ISGEC HEAVY ENGINEERING LTD (ISGEC) Q2 FY23 Earnings Concall Transcript

ISGEC HEAVY ENGINEERING LTD (NSE:ISGEC) Q2 FY23 Earnings Concall dated Nov. 11, 2022

Corporate Participants:

Ashwani Sharma — Investor Relations

Aditya Puri — Managing Director

Kishore Chatnani — Chief Financial Officer

Analysts:

Niteen S Dharmawat — Aurum Capital — Analyst

Digant Haria — GreenEdge Wealth — Analyst

Anurag Patil — Roha Asset Managers — Analyst

Manish Goyal — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen good day and welcome to Q2 FY23 Earnings Conference Call of Isgec Heavy Engineering Limited. As a reminder, all participant lines will be in listen-only mode 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. Ashwani Sharma from ICICI Securities. Thank you and over to you.

Ashwani Sharma — Investor Relations

Yeah, thank you. Good day, everyone. On behalf of ICICI Securities I would like to welcome you all for the Q2 FY23 earnings conference call of Isgec Engineering. Today, the management is being represented by Mr. Aditya Puri, Managing Director; Mr. Kishore Chatnani, Whole-Time Director and CFO; and, Mr. Sanjay Gulati, whole-time director and head of Manufacturing Unit. We will start the call with the opening remarks on the results and outlook by Mr. Puri. Post that we can have the Q&A session. I would now like to hand over the call to Mr. Puri for his opening remarks. Over to you and thank you everyone.

Aditya Puri — Managing Director

Thank you Ashwani. Good afternoon everyone and thank you for joining us on our earnings conference call. I hope that you and your loved ones are all well and safe. We look-forward to a fruitful interaction. You would have seen the quarterly financial results that we had published earlier today. We’ve also uploaded a presentation on the BSE/NSE websites and on our own website www.isgec.com. This was done earlier today. There is also a much more — there is also much more information about our business on our website.

The standalone revenue for Q2 FY23 INR1,160 crores compared to INR1,172 crores in Q2 FY22. The standalone revenue for the half year ended 30th September 2022 is INR2158 crores, which is about 9% higher compared to the — compared to the INR1986 crores for the half year ended 30th September 2021. The standalone profit before-tax for Q2 FY23 is higher, at INR57 crores against INR31 crores for Q2 FY22. Further for the half year ended 30th September 2022 the profit before-tax was INR97 crores, which is about 93% higher compared to [technical issue] for the half year ended 30th September 2021.

Consolidated revenue for Q2 of FY23 INR1615[Phonetic] crores, which is about 10% higher compared to rupees INR1379 crores for Q2 FY22. Also for half year ended 30th September 2022, the consolidated revenue was INR2768[Phonetic] crores, which is 10% higher as compared to INR2513 crores for 30th September 2021. The consolidated profit before tax for Q2 FY23 is INR49 crores compared to INR14[Phonetic] crores for Q2 FY22 and the consolidated profit before-tax for the half year ended 30th September 22 is INR79 crores as compared to INR32 crores for the half year ended 30th September 2021.

In the standalone results, the profitability is closer to normal both for the manufacturing and the EPC segment. The results have also been helped by the seat of dividends from subsidiary companies during the quarter. In the consolidated results the profitability is better because of better profits in ISGEC Heavy Engineering Limited and profits with Eagle Press and Equipment Company Limited. I will now talk about the order booking. The consolidated order booking for Q2 of FY23 is INR1508 crores compared to INR849 crores of orders booked in Q2 of last year. The consolidated orders in-hand on 30 September 2022 is INR7762 crores against INR7518 as on 30th September 2021.

The order book is satisfactory. Of the consolidated order book 77% is for the project business and 23% is for the product business. The order book includes INR832 crores for export orders, which is about 11%. The order book for ISGEC Hitachi Zosen is also good, it has INR801 crores of orders as on 30th September 2022. The overall demand trend is encouraging as the inquiry position continues to be good. Export inquiries have picked up. As informed earlier we started construction at the Cavite biofuel ethanol plant in the Philippines and, we’re expecting it to be completed by July 2023. We are working on developing the feedstock in preparation for running the plant from August 2023.

My colleagues and I will be happy to answer any questions. Thank you.

Questions and Answers:

Operator

Thank you, very much. Ladies and gentlemen we will now begin the question-and-answer session. [Operator Instructions] We have our first question from the line of Niteen S Dharmawat from Aurum Capital. Please go-ahead.

