INOX India Limited (INOXINDIA) Q3 FY24 Earnings Concall Transcript

INOX India Limited (NSE: INOXINDIA) Q3 FY24 earnings concall dated Feb. 13, 2024

Corporate Participants:

Krishna — Investor Relations

Deepak Acharya — Chief Executive Officer

Pavan Logar — Chief Financial Officer

Siddharth Jain — Director

Analysts:

Mohit Kumar — ICICI Securities — Analyst

Ankur Sharma — HDFC Life — Analyst

Prateek Bhandari — Art Ventures — Analyst

Prachir Jain — Shri Kalyan Holdings — Analyst

Nikhil Abhyankar — ICICI Securities — Analyst

Amit Kadam — Canara Robeco Mutual Fund — Analyst

Pritesh Chheda — Lucky Investment Managers — Analyst

Vinayak — Hirema — Analyst

Sanjeev Damani — SKD Consulting — Analyst

Chirag Kaskiwala — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the INOX India Results Conference Call hosted by ICICI securities. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Mohit Kumar from ICICI Securities. Thank you, and over to you, sir.

Mohit Kumar — ICICI Securities — Analyst

Thanks, Darwin. On behalf of ICICI Securities, we welcome you all to the Q3 FY’24 earnings conference call of INOX India. To discuss the result today, we have with us Mr. Siddharth Jain, Director; Mr. Mr. Parag Kulkarni, Executive Director; Mr. Deepak Acharya, Chief Executive Office; Mr. Pawan Logar, CFO; Mr. Sunil Lavati. Investor Relations officer. We’ll start with a brief opening remarks followed by Q&A. Prior to that, I’ll hand over the floor to Krishna for a disclaimer.

Krishna — Investor Relations

Thank you Mohit, and good evening, everyone. I’m pleased to welcome you all to INOX India Limited’s result conference call to discuss the Q3 and nine month financial numbers. Please note a copy of the disclosure is available in the Investors section of the website as well as on the stock exchange. Anything said on this call which reflects the outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces.

With this, I shall hand over the call to Mr. Deepak Acharya, the CEO for his opening remarks. Over to you, sir.

Deepak Acharya — Chief Executive Officer

Good evening and thank you Mohit Kumar and Krishna. I’m Deepak Acharya from INOXCVA. Good evening everyone and hearty welcome to all the investors and analysts on the first result conference call of INOX India Limited post the listings call. As you must be aware that we recently got listed in stock exchange on 21st December 2023 and this is our first quarterly result post listing. Thank you for taking the time out and participating in our result conference call.

The unaudited financial result as well as the investor presentation for Q3 and nine months FY’24 have been uploaded on the stock exchange. Hope you had a chance to review the same. For the benefit of all who are listening to us for the first time, I like to brief and share the key highlights of our business. INOXCVA has 30 years of experience in design manufacturing, installation of cryogenic equipments across the globe, making us the world’s leading provider of customized cryogenic equipments today.

Our business divisions include industrial gas, LNG, cryoscientific division and are working continuously towards clean energy initiative in LNG, liquid hydrogen and fusion energy. Over the years, the company has developed engineering expertise coupled with quality product offering and our unwavering customer service that has helped INOXCVA to make its brand value in this space. The company executes large turnkey projects and manufactures specialized noncryogenic equipment also. The company has a large scale serial manufacturing facility at four locations in India and part manufacturing and service distribution from one of the locations in the field, with service distribution extending to Netherlands as well. Very recently, the company undertook a greenfield capacity addition and set up its fourth manufacturing facility at Savli, Gujarat at the project cost of INR100 crores funded entirely through our internal accruals. To optimize operation, the company has continually undertaken capex to support the growing demand into new application areas and strengthened the design function.

Over the years, the company has delivered its products and services to over 100 countries, key geographical areas being U.S., Europe, Saudi Arabia, Brazil, Korea, UAE, Australia to name a few. During nine month FY’24, the company recorded highest overexport — ever export revenue of INR501 crore up by 75% year on year. Supported by buoyant market situation worldwide, our existing products used in industrial gases, LNG, hydrogen and evolving new other applications, we have robust order backlog of INR1,043 crore on nine-month FY’24 with 50% orders from industrial gas, 23% orders from LNG and balance 27% orders from cryoscientific division. Export orders comprise 47% of the total order backlog. We have actively participated in various public sector tenders which are at different stages of awarding. In addition, we are engaged in discussion with numerous private customers for building LNG infrastructure.

Let me briefly take up each of our business divisions separately. Industrial gas. Industrial gas registered a quarterly Q3 FY’24 revenue of INR214 crore and nine-month revenue of INR571 crores, contributing 65% of the total income. Under this division, we manufacture cryogenic tanks and systems for storage, transportation of industrial gases such as oxygen, nitrogen, Argon, hydrogen, CO2, etc. The various products manufactured under this segment are storage tanks, transport tanks, micro bulk units, vaporizers, cryobiotanks, storage and [indecipherable] gas efficient equipments. Over the years, INOXCVA has continually moved up the value chain by developing expertise in designing and manufacturing cryogenic equipment from one liter capacity to 1 million liters capacity.

LNG division LNG division registered a quarterly Q3 FY’24 revenue of INR75 crores and nine month revenue of INR247 crores, contributing to 29% of our total income. Under this division, we manufacture standard engineering equipments for LNG storage, distribution and transportation. Various products manufactured under this segment are storage and Regas system for industrial applications, marine fuel gas systems, LCNG fueling station, vehicle mounted LNG fuel tanks, LNG infrastructure for automotive applications, mini LNG infrastructure, etc. Certain marquee projects executed by the company are installations of mini LNG terminal in Scotland, UK in 2019 as well as commissioning of LNG dispensing station in the hills.

