Spml Infra Limited (NSE: SPMLINFRA) Q3 2025 Earnings Call dated Feb. 17, 2025
Corporate Participants:
Manoj Digga — Executive Director of Commercial, CFO & Director
Analysts:
Pranay Premkumar — Analyst
Kevin Daftary — Analyst
Unidentified Participant
Aditya Sen — Analyst
Prathamesh Dhiwar — Analyst
Mayur Gathani — Analyst
Presentation:
Operator
Ladies and gentlemen, Good day and welcome to The SPML Infra Limited Q3 and 9 months FY25 earnings conference call. [Operator Instructions] I now hand the conference over to Mr. Pranay Premkumar from Afactor PR Investor Relations team. Thank you. And over to you sir.
Pranay Premkumar — Analyst
Good evening everyone. From the senior management, we have with us Mr. Manoj Digga, Director Commercial and Chief Financial Officer and Mr. Sujeet Kumar Junjunwala, VP Fund Management and Banking. Before we begin the conference, I would like to mention that some of the statements made during the course of today’s call may be forward looking in nature including those related to the future financial and operating performances, benefits and synergies of the company Strategies, future opportunities and growth of the market of the company service. Further, I would like to mention that some of the statements made in today’s conference may involve risks and uncertainties. Thank you. And over to you Mr. Manoj Dikhar.
Manoj Digga — Executive Director of Commercial, CFO & Director
Thanks Brunet. Good evening and thank you for joining the conference call of our third quarter and nine months of FY25 financial result of SPML Infra Ltd. I would like to extend greetings for a prosperous new year as we are meeting for the first time in 2025. I will give you a brief overview of the industry trend, business updates and you will also walk through the company’s financial performance over this period.
Regarding the water sector, the central government remains focused on building robust infrastructure with specific focus towards the water Infra segment. Given that the water crisis has now reached a very critical point and disturbing implications, it is much more imperative and urgent to act now to protect these vital resources. NITI Aayog has also reported that 25 major cities in India including Delhi, Bengaluru and Chennai face the imminent danger of groundwater depletion by 2025. United nations has also projected India to become water stressed by 2025.
There are other factors also affecting water resources like global warming leading to erratic monsoon and accelerated water evaporation and the increased urbanization and inefficient infrastructure to increase the burden of water supply. With existing and emerging challenges, a well designed and resilience water infrastructure system is an urgent need. As you are aware, the Jaljeevan Mission was initiated in 2019 with an estimated outlay of 3.6 lakh crore in partnership with State government to provide safe water through individual household TAP connections by December 2024 to all rural households.
This scheme has resulted in providing 15 crore plus households with functional tap water connection covering almost 80% of the Indian rural population. It is very admirable to see the continuous emphasis on water infrastructure through Jarjeevan Mishal which has now been extended till 2028 in order to achieve 100% coverage. The outlay of 67,000 crore for the current financial has been announced in the Union budget this year. We completely support this initiative and look at this as an opportunity for further contribute towards building an efficient water infrastructure network in India.
Apart from these initiatives, our honorable Prime Minister has gone a step further as he planned to dedicate a project worth around 40,000 crore to link 11 rivers in Rajasthan which is currently facing severe water crisis. He also laid the foundation stone Ken Batua River Linking project which is estimated to cost 44,605 crore in Madhya Pradesh which aims to solve the water issues in Bundalkhand region spread across part of Uttar Pradesh and Madhya Pradesh. Overall, the current Government of India is very serious in securing the country’s water future through strategic policy, sustainable initiative and robust infrastructure development.
As regards the SPML business and operation, coming to our business and operation as we have been highlighted that we operate in three major segments of water supply out of which river to reservoir which is a bulk business segment is our preferred business area which basically includes laying large diameter pipeline for water transportation while the other two segments are Reservoir to Tab and Home to Rivers. Q3 has been a muted quarter in terms of the revenue growth not only for us but also for the entire industry.