Niteen S Dharmawat — Aurum Capital — Analyst

Yeah, thank you for the opportunity. So wanted to understand what is the contribution that we are having from the – from the government sector now in the revenue and what is our target to bring it down further. Does it remain same as we have stated earlier.

Kishore Chatnani — Chief Financial Officer

See, if you notice in the order book we have mentioned that we have public sector orders of 44%. Of the total order book, 44% is coming from the PSU sector. So yes we are targeting to reduce it a bit. Largely because we are looking at shorter-duration orders. So not really because we have any other issue with the public sector orders but largely because some of their orders are longer duration, so we would like to bring it down. So presently order book is 44% from PSUs. Largely central PSUs. There are two orders from state PSUs also. We don’t have any order directly from the government.

Niteen S Dharmawat — Aurum Capital — Analyst

Okay, and how is the payment over there, the receivable numbers from the government side.

Kishore Chatnani — Chief Financial Officer

So there is no difficulty in receivables in collecting receivables, which are due. The issue that we have been talking about in the earlier calls is that most of the PSU orders have payment terms, which are linked to milestones. So while we continue to supply material and cement and so on to the sites. It’s only after certain construction or reduction managements are done when the payment becomes due. So the idea of looking at lower numbers of PSU orders is to look for better cash-flow.

Niteen S Dharmawat — Aurum Capital — Analyst

Got it. And my second question is about the debt so what is the consolidate debt now we have.

Kishore Chatnani — Chief Financial Officer

Consolidated debt. Give me a second. The consolidated debt is INR1177 crores as of 30th of September. Across all the group companies. This was INR1,205 at the end of March 22.

Niteen S Dharmawat — Aurum Capital — Analyst

Okay and what is the big plan to repay the debt?

Kishore Chatnani — Chief Financial Officer

So we have in terms of term loans, we have about INR100 crores of term loans for the [Indecipherable] which is for the ethanol plant that we established last year in December last year. And Eagle Press has term-loan outstanding of about INR30 crores or so. And the other term-loan is for the Cavite Biofuels, Philippines plant. The rest of the volume [phonetic] is working capital volume.

Niteen S Dharmawat — Aurum Capital — Analyst

Okay and you mentioned about the export inquiries so these are coming from any specific geographies.

Kishore Chatnani — Chief Financial Officer

Mostly Southeast Asia, Africa, and Central America.

Niteen S Dharmawat — Aurum Capital — Analyst

Sorry.

Kishore Chatnani — Chief Financial Officer

Southeast Asia, Africa and Central America. Got it sir. Thank you so much. If I have any additional questions, I’ll come in the queue.

Operator

Thank you. [Operator Instructions] We have a question from the line of Digant Haria from GreenEdge Wealth. Please go-ahead.

Digant Haria — GreenEdge Wealth — Analyst

Yeah, hi sir. Sir, firstly, we have seen some improvement in the operating margins sequentially. Is it largely because we have a large revenue coming from the product side or is it that you know some the mix is that low-margin orders that we had taken in the material handling and railway segment have they runoff?

Kishore Chatnani — Chief Financial Officer

Yeah, so the margin has increased in both the projects and the products business and your second hypothesis is also correct that there is low-margin projects are slowly — their mix is reducing.

Digant Haria — GreenEdge Wealth — Analyst

Okay, okay, okay. Okay and so is it fair to say that you know, going-forward the margins should only continue to improve because the raw-material prices are now probably stabilized or they’re down versus what they were six months back and we have also consciously become more agile in terms of our pricing. Fair to say that next two-three quarters we will see margins improving the project.

Kishore Chatnani — Chief Financial Officer

You are right. It should.

Digant Haria — GreenEdge Wealth — Analyst

Okay, okay, and then my second question is that in the — in the products division this time we had a very large revenue, more than INR500 crores so is there any pattern seasonality or it is just because the order sector did well, how should we look — how should we read about this on an annualized basis like you know what kind of revenue can we do here now on.

Kishore Chatnani — Chief Financial Officer

So, I think this 435 [Phonetic] would probably represent a fair average for the year for manufacturing bussiness.

Digant Haria — GreenEdge Wealth — Analyst

Okay, it was INR569 crores this [multiple speakers] Okay. So you are saying that this INR569 crores we should read more like INR450 crores as sustainable quarterly number.

Kishore Chatnani — Chief Financial Officer

I think we should look at — look at INR1,800 to INR1,900 crores for the full-year.