On cryo scientific area. Cryo scientific registered a quarterly Q3 FY’24 revenue of INR6 crore and nine month revenue of INR37 crore contributing to 4% of our revenue. Under this segment, we manufacture equipment for technology intensive applications and turnkey solutions for scientific industrial research involving cryogenic distribution including equipment for fusion research. Various products manufactured under this segment are satellite launch facilities, cryogenic propulsion system and research, MRI cryostats, fusion and superconductivity, etc. Certain niche projects undertaken by the company as we manufactured and delivered an MRI cryostat for the Government of India project. The company was awarded the contract for development of cryogenic equipments for second launch pad project of ISRO in the year 1999. In 2018, the company manufactured, installed and commissioned COMNAVAC thermal vacuum system for ISRO Ahmedabad. We also are proud contributors to the world’s largest fusion research project by providing critical equipments, mainly four kilometer long complex jacketed piping to maintain ultra cold superconducting magnets operational under all conditions to ITER project in France, Europe.

Let me share in brief on the overall financial performance of our company. I am pleased to inform you that the company recorded the highest ever revenue of INR875 crores and EBITDA of INR270 crore during nine months FY’24. The major reason for increase in the robust performance by all our major business segments, historically, on an annualized basis, the revenue of the company has been growing at a CAGR of 27% over the previous two years. EBITDA and PAT margins during the nine months are 25% and 17% respectively. That reflects our highly specialized customized and engineering solutions and favorable product mix.

I am happy to share that we have been a dividend paying company for the last few years. On the capex side we have spent total of INR103 crores over the last three years up to FY’23 which has been met through our internal accruals only. Due to high cash flow generation over the years, we are a debt free net cash surplus company having cash and cash equivalent available on 31st December 2023 of nearly INR235 crores.

Last bit on the financials I would like to highlight that we are proud to have best in class return ratios with return on capital employed ROCE 37% and return on equity ROE 28% on FY’23.

Let me now share certain key recent business developments. Adani Total Gas and INOXCVA has entered into a mutual support agreement under which the entities mutually accord a preferred partner status for the delivery of LNG and LCNG equipment and services for identifying and exploring possible collaboration opportunities for strengthening the LNG ecosystem in India. This collaboration with INOXCVA shall help Adani Total Gas in undergoing phased transition of long haul heavy vehicle buses currently using diesel for LNG, helping over 30% reduction in CO2 and greenhouse gas emissions. Also, we help facilitate fast track setting of LNG stations across the country for boosting the confidence of fleet operators to use LNG as a transportation fuel.

Very recently, we signed an MoU with Inter-University Accelerator Centre, an autonomous institute under the University Grant Commission, Ministry of Education, Government of India, towards collaboration for the development of technology for the design and manufacture of superconducting magnets based for clinical, industrial and defense research applications. The synergy is to make India one of the global players in manufacturing of superconducting magnet based systems including next generation MRI magnets. The technology can be now indigenously developed such as complex systems can be manufactured in India now.

Recently we also got following three patents registered: One, LNG dispensing station; second, invention on sliding spacer in the cryogenic piping; and third, displacement decoupling arrangement for double walled cryogenic piping system. These patents shall strengthen our leadership in cryogenic industry and differentiate our products for superior performers.

Cryogenic landscape. The world is talking about hydrogen as the cleanest fuel and we forayed into this segment since 1999. We are the first Indian company to manufacture trailer mounted hydrogen transportant designed jointly with ISRO organization. We offer complete solutions for hydrogen storage, transportation and fueling infrastructure. With the proposed launch of National Hydrogen Mission, we anticipate good traction in this segment and we are happy to share that we are well placed to optimize the huge opportunities in this space.

Going forward, we anticipate high demand for cryogenic gases from the metallurgy sector, oil sector, gas, chemical industry, decarbonization, electronics, healthcare space and satellite, etc. In addition, a shift towards cleaner fuel sources such as LNG and hydrogen in industrial and transport will provide boost to our products. For LNG. We expect strong demand from Asian countries like India, South Korea and other Asian countries which are increasingly transitioning from energy sources such as coal, crude oil to nuclear and gas.

At INOXCVA, our focus is on users in the remote island as well as industrial consumers with no access to natural gas pipelines. Lastly, I would like to acknowledge and be thankful to all our stakeholders who are associated with INOXCVA, above all, our employees. I’m extremely thankful to INOXCVA team for delivering resilient work and striving for excellence over the years.

This concludes my planned remark and now I would like to hand out the call to Pavan Logar to take us through the financial highlights before we open the floor for Q&A.

Pavan Logar — Chief Financial Officer

Thank you Deepak sir and good evening everyone. A warm welcome on our first result conference call. I shall summarize the consolidated financial highlights for the quarter and nine months ending 31st December 2023.

During the quarter, total income was INR295 crores, a growth of 18% from INR250 crores of Q3 FY’23. During the quarter, EBITDA was INR71 crores, a growth of 23% from INR58 crores in Q3 FY’23. EBITDA margin was at 24.2% as compared to 23.3% in Q3 FY’23. The improvement in profitability is on account of pricing time to time and order to order. Normally it ranges between 21% to 24%.

