JNK India Ltd (NSE: JNKINDIA) Q4 2025 Earnings Call dated May. 30, 2025
Corporate Participants:
Unidentified Speaker
Annie Varghese — Senior Manager, Investor Relations
Arvind Kamath — Chairperson and Whole Time Director
Pravin Sathe — Chief Financial Officer
Analysts:
Akshit Gangwal — Analyst
Shaurya Savjani — Analyst
Unidentified Participant
Mihir Thakker — Analyst
Sahil Sanghvi — Analyst
Ashish Chopra — Analyst
Varun Goel — Analyst
Vedant Sarda — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4FY25 earnings conference call of JNK India hosted by IIFL Capital Services Limited. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded.I now hand the conference over to Mr. Akshit Gangwal from IIFL Capital Services. Thank you. And over to you, sir.
Akshit Gangwal — Analyst
Thank you. Good afternoon everyone. On behalf of IFL Capital, I welcome everyone to JNK India’s 4Q FY25 earnings call. We have with us today Mr. Arvind Kamand, Chairperson and Whole Time Director. Mr. Praveen Sathe, Chief Financial Officer and Ms. Annie Varghese, Senior Manager, Investor Relations. Without further delay, I will now hand over the call to the management for their opening remarks which will be followed by Q and A. Over to you, sir.
Operator
Hello. Sir, please go ahead.
Unidentified Speaker
Just a second.
Operator
Sure.
Annie Varghese — Senior Manager, Investor Relations
Hello.
Operator
Yes ma’ am. Please go ahead.
Arvind Kamath — Chairperson and Whole Time Director
Yeah. Thank you. Good afternoon everyone. I am Arvind Thomas, Chairperson and whole time director of UNK India. Thank you for joining us for our Q4 and full year FY25 earnings call. Your continued trust and interest are highly valued as we complete our first full year as a publicly listed company. Our journey over the past five years highlights the strength and resilience of our business. Since financial year 21, we have expanded our order book from, 436 million to 10,819 million this year. This is a compounded annual growth rate of approximately 65.7% representing more than a seven fold increase. This order book and the order inflow of 9327 million which is recorded in this financial year FY25 are the largest in the company’s history, marking a key milestone and reflecting strong customer confidence on JNK India. Over the same period, revenue has more than tripled to 4,950 million rupees reflecting a CAGR of 37.7%. These figures demonstrate consistent demand and effective execution across our markets. Returns have moderated over the period with ROCE at 16.6% and ROE at 8.6% reflecting margin pressure despite growth in scale. Importantly, we have driven meaningful cost efficiencies with employee expenses as a percentage of revenue improving from 23.6% in FY21 to just 9.2% in FY25. Illustrating disciplined cost management, our manufacturing facility in Mundra has consistently delivered quality and capacity enhancement supporting project execution and timely delivery. We have strategically expanded our product portfolio to include cracking furnaces, incinerators and flares, broadening our solutions for the refinery and petrochemical industries. Looking ahead, our focus remains on executing our strong order book, efficiently improving margins through cost control and growing renewable energy offerings. We are confident about the opportunities presented by India’s expanding refining and petrochemical sectors which continue to grow at consistent rates. In summary, FY25 was a foundational year marked by significant growth, portfolio expansion and operational resilience, setting the stage for sustainable value creation ahead. Thank you for your continued support. Again, I Now invite our CFO Mr. Praveen Sathik to provide us detailed financial updates. Thank you once again.
