Schneider Electric Infrastructure Limited (NSE:SCHNEIDER) Q3 FY23 Earnings Concall dated Feb. 14, 2023.
Corporate Participants:
Sanjay Sudhakaran — Managing Director
Mayank Holani — Chief Financial Officer
Analysts:
Harshit Kapadia — Elara Securities Private Limited — Analyst
Nikhil Abhyankar — DAM Capital — Analyst
Raj — Aarja Partners — Analyst
Apurva Bahadur — Goldman Sachs — Analyst
Sanjaya Satapathy — Ampersand — Analyst
Digant Haria — GreenEdge Wealth — Analyst
Rajesh Kothari — AlfAccurate Advisors — Analyst
Shyam Maheshwari — Aditya Birla Mutual Fund — Analyst
Viraj Mithani — Jupiter Finance — Analyst
Aditya Deora — Divisha Investments — Analyst
Aditya Sawant — Shreeji Finserv — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Schneider Electric Infrastructure Limited Q3 FY ’23 Earnings Conference Call, hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Harishth Kapadia from Elara Securities Private Limited. Thank you and over to you, sir.
Harshit Kapadia — Elara Securities Private Limited — Analyst
Thank you, Lisan [Phonetic]. Good evening, everyone. On behalf of Elara Securities, we welcome you all for the Q3 FY ’23 and nine month FY23 conference call of Schneider Electric Infrastructure Limited. I take this opportunity to welcome the management of Schneider Electric Infrastructure representing Mr. Sanjay Sudhakaran, Managing Director; Mr. Mayank Holani, Chief Financial Officer; and Mr. Vineet Jain, Head, Investor Relations. We will begin the call with a brief overview by the management, followed by Q&A session.
I’ll now hand over the conference Mr. Sudhakaran for his opening remarks. Over to you, sir.
Sanjay Sudhakaran — Managing Director
Thank you very much. Good evening to all of you, ladies and gentlemen, a warm welcome. I’d like to take you through the affairs of the organization of Schneider Electric Infrastructure Limited. Without wasting any more time, we will go straight to Page number 3, which is the economic outlook. Nothing’s changed much on the economic outlook, the macroeconomic outlook as we proceed into this quarter. The geopolitical situation across the world remains fluid, though, world has kind of learned to live with it. The sounds of recession are getting — global recession are getting louder, but the good news is that the Indian economy continues to be resilient [Phonetic] driven by domestic demand and also rebalancing of supply chains that the world is witnessing.
So the opportunities for export and industrial production and export out of India looks stronger. All this represents a strong opportunity for India as we enter the financial — the calendar year 2023. We also see that the balance sheet of the banks are much stronger, so credit off-take should be better. We also see manufacturing at more or less at capacity and all the industrial houses having a better balanced suite. So we should see investments coming in from the private sector as well in addition to the investments promised by the governments. So all in all, the situation looks pretty decent for India and I think that should give us confidence that the orders coming in the future, we should be able to see it with more predictability.
So we’ll go on to the next slide, which is Page number 4. Here, we’ll give you an update about our key segments, which is power and grid, mining, minerals and metals and transportation. We’ll also give you how the budget dovetails into these segments and what impetus would be provided by the government in terms of these segments and what opportunities it presents for us in the future. So the most important segment that we represent, which is power and grid. Electricity continues to have a stronger demand driven by manufacturing and also retail consumption. The government is pretty much committed to transformation in this segment by digitization and also changing the energy mix more towards renewables and greener sources of energy.
The budget allocates more money, almost INR350 billion to achieve India’s net zero goals. This should translate into more digitization opportunities and more renewables and changing the energy mix and that’s bringing in more of micro grids, etc, into the foray. Also, there is an allocation towards green hydrogen, which we are tracking very closely with corporates to see how we can convert these requirements into real-time business. On minerals, mining and metals, the key driver seems to be government infrastructure spend, which will be primarily around metros, around infrastructure projects and steel and airports, etc. So all these will spur the demand for cement and we should see more capacity increase — capacity additions happening on the cement side. We also see that the steel capacity additions will also be around 50% by the ’30, ’31, which should also present some good opportunities for our business.
The transportation segment is a key segment, which is where most of the spend is going to happen in terms of modernization of the railways, the metro networks and airports that are going to be built and we have a strong position here. So all in all, I would say the budget highlights provide a good impetus to the growth of our key segments and we should see positive uptake coming from these segments in 2023.
Let’s go to the next slide, which is a brief overview on some of the emerging segments. Actually no EV charging and e-mobility present a strong opportunity for Schneider and its products and services. The cloud and services provider segment which is the data center segment is something that we have been focusing on very strongly and we’ve been having a good run here. Also, the renewables segment is something that is very important to us in terms of changing energy mix of the country. The budget also allocates a good amount of impetus to these segments.
The 5G rollout should further strengthen the cloud and services segment and we should have e-mobility also maturing into a strong business proposition as we see the mix change from — for passenger vehicles from conventional, petrol and diesel to more electric vehicles and the charging facilities that are coming around the country and the strong focus by the government to ensure that the charging facilities are in place to be able to absorb this growth in EV segments. So overall, I would say a positive trend in terms of both our traditional segments as well as our emerging segments.