During the quarter, PAT was at INR49 crores, a growth of 19% from INR41 crore of Q3 FY’23.

During nine months FY’24, the company recorded a highest ever total income of INR875 crores, a growth of 18% from INR74 crore in nine months FY’23. During nine months FY’24, the company recorded highest ever EBITDA of INR217 crores a growth of 22% from INR178 crore in nine month FY’23, EBITDA margin was at 24.8% as compared to 23.9% in nine month FY’23. During nine month FY’24, the company recorded highest ever export revenue of INR501 crores up by 75% YoY and comprising 57% of the total income.

The company has a customer base spanning over more than 100 countries and key geographies includes U.S., Europe, Saudi Arabia, Brazil, Korea, UAE, Australia and Bangladesh. Order backlog as on 31st December ’23 is tune of more than INR1,000 crores, INR1043 crores. Exports comprising 47% of the total order backlog.

The total debt as on FY’23 is nil providing adequate room to raise debt in future. Total net worth as on FY’23 is INR549 crores.

The company has comfortable net cash position of INR235 crores as on December ’23 end. In June 2023, Crisil Rating has upgraded our bank loan ratings from Crisil A-plus positive to Crisil AA minus stable and short term bank facilities at Crisil A1 plus.

That concludes my update on the financial highlights of the company. I shall now request the moderator to open the floor for question-and-answer session. Thank you.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Ankur from HDFC Life. Please go ahead.

Ankur Sharma — HDFC Life — Analyst

Yeah, thanks. Good evening, sir. Thanks for your time, as always. Just a few questions. One, was this very strong order inflow growth that we see during the quarter, I think almost an 80% growth. If you could just help us. Is there a large LNG order also in this or where are we getting these orders for industrial gases, which segments and which markets? If you could just help us.

Deepak Acharya — Chief Executive Officer

Ankur, I think you mentioned about the 80% increase. What we were talking about is the last quarter we have received substantial orders in all the sectors. We have received the orders from the industrial gas sector, LNG sector, as well as cryo scientific sector. If you see the situation one quarter before, we had a pending order of almost about 1035 [Phonetic] level. And the sale which has happened in the quarter is almost the same level as we have received. The orders that we have have come from major projects which are coming out of the industrial gas as well as the projects that we have now from the cryo scientific thing.

Ankur Sharma — HDFC Life — Analyst

Okay, what I’m trying to understand, is it more of like base orders or is there any large one-off orders also in this is what I was actually trying to understand.

Deepak Acharya — Chief Executive Officer

Orders, which we keep on getting. Some of the projects could come on, some other projects could come up, some other division, but this is kind of a base which is happening all the time.

Ankur Sharma — HDFC Life — Analyst

Okay.

Siddharth Jain — Director

I’m not sure if everybody can hear me. This is Siddharth Jain speaking. Can everybody hear me?

Ankur Sharma — HDFC Life — Analyst

Yes, sir.

Siddharth Jain — Director

Okay, thank you. Yeah, I just wanted to add that our last quarter was a great quarter. I think approximately INR295 crores of fresh order, which is in line with our expectation and our turnover out of which about INR190 crores was, I think, industrial gas. I mean, Mr. Acharya can correct the numbers and about

Deepak Acharya — Chief Executive Officer

[indecipherable] crores in IG and INR75 crores in LNG and balance in cryo scientific and others making it to INR295 crores.

Ankur Sharma — HDFC Life — Analyst

Okay, got that. And then clearly you would expect this momentum to continue, right? So I’m just trying to understand how are the end markets? Is it more exports? Is it more domestic? If more of exports, then which geographies? If you just help us understand and give us sense on key end markets which are driving this kind of growth for you.

Deepak Acharya — Chief Executive Officer

I think the growth is being driven equally by all the three sectors. We do see kind of a stronger demand coming up on the cryo scientific area right now, mainly because of some of the major projects which are now coming up on the scientific research area. We do see that there is a consistent demand which is coming up for LNG, as you must have heard about the collaboration or the agreement that we have signed with the Adani that is also opening up new doors. And they are having aggressive plans to go ahead and further for distribution of natural gas. We are constantly dealing with several institutions and the customers where the projects are on the anvil. So I would guess that the trend that we have as far as the past is concerned, we expect that to continue even going forward.

Ankur Sharma — HDFC Life — Analyst

Okay. And if you could just remind us what would be your ’24 guidance on top line margins, if any, if you could help us with that.

Siddharth Jain — Director

Let me take that, Siddharth Jain. Of course, we don’t give guidance for the future, but as we said during the IPO time that we expect our past trajectory to continue in the next few years. And as you can see from our current results, I think we see that trend continue.

Ankur Sharma — HDFC Life — Analyst

Sure. Okay. All right. Great. Thank you so much.

Siddharth Jain — Director

Thank you.

Operator

Thank you. The next question is from the line of Prateek Bhandari [Phonetic] from Art Ventures. Please go ahead.

Prateek Bhandari — Art Ventures — Analyst

Hi, sir. Good evening. Am I audible?

Deepak Acharya — Chief Executive Officer

Yes.

Prateek Bhandari — Art Ventures — Analyst

Can you tell me what was your capex for the nine months FY’24 and what you are willing to do as a capex for the coming up quarter? And also the capex for the upcoming financial year? That is financial year ’25.

