KEC International Ltd (KEC) Q3 FY23 Earnings Concall Transcript

KEC International Ltd (NSE: KEC) Q3 FY23 Earnings Concall dated Feb. 1, 2023

Corporate Participants:

Vimal Kejriwal — Managing Director and Chief Executive Officer

Rajeev Agarwal — Chief Financial Officer

Analysts:

Parikshit Kandpal — HDFC Securities — Analyst

Vivek Ramakrishnan — DSP Investment Managers — Analyst

Renu Baid — IIFL Securities — Analyst

Saket Kapoor — Kapoor & Co. — Analyst

Priyankar Biswas — Nomura — Analyst

Amish Kanani — JM Financial Services — Analyst

Teena Virmani — Kotak Securities — Analyst

Uttam Kumar Srimal — Axis Securities Limited — Analyst

Ashish Shah — Centrum Broking Limited — Analyst

Peter Agnel — KSEMA Wealth Management — Analyst

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Kaushal Dedhia — Axis Bank — Analyst

Hiten Boricha — Joindre Capital Services — Analyst

Presentation:

Operator

Ladies and gentlemen, good morning and welcome to KEC International Limited Q3 FY ’23 Results Conference Call. We have with us today from the management Mr. Vimal Kejriwal, Managing Director and Chief Executive Officer; and Mr. Rajeev Agarwal, Chief Financial Officer. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Vimal Kejriwal, Managing Director and Chief Executive Officer. Thank you, and over to you, Mr. Kejriwal.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thank you, Rutuja. Good morning. I welcome you all to the Q3 earnings call of KEC.

Let me start with an update on the overall performance for the quarter and thereafter, talk about each of the respective businesses and the key strategic initiatives. [Technical Issues] exclude revenue, revenues of INR4,375 crores for the quarter, a robust growth of 31% vis-a-vis Q3 last year. We are witnessing strong execution momentum across most of our businesses. The growth is backed by good performance in the T&D, Civil and Oil & Gas businesses. With this, our YTD nine-month revenue stand at INR11,757 crores, a healthy growth of 24% vis-a-vis nine months last year. We continue to deploy several mechanization, automation and digitalization initiatives across projects and engineering, which has significantly helped us to improve productivity and quality of execution.

We have delivered EBITDA margins of 4.6% for the quarter, a sequential improvement of 20 basis points vis-a-vis Q2 FY ’23. The margins have been impacted primarily due to the execution of legacy projects with adverse commodity prices and the performance of the EPC projects in SAE Brazil. I’m pleased to share that we have completed the last EPC project in SAE Brazil in December ’22. During the quarter, we have secured significant orders of approximately INR1,000 crores in SAE across Brazil, Mexico and U.S., including one of the largest power supply orders from a reputed developer in Brazil. With this, our order book and L1 in SAE has increased significantly to over INR2,000 crores, comprising of orders for supply of towers, hardware and polls. The robust order book reaffirms our confidence of a revival in the performance of SAE from [Technical Issues] onwards.

[Technical Issues] delivered a PBT margin of 0.3% and a PAT margin of 0.4% for the quarter. We continue to witness strong traction in the order intake. With the orders announced yesterday of INR1,131 crores, our YTD order intake now stands at INR15,554 crores, a growth of 10%. The order intake has been largely contributed by our T&D, Civil and Railway businesses followed by Cables and Oil & Gas. Most of these orders had been secured at current commodity costs. This gives us the confidence on the margin trajectory going ahead as these orders get into execution. The traction in order intake has enhanced our order book to INR28,981 crores, including the orders secured in Q4 till date, a robust growth of 19% vis-a-vis last year. Additionally, we have an L1 position of over INR6,000 crores diversified across businesses. With this, our order book plus L1 position stands at an all-time high of over INR35,000 crores, which is largely divided equally between T&D and non-T&D businesses.

In a recent [Technical Issues], the Indian Cabinet has approved the National Green Hydrogen Mission. This mission will result in development of green hydrogen production capacity of at least 5 million metric tonnes per annum with an associated renewable energy capacity addition of about 125 gigawatts in the country by 2030. The targets by 2030 are likely to bring in INR8 lakh crores investments and a significant increase in projects for solar, as well as the associated transmission lines and substations. Accordingly, we have restarted and refocused on the solar business and have secured our largest order to build a 500 megawatt solar PV power plant in India. This prestigious project will be executed over a period of 16 months.

Focus on cash flows and working capital stands unabated. The dedicated efforts we have brought down our working capital to 139 days as on 31 December ’22, a reduction of nine days against 30 September. The debt level including acceptances continues to show a sequential improvement, and has reached INR5,617 crores as on 31 December, a reduction of more than INR300 crores against 30 September ’22. This is despite a sequential increase in revenue of over INR300 crores. We have reduced our debt level, including acceptances consecutively for the last two quarters. The total reduction is over INR450 crores against 30 June ’22. We are confident of a further improvement in the working capital in Q4. Our interest cost stands at 3.4% for the quarter as a percentage of sales. The interest cost is higher owing to the steep increase in interest rates, both in SAE Brazil, as well as in India, and the elevate debt levels.

Now, coming to the specific businesses, our core T&D business has delivered a stellar growth of 40% for the quarter vis-a-vis Q3 last year. The growth has been delivered on the back of robust execution across both domestic and international markets. The T&D business has significantly expanded its order book with strong order inflows of over INR7,000 crores across India, Middle East, Africa and Americas. In India, the business has secured its maiden order in the strategic segment of HVDC terminal station from a leading private player. KEC is the first EPC company in India to secure an order of this scale in this segment. The business has also diversified its customer base to include non-utility clients, the two orders for GIS substation projects from a reputed power generating company and a leading refinery PSU in India. In international T&D, we continue to expand our presence with multiple order wins in key markets. We have also consolidated our leadership position in the Middle East market by re-entering Kuwait and securing large interconnection orders in the Gulf. The overall tender pipeline in T&D continues to remain strong both in domestic and international markets given the push for renewables and requirements for new transmission lines, substations and underground cabling. The outlook in Middle East remains positive, especially in Saudi and Abu Dhabi.