We’ll go on to the Slide 6, which showcases some of our key wins going forward. I would say that we are helping the country of Nepal build its robust power and distribution system. We recently won a major order from this customer leveraging our strengths of digital and software combined with transformers, which will give them predictive analysis. So this is the first of its kind of installation within Nepal and we are expecting strong repeat business from them as well.
We’ll go to the next slide, which is a win with the cloud and services provider. This is to provide LV and MV [Phonetic] equipment to them. This is a repeat customer who has been repeating us for almost two to three years now and we see strong traction here in years to come with this customer and more pull through for our products and services as we go forward.
We’ll go to Slide number 8 on minerals, mining and metals is the — one of the world’s top glass manufacturers who have repeated us with another order, which is to provide electrification for their new facility and we expect more pull through and orders from them coming forward actually as we execute this project is as well. The key strength that we displayed in this particular project was of course our execution capability, the way we execute our projects with both quality and meeting single [Phonetic] timelines.
We go to Slide number 9. As our diversification continues into segments which have earlier been intact. One of the top global food and beverage companies has contracted with Schneider to provide them with MV and LV panels along with the sandwich [Indecipherable] with our transformers. So this is a complete package, which we will provide to the customer and this gives us a proposition to also put in some of our digital enablers here and with eco structure provide them with end-to-end solutions.
Going on to the next slide, which is Slide number 10. One of the major cement companies in India who has been regularly buying our products has also patronized our restructure service plan, which is an asset advisor in combination with intelligent products, which will help them move their maintenance from more of a routine maintenance to more of predictive maintenance thus improving the uptime of the equipment. So this is eventually the journey that we want to move along and I will also touch upon briefly as to what we are doing next to be able to leverage these solutions with our customers in a more holistic manner.
So that’s where we come in with active ranges. Active ranges are products which are shipped out of the factory with sensors enabled with cloud connectivity natively, which connect natively to eco structure assets advisor providing predictive maintenance and analytics to customers. So our endeavor in the future would be that every panel shipped out of the factory would be an active product and the customer would be able to subscribe to our services in a monthly or in a yearly fashion, which will — by which they would be able to exploit the full value of our analytics and thus improve their uptime and reduce their maintenance costs. So this is the eventual model which we move into. Of course, it will be a journey. We will slowly start with certain customers and we’ve already had our first ring.
Going on to the next slide, which is Page number 12. We are working with 30 such customers and we have also upgraded our manufacturing facility with paring tools, which will enable us to quickly configure this equipment to be able to be active ready in the field so that it requires minimum interruption at a fee level to be able to connect the network.
So going on to Slide number 13, a brief update on how we are doing on the transactional piece. As we have mentioned time and again, transnationalization of our business and digitization of our business are two key pillars of our transformation journey. So we spoke about digital briefly. Now we’ll talk about transactions. So our distributor business has grown 50% in this period if we are talking about from Q1 to Q3. Panel builders have grown substantially in terms of our licensee partners and our core competent partners we sell our breakers which are up — also up 30%. So we see good amount of traction in our transnationalization journey, thus increasing the reach of the organization across the country and also providing us with the necessary reach to new and new customers.
So now, I will request Mayank Holani, our CFO, to give you an update on the financials. Thanks, Sanjay. Good afternoon, ladies and gentlemen. Slide 15, our OG order intake for the quarter is higher by about 6.7% versus same quarter last year, while year-to-date nine months order intake is about 10% higher versus last year. So that’s a kind of growth and primarily the segments which have grown during this period in the quarter are mobility and the fuel segments, while for the nine months period the growth has been coming mainly from mining, metals, minerals and the fuel segment. And next slide. So on sales, our sales for the quarter was down by about 4.3% from the same quarter previously and here, I would just give a bit of background. So last year was very high sales during this quarter coming with a low performance in quarter one and quarter two, which were impacted by second wave of COVID. Effectively, we were also carrying a lot of FG where customer projects were delayed. For this year, if you till September in H1, growth versus last year was more than 34%. So — and then coming from that this quarter is such a big number growth. In absolute terms, it’s a big quarter, but yes, in percentage terms slower than last year. Nine months period, if you see, the sales growth is about 14.8%, good solid growth. In terms of segment if you see for the quarter, minerals and mobility contributed to the sales mainly the growth in sales and in nine months period if you see, the growth has been coming mainly from mobility and mining, metals, minerals and the fuel segment. Next slide. So coming to P&L, if you see our gross margins have improved by 100 basis points, primarily due to the better sales mix while as we see in the market the raw material inflation has upgraded a bit from the extreme level of the movement, which was seen in the previous year. Then the profit before exceptional items and even net profit after tax is about INR435 million versus INR524 million in the previous year into — you see some increase in employee cost slightly above because the production in the quarter has been higher, while the last year was impacted by the old inventory carrying. So that way not a — it’s a reasonably good performance. Nine months period, if you see our gross margin was higher about 100 basis points, primarily due to the better sales mix and raw material inflation moderation and profit before exceptional items is about 4.6% at INR629 million versus INR276 million in previous year and almost double in terms of percentage and after exceptional items profit — net profit is INR788 million versus to INR276 million. One point I would like to highlight here is again the successful [Indecipherable] quarter where we have been in profit. So we are now in terms of momentum in the quarter-on-quarter performance. We have been able to deliver profitable performance quarter after quarter in line with our strategy and continued focus on cash and margins. And we’ll continue this journey. I’ll close here and leave the floor open for Q&A. Thank you.