Deepak Acharya — Chief Executive Officer

Actually, for nine months, we already incurred about INR90 crores, INR90 crores. INR95 crores. And in the next quarter, we will incur around INR25 crores more. And this is mainly because of this Savli project which we already shown in our IPO also, now the production already started for this Savli. And from next year onwards, around INR50 crores, around INR40 crores to INR50 crores will be there. And around INR15 crores to INR20 crores will be for maintenance capex every year.

Prateek Bhandari — Art Ventures — Analyst

Okay. And can you throw some color on the margins that you are willing to maintain for the coming financial year? Will they be in the same lines or we can see any improvement? And if there is going to be any improvement from, which business vertical you are seeing the same?

Siddharth Jain — Director

Normally we will maintain our margins in a similar way. However, few basic points here and there in the different divisions will depend upon the type of order and the specialized equipments we have to supply. But normally, it will be almost similar.

Prateek Bhandari — Art Ventures — Analyst

All right. Thank you. Thank you so much.

Operator

Thank you. The next question is from the line of Prachir Jain from Shri Kalyan Holdings. Please go ahead.

Prachir Jain — Shri Kalyan Holdings — Analyst

Congratulations on the robust performance of your company. I would just like to ask you the collaboration of the company with Adani Total Gas, how much will it contribute to the revenue of the company and how long will it take to reflect in the balance sheet and the profit and loss of the company? Thank you.

Deepak Acharya — Chief Executive Officer

Yeah. Adani Total is a preferred partnership, we have signed an MoU with them and they have very major plans for LNG as a vertical for them. And in coming two to three years, they’ll be expanding heavily, especially on the fueling station, LCNG station, satellite station, and maybe the convergence of their mining and cement trucks to LNG as a fuel. So, though the numbers are not clear to us as on today, but they expect a substantial addition into the LNG business on this.

Prachir Jain — Shri Kalyan Holdings — Analyst

And this is a long term contract?

Siddharth Jain — Director

It’s a long term contract. At least we have like five years contract with them. And if required there it can be extended.

Prachir Jain — Shri Kalyan Holdings — Analyst

Okay. Thank you.

Siddharth Jain — Director

If I may just add, Prachir. You see when Adani is building out — when Adani Total Gas is building out this LNG infrastructure, it requires a lot of for us to collaborate with each other on an engineering basis as well, design, engineering, planning. So we’re going to work with them to help them design the equipment that they need to fulfill their needs. So numbers is one part. This is not just about a commodity supply. It’s about system supply. That’s the difference.

Prachir Jain — Shri Kalyan Holdings — Analyst

Okay. Thank you, sir.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Nikhil Abhyankar from ICICI Securities. Please go ahead. Nikhil, the line for you has been unmuted. You may proceed with your question.

Nikhil Abhyankar — ICICI Securities — Analyst

Hello. Yeah, so thanks sir. Thanks for the opportunity. So we were also participating in PSU tenders for CNG station. So can we throw some light on that as to how many tenders we have participated? Are we L-1 in some of the tenders? And how do you see the prospects of them going forward?

Deepak Acharya — Chief Executive Officer

So we have been participating in the several tenders so far and just a minute. Like for LCNG we have been with Gujarat Gas, Torrent Gas, Indraprastha IRM, [indecipherable] Gas, HPCL, BPCL. So almost all these places we have received the orders and many projects like GAIL and other things they are under the bidding stage. And we hope that with whatever the track record we are having, we’ll certainly get orders from these PSUs. Even we have supplied lot of critical equipments to IOCL for their 26 LNG fueling station projects.

Nikhil Abhyankar — ICICI Securities — Analyst

Right. And sir, when you participate in this PSU tender, how is the competitive intensity? Can you just name a few, some of your competitors who are always present in this bidding?

Deepak Acharya — Chief Executive Officer

So we have, like our major competitors is the Chart VRV in Chennai. And there are some local other manufacturers who also bid. But whatever we have seen in the past, our rates are very competitive and our product has a very good acceptability in the market. And with the very critical specifications they are putting into RFQs, we get the leading hand over all of them.

Nikhil Abhyankar — ICICI Securities — Analyst

Okay. And sir, are we also willing to participate in LNG fueling station?

Deepak Acharya — Chief Executive Officer

Yes, we are participating in LNG fueling station in a big way and we have already commissioned HPCL and BPCL projects and so many other projects are in hand now, we have got a few stations from Adani Total as well.

Nikhil Abhyankar — ICICI Securities — Analyst

So going forward, is it fair to assume that our share of domestic sales will be higher as compared to exports?

Deepak Acharya — Chief Executive Officer

It is almost like 50%-50%, maybe sometimes 48-52 like that. But it is normally last few quarters. It is 50-50.

Nikhil Abhyankar — ICICI Securities — Analyst

Understood. And just the last question sir. Our order book is almost 1X of our FY’23 revenue and almost on — so what exactly is the execution cycle of this order book? And this much —

Deepak Acharya — Chief Executive Officer

Normally we have two major products. One is standard products and another is custom built products. The cycle time for manufacturing of standard products is roughly three to four months whereas the big project ranges from eight months to 12 months maximum. This is the time period where we normally finish such projects.

Nikhil Abhyankar — ICICI Securities — Analyst

So within one year we execute the entire order book?

Deepak Acharya — Chief Executive Officer

From the scratch to completion.

Nikhil Abhyankar — ICICI Securities — Analyst

Understood. And sir, on this agreement with Adani Total, you mentioned on the call that we are at the stage of designing and basically doing all the designing work as of now. So when should we start the actual order booking from this agreement?

