Sterling and Wilson Solar Ltd (NSE: SWSOLAR) Q1 FY24 Earnings Concall dated Jul. 14, 2023
Corporate Participants:
Sandeep Thomas Mathew — Head, Investor Relations
Amit Jain — Global Chief Executive Officer
Analysts:
Puneet Gulati — HSBC — Analyst
Bajrang Bafna — Sunidhi Securities — Analyst
Faisal Zubair Hawa — H. G. Hawa & Company — Analyst
Gaurav Shah — Harshad Gandhi Securities — Analyst
Abhineet Anand — Emkay Global Financial Services Ltd — Analyst
Rabindra Nath Nayak — Sunidhi Securities — Analyst
Iqbal Khan — Nuvama Wealth & Investment Limited — Analyst
Subrata Sarkar — Mount Intra Finance — Analyst
Vignesh Iyer — Sequent Investments — Analyst
Vikram Sharma — Niveshaay Investment Advisory — Analyst
Dhway — Niveshaay Investment Advisory — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Sterling and Wilson Renewable Energy Limited Q1 FY ’24 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Sandeep Thomas Mathew, Head of Investor Relations. Thank you and over to you.
Sandeep Thomas Mathew — Head, Investor Relations
Thank you. And a very good afternoon to all of you. I welcome you all to our Q1 FY ’24 earnings call. Along with me, I have Mr. Amit Jain, our Global CEO; and SGA, our Investor Relations Advisors. Our CFO, Mr. Bahadur Dastoor, is on medical leave and therefore unable to attend the call today. He will be back from the next earnings call. We will start the call with an update on the operational highlights for the quarter and the solar industry outlook by Mr. Amit.
Thank you and over to you, Amit.
Amit Jain — Global Chief Executive Officer
Thanks, Sandeep, and a warm welcome to all the participants on this call. I would like to give a quick update on our business operation and outlook on the solar industry. To begin with, the company announced new orders totaling INR466 crores in Q1 FY ’24 triggered by continuing ordering momentum seen in India. We’ve obtained two orders from existing customers, Serentica and Amplus, this quarter. The Serentica order is a 319 megawatt DC project located in Bikaner, Rajasthan and Amplus is a 72.5 megawatt DC project located in Jhansi, UP. Our unexecuted order book as on 30 June 2023 stands at INR4,902 crores with nearly 90% of the order book comprising domestic EPC projects, which are executable over the next 12 to 18 months. With the inclusion of Nigeria MOU that was announced in September ’22, our order pipeline is anticipated to enhance significantly.
We are working with various stakeholders to finalize the NTPC agreement for the project by Q2 FY ’24. Our order pipeline continues to remain very strong at approximately 22 gigawatts, of which India accounts for 58.4% and Australia 14.8%. Our business development teams are working very hard and remain focused to deliver the strong growth trajectory we are targeting in this year. Our strategic focus is to secure an impressive order booking of 3 gigawatts to 5 gigawatts from the highly promising Indian market. In the international market while we have been adopting a more cautious approach with new orders, we are beginning to make headway with our clients as well. As stated in earlier calls, we reiterate that lumpiness in order flow is to be expected with EPC companies like ours. The timeline for achieving project closure could vary depending on a host of factors, including finalization of contractual term, financial closure, etc.
In terms of execution, our core operations have begun to show a turnaround as we have hoped and indicated in the last quarter’s call. We have begun to trend back to normalized margins in our EPC segment and hope to maintain a similar trend for the rest of the year. We should also begin to see a meaningful pickup in revenue when our NTPC project begin to go full stream, which we anticipate from Q3 FY ’24. We have also been rationalizing overheads to the extent necessary and the result of these efforts are more likely to be visible from the second half of this fiscal year. Now moving to industry outlook. We have seen an unprecedented decline in prices of silicon, wafer cells, and modules in last six months with the module price now falling to nearly USD0.18 per watt-p and is around the historic lows we have seen during the pandemic times.
The recent downward trajectory marks a departure from the prolonged upward trend witnessed post the pandemic. With the significant supply pressure due to emergence of new production capacities in China, industry analysts continue to anticipate module prices to remain depressed for some time. The time remains right for more projects to come on stream aided by lower LCOEs. In its most recent solar market forecast BloombergNEF project, annual global installation could touch an estimated 344 gigawatt and is already up from 316 gigawatts projected in January 2023. Given the significant role that renewable energy plays in India energy transition and immensely attractive opportunity arises within the solar operation and maintenance industry. The India solar footprint has experienced significant growth expanding from a mere 3.7 gigawatt in 2015 to an impressive 60 gigawatt plus in FY ’23.
Solar operation and maintenance sector has emerged as a distinct and highly profitable market boosting its own unique landscape and dynamics. With the steady rise of operational solar plants, the retendering of owned contract is becoming a burgeoning prospect for providers such as ourselves. We are consistently extending our O&M portfolio, placing an enhanced emphasis on third-party owned within global markets, utilizing both organic and inorganic strategies.
With this, I will ask Sandeep to take you through the consolidated financial highlights. Thank you.
Sandeep Thomas Mathew — Head, Investor Relations
Thank you, Amit. So, moving to the highlights. Revenue for this quarter was INR515 crores. Revenue has improved substantially on a sequential basis aided by higher contribution from the domestic EPC segment. The company has also reported consolidated gross margin of 11.3% this quarter and this is after nine quarters of losses and this has been primarily aided by the higher contribution from the domestic EPC segment. Our unexecuted order book, which largely comprises domestic projects currently, is likely to help sustain these gross margins going forward. Our domestic EPC margins, as you may have seen, has improved to 13% and is higher than average in this quarter compared to our FY ’23 margin, which was around 9.7%.