Coming to Railways, this business has achieved a revenue of INR897 crores for the quarter. I am pleased to share that the business has secured YTD order inflows of INR2,900 crores, a healthy growth of 1.8 times vis-a-vis last year. These include orders in conventional OHE and composite projects, as well as orders in new areas of speed upgradation, technologically-enabled areas of metros and emerging areas of TCAS, Train Collision Avoidance System under Kavach, which aims to enhance safety of Indian Railways with world-class technology. We are witnessing an increase in competition, especially in the conventional segment with the entry of road EPC players and Tier 2, Tier 3 EPC contractors.

Our Civil business has delivered another quarter of strong performance with revenues of INR845 crores, an impressive growth of 75% over Q3 last year. The growth has been delivered on the back of robust execution in water pipelines, metro, industrial and residential projects. The Civil business continues to deliver consistently on the order intake front and has secured YTD orders of over INR4,800 crores. During the quarter, the business strengthened its presence with significant order wins in the water pipelines, industrial and data center segments. We are pleased that our foray in the data centers is reaping results and we are now executing four data center projects across India. The uptick in order intake has significantly enhanced the order book plus L1 to approximately INR11,000 crores comprising of turnkey EPC projects across segments from marquee clients. The business outlook continues to remain healthy, largely driven by improvement in private consumption and government capex. We are confident that this business will continue to be the key growth driver for us going forward.

In Oil & Gas pipelines, the business has delivered revenues of INR159 crores for the quarter with a growth of over 2 times vis-a-vis Q3 last year. The business has a strong order book plus L1 of over INR900 crores comprising of government and private players. We are confident of scaling up this business both in India, as well as in the overseas market.

Our Cable business achieved revenues of INR368 crores for the quarter. The business continues to deliver well on the order booking front with good traction from domestic, as well as export markets. The business is also progressing well with the development of 10 new products this year, of which four products have been commercialized already. We are in the process of further enhancing the backward integration and augmenting the production capacity of LTE and telecom cables by adding a few balancing equipments.

In ESG, we continue to take several measures to transform our operations in a sustainable manner. Installation of solar energy capacity at our manufacturing plants is one of the key strategic actions to increase renewable energy usage through in-house generation and reduce greenhouse gas emissions. During the quarter, we have installed solar rooftop at our Dubai plant in addition to the existing rooftops at our Nagpur and Jaipur plants. With this, 20% of our total power requirements will be catered through solar energy.

I’m glad to share that KEC has been recognized as one of the best construction companies of the year in the reputed Construction Times Awards 2023 for our best-in-class project management practices, new-age engineering solutions and strong focus on quality and safety. Moreover, we have also won the best metro rail project for safety and innovation for our Kochi Metro Project and the Best Railway Project of the Year award for the Hubli-Tinaighat railway electrification project.

Overall, I understand that some concerns have been expressed on our margins and interest cost for the quarter. However, I would like to highlight that we have delivered on the following fronts as mentioned earlier. We had increased our revenue guidance for the full-year from 15% to 20% last time. The growth of 31% year-on-year in Q3, we are confident of exceeding the targets of 20% growth. In SAE, we have closed our last EPC project this quarter and are confident of a revival in the performance from Q4 onwards. We have conveyed that our margins will start showing a sequential improvement from Q3 onwards and we have delivered an increase of 20 basis points. We have brought down our net debt, including acceptances by more than INR450 crores in the last two quarters, against our guidance for INR500 crores for the full-year. This is despite a nine-month revenue growth of 24% Y-on-Y and we are very confident that we will be able to achieve our INR500 crore target for debt reduction. With the traction in orders. We have built our highest-ever order book plus L1 of over INR35,000 crores. The outlook remains robust across most of our businesses with a tender pipeline of over INR1,11,000 crores. This gives us confidence in delivering a continued good growth in the quarters to come with an improvement in the margin trajectories going forward.

Thank you very much. I’m now open to questions.

Questions and Answers:

Operator

Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions] We have the first question from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.

Parikshit Kandpal — HDFC Securities — Analyst

Hi Vimal sir, congratulations on a decent quarter and reduction in debt. Sir, my first question is on the margin. So if you can highlight in this quarter how much was the EBITDA contribution from SAE? That’s my first question.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Parikshit, good morning. I think on SAE we had a loss of around INR50 crores on EBITDA.

Parikshit Kandpal — HDFC Securities — Analyst

INR50 crores [Indecipherable]. If I can reconcile the consol and the stand-alone numbers, those are INR20 crores EBITDA positive. So how that happened?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So I think that’s one of the reasons why there are some questions on the stand-alone margin. What is happening, Parikshit, is that, we have got three or four other subsidiaries which are our operating subsidiaries 100% owned by us. So we have a Dubai, we have a factory in Dubai, we have a Dubai LLC, we have, as per local laws, for Malaysia also we need a subsidiary. So these subsidiaries in the last few quarters have started a lot of, I’d say, business and margins. So when you look at stand-alone versus consol, it’s not just SAE, it’s also these three and also our Oil & Gas Spur which we acquired is again 100% subsidiary. So all these four or five results are now getting — coming through the consol part of it, which is why there is — you are not able to directly reconcile the numbers from what I told you.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. My second question is on the stand-alone, sir. I mean, now I see things to be improving and is it from fourth quarter, it will come back or will be breakeven? So — but on the stand-alone, we reported almost all-time low margin of 4.7%. So does it mean like last quarter it was 6.2%, before that 8.2% and 7.3% and earlier it used to be 9% to 10%. So why there is a sharp reduction in the stand-alone margin? If you can highlight any pain points segment or any one-offs during this quarter that has led to such sharp dip in the margin? And whether going ahead, how do you look at the margin on the stand-alone segment in the coming quarters like for fourth quarter?

Vimal Kejriwal — Managing Director and Chief Executive Officer

Parikshit, there are two basic reasons for that. One is, what I mentioned earlier, where quite a few of our new T&D orders, especially in Abu Dhabi and some of our tower supply orders and also largely profitable order in Malaysia are through the subsidiary. So some part of that has gone into the subsidiary. So that’s one reason. Okay. Going forward, I think you have to start looking at consol probably more than this because these — especially the Middle East subsidiaries will be — will continue to do a lot more business.

Second part is, if you remember, we have been discussing about 5% of our order book is from legacy projects. And during the quarter, we have had a fairly decent execution, I’ll say in some of the legacy projects, especially because the commodity prices are going down and then there was some resolution of power grid on the TBCB projects which were under the GIB hold. So we did do a lot more revenues to close the older projects. So that’s the reason why the numbers have come down and the numbers are primarily on the T&D side, which are lower.