Deepak Acharya — Chief Executive Officer

Already we have started order booking. The three earlier stations what they were having, so we have helped them in starting those stations because they were having some issues with the station which was delivered by some other company. And we recently, last week only we received five fueling stations from them.

Nikhil Abhyankar — ICICI Securities — Analyst

Five fueling stations. Okay sir, that’s all from my side. Thank you.

Operator

Thank you. The next question is from the line of Amit Kadam from Canara Robeco Mutual Fund. Please go ahead.

Amit Kadam — Canara Robeco Mutual Fund — Analyst

Yeah hi sir, just wanted some clarity.

Operator

Sorry to interrupt but you are not audible sir.

Amit Kadam — Canara Robeco Mutual Fund — Analyst

Is it fine now?

Operator

This is much better.

Amit Kadam — Canara Robeco Mutual Fund — Analyst

Hi, good evening sir. Just wanted some clarity on the numbers. How it is like from a seasonality or fluctuation point of just one observation was in the top line or revenue part. The domestic revenues is pretty much flat YoY whereas the large part of the growth was contributed by the export where INR99 crore export has moved to INR145-odd crore. Just wanted to understand what are the things happened during particular orders or which leads to like a domestic even though there is what your commentary says that there is traction in the domestic market also. But then YoY-wise it’s flat and what is leading to this significant jump in that export of more than 50% odd? So that’s the first question from my end.

Deepak Acharya — Chief Executive Officer

So basically on industrial gas business, is a very standard business. So the growth looks little flatter. But definitely we are not losing any orders and we are very confident that we will get orders in future as well. And on the export front, we have major like LNG and cryo scientific orders and these are from various European companies and various research institutes from Europe. And that is why we are saying that our export will be almost 50% what we have achieved so far and will continue in the same fashion.

Amit Kadam — Canara Robeco Mutual Fund — Analyst

In that case, just adjusting for that particular raw material inflation which would have impacted our top line. But as you are saying that we are getting a good traction in the LNG fuel station installation, this OMCs are getting little — got little aggressive in setting that. Then what has just wanted to understand more with more clarity that what would have gone out and what would have incrementally come in in this particular revenue. Because as you said —

Siddharth Jain — Director

Acharyaji, let me take this. You have to view our revenue not on a quarterly basis between domestic and export. Because every quarter — in some quarters, exports are more and domestic are less and vice versa. It has to be seen on an annual basis.

Amit Kadam — Canara Robeco Mutual Fund — Analyst

Sir, annual basis? I’m just —

Siddharth Jain — Director

Annual basis. Our guideline are split between domestic and export right now is looking like half, half on an annual basis. Does that answer your question or it doesn’t?

Amit Kadam — Canara Robeco Mutual Fund — Analyst

It doesn’t sir. Because last year quarter three, your domestic revenue is INR145 crore ballpark.

Siddharth Jain — Director

No, I’m saying you can’t compare year on year, quarter on quarter cannot be compared.

Amit Kadam — Canara Robeco Mutual Fund — Analyst

Okay.

Siddharth Jain — Director

You have to compare annual, annual means 12 months. Annual does not mean three months on three months, that cannot be compared in an industry like ours where some months you will have domestic sale more, some months you will have export sale more. You have to see the 12 months cumulative number. Because 50% of our revenue is nonstandard tanks project based. It depends on revenue recognition methodologies. Because of IndAS, there are many factors involved. So you cannot compare Q3 versus Q3, FY’20 versus FY’23 and look into the export domestic split in that.

Amit Kadam — Canara Robeco Mutual Fund — Analyst

Fine. Point taken, sir.

Siddharth Jain — Director

The guidance is on an annual 12-month cumulative basis, half half.

Amit Kadam — Canara Robeco Mutual Fund — Analyst

Okay. Just to extend this thing, then if we want to take a little more idea on how we are going ahead or moving for that annual number, what will be the correct way of understanding our growth trajectory? Because the annual could be a little longer time to get the clear sense how we fare by the year end. But if you want to track in a better way in some piecemeal level, then what would be the correct way of seeing that we are on the correct trajectory?

Deepak Acharya — Chief Executive Officer

On an EPC — in EPC, when you’re doing businesses like ours, where 50% of our revenue comes from projects which take eight to 12 months and 50% of our revenue comes from standard times, it’s very difficult to track piecemeal when the delivery of our product only takes more than a quarter.

Amit Kadam — Canara Robeco Mutual Fund — Analyst

And then what will be the strongest quarter for us, sir? Then at least that —

Siddharth Jain — Director

There is no strongest quarter. We are not a seasonal business.

Amit Kadam — Canara Robeco Mutual Fund — Analyst

Okay. So deliveries can happen all through the year based on how the orders are. Okay.

Siddharth Jain — Director

Absolutely. Deliveries do happen. I mean, for example, this past quarter we did INR295 crores of sales and our nine month revenue was also — what is our nine month revenue, guys? So it’s pro rata, as you can see. Almost.

Amit Kadam — Canara Robeco Mutual Fund — Analyst

Got it. And just final question is, just wanted to get some update on the LNG fuel tanks as such, which was your planning for the commercial vehicles, heavy commercial vehicles, where we are, in terms of how the OEMs are looking forward, we had got some initial traction in terms of qualification where we stand right now?

Siddharth Jain — Director

So, you know, I think this is a really futuristic segment and it’s fortunate that we were the first movers in this in India, where we have invested in the line ahead of schedule. We have designed world class products and we have got approval of our products from all the OEMs as well. We are definitely seeing a lot of traction on it. In order for the OEMs to buy the tanks, they also need the fuel stations in place. And those fuel stations are coming up as well. So our deliveries are continuing and we are seeing over the next 12 to 24 months, a much larger offtake in this line.