Questions and Answers:
Operator
Thank you. [Operator Instructions] The first question is from the line of Nikhil Abhyankar from DAM Capital. Please go ahead.
Nikhil Abhyankar — DAM Capital — Analyst
Thank you for the opportunity. Sir, my first question is regarding our margins. Our margins have improved by almost 2 percentage points over the nine months. So is this trend is sustainable and where do you see the margins next year?
Sanjay Sudhakaran — Managing Director
So Nikhil, in terms of the overall margin, we if you see continue the same momentum and obviously, we would like to improve from this. Well, we don’t give any indicator number or forecast for the subsequent period such as, but yes, we intend to continue and improve this momentum. And obviously, the margin improvement had to come because last year few quarters have been turbulent with the raw material inflation and COVID or this impact and which impacted the volume as well as the profitability.
Nikhil Abhyankar — DAM Capital — Analyst
Understood. And sir I’ve got a very basic question. So how does our products is different than the unlisted Indian entity, sir?
Sanjay Sudhakaran — Managing Director
So we — in this entity, we are into medium usage product, while those products are for mostly not there in the other entities, except for few overlaps in terms — but there is no — nothing. So we are into medium voltage products which are into the ETO products engineered to others, while in the unlisted entity, you have — or more one entity for UPS low voltage products and the industrial automation products.
Nikhil Abhyankar — DAM Capital — Analyst
Okay. So you basically cater to medium voltage and the other entities cater to the high voltage and low voltages.
Sanjay Sudhakaran — Managing Director
Yeah.
Nikhil Abhyankar — DAM Capital — Analyst
Okay. And sir, there has been a — the RDSS [Phonetic] scheme has been launched and has been given a substantial capital expenditure plan regarding it. So do you see the private capex and distribution capex impacting our order inflows and how are we targeting it?
Sanjay Sudhakaran — Managing Director
So if you really think, Nikhil, there is an intent by the government to spend through the RDSS scheme, but If you really see how much money is flowing into the discounts right now, I think that will take some time.
Nikhil Abhyankar — DAM Capital — Analyst
Okay. So you are saying quarters or years?
Sanjay Sudhakaran — Managing Director
Yeah, maybe a few quarters. That’s what we are expecting, yeah.
Nikhil Abhyankar — DAM Capital — Analyst
Understood. That’s all from my side. Excellent. All the best.
Operator
Thank you. [Operator Instructions] The next question is from line of Raj from Aarja [Phonetic] Partners. Please go ahead.
Raj — Aarja Partners — Analyst
I wanted to know how are seeing FY ’24 in your list to span out?
Sanjay Sudhakaran — Managing Director
Can you repeat your question?
Raj — Aarja Partners — Analyst
How do you think FY ’24 is going to look like looking for from the business perspective?
Sanjay Sudhakaran — Managing Director
So you’re asking about the financial year ’23, ’24.
Raj — Aarja Partners — Analyst
Yes, yes.
Sanjay Sudhakaran — Managing Director
Like Mayank mentioned before, we do not want to give a forward-looking guidance on the business as of now. We refrain from doing that. But if you look at all the parameters from our key [Phonetic], which I spoke about in my opening address as well. If you look at the economic outlook of India, you could expect India to be more resilient given the factors that I mentioned already. So the macroeconomic outlook seems to be good, though, unpredictable it looks to be good. From the key segments that impact our business also, we touched upon the six segments that could be important to us and you see that these segments seem to be resilient and infrastructure investments in India would not abate either through government spending or through the private spending. We could feel positive about that. So if you triangulate all these external factors, you could probably feel confident that we should be able to have a good ’23, ’24 as well in line with these parameters.
Raj — Aarja Partners — Analyst
All right, yeah. Thank you. Have a good day. Bye.
Operator
Thank you. The next question is from the line of Apurva Bahadur from Goldman Sachs. Please go ahead.
Apurva Bahadur — Goldman Sachs — Analyst
Yeah, hi sir, thank you for the opportunity. So I think you in one of the slides, you had mentioned that there is a large opportunity coming from renewables and basically the entire team clean tech sort of an ecosystem. So can you please share your thoughts like what’s the size of opportunity that you see over there which are our products which specifically cater to this? That would be very helpful.
Sanjay Sudhakaran — Managing Director
So if you look at the energy mix, you have seen that the Government of India wants to clearly move its energy mix from traditionally non-green sources of energy such as coal and oil to more of greener energy sources like wind, like solar, etc. So you will see new capacity additions happening in these particular segments. And anywhere where you have investments happening in terms of energy production, you would need to evacuate the energy and that represents a good opportunity for us to supply our products. Now we want to fully tap into these segments because we see that all future investments, most of the future investments in terms of generation would be directed towards these segments. So we’ll be developing and investing in products, etc, and software and expertise around the management of these assets digitally. So we will be investing in those areas, which should help us take a decent market share in these particular areas. That’s the strategy.
Apurva Bahadur — Goldman Sachs — Analyst
Sir, so this will be more on the grid digitization and management side of things?
Sanjay Sudhakaran — Managing Director
Yes. And also on the evacuation side, you would have the medium voltage equipment which are required, right?
Apurva Bahadur — Goldman Sachs — Analyst
Fair enough, fair enough. So sir, I believe the CEA had come out with I believe a 2.3, 2.4 trillion plan, 4,500 gigawatt power evacuation transformation infrastructure requirement. So could you share what would be the size of PAM for Schneider [Indecipherable] of this 2.4 trillion?
