Skipper Ltd (India) (NSE:SKIPPER) Q4 FY23 Earnings Concall dated May. 16, 2023.
Corporate Participants:
Sharan Bansal — Director
Devesh Bansal — Director
Analysts:
Rahul Mishra — Centrum Broking Limited — Analyst
Sachin Kasera — Swan Investments — Analyst
Deepak Poddar — Sapphire Capital — Analyst
Vignesh Iyer — Sequent Investments — Analyst
Chirag Jain — Individual Investor — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Skipper Limited Q4 FY’23 Results Conference Call, hosted by Centrum Broking Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Mishra from Centrum Broking Limited. Thank you and over to you, sir.
Rahul Mishra — Centrum Broking Limited — Analyst
Thank you, Liz, and hello and good afternoon to everyone, and thank you for joining the Skipper Limited Q4 FY ’23 earnings call. From the management side today, we have Mr. Sharan Bansal, Director; Mr. Devesh Bansal, Director; Mr. Shiv Shankar Gupta, Chief Financial Officer, and Mr. Aditya Dujari, Deputy General Manager of Finance and Investor Relations. Without any further ado, I will hand over the call to Mr. Sharan Bansal for his opening remarks, post which we can open the floor for Q&A. Over to you, sir.
Sharan Bansal — Director
Thank you, Rahul. Good afternoon to you all, and thank you for your continued interest in Skipper. Please take note, any forward-looking statements made during this call must be reviewed in conjunction with the risks that the industry and the company pays. The year ago was filled with many achievements and milestones for the company. We are glad to share some of those marked achievements with you. The company registered its best-ever revenue quarter of INR657 crores, showcasing strong momentum across all major business segments. We achieved our highest ever quarterly revenue of INR149 crores, and annual revenue of INR406 crores in the Polymer segment, back of strong volume growth. The growth has been achieved purely on account of volume, which shows the rising market acceptance and pull for our polymer products. We expect this trend to continue in the coming years.
We also achieved the highest-ever engineering export sales and volume. The export revenue for the year stood at INR723 crores, registering an 80% year-on year growth. We’ve achieved the highest-ever annual order inflow in the company’s history, securing new orders in excess of INR4,137 crores during the year. We secured our largest single order win valuing at INR2,570 crores from BSNL during the year.
The year end closing order book stands at INR4,551 crores which is the highest-ever in the company’s history, and is well-diversified across sectors and segments. We also had the highest year end bidding pipeline. We are actively pursuing projects worth INR6,600 crores in international front and INR3,520 crores on the domestic front.
We’ve also ventured into water EPC work for the first time and secured an order of INR100 crores per JJM — Jal Jeevan Mission project. We became the first Indian pole manufacturer to successfully design and supply transmission monopole structure to North America. And we successfully executed two transmission pole supply contract with one of the biggest transmission utilities in Canada.
We successfully supplied large quantities of Towers to largest-ever transmission line project ever being made in Australia. This project is called Project Energy Connect, and it is located in New South Wales, Australia.
We received first time orders from countries or Dominican Republic, USA, Canada, Iraq and Kuwait during the year. Taking the total export reach to 55 countries worldwide. We’ve tested and supplied guide tower for the first time, 12 Towers were tested and our in-house test station in the R&D center in a single month, which is a record. The sector continues to witness uptick in both ordering and execution, and the company expect growth to gain further pace with increased participation opportunities across the globe.
Some of the key operational and financial highlights in comparison to previous year and quarter were as follows. There has been strong revenue performance across our major business segments in spite of inflationary cost push and geopolitical challenges, while maintaining healthy operating margins of 10% plus.
The net revenue for the quarter stood at INR657 crores, again INR553 crores previous year quarter-four, which is up by almost 19%. The segmental revenue breakup are as follows — Engineering INR497 crores, which is up by 20.7%. Polymer INR149 crores, which is up by 26.4% and infra segment INR11 crores.
The full-year consolidated revenue increased by 16% over previous year to INR1980 crores. The segmental revenue breakup of full year were as follows: Engineering INR1524 crores, up 15.3%, Polymer INR406 crores, which is up by 27% and infra segment INR50 crores.
The company achieved highest ever engineering export sales of INR723 crores against INR400 crore previous year, registering a growth of 80%. Our export share in overall engineering revenue stood at 47% in 12 months, FY ’23 in compared to 30% last year.
Forex derivative M2M losses arising on account of sharp depreciation of rupee has resulted mainly in decrease of profitability of the current year by INR24.3 crores. And there was a simultaneous increase in the previous year corresponding period by INR19 crores. The nature of this Forex loss is largely emotional; thus, all comparative growth numbers are required to be calculated excluding this effect of forex adjustment for better operational performance understanding and analysis on like-to-like basis.
Our yearly operating performance excluding the impact of Forex gain loss were as follows. Operating EBITDA rose by 46%, EBITDA increased to INR207 crores instead of INR149 crores. Standalone operating EBITDA margins improved to 11% in comparison to 8.7% in FY ’22. The Q4 ’23 operating EBITDA percentage was at 10%, against 11% last year quarter.