The quantum of awarded is quite low value due to delay in approval at the end of the central and state government. With the new budget and fund allocation in place, we are confident that free standards will start floating in which could help to build the strong revenue projection. Our order book currently stands at 2,500 crore and orders around rupees 2,800 crores are in L1 stage and we are expected to get materialized into profitable order for us in Q4 financial year 25 and Q1 of 26 in transit we are building for substantial number of project value almost 9,000 crore which are currently at bidding stage and we are very confident that our strong pre qualification credentials and vast experience will enable us to successfully convert those into order wins.
We are pleased to announce that post successful evaluation of our financial performance, our long term fund based term loan of rupees 477 crore has been assigned a rating BBB stable. While the long term short term proposal proposed non fund base of rupees 200 crore has been assigned a rating of BBB stable by ICRA. This has given us an opportunity to taking the regular limit with the bank at a lower margin and raise further date for our future expansion. I’m also pleased to inform you all that SPM and INFRA has been achieved an all time best ranked of 14 in the latest GWI World Top 50 Private Water Companies list.
It’s an accomplishment for us that we are among the top 15 companies worldwide dealing in water management. Our arbitration proceedings from which our repayment of date is likely linked are progressing satisfactorily and the company is very much confident a substantial amount of cash flow will be received from the arbitration award for the growth of the company after repayment to NARCL due as regarding Q3 and 9 month financial 25 year financial year 25 performance, we would now move forward for quarterly financial performance on a standalone basis.
We recorded a revenue of 201 crore in Q3 financial year 25 as compared to 250. 59 crore in Q3 financial year 24. As mentioned earlier, revenue has been impacted in this quarter due to lower order inflow in the market. But as I mentioned earlier there are orders in L1 status which provide us revenue visibility. Our EBITDA has recorded as at 23 crore compared to 5 crore in last quarter. We recorded a path of 10.4 crore in Q3 financial year 25 as compared to rupees 1 crore in the last year. In the Same quarter for Q3 financial year 25. Our EBITDA margin and PAT margin stood at 11.5% and 5.2 respectively which is in line with our targeted EBITDA margin. With regard to our nine month performance, we recorded revenue of rupees 622.7 crore in nine months financial year 25 as compared to 867 crore in nine months. Financially at 24.
Our EBITDA has recorded at 70.5 75.7 crore compared to 11.4 crore in the same period in last year. We recorded PAT of 37.5 crore in 9 month financial year as compared to 2 crore in 9 months financial year 24. We are confident that going forward our margin profile will keep on improving as we have been bidding for selected or project which would improve our overall profitability. Before I conclude I would like to mention that we are actively exploring opportunity in the battery energy storage system market. Considering the huge focus of the government and the business volume going to come.
As we have adequately pre qualified to participate in this standard as well as this highlights our expertise in the growing field of large scale renewable energy activity. With this we conclude our opening remarks. We now open for floor for question and answer session. Thank you.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Kevin from Sidharth Partners. Please go ahead. Sorry to interrupt sir. I would request you to please use your hand sir.
Kevin Daftary
Better now?
Operator
It’s better.
Kevin Daftary
Good evening sir. Congratulations for the good set of numbers and year on year improvement question. Thank you. Like currently guidance is given for L1 project and the future pipeline. I just missed that number. If you could repeat that number like 2500 is current order book. We have been awarded project. What would be that number?
Manoj Digga
We. We have basically 2853 there are five tender where we are L1 that is one. There are four tenders and roughly around 9,518 crore of bid which we have targeted to bid into going forward already announced and the tenders are going to be started soon.
Kevin Daftary
Okay. Second question is sir can you help us with cash and cash equivalent position and net as on date. Let’s say updated the total cash balance around roughly around 270 crore. We are having the cash balance as on 30th 31st December.