Deepak Acharya — Chief Executive Officer

I like to add that besides OEM, there are a lot of conversions also happening. Old trucks and buses may be converted from diesel to LNG as a fuel along with the engine. So that much is also happening in many places now. So that will also add a visit to our business.

Amit Kadam — Canara Robeco Mutual Fund — Analyst

Fair enough, sir. So there is a further question. I’ll join back in the — I’ll come back later. Thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Pritesh Chheda from Lucky Investment Managers. Please go ahead.

Pritesh Chheda — Lucky Investment Managers — Analyst

I didn’t understand what exactly we will do in the truck size. Basically we will give them the tanks or we’ll have a whole kit around it?

Deepak Acharya — Chief Executive Officer

We will give the fuel tanks and the kit suppliers are again we have associated with them. So together it will be fitted into the truck. And basically our supply will be mainly the tank — the fuel tank.

Siddharth Jain — Director

I want to clarify. There are two different parts for the fresh OEM. We are OEM suppliers of the tank itself. Just for the sake of an example, let’s call it Tata. And if they’re making a truck, it will be a brand new gas engine based truck where we will be supplying the tank. But in the case of a conversion — in the case of a conversion, it requires a kit supplier as well. So just two different verticals, Pritesh.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay.

Deepak Acharya — Chief Executive Officer

As I said, that when we say the LNG tank, tank comes along with its conversion to the regasification. So directly the gas is regasified and delivered to the engine. So the entire system, which is consisting of the storage tank as well as regasification is packaged together. And that is the package which we will give whether it is for a new build or for conversion.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. And is it fair to assume that today the LNG business, which is 20% of your business, is largely coming outside India? The India part of the business and the ordering will now start?

Deepak Acharya — Chief Executive Officer

It is both because you see in India also there is the city gas distribution system which has happened. The part of the trucks getting converted or heavy duty trucks getting converted to LNG is the one which is happening now. But there is also the industrial requirement where people who are not on the pipeline, they get the fuel in the LNG form. That means in the liquid form. And then they have their own regasification on site. Also there are city gas distribution companies which are not onto the gas pipeline, they have the LCNG stations, which means the liquid CNG station, which are also supplied by us as a cryogenic storage and pumping systems. So this part of the business continues. We expect the growth to happen when the trucks become also the long distance truck get converted and the additional business would come up with the LNG fuel stations as well as LNG fuel tanks coming up on that.

Our export market continues for the tanks and regasification systems that we supply to the global market. Marine is a major market that we keep supplying and that is for the conversion of the marine fuel from the diesel or any other heavy polluting fuel to the LNG. And we supply the LNG tanks as well as that regasification system which comes along with that.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. And what’s your global market share in LNG and India market share?

Deepak Acharya — Chief Executive Officer

Actually, this business is so niche and it’s very complex. So there’s no published data which is available. But what we can say is we are among the first couple of companies which are there in this operation. So there are only few companies with whom we compete globally when we talk about such regasification systems or the marine applications as such.

Pritesh Chheda — Lucky Investment Managers — Analyst

And my last question is, this Adani partnership, what does it encompass? What kind of equipment supply does it lead to?

Siddharth Jain — Director

The total package system like fueling station, LCNG stations, satellite stations, fuel tanks for the trucks, and basically to support their initiatives in the LNG sector, training them and providing them the technical inputs for their new upcoming projects. This is the entire gamut where we’ll be working with them.

Pritesh Chheda — Lucky Investment Managers — Analyst

And when should the ordering to you start?

Siddharth Jain — Director

Ordering has already started. We are recently fueling stations from them now.

Pritesh Chheda — Lucky Investment Managers — Analyst

Thank you, sir. Thank you. The next question is from the line of Vinayak from Hirema [Phonetic]. Please go ahead.

Vinayak — Hirema — Analyst

Yeah, good evening, sir. Can you shed some light on beverage can business?

Deepak Acharya — Chief Executive Officer

Yeah. We recently started a plant at Savli in 31 acres of land which is there. So we have put our first three shops where we have started manufacturing beverage cans. And the capacity of this plant is around 1 million. But we will go in step by step. So we have already started manufacturing. The trial production is on and few commercial production is also started. We have supplied to Belgium, U.S. and Germany. And the order flow has started coming in now.

Vinayak — Hirema — Analyst

How is it picking up, sir? Recently we had some collaboration with Italian manufacturer, right sir?

Deepak Acharya — Chief Executive Officer

Yeah, that was the initial collaboration for the technology transfer and we are working with them continuously on the product development as well as the manufacturing excellence initiatives. So that is we did on August 23 and it is continued.

Vinayak — Hirema — Analyst

So how are the margins in that business, sir?

Deepak Acharya — Chief Executive Officer

I think we have just started the whole project right now. So it is the initial supplies which are going on. Now we are in the process of making sure that all the line set up and the line balancing is happening. So this is the early stages. I think we can practically see the operations during next financial year. FY’25 could give us a certain clear picture, because this year is just the investment which has happened and we are training our people and we are just getting the product through. In terms of the trial productions, I would say.

Vinayak — Hirema — Analyst

My second question is there is a lot of overlap between INOX Air products and INOXCVA business, right, sir? Is there any noncompetitive agreement between these two companies?