Sanjay Sudhakaran — Managing Director
So I wouldn’t be able to put a number to it because every project is quite unique and it’s sometimes very difficult to put a PAM depending upon — it’s not a straight line. So it would be difficult to put a PAM number on to an investment of that particular size, but we can definitely see that there is an opportunity for growth.
Apurva Bahadur — Goldman Sachs — Analyst
Understood sir. Sir, and all the projects that have been developed so far, can you share some of the major ones or what sort of contribution have we made in terms of the equipment that was supplied or something of that sort?
Sanjay Sudhakaran — Managing Director
So we have been supplying power transformers to these facilities. We have been supplying medium voltage equipment like AI, switchgear, etc, to these facilities. We have certain product gaps as — and technology gaps as far as this is concerned in India, but we do have it in our global stable. So we will be kind of transferring those technologies, etc, to develop more-and-more products, which can cater to the same.
Apurva Bahadur — Goldman Sachs — Analyst
Okay, sir. The pay rent is okay with this transfer of technology and it won’t happen with the analysis entity, right?
Sanjay Sudhakaran — Managing Director
No, no, we are very clear on the strategy. All developments as far as medium voltage and investments are concerned will happen through this entity only.
Apurva Bahadur — Goldman Sachs — Analyst
Fair enough, fair enough. Sir, also, I believe you had mentioned something on clean hydrogen front. So over there as well is the opportunity linked to the renewable energy which is required or is it anything specific to the electrolyzer or the hydrogen ecosystem as well?
Sanjay Sudhakaran — Managing Director
Yeah, it’s related to the latter, which you mentioned.
Apurva Bahadur — Goldman Sachs — Analyst
Okay, but with the electrolyzer as well.
Sanjay Sudhakaran — Managing Director
Yeah.
Apurva Bahadur — Goldman Sachs — Analyst
What sort of types of equipment will we supply over there, sir?
Sanjay Sudhakaran — Managing Director
So we will be supplying — we won’t be supplying the electrolyzer. We will be supplying the power equipment, which is related to manage the energy.
Apurva Bahadur — Goldman Sachs — Analyst
Okay. So your transformers, rectifiers, etc?
Sanjay Sudhakaran — Managing Director
Yes.
Apurva Bahadur — Goldman Sachs — Analyst
And have you done any agreements for that, sir, or any plan of action over there?
Sanjay Sudhakaran — Managing Director
We have had a couple of wins. Unfortunately, we cannot disclose the name of the customer in the public domain without their due permission.
Apurva Bahadur — Goldman Sachs — Analyst
Understood, sir. And sir, lastly I think also on the e-mobility side, so what will be our play over here in EV charging infrastructure?
Sanjay Sudhakaran — Managing Director
So on the EV charging, our main play would be the packaged substations, the medium voltage and the low voltage equipment and the grid management software which will be required for this.
Apurva Bahadur — Goldman Sachs — Analyst
And sir, this will be sold to the discomps [Phonetic]…
Sanjay Sudhakaran — Managing Director
Not necessarily. It can be sold to say, for example, vehicle manufacturers like truck manufacturers or bus manufacturers. Someone who can get into a turnkey contract to operate a network of buses for a state government and that would require electrification of charging stations, right, and that represents the opportunity.
Apurva Bahadur — Goldman Sachs — Analyst
Right, sir. Very useful. Thank you so much. All the best.
Operator
Thank you. The next question is from the line of Sanjaya Satapathy from Ampersand. Please go ahead.
Sanjaya Satapathy — Ampersand — Analyst
Yeah. So, thanks a lot for the opportunity. Sir, my question is that in this quarter on a year-on-year basis, your revenue declined somewhat and you have given the reason that it is because of base effect. Can you just explain that is it just base effect because if you cannot grow on this base, then what would you say about the future? And the second thing is that you have a massive seasonality from quarter to quarter. And the March quarter last year was pretty much lower compared to December quarter. So, can you just give us some sense of the seasonality?
Mayank Holani — Chief Financial Officer
So, on the first question, see, last year, if you see, June quarter was badly impacted by Wave 2 of COVID, and then even the effect continued in the September quarter. So, if you go back and see the numbers for June and September quarter, the sales was very low whether — even negative from the previous year. So, September 2021 quarter, sales were lower than even the 2020 quarter when the first wave effect was there. And what happened is, due to the project delays and all, we were carrying a lot of inventory or fixed — finished goods at the end of September ’20, so that’s our published balance sheet. So if you see, from September ’22 to — versus September ’21, our FG at the end of September ’22 was lower by about — more than INR50 crores, right?
So what happened is, last year, we had manufactured, but we were carrying all those FG because customers thought there were delays at the customer end or things like that, which we could ship in the last year quarter three. This year, our sales growth till December because there was a low base effect and the sales growth in first six months, if you see, it was 34%. Sales growth in both the quarters, June quarters and September quarters, even individually was more than 30% and average for six months was 34%.
So, the debt has gotten more normalized, so — this number, which is about 4.5% low. So it’s not a loan sales or decline, it’s just kind of evening out of the balance because last year, you had two very low quarters, and then the number went up in December quarter. And then — so, I don’t see any challenge or — and if you see the order growth overall for nine-month period, with quarter-on-quarter, you may have — sometimes you have a higher growth or lower growth. Even our order growth for the nine-month period is double-digit. Sales growth also is quite solid. So, I don’t see any challenge or any concern on that.