Engineering segment operating EBITDA margin for the year improved to 12.8% in comparison to 10.7% in previous year. Now we are clocking the desired margin range of 12% to 13% for many quarters. The consolidated operating PBT for full year increased to INR71.3 crores against INR11.3 crores last year, which is a major increase of 531%. While operating PBT margin improved to 3.6%, instead of 0.6 last year.
The operating PBT for the quarter was INR24.7 crores in comparison to INR23.9 crores previous year quarter. Our JV, Skipper Metzer India LLP engage in the business of manufacturing or drip and micro-irrigation system has turned profitable and reported a PAT of INR57 million during the year, that is INR5.7 crores. The consolidated financial results include our portion of the same.
The consolidated reported PAT increased to INR35.6 crores, against INR25.2 crores last year, registering a growth of 41%. Some of the notable improvement on the balance sheet and cash flow front are as follows — The total gross debt as on 31st March ’23 stood at INR484 crores, against INR567 crores last year. The company has been able to achieve this reduction in debt by INR83 crores in spite of higher sales during this year on account of efficient working capital utilization and better collection and payment terms from debt. Achieved significant reduction in overall debtors by INR85 crores in comparison to last year, in spite of higher sales. Gross debtor days improved to 70 days, against 100 days.
The focus and steps undertaken towards balance sheet consolidation resulted in significant improvement in cash flows of the company. Our net operating cash-flow for the year increased to INR284 crores from INR17 crores in FY ’22, on back of strong underlying earnings and efficient working capital management.
The debt-equity ratio has improved to 0.63 against 0.77. Further, some notable developments on the government policy front which will have a positive bearing on the company’s growth and performance are the restoration of RODTEP scheme in our engineering product business, which will boost our export competitiveness and potentially improve our overall operational performance.
The company will also get benefited from the India — Australia free-trade agreement. Our engineering products are now eligible to enjoy preferential market access in duty structure in Australia. This will boost our export competitiveness and future growth.
The recent government announcement for transmission system plan for integration of 500 gigawatt of renewable capacity with an investment outlay of INR2.4 lakh crores in domestic transmission project is also a big positive for us.
Further, I’m glad to share that Skipper Pipes have onboarded M.S. Dhoni and Chris Gayle as brand ambassadors to help raise awareness about safe water supply. For Indians, M.S. Dhoni is not just a cricketing icon, but also an embodiment of value, such as trust, reliability and resilience, which perfectly align with the values of the Skipper Limited. It’s a well thought out brand strategy to position ourselves as a leading player in the industry by associating with the skipper, or captain of Indian cricket himself, M.S. Dhoni. Skipper Pipes has been certified with highest standard of NSF14. The campaign aims at creating awareness about 100% lead free and NSF 14 certified PVC pipe for Indian household and the importance of using best-in-class lead free pipe for potable water solutions. Thank you. I’m happy to take your questions.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Rahul Mishra from Centrum Broking. Please go ahead.
Rahul Mishra — Centrum Broking Limited — Analyst
Yeah, hi, thanks for the opportunity, and first of all, congratulations to the management on a very good set of numbers during the quarter. Sir, I have a couple of questions. But to start with, to the bidding pipeline as we see from the presentation, it looks very healthy at INR66 billion for international orders and INR35 million for domestic market. So, if you could help me understand what all sectors are these offers likely to come from? And if you can put any timeline on when the tenders will be awarded?
Sharan Bansal — Director
Yes, so effectively our bidding is largely to the EPC players, who are either in turn bidding for these transmission tenders, or in many cases they have already won those projects, and we as a supplier are bidding to them. So, we have active relations with a number of global EPC players, and many of these bids which we have submitted with them, we are in advanced stages of finalization with a number of them. So, every quarter we are expecting inflow about INR400 crores to INR500 crores of order inflow, which is what we have been maintaining for last several quarters. And yes, as we are looking at the demand prospects, we feel that this bid pipeline will continue to grow. As we have mentioned, this INR66 billion in international front and about INR35 billion on the domestic front right now. We are also expecting more bids to come up in the domestic side this year.
Rahul Mishra — Centrum Broking Limited — Analyst
Sure, sure. Thanks. So, my next question is pertaining to the same, tender pipeline. Sir, if you can help me understand what could be the net-net margin profile for these tenders? I know like, the tenders will be a mix of international, domestic EPC contracts. So, if you can just put any number, any figure to that for the margins.
Sharan Bansal — Director
Yeah, so on a consolidated basis, we are confident of delivering 12% to 13% margins in our engineering segment. We have, in this year also our operating margin has improved across the company significantly to 11%, and I’m saying for engineering segment also, we have seen good margin for the full year, so you can expect 12% to 13% margin for the engineering segment. Yes, for the full-year, this year, engineering segment, we have delivered 12.8%. So 12% to 13% is what you should be expecting for these incoming orders.