Pravin Sathe — Chief Financial Officer
Thank you Mr. Tamil and good afternoon everyone. I’m Praveen Saki, CFO of JNK India. I will now present the financial details for quarter 4 and FY25. In quarter four, the total revenue was 2000 million, more than doubling sequentially from quarter three, but down 10.9% year on year due to project life cycles. Operating revenue was 442 million with a margin of 22.1%. EBITDA was 276 million, representing a margin of 13.8% and profit after tax was 132 million, reflecting a margin of 6.6%. For the full fiscal year, revenue increased by 2.5% to 4,950 million. Operating profit decreased 22% to 14. 24 million, compressing the margins to 28.8% from 37.8% in FY24. EBITDA declined 37.9% to 649 million, with margins narrowing to 13.1% from 21.6%. Profit before tax dropped 50.4% to 441 million and profit after tax declined 51.8% to 302 million. Return on capital employed was 16.6% while the return on equity stood at 8.6%. FY25 delivered the highest order inflow and the largest closing order book in our company’s history with inflows of 9,327 million and a backlog of 10,819 million. The extensive pipeline also offers strong revenue visibility. As we enter FY26, employee benefit expenses improved to 457 million aided by the winding down of ESOP related costs. Looking ahead, we remain committed to to driving margin recovery through disciplined cost control and operational improvements while investing in high potential growth areas aligned with India’s energy transition. In summary, FY25 was a year of steady revenue growth amid margin pressures. Our diversified portfolio and extensive order book provide a strong foundation for continued progress. Thank you for your attention. We now welcome your questions.
Questions and Answers:
Operator
Thank you gentlemen. We will now begin with the question and answer session. Anyone who wishes to ask a question may press STAR and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Shaurya. Savjani from Savjani Enterprises. Please go ahead.
Shaurya Savjani
Thank you for the opportunity sir. I just wanted to get a clearer understanding on the margin perspective. Since Q4 of last year there has been a significant decline in margin with raw material and project costs rising up to 81% compared to the historical average of 40 50%. In previous calls you’ve attributed this to projects being in the mid stages of execution. However, we haven’t seen this level of margin compression in the past fiscal even during similar execution phases. Could you help us understand what has changed in this current fiscal to cause this sharp deviation?
Pravin Sathe
Yeah, thanks for your question. In our previous earnings call also, as you have rightly pointed out, we have mentioned about the project life cycles being in the stages wherein the margin is little bit complex and I would like to draw a reference to our earlier earnings call wherein we had mentioned that this has to be seen along with the order inflow in the previous financial year also. So since the order inflow in financial year 2324 was not significant, the margins that were getting compensated by the projects which were in the earlier life cycles contributing to the higher margin that impact, that compensating impact was not available that we clarified in the last call.
So this year we were anticipating this downfall as the new projects that have come in financial year 2425 they have started generating revenue from the Q3 onwards. So that compensating effect will be seen in the next financial year. So this year we were anticipating a drop in the profitability and that we had mentioned earlier also.
Shaurya Savjani
Right? Sir, I have another question initially I’m also trying to understand the employee benefit expense. As the CFO rightly mentioned, the employee benefit expense has sharply declined with some numbers from 26.3 crores in the same quarter last year to 3.2 crores this year. This is actually quite surprising to me because especially you said that there are being ESOPs distributed throughout FY25 and you are also expecting an increase in the labor force due to heavy order inflows. Why would. There has been such a steep, steep decline in the employee benefit expense, even though you might say the stock price would have declined. Right. But maybe, would that be justifiable for such a steep decline in the employee benefit expense?
Pravin Sathe
Did you declare incentive for the year this year? See, there are two, three factors contributing to this. One is the ESOP reserves that we were creating against the ESOP scheme. So every quarter there was a debit to the profit and loss GAM. And that ESOP scheme has ended on the 31st of March 25th. So that portion has gone away. It was a sizable chunk. Another thing is there is a reduction in the managerial remuneration also.
And the third factor is that we used to give the year end incentives in every financial year which used to come in the quarter four of that respective financial year. So this year strategically we decided not to give the incentives in the quarter four, but look ahead for the progress of the company in the current financial year and then take the on that. So it has resulted into reduction in employee benefit cost.
Shaurya Savjani
Right, sir, Right. And just one last question. I’d also like to understand the current order pipeline and future expectation in both the new segments, which is waste handling systems and renewable energy segments and specifically for the renewable energy space. You know, given that there are several large scale competitors, how do we view our competitive, competitive positioning? What would you say is our moat in these segments and how are we planning to scale or differentiate going forward? You know.
Arvind Kamath
Yeah, this is Arvind Kamat here. So basically as long as the order book is concerned, you know, we gave you the figure which is fantastic. I mean we had a higher order inflow for the FY25 and that was also coming in terms of the diversified product portfolios like cracking furnaces, process plant and flares and incinerators. So going ahead we have a very good pipeline and finalization of about four projects are expected in next six to eight months, which are quite large opportunities in the heating equipment and other equipment.