Manoj Digga
And roughly around 2500 crore order book we are having in our book. And debt wise the only debt which we have is something which is structured with that. Basically we have roughly around 460 crore of debt which is there in our book which this is along with the interest which we have pay in various tranches from the arbitration award up to 2028. Understood? Understood. So that that will will keep on coming and that will keep on going. Nothing is going to be paid from the cash.
Kevin Daftary
Sure I know that we. When we last met we had this discussion.
Manoj Digga
Just one question on cash and cash print Sir. We had seen Some number around 470 crore in your earlier presentation with some money was to come. So that is the last time when we as we have issued certain warrant and certain equity. So roughly around 150 crore approx further warrant is going to come and certain amount of roughly around 30 crore. 26 crore from Viva Viswas is going to come. So if we add this together then it will be around 450 crore.
Kevin Daftary
Understood. So that still awaited that warrant subscription in. Is it expected in Q4 sir?
Manoj Digga
No, nothing Q4 we will expect some some sort of Viv money from Q4 the entire 26 crore can come or at least 15 crore will come in Q4 Warren though based on the need we will demand from the from the shareholders. Sure. At the moment we are having 260 crore and then again the bank guarantee at a lower margin we are expecting. So we don’t. We may not require immediately this warrant money.
Kevin Daftary
Understood. Last question sir. This warrant money which is to come is it primarily from NARCL or somebody or who are the large investor?
Manoj Digga
The large investor is majorly is from the promoter. And then the last time we have roughly around 294 crore. A preferential issue we have made out of which roughly around 115 crore which is going to come from the warrant money. 118 crore which is going to come from the warrant money. And 37 and half crore was our earlier warrant which we have issued to the promoter. So from these two warrants the money is going to come.
Kevin Daftary
That’s helpful, sir. Thank you very much.
Manoj Digga
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Raman from Sequent Investments. Please go ahead.
Unidentified Participant
Hello sir, can you hear me?
Manoj Digga
Yes. Yes, I can hear you, sir.
Unidentified Participant
In the previous quarter you guided that we’ll do the revenue equivalent of FY24. But there has been unexpected slowdown this quarter as well. So are we. Can we do the same revenue or it will be less than FY23?
Manoj Digga
As I told you in my last two conversation. Because this year because of the various factors including the election and then the various various other issues of the government, the deployment of fund by the government has reduced substantially. And as I told in the first quarter itself that Q2 Q3 will remain tight. It has happened. It is almost all the companies Q3 results are not that good. In our case we are able to match the more or less compared to our Last quarter number. Q4. Again I feel some betterment. But Q4 there will be a pressure. There will remain into the pressure but some betterment from the Q3. But Q1 going forward from next year it should be better.
Unidentified Participant
Okay. We are expecting that Q1 will be like. We’ll wheel back till the business will be normalized, right?
Manoj Digga
I think Q1 should be normalized. By that time we will have new order revenue also come into the picture. So from Q1 onward there will be much better into the revenue side and profitability side.
Unidentified Participant
So also can you give us what can. What’s the revenue guidance for FY26?
Manoj Digga
For FY20 this year? For the Q4?
Unidentified Participant
No, no. Next. Next. Next year. The whole year. What are you aiming?
Manoj Digga
Next year it will be better. From this year we have the target of revenue jump 30 to 50%. That should happen. That depends on how quickly we get the order book which are going to start coming in tranches from the Q4 and maybe slightly early part of the Q1 and then going forward the further order what happened the last eight, nine months, six months. There is a slow down into the order position and order tendering and order allotment. I think the Q4 Q1 will be better off because a lot of tenders are going to come. So. So that will give the more visibility on procuring the order and that result will come into the next year performance.
Unidentified Participant
Okay, so basically the slowed. There was a slowdown in the tender in the. In this year which will be reflected the in the next year. Right?
Manoj Digga
I think. I think part will be covered by the government in the next year Q1 and Q2.
Unidentified Participant
Okay. With respect to Q4, can we expect the margins to improve or will it be in the range of 4 to 5%?