Rahul Mishra — Centrum Broking Limited — Analyst
Sure, sure, sir, sure. Sir, my next question is pertaining to one of the slides in the PPT, when it was mentioned that there is a pent-up demand in the domestic T&D space, as most of the tenders that got postponed will now be conducted in coming months. So, if you can just throw some light on what all states in the domestic market we are seeing this pent-up demand?
Sharan Bansal — Director
Yes, majority of the tenders are catering to renewable power integration. So, we expect majority of the tenders to come in, in Rajasthan and Gujarat side.
Rahul Mishra — Centrum Broking Limited — Analyst
Okay, okay, and considering most of the tenders will be awarded from government entities. So how would you see the working capital position like in terms of receivables, if, what was the average receivable days while you are working with the existing government stakeholders.
Sharan Bansal — Director
We are seeing, we are not seeing any challenge in terms of receivables, as I mentioned in my remarks, we have brought down our debtor number of days to 70, instead of 100 plus debtor days in the previous year. So, we are as such not seeing any inch in realization from whether it is domestic side or international side.
Rahul Mishra — Centrum Broking Limited — Analyst
Okay, okay. Fair enough, fair enough. Sir, my next question is for the telecom towers, considering that we are the largest manufacturers and suppliers of telecom towers. So given the government’s thrust on adding new 8 lakh towers over the next two years, how are we placed in the industry in terms of market share, and what is the revenue as well as margin potential from this order pipeline of 8 lakh towers.
Sharan Bansal — Director
We have recently won this large BSNL contract also for setting up and installation for 4G towers in rural areas. We are seeing more such opportunity as the 5G expansion and investment takes momentum. So, I believe that Skipper as the largest player in this segment, we will continue to see better and better opportunities in the telecom space also, just the way we are seeing in the power transmission. The margins should be in line with our overall company margin.
Rahul Mishra — Centrum Broking Limited — Analyst
Okay, okay. My next question again pertains to the Telecom segment. So, telecom segment, sir, what is the current share of revenue coming from telecom sector, given that we have recently won a big order from BSNL, and going ahead, if we could secure some orders — similar orders like these, can it become a significant contributor to our engineering product segment after exports?
Sharan Bansal — Director
Yes, possibly you are right. Currently, if I look at the year that just ended, telecom would be maybe less than 15% of our overall revenue. But, yes, with the BSNL contract as well as other opportunities in the telecom sector, we may see some increase in that — in our overall revenue mix.
Rahul Mishra — Centrum Broking Limited — Analyst
Sure. I have some more questions, but I will join back in the queue. Thanks for all the reply, sir.
Operator
Thank you. We’ll move onto the next question that is from the line of Sachin Kasera from Swan investments. Please go ahead.
Sachin Kasera — Swan Investments — Analyst
Yeah, good afternoon and congrats for a good set of numbers. First of all, on this big contract that we received from BSNL, so if you could give us some clarity in terms of how do we see the execution and the ramp-up, and the working capital cycle for this specific order in financial year ’24?
Sharan Bansal — Director
Yeah, sure. So, the contract is a make of capex and O&M. So, the 60%, 65% of the contract value will be realized in the next two financial years, that means this FY ’24 and FY ’25, which is the capex part of it, and the O&M part, which is about 35% to 40%, that will be realized over next five years after the [Indecipherable] installed. So that is how we are expecting the revenue will be realized. And in terms of working capital, it should be in-line with our company’s overall working capital, currently whatever we have.
Sachin Kasera — Swan Investments — Analyst
No, I was asking if you could be a little more specific like in financial year ’20s execution of 60%. How should we look in terms of how much extension should happen in ’24 and ’25. If you could give that breakup roughly, will it be like equal 50-50, or it will be more like much less this year and major execution will happen in ’25, this is whatever interactions we have there.
Sharan Bansal — Director
It will honestly depend on site conditions as the project had just kicked off. So, it is too early to say what will be the exact revenue. Of course, the government does want more revenue to take place in this FY ’24 itself, maybe because of the elections, but it remains to be seen once how the speed on the ground picks up. We definitely expect that the 100% of the capex part of the revenue will be realized in FY ’24 and ’25, but the split between the two years, it is too early to say.
Sachin Kasera — Swan Investments — Analyst
And any sense on, has the execution started full-fledged, or when would [Indecipherable] start in terms of complete execution, any sense that if could give us.
Sharan Bansal — Director
Yes, the execution has started in number of the clusters in the area that we have.
Sachin Kasera — Swan Investments — Analyst
Okay, sure. Second question was on the margin in the engineering business. So, this year we have seen almost 200 basis point improvement at 12.8%, and in one of the previous calls you had mentioned that you expected in the range of 12% to 13%. But in one of the slides in the presentation, it has been mentioned that you are expecting the share of exports to rise to almost 75% over the next two years in the engineering business. And this is from whatever you have interacted in, you had mentioned in the past conference calls that the margins in exports are much better. So, if the share of export is going to increase from 50% to 75%, should we not expect to have better EBITDA market in the next two years?