Digant Haria — GreenEdge Wealth — Analyst

Okay. So okay, that’s a better way to look at it. Okay and then any update on like you know if you can just provide the update on the Philippines plant. I know we started construction last quarter, but how does — how is it progressing you know what is the P&L impact for the quarter which comes because of the — you have to pay the staff and the security and everything there?

Kishore Chatnani — Chief Financial Officer

So we’ve started the construction and our target date was at that time also to finish it in a year’s time and we are still sticking to that — the current schedule also for that. That we will be completing by July 23 and we expect to start the operations in August 23. And on the numbers about the quarterly — so there is a quarterly cost of about INR89[Phonetic] crores per quarter which is largely for salaries. This quarter there was a large payment for insurance of the plant also. And there has been some impact of the currency depreciation between Peso, dollar, and rupee. So this quarter specifically it’s more than INR89. INR9 to INR10 crores a quarter and obviously once the plant starts then that expenditure will go into revenue for that company.

Digant Haria — GreenEdge Wealth — Analyst

Okay, okay. Perfect and then last question if I may ask that in terms of the end-markets, how are we seeing the demand and the pricing environment if you can give a slightly more elaborate answer in terms of how is the ordering looking and how are the negotiations happening with the customers, you know for yourself as well as you know like you know more capex cycle.

Kishore Chatnani — Chief Financial Officer

So capex cycle we think slowly it is turning positive, the sentiment is turning positive. Yes, there are a lot of uncertainties because of the Ukraine war and demand in Europe almost finishing and recessionary conditions — expected recessionary conditions in Europe and North-America but as far as the — as far as India is concerned demand is holding out and pricing is also okay. We are not facing any major issues right now.

Digant Haria — GreenEdge Wealth — Analyst

Got it. So it is fair to say like you know from hearing — after a long-time hearing you it seems that the worst of margins and working capital for us both is probably behind in the next 12 months we will see better for both these financially.

Kishore Chatnani — Chief Financial Officer

I think 12 month horizon is a fair horizon to see.

Digant Haria — GreenEdge Wealth — Analyst

Yes, absolutely. Fine thank you so much sir and wish you all the best. Thank you.

Kishore Chatnani — Chief Financial Officer

Thank you.

Digant Haria — GreenEdge Wealth — Analyst

Thank you. We have our next question from the line of Ashwani Sharma from ICICI Securities. Please go-ahead.

Ashwani Sharma — Investor Relations

Yeah. Thanks for the opportunity, Sir. One is that if you can you did mention about strong demand which is seen in capex picking-up but if you could give us some idea on if we look at your end-markets which sector is looking more promising or they are doing capex if you can give us some idea over there.

Kishore Chatnani — Chief Financial Officer

Refineries, petrochemicals, and also certainly equipment that we supply to cement plants. There is demand emanating from that and from the power sector.

Digant Haria — GreenEdge Wealth — Analyst

Okay.

Kishore Chatnani — Chief Financial Officer

Power sector in terms of — these are the factors that we are investing at this point in time — at this point in time.

Digant Haria — GreenEdge Wealth — Analyst

So when you say power it is the government or private?

Kishore Chatnani — Chief Financial Officer

It is a mix of both but mostly government [indecipherable] include air pollution control equipment also.

Digant Haria — GreenEdge Wealth — Analyst

Okay. But sir if I look at. What kind of inquiry pipeline is there currently and how we’ve changed over the last six months?

Kishore Chatnani — Chief Financial Officer

I think the pipeline is larger, the pipeline is certainly larger and it has increased over the last six months. Looking stronger. [Multiple speakers] one sector where we’re there is a little deficiency of demand is demand related to automobile sector. There the numbers are not really — on an aggregate level the numbers are not very promising at this point in time and you say I think in October the car sales are very close to what, they were in October 20. Okay. Thanks a lot. I will come back for more questions, sir.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Anurag Patil from Roha Asset Managers. Please go-ahead.

Anurag Patil — Roha Asset Managers — Analyst

Thank you for the opportunity. Sur what our current order book should be on the fixed-price basis?