Deepak Acharya — Chief Executive Officer

Think there is a little misunderstanding. Let me clarify that INOX Air Products is in the business of setting up the air separation plants and selling the industrial gases, which is liquid oxygen, liquid nitrogen. They would need the capital expenditure in the form of storage tanks, transportation tanks, customer station tanks. And that is the product that we manufacture. The INOXCVA or the INOX India Limited is the one which is a capital goods manufacturing company and which supplies the products to INOX Air Products as well as the competitors of INOX Air Products. So we are able to sell. So there is no competition between the two. We have a relationship of buyer and a supplier.

Vinayak — Hirema — Analyst

My third question is, is there any direct benefit from the National Green Hydrogen mission? I mean, I couldn’t see any collaborations between green hydrogen producers as of now, including air products.

Deepak Acharya — Chief Executive Officer

In hydrogen production globally is happening at an early stage where the countries are all getting committed to conversion of the fuel, ultimately to hydrogen, because that is the least polluting or the zero polluting fuel. Now, our business is mainly associated with the distribution of hydrogen, and as the hydrogen generation starts, we are not in the generation of hydrogen, but we are in the storage and distribution of hydrogen. So our business is happening to all those green hydrogen projects which are coming up globally and where they need to store large quantities of hydrogen, and as we had mentioned during the IPO stage also that the world’s largest green hydrogen product or liquefaction plant has come up in Korea and we have been the supplier of the storage equipment at that particular location. And similarly, we do see there are more opportunities where different projects coming up in the world. We are in a position to bid for them and we are able to showcase our references to exploit the growing market which will come up. But as everyone knows that this is a long term play, the projects will come one by one and we hope to have the continuity of this.

Vinayak — Hirema — Analyst

Sir, one more. Are we looking for any ITER kind of mega project as of now?

Deepak Acharya — Chief Executive Officer

There are similar projects which are coming up. I think the ITER is one extremely large project. But I’m sure when this project becomes successful or when it comes to the various countries will start looking into their own projects. Even India at some stage will think about making some demo projects or a demo fuel — the fusion project. But simultaneously we also have other projects which are called big science projects. For example, right now in Germany, there is a FAIR project which is coming up, FAIR. And we have already started bidding as well as receiving certain orders for the projects, that is the FAIR project, and we expect similar projects to happen all over the world and in different locations. We will bid for such kind of mega science projects.

Vinayak — Hirema — Analyst

Yes, sir. In terms of government projects, if we can a bit compromise on our margins, can we get more projects from the government PSUs kind of?

Deepak Acharya — Chief Executive Officer

If you’re referring to the scientific projects?

Vinayak — Hirema — Analyst

Non scientific, sir. General.

Deepak Acharya — Chief Executive Officer

General, we have only two areas which we really work with the government and it’s in the LNG field and the scientific field. And the third one is of course, hospital requirements. The government business, as you would know, will always go for a tendering and the tendering happens between the selected products.

Vinayak — Hirema — Analyst

That’s what I was asking. Whether are we going to compromise margins in order to get more projects from the government? Is there any aggressive plan towards it?

Deepak Acharya — Chief Executive Officer

Actually, our intention for bidding at every government tender is to win the tender, and tender price is one of the criteria and we have to see that we meet all the specifications. And we focus our manufacturing cost to be the lowest possible thing, while protecting our margin, we would be in a position to win these kind of businesses. So it’s our effort all the time. And we do win a high percentage of the government orders by our strategy.

Vinayak — Hirema — Analyst

Aggressive strategy. Thank you.

Operator

Thank you. The next question is from the line of Sanjeev Damani from SKD Consulting. Please go ahead.

Sanjeev Damani — SKD Consulting — Analyst

Namaskar, sir, and congratulations on the very fine performance that you have shown, sir. Actually, I just wanted to thoroughly understand things to my level. Are we –am I audible, sir?

Deepak Acharya — Chief Executive Officer

Yeah.

Sanjeev Damani — SKD Consulting — Analyst

Thank you. Are we simply mechanical erectors of tanks or some technologies are also involved in making this so as to making it almost noncompetitive from other small or big workshops? Can you kindly answer me this.

Deepak Acharya — Chief Executive Officer

So I think what we do is we manufacture these tankages for storage of liquefied gases which are extremely low temperature. That’s why we call them as cryogenic tanks. Typically all these tanks will store gases like oxygen, nitrogen at a temperature well below minus 150 degrees centigrade. At such a low temperature, conventional tankages do not work because the carbon steel will not work. Some special materials are required. So normally these are all double walled vessels where the vessel of storage is stainless steel. And then we have the outer jacket of carbon steel or stainless steel, and then we have something called a super insulation or extremely different kinds of insulation technologies under vacuum. So this is a technology by itself and it is not a commodity product where anybody can produce that. As you could see that globally we are among the top 10 companies in the world who are producing such a kind of a specialized product. And therefore the competition is very difficult to come in because this is highly engineered, it requires a lot of certification to produce. So there are challenges both in designing the product, manufacturing the product, and making it very reliable on a large scale. So that keeps the competition away.

Siddharth Jain — Director

Thank you very much, sir. You really explained me to my satisfaction and my understanding. Thank you very much for it. I mean, there are — you were talking about automobile tanks. Suppose in a Tata truck we have to fit in a LNG storage tank. You know, I have heard of Everest Kanto and Confidence Petro making lot of cylinder type or tanks meant for fitted into automobiles. So are they our nearest competitor in that segment or no? Kindly reply.