International EPC margins have also moved to the green and in this quarter they were aided by reversal of certain cost and excess provisions that we had earlier made in two projects. We have also — it’s also worth noting that we have achieved standalone operational EBITDA breakeven in the first quarter. In O&M business, which constitutes about 9.2% of our revenue, the trajectory has — the margin trajectory has begun to significantly improve. However, it still also remains impacted by a few projects where the cost is currently being incurred, but no revenues have been recognized. Moving to the balance sheet. As of June 30, our net debt stands at approximately INR2,100 crores and cash and cash equivalents was about INR63 crores. We had a positive core working capital of about INR140 crores.
However, if we were — we should note that net working capital would be at a negative INR402 crores were the indemnity receivables to be excluded. We are targeting to significantly reduce our debt by Q4 FY ’24 and this will be achieved through a combination of receivables recovery, indemnity inflows, and the negative working capital cycle that we see in our new projects. In terms of outlook for the rest of the year, we hope to achieve commissioning and handover of our legacy international projects without any further delays and cost. We are optimizing our overhead cost which should get reflected in the coming quarters, as Amit earlier alluded to, and we also aim to maintain gross margins of about 10% to 11%, which should be supported by the almost 94% of our current UOV comprising India orders.
With this, now, we can open the floor to question and answers.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from the line of Mr. Puneet from HSBC. Please go ahead.
Puneet Gulati — HSBC — Analyst
Thank you so much and congratulations for coming back on recovery path. My first question is with respect to the new projects which we have taken, are these — do these projects have fixed price contract or is there a pass-through of module cost there?
Amit Jain — Global Chief Executive Officer
Can you repeat the question, which project you mentioned, we missed that part?
Puneet Gulati — HSBC — Analyst
The new projects, for example Serentica, Amplus that you talked about and in general not specifically about these particular projects only. Are the new projects which you have taken, do they have a pass-through clause or are they fixed price contracts with respect to the module prices?
Amit Jain — Global Chief Executive Officer
So Puneet, to give you a background that India is a purely BOS market and module supplier in all the orders which we have bagged; rather NTPC, Serentica, or Amplus; the module supply is not in our cost. So, there is no risk on part of modules in our scope and it is being supplied by the client. All other materials, which we are supplying, they are fixed price contracts and we have placed orders on back-to-back basis to all our vendors. So practically with respect to all scope of supplying in all the projects which are under execution, we have no exposure or no risk on account of any material cutoff.
Puneet Gulati — HSBC — Analyst
Understood. So, how would you — would you think that the margins which you’ve done this year are likely to sustain?
Amit Jain — Global Chief Executive Officer
Definitely. Rather our margins are likely to sustain or improve with the overhead rationalization. And with that, in the future and further quarters of Q3 and Q4 we’ll see a significant rise in revenues so we expect margins to improve.
Puneet Gulati — HSBC — Analyst
And what are the other payment terms broadly for these orders in terms of advances, etc.?
Amit Jain — Global Chief Executive Officer
All the orders will remain like as we have like explained in various calls earlier also. That all the payment terms are adjusted in such a manner that we remain cash positive throughout the project execution period.
Puneet Gulati — HSBC — Analyst
Okay. Understood. That’s very helpful. And lastly, any progress on the Reliance project that you’re hearing in terms of execution?
Amit Jain — Global Chief Executive Officer
So Reliance discussions are progressing and, as you must have read, there is target to install more than 100 gigawatts by 2030. So with that run rate, I think the rollout should start — begin and if we take the average rate also so it will be in the range of anywhere plus 10 gigawatts per year. But I will not be able to give you any finite or like any definite timeline to you. The rollout — we expect the rollout to be announced soon.
Puneet Gulati — HSBC — Analyst
All right. That’s it. So, thank you so much and all the best.
Operator
Thank you. Our next question is from the line of Bajrang Bafna from Sunidhi Securities. Please go ahead.
Bajrang Bafna — Sunidhi Securities — Analyst
Congratulations, Amit ji, for coming in black especially on the GP side and hope that this trend continues. My first question pertains to if we see the 22 gigawatts bid pipeline for you, what sort of success rate that we can perhaps build in for our understanding going forward? So, that will be my first question. And second on the fixed cost side, we were close to, let’s say, INR400 crore kind of yearly run rate. With the initiatives that we are taking, where we want to see it maybe in FY ’24 per se? So, that will be really helpful if you could clarify that.
Amit Jain — Global Chief Executive Officer
So as far as — first of all, thanks to you. And with respect to the expected hit rate so out of the current pipeline, almost 60% we are expecting it from domestic market, that pipeline which is there, and we have hit rate of 18% to 20% in domestic market, the segment we are addressing and the cumulative hit rate has been around 14% to 15% historically. But with the improvement in the domestic market hit rate and the major portion of the orders coming from domestic market, we expect this hit rate to improve. So, this year we are expecting 4 gigawatts to 5 gigawatts from domestic market and rest of the orders will be from the market — strategic international markets like Australia, Middle East, and Africa. So we expect that will remain upward of 15%, which has been — traditionally we have been, but this will be improved by significant contribution from domestic markets.