And in terms of the renewable energy, it’s more of a kind of an entry to earth in a bigger way because what we have done is one green hydrogen fuel station which is. Already order is executed and we are also looking for to develop our credentials and references in this space. We have about four to five proposals currently going on in the green hydrogen space. And that’s where we plan to leverage our hydrogen handling capability and get more opportunities. So in terms of our mode, basically we have good experience in terms of the hydrogen handling. Hydrogen as a gas which is very flammable and highly volatile. So we do have a good experience of handling through our reformers as well. And JNK Korea also has extensive experience in hydrogen handling. So we are basically leveraging that expertise and experience in green hydrogen projects as well.
Shaurya Savjani
Right. Sir, I wanted to also know about the waste handling system which are the flares and incinerators. I don’t think you mentioned that.
Arvind Kamath
Yeah, waste handling systems, we already received orders last year and that’s part of our combustion equipment itself. So we already quoting for those opportunities and more opportunities are lined up in that area as well already.
Shaurya Savjani
Anything in numerical figures for the pipeline?
Arvind Kamath
Pipeline generally, I mean in terms of numericals, the big pipeline, what we have, the firm bid pipeline is about raising about 4,000 crores. So that’s the kind of a figure what we have which looks to be finalized in next one year’s time.
Shaurya Savjani
And this is for all products,
Arvind Kamath
I mean predominantly heating equipment and alike.
Shaurya Savjani
Okay, Understood, understood. Thank you so much for your time, sir. Thank you. And congratulations on good order book and flows. Thank you so much.
Arvind Kamath
Thank you sir.
Operator
A reminder to all participants, please press star and one to ask a question. Participants, you may press star and want to ask a question. The next question comes from the line of Vedant Sarda from Nirmal Bank Securities. Please go ahead. The next question comes from the line of Anshul Jetty. Please go ahead.
Unidentified Participant
Hello.
Operator
Yes, please go ahead.
Unidentified Participant
Yeah, I’m audible. Yeah. So my. Hello sir. So my question is on the working capital front, our trade receivables have increased by almost 50%. So it would be great, you know, if you could throw some light on our working capital days and the future outlook. How do you see about that?
Pravin Sathe
See a. We have been telling this previously also what happens is maximum dispatches happen in the last couple of months. So if you see as on the balance sheet date the receivables look very heavy. But out of that I would like to tell you that in last couple of months we have almost recovered more than 150 crores. So if you see the position as on balance sheet date you will definitely feel that the receivables have piled up.But it is due to the dispatches that happen in February and March. This is a typical situation every year.
Unidentified Participant
So what portion would you attribute to the PSUs in the trade receivables
Pravin Sathe
This time? Major receivables were of PSUs only.
Unidentified Participant
Any portion of UN.
Pravin Sathe
Hello? We cannot hear you.
Unidentified Participant
Hello? Am I audible now?
Pravin Sathe
Yes.
Unidentified Participant
Yeah. Any portion of unbilled revenue in other current assets as well.
Pravin Sathe
Basically there is no unbilled revenue as such. But the revenue that could have been billed but which has gone in this financial year is roughly around 70 odd crores which has slipped down to this financial year.
Unidentified Participant
Okay, so next question is on the margin front. So if I look at EBITDA margins without you know adding the other income part we are at around about 9%, 9.8% EBITDA margins. So what the future outlook and how do you see EBITDA margin in the next two years? Going at that, we have a big order from Reliance as well next year.
Pravin Sathe
Going forward we have kept a benchmark of at least 14 to 16% of EBITDA.
Unidentified Participant
Okay sir, thank you.
Pravin Sathe
Considering the large orders, we cannot anticipate EBITDA of 18 or 20%. But 14 to 16% could be a range that is reasonable and achievable. That is what we appreciate.
Unidentified Participant
Okay sir, thank you. That’s it from my side.
Operator
Thank you. A reminder to all participants, you may press star and one to ask a question.The next question comes from the line of Meer Thakkar from Prithvi Finmart. Please go ahead.