Manoj Digga
As we explained in every presentation, our focus is not on the top line. Our focus will be on the bottom line. Number two, there is not enough order in the market. So at this moment we can be and we are a very prominent player. So we can be very selective in taking the orders. So our target is getting the order between 10 to 15% margin. And we are still continuing with that. We are going to take. We are targeting those orders only where we will have 10 to 15% margin.
Unidentified Participant
Okay. Sir, I have a doubt with respect to the repayment of NARC dues and arbitration. Can you please explain me the repayment of NRC dues using the arbitrage arbitration which you were saying earlier.
Manoj Digga
The total our NARCL due we have settled in by way of 700 crore out of which we have already paid. Last year roughly around 224 crore. This year we have further paid roughly around 13 crore. So and this year with the sale of one property for this agreement has already been executed. We will further pay 30 crore. So roughly around by this year end there will be a loan book of roughly around 433 crore which we have to pay in next three years. Next four years.
And we have the arbitration award of roughly around 625 crore related interest. This accumulation interest is keep on increasing every day. Whereas our loan book has been frozen at 433 we accrued we have to pay. Our target is to get the arbitration award is into next two to three to four years in franchise. Like one of the arbitration awarded the supreme final hearing level of roughly around 200 crore. So this will keep on getting and part we will keep on paying to the to the narcl.
So NARCL total dues we have to pay in seven years out of which and NARCL is due has to be paid into the from the arbitration award. Arbitration of around 433 crore. The award has to dues we have to pay against which we have the arbitration award. Which if we take the four years which is our targeted period by which we should get roughly around 800 crore. So we are double covered into arbitration award we are double covered into the period.
So I don’t think there will be any problem. Whatever amount is going to come from the arbitration we are paying 75% to the NARCL. 25%. Further we are keeping for our cash flow purpose. So suppose we get the 800 crore. Roughly around 433 crore we will pay to the NARCL and balance will further infuse as a cash to the company for doing the business.
Unidentified Participant
So this 433 crores which you you said the NARCL due by the end of FY25 is it. Is it different from the debt component like the which you mentioned earlier of 460 crores.
Manoj Digga
No. As I told you now we. We are. We this year we have to pay around 44 crore. Out of which 40 crore by sale of property which we have identified and we have executed the agreement also 4 crore from the FD interest and the cash flow position. So 40 crore. Out of this 40 crore we have already received certain amount as advance. That advance we have paid to the NARCL. So as I told you 224 crore we last paid last year. 44 crore we are paying this year. Minus 700 crore is 433 crore.
Operator
Sorry to interrupt sir. I would request you to rejoin the queue for your follow up question. Thank you. The next question is from the line of Aditya Sen from Robo Capital. Please go ahead.
Aditya Sen
Hi. Thanks for the opportunity. Sir, I just wanted to confirm when you say targeting 1210 to 15% margins. So that is EBITDA margins, right? Not PAT margins.
Manoj Digga
We don’t have to pay any interest. Only the India’s adjustment we have today. So whatever is the ebitda. That is the PAT because depreciation. Correct. So basically the gross margin which we are going from the plant and now there are certain overhead expenditure which we will allocate to the various projects. So very small percent come to the every project into that. So margin gross margin will be 10 to 15%. Net margin between 8 to 10%.
Aditya Sen
All right, got it. Thank you.
Operator
Thank you. The next question is from the line of Prathamesh from Tiger assets. Please go ahead.
Prathamesh Dhiwar
Yeah, so just a couple of questions. So sir first just wanted to know like what’s the reason for the order delays in the industry, in the water industry because I think we are saying it from Q2 Q3. So what’s what. What is the main reason? We are getting a lot of order delays.