Now, coming to the fourth quarter, December quarter has always been higher than compared to the other three quarters, like in the past all the years. So that’s how it has been. And we hope to have a good quarter in the March also.
Sanjaya Satapathy — Ampersand — Analyst
But December will still be the biggest quarter and March quarter will not be as big, right, sir?
Mayank Holani — Chief Financial Officer
Yeah. It’s because of the value chain where we are placed, it’s because of that [Indecipherable] because what we sell in the December quarter usually take another one or two months to install in the size. And every company has a financial, you have to market. So people want us to supply in December so that they can install in the same quarter and get the revenue — capitalize the capex what they are doing. That’s the cycle that we are in, and that’s the reason we are having the higher quarter. And the same kind of reason for the March quarter because we are in the last part of it. So people used to fight on the existing equipment, but they have to install, and that’s the reason [Indecipherable] Q4 is comparatively less than Q3.
Sanjaya Satapathy — Ampersand — Analyst
Understood. And sir, last question that I just wanted to get a sense from you is that on, our last 12-month basis, your EBITDA margin has improved to somewhere around 7%. And there has been a remarkable improvement almost every year for the last three, four years now. So going forward, will we see further upside to this kind of margin performance? Or the way the company will target, it will be more a top-line driven growth or it will be something where you’re still not too confident about margin and so you will be continuing to remove low margin business and achieve the bottom line performance driven by cost reduction?
Mayank Holani — Chief Financial Officer
I think you have missed a couple of questions. So let me answer you one by one.
Sanjaya Satapathy — Ampersand — Analyst
Sorry, I couldn’t articulate it better.
Mayank Holani — Chief Financial Officer
It’s okay. So let me just answer one by one. First, as management communicated many times that we are not giving any forward-looking direction, so I will not comment on the margin movability, how it will move. But you can look at in the past trends and the management will look to focus on the similar journey we are trying to do. And if you’re coming on the management focus is on the topline as well as the bottom line. So, our major focus on whatever the business we are doing, we should be coming with a profitable margin. So we are not [Technical Issues] any of the contracts, which is loss-making or where our payments are not secure.
Sanjay Sudhakaran — Managing Director
And cash security, yes, that’s what I was about to comment here.
Mayank Holani — Chief Financial Officer
So that’s the focus area is there and journey will continue and you’re talking about the cost control and all. So that part, I will say that 90%, 95% of the journey is already over. So now we are preparing our organization for the upcoming opportunity. So we will not see much of the cost-cutting on that side. So almost that our cost-cutting part is over. And now we are reinvesting in the organization for the future-ready perspective.
Sanjaya Satapathy — Ampersand — Analyst
Understood. So, this is a top-line driven story is what it will be from hereon?
Operator
Sorry to interrupt. Mr. Satapathy, may we request that you return to the question queue?
Sanjaya Satapathy — Ampersand — Analyst
Sure.
Operator
Thank you. [Operator Instructions] The next question is from the line of Digant Haria from GreenEdge Wealth. Please go ahead.
Digant Haria — GreenEdge Wealth — Analyst
Yeah. Hi, sir. Sir, my question is slightly more basic that we mentioned that we won an order from a cement major. So, if that order value was, say, 100, if you can just break it down as to what revenue would we get from the component sales like a transformer or a switchgear or a panel? And what component is the AMC and what component will be the cloud kind of solutions that we use for monitoring and automation?
Sanjay Sudhakaran — Managing Director
So, roughly the equipment would be around 50%, services would be around 30% and everything balance, for example, the AMC and the services and the cloud connectivity, etc, would be the balance.
Digant Haria — GreenEdge Wealth — Analyst
So, 30% which you said services that would be the installation charge — or installation or the EPC charges?
Sanjay Sudhakaran — Managing Director
Yes, yes, yes.
Digant Haria — GreenEdge Wealth — Analyst
So only the 20% would be recurring, which we will get every year.
Sanjay Sudhakaran — Managing Director
Correct, correct.
Digant Haria — GreenEdge Wealth — Analyst
Okay, okay. And does this — do we make these transformers, which gives all the equipment that we need for these electricity solutions in-house or we are looking to get out of, say, transformer manufacturing or any of those manufacturing-intensive part?
Sanjay Sudhakaran — Managing Director
We make most of it in-house. But the casting and all, we do not do it ourselves. The castings and all are through vendors and we do the core stuff in-house.
Digant Haria — GreenEdge Wealth — Analyst
Okay, okay. So, does that explain that our employee costs are, say, 15% of the total revenue? Because for a similar kind of company, the employee costs can actually be much lower. So just wanted to check that and when you said, the cost-efficiency part is over.
Sanjay Sudhakaran — Managing Director
So what kind of industry are you benchmarking it in terms of 15%?
Digant Haria — GreenEdge Wealth — Analyst
Sir, I was just comparing with, say, an ABB or a Siemens, somebody who makes components also and who give solutions also.