Mihir Thakker
Thank you so much for the opportunity. Just wanted to know what is the execution duration of the current. Order book on the hand. Hello.
Pravin Sathe
Yeah. Currently whatever order book is there, we anticipate that it will get executed over six quarters.
Mihir Thakker
Okay. And the bid pipeline that you mentioned of about 4000 crores. So what is what. What conversion rate are you expecting on this?
Arvind Kamath
It’s a bit difficult to exactly pinpoint because depending on the size of the opportunities. But historically whatever gets finalized, we’ve been able to get anywhere in the range of 20 to 30% as our share.
Mihir Thakker
Thank you so much. That’s it.
Operator
Thank you. The next question comes from the line of Akshit Gangwal from IIFL Capital Services. Please go ahead.
Akshit Gangwal
Yeah, thank you for the opportunity, sir. I just wanted to understand. So like at the beginning of the year our target was to execute the opening order book of about 620 odd crores this year and which is not materialized. But I assume that given the project life cycles, do we see that in the next couple of quarters? Do we see revenues picking up? Because typically what you’ve mentioned is that 1h is 1/3 of your overall FY revenues. So will that trend continue this year? Or how do you see revenue split across quarters for FY26?
Pravin Sathe
Yeah, yeah. Akshay, actually what you have said is right. The revenue will start picking up from the quarter two onwards. In fact, quarter one would also be better as compared to the past year. But the actual pickup will start from quarter two onwards.
Akshit Gangwal
Okay. So quarter two should see some pickup and any. So you mentioned that the current order book should be for the next six months. So any targets for FY26 next six quarters. So any targets for FY26 numerical targets like what we are looking at considering spillover of from this year as well. How would that look like?
Arvind Kamath
Yeah, I mean as you mentioned started your question because you know, whatever last year we thought of we could not due to certain reasons of execution and delays from the customer as well. So we want to be bit. What do you say in our estimates for this year. But still something like around 40% to 50% increase on the revenue is what looks very feasible considering what. Situation. The various orders are as of now.
Akshit Gangwal
Okay, understood. And the Reliance project you expected to complete by FY26 or it will spill over to FY27.
Arvind Kamath
Some part could spill over to first quarter of FY27.
Akshit Gangwal
Okay, so first quarter of FY27 is when we expect that entire project to get completed.
Arvind Kamath
Yeah, but most of the revenue would also be built in this financial year.
Akshit Gangwal
Okay, understood, Understood. And so the last question. So 14, 16% of OPM that we are looking for, is this including the other income or excluding that? Because I think around 4% of the EBITDA margins that you are looking at this year is from the other income. It sees a big jump. So just wanted some clarity on the guidance.
Pravin Sathe
See 14 to 16% on total revenue. I am saying.
Akshit Gangwal
Okay, so you look at total revenues including the other income portion.
Pravin Sathe
Yes. Yes.
Akshit Gangwal
Okay. All right. Thank you so much.
Operator
Thank you. A reminder to all participants, you may press time one to ask a question. The next question comes from the line of Sahil Sanghvi from Monarch Network Capital. Please go ahead.
Sahil Sanghvi
Hi, good afternoon and thank you for the opportunity. I missed the initial three, four minutes of the call. Sorry I was late in joining. So could you help us with the reason of the lower revenue that we’ve clocked this quarter? As in we were targeting much higher numbers. So project wise or something more detail on the project delivery. What happened exactly?
Pravin Sathe
Hi Sahil. Actually we were targeting a revenue of somewhere around 620 at the beginning of the financial year. And then we had given a revised guidance on that. So in fact what revenue we have booked we could have booked 70 odd crores more revenue which has slipped to the current financial year due to various reasons because of delayed payments from the client or for the export shipments or for the inspection of the ready material not done by the client for various such reasons. About 70 odd crores revenue has flip the current financial year.
Sahil Sanghvi
Is this all attributable to external factors on his. Some execution delay also. I mean is it mix of both or
Pravin Sathe
Majorly it is due to external factors. Okay. Okay. And also wanted to understand the status of the HPC and order. Are we on track to complete it by December or will it slip over to fourth quarter?