Kishore Chatnani — Chief Financial Officer

So all the private sector orders are fixed-price. All the export orders are fixed price. The PSU orders many of them have — many of them have price variation clauses which permits price variation for changes in steel price-based on the index. Cement price, labor index, and some of them and fuels. And some of them also have for variations allowed for copper and nickel and aluminum. But because 44% of the order book is from PSUs so most of it has price variation clauses but as we have been mentioning in earlier calls. The price variation is only about 40% to 50% of the price variation we are able to pass-on. Because for example steel we just applied [indecipherable] there we can pass on the price variation but in a steel equipment then the customer is not able to gauge how much steel is gone into it and therefore we don’t get an escalation on that. Also, most of the price variation clauses are linked to index. So there is a steel price index. But actually the steel that we are buying is from the best companies and their prices do not really move exactly in-line with the index. So typically we are able to pass-on 40% to 50% of the price variation. And, when I say variation it means increase as well as decrease.

Anurag Patil — Roha Asset Managers — Analyst

And sir on the low-margin legacy projects which are impacting the margins till now so in the current order book what can be that portion, very approx will be fine.

Kishore Chatnani — Chief Financial Officer

So it’s not really low-margin projects. Some of these projects have had seen commodity price inflation, and that’s caused some reduction in margins. Some of these projects have also seen site work, the time for the execution of the project getting extended because of multiple reasons, starting from COVID and with the customer or ourselves. And so most of — when you say low margin, it’s not repeating those orders deliberately at a low margin. But the margins that we are realizing are lesser than that because of these reasons that have I explained. So as Mr. Puri mentioned a little while earlier, in about a year’s time, we should be back to normal profitability fully.

Anurag Patil — Roha Asset Managers — Analyst

Okay. And sir, in our own ethanol distillery, what is the sustainable margins at EBIT level?

Kishore Chatnani — Chief Financial Officer

So I hope you noted that we are expanding the distillery capacity from 100 KLPD to 150 KLPD. But I don’t have an EBIT number on that readily. So let me look for it. I’ll try to answer it, if I can find it for you.

Anurag Patil — Roha Asset Managers — Analyst

So sir, this expense 150 KLPD capacity already, it is operational or it is a work in progress?

Kishore Chatnani — Chief Financial Officer

It is a work in progress, it will get operational sometime by the end of January ’23. But also, we have to clarify here that we will be going to 150, and we will be doing — we will be reducing the number of days the distillery will run, which will give us efficiencies in operations, and will pay back. However, if our distributor can use various raw materials. And if it is found to be economical, depending on the sugar price and ethanol price, we could extend the season. But as of now, this is more for operational efficiency and operational to reduce the cost of production of a unit of ethanol.

Anurag Patil — Roha Asset Managers — Analyst

And for this 150 [Phonetic]KLPD expansion, how much will be the capex?

Kishore Chatnani — Chief Financial Officer

INR7.5 crores.

Aditya Puri — Managing Director

INR7.5 crores.

Anurag Patil — Roha Asset Managers — Analyst

Okay. That is it from my side. Thank you very much.

Operator

Thank you. [Operator Instructions] We have a follow-up question from the line of Ashwani Sharma from ICICI Securities. Please go ahead.

Ashwani Sharma — Investor Relations

My question is on margins. So with commodity prices showing some signs of softness, what’s your thoughts on the margin improvement on a blended basis, if you can touch individual segments, that will be more helpful.

Aditya Puri — Managing Director

I do not think that we can — I think we — see, when we say over a longer period of time, the indication is the same. We have talked about it earlier also. Manufacturing segment, 8% to 9% is sustainable. In the EPC segment, 5% to 6% is sustainable. Some quarters will have 1% more, some quarter 1% less.

Ashwani Sharma — Investor Relations

Okay. And any thoughts on the mix? I think where do you see your mix, I mean, between project and manufacturing? Because earlier when we look at your number, the mix was, it was more heavy on the manufacturing and the margins were also better. Do you see that again changing to the earlier number going ahead?

Kishore Chatnani — Chief Financial Officer

So we are targeting an increase in the manufacturing turnover by about 15% next year. Product business will certainly not be less than this year, but how much that increases that we will come to know by the time of the next call. But in manufacturing, we are targeting a 15% increase in revenue.

Ashwani Sharma — Investor Relations

Okay. And sir, if you could talk about [indecipherable] performance, how is the order book over there?

Kishore Chatnani — Chief Financial Officer

The order book is good. We just spoke about it. The order book as of 30th September was INR801 crores.

Ashwani Sharma — Investor Relations

And how is the performance?

Kishore Chatnani — Chief Financial Officer

So the performance was not very good, as we already just explained to you.