Sharan Bansal — Director
Well, we would certainly like to do better than 12% to 13% margin, but as and when the export grows, hopefully, we will do better margins also. As of now, we are guiding for 12% to 13% margins only.
Sachin Kasera — Swan Investments — Analyst
Sure, sure. Secondly on this bidding pipeline in the engineering business in the domestic market, does this include some of this — you mentioned that almost 8 lakh towers are to be installed. So, this domestic pipeline, it is mainly on the T&D side, or this domestic pipeline again includes some other circle orders like the one that you have recently won.
Sharan Bansal — Director
In the domestic pipeline, the share of telecom is lower, but yes, there are some telecom opportunities also included in the domestic pipeline.
Sachin Kasera — Swan Investments — Analyst
So, this few other circles that you mentioned, if you could give us some sense, what is the overall size of this 5G rollout opportunity, because I think what we have is just few circles, right? And you mentioned the total installation has to get around 8 lakh towers. So, if you could give us some ballpark picture what is going to be the size of the market? What is like a tentative timeline in which you can expect the bidding to happen? And who are the key players? How are we positioned? It will be very helpful.
Sharan Bansal — Director
See, the overall 8 lakh towers will be a combination of towers put up by all the operators and the third-party tower companies in India. So, it is difficult to comment on individual plan. This is the estimate out up by various sources that 8 lakh towers will be required in the overall 5G expansion –network expansion. So, as such, definitely opportunities are increasing. We are seeing more and more big opportunities in the telecom segment, but giving a circle wise breakup would probably not be possible to let out.
Sachin Kasera — Swan Investments — Analyst
Sure, but at least on the BSNL side, if you could give us some indication, because I’m sure that’s more of a government tender-based business. So how many more bids are expected tentatively in financial year ’24, if you have some insights on that.
Sharan Bansal — Director
No. BSNL, currently what we are doing is the 4G saturation project. As of now, we haven’t announced any other project which they are going to undertake. But is expected that as they also move to deeper penetrate their 4G and 5G expansion, they definitely will be coming out with more projects, but as such, there are no confirmed plans in hand for us.
Sachin Kasera — Swan Investments — Analyst
Sure, just last question on the export side of the business. So now that we’ve got significant approvals, and you know when we are seeing some of the other companies which are in their listed space and in the different categories like supplying conductors, like addressing the same industry, they are seeing very strong order book from North America. In fact, some of them also seen very strong execution in the financial year ’23. So, if you could share some thoughts in terms of how are you seeing the ramp up and the order inflow visibility for the North American market.
Sharan Bansal — Director
Yes, North America is an interesting opportunity. The conductor manufacturers have an advantage because there, conductors are going to reconductoring projects also. However, towers and poles are typically used when only new lines are built. So, I’d say that we have entered the North American market last year with some small orders. We are expecting some significant size orders in the coming years, but in terms of revenue, as of now, because we don’t have large orders from the North American market, so we don’t expect much revenue from there to come this year also. Only when we receive some significant orders from that market, then the following year, we can expect some significant revenues coming in.
Sachin Kasera — Swan Investments — Analyst
But over the next, say two to three years, can we see significant order inflows from this North American market?
Sharan Bansal — Director
Yes, yes, there are number of projects which we are pursuing right now. So, yes, we are quite hopeful that we should see good order inflows from North America, as well as other developed markets like Europe and Australia.
Sachin Kasera — Swan Investments — Analyst
Sure, and just one question on the balance sheet. If you could share what is the capital expenditure plan for financial year ’24 end. Are we envisaging any debt — net-debt reduction planning for FY ’24.
Sharan Bansal — Director
We are planning a total capex of approximately INR75 crores in in this current financial year FY ’24. And in terms of debt reduction, we have been consistently controlling the overall debt including working capital. As I mentioned in my remarks, we have been able to bring down overall borrowing by approximately INR70 crores to INR80 crores even in this financial year, despite the growth of sales.
Sachin Kasera — Swan Investments — Analyst
Sure, thank you.
Operator
Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead.
Deepak Poddar — Sapphire Capital — Analyst
Hello, hello. Thank you very much sir for the opportunity. So, first of all, I just wanted to understand in terms of revenue mix, between the polymer, engineering product and infra, how do you see the revenue mix currently which is at maybe what 75%-25%.
Sharan Bansal — Director
Yes, the current revenue for us, 79% is T&D and engineering and EPC, and 21% is polymer. Correct.
Deepak Poddar — Sapphire Capital — Analyst
And 5% is infra.
Sharan Bansal — Director
Yeah, so your question is?
Deepak Poddar — Sapphire Capital — Analyst
How do we see the revenue mix going-forward?
Sharan Bansal — Director
While we expect growth in both the businesses, so definitely we expect that Polymer segment should grow in overall revenue mix of the company, because it is growing at a much faster pace than the engineering business. So, we do expect in the coming years, Polymer to take a greater share in the overall revenue.