Sanjay Sudhakaran — Managing Director
So, if you have a mix of products, which — as Mayank mentioned, we are an engineered-to-order company, right? Most of the products in this particular portfolio and this legal entity are engineered to order. You could have, say, the organizations that you compare with would have a mix between engineered-to-order and highly standard products. So if you have highly standard products, which are mass-manufactured, you could have a different wage mix, whereas if you have an organization, which is primarily engineered-to-order, which could be a subset of their business. So it is not exactly comparable.
Mayank Holani — Chief Financial Officer
Exactly, if you see ABB or Siemens, it’s not comparable. Any company, it’s not comparable.
Digant Haria — GreenEdge Wealth — Analyst
Okay, okay. Okay, sir. I get it. So we are probably at the optimum level where we should be, so I get that. So, thank you, sir. I have more questions, that I’ll come back in the queue.
Operator
Thank you. The next question is from the line of Rajesh Kothari from AlfAccurate Advisors. Please go ahead.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Hi. Thanks for providing the opportunity. My first question is, if I look at from the order inflow perspective, for the full year basis, about, say, 14% kind of growth. But if I look at the many growth drivers, like data center and all those new segments, if I look at the industry, the growth has been quite higher than 14%. I’m talking on nine-month basis because quarter-on-quarter, it becomes difficult to compare. So why it is like that? Why only 10% growth in order — compared to any other segment, if I look at any large companies or data center, the order growing at 25%, 30%?
C-Sudhakaran:
So you should also look at the fact that we have a certain mix of business, right? So, there are some traditional segments which have a larger weight and you have some emerging segments, which have a lower weight. So, the emerging segments based on your strategy, you could have a higher growth, but say, a segment like Power & Grid, as someone was asking me as to whether the RDSS scheme, the money is actually flowing into it and are the investments happening in real-time. So, you see that those segments are growing at around 5% to 6% and which have a larger weight on the overall business. So, do you think — I think that’s true for any engineering company. I mean I don’t think even the comparable companies, whether you look at ABB Cement. So for that matter any company, I don’t think any company is only 100% the new base, am I right? Legacy is always — that’s how the transition moves. But still, if I look at on the totality basis, the order intake growth of most of other companies, having 18%, 20%, 30% kind of a growth and that too on a three-year CAGR basis, not only on one-year, but on three-year CAGR basis.
Sanjay Sudhakaran — Managing Director
What I’m telling you that you need to look at every organization from the mix perspective also. You will have to detail out the businesses by product segments, and then you will have to compare it because if you lump everything put together, which is a high mix of transaction business and infrastructure business, you will not be able to get the right picture.
Rajesh Kothari — AlfAccurate Advisors — Analyst
I understand. But what I meant was that, it means that the new segments for them is compensating for the low growth of the traditional segment.
Sanjay Sudhakaran — Managing Director
I would urge you to do a product mix allocation also, if you have their financials broken up into that particular categories, which you will not be able to find as well.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Absolutely. So — but I mean I didn’t…
Sanjay Sudhakaran — Managing Director
So, unless you do that analysis, you cannot ask me this question as well.
Rajesh Kothari — AlfAccurate Advisors — Analyst
But we don’t have even your product mix, where you will not give us the…
Sanjay Sudhakaran — Managing Director
So that’s what I’m saying. I do not have information about somebody else. Similarly, I wouldn’t be able to comment on that.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Okay. Okay. So let me put it in this way. Over next two, three years, do you think the new growth drivers, the weightage in your business will basically make it substantial enough to offset for the low growth drivers and make strong double-digit order intake growth?
Sanjay Sudhakaran — Managing Director
Yes, that is the endeavor. That is the reason why you allocate resources and attention to segments that are emerging and high growth.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Okay. So, when you say that’s endeavor, but are you seeing the on-ground realities resulting into conversion of those opportunities into the actual delivery?
Sanjay Sudhakaran — Managing Director
Yes.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Okay. Okay. So hopefully next year, should we see those fruits?
Sanjay Sudhakaran — Managing Director
Hopefully, yes.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Okay. Fine. And one more question from my side. From the competition intensity perspective, particularly on those new growth segments, how do you see that? And how do you see the relative competitive positioning of Schneider in right-to-win market share?
Sanjay Sudhakaran — Managing Director
So, competition exists in each and every segment that we operate in. And I would say that we are at no disadvantage as far as the market is concerned.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Okay. Okay. Fine. Any large orders basically, which are in pipeline in terms of the — or might — pipeline even in the last nine months, which might have skewed these numbers, including…
Sanjay Sudhakaran — Managing Director
I can’t share those details, forward-looking details.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Okay. Okay. Perfect. Thank you.
Sanjay Sudhakaran — Managing Director
Thank you.
Operator
Thank you. The next question is from the line of Shyam Maheshwari from Aditya Birla Mutual Fund. Please go ahead.
Shyam Maheshwari — Aditya Birla Mutual Fund — Analyst
Yeah. Thank you. Sir, I just wanted a breakup of our revenue into different end user industry. So, for example, for every INR100, how much of our dependence is on the different sectors in the old economy as well as the new economy sectors?
Sanjay Sudhakaran — Managing Director
We’ll give you a broad breakup between old economy and new economy. So it will be somewhere around INR80 and INR20, but we wouldn’t be able to give you more granularity on segment-wise performance.
Shyam Maheshwari — Aditya Birla Mutual Fund — Analyst
Okay. Is there any particular sector in which we have some sort of higher dependency?