Aditya Puri — Managing Director

[Multiple speakers] so the performance of [Indecipherable] for the quarter 2 was not very good because the amount of billing done was less. But however, their production was good, and the equipment are ready for dispatch. A lot of the equipment are ready for dispatch, and they will be shipped out in the third quarter and the fourth quarter. And the equipment is not lifted because of the buyers because the buyer was not ready for the shipment was in scope, and he was not ready for the shipment. So — and we recognize the revenue on sale of good basis that is [indecipherable]

Ashwani Sharma — Investor Relations

Yes, Thanks. I will come back for more questions.

Operator

Thank you.

Aditya Puri — Managing Director

Somebody had asked earlier about the EBITDA on the ethanol operations. So for the current year, we’re expecting it to be about 11.5%. And once it goes up, we are hoping that it will go to something closer to 12.5%.

Operator

Thank you. We have our next question from the line of Manish Goyal, an individual investor. Please go ahead.

Manish Goyal — Individual Investor — Analyst

Yes, thank you so much and very good afternoon. On Cavite Biofuel, once we start the production next year, sir, like what can we expect in terms of like what could be like normalized annualized revenues in that business? And what kind of profitability we can see? And will it be only like [indecipherable] ethanol? Or how — if you can give bite[Phonetic] some number one. And number two, once we commence production by that time, what will be total investment from our side, like from ISGEC Heavy parent books, how much it will be? And what will be the other loan outstanding? That’s the first question sir.

Kishore Chatnani — Chief Financial Officer

So in Cavite Biofuel the annual ethanol production capacity is about 42 million liters. And so the revenue expected from the sale of ethanol and the sale of bio products, it’s something like INR320 crores a year. But it’s to be noted that the price of ethanol changes every 15 days. It is fixed by the Philippine government. And they take into account the input — the feedstock price. So they take into account the price of molasses and the price of sugarcane. And based on that, the price of ethanol changes every 15 days. So whatever number I gave you just now INR320 crores is likely to be actually going up in terms of revenue.

Manish Goyal — Individual Investor — Analyst

And it is entirely sugar [indecipherable], right?

Kishore Chatnani — Chief Financial Officer

The plants can run both on sugarcane and molasses. So initially — and the Philippines government formula [indecipherable] formula, gives 50% weightage to sugarcane and 50% to molasses. Our plant initially will have less of sugarcane as the sugarcane grows but after about three years, we expect to do 210 days on sugarcane, and 120 days on molasses.

Manish Goyal — Individual Investor — Analyst

Sorry, can you repeat 110 days on?

Kishore Chatnani — Chief Financial Officer

210 days on sugarcane and 120 days on molasses in a year.

Manish Goyal — Individual Investor — Analyst

And sir, by — like what could be our peak investments we see in Cavite Biofuel from our balance sheet — Indian balance sheet? And what will be the total capital expansion?

Kishore Chatnani — Chief Financial Officer

So the capital expansion investment being done now to complete the plant, as I mentioned earlier, is INR180 crores. And this INR180 crores is being borrowed from a bank in Philippines. And of course, besides this — the numbers have not changed. We have not given any further money. So there is a INR50 crore loan outstanding from us from ISGEC to Cavite Biofuel which is earning interest from them. And of course, the original outstanding amount due to us. So the number that I remember is INR254[Phonetic] crores. Of course, it changes based on the exchange rate.

Manish Goyal — Individual Investor — Analyst

Okay. And so margins would be — what kind of margins and what kind of returns we see, probably, on these projects, sir?

Kishore Chatnani — Chief Financial Officer

I think we’ve mentioned the situation remains the same. We have said that in about a year’s time, we expect to get all our money back while servicing the bank loans, also.

Manish Goyal — Individual Investor — Analyst

Once the project starts within one year, we will get our money back like INR250 crores plus INR50 crores.

Kishore Chatnani — Chief Financial Officer

Pardon me I said six years. Because the bank loans also have to be serviced. So after that, our outstanding, of course, some of it is attracting interest. So it will take us six years — between five and six years to get our all money back.

Manish Goyal — Individual Investor — Analyst

Okay. Okay. And sir, in India, like we mentioned that we are looking to increase capacity from 100 KLPD to 150 KLPD to improve efficiencies. So that like ideally, we can optimize the number of days of operation. But are we not probably contemplating to kind of use other fixed-outs like rise or any other where we can probably run the plant for the entire year?

Aditya Puri — Managing Director

So that’s more modifications are required in the plant. So we are not doing that right now. However, we will be exploring the possibilities not right now, but nearly a year from now to make the plant fit to run on sugarcane juice efficiently.