Bajrang Bafna — Sunidhi Securities — Analyst
Got it. So, INR4,000 crore to INR5,000 crore kind of order we can expect from domestic market?
Amit Jain — Global Chief Executive Officer
Yes. That’s what the target is. We are expecting INR4,000 crores to INR5,000 crores orders — order book from the domestic market.
Bajrang Bafna — Sunidhi Securities — Analyst
And similar from the international market except Nigeria?
Amit Jain — Global Chief Executive Officer
Yeah. The order is — we had given a guidance of earlier like close to $1 billion so both domestic and then international put together excluding Nigeria. So, we are striving to achieve the guidance which we had given in the last quarter.
Bajrang Bafna — Sunidhi Securities — Analyst
Okay. And sir, if you could just guide us the Nigerian progress little more because we were anticipating it to be somewhere in the beginning of the quarter, now it is getting little postponed. So, any precise reason for that because government is already there?
Amit Jain — Global Chief Executive Officer
No, government is not there. So in earlier call also we have guided that it will be either Q1 or Q2. So we are expecting — because it’s a very large order and it can take little bit of few weeks or a month or so delay, but we are expecting to get it concluded within this quarter towards the later end. So right now based on our feedback and discussions and interactions we gather is we’d likely to conclude it by the end of this quarter.
Bajrang Bafna — Sunidhi Securities — Analyst
Okay. And sir, just one clarification on this Nigerian order. Earlier it was $1.5 billion project. Now since you already alluded that the module prices have come down significantly and there is a currency devaluation that has happened in Nigeria. So, what will be all these things? Whether this is going to impact on the value or on our earlier envisaged margins of this 10%, 12%? Any impact of that on these changes?
Amit Jain — Global Chief Executive Officer
No. Because this project is being funded by EXIM Bank of USA and all the major component of the projects are being imported from US. So, the module prices have come down in China. But with respect to the modules to be supplied for Nigeria, they will not be sourced from China. Either they will be sourced from — most probably from US only and in USA market, the module prices more or less remains at the level at which we had considered in our bid. So, bid value will not come down. It will stay at least at the guidance which we have given to the market. So, it stays there and there will be no impact on our margins. This is a negotiated bid so all the subcontractor prices after negotiation and whatever the levels they were existing have been considered and the margins will remain firm at the levels which they were considered.
Bajrang Bafna — Sunidhi Securities — Analyst
Okay. Got it. And sir, if we see the run rate, can we expect still to achieve INR6,000 crore to INR7,000 crore kind of revenue in FY ’24 because the first quarter is a little bit slow? So, is it still doable considering we have a large bid pipeline?
Amit Jain — Global Chief Executive Officer
We are striving for a much higher number. Like we’re striving for this number, but as you know that we have unexecuted order book of almost INR5,000 crores — INR4,900 crores right now and we will have book and also will be added to this number. So, we expect the revenue booking to significantly increase in Q3 and Q4 and we are striving definitely for a much higher number.
Bajrang Bafna — Sunidhi Securities — Analyst
Got it, sir. Thank you very much and all the very best, sir.
Operator
Thank you. Our next question is from the line of Faisal Zubair Hawa from H. G. Hawa & Company. Please go ahead.
Faisal Zubair Hawa — H. G. Hawa & Company — Analyst
So sir, in the international strategy, again the competition will rise due to the low module prices and even the module makers itself will be very much attracted to doing the EPC themselves as in the China model. How will we really fight that because this will really increase the competitive intensity?
Amit Jain — Global Chief Executive Officer
Actually, Mr. Hawa, I could not hear you clearly. The voice is breaking and very low. Could you repeat again?
Faisal Zubair Hawa — H. G. Hawa & Company — Analyst
So, the module prices have now come down and this will result in a lot of competitive intensity in bidding for EPC contracts. So, how will we now really be placed in the international market? Because what could really happen is that we bid at this time in a very competitive scenario and probably get caught again in large time horizon contracts.
Amit Jain — Global Chief Executive Officer
No. Actually I would say that the correction in the module prices will improve the EPC margins in the international markets because earlier — first of all, it will help us on two counts. The contract closure would be much faster and more and more decisions will be taken due to the low volume prices. Second part is that EPCs were under lot of pressure because of the higher module prices. Because of particular committed tariffs, we were under — all the developers were pushing EPCs for much lower and competitive number. But now EPC margins will improve and international bids are generally with module pass-through so that’s what we have indicated. That we will be either negotiating with the customer through pass-through costs. Whatever risk comes, we’ll be able to claim through customers or we will be going with much higher bonds with our module supplier so that we are fully protected with respect to module price rates either by the pass-through to our customer or higher amount of bonds from the suppliers.
Faisal Zubair Hawa — H. G. Hawa & Company — Analyst
There are two further areas of concern. One is that the promoters are constantly selling shares on the market so we are really worried that this could be two promoters who have just come into a marriage where there was no actual synergy and there could be less skin in the game for the present promoters now. That’s one concern. And the second concern is there is an interview in the press saying that we would like to even raise more funds through equity. So, where do we stand on both?
Amit Jain — Global Chief Executive Officer
So, I would like to say there is a complete synergy between both the promoters and both are providing strategic direction to the company. So, we don’t see any concern on that count. So, Mr. Khurshed Daruvala is leading the company and he is completely guiding us as well as the complete Board constituting of the earlier promoters and new promoters is giving the direction to the company and I don’t see any concern there. SP has raised huge amount of capital recently and whatever sale might have happened due to some temporary — to address some urgent requirement, but I don’t see that happening and more comments on this can come from promoters.