Sanjay Sudhakaran — Managing Director
We have already mentioned that, right, with the traditional segments of Power & Grid and Minerals, Mining, & Metals, we have a higher dependency.
Shyam Maheshwari — Aditya Birla Mutual Fund — Analyst
Understood. Sir, just one more question from my side. So do we also export some of our products to the parent entity?
Sanjay Sudhakaran — Managing Director
Very little, yes.
Shyam Maheshwari — Aditya Birla Mutual Fund — Analyst
Very little, but not substantial. Wouldn’t be meaningful? Okay. All right. That’s it from my end. Thank you.
Operator
Thank you. The next question is from the line of Viraj from Jupiter Finance. Please go ahead.
Viraj Mithani — Jupiter Finance — Analyst
Good evening, sir. Sir, can you just elaborate on this active range frustration you talked about? Does it mean…
Operator
Sorry to interrupt. Sir, your audio is not clear.
Viraj Mithani — Jupiter Finance — Analyst
Now, is it clear?
Operator
No, sir. I’ll request you to use the handset mode while speaking, and not the speaker phone.
Viraj Mithani — Jupiter Finance — Analyst
I am on the handset mode only, ma’am.
Operator
Sir, your audio is sounding a little muffled.
Viraj Mithani — Jupiter Finance — Analyst
Okay. Is it clear now?
Operator
A little better. Please, proceed.
Viraj Mithani — Jupiter Finance — Analyst
Yeah. Sir, my question is, you talked about this active range subscription. Does it mean that — will it increase our [Technical Issues] subscription revenue going forward? Because you said, every product would be probably connected.
Sanjay Sudhakaran — Managing Director
Sir, I didn’t get the last part of your question. Can you repeat?
Viraj Mithani — Jupiter Finance — Analyst
No, can you give more color on your active range subscription? Like would it increase our some sort of subscription revenue in days to come?
Sanjay Sudhakaran — Managing Director
Yes, yes. Yes, that’s the idea. Yes, you’re absolutely bang on. It will increase your subscription revenues and year-on-year recurring revenues.
Viraj Mithani — Jupiter Finance — Analyst
So does it mean we’ll be doing analytical sort of a business over the clients like analyzing certain data and giving them certain feeds and certain outputs?
Sanjay Sudhakaran — Managing Director
You’re right. It will come up with different — it will have different service plans which the customer can subscribe to. It will have a vanilla plant, which will give a certain set of features. And if you have a plan, which is slightly bigger than that and better than that, you would have to pay more and you would get some more of the services. And then, you will have a top-end plan, which will — if you subscribe to, you will get analytics, you will get one-hour service support. So it’s like that. So it’s tailor-made to suit customer requirements.
Viraj Mithani — Jupiter Finance — Analyst
So I understand this will be the high margin business. Is that correct to think?
Sanjay Sudhakaran — Managing Director
It would be higher margin business. I wouldn’t say high-margin business, it would be a higher-margin business. But the value proposition is not just around the margin. The value proposition is around the customers adding value to the customer, the stickiness with the organization and the ability for the customer to repeat us.
Viraj Mithani — Jupiter Finance — Analyst
Okay, sir. Sir, my next session is the there’s a report that there’s a shortage of transformers in the world. So does it benefiting us [Technical Issues] because the suppliers are very few?
Sanjay Sudhakaran — Managing Director
The global supply chain continues to throw up even new surprises every quarter. But I think we’re finding a way through that. So every quarter, it seems to be a different commodity that seems to be in short supply, totally unpredictable. So what we — because of our leverage of a global organization and the global supply chain, we are positioned okay and we will be able to overcome these challenges. But as you rightly said, if there is a shortage, there is a shortage and the shortage is for everybody.
Viraj Mithani — Jupiter Finance — Analyst
Okay. Sir, any plans for increasing Indianization of our product and any capex plan?
Sanjay Sudhakaran — Managing Director
Increasing what?
Viraj Mithani — Jupiter Finance — Analyst
Indianization of our products. We import, a lot of things from our parent, from other countries. Any plan to include the Indian content in our products?
Sanjay Sudhakaran — Managing Director
Yeah. So depending upon how the volumes pan out and the ability of the suppliers to invest on behalf of us in terms of products, in terms of raw materials and components that meet the quality requirements, we will progressively localize more and more as we go forward. You’ve already heard of the plants on the expansion in Calcutta that we put forward, similarly as volumes keep rising, and we reach a certain scale, we will localize more and more of those components in India. The idea is to move towards — mostly move towards 100% localization for India.
Viraj Mithani — Jupiter Finance — Analyst
Okay. And sir, my last question is any — just one question, ma’am. Just one question more, ma’am.
Operator
Sir, there are participants waiting for their turn.
Viraj Mithani — Jupiter Finance — Analyst
All right. Okay, ma’am.
Operator
Thank you. [Operator Instructions] The next question is from the line of Aditya Deora [Phonetic] from Divisha Investments. Please go ahead.
Aditya Deora — Divisha Investments — Analyst
Good afternoon, sir. Sir, in the presentation slide, you have mentioned that there is — in slide number seven, that there is this order that you have won from one of India’s top web services company. And there would be, maybe 34% kind of a run rate for next quarter and around two to three years. So, can you elaborate a bit more on this order?
Sanjay Sudhakaran — Managing Director
So, this is an order with — for electrification with the cloud and services provider, one of the top cloud and services provider in the country.