Arvind Kamath
Yes, it’s exactly difficult. I mean our endeavor is to close in the quarter three only. But you know, being hpcl there are some issues in terms of the site work because site work has already started civil and the construction mechanical, everything has started. But you know, being a PhD in Mumbai, there could be certain distinct. So I mean our endeavor is to close by Q3. But we are sure that at least by maximum by Q4 we will be able to close it in case if there is a delay.
Sahil Sanghvi
Sure, sir. And this 70 crore that we are seeing which is now delayed to FY26, will that be recognized in 1Q itself or would that go to 2Q? I mean just trying to understand will the revenues be more evened out? That’s more from the quarterly perspective.
Pravin Sathe
Since I told you that this revenue has slipped to current financial year due to external factors. So it is very difficult to predict that it will materialize in the Q1 itself. But we can say that revenues will get rationalized in this financial year
Sahil Sanghvi
And then margins should also I announce that this year we have moved to the new revenue recognition.
Pravin Sathe
Yes, that is for sure. That is for sure.
Sahil Sanghvi
Okay. Okay. Thank you. Thank you sir. Thank you for your answer and all the best.
Pravin Sathe
Thank you.
Operator
The next question comes from the line of Ashish Chopa from Goldman Sach Asset Management. Please go ahead.
Ashish Chopra
Yeah. Hi. Thanks for the opportunity. I just had a follow up on the previous participants and to just understand the execution delays in further detail. So last quarter we had mentioned that 620 crore was the target at the year’s beginning. But because of these execution delays you had mentioned that you will be falling short, let’s say by 10 to 12%. So that’s the 70 odd crore shortfall on that base.
And as we end the year and which implies 250 or 250 crores of revenues in the fourth quarter as we exit the year there is the number is eventually around 191 crores. So there’s another 60 odd crores on top of that 10 to 12% which seems to have not come through. And so versus the original number of 620, we are going short by more than 120 crore. So just what in. Incrementally panned out in the fourth quarter over and above what was already visible to you in the first nine months that led to this additional delay of 50 to 60 crores.
Arvind Kamath
Yeah, good afternoon, Asish. Yeah, basically whatever. Just Praveen Satay explained about 70 crores revenue which was mainly delayed from the last quarter was because of the delays by payments from the customers. So we had to slow down that processing of those orders. And some parts were also not cleared by final inspection because of the customer which was exposed and some part customer asked us to delay because inside was not ready. So these about 67 to 70 crores to be precise which was delayed from last quarter which we actually planned in the last quarter.
Ashish Chopra
Okay. And the other thing that you also mentioned in the third quarter was that you given the order book that you have at your disposal.
Operator
I’m sorry to interrupt. Ashish, you’re not audible. Could you please move to an area where the network coverage is better? No, you’re still not clear. Yes. And please use your handset mode. Yes, go ahead with your question.
Ashish Chopra
Yeah, I hope I’m audible now.
Operator
Yes,
Arvind Kamath
Yes,
Annie Varghese
That’s better.
Ashish Chopra
Okay. Yeah. The second question was that you had also mentioned at the end of the third quarter that given the order book you have, despite some slippages that you were witnessing in F25, you still remain on track to maybe get to a revenue in the range of thousand crores with 17 to 18% EBITDA. Now despite some of these orders which are slipping into F26, that should be additive. And you mentioned 52 or 40 to 50% sort of a growth number which still implies a substantial shortfall to that as well.
So we are looking at somewhere in the range of 700, 750 crores versus that number. So does this, you know, the revenue in the current year equivalent to the order book at the end of the year, is that no longer holding now? I mean, just wonder what’s changed both on the revenue outlook front and also on the margins front. Why is it now 14 to 16 versus 17 to 18 that we had been holding on to till till at least as recently as the last quarter?
Pravin Sathe
The old projects that are getting slipped over to the current financial year, they are in the stages where the margin profile is very low. So practically what margin is getting generated by the new projects in this financial year is somewhat getting eaten away by these projects. So therefore we are giving the conservative estimate of 14 to 16%.
Ashish Chopra
Okay. And also if you could elaborate on the revenue outlook.