Deepak Poddar — Sapphire Capital — Analyst
Correct. Understood. So, ideally, I mean, we have been — I mean vocal about what 25% CAGR over the next three years. So widely the polymer should grow at, what, 30%, 40% and engineering product would grow lesser than 25% right, to have that consol level 25% CAGR.
Sharan Bansal — Director
Yes, yes, that’s about right.
Deepak Poddar — Sapphire Capital — Analyst
So, and in terms of potential for margins in your polymer division, how do we see that? I mean, currently it is only at about what 5% odd rate. So how do we see the potential in polymer, I mean, as we as we scale up, because ideally, then it’s EBITDA margin-dilutive, right, at a consol level.
Sharan Bansal — Director
But then, obviously you would have noticed that the industry average EBITDA margins are very healthy in this business. We are positioned as a premium brand in the markets that we operate in. Our EBITDA margins are low right now, because we are a young brand and we are still investing in our distribution and in our channel sales. We could see a consistent improvement every year in the EBITDA margin going forward.
Deepak Poddar — Sapphire Capital — Analyst
Okay, so, what’s the sort of margins that we would aspire for in this business? Is it 10%, 12% is what the aspiration would be for us on the medium term.
Sharan Bansal — Director
In the longer term, we definitely would aspire to be close to the industry average, which is in the range of 13% to 14%.
Deepak Poddar — Sapphire Capital — Analyst
13% to 14%.
Sharan Bansal — Director
Yes, in the long-term.
Deepak Poddar — Sapphire Capital — Analyst
Okay, I got it. I understood. Yeah, that’s it from my side, sir. All the very best. Thank you so much.
Operator
Thank you. The next question is from the line of Vignesh Iyer from Sequent Investments. Please go ahead.
Vignesh Iyer — Sequent Investments — Analyst
Congratulations, sir, on the good set of number. I just wanted to understand, if I take this closing order book and exclude the BSNL order from that total order book, so what would be a normal execution period for this non BSNL order book.
Sharan Bansal — Director
For the non-BSNL order book, you can assume an execution period of approximately 12 months to 18 months.
Vignesh Iyer — Sequent Investments — Analyst
Okay, okay, fine, and second question, if you could just, so I do understand there is another nature of interest payment that, I mean, except for long-term debt that you hold in the book, books of account, I just wanted to know, what would be the breakup of this INR32 crores that would be paid in quarter four and INR104 odd crores interest that we paid in entire year. What is the nature of the interest that is being paid, if you could just give me a break up on that entire amount.
Sharan Bansal — Director
See, INR104 crores is overall finance charges, so that includes unknown interest, working capital interest as well as interest paid on all SPs discounted for our field bill [Phonetic], so the interest — the financial as well as charges made on account of bank guarantees etc., so all that inclusive is contributing to finance charges of INR104 crores.
Vignesh Iyer — Sequent Investments — Analyst
I understood, but if you cannot give me the number, if you could just tell me what is the cost of funds of term-loan and working capital loan separately, just that I get an idea of what is the cost of the loan that you hold in your books.
Sharan Bansal — Director
So, the average cost of loan should be somewhere ranging from 8% to 9%. And if we talk on the interest cost, for phase two [Phonetic], it was 5.6% in last financial year and just concluded here. We have done 5.3%.
Vignesh Iyer — Sequent Investments — Analyst
This is as a percentage of revenue.
Sharan Bansal — Director
As a percentage of revenue.
Vignesh Iyer — Sequent Investments — Analyst
Okay, okay, fine, I’ll get back-in the queue. Thank you.
Operator
Thank you. The next question is from the line of Sachin Kasera from Swan Investments. Please go ahead.
Sachin Kasera — Swan Investments — Analyst
All right. Couple of questions on the polymer business. If you could share with us the volume that we have done in this current financial year versus the last financial year.
Sharan Bansal — Director
Our company doesn’t report volume data. We report value data only.
Sachin Kasera — Swan Investments — Analyst
Sure, but most of the players in the industry do share, but yeah, I expect it as a company policy. Second question was with respect to you, if you see the last three, four years, because we were implementing the TOC concept, we did not see much growth in terms of revenue and profitability. And lot of these players who were much smaller than us have become much larger, and even some of the larger players have grown to very big size. So, because of which our market-share has become much lower. So now that we’re through with this, what is the type of aspiration we have, because today it’s like a INR30,000 crores industry, we have like 1% market share. So, for us to be a relevant player in the industry, we at least have to reap some significant amount of market share. So, either on a regional basis, do we intend to be a main player and want to become a national player all India. If you could just dwell a bit in [Indecipherable], what are your aspirations in this business, and how do you think are we positioned to be able to meet our aspirations.
Sharan Bansal — Director
Yeah, sure. Devesh, would you like to take this question?