Aditya Deora — Divisha Investments — Analyst
And like what will be our margin profile for this order like? Would it be similar to the company margin or a bit better?
Sanjay Sudhakaran — Managing Director
I cannot disclose those details of individual orders.
Aditya Deora — Divisha Investments — Analyst
Fine, fine. Sir, during this year’s AGM in the presentation — in one of the slides, you had mentioned that you are doing some capex to improve the productivity of the employees and efficiency of plants. And today, during the con call, I guess you had mentioned that the productivity of employees part of it has been taken care of. So, should we expect some improvement from efficiency of the plants to improve here on?
Mayank Holani — Chief Financial Officer
See, obviously, with the ongoing production in the volume, we expect productivity to improve, but there is not any — beyond this, any drastic change, which we expect in immediate future.
Aditya Deora — Divisha Investments — Analyst
Okay, okay. And sir, any update on the expansion, like how much capex we have done for the INR138 crores expansion?
Mayank Holani — Chief Financial Officer
No, not significant, effectively nothing, just in the process of agreement and [Indecipherable] and then it will go on.
Aditya Deora — Divisha Investments — Analyst
But we are still within the timelines, right, that we had mentioned?
Mayank Holani — Chief Financial Officer
We are within the timelines, yes.
Aditya Deora — Divisha Investments — Analyst
Perfect. Thank you. Thank you.
Operator
Thank you. The next question is from the line of Aditya Sawant from Shreeji Finserv. Please go ahead.
Aditya Sawant — Shreeji Finserv — Analyst
Thank you for the opportunity. Sir, my first question is on the debt. The company has around INR400 crores of long-term borrowings. So, what are your plans to reduce the debt? What are some opportunities that can help to reduce this even in the long run?
Mayank Holani — Chief Financial Officer
Long run, I mean difficult to comment. But yeah, see, the debts are there. And as you also know that we have been making losses for many years and then the COVID also impacted the cash flows. But we are back on profitability from last year and till nine months also, you’ll see the performance is much better than previous year. Our cash flow has also been good last year, and this year, you know what we reported in September. So, once — since we are — once we are on track in terms of profitability and generating cash, so obviously, we’ll be looking at reducing the debt.
Aditya Sawant — Shreeji Finserv — Analyst
Okay. And do we expect the coming quarters to being profitability?
Mayank Holani — Chief Financial Officer
Pardon. Can you repeat?
Aditya Sawant — Shreeji Finserv — Analyst
Can we expect the coming quarters to be in profit like after a long period of losses?
Mayank Holani — Chief Financial Officer
So you are seeing — we have been able to deliver last five quarters consistently with a profitable P&L. So, we should hope to continue doing the same.
Aditya Sawant — Shreeji Finserv — Analyst
Okay. All right. Thank you.
Mayank Holani — Chief Financial Officer
That’s what I can say, not more than that.
Aditya Sawant — Shreeji Finserv — Analyst
All right. Thank you.
Operator
Thank you. The next question is from the line of Rajesh Kothari from AlfAccurate Advisors. Please go ahead.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Thanks for providing the opportunity, sir. Just one small question I had. In slide number — I don’t see slide number here — in that order of successful execution of INR34 crore next quarter and then INR1,200 crore over next two to three years, what is the winning of this? Because your orders slide says INR978 crores and this itself is INR1,200 crores. So I’m slightly confused. What is this INR1,200 crores number is to be executed over three years, this is over and above the INR978 crores.
Sanjay Sudhakaran — Managing Director
So this is a customer investment actually. This is not…
Mayank Holani — Chief Financial Officer
Opportunity, potential opportunity.
Sanjay Sudhakaran — Managing Director
This is the investment by the customer. This cannot be read as our numbers.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Okay. This is the investment by customers. So what can be the opportunity for us in this?
Sanjay Sudhakaran — Managing Director
So you can say that roughly 10% is the opportunity that exist for us.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Understood. And this would be part of the INR978 crores?
Mayank Holani — Chief Financial Officer
Sorry. Can you repeat?
Sanjay Sudhakaran — Managing Director
As we are talking about the opportunity, how can it be a part of your current order book.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Okay. Got it. Understood. And this orders slide, this is the order intake, am I right?
Mayank Holani — Chief Financial Officer
Yes. On outside group order intake, yes.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Group order intake. So what is that current order book?
Mayank Holani — Chief Financial Officer
So current order book is — just a minute — that’s about INR817 crores.
Rajesh Kothari — AlfAccurate Advisors — Analyst
INR817 crores?
Mayank Holani — Chief Financial Officer
Yeah.
Rajesh Kothari — AlfAccurate Advisors — Analyst
Okay. Okay. Okay. Thank you, sir.
Mayank Holani — Chief Financial Officer
Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Harshit Kapadia for his closing comments.
Harshit Kapadia — Elara Securities Private Limited — Analyst
Thank you, Lisa. We would like to thank the management of Schneider Electric Infrastructure for giving us an opportunity to host this call. We would also like to thank all investors and analysts for joining for this call. Any closing remarks, Sanjay sir, you would want to share with investors?
Sanjay Sudhakaran — Managing Director
I would like to thank all of you for taking the time out and talking to us regarding the organization and its future growth prospects. Thank you very much, and look forward to meeting you next time on this call as well.
Operator
[Operator Closing Remarks]