Pravin Sathe
So as Mr. Kamath said in the past, also whatever guidance that we have given, then we have to revise the guidance due to external or internal situations. So we want to be on very conservative side. That’s why he has said that we can expect a revenue growth of 40 to 50% over current year’s revenue. So this is a conservative estimate. We don’t want to give overestimated guidance.
Ashish Chopra
Understood. And one last question from my side. So on the pipeline of orders that you mentioned of 4000 crores that should maybe get finalized somewhere in the course of the next 12 months, are any of these larger orders imminent? Maybe in the next quarter or so? Because the reason for asking that is after the big order from Reliance, I think the last nine months have seen fairly relatively tepid momentum of order inflow.
I think the first two months of this quarter as well. I don’t think you’ve announced anything. And maybe another three, four months if the situation doesn’t change. Perhaps we are looking into F27 as an year when again the revenue growth starts becoming questionable considering that the orders one later may only get executed somewhere in the middle of that year and then into F28. So just basis the pipeline, are there any orders which are in advanced stages or. It remains to be seen and unclear as to when this pipeline gets.
Arvind Kamath
Yeah, no, no. I mean actually two of the opportunities are, you know, very much on the finalizing stage and it could get finalized in next one or two months itself. And both are comparatively quite significant value. So and that way one is for export and one is for domestic opportunity. Both are firmware already in place and anytime next one month the customer could take a decision on. So that way we are quite bullish in terms of at least the big pipeline, what we have and in terms of the order inflows for this financial year as well and the diversification into the various product lines. Also has helped us in increasing our big pipeline and also the new proposals going ahead.
Ashish Chopra
Got it. That’s it from my side. Thanks for taking my time.
Arvind Kamath
Thank you.
Operator
A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Varun Goel from Mirai Asset Mutual Fund. Please go ahead.
Varun Goel
Just wanted to understand the margin picture. You know this guidance of 14, 16% including other income. I know it’s if I strip that other income off then looks like the operating guidance is around 12, 13% compared to the 21% we did in FY24. And secondly, if you can just clarify, to my understanding the average order execution is one to two years. So if even if some large orders are coming to an end and they’re having lower margins, then ideally our margins in FY25 should have been higher. So can you just help me understand these things?
Pravin Sathe
Yeah. Basically you are referring to the 21% EBITDA of financial year 24. So earlier also we have clarified this that due to front loading of revenues in the previous year we were using a different revenue recognition model that time we were using output method. So based on the milestones we used to book the revenue and the corresponding cost. So the milestone based revenue where giving a vitiated picture if you see quarter on quarter basis.
So we have changed that method in the current financial year and we are following the cost based method that is input method. Both the methods are approved as per the Indus 115. So to iron out this variation quarter on quarter, we have decided to use the input method. Now when we talk about the margin of 21% in financial year 24 it was including the other income and 3 to 4 points the margin was on the higher side because there were few items in that financial year which had a very high margin of profitability and therefore it had contributed to a higher margin of three to four points in that financial year.
Now that impact is seen in the next financial year, that is the current financial year. So three to four points if you reduce from that 21 it comes. To 16 17%. So that is the normal profitability that we have been experiencing. So that is why still to discount it and give a conservative estimate, we are saying that we can give a guidance of 14 to 16%.
Varun Goel
Could you also clarify the second point?
Pravin Sathe
Can you please elaborate on the second point? I just missed that.
Varun Goel
It was just mentioned in the previous question that the pending order execution will be towards the closer of the orders or and therefore it will be lower margin. So I am just asking then by that logic FY25 margin should have been higher because then we should have booked higher margin part of the orders in FY25. But it appears as if both FY and FY26 we are having lower margin. So can you just help me understand that
Pravin Sathe
In my first answer only I have touched upon that point that these are the projects wherein we have already booked higher margins in financial year 24. So now the margins are on the lower side in these typical projects which are, you know, got delayed and they are getting slipped over to the current financial year.
Arvind Kamath
And whatever the orders booked in FY25, we have hardly done any execution in the FY25 itself. So most of that exhibition will take place in FY26.
Varun Goel
And what would be your average order execution cycle? Sir,
Pravin Sathe
Every execution cycle could be around one and a half years to two years.
Varun Goel
Right? Okay, thanks.