Deepak Acharya — Chief Executive Officer

Kanto and others will produce the high pressure cylinders in which you can store natural gas and make it CNG and CNG is the one which is supplied or these are the CNG storage tanks. Now these are storing the natural gas in the gaseous form at room temperature. As against that, what we do is that we provide those tanks which can be fitted onto the Tata or Ashok Leyland or any other truck which is in the liquid form at extremely low temperature. And because it is liquid, it is much more denser than the gas that you are putting it even under high pressure cylinder. So what we deliver is a completely different product and is suitable particularly for large quantity of fuel to be stored in a truck. So that has the longer.

Siddharth Jain — Director

These fuel tanks are roughly around 450 liters and it goes in one stage around 700 kilometers in one sail. So that’s the advantage of these fuel tanks.

Sanjeev Damani — SKD Consulting — Analyst

Right. Sir, I’m really thankful. I mean now I establish that you are one of the prominent niche player in this and you have established yourself to be a responsible and reliable supplier of these items. Sir, one more question is coming to my mind is about scientific product. When you say we make scientific product means what?

Deepak Acharya — Chief Executive Officer

We do make scientific products because such low temperature science requirements come up for various research application. Let’s say for helium distribution which is minus 259 degrees centigrade. So these kind of things which are required —

Sanjeev Damani — SKD Consulting — Analyst

So either for making experiments or dwelling or using such critical products under such temperature that people would require these kind of products, am I right?

Siddharth Jain — Director

Scientific. We can say we have supplied so many equipments during the second launch pad. So whatever launches you are seeing from the —

Sanjeev Damani — SKD Consulting — Analyst

Sir, my last question is regarding our raw material. So all our raw materials are indigenously available or we have to procure or are we improvising on basic metals that we receive and make it usable for our end?

Deepak Acharya — Chief Executive Officer

Normally our vessels require the inner vessel is of stainless steel — [indecipherable] stainless steel and outer vessel is of carbon steel. Both these materials are available in India but depending on the customer requirements if somebody asks for a foreign material or we import the material from other countries but there are specific valves, control valves and many other equipments which are not readily available in India, that time we have to import those components.

Sanjeev Damani — SKD Consulting — Analyst

Okay. So when — where we are not supplying tanks, you are supplying the other additives, as you said, that as a kit for converting liquid into gas in operation, such other parts are being procured by us. Or do we manufacture certain more parts other than tanks?

Deepak Acharya — Chief Executive Officer

For conversion of kits, we don’t do anything. There are conversion parties who are involved into it, but we support them from our tank side and the operation side, so that we make a success for the owners of the tanks.

Sanjeev Damani — SKD Consulting — Analyst

We will never take an order of the kit.

Operator

Please rejoin the queue.

Sanjeev Damani — SKD Consulting — Analyst

Thank you. Thank you, sir. Thank you very much.

Operator

Thank you. [Operator Instructions] The next question is from the line of Chirag Kaskiwala, an investor. Please go ahead.

Chirag Kaskiwala — Individual Investor — Analyst

Yeah, hi. So, as you get 50% of your revenues from export market and 50% from domestic, so globally, Linde Plc is a market leader along with a few other players. So how do you see yourself in terms of facing the competitive challenges from the global leaders, and in the domestic market, do you see any risk of, let’s say, Linde Plc entering into domestic market through its Linde India company? And how do you plan to face that competition?

Deepak Acharya — Chief Executive Officer

Yeah, Linde is one of our customer as well. We supply for last more than 10, 15 years series of tanks to their requirement, even for their projects. What you rightly said, they recently started some tank manufacturing and the project is just started. I think they will take another three to five years to really produce good number of tanks in their shops.

Siddharth Jain — Director

May I just supplement what Deepak Acharya has mentioned. You see, as I mentioned earlier, regarding INOX Air Products, Linde is primarily a gas distribution company. And their major focus and the businesses that they are doing globally is to make air separation plants. That is what you see as a major revenue. They always require the cryogenic storage and distribution and bulk of it is procured from outside. And we are the supplier to them on a global basis to different geographies. They do have their own manufacturing of tanks in Europe, but it is a high cost, their own manufacturing and then utilization. They do it. But bulk of their requirement for Linde is actually procured from outside. And we are their primary vendor or one of the critical vendors for that. So as we see that even when their India operations grow or any other global operations go, they are not our competitors, but they are more complementary to — we are more complementary to them. And even if they take up any example, let us say large project in India, we are the ones who supply all the storage tanks and regasification systems to them.

Chirag Kaskiwala — Individual Investor — Analyst

In terms of commodity price inflation, how do you position yourself? Do you have sufficient bargaining power to pass on the commodity price inflation? Or you might be required to take a hit on margins if the commodity price inflation goes out of control?

Deepak Acharya — Chief Executive Officer

Normally it is a pass through. We are in a position to pass fees because there are only limited suppliers and all of them would have the same situation whenever the customer requirement comes in. So it’s a pass through for us.

Chirag Kaskiwala — Individual Investor — Analyst

Okay, thank you.

Operator

Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Deepak Acharya — Chief Executive Officer

Thank you, everyone, for your active participation and for your questions. We hope we have been able to answer most of your queries. In case we have missed addressing any of your queries, kindly reach our Investor Relations Officer, Mr. Sunil Lavati, as well as our IR partner, Ernest & Young, and they will connect with you offline. Thank you. Thank you very much for the participation.

Operator

[Operator Closing Remarks]