Sandeep Thomas Mathew — Head, Investor Relations
Also just with respect to the equity raise, see, I think we are looking at all options — keeping all options open at this point of time and that would be the context with respect to I guess that media article that you are referring to. So yes, we are keeping all options open, but that does not imply that there is anything impending at this moment at least.
Faisal Zubair Hawa — H. G. Hawa & Company — Analyst
And thirdly, sir, what is our bank guarantee limit presently and are we applying for more bank guarantee limits and how will we really get them with the negative net worth?
Amit Jain — Global Chief Executive Officer
See, bank guarantee limits — sufficient bank guarantee limits are available with us. Bank guarantees has never been a concern with us to address whatever amount of bids or orders we are expecting. So historically and even today, we don’t feel any concern about that. The standalone net worth is positive so that in Indian market to pick orders of any magnitude is not an issue for us and even in international markets, we are tying up with partners wherever the projects are too big otherwise clients are comfortable to deal with us on standalone basis as well. So, we are strategizing and are able to manage with a negative net worth on the consolidated for international projects.
Faisal Zubair Hawa — H. G. Hawa & Company — Analyst
Okay. Thank you.
Operator
Thank you. Our next question is from the line of Gaurav Shah from Harshad Gandhi Securities. Please go ahead.
Gaurav Shah — Harshad Gandhi Securities — Analyst
Hi. Thanks for [Technical Issues]. I have a couple of questions. Firstly, on Note number 7A in your Notes’ accounts with respect to the legal case pertaining to the wholly-owned subsidiary claim of some INR793 odd crore. Sir, is this covered under the indemnity claimed agreement with the old promoters? First question is that. And second question is mostly on the sort of like a lessons we learned from our legacy orders. Don’t you think we require some sort of improvement in the way we draft our legal agreement just to control the risk we face as a company from like customers’ counterclaims and all that? So, just wanted to have your views on that.
Amit Jain — Global Chief Executive Officer
So I think the point number one, Sandeep will address later. On point number two, that the contracts were like drafted properly all the time even in the past and now due diligence is always taken care of. But certain circumstances which took us by surprise, either the pandemic or the complete break of supply chain in international markets, they were not addressed. But since we have learned from those two events and now we are extremely cautious and revising our risk metrics and all those elements are properly getting addressed in the contracts we are signing. So, we have taken sufficient care and the contracts which we are signing gives us a very good level of protection in terms of various events.
Gaurav Shah — Harshad Gandhi Securities — Analyst
Okay. On the first question, Sandeep?
Sandeep Thomas Mathew — Head, Investor Relations
Could you just repeat that?
Gaurav Shah — Harshad Gandhi Securities — Analyst
Yeah. So, this particular claim of INR793 odd crore case. So, is this part of the indemnity agreement we have with our old promoters? It’s the case pertaining to our wholly-owned subsidiary where there is like we have incurred some cost — overrun cost of INR460 odd crore and there is a counterclaim from the customer like for INR157 crore?
Sandeep Thomas Mathew — Head, Investor Relations
Yeah. We’ll get back to you on this just give us some time.
Gaurav Shah — Harshad Gandhi Securities — Analyst
Okay. That’s it from my side. Thanks a lot.
Operator
Thank you. Our next question is from the line of Abhineet Anand from Emkay. Please go ahead.
Abhineet Anand — Emkay Global Financial Services Ltd — Analyst
Just trying to understand this indemnity inflows, what’s the timeline this year? How much we are going to get let’s say in 1H, 2H of this year and what will be left for next year if you can highlight?
Amit Jain — Global Chief Executive Officer
See, how the indemnity works is that all the crystallized claims till September of that particular year is paid by our promoters to the company and this year we expect it in the range of approximately upward of INR250 crores, which we’ll get a slice and will be paid by the promoters according to the indemnity agreement.
Abhineet Anand — Emkay Global Financial Services Ltd — Analyst
Sir, this basically will be paid in H2 of this year, right?
Amit Jain — Global Chief Executive Officer
Pardon?
Abhineet Anand — Emkay Global Financial Services Ltd — Analyst
This INR250 crore that you talked about, this we’ll get in second half of this year?
Amit Jain — Global Chief Executive Officer
That’s correct. Second half of this year.
Abhineet Anand — Emkay Global Financial Services Ltd — Analyst
And again the second half of next year, the rest we will get, is it like that?
Amit Jain — Global Chief Executive Officer
Whatever amount gets crystallized, that will be paid accordingly in terms of the indemnity agreement.
Sandeep Thomas Mathew — Head, Investor Relations
So Abhineet, the indemnity amounts get crystallized on September 30 of every year and this amount that we have that will be crystallized this time around will be essentially billed on September 30 and then promoters have I think a month or so to make the payment. So, it will definitely happen in Q3 or earlier than that.
Abhineet Anand — Emkay Global Financial Services Ltd — Analyst
So by which financial year this gets zero?
Sandeep Thomas Mathew — Head, Investor Relations
We would expect it to get fully crystallized in maybe in another — hopefully by 2024 or 2025, yeah. Another year or so — another year or two. Most of it will get crystallized. Bulk of the amounts will get crystallized by September 2024.
