Suzlon Energy Ltd (NSE: SUZLON) Q3 2025 Earnings Call dated Jan. 28, 2025
Corporate Participants:
J P Chalasani — Chief Executive Officer
Himanshu Mody — Chief Financial Officer
Analysts:
Mohit Kumar — Analyst
Sumit Kishore — Analyst
Puneet Gulati — Analyst
Vikram Datwani — Analyst
Amit Dale — Analyst
Adish Mehta — Analyst
Dheeraj Kripalani — Analyst
Arun Kailasan — Analyst
Analyst
Depesh Kashyap — Analyst
Rohan Vora — Analyst
Rusmik Oza — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Suzlon Energy Limited Q3 FY ’25 Earnings Conference Call. During this call, the company management may make certain statements that reflect their outlook for the future, which could be constructed as forward-looking statements.
These statements are based on management’s current expectations and are associated with certain uncertainties and risks as detailed in the annual report. Actual results may differ. So these statements should be reviewed in conjunction with the risk of the company faces.
[Operator Instructions] Please note that this conference is being recorded. We will begin with opening remarks followed by Q&A session. [Operator Instructions] From the management, we have with us Mr. J.P. Chalasani, Group CEO; and Mr. Himanshu Mody, Group CFO.
Over to you, J.P. Chalasani, sir. Thank you.
J P Chalasani — Chief Executive Officer
Thank you. Good evening, everyone, and thank you for joining our earnings conference call for quarter three FY ’25. We are happy to share that our good performance has continued for quarter three FY ’25 driven by strong growth momentum and the success of our key strategic initiatives. I will now highlight the key points. And following that, we will open the floor for any questions you may have.
As promised in the last investor call, we are pleased that for the current quarter also, our order book is at an all-time high of over 5.5 gigawatts, maintaining our leadership across the customer segments. For the very first time in history, we will also enter the new financial year within orders in hand for the entire year. Our focus continues to be on securing high-quality orders for period beyond FY ’26 that offer greater value and better margins.
On the manufacturing front, we are extremely happy to announce a significant ramp-up in capacity to over 4.5 gigawatts with revamped Pondicherry [Indecipherable] facilities. Additionally, we have added new blade lines in Madhya Pradesh and Rajasthan, which will increase our production to meet demand for the future. The order book for S144 now exceeds 5 gigawatt, a testament to superior technology and strong customer confidence is Renom. This achievement reflects our 29 years of proven track record and a 31% market share in the installed base in India. We take pride in stating that the S144 is truly made in India, made for India product with over 85% of its components sourced domestically.
On the execution front, Suzlon received a record quarterly delivery of 47 megawatts marking an outstanding 163% year-on-year growth of 170 megawatts same quarter last year. With the 977 megawatts delivered in the 9 months of FY ’25, we have already surpassed the entire FY ’24 total of 710 megawatts setting a new benchmark for performance. The industry commissioned approximately 2,277 megawatts in first 9 months of FY ’25, falling short of expectations, primarily due to transmission delays and land-related challenges. However, we see a sizable number of turbines are currently in the pre-commissioning stage to get commissioned in a phased manner.
Talking about Suzlon, we have commissioned 241 megawatts in the first 9 months and with an additional 218 megawatts, which is pre-commissioned, bringing the total to 450 megawatts. With around 80% of our order book being non-EPC orders, where land availability is in customer scope. However, even for non-EPC orders, we have prioritized orders with parcel and availability upfront. Notably, NTPC, general renewables and the latest Torrent Power orders come with substantial land availability at the start, which will provide better commissioning visibility for FY ’26.
Our OMS business continues to do well with 15 gigawatt capacity in India with machine availability insured beyond 96%. Renom continues to strive for customer fleet acquisition with the assets under management crossing 3 gigawatts. We believe India’s renewable energy journey is just beginning with the wind sector poised for multi-decade growth, supported by a wind installation target of 400 gigawatt Bharat 2047.
With our ramp-up strategy on track and operational preparedness at optimal levels, we are well positioned to sustain momentum, creating long-term value for our stakeholders and play a pivotal role in advancing India’s renewable energy.
It gives me a great pleasure to mention that our efforts on the ESG front is being deeply appreciated and recognized by the external world. Suzlon is now a member of United Nations Global Compact and has aligned to the decarbonation goal of Net Zero by 2050. I would now like to invite Himanshu to take you through our financial performance.