Parikshit Kandpal — HDFC Securities — Analyst

So how do we read the margins from the fourth quarter on the stand-alone business and ERP leaving aside the subsidiaries in the Middle East? So the embedded margin in the current order book. So if you can give some sense whether this is the bottom of the margins? How do we see for next few quarters for the India business?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So Parikshit, I will respond on the consol. I don’t have the stand-alone numbers for Q4 and all that. But as we have said that the margins got, I’ll say, bottomed out in Q2, Q3 we would have loved to see a higher margin, but that’s what we have been able to deliver because of the commodity at 4.6%. We are very clear that the margins will show an uptrend going — continue to show uptrend. I don’t — I will not be able to give exact numbers, but I think at least 75 basis points to 100 basis points improvement should happen in Q4. And then, obviously, further improvements will happen in FY ’24.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. Thank you, sir. That’s all my questions and all the best.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thanks, Parikshit.

Operator

Thank you. The next question is from the line of Kunal Khudania from DSP Investment Managers. Please go ahead.

Vivek Ramakrishnan — DSP Investment Managers — Analyst

Hi. This is Vivek Ramakrishnan. I’ve got two questions. One is, sir, you had mentioned current prices of commodities and if you see even aluminum prices have gone up decently from the bottom INR2,250 to INR2,600. Sir, what is the comfort band that we can take in aluminum prices for your order book is the first question, I mean, I’m just using aluminum as a reference commodity?

The second question is the order inflow in Q3. We thought it was lower than what we have seen in previous quarters. Are there some delayed orders which will come through in Q4 and hence boost up the order book? Those are my two questions, sir. Thank you.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thanks. I think on the second question, we are L1 in some large orders and unfortunately, they got delayed in the sense that we were expecting them by 31, but they have got delayed. So, maybe we should see the conversion happening very quickly. So there is no I’ll say delay or anything that way. I think by Q4 end we should be looking at the numbers, we have been talking about INR18,000 crores to INR20,000 crores of order intake. I think we are on line to achieve those numbers. Okay?

Sorry, what was the first question.

Vivek Ramakrishnan — DSP Investment Managers — Analyst

Sir, the first question was, on aluminum prices in terms of…

Vimal Kejriwal — Managing Director and Chief Executive Officer

Aluminum price, okay. So, Kunal, largely, we are hedged on all aluminum. When — all the new orders whenever we got them we have already hedged of this. I think a very small portion on the legacy orders is still open because those projects are in a way still not fully cleared by the client and we can’t take, supplies, etc. So very — a small portion of it is open, which I think hopefully if we get clearances or get closed either in Q4 or maybe in Q1, but the numbers are nothing to worry about.

Vivek Ramakrishnan — DSP Investment Managers — Analyst

Which is why you are saying that the margins will improve a little more in Q4 and then lot more in Q1? That’s why you are projecting that trajectory?

Vimal Kejriwal — Managing Director and Chief Executive Officer

Hopefully by Q4 most of these things should get closed if we get our clearances or we will provide for it. And then it will go into Q1 and all that we should start with — I’ll say virtually a clean slate.

Vivek Ramakrishnan — DSP Investment Managers — Analyst

Okay, sir. Thank you very much and wish you good luck.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thanks, Kunal.

Operator

Thank you. The next question is from the line of Renu Baid from IIFL Securities. Please go ahead.

Renu Baid — IIFL Securities — Analyst

Yeah, hi. Good morning, sir.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Good morning, Renu.

Renu Baid — IIFL Securities — Analyst

Yeah. First question back on profitability. So if you look at the stand-alone business reported EBITDA margins at 4.6% or approximately in EBITDA terms hardly INR180 crores. And theoretically, if we assume that the non-T&D, ex Oil & Gas, which is mostly India-centric, would have made average 8% EBITDA margin. This is hardly INR10 crores, INR20 crores of EBITDA that has been contributed by the rest of the T&D business domestic. So what kind of losses are we seeing for certain large central sector projects which were legacy projects? If you can help to provide some insight, give us inputs in terms of when do we see these losses from these domestic T&D tapering out?

And also sequentially while you did mention there is the margins, 20 basis point improvement, it is almost flattish. I’m not sure to what extent we should look at as a notable improvement. So 4Q also you were guiding just 100 basis point margin expansion. So apart from SAE which will breakeven from next quarter, some more inputs in terms of the loss-making domestic projects and what kind of turnaround are we expecting and what is the value of these projects still remaining in the backlog, which will be agreed within the next two quarters?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So Renu, first of all, I never said notable improvement in performance. What we had said and what we have said is that, from Q3 onwards, the tide will turn and we’ll start seeing a change in the trajectory, and which is what I alluded when I said that it has gone up by 20 basis points. So, as I said earlier, I think in our view the bottom has been touched and now we will see an improvement. So that’s putting the words right.

Okay. The second piece is that, you’re right, more or less on saying that the T&D margins have been very poor for the quarter. Okay? And we are very clear that we had some orders, especially on the TBCB side. And also if you remember the old Essel order, which was taken over by Adani, so it was a fixed price product. So those two orders have been, I’ll say, the primary contributors.

And third, now that the logistic costs have come down, but because of the large increase, our international business is doing at least 50% turnover higher than last year. We did incur a large logistic cost. Fortunately, logistic costs have now come down to back to normal or even actually below normal below some tender estimates now. So to me, the execution of TBCB projects, especially on the steel side now, almost — I’ll say on the legacy side our steel orders are virtually zero. We have almost executed everything on the steel side, maybe a couple of thousand tons here and there, which are not clear by the client is pending to be cleared, so which is why we are expecting Q4 to start picking up. There are some small legacy orders, which are there, which we want to close, which is why Q4 we have a sort of a guarded optimism.

Renu Baid — IIFL Securities — Analyst

Got it. So once done with Q4 T&D which is the core business, almost 50% of revenues. Do we see margins — when do we see the margins coming back to at least 9% to 10% level, which used to be the normalized or sub-normalized margin for the segment? Should it happen in ’24, late ’24 or ’25?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So Renu, to me it should be around Q2 or something of FY ’24, okay? Because I think the legacy order should get over in Q4, maybe — there may be a little bit spillover here or there, which is why I’m a little bit guarded on Q1. But I think from Q2 onwards, we do see that the T&D margins should start getting back completely to our normal margins.