Abhineet Anand — Emkay Global Financial Services Ltd — Analyst
Okay. Second is let’s assume this is hypothetical stuff. So Reliance wants to do some 100 gigawatts by 2030. Now even though, let’s assume, that they do 10 gigawatt every year, first — point one is that, do we have execution capabilities for doing 5 gigawatt to 6 gigawatt beyond the India opportunity that is there? And obviously Reliance will diversify giving it to three, four players, right? So does that mean that if Reliance market base is 10 gigawatts as in tender, for us it implies around 3 gigawatt to 4 gigawatt. Is this understanding right or if you can throw some light on that?
Amit Jain — Global Chief Executive Officer
So see, Reliance — that you are right. Once the Reliance rollout happens, it will be massive rollout and we are fully geared to handle the rollout when it is planned. So our ramp up plans are already in place, the execution strategy for background of rollout is already in place. So whatever volume comes to us, we are fully geared up to handle and ramp up can be done quickly. So the ramp-up plans are already in place, which we had already started earlier. So, that’s not an issue with us. Now what is the finally strategy adopted by Reliance, I will not be able to comment on that, but we are very hopeful that we will win the strategic portion for the fiber companies or the major portion of the rollout.
Abhineet Anand — Emkay Global Financial Services Ltd — Analyst
Okay. And on this Nigeria contract, I just wanted some more details, sir. In terms of, let’s say, in 2Q we get this contract and let us assume for the simplicity it’s at $1.5 billion. So I mean in terms of revenue, if you can just split that into the next three years, four years and what percentage comes in ’25, a very broad number so that it really helps us in that sense?
Amit Jain — Global Chief Executive Officer
We will sign the projects in September, but then the financial closure with EXIM Bank will take some time. So either there will be a very minimal portion of revenue this year if it happens, but the bulk of the revenue will be booked in FY ’25 and FY ’26.
Abhineet Anand — Emkay Global Financial Services Ltd — Analyst
So, that’s a two-year project only you’re saying?
Amit Jain — Global Chief Executive Officer
Yeah. Majority of the booking will be taken in FY ’25 and FY ’26.
Abhineet Anand — Emkay Global Financial Services Ltd — Analyst
Okay. And in terms of rates for the module, there also I mean it will be a fixed price for module? How it will happen, sir?
Amit Jain — Global Chief Executive Officer
No, the provision are sufficiently built in to take care of it whether any price variation happens so that has been addressed in the contract and we have sufficiently covered for the module price variations there.
Abhineet Anand — Emkay Global Financial Services Ltd — Analyst
Okay. Because it’s a long gestation period so I was just hoping that everything is — so all pass-throughs will be there especially from the module side, right?
Amit Jain — Global Chief Executive Officer
Pardon, again?
Abhineet Anand — Emkay Global Financial Services Ltd — Analyst
I’m saying all — any high price of modules will be a pass-through in that contract?
Amit Jain — Global Chief Executive Officer
Absolutely. We will — we are completely protected on that front.
Abhineet Anand — Emkay Global Financial Services Ltd — Analyst
Okay, sir. Thanks. Those were the questions. Thank you.
Operator
Thank you. Our next question is from the line of Rabindra Nath Nayak from Sunidhi Securities. Please go ahead.
Rabindra Nath Nayak — Sunidhi Securities — Analyst
Thank you for the opportunity and congratulations for a positive gross margin in the quarter. So whether we have started the NTPC — execution of the NTPC order or part of the NTPC order in this quarter or it is expected to start working in the coming quarters?
Amit Jain — Global Chief Executive Officer
NTPC, we have got two orders for NTPC. First order, the work has already started. We are fully mobilized on ground and all the orders has been placed. So, work is going on on the site for the first part. The second part also, the engineering has started and we are starting the process of order placement and site mobilization for NTPC 2 project as well.
Rabindra Nath Nayak — Sunidhi Securities — Analyst
Okay. So, that means —
Amit Jain — Global Chief Executive Officer
That subsequent revenue will start coming in the first month in Q3 and Q4. Major revenue will be booked in the last two quarters for both the NTPC projects.
Rabindra Nath Nayak — Sunidhi Securities — Analyst
Okay. And sir, we come to understand that in India as compared to the past, the solar EPC contractors are now insulated from majority of project risk. How far is it true in your view so far as the Indian market is concerned?
Amit Jain — Global Chief Executive Officer
Could you repeat your question again, please?
Rabindra Nath Nayak — Sunidhi Securities — Analyst
See, so far as the majority of the project risk for the EPC contractor for the solar project, they are up to some extent insulated on the major project risk. We have just come to understand this. Is it true? So, you can give some views on this?
Amit Jain — Global Chief Executive Officer
So, there are two parts to it because most of — like in India it’s a BOS market and the modules are supplied by the developers. So, we are completely insulated from the module price risk. We do not undertake the land aggregation risk on any project in India. So with respect to these are the two major risks in India, which we are completely insulated from. Rest, we have very, very strong execution capabilities in India and have extremely good vendor relationship so that keeps us insulated from most of the project risks in India and we have — so far have been very, very successful in delivery projects — delivering projects in India.
Rabindra Nath Nayak — Sunidhi Securities — Analyst
Okay. So then do you see the competitive space for the Indian utility solar market, do you see a lot of players are going to enter in this market going ahead or it is not that case you’re looking at?
Amit Jain — Global Chief Executive Officer
Again like I have to request you to repeat again?
