks with that.
Unidentified Participant
Sir, again, my question was more on the side that we are seeing that peers or other transformer manufacturers are actually seeing the realizations go down with consistent margins. So we would assume that it was the commodity input prices that were going down instead of going up. So my question was on how our realizations are moving, like on the higher-end or on the lower-end?
N. Venu
The realization of the — on the products, you mean?
Unidentified Participant
Yes.
N. Venu
We will not talk about the realization for each on the product line basis. What I can tell you is that since the demand is high, naturally, there would be tendency for the going up on the margins which is what we are looking at it, but also, costs are also going up, right? We need to also balance those costs versus things. And there are unknown costs, other than that. So I would say it’s a stable in other words.
Unidentified Participant
Okay. And you are not seeing any huge fluctuations in the price of CRGO as such, right? Right now, thereby, is that stabilized more or less?
N. Venu
As I said, there are fluctuations, but those fluctuations are being covered with our price escalation. And as I said, we are giving a priority to ensuring the supply over the pricing. That’s how we have been working and that’s how our contracts have been structured with the CRGO people.
Unidentified Participant
Understood. Thank you so much, sir. Thank you.
Operator
Thank you. [Operator Instructions] We’ll take a follow-up from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Parikshit Kandpal
Yes, sir. Sir, thanks for the follow-up. So we have taken the related-party approvals for order from the parent entities. So just wanted to understand how much of that has come in already in 1H and in this quarter.
N. Venu
Ajay, you’d like to answer that?
Ajay Singh
So right now, if you see, we’ll not like to quantify at the moment, but we’ll get more visibility in the coming quarters how we are faring on those particular approvals. So last time when we took the approval, we had anticipated and we have done a bottom-up exercise where we see that by the year end, we’ll be crossing the thresholds, that is for which we have taken the approvals in advance. But maybe we’ll get more clarity in the coming quarters.
Parikshit Kandpal
But as of now, nothing has been materialized from that approval, right? Nothing has come in the first half?
Ajay Singh
No, no, obviously, it has come.
N. Venu
It has come.
Ajay Singh
It has come because it will come at a — quarterly, it will come.
Parikshit Kandpal
See that is what I’m asking for, in 1H, how much has come in? And in this quarter, if anything has come in this quarter out of the total order inflow of 1,900-odd-crores, what is the contribution from related-party?
Ajay Singh
So ballpark number, you can say, INR300 crores.
Parikshit Kandpal
INR300 crores?
Ajay Singh
For — you are talking about the Switzerland we [Phonetic] talked about, the ballpark number, the approval that we have taken is around INR1,200 crores and the ballpark we see till 30th September is around 300-plus-crores roughly.
Parikshit Kandpal
So a lot of ordering is still to happen in the second half. So we’ll see some more — a larger contribution to come in from the related entities in the second half.
Ajay Singh
Sure, sure. Yeah.
N. Venu
But at the same time, just to be sure that whatever we take the approval, there is no guarantee that we will get everything, no? We’ve taken approval in anticipation of some of the projects. We are bidding together with those companies and that’s how the approval will be taken ahead of the curve in line with the good governance practice. So whatever we take, everything will not come into that.
Parikshit Kandpal
Okay. Sure, sir. Thank you.
Operator
Thank you. [Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. N. Venu for closing comments. Over to you, sir.
N. Venu
Thank you. Thank you very much. Once again, ladies and gentlemen, I want to take this opportunity to wish you and your family, your loved ones, a happy Dhanteras and happy Diwali. Take care and stay safe, and talk to you soon. Thank you very much.
Operator
[Operator Closing Remarks]