Renu Baid — IIFL Securities — Analyst

Got it. Sure. And on the SAE, now that the EPC project is done. We have a fair share of new tower supply orders with us. Is that business now looking back at mid-single-digit kind of EBITDA margins and do we expect any compensation from customers after project closure?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So those discussions are going on. I am not very hopeful of getting too much money, okay? So I don’t see that much will come in or whatever, so those files have been also almost commercially closed also. So that is why Q3 we had slightly higher than what we would have loved to have as EBITDA losses.

Coming back to your question on the SAE margins. Our expectation is that, Q4 we will definitely have an operating margin between SAE Mexico and Brazil put together. Hopefully, both of them should be positive, otherwise, at least on a totality, we definitely see that the numbers should be clearly positive. I’m not sure whether PBT would be positive, because our interest cost right now is high. We are working on the refinancing of the Brazil loans which I think is happening. I think large part of it should get refinanced in this quarter, which will bring down the interest cost going forward. So I think from Q1 onwards, I will [Technical Issues] should we be become PBT positive in Q1 maybe but Q2 onwards, I think we should start seeing PBT positive in SAE also.

Renu Baid — IIFL Securities — Analyst

Sure. And lastly, on the debt numbers, what is the year-end net debt number finally expected some INR3,000 crores given that INR500 crores of reduction you have targeted?

And on the cash flows, what are the progress on cash flows from Afghanistan and railway projects which you were stuck for last one year? Have those projects started to move and how do we look at the cash flows improving for the business?

Vimal Kejriwal — Managing Director and Chief Executive Officer

I’ll let Rajeev answer, but just on principles, I think railway projects have started moving in, cash flow has started coming in, which is why you’re seeing a reduction. Afghanistan, we have not got a single rupee or dollar till now, but we do expect and we had earlier said in Q4, we should be getting maybe INR200 crore, I don’t know the exact number between — I think as a benchmark maybe you can take a INR200 crore figure, that we should get around INR200 crores in this quarter. Maybe Rajeev, you want to answer on those?

Rajeev Agarwal — Chief Financial Officer

So, Renu, basically on the debt side, I am expecting probably further reduction of about INR300-odd crores in the Q4 also. Okay? So from the current level of INR5,600 crores, I expect the debt should go down to maybe INR5,300 crores or maybe INR5,200 crores, something in that region. And debt reduction will happen because we are expecting further revenue growth of maybe 20%, 25% in Q4 also. So that will — debt reduction will take up NWC down to maybe about somewhere between 125 to 130 days. So that’s the target range we are working on for debt reduction and that will give us a substantial debt reduction because for the full-year the growth of the revenue itself will be about 20%-plus. So with a 20%-plus kind of a revenue growth, which will be — absolute term will be about INR2,500 crore, almost INR3,000 crore and with that a debt reduction of almost INR300 crore is what we are targeting for the full-year as we go.

Vimal Kejriwal — Managing Director and Chief Executive Officer

So, Renu, let me put in a different fashion. To me, we had thought we’ll go to INR5,000 crores or something as of this. But because the revenue growth is slightly more than what we had projected, that may have an impact of INR100 crores, INR200 crores in terms of the absolute debt, but the NWC which has come down — will come down further. So there is — clearly there is an efficiency effort on collecting more.

Renu Baid — IIFL Securities — Analyst

Right. And what is the average cost of capital for us, say, domestic debt?

Rajeev Agarwal — Chief Financial Officer

So right now, Renu, it is between, let’s say, 7% to 8%. Some of the debt from the banking side is coming at about 7%, 7.5% and CP market is also moving in a similar fashion.

Renu Baid — IIFL Securities — Analyst

Thank you and all the best, sir.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thanks, Renu.

Operator

Thank you. The next question is from the line of Saket Kapoor from Kapoor & Company. Please go ahead.

Saket Kapoor — Kapoor & Co. — Analyst

Yeah. [Foreign Speech] sir and thank you, Renu ma’am for covering most of the points. Sir, if you could give us the breakup of what — how has the forex split in terms of the finance cost for this quarter, as well as for the nine months, the forex impact?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So, Saket, I don’t have exact — I think around INR30 crores or so has been the overall number for nine months, INR30 crores positive.

Saket Kapoor — Kapoor & Co. — Analyst

INR30 crore positive. Okay. So the nine months finance cost is INR377 crores, this has an inbuilt profit of INR30 crore?

Vimal Kejriwal — Managing Director and Chief Executive Officer

It doesn’t go in the finance cost. Finance cost [Foreign Speech]. This is on the top line and not [Foreign Speech] it goes into other income basically.

Rajeev Agarwal — Chief Financial Officer

So Saket, this is part of other expenditure. It is grouped foreign exchange gain or loss, and this is a gain of INR30 crore. This is actually getting clubbed in the other expenditure schedule.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, sir. Sir, we also acquired one company, which was in the laying of pipe, what is the update on the same? How is the order booking and what has been the performance?

Vimal Kejriwal — Managing Director and Chief Executive Officer

[Foreign Speech] quarter we had a revenue of around INR159 crores. Our order book plus L1 [Foreign Speech]

Saket Kapoor — Kapoor & Co. — Analyst

Right, sir. And sir, Cable segment [Foreign Speech]

Vimal Kejriwal — Managing Director and Chief Executive Officer

[Foreign Speech] What has happened is that, with the volatility in the commodity prices, copper and aluminum, and since copper went very high, we did see some of the buyers staying out. We will wait for some more time till copper stabilizes. So, [Foreign Speech] demand we are seeing a volatility because of the metal prices. Basic demand [Foreign Speech]

Saket Kapoor — Kapoor & Co. — Analyst

[Foreign Speech]

Vimal Kejriwal — Managing Director and Chief Executive Officer

[Foreign Speech]

Saket Kapoor — Kapoor & Co. — Analyst

Order booking, same?

Vimal Kejriwal — Managing Director and Chief Executive Officer

Same trend.

Saket Kapoor — Kapoor & Co. — Analyst

[Foreign Speech]

Vimal Kejriwal — Managing Director and Chief Executive Officer

[Foreign Speech]

Saket Kapoor — Kapoor & Co. — Analyst

[Foreign Speech]

Vimal Kejriwal — Managing Director and Chief Executive Officer

[Foreign Speech]

Saket Kapoor — Kapoor & Co. — Analyst

[Foreign Speech] All the best, sir. Thank you.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Priyankar Biswas from Nomura Financial Advisory. Please go ahead.