Himanshu Mody — Chief Financial Officer
Thank you, J.P., sir, and good evening to all of you, ladies and gentlemen. As always, I will be using Slide number 18 to 26 of our investor presentation as a reference point of my discussion during this discussion. The investor presentation has now been uploaded on our website.
With an unprecedented order book of 5.5 gigawatts, we are thrilled to have clear and promising revenue visibility. The time line for executing this order book is approximately 24 months setting up for an exciting and transformative period over the next two fiscal years. In Q3 FY ’25, Suzlon continues its exponential growth trajectory, delivering 447 megawatts with all financial parameters, storing a strong surge Y-o-Y and Q-on-Q.
In the 9 months of FY ’25, we have already surpassed all our targets or deliverables that we did for the full year in FY ’24. On a consolidated basis, Suzlon delivered record performance in Q3 with a revenue of INR2,969 crores, which is 91% higher Y-o-Y for the same period. For the WTG segment, our contribution margin has improved to 22.7% for the 9-month period FY ’25 from 19.4% during the same corresponding period for the prior financial year.
Our EBITDA for the quarter three is at INR500 crores, which is 102% increase Y-o-Y and a 70% jump Q-on-Q with an improvement in EBITDA margin to 16.8% from 15.9% last year despite organizational buildup, technological advancements and a substantial ramp-up in capacity. This we’ve been able to achieve largely because of the scale and the leverage that we now have with our suppliers due to the scale that — of our order book.
Quarterly PAT of INR388 crores is 91% higher on a year-on-year basis and 93% higher on a quarter-to-quarter basis, which gives us confidence that Suzlon has shifted into high gear on the operational growth following a successful financial turnaround on the balance sheet front nearly a year ago.
We are also pleased to report that our balance sheet has further fortified as of December 2024, with a net worth of INR4,914 crores and a net cash position of INR1,107 crores. Our pioneering business model of offering end-to-end wind energy value chain, fully integrated supply chain, track record of project execution and best-in-class service cannot be easily replicated, which provides us a very, very strong competitive edge.
With that, I’d like to conclude my presentation and open the floor to any queries that the callers may have. Thank you.
Questions and Answers:
Operator
[Operator Instructions] The first question is from the line of Sumit Kishore from Axis Capital. As there is no response, we’ll move to the next question, which is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Mohit Kumar
Good evening sir. And good evening on a very, very good quarter and super last 24 months. My question is on the order inflow inquiry. Of course, it has increased 18 months.
Operator
I’m sorry to interrupt, sir, but you are not audible.
Mohit Kumar
Am I audible now?
J P Chalasani
Yes. Yes.
Mohit Kumar
So the question is how has been the order inflow inquiry as of now. Are we seeing inquiries? Are we seeing inquiry as strong as it has been there in the last 18 months?
J P Chalasani
Yes. I think it is not last 18 months. What I would say is actually, it is increasing from quarter to quarter, the other inquiries as we keep saying it. So therefore, we see a good traction in terms of order inquiries and there are — obviously, you know that there are three types of other things. One is CNS segment, which is our strongest point where we have 58% mark in our order book share. Then PS is picking up now. You know that we have won already NTPC orders, second biggest futility, we’re expecting results to come out in the next 30 to 45 days and other PSCs. And third is a bid — so the bid for it.
So we actually — and also, we are now seeing a traction that people are talking about. Five, it is not needed to be done when we do a project development, and then we want to do a project, let’s say, in FY ’27, starting at end of FY ’26. So we’re getting an interesting proposal. And so we’re also getting into discussion that people are saying, we have a little longer-term pipeline type of discussions rather than just having one-off projects. So I think from tangle, the traction what we’re seeing on the order book is very, very encouraging.
Mohit Kumar
My second question on the C&I side, given the fact that the transmission charges are supposed to go up by June ’25 and there was the expectation that C&I will pick up in the Q4 FY ’25 and Q1 FY ’26. Are you seeing that momentum?
J P Chalasani
Yes, it continues — see, let’s understand it, first of all, the transmit two factors which play a role. One is tariff arbitraries compared to what the house today versus what happens with the renewables. Secondly, the transformation front, it is not completely going away in June ’25. We are moving from 100% waiver to 75%, okay? For one more year, you have 750%, then it goes 50% and it goes 25%. So therefore, we will — while it is less than what it would have been up to but there’s still the transmission charges were to the extent of 75% for the next 10 years. So therefore, the people would have preferred to complete as much as possible before June ’25 but then the — it’s wherever projects are there still things happening on that.