Manoj Digga
If you see the Jalgival mission itself renewal was pending. So that’s the reason. All the order which are linked with the Jeevan mission they either they have they tendered but and not allotting the order or they are not doing that tender. So which has done now because they’ll even mission they have extended up to 2028 and the government various tenders have got stuck into the government action. Because the government was very silent in Q3 and Q2 and Q3. Now the entire tendering has started process and we have applied into the 2,800 crore which is there in our. In our hand.
We are expecting in tranches in part maximum will be this March or maybe early by April we will get this order and 9,800 crore the order which is in the tender position. We are expecting that by the first quarter all the tenders will come and there also we should get a substantial portion. So it’s a issue with the water department because of the gender. All the tender was slow which is applicable to all the all the water EPC company. But now the tender as I told you last six months since the tender has not come. We are expecting a substantial growth into the Q3 and Q1 into the tender. And some part of the last slowdown will be covered up by these two quarter.
Prathamesh Dhiwar
Okay. Got it sir. And so my second question will be on the best side. So what sort of growth and orders are we looking at from this segment and when are we expecting any orders from the segment and how much it will it’s going to contribute in top line in coming time.
Manoj Digga
Means if you see that this 3000 crore 28 and 53 specifically these are the orders which we are in hand. This we are expecting in franchise this quarter and the early part of the next quarter. And this 9,800 crore we are getting we are expecting a substantial on to that. But let’s see how it pan out and every order which we are targeting it is going to be completed in three, two, three and half years. So whatever order we will get one third of that, roughly around 1/3 is going to be executed into every year. And all this tender is basically we are targeting 1012-15%. 15% margin. So whatever is the margin into the turnover data is going to come into the revenue into the book.
Prathamesh Dhiwar
So that’s, that’s the growth is going to come forward. Going forward plus our existing turnover. Yeah. So actually I was asking about battery energy storage system business. So from there what sort of order and when are we expecting orders to come in?
Manoj Digga
And battery BSS has recently started, the tender has also started recently. So we are expecting at least one order of battery energy storage system into this financial year. 20, 25, 26. So we are not one order we are expecting in the whole financial year and at least if we get more than it is better. But what are business we are going to expect more.
Prathamesh Dhiwar
Okay so in value terms can you define like how much that order will be for best?
Manoj Digga
Yeah, yeah, yeah. ESS is depending upon which orders we will get. It starts from 500 crore to thousand crore or 300 crore to thousand crore. So which order we will get, what to give, we’ll keep you updating on every quarter.
Prathamesh Dhiwar
Okay. So thank you.
Operator
Thank you. The next question is from the line of Ajinkya who is an individual investor. Please go ahead.
Unidentified Participant
Hello sir. I just wanted to ask you about like what are the, you know what is the timeline and like what is the revenue recognition of these orders you are getting and like how are you recognizing revenue? Since you said you will complete the orders of the NFC to three and a half years. So I just want to know more about it.
Manoj Digga
This is the accounting standard. So there is a very clear cut guideline provided by the accounting standard on the revenue recognition. But if you very thumb rule you can take because the orders are in the three and a half years completion the last portion will be very less revenue because it’s mainly the touch up and final billing and final startup revenue etc. But the most of the revenue will be built into the next three years. So if it is a thousand crore order like in the Jharkhand we are expecting roughly around 620 crore and maybe February that order we will get if that is going to get that in every year we will get roughly around 200 crore order into the revenue convert into the revenue. So next three years it will be converted two years approximately 200 crore every year. And the same way other orders which we will keep on getting that will be converted into approximately 1/3. It can be slightly here and there but for your calculation purpose you can take 1/3 of your total revenue of the order will be converted into revenue every year. If it is a three year, if it is a four year then 25% of the order which will cover into every year.
Unidentified Participant
Okay sir. Okay. And another question it’s come more on the financing part like what is what could be the breakup like short term and long term debt. And how are you planning to finance the like? Since it is in a capital intensive business. How are you planning to finance the whole order next year?