Devesh Bansal — Director
Sure, so you are right. The headroom available for us in this industry is quite large. As you mentioned, we are at only about a 1% market share, so there is enough room to grow for players like us. The TOC working that we have done over the last three to four years has built up a great distribution network for us. So, the presence that we have across the areas that we operate is quite strong, and we are now reaching out to almost 30,000 retail touch points on a regular basis. With now the launch of our branding activities as well, we hope to be able to capture a substantial part of this market. The market, you’re right, has grown significantly in the last few years and it is going to continue to grow, especially with all the investment that is happening in the water sector by the government as well. This market will continue growing for the next many, many layers and. We hope to play a big part of it going forward.
Rahul Mishra — Centrum Broking Limited — Analyst
But you know, I have somewhat [Indecipherable] my memory goes back, you were closer to around 2% market share or 1.5% market share four or five years back. Today, we are closer to 1%. Should we assume that at least in the next three, four years, we expect to go back to that 1.5% to 2% market share at least.
Sharan Bansal — Director
The aspiration is to obviously be much higher than that. We’ll see how it works out.
Sachin Kasera — Swan Investments — Analyst
Sure, and secondly, do we want to be a more focused on Eastern region where we right now have a major presence in — look at a much more dominance there, or eventually we want to be a much larger and a pan India player, but that would also mean significant investors, both in terms of distribution, marketing, as well as capex, if you could give your thoughts on that.
Sharan Bansal — Director
So currently, east and northeast are very strong market for us, and we enjoy a great brand presence, as well as decent market share in these markets, which will continue to grow, but we are also very well present in North India now, as well as parts of South India. So, the idea is to continue expanding geographically as well as consolidate our position in East and North East parts. So, I see both of these two regions that have been going forward.
Sachin Kasera — Swan Investments — Analyst
And currently, your manufacturing is mainly in Eastern India.
Sharan Bansal — Director
Yeah, currently the manufacturing is in two plants, one in Calcutta and one in Guwahati.
Sachin Kasera — Swan Investments — Analyst
And what would be the capacity of both these plants?
Sharan Bansal — Director
Consolidated capacity currently for polymer business is around 60,000 tonne per annum.
Sachin Kasera — Swan Investments — Analyst
Six, zero, 60?
Sharan Bansal — Director
Yes.
Sachin Kasera — Swan Investments — Analyst
And what would be the average utilization currently we would be looking at.
Sharan Bansal — Director
Current utilization while we don’t generally disclose the volume numbers, but currently the utilization for the pipes business is approximately 50%.
Sachin Kasera — Swan Investments — Analyst
And do you intend to set up any plant in North India, because you mentioned that North India is also a big focus area.
Sharan Bansal — Director
It’s not in the current year’s plan, but we’ll see as we go down.
Sachin Kasera — Swan Investments — Analyst
Sure, sure. Thank you.
Operator
Thank you. The next question is from the line of with Vignesh Iyer from Sequent Investments. Please go ahead.
Vignesh Iyer — Sequent Investments — Analyst
Yes sir, thank you for the opportunity again. Just to understand that, what would be our guidance for probably the next two year in terms of revenue. I mean, if you could tell me, except for the BSNL orders, because it has its own execution cycle, right? So, if you could just let us know what will be.
Sharan Bansal — Director
Your question is the execution period the non-BSNL order.
Vignesh Iyer — Sequent Investments — Analyst
No, no, no. I want to know what is the guidance in terms of the revenue that we would generate from EPC segment excluding the BSNL order, because BSNL order has its own execution cycle, right. So, what — do we have any guidance for, I mean your regular orders that you’re getting based on that.
Sharan Bansal — Director
Okay, you are specifically asking about the EPC segment only.
Vignesh Iyer — Sequent Investments — Analyst
Right, EPC segment, right.
Sharan Bansal — Director
Okay. Our segment is not very large. We do have certain projects for transmission line and railway electrification projects. So, we do expect to do maybe INR40 crores to INR50 crores of revenue in those areas. We have taken, we have entered into the space of water EPC at [Indecipherable] project. So, we do expect revenue from that division to now come in. So overall, you can say, non-BSNL Infra revenue which should be in the range of INR100 crores to INR150 crores all.
Vignesh Iyer — Sequent Investments — Analyst
Okay, I’m going to the new… Yeah, sorry.
Sharan Bansal — Director
Sorry, once again?
Vignesh Iyer — Sequent Investments — Analyst
Yeah, so just to understand, this water EPC, this water project that we have got, does it have a different EBITDA margin profile or it is similar to what it is right now.
Sharan Bansal — Director
The water EPC business will be having a similar volume profile from our existing businesses.
Vignesh Iyer — Sequent Investments — Analyst
Okay. Thanks. That’s all from my side. Thank you.
Operator
Thank you. The next question is from the line of Sachin Kasera from Swan Investments. Please go ahead.
Sachin Kasera — Swan Investments — Analyst
Yeah, just two small questions, one is on the interest cost. So, this year it is close to around 5% of revenues. Going ahead, while obviously, there may be increase in working capital has the net-debt may not come down. But over the next couple of years, do you think that we can turn a far more efficient operations and try to reduce this to like3.5% to 4% of revenues, or this is the optimum at which we would be working the next two years.