Mohit Kumar
Understood. Sir, my last question is on the financial side. I think on the O&M services, your revenues are increasing Q-o-Q, right, Q-o-Q and Y-o-Y, but your EBIT is almost similar at $2 billion. Can you please explain that? And how should we build up the — for the future?
Himanshu Mody
So Mohit, it is essentially, there is — if you look at any period, there are certain one-off items that hit the P&L, whether it is relating to insurance services or the insurance claims on the VAP and VAS services that causes this fluctuation. But clearly, going forward, as we’ve always maintained that the O&M margins at an EBITDA level will be about 40%, and we continue to maintain that guidance going forward. There may be aberrations quarter-to-quarter due to, as I said, insurance claim income and the VAP sales.
Operator
The next question is from the line of Sumit Kishore from Axis Capital. Please go ahead.
Sumit Kishore
My compliments on a fairly strong set of numbers in Q3. My first question is, what are the emerging trends of wind solar sizing in FDR projects with evolving battery economics?
J P Chalasani
It’s actually very difficult to predict as to as I think partly you changing pricing scenario of storage would keep changing the combination of wind, solar, how much you want to have it. Having said that, the — what type of an FDR we are talking is important because are we talking about the load following FDR because FDR definition is completely different. If you see coordinates in the bits itself there are 7 or 8 types of FDRE.
Sumit Kishore
And let us say for load following FDRE?
J P Chalasani
Load following FDRE, earlier, it used to be like the — it used to be about 200% of the big capacity is supposed to be wind. Now people are still talking about 140%. So therefore, the — it also depends upon the load profile, specific load profile, okay? If you are talking about, let’s say, a load profile of bids, I’m looking, which they came up because the peak is much higher so then we will have more of win capacity there. And if you’re talking about semi-urban type of an FDRE, then you will have a different combination. It’s difficult to explain, but it is changing with respect to the store spacing, but still the installed capacity required of wind will be more than 100% in any FDI-falling scenario. Whether it would be 150 or it should be 160 or 170, we really don’t know, depending upon the load profile of that particular retail distribution segment.
Sumit Kishore
Got it. The second question is, could you quantify the nonrecurring items which may be part of third quarter as part of employee expenses. Also whether the depreciation and interest costs that we see in Q3 are the recurring numbers that we should expect with the higher WTG capacity, especially on depreciation?
Himanshu Mody
So depreciation, Sumit, will be a recurring item because with the increased capex as J.P. sir mentioned with Pondicherry for the additional nasal facility getting mobilized and our additional malls for the S144 getting commissioned, the increased capex is, of course, hitting the P&L from a depreciation perspective. So you should certainly assume that the depreciation of — about INR60 crores to INR65 crores a quarter would continue as a normal standard.
J P Chalasani
One-off expenses.
Himanshu Mody
Yes. So one-off expenses in employee, of course, would largely pertain to ESOP charge. Now the ESOP charges for Q4 would be the similar as you’ve seen for Q3. As we step into the next financial year, difficult to say. But as of now, it looks like that the ESOP charge on account of employee expenses as a one-off would reduce for the full year in FY ’26 as compared to FY ’25.
Sumit Kishore
What has been the number for Q3 on ESOP expenses?
Himanshu Mody
ESOP expenses, Q3 would be about INR32 crores. And for the 9 months, that expense, of course, you can just simply multiplied by three, about INR83 crores is a 9-month expense on ESOP. Our estimate is INR116 crores would be the charge for — ESOP for the full year FY ’25. And that INR116 crores would certainly be lower, I can’t say by what amount for FY ’26, but it would certainly be lower.
Sumit Kishore
Okay. And just one last question, if you could comment on what strategic steps are you taking for diversifying from your main growth engine of WTG in India right now?
J P Chalasani
Right now, as you see, there is a huge amount of traction within India. What we are now trying to look at is that how do we actually diversify our business within WTG as growth is like as what we have been talking earlier. We’re increasing our activity of advanced development, okay? So we’re getting into those contracts. As we speak today, we do have a contract which we don’t announce as part of WTG contracts for about 1,100 megawatts for advanced development of projects. And then for furthermore we are entering into. So therefore, what we are trying to do is diversify I don’t know whether you call it as diversification, we call it as a different action is that what do we need to do that this growth engine would further grow?
So because one of the reasons we are seeing is that the commissioning not happening at the required level, that has the pushback on how much can you supply. So we are trying to see the pushback and removed on it. That’s one area which we are significantly concentrating. We started this year that will grow by the next year as well so that we will not have an issue of focus back coming on our supply. That’s one area we’re doing it. Second area, obviously, we are concentrating this in terms of multi-brand acquisition in case of Renom.