Manoj Digga
Like as I told you this our NARCL is it’s all long term. Basically only the food only like this year we have to pay 40 crores in accounts. We have to show short term as a 30 crore which is left into which we have to pay into this year. Rest all are long term because all are linked with the arbitration award. And long term we have to make the permanent. Whenever the arbitration award comes we have to pay 75% and 25% comes to the company as additional cash. On the on the working capital we are expect we have applied for certain BG limit. Whenever that BG comes it will not come into the financial debt. It will be only the non fund based limit. We don’t require any fund based limit. Because we have the sufficient cash flow in our book. Only the BG is required for bidding. And that is we are going to take from 200 crore to 400 crore from the various banks. Whenever it comes it will be only into the contingent liability. It will not be in the financial date.
Unidentified Participant
Okay, just a following question. Follow up question. So do you see your finance cost going up in the coming quarters or year?
Manoj Digga
This finance cost as I told you it’s 400700 crore is inclusive of interest every quarter we have to provide into the books of account. It’s only the in depth adjustment. We don’t have to pay anything or any cost element into our book. Roughly around that 9 crore is basically and there is some JCO, there is some operational this mobilization advance some interest we have to pay. That’s the reason slightly the finance cost has been increased. Otherwise our finance cost will be roughly around 9 crore every quarter. We which is the index that’s meant it is nothing we have to pay. It’s only the provision.
Unidentified Participant
Okay, sir. Okay. Thank you. Thanks a lot, sir.
Operator
Thank you. [Operator Instructions] The next follow up question is from the line of Raman from Sequent Investments. Please go ahead.
Unidentified Participant
Hi sir. Thanks for ask a follow up question. So what was the total warrant size which was issued to promoter and I think there were two times the warrants were issued. So what was the total warrant size and what will be the funds used for?
Manoj Digga
The total warrant from the promoter and associate promoter and investor is roughly around 155 crore which we had to receive. Out of which 37 and half crore of the promoter which which has been issued earlier will come in the Q4 or maybe Q1 into the next year. Rest 118 crore which has been issued into the last preferential offer will be received into this year 2526 and may be part into the 2627.
Unidentified Participant
And what will be the this 155 crores used for?
Manoj Digga
For the basically we have allotted two times. One time we have given 50 crore to the promoter out of it 12 and half crore. They have given 37 and half crore which is going to come that I have told you this year Q4 and the first quarter we will get that amount and rest will be the new preferential offer. Very recently which we have closed roughly around 118 crore of the warrant amount out of this roughly around 8085 crore of the promoter and risk from the public that are going to come into 2526 and 26 early part of 2627.
Unidentified Participant
Okay. No, no. I’m asking what will be the funds used for like to fund are we using this to pay the debt?
Manoj Digga
Don’t have to pay anything to the NARCN because all the fund what we are raising it is only for the business of the company.
Unidentified Participant
Thank you.
Operator
Thank you. The next follow up question is from the line of Aditya Sen from Robocapital. Please go ahead.
Aditya Sen
Hi. Thank you again sir. As we mentioned that we have an order book of 2500 crores and L1 of 2800. So by the end of Q1 FY26 we will have roughly 5000 crores of order book. And as you said that we do roughly 30% of execution each year. So that will translate to 1,500 crores of revenue. Is this understanding correct?
Manoj Digga
It should be. But I’m asking this question because this is not tallying with our revenue growth guidance as you mentioned 30 to 40 50% revenue growth. So that is ranging between thousand to 1150 crores. So this could be because whatever is the roughly around this year. As I told you this year our revenue for all the water company, water etc company was subdued which I have told into the Q2 also that Q3 will be tied. Q4 will be better than Q3 but it will remain tight. Because very recently all the money started coming and all the what order etc has started coming. But the next quarter our existing order and the new order which we are Targeting into the Q4 and Q1 the impact of that will come and you can take one third of the total as a revenue to that year. That is. That is a thumb rule. Plus minus 5% 10%
Aditya Sen
. Yes, I understand that. Got my answer sir. Thank you.