Rabindra Nath Nayak — Sunidhi Securities — Analyst
Sure. If the India market is becoming favorable because in the EPC contract — a lot of the EPC contractor will enter into the market particularly in utility solar. Whether do you see these things emerging or it is not likely?
Amit Jain — Global Chief Executive Officer
So they may — lot of players looking at the lucrative market may try to enter. But we have been for last one decade the leading solar player in India and we have consistently maintained our market share and with our reputation, most of the new and established companies like to work with Sterling and Wilson. So I expect the market to grow because in a growing market, we expect our market share to rather go up considerably than we have in the past.
Rabindra Nath Nayak — Sunidhi Securities — Analyst
So, you have stated that 60% of the business will come from India, right?
Amit Jain — Global Chief Executive Officer
Yeah. More than 50%. This year the 60% of the pipeline is from India and right now the current executive — unexecuted order book, more than 90% has come.
Rabindra Nath Nayak — Sunidhi Securities — Analyst
Okay. And sir, about the indemnity, sir, you mentioned the INR250 crores we are expecting this year so as per your estimate because all the indemnity is related to the past projects. So if we have might have considered that all the past projects where we have done work, then what is the expected indemnity proceed now we are working in? So far in a consolidated basis, we will likely to get by FY ’25 or ’26?
Amit Jain — Global Chief Executive Officer
So, I think I will request Sandeep to answer that question.
Sandeep Thomas Mathew — Head, Investor Relations
So see indemnity inflows, as Amit had earlier alluded to, this September — by this September. What is the slate as of now is roughly about INR270 odd crores, right, and there is obviously another quarter to go. So whatever that final amount is, that will be billed to the promoters as of this September. There are multiple events happening in the background as well. There are some arbitration cases, etc. going on where we hope that there will be some favorable judgment. etc. coming in very soon. So, that amount could go up as well in this particular September itself for example. But however, because there are multiple cases etc. that are going on, the timing of these will only be decided once we have a final decision as such. And you should be very clear that these amounts will come from either the clients or the promoters, it’s not just the promoters who are liable. So if we are able to recover it from the clients, then we will do it at the earliest from them. So, these settlement agreements are going on. There are negotiations happening. A large amount of the amounts are liquidated damages related etc. Once the projects are completed and handed over, which we expect will happen very soon especially in the international markets; then we will be able to sit across the table, get those agreements in place, and get those moneys back.
Rabindra Nath Nayak — Sunidhi Securities — Analyst
No. That I understand, sir. I want to know that it is an ongoing process, it will continue. But the thing is that where we are favorably get the order — get the money, so what is the amount? As of now we have calculated that this would be — with a favorable judgment, with a favorable understanding from the company, this is the amount we will get. But it will be subject to change when the time passes with the arbitration, what is that amount you are working on? Can you please give us a highlight on this?
Sandeep Thomas Mathew — Head, Investor Relations
So, are you referring to the total amount that is…
Rabindra Nath Nayak — Sunidhi Securities — Analyst
Yes. Where we are favorably placed, what is the total amount we should expect?
Sandeep Thomas Mathew — Head, Investor Relations
Yeah. It is about INR1,100 crore. The total amount that is in question.
Rabindra Nath Nayak — Sunidhi Securities — Analyst
Okay. And sir, in reference to Note Number 6, it is the understanding, right, that the stated amount cannot be recovered from the promoter unless the Supreme Court upheld the case?
Sandeep Thomas Mathew — Head, Investor Relations
Sorry, which was this particular thing that you’re referring to?
Rabindra Nath Nayak — Sunidhi Securities — Analyst
I’m referring it is Note number 6, is the understanding right that the [Speech Overlap]
Sandeep Thomas Mathew — Head, Investor Relations
I will not be able to clarify that till the time that it is crystallized and the dispute is completely settled at whatever level it is. So the dispute with the client once the matter is finally settled and accepted by the company. So it is the company which comes into play whether we have accepted the decision or where we want to escalate the dispute or the matter which has not been settled and then appropriate for them whenever decided, the amount gets crystallized.
Rabindra Nath Nayak — Sunidhi Securities — Analyst
Okay. No, this amount — NCLT has gone against us so we have gone to the Supreme Court for this. It’s for the Note Number 6. You might be referring to Note Number 7A, I’m not referring to Note Number 7A, so you’ve answered that. But Note Number 6, sir, there is an understanding that the recovered amount — the NCLT has dismissed the case against us. So whether we will not get recovery from this amount or it is still we can go ahead with the recovery of the amount?
Sandeep Thomas Mathew — Head, Investor Relations
So, we will be [Speech Overlap].
Amit Jain — Global Chief Executive Officer
Sandeep, please continue.
Sandeep Thomas Mathew — Head, Investor Relations
So these amounts, there is no question of them not coming to the company, right, it is just a matter of when the case gets finally settled and we are trying to expedite and get these amounts at the earliest. So, this particular case that we filed in the Supreme Court is just to essentially expedite the whole process of recoveries.
Rabindra Nath Nayak — Sunidhi Securities — Analyst
Okay, sir. Thank you and all the best for the future, sir. Thank you.
Operator
Thank you. Our next question is from the line of Iqbal Khan from Nuvama. Please go ahead. Mr. Iqbal Khan, your line has been unmuted, you can go ahead with your question.
Iqbal Khan — Nuvama Wealth & Investment Limited — Analyst
Hi. Sorry, I was on mute. Am I audible now?
Operator
Yes, sir. Please go ahead.