Priyankar Biswas — Nomura — Analyst

Good morning, sir. My first question to you is like you have spoken about this probably the margins, how it would go on a trajectory. So what I am trying to understand is, like if you have to guess what can be broadly be the 1H FY ’24 margin in your view? And also parallelly with that, what is the current non-T&D EBITDA margin?

Vimal Kejriwal — Managing Director and Chief Executive Officer

Very difficult to give you 1H numbers right now, okay? But as I said that we do expect around 75 basis point to 100 basis point increase in Q4 and Q1, it’s difficult right now, maybe, I don’t know whether we can take a similar increase or something, that’s what we should be looking at. 1H, Q2 is right now difficult to see, but as I was telling Renu earlier that Q2 onwards we should start getting T&D margins back to normal. We’ll wait and watch, but I do expect that quarter-on-quarter there will be an improvement till probably Q3 or so where we reach that margin. So to me, March then — so you have Q3, Q4, then you have Q1, Q2, I think each of them, you will definitely see an improvement happening in the margin quarter-on-quarter sequentially.

Priyankar Biswas — Nomura — Analyst

So if I extrapolate that. So, maybe would it be fair to say that at least by 3Q FY ’23 or 4Q FY ’23, something around that, you should be broadly at around 9% to 10% exit rate. Would that be a fair assessment?

Vimal Kejriwal — Managing Director and Chief Executive Officer

Q4 exit rate, I think we should be on target, what you’re saying.

Priyankar Biswas — Nomura — Analyst

And sir, just asking a broader question like, can you help us with the share of private orders in your book at present? And what are the key corporates that we have exposure to?

Vimal Kejriwal — Managing Director and Chief Executive Officer

[Foreign Speech] Our private orders are where, our private orders would be in SAE mainly. In India, will have — in Civil, we will have private orders. Okay? In T&D, [Foreign Speech]. So I don’t think in T&D we have any major piece of private order. This should mainly be in Civil and we’ll have one or two small orders in Railways, but not big orders, but on the port side, and all that for connectivity, etc. We have got one of those smaller orders. So, it will not be very high in terms of, I’ll say, non-Civil. Okay? Civil, maybe it’s basically more on the residential and industrial.

Priyankar Biswas — Nomura — Analyst

Okay. Sir, just continuing just on the working capital side of things. So, I remember that there were some large retention money with Railways, based on the last couple of calls. So what is the status of that? And do we see that leading to some sort of a working capital improvement, let’s say, next quarter or the quarter after that?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So, it was not actually retention. What has happened — it was not actually retention money, what happens in Railways is that, with the new concept of EPC projects, they are more milestone-based payments. So in some cases, if milestones have not been achieved as per the contract, the payments have been held back and those payments are coming. So when Rajeev talked about an improvement in the numbers for working capital, a part of that was on the back of expecting that we will get our Railway money. It’s normalizing, if this is the direct question if you’re asking, it’s normalizing. So I think by end of Q4 we should expect that the Railway receivables will be normalized.

Priyankar Biswas — Nomura — Analyst

Thank you, sir. And just last question if I may squeeze in, like last quarter I think 5% of the order book was roughly legacy is what you had highlighted. So what would be the similar number now like from 5% what it is down to probably?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So I don’t have the exact number but [Foreign Speech] because we have done lot of execution out of that. So maybe 3% to 4%.

Priyankar Biswas — Nomura — Analyst

Okay. Thank you, sir.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Amish Kanani, I’m sorry, from JM Financial PMS. Please go ahead.

Amish Kanani — JM Financial Services — Analyst

Yeah. Hi, sir. Sir, congrats on a good execution, though it’s coming at a low profits. Sir, two questions. One, sir, L1 is now little bit higher in our order book. So if you can give us some flavor of, is it one order which is chunky, is it government, private? And are we looking at closing it soon? Or is it the nature of the piece that we have L1 converts into order book and then the L1 comes into the picture, some flavor there? And overall IND1.1 lakh crore of pipeline. Any indication of what could be the win rate and any early indication of what could be the order book accretion for next year or base of, say, INR18,000 crores, INR20,000 crores, sir?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So Amish, most of the L1s are from government. Okay? And there are one or two large orders in that. We do expect that they will get converted into orders in maybe a week or two weeks or three weeks. So I think within February, we do expect that a large chunk of this will — L1 will get converted into orders. So that’s one part.

As far as order intake is concerned, as I said that we are expecting, we are already at INR15,000 crores plus and I think with these orders — these tenders getting converted into orders, we should be around INR18,000 crores, INR19,000 crores or so. Assuming that there will be a revenue growth of 15% next year, we do expect that our order intake target next year should be at least INR22,000 crores or INR23,000 crores. We are not yet frozen our numbers. I think the budget-making exercise is going on, but it will definitely be INR20,000 crores-plus. I don’t know exactly what numbers will come out from various businesses, but I’d say [Foreign Speech].

Amish Kanani — JM Financial Services — Analyst

Okay, sir. Yeah. Sir, the question was, are we having the profitable orders which we want to win or maybe we’ll kind of contain ourselves and focus on maybe lower orders but very profitable orders? That was the context in which I was saying. Sure, the numbers will…

Vimal Kejriwal — Managing Director and Chief Executive Officer

Amish, you’re very right, which is why I said that once we start receiving numbers from businesses we’ll decide [Foreign Speech]. But I think to us, very clearly the focus is not on revenue growth. Okay? If that’s your question, that’s my answer. It’s not on revenue growth. We will look at continuing to see how do we improve the profit margins on the orders. We will definitely not take orders where the margins are lower. I think we are very clear in our thought process on that.

Amish Kanani — JM Financial Services — Analyst

Sure, sir. And sir, second, if I annualize the current quarter’s interest cost of INR150 crores and average the last quarter’s debt including acceptance in this quarter. Our interest cost goes to more like near 11%, 11.75% or 10.75% or something like that and you did mention our domestic interest cost is 7% to 8%. So if you can give us some flavor of whether the rest of the cost is all Brazil or domestic versus non-domestic interest cost? And are we looking at significant lowering of interest cost on a blended basis? So say 11% — and particularly in the context of rising interest costs, sir. Thanks.