Operator
Thank you. [Operator Instructions] The next follow up question is from the line of Kevin from Siddharth Partners. Please go ahead.
Kevin Daftary
One is with respect to this non fund based limit that you are talking about players who are also trying to sort of use bonds or surety bonds. So to say are we not exploring that to sort of reduce the cost?
Manoj Digga
No, no we are exploring. If you see the cot bond mainly started into the road project. Correct. What project started? Very very one or two project has come into the cot bond. But we are taking. We are discussing with one or two insurance company to get the limit into that. So whenever those project which are which where the Shruti bond can be used as a performance bank guarantee etc we will use that. So that process is also going on. We are using. We are discussing with one or two insurance companies who are in the forgetting the cot bond limit but in water very all the. All the projects are not with the cot bond in the road. It is more.
Kevin Daftary
Understood sir, that’s helpful. In the second just question on this warrants. This warrants whenever it is the infused money will be convertible only at the decided pre decided price. That 217 or something. If I remember it right.
Manoj Digga
There are two warrants. One is 118 and second is 215.
Kevin Daftary
Okay. So the left out portion is at 118 or 270.
Manoj Digga
215 which is the very last differential offer we have issued. All the warrant which is coming into that differential offer will be converted into 250.
Kevin Daftary
Okay. Okay. So balance which we have to review roughly 130odd crore from promoter and investor will be at this price, right?
Manoj Digga
No, if you see the Warrant There are two warrant. One is 37 and a half crore which is exclusively promoter which we have issued past bag is at 118. The last volume which we have issued to the promoter and various investor that is at 215. So whenever the money will come it will be at 215.
Kevin Daftary
Okay, that’s helpful. Thank you. Thank you very much.
Operator
Thank you. [Operator Instructions] The next question is from the line of Mayur Ghatani from Ohm Portfolio EquiResearch Private Limited. Please go ahead.
Mayur Gathani
So can you please explain what do we intend to do in the battery energy storage and where do we how do we get the capex for the same.
Manoj Digga
There are battery energy is a part of the transformer and the government has made it mandatory that every companies who are in the renewable energy has to utilize 10% into the battery storage. Because the battery earlier if you see the battery can’t be power, can’t be storage. But by now with this battery energy storage system power power can be storage and that can be utilized for the peak time and non production time. So that that was the main purpose of this battery energy storage system. At the moment we are planning for the EPC of the battery energy system. So we will take the order and like we are. We are.
We are converting and we are making to the container for the supply to the to this along with the transformer as a battery energy storage system that we are going to do EPC basis future we have the plan to have the setting up. We may plan for setting up the manufacturing of the battery container basically the battery pack etc and to make the epc. But at the moment we will do as a EPC business for this battery energy storage system where there that there’s like any other EPC. The same way it will be capital expenditure will keep on incurring and we will keep on getting the money from by way of railing.
Mayur Gathani
Okay, has the government floated any tenders currently on this or it is expected to float next year.
Manoj Digga
One or two tender, three, four tender has come. We are. We are floating to all this tender. We are also participating and we are expecting at least one order into the next financial year.
Mayur Gathani
Okay, so what you’re saying is basically with the renewable energy or other thing, government has made it compulsory for having 10% as battery storage to store the power and you will be doing the EPC work for that part of the business.
Manoj Digga
That’s correct. We are in any case transformer. We are. We are implementing the transformer for any water unit, power unit. Because that is the transformer. Every power unit need the transformer. We are. We are the. We are. We are from the last 40 years. We are supplying and is constructing the transformer. Battery energy storage system is a part of that transformer. So we are qualified for all the type of transformer and battery energy is a part of that. So no separate qualification is required. We are qualifying into all the. All the batteries energy storage standard.
Mayur Gathani
Got it sir. Thank you very much for that. Thank you.
Operator
Thank you. The next follow up question is from the line of Raman from Sequent Investments. Please go ahead.