Sharan Bansal — Director
Yeah, I think finance cost is a function of obviously the working capital working as well as the interest rates, and we all know that during the year, interest rates have increased substantially. So probably the effect of the improvement that we have achieved in the overall working capital management has not been so easily visible in the finance cost, because of the rising interest rate. However, now I believe that with further improvement in the working capital management, there definitely is an opportunity for this number to go close to 4%, but whether that will happen in this year or next year is hard to say, but yes, we do believe there is an opportunity to go below the current level of 5% that we are at.
Sachin Kasera — Swan Investments — Analyst
Sure, secondly, 2015 to 2018 when we were doing very well, our ROCE used to be in the range of 24%, 25%. Now they have recovered to like 12%, 13%. With this type of improvement in terms of mix towards exports and now also positive outlook on performance polymers in this strong outlook on the BSNL order, next two, three years, we think we can once again aspire to get 18%, 20% ROCE or that was like a one-off time and like 14%, 15% ROCE is what we should look at a far more stable and a sustainable ROCE for our business model.
Sharan Bansal — Director
I think 20% plus should be definitely the long-term aspiration of the company.
Sachin Kasera — Swan Investments — Analyst
Sure, thank you, all the best.
Operator
Thank you. [Operator Instructions] The next question is from the line of Rahul Mishra from Centrum Broking. Please go ahead.
Rahul Mishra — Centrum Broking Limited — Analyst
Hi, thanks for the follow-up. My question pertains to the polymer segment. I see that we are targeting to increase our touch points from 30,000 — we are targeting to double our touch points from 30,000 currently to 60,000 in the next two years. Could you elaborate how are we concentrated region wise? I’m sorry, I may have missed it during the con-call. So, if you can just like give a brief understanding like how are we concentrated across India.
Sharan Bansal — Director
Yeah, Devesh, you want to take that question?
Devesh Bansal — Director
I’m not sure about the figure of 60,000. It seems really a fat figure, but the idea is to continue exploiting the current distribution network that we already have, which is itself very large. So, for us to grow even from the existing distribution network is very well possible, and of course we will continue expanding the retail bases. So, both these things will happen. And the concentration region-wise, which I had mentioned earlier as well. East and North-East are our strongest market obviously, wherein we have very good bank balance. But North India has also come up very well and part of South India as well.
Rahul Mishra — Centrum Broking Limited — Analyst
Okay, okay, well, sir, if you can help me understand the [Indecipherable] like whether we sell it through brand outlets or we sell it through multi-brand outlets. What is the proportion between the two among the 30,000 touchpoints.
Sharan Bansal — Director
So, all the retailers in the market across the industry in the PVC business, very few retailers are single-brand, the entire retail base is multi-brand only, so we operate to these people only. The distributor that we have are excluded. So, the distribution is excluded, but the retailers are on multi-brand, and that is the common phenomenon across the industry.
Rahul Mishra — Centrum Broking Limited — Analyst
Sure, sure, sir. Sir, can you give us a breakup between the organized versus unorganized market-share for the PVC industry, and are we seeing any industry consolidation going ahead with share of organized increasing.
Sharan Bansal — Director
Yes, for sure. So, I don’t have the exact figures obviously, but then our assumption is that the organized to unorganized share in the PVC industry is about 60-40, and it is increasing further. So, as we go along, we’ll see the exit of a lot of unorganized players and organized players will continue to grow.
Rahul Mishra — Centrum Broking Limited — Analyst
Sure, sure. Thanks sir. So, my next question is like I was going through the PPT and it was mentioned that the non-T&D product share in the total order book, the total outstanding order book stood at 62% and we are currently following the strategy of increasing our non-T&D proportion from railways and telecom. So, if you can just elaborate a bit on like which particular sector among these two would be fastest growing. And in case if it is railways, then what would be the scope of work that we could get.
Sharan Bansal — Director
So, we definitely see a lot of opportunity from telecom and on the back of this present order as well as other orders to come up in the coming years. We definitely see tremendous opportunities in the Telecom segment. Railway also either is a decent-sized segment for us. There are, although railway electrification opportunities are probably lesser compared to last year, but we are on the lookout of other opportunities in the railway sector also.
Rahul Mishra — Centrum Broking Limited — Analyst
And with respect to railway orders, what would be the proportion of projects or orders which are fixed price contracts.
Sharan Bansal — Director
Mostly, the contracts do come with pass-through margin [Indecipherable] clauses in terms of raw materials.
Rahul Mishra — Centrum Broking Limited — Analyst
Okay, okay. Sir, my last question will be on the international business, if again, if you could just throw some color on like how many countries we are currently present in, and how many we plan to enter in the future. And since, you also mentioned that international business would constitute 75% of total order book in the next two years. So are we saying that we will be extracting more and more revenue from our existing reach in the international market, or we will be tapping more export opportunities. And with this scale-up in the exports market in the engineering segment, how significantly it will add to our margins in profitability, like we have already highlighted that we would be maintaining our margins at 11% to 13%, so can we see like additional 100 bps or 200 bps, I maybe saying it on a higher side with this scale up in export segment.