Vimal Kejriwal — Managing Director and Chief Executive Officer

So Amish, I think what is there in the interest cost is also interest from customer advances because there are lot of customers which are as per the CVC guidelines, they are now — all the government companies are mandating to charge interest on advances. So that’s one element, which is there. Second is the element on acceptances, which is there, where there are interest costs. So to me, if you look at our inventory, what is going to happen is that, our interest as a percentage of revenue will definitely go down in Q4. One is because the revenue is going to be very high. I think let’s see what happens if there is an FOMC meeting today also and then the RBI meeting, what happens on the interest cost they are going decide.

Third piece is that, with the dollar strengthening, the premium rates have been going down. So a little mix of our borrowings with more forex borrowings, which has at least 200 basis points, 300 basis points advantage. So somewhere we do expect that our interest cost as a percentage of revenue will come down and I think overall also in terms of the interest rates, today when we are talking about 7.5%, 8% and all that, the average interest rate [Foreign Speech] slightly. I don’t see it going down significantly because the market may still go up, but we may be able to optimize it slightly.

Amish Kanani — JM Financial Services — Analyst

Sure, sir. Sir, if I — if you permit one last question on the Green Corridor, sir, a lot of expectations. So if you can give us some flavor of how big is the opportunity maybe today’s budget also will outline some more details there? But how big is the opportunity and are we looking at growth even from there?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So there are two Green Corridor. I think there are lot of tenders, which are even open today and some of them are getting quoted. I think this week or [Technical Issues]. Okay? So there are quite a few tenders, which are out open right now in Gujarat, little bit in Karnataka and Rajasthan. So clearly this year, we will see lot of [Technical Issues] awards happening on the back of the Green Corridor, that’s the current Green Corridor.

The second piece is, what I had talked about green hydrogen and all that, so projects are coming up in Gujarat and Rajasthan again for green hydrogen which renewables are being setup. Okay? The renewal [Phonetic] which we announced 500 megawatt is coming up in Karnataka. So all those are — for that there will be further lines which will come up. I think those lines, we have not yet seen coming up, except for some lines in Gujarat, Kawada region we are seeing some tenders, which have come up. Others will now will now come up. So, I do expect that’s probably in H2, there will be a lot of tenders, which will come on the backdrop of renewables for green hydrogen.

Amish Kanani — JM Financial Services — Analyst

Sure, sir. Thanks a lot.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thanks, Amish.

Operator

Thank you. The next question is from the line of Teena Virmani from Kotak Securities. Please go ahead.

Teena Virmani — Kotak Securities — Analyst

Hi, sir. Part of my question is already answered, but one thing on the interest side. You mentioned that on the domestic average interest rate is around 7% to 8%. Can you specify how much is the net debt SAE level and what are the interest rates over there? And what kind of refinancing reduction — benefit from the refinancing that you are expecting on the SAE side?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So, Teena, thanks for being there. I think our overall debt in SAE is around $50 million. Okay? And we are looking at refinancing a large part of it and hopefully now that the EPC is behind us and the business starts running profitable, we will also start getting better rates apart from the refinancing also. Refinancing, we are expecting probably a reduction of 4% to 5%, that’s what’s going to happen on the rate [Phonetic].

Teena Virmani — Kotak Securities — Analyst

Okay. And what would be the current interest rate? They’re in the range of 18%, 19% or…

Vimal Kejriwal — Managing Director and Chief Executive Officer

Between 18% to 20%.

Teena Virmani — Kotak Securities — Analyst

Okay. So it will come down to around 14% to 15%.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Yeah. I think 12%, 13% is what we are looking at.

Teena Virmani — Kotak Securities — Analyst

Okay. Okay. And my second question is related to the legacy projects. You talked about that only 3% to 4% of the order book is around legacy projects on the T&D side. So why are we so conservative in terms of margins for even 1H of FY ’24? And then technically this 3% to 4% of the entire order book, so — and they are all legacy projects, so why can’t we just complete it and get to work with it and start focusing on the newer orders which are at relatively higher margin? So, I mean, my question is more related to the margin improvement trajectory that ideally should come up for KEC for FY ’24 even from 1Q or 2Q onwards.

Vimal Kejriwal — Managing Director and Chief Executive Officer

So I think, Teena, we are doing — trying to do exactly what you’re saying. We are trying to push the execution of newer projects and close the older projects. But as I — at least two or three of these older projects are stuck up in the GIB issuer in Rajasthan and they are getting cleared one by one by the court and power grid. In fact, this quarter we should finish at least two of those projects in the Rajasthan green belt. So I think we are trying our level best to finish. And I think the other issue is that, all these delays and all are causing further escalations and we are negotiating with our client and all to get escalations because the majority of the delay is not because of our site. So that’s just going on.

So I think the other piece which is there, Teena, is that, today, there is a lot of volatility even one of the earlier speakers also talked about saying aluminum has gone back to 26, so I think somewhere we are also hedging our bets to ensure that we deliver on what we commit, otherwise, we talk about today something and the numbers change differently, it becomes a problem. I would rather err on the side of conservatism rather than being aggressive.

Teena Virmani — Kotak Securities — Analyst

So, if we take off these projects which are stuck up because of the GIB issue or even any further escalation also, apart from these orders from the existing order book, what could be the margin trajectory in the current scenario when commodity prices are relatively lower when — actually when you would have bid for those projects?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So if we can keep in our margins on order book vary from 8% to 12%, 15% or maybe up there will be higher also, but generally margins would be around 8% to 10% generally.

Teena Virmani — Kotak Securities — Analyst

For the remaining order book ex of T&D?

Vimal Kejriwal — Managing Director and Chief Executive Officer

For all of our orders, which we are quoting, generally we quote on that sort of margins. So more or less you can assume that way. Okay.

Teena Virmani — Kotak Securities — Analyst

Got it, sir. Thank you. Thank you so much.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thanks, Teena. Thank you.

Operator

Thank you. The next question is from the line of Uttam Kumar Srimal from Axis Securities Limited. Please go ahead.

Uttam Kumar Srimal — Axis Securities Limited — Analyst

Yeah. Thank you, sir, and thanks for the opportunity. Sir, what kind of capex we are envisaging in FY ’24 and FY ’25?

Vimal Kejriwal — Managing Director and Chief Executive Officer

Our normal capex has been around INR200 crores, okay? Next year, maybe I think we will — we are looking at around INR250 crores. In fact, I don’t see it going up because for Civil since we are relatively new, we have been spending a lot of money on Civil. And I think over the last two, three years whatever we have spend and what we plan to spend next year should build up a buffer for us. So average [Foreign Speech] you can go ahead.