Operator
Thank you. The next question comes from the line of Vedant Sasa from Nirmal Bank Securities. Please go ahead.
Vedant Sarda
Thank you for the opportunity. Sir, like you told, current order book is for sufficiently for six quarters. Like we would be operating at our full capacity like it is. Hello.
Pravin Sathe
No, it is not like that. We said that current order book will get executed over six quarters. So it is not that it is sufficient for six quarters. It will get executed over a period of six quarters. And there is no capacity constraint at such.
Arvind Kamath
And we will also get new orders which will also be, you know, executed in four weeks over the six quarters.
Vedant Sarda
So what is the capacity utilization rate on which we are running?
Pravin Sathe
As we have been telling since we went public that there is no installed capacity as such for our typical business. Because we can outsource the facility. We can outsource the fabrication to other facilities also. And therefore there is no capacity restriction as such. So it is a very elastic thing. We can accommodate even the higher orders. We will have to outsource fabrication to the other units which are approved vendors.
Vedant Sarda
Okay, thank you.
Operator
Thank you. A reminder to all participants, you may press time one to ask a question. The next question comes from the line of Sharia Savjani from Savjani Enterprises. Please go ahead.
Shaurya Savjani
Hi. Thank you for the opportunity. Once again I wanted to touch upon the pipeline again, right? You said that looking at approximately a 4,000 crore pipeline. I believe in the previous Concord you had said that there is 4,000 domestically and 4,000 export pipeline and both are different. So cumulatively 8,000. Just correct me if I’m wrong and can you give me a better understanding on this?
Arvind Kamath
Yeah. Hi. See basically when we say pipeline it’s a bit kind of, you know, how do you look at it currently what I said for 4000 crores is the firm offers itself. In our kind of a project business what happens is there are two types of opportunities. One is the firm opportunity which means already the firm enquiries have been received and we have submitted the firm codes which will actually get finalized in next say six, eight months or maximum year’s time.
Whereas when we say big pipeline, there are also proposals which we submit when the project is announced. But we submit a proposal to the EPC companies or EPC is bidding for the project, things like that. So that could get finalized over a period of say eight months to, you know, later eight months to one and half year. So the total proposal pipeline is in that range. What we. What is. That is correct. And the firm proposals which we mentioned just now is what is going to get finalized per say in about six to eight months time.
Shaurya Savjani
Understand? Understand. Okay, thank you.
Operator
A reminder to all participants, please press star and one to ask a question. The next question comes from the line of Vedant Sarda from Nirmal Bank Securities. Please go ahead.
Vedant Sarda
Thank you for the opportunity. Sir, you mentioned that we have method of recognizing revenues using currently out input based method that is a percentage.
Pravin Sathe
Yes, yes.
Vedant Sarda
So earlier we were using output method. So how it is different from the current method and how it is impacting our financials.
Pravin Sathe
It is different in the sense that in the output method, the revenue, there are various performance obligations out of the contract. They are identified, their transaction value is described. And as you go on achieving that performance obligation, you go on billing that particular milestone and the cost corresponding to that milestone is taken against that revenue. Now, in order to facilitate the cash flow, what typically in our business people do, we also have been following that in the initial milestones, the revenue is on the higher side, whereas the cost is on the lower side.
Though the cost is low, a higher portion of revenue is allocated to those performance obligations. So what happens is in certain quarters, the revenue gets booked at a very high scale, but the corresponding cost is very less. So that quarter shows a very high margin. And in input method, what happens is you prepare a budget, you based on the total budgeted cost, you have a budgeted margin and periodically you visit that budget again and again and revalidate the margin.
So as you go on incurring the cost, you apply the margin percentage to that cost and, and proportionate revenue, you recognize. So the deviations in margins, quarter on quarter gets ironed out. I hope I’m clear.
Vedant Sarda
Yes, yes.
Operator
So please go ahead.
Annie Varghese
If we have no more questions,
Operator
Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for the closing comments.
Arvind Kamath
Thank you, everyone, for attending the call and, you know, asking the relevant questions. Thank you once again.
Operator
Thank you, sir. Ladies and gentlemen, on behalf of IIFL Capital Services limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.