Sharan Bansal — Director
Yes, it’s perfectly possible. So as and when exports keep growing, so the growth in exports will come by two ways, one is that by the addition of more and more new markets. As you know, every year we are adding seven to eight countries in our overall export reach, and of course the greater engagement with the existing buyers and stakeholders where we are gathering a bigger share of their wallet every year. So that’s how the export growth will continue, and that’s how we are targeting to take it up to 75% of our revenue, which is also by the way, we expect it to grow at 25% CAGR every year. Yes, definitely, with the improvement in export order book and execution, we can target better margins higher than 12% to 13% in the future.
Rahul Mishra — Centrum Broking Limited — Analyst
Okay, okay, sure, sure, sir. So, my last question is again pertaining to international business, that is export markets. So, which all countries’ firms are we seeing that they are participating and those can give a good competition in the exports industry, and how are they faring currently.
Sharan Bansal — Director
Could you repeat your question please?
Rahul Mishra — Centrum Broking Limited — Analyst
Yes, sir, I was saying that what other countries’ firms, like from which countries are we seeing competition in the international business, like either from Turkish firms or Chinese films.
Sharan Bansal — Director
Yes, essentially, we are seeing major competition from, historically we’ve seen competition from Chinese and Turkish companies, and from the Middle-East also there are a few companies, although it is smaller in size, where we do see some competition.
Rahul Mishra — Centrum Broking Limited — Analyst
All right, thanks, thanks a lot sir for all the answers. I’m done with my question. Thank you sir.
Operator
Thank you. [Operator Instructions] The next question is from the line of Rahul Mishra. Please go-ahead.
Rahul Mishra — Centrum Broking Limited — Analyst
Yeah, hi, thanks for the follow-up. Sir, I have just one last question, since we ventured into the water EPC works for the first-time order of INR1 billion, and given the government’s thrust on like providing tap water connections to all rural households, so there is likely to be a surge in demand for PVC pipes. So, can you see incremental order into this segment?
Sharan Bansal — Director
Yeah, so, you’re right. With almost 80% of the Indian households now getting connected by pipe water, which was not there earlier, there is definitely going to be an increased demand for plumbing pipes, which is going to be the PVC and CPVC. So, over the next few years, we expect there to be very healthy demand for plumbing pipes and plumbing products from across the country, and we hope that with our retail presence that we have in different geography, we will be in a very good position to take advantage of that. So, it’s a very exciting time going forward.
Operator
Thank you. The next question is from the line of Chirag Jain, an Individual Investor. Please go ahead.
Chirag Jain — Individual Investor — Analyst
Sir, am I audible?
Sharan Bansal — Director
Yes, you are.
Chirag Jain — Individual Investor — Analyst
Sir, just wanted to understand your thought process with regards to debt currently. So, I know you’re at a low debt-to-equity, but what would be your thought process with regards to repayment of the SIB, because if I go back and look about five years back, at that time around similar level of debt, we were paying interest of about INR50 odd crores. Currently we are having a high-interest burden, which is what is eating into profitability. So just wanted to have an understanding because you communicated in the current con-call that your average cost of borrowing was about 8% to 9%, so in future, what would be the interest payments.
Sharan Bansal — Director
So, I think, as I mentioned, that the overall interest cost, actually finance cost, which is inclusive of launches, the interest outgo on the debt, it is inclusive of all the other charges which is the discounting charges, which we pay on our tail bill, as well as the bank guarantee charges which we pay in order to obtain bank guarantees, etc., for our business. So, I believe that the finance charges are in line with our overall business, but they are also mentioned there is an opportunity to reduce this with better working capital management in the years to come.
Chirag Jain — Individual Investor — Analyst
Sir, in the current year, which is coming back, would we see the overall finance cost going down as compared to because you have been talking about increasing your top-line also. So, finance costs will increase in commensurate with your top-line, or then because of your prudent measures with regards to working capital, it will come down.
Sharan Bansal — Director
Yes, the effort will definitely be there on a percentage basis, we should see improvement in the finance cost as a percentage to revenue.
Chirag Jain — Individual Investor — Analyst
Thank you, sir.
Operator
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments.
Sharan Bansal — Director
Thank you, everyone. We are confident of profitable revenue growth of high-double digit with a consistent margin in the current year, and expect new growth in excess of 25% CAGR for the next three financial years on the back of pending engineering contracts and strong Polymer segment performance. Our diversification into international markets and sectors will help us pick and choose higher-margin orders which are coming our way, and provide us with an opportunity to be spoiled for choices across the sectors. This will aid in better margin performance and improve bottom-line profitability and capital return ratios in the coming quarters. We appreciate your continued support and look forward to interacting with you again in the next quarter. Thank you very much.
Operator
[Operator Closing Remarks]