Uttam Kumar Srimal — Axis Securities Limited — Analyst

Okay. And sir, this quarter our interest cost has been around INR150 crores. So we — can we expect same run in quarter four or we are expecting some lesser amount in the quarter four? Hello?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So I think we are expecting somewhere around maybe a 10% reduction, so we should be around INR130 crores, INR135 crores is what we are expecting.

Uttam Kumar Srimal — Axis Securities Limited — Analyst

Okay. Okay, sir. That’s all from my side, and all the best to you.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thanks, Uttam. Thank you.

Operator

Thank you. The next question is from the line of Ashish Shah from Centrum Broking Limited. Please go ahead.

Ashish Shah — Centrum Broking Limited — Analyst

Yeah. Thank you for the opportunity. Sir, firstly on the segmental margins, would it be safe to say that Civil and Railways would have been somewhere around 9% to 10% for this quarter?

Vimal Kejriwal — Managing Director and Chief Executive Officer

I don’t have the exact number, but it would be slightly lower than that. Okay? But it would be — it’s not very [Technical Issues]

Operator

I’m sorry, sir, we are not able to hear you. Can you please repeat?

Vimal Kejriwal — Managing Director and Chief Executive Officer

You’re not able to hear me or Ashish?

Operator

Sir, we couldn’t hear you. May I request you to please…

Vimal Kejriwal — Managing Director and Chief Executive Officer

Okay. Okay. Okay. So I said that, I don’t have the exact segmental breakup and all that, but I think we are closer to your numbers, not exactly. I think maybe slightly lower than that number, Ashish.

Ashish Shah — Centrum Broking Limited — Analyst

Got that, sir. Sir, second is on the Solar business, we did say that we are thinking of — we have actually re-entered the business. But this historically has been a low-margin business and has had several issues in terms of government regulatory flip-flops. So where do you see the clarity, now that you want to sort of build up this business again and what kind of margins you would expect in these orders?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So, Ashish, most of the flip-flops [Technical Issues] different levels. So one is on the custom duty on modules. Sometimes you have safeguards, sometimes you don’t have safeguards, and other things, whether you can import from China, not import from China, that’s to me the basic thing. The second thing has been on receivables from the discoms whether they get it or not. So I think for us what we have done is that, we have very clearly said that we will not take projects where the module is in our scope or we tie up with where the domestic module requirement then you tie up with a domestic module manufacturer who becomes your partner in the bid. So for us, I think we have learned our lessons. We have seen what others have done. So I think we are playing it safe and looking it as a pure EPC minus modules. That’s the way we’re looking at it.

Ashish Shah — Centrum Broking Limited — Analyst

So you’re saying our scope will not include modules even in the projects that we’re bidding, we will partner with the module manufacturer?

Vimal Kejriwal — Managing Director and Chief Executive Officer

The current project which we’ve got around INR700-odd crore also is without modules. Going ahead also what we have said is that, we will not take projects where modules are in our scope or where modules are on a fixed price. Okay? There may be one of the projects where you have got local partners who manufacture it and if they want to join you as a partner and they take the responsibility, you may look at it, but right now all our bids what we are looking at are without modules.

Ashish Shah — Centrum Broking Limited — Analyst

Right. And would you look at somewhere in like high-single-digit margins for this business?

Vimal Kejriwal — Managing Director and Chief Executive Officer

Definitely, no question of looking at less than that. Okay?

Ashish Shah — Centrum Broking Limited — Analyst

Right. Sir, one question on the balance sheet side. So we had been expecting some unwinding of GST receivable, I mean, GST credits that we have in the balance sheet. So probably around INR500 crore is what we had been expecting. Can you indicate what is the progress of that this year so far?

Rajeev Agarwal — Chief Financial Officer

Basically on, Ashish, on the unwinding of GST has started, okay, in one of the business in Railways, the unwinding has happened to the extent of about INR100-odd crore in the last quarter. Okay? But overall unwinding is, visible as of now because there are some additional stocks that we have purchased because of the very volatile raw material prices and also there is some unbilled which has actually increased during this period, which will get built to the customer in the quarter four. So definitely unwinding on the GST account has happened, but INR500 crore was the total amount and what I remember is that, I guided that to the investor this INR500 crore unwinding will be in two years time. So we are on track on that side. So I think in Q4 also I’m expecting another INR150 crore unwinding should happen on the GST front.

Ashish Shah — Centrum Broking Limited — Analyst

Right. Sir, lastly, any word on — I mean, you did say that you’ve not got anything from Afghanistan, but any word on where we are in terms of our negotiation and where — when do you think the money can come?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So Ashish, what I had said was that we expect to get around INR200 crores this quarter.

Ashish Shah — Centrum Broking Limited — Analyst

Okay. Sure. Fine. Thank you.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thanks, Ashish. Thank you.

Operator

Thank you. The next question is from the line of Peter from KSEMA Wealth Management. Please go ahead.

Peter Agnel — KSEMA Wealth Management — Analyst

Hello, sir. Sir, I was just wondering on the Railway and Middle East project, what are the major projects we are executing and what would be the margin profile for the same?

Vimal Kejriwal — Managing Director and Chief Executive Officer

There is actually a lot of projects, if you want more details maybe you can speak to Abhishek who can give you more details from the exact type of projects and all that. But Railways, we are doing all sorts of projects, whether it’s pure laying of tracks, even on the metro side ballastless track, signaling. So virtually we are doing — we have our project portfolio has got almost everything. And if you looked at the Middle East is what you asked [Technical Issues] transmission lines, we have got substations, we have got underground cabling. Yeah?

Peter Agnel — KSEMA Wealth Management — Analyst

Okay. And what is the margin profile on those, sir?

Vimal Kejriwal — Managing Director and Chief Executive Officer

Difficult to give an answer like that because margin profiles are vary from project to project. So typically most of our margins, when we quote around 8% to 10%. But individual projects will definitely vary.

Peter Agnel — KSEMA Wealth Management — Analyst

And second — last question, sir, I wanted to know is that, a little technical, major shift happening towards renewables, is there any medium to mild impact on the T&D business going forward?