Unidentified Participant
Sir, can you hear me?
Operator
We can hear you.
Unidentified Participant
Sir. Earlier you said you are also planning to set up a manufacturing plant for manufacturing of battery packs.
Manoj Digga
At the moment that is not. But going forward there can be a possibility. But at the moment we are doing only the epc. We are planning to do the EPC business.
Unidentified Participant
Okay, sir. And my one more follow up question is with respect to the order book. You said 2500 crores of order book. Out of which what’s the L1 order book with respect to L1 projects?
Manoj Digga
At the moment we. Other than our existing order book of 2500 crore, we have the 2853crore of tender where we have already qualified as L1. The order LOI. We are going to get converted into this fourth quarter and maybe early part of the next quarter in franchise. Because there are four order four or five orders into this 282 8,000, 200 8,053 crore order. And we have. We are identified and participating roughly around 12 to 15 tenders of roughly around 9,000 crore which are going to come into this quarter and early part into the next quarter that will also get converted into loi.
Part may converted into loi. So these are the order potential which we are going to get into this year and early next year. And as I told you because there was a delay in the process of 10 of water because of the water or tender because of the Jaljeevan Nissan. So we are expecting a sizable further order going to come into the Q1 and Q2. That is where also as I told you we are from last 45 years we are into the water and power sector and we are qualified qualifying company for almost all the water order. So further water order whatever tender will come we will further participate into. So there are three. One is existing book of 2500 crore.
Second is the existing L1 of 2853 crore. Third is the existing tender which has already been floated roughly 9,000 crore which we are targeting. Float tender is more floated but we are targeting into the 9,000 crore. Fourth the the tender which was not floated because of the government slowdown are going to come going forward so these four element will cover into our next year order.
Unidentified Participant
Okay? Okay. And so from the 90000 crores bid which you bid it for what’s the conversion rate like the win rate in 9,000 crore?
Manoj Digga
Yeah, we have which we are targeting to bid the tender has already been floated it should come I conversion of tender into the order. Basically it’s very forward looking so I will not able to do that. But all where we are qualified and few of the orders which are of the bulk and we are targeting to take that. So it should get a reasonable amount we should get but conversion it will be the informing to the conversion or indicating maybe the forward looking.
Unidentified Participant
Okay. Yes. Thank you sir.
Operator
Thank you. [Operator Instructions] As there are no further questions from the participants I would now like to hand the conference over to Mr. Manoj Dekga for closing comments.
Manoj Digga
Thank you for participating into the Q3 this annual con call. As we told you the past the water business was slightly difficult in the last two quarters. We are expecting that headwind to come out and the Q3 and going forward the next year should be better for all the water companies. There are a lot of tenders which are there lot of tenders where we are in L1. And a lot of tenders are going to be floated. And this will give us a substantial opportunity to take the new orders. So we feel with these new orders and with the existing order book we will have a good year going forward. Which is going to come along with the water.
There is enough, enough opportunity into the power sector. Because of the BESS and the government focus into the water, irrigation, river linking and the BESS will give the company enormous opportunity in next five years to grow in a sustainable basis. Both on the top line and bottom line. As I told you earlier also we have taken the target that we will not be focused into the top line. We will be very, very focused into the bottom line.
And we will target to have a order book which is good, profitable and which is easy to do complete and which is meeting out our target of taking the order. So Our target is 5 to 7,000 crore every quarter. Not that. Whereas the opportunity is very, very high in all these sectors. So that’s our target and that’s the way we are moving forward. The add factor is there as our investor relation. Kapil Joshi is there for our investor relation of the company. We keep on coming to Mumbai. So anybody who wants to discuss in more detail more understand more about the company we will be happy to meet. We will happy to discuss. We will happy to share the information. We keep on sharing the information to the stock exchange on all that update. You keep on getting the same from our website. Thank you.
Operator
Sir on behalf of SPML Infra limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines.
Manoj Digga
Thank you.