Iqbal Khan — Nuvama Wealth & Investment Limited — Analyst
Sir, firstly, congratulations on a good set of results. Just one — I mean all the questions are almost answered. One question I had is on the Indian project. You mentioned that you’re targeting around 4 gigawatts to 5 gigawatts. So, any work in progress that is happening in this 4 gigawatt to 5 gigawatt project that you are looking upon? Can you just throw some light or picture on this? And similarly for the international project, are you currently actively bidding somewhere or any thought process on those lines?
Amit Jain — Global Chief Executive Officer
So as we briefed, we are targeting 4 gigawatts to 5 gigawatts in this market and out of 23 gigawatts, almost 60% of the project pipeline is from India, which is 13 gigawatts to 14 gigawatts. So, we are actively working on bids. Like for the Q2 itself, we are like working for more than 4 gigawatts of bids. More and more projects are getting announced and we expect public sector entities this year to announce more than 13 gigawatts of bids which we likely to see this quarter onwards. So, market is robust and we are working on all the fronts and we see the sufficient market — the project pipeline is there, which will help us in achieving our targets.
Iqbal Khan — Nuvama Wealth & Investment Limited — Analyst
Okay. Sir, if I may just slip in one more question. The indemnity you mentioned around — upward of INR250 crores will get crystallized. So, will this entirely be booked to the promoters or it will be a mix of promoters and the customers?
Amit Jain — Global Chief Executive Officer
So, INR250 crores, which has been crystallized, will be paid by promoters.
Sandeep Thomas Mathew — Head, Investor Relations
The amount that has crystallized as of June is about INR270 crores, which is essentially the amounts that are likely to be paid by the promoters. There will be, as I said, other cases that are going on and we are in fact expecting some favorable outcomes as early as, let’s say, even this month. So if those do materialize as expected, that amount can go up as well and as they crystallize, we can recover it either from the customer or from the promoter. So, INR270 crores is the number as of June. So, I’ll just put that out.
Iqbal Khan — Nuvama Wealth & Investment Limited — Analyst
All right. Thank you, Sandeep. Thank you so much.
Operator
Thank you. Our next question is from the line of Subrata Sarkar from Mount Intra Finance. Please go ahead.
Subrata Sarkar — Mount Intra Finance — Analyst
Hello. Most of the question has been answered. Just one query on the Nigerian side. So after there is a change in government, whether there is some — like will that have some impact or will there be some again re-evaluation of some stage which may now come into play because of the change in the government?
Amit Jain — Global Chief Executive Officer
No. Actually in Nigeria, the same party which was earlier in power has been re-elected and the policies and thrust is going to be the same. The current government is also very bullish on renewable projects and they have introduced some more favorable amendments for the implementation of renewable projects. So, a new government is also equally bullish on new energy projects and we don’t see any problem with respect to the projects with respect to the new government. It’s not a change in the government because same party with the same policies continues in power.
Subrata Sarkar — Mount Intra Finance — Analyst
Yes, sir. But there is a change in the Presidentship, sir.
Amit Jain — Global Chief Executive Officer
Yeah. Change in the President is there, but the policies remains the same and it is receiving the same amount of traction and US government is also strongly backing the project. So, we don’t see any problem at all there.
Subrata Sarkar — Mount Intra Finance — Analyst
Okay, sir. Okay.
Operator
Thank you. Our next question is from the line of Vignesh Iyer from Sequent Investments. Please go ahead.
Vignesh Iyer — Sequent Investments — Analyst
Hello, sir. Thank you for the opportunity. Two questions from my side, sir. The first is this NTPC order book, what is the timeline of executing the same once the work starts? And also the same once we wrap up our Nigerian project I mean and add it to our order book, what would be the timeline of executing the Nigerian project as well? Second question is I wanted to understand would Nigerian project would have gross margins in the range of 11% to 12%?
Amit Jain — Global Chief Executive Officer
Could you repeat the last part of the question?
Vignesh Iyer — Sequent Investments — Analyst
Yeah. So the Nigerian project, I just wanted to understand since international projects we have a lower gross margin so I wanted to understand would Nigeria has the same level of gross margins or would it be like higher like around 12%?
Amit Jain — Global Chief Executive Officer
So, to start with NTPC orders. As explained in my earlier reply that NTPC 1 project execution has already started, site has been fully mobilized, and we have placed majority of the orders. The bulk of the revenues from NTPC 1 and NTPC 2 projects will come in Q3 and Q4 of this year. The project execution have timeline of almost 18 months and we expect to complete by second half of next year so both the NTPC projects will be completed. Coming to Nigeria, the majority of the revenue for Nigeria project will be booked in FY ’25 and FY ’26. So, Nigeria project is a negotiated project and we expect margin in Nigeria project to be in line with our domestic projects. So, we expect better margin than other international projects in Nigeria project.
Vignesh Iyer — Sequent Investments — Analyst
Sir, what is the timeline of execution for Nigerian project?
Amit Jain — Global Chief Executive Officer
Nigerian project we expect to sign by end of Q2 and then there is a period of financial closure. So, we expect the major execution will happen in FY ’25 and FY ’26 and bulk of revenue will also be booked in FY ’25 and FY ’26.
Vignesh Iyer — Sequent Investments — Analyst
Okay. Thank you. That’s all from my side. All the best, sir. Thank you.
Operator
Thank you. Our next question is from the line of Vikram from Niveshaay Investment Advisors. Please go ahead.