Vimal Kejriwal — Managing Director and Chief Executive Officer

To me there is actually — in a way I look at it more positively because if you look at most of the projects which we have secured in India and elsewhere are for the transmission of power generated by renewables. Okay? So what happens is that, renewables will — especially solar and all will come only in specific parts of the country. But the power [Technical Issues] over the country. So we are actually seeing large transmission lines getting build and [Indecipherable] has been talked about for a long time, we are talking about a huge project. So to me renewables has not been way of concern. In fact, we look at it very positively.

Peter Agnel — KSEMA Wealth Management — Analyst

Okay. Thank you, sir. That is all from my side.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Amit Anwani from Prabhudas Lilladher. Please go ahead.

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Hi, sir. Thanks for taking the question. Sir, my question with respect to Railways business as we have been highlighting from past few quarters about the retention and milestone and increase in working capital. So the current order and mix which we are getting into Railways, so what is your outlook about the working capital and is this milestone and retention is changing favorably with respect to the new orders you are receiving?

Vimal Kejriwal — Managing Director and Chief Executive Officer

So, Amit, what has happened is that, after the first few orders came in and then everyone realized that there are problems in the way those milestones have been placed. Railways have also changed many of their payment criteria. I’ll give a simple example. Earlier, let’s say, if you are supplying an equipment, that equipment would not be paid unless a particular segment of the line was commissioned. But now they have said that, okay, once you supply an equipment, we’ll pay 80%, 90% of the equipment. So to me, although the milestone payments were made, but there has been significant changes on the payments, especially, on account of what they call on-account payment, you do your supply, you’ll get your payments around that. So that is one part.

Second part is the situation of our order book is now moving towards metro, where we are doing ballastless track, signaling, powers and supply, etc., which are shorter duration projects, has better payment terms. So I think Railways, as I said earlier, that the working capital should get normalized by the end of this year.

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Okay. So, sir, this shorter duration and better payments would be contributing how much to the order book in Railways?

Vimal Kejriwal — Managing Director and Chief Executive Officer

I don’t have the number right now. Okay? Yeah.

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Sir, with respect to Civils business, Civils you’ve already I think mentioned about margin somewhere maybe 8% to 9%. Just wanted to understand, which are the major sub-segments expected to contribute in Civil. I think you highlighted about data centers, you are executing four projects in few other sub-segments. So just wanted to have an outlook on Civils.

Vimal Kejriwal — Managing Director and Chief Executive Officer

So Amit, there are — I would say, four or five segments which are there. One is, obviously, the water pipeline segment where we have got large orders where you supply potable water to villages. So that’s right now our largest segment. Second one would be the metro viaducts. So we are right now have seven projects on metros, so that’s the second one. Then we have residential projects. I think we will get probably revenue of almost close to INR1,000 crores or slightly less than that in residential. Then you have industrial projects and then you have what we call public spaces. So we are building an airport, we are building a High Court, we are building some MLA and all that. So I’ll say broadly this is the way our segments are divided. And I think the last one is, we have been bidding for international. I don’t have an order right now, but hopefully from next year onwards, you’ll also see some international revenue flowing into Civil.

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Right, sir. Sir, my last question is, I might have missed out on the order prospect for international T&D, domestic T&Ds, Railways, Civil for FY ’23…

Vimal Kejriwal — Managing Director and Chief Executive Officer

Sorry, I missed your question. What do you want?

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Sir, just wanted to understand the order prospect in international T&D, domestic T&D, Railways, Civil.

Vimal Kejriwal — Managing Director and Chief Executive Officer

What we have said, Amit, is that, we expect our revenues to grow by around 15% next year and so order intake should also be growing by that sort of percentage. So we expect around INR18,000 crores, INR20,000 crores of overall order intake this year, maybe INR20,000 crores-plus, INR20,000 crores would be the target overall for order intake. Which business what we take is something which we are still working out exactly.

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Okay, sir. Thank you.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thank you, Amit.

Operator

Thank you. The next question is from the line of Kaushal Dedhia from Axis Bank. Please go ahead.

Kaushal Dedhia — Axis Bank — Analyst

Just one question from my side is on the fixed orders currently. So how much of the current order book is fixed price and how much is [Technical Issues]?

Vimal Kejriwal — Managing Director and Chief Executive Officer

Kaushal, I don’t have the breakup right now of this. But typically, if you look at some of our international orders would be most — I’ll say most of the international orders would be fixed. But I’ll say that generally all of them are hedged now. So I don’t see any significant risk [Phonetic]. Civil generally — Civil and Railways generally have a price variation clauses. India T&D depends upon the type of clients and the type of project. I honestly — it will be difficult for me to guess a number, maybe we’ll give a number to you separately, you work it out.

Kaushal Dedhia — Axis Bank — Analyst

Thank you.

Vimal Kejriwal — Managing Director and Chief Executive Officer

Thanks, Kaushal.

Operator

Thank you. The next question is from the line of Hiten Boricha from Joindre Capital. Please go ahead.

Hiten Boricha — Joindre Capital Services — Analyst

Good morning, sir. Sir, most of my questions has been answered. I have only one question. So what would be our tax rate for this year and next year?

Vimal Kejriwal — Managing Director and Chief Executive Officer

Rajeev?

Rajeev Agarwal — Chief Financial Officer

Tax rate for the next year should be normal at about 25%.

Hiten Boricha — Joindre Capital Services — Analyst

For FY ’24, and for FY ’23?

Rajeev Agarwal — Chief Financial Officer

FY ’23 we have already — for nine months period on a stand-alone numbers, it is working out at about 26%. On a consol, since there is a deferred tax asset debt has been created because of the losses in SAE Brazil. So overall tax rate is coming down about 15% or so.

Hiten Boricha — Joindre Capital Services — Analyst

15% in FY ’23. And sir, you told 25% in next year, that is on consol level or on stand-alone level? So I wanted a number on — consol level, right? Okay. Okay, sir. So 15% in this year and 25% next year, right?

Rajeev Agarwal — Chief Financial Officer

That’s right.

Hiten Boricha — Joindre Capital Services — Analyst

Yeah. Okay. Okay. Thank you.

Operator

Thank you. As that was the last question for today, I would now like to hand the conference over to Mr. Vimal Kejriwal for closing comments. Over to you, sir.

Vimal Kejriwal — Managing Director and Chief Executive Officer

I’ll just say thank you very much for your continued interest in KEC. Thank you.

Rajeev Agarwal — Chief Financial Officer

Thank you.

Operator

[Operator Closing Remarks]