Manish Goyal — Individual Investor — Analyst

Okay. Okay. And sir, like what we see from the numbers, if you probably see console stand-alone and particularly on the manufacturing of equipment, we see a fairly good improvement on the profitability side. So what could it have been contributed by [indecipherable]? Because I believe we mentioned that Hitachi has not done well. So the improvement would be driven by Eagle Press? Or how is it?

Kishore Chatnani — Chief Financial Officer

Yes, by Eagle Press and — by Eagle Press — and yes, basically Eagle Press Saraswati Sugar Mills has also done well. And its [Phonetic]profitability is also higher.

Manish Goyal — Individual Investor — Analyst

So Mr. Puri, I was referring to when I probably remove stand-alone from console and particularly on segment for manufacturing of machinery and equipment. I see a INR15 crore profit number, which is on Y-o-Y basis, which has a loss of INR6 crores. And on Q1, it was just a INR2 crore number. So I was just trying to understand that if Hitachi has not done well?

Aditya Puri — Managing Director

Eagle Press price has done very well.

Manish Goyal — Individual Investor — Analyst

Okay. So this year, we expect Eagle Press to report a decent profits? How do we see it? Because annual report still says that could be a challenging year, and then probably after that, we can look at 30% growth. So trying to understand that.

Aditya Puri — Managing Director

This has been a challenging year, and it continues to be a challenging year because of automobile production not going up in North America because of chip shortage. However, we are bullish that once this chip shortage is over, it should be — people will start investing. So the next six months may be challenging. But the previous 12 months, if I have to say, the previous 12 months, it has been positive. The PBT has been positive.

Manish Goyal — Individual Investor — Analyst

Okay. Because the annual report mentions about 30% growth in FY ’23. So I was a bit curious to get the.

Aditya Puri — Managing Director

Yes. But this chip shortage is not anticipated, and this is affecting production. But as of now, in the previous 12 months, it’s been positive. The next one or two quarters may be challenging for Eagle Press, and we expect the things to improve after that.

Manish Goyal — Individual Investor — Analyst

And sir, I’ll probably — last question on Hitachi, like last year, the profits were just near[Phonetic] INR4 crores as per annual report on a revenue of IN 331 crores. So can we expect a fair degree of improvement in top line and margins this year? Or it’s still challenging, and we should expect it only next year? Because our order book has been growing quite well in last few quarters.

Aditya Puri — Managing Director

So I think the whole impact of the commodity price and all because these are long-duration orders will be seen next year. This year will be an improvement on last year, but next year, we should see a much better improvement.

Manish Goyal — Individual Investor — Analyst

Thank you so much sir for all the answers. I will come back in the queue. Thank you so much.

Operator

Thank you. [Operator Instructions] We have a question from the line of Ashwani Sharma from ICICI Securities. Please go ahead.

Ashwani Sharma — Investor Relations

Sir, two follow-ups. First is, if you could give us some indication on the execution timeline for most of our markets like FGD, sugar, refineries, metal and chemicals?

Kishore Chatnani — Chief Financial Officer

So FGD typically 36 to 50 — 48, 50 months. The equipment for refineries and petrochemicals can vary. If it is [indecipherable], it is normally anywhere between 10 to 14 months, but if it is a joint venture, Hitachi also, it would go up to 21 months. Sugar plants and ethanol plants are normally anywhere between 12 months through 14 months.

Ashwani Sharma — Investor Relations

And metal?

Kishore Chatnani — Chief Financial Officer

On the process side, generally the cycle time are lower.

Ashwani Sharma — Investor Relations

Okay. And fine. The second question I had on the guidance. So earlier, you had guided for a 5% kind of a growth. Is there a change in the guidance now?

Aditya Puri — Managing Director

We also remember last time I told you that we will give you final guidance in March. So we’ll give the guide then. Right now teams are looking — are optimistic but we’ll give you a final guidance, if we can, in March.

Ashwani Sharma — Investor Relations

So can we assume that this 5% will remain for FY ’23 in that case?

Kishore Chatnani — Chief Financial Officer

Yes, 5% will remain. Yes.

Ashwani Sharma — Investor Relations

Alright. [Indecipherable] my two questions. Thanks.

Operator

Thank you. As there are no further questions, I now hand over the conference to the management team for closing comments. Over to you, sir.

Aditya Puri — Managing Director

Thank you so much for attending, and keep safe. And thank you, and all the best. Thank you very much.

Operator

[Operator Closing Remarks]