Vikram Sharma — Niveshaay Investment Advisory — Analyst
Hi, sir. Thank you for the opportunity. Sir, my question was the current EPC order book of INR4,900 crores we have so what is the order book in megawatt terms? And also I wanted to know like what kind of EBITDA per megawatt we are targeting in our domestic business?
Amit Jain — Global Chief Executive Officer
So as we have said that EBITDA, we are targeting in the range of 10% to 11% in domestic market and the order book in terms of gigawatt is upward of 4 gigawatts as of now.
Vikram Sharma — Niveshaay Investment Advisory — Analyst
Approx?
Amit Jain — Global Chief Executive Officer
Approx. 4 gigawatts.
Vikram Sharma — Niveshaay Investment Advisory — Analyst
Okay, sir. Thank you.
Operator
Thank you. Our next question is from the line of Bajrang Bafna from Sunidhi Securities. Please go ahead.
Bajrang Bafna — Sunidhi Securities — Analyst
Thanks for the follow-up opportunity. Sir, the question pertains to we are a formidable player in the solar side. We also talked about — in your some media interactions about wind BOS and as well as battery storage and management services. So if you could just guide us that when we are targeting how these opportunities can crystallize for us and by when we expect some traction there? So those are — I know that those are the futuristic opportunities for us, but any progress that we have made so far in that direction will be really helpful for us to understand and whether any capital or capex requirements will be there to come up in those areas? So if you could guide on that, it will be really helpful. And second is that we are talking about 4 gigawatts to 5 gigawatts kind of opportunity in India. So suppose we are talking about 13 gigawatts, 14 gigawatts could be the award this year; but going by the government targets, they are talking about very tall numbers going into next couple of years. So, what kind of capacity we can cater to? Suppose tomorrow if we are given an opportunity to go for 20 gigawatts in a year, are we prepared for that including Reliance or something like that? What is the capacity constraint that is there in this business just to understand from a scalability perspective? Thank you, sir.
Amit Jain — Global Chief Executive Officer
Okay. So, what was first part of your question? Like, I think question became too big. Can you repeat the first part of your question?
Bajrang Bafna — Sunidhi Securities — Analyst
Sir, two angle to first part. The wind BOS opportunity and…
Amit Jain — Global Chief Executive Officer
So, let me start with the new areas. So as far as battery energy storage systems is there, we have already executed small projects in international markets for battery energy storage system and in various international markets, huge standalone projects and projects coupled with solar facilities have started coming up. We are already working on multiple bids in Australia with respect to battery energy storage system projects and one of the projects, we are very close or in the final stages of negotiation with the clients. So within this financial year, you can see closing one of the big projects in international market with respect to that battery energy storage systems. As far as the BOS for wind is concerned, so multiple hybrid projects are getting announced in India. We are working with our customers.
So any opportunity on the wind project associated with hybrid projects, we’ll pitch for that and that’s the plan and we hope that within this fiscal year, we may land up that opportunity in India with respect to wind BOS. So, we are a pure play EPC and there will not be any significant capex requirement for entering into both the businesses. So, we will be sourcing the batteries or like — and BOS is there so the wind turbine manufacturer of the client will undertake all those responsibilities. We will remain restricted to pure play EPC segment. So only with respect to adding more manpower or enhancing our engineering teams, we don’t see much bigger capex on those two counts. As far as the capacity addition, we do seem to address the enhancement or explosion of new bids in Indian market.
So, we are keeping constant eye towards what’s the market rollout is. So we are expecting this year it will be 14 gigawatts to 15 gigawatts, from which we will be able to bag 4 gigawatts to 5 gigawatts. We have sufficient capacity at this point of time to address that kind of rollout. But as and when we see that market is expanding so we are fully geared up to enhance or ramp-up our execution and engineering teams. Most of the execution on the ground is carried out by subcontractors so we have a huge subcontractor base, which can also be very quickly ramped up to address the rollout on ground. We have mapped the complete manufacturing for our vendor for supply of those products. So we are very confident that even with much more capacity addition happening in Indian market, we are fully geared up to address the market.
Bajrang Bafna — Sunidhi Securities — Analyst
Got it. Thank you, sir, for a beautiful explanation. Thank you very much and all the very best, sir.
Operator
Thank you. Our next question is from the line of Dhway [Phonetic] from Niveshaay. Please go ahead.
Dhway — Niveshaay Investment Advisory — Analyst
Congratulations for the great gross margin, sir. My only question is that are we looking for any collaboration when we go for the wind BOP [Phonetic] or — and are we prepared for the subcontractors’ agreements already?
Amit Jain — Global Chief Executive Officer
See, as we’re saying, that we will address at this point of time the wind BOS opportunity coupled with hybrid projects. So, we have in-house like engineering capability and we understand how the contracts work with respect to BOS associated with the wind and we are prepared for that.
Dhway — Niveshaay Investment Advisory — Analyst
Okay. Thank you. All the best for the future, sir.
Operator
Thank you. That was the last question of our question-and-answer session. I would now like to hand the conference over to Mr. Amit Jain for closing comments.
Amit Jain — Global Chief Executive Officer
I would like to thank everybody for joining the call. I hope we have been able to address all your queries. For any further information, kindly get in touch with Mr. Sandeep Thomas Mathew or SGA, our Investor Relation Advisors. Thank you once again and have a great day. Thank you.
Operator
[Operator Closing Remarks]