So these two are going to be the major things. But then we are looking at any probability of exports in case you hit there, but that we’re in the process of studying. We’re not going to say that there is going to be the action right now plan for the next year, but then we are looking at it. So saying that, okay, if in India, this is what is maximum it can take, then because we have a capacity, is it possible to do it to, let’s say, Europe, we don’t know what’s going to happen. U.S. I know you this question regard, but I have no answer for that, the Europe and other places because there are a lot of European manufacturers are significantly exporting from here to Europe as the base. Our manufacturing costs are much lower than them. So obviously, if they can do it, we can also do it. But that is more of an incremental capacity over and above what we can sell in India is what we are looking at. Otherwise, Himanshu if you want to add — we don’t have any that, but significant
Himanshu Mody
No, I agree. And just to further add to my earlier answer, Sumit, and also to Mohit’s question in — for the first question. From the depreciation perspective, this quarter is the first quarter where we are fully consolidated Renom as well because in Q2, we consolidated that only for about 25 days. in Q3 is the first quarter where the entire consolidation has happened and about INR8 crores delta in depreciation that you see is on account of Renom. And also to earlier to Sumit’s question, when you see the OMS segmental EBIT because Renom as a margin business is lesser than the Suzlon’s O&M business. So as Renom keeps growing, although it’s very small still, so it doesn’t make too much of a difference. But as we see the segmental revenue along with Renom, you might see a percentage shrink, but very minimal.
Operator
The next question is from the line of Puneet Gulati from HSBC. Please go ahead.
Puneet Gulati
Congratulations on great order book. So how should one think about this 5 gigawatt order book? Or what period would you expect to deploy this?
J P Chalasani
These are some part of it, obviously, for currently we’re executing in quarter four of this year. And the large portion is for FY ’26 and some of them is FY ’27. Let’s be clear that there — says that you have an order book when you take the order book, you have a contract can you say that this is what is the delivery, but we all know that there are things happening with respect to the project schedules because maybe the substation got shifted or something else is happening. So we are — there is a constant discussion between us and to the extent that we keep modifying the schedule. But the simple answer to your question is that most of this order is for FY ’26 and FY ’27.
Puneet Gulati
Possible to give some sense of how big residual after quarter four. Possible to get a breakup between quarter four and then maybe FY ’26?
J P Chalasani
Yes. I can give you a contractual breakup. That’s not going to help because it doesn’t give you any number of saying that what it is really going to be because the contraction number is different in reality what happens is different. So as we keep approaching quarter-to-quarter, we will know next quarter, we’re going to deliver. And in this environment as I said in my opening comments, first time in the history of Suzlon, we are starting the next financial year with the full order book in position.
Puneet Gulati
Right. That’s very interesting. And in that context, how are you pricing your product where there is uncertainty of timing of installation FY ’26, ’27. Is there a flexibility in prices that you’re keeping? Or is it a fixed price contract?
J P Chalasani
Two things we do. One is that the steel can be a pass-through because that’s a major component for us. And second, what we say is that our price is valid for x amount of months for the project to get executed. If the supplies for reasons not attributable to Suzlon, they get delayed contractually, then obviously, we need to sit back, we can’t really go fee can see that and discuss the pricing. These are the two safeguards, what we have.
Himanshu Mody
So third one that we’ve also done for our larger A-class components with our suppliers, we’ve entered into long-term framework agreement. So we know that at least the key critical components. Also, we do have a, in a way, price lease and beyond a certain volume, we in fact have a volume discount.
Puneet Gulati
Okay. So there is a volume discount once you really get a number and before that it’s fixed, have you given any advance, is there a risk that these contracts might get canceled if the price discussions don’t rectify or are very firm in nature and there is huge advance payments?
Himanshu Mody
We’ve not given any advance to our suppliers because of the framework agreements. These are new framework agreements. But we’ve kept a fairly large margin of, say, in terms of what we can deliver over the next 12 to 24 months vis-a-vis our order.
J P Chalasani
This is no supply chain.
Puneet Gulati
Sorry, received advance from your customers?
J P Chalasani
Yes. Yes. We don’t announce any contract unless there is — the contract is backed with advance. We don’t announce.
Puneet Gulati
And last one. And are these all for S144? Or is there a plan for an upgrade built into these audits?
J P Chalasani
No, all these are for 144 at this stage. So — and of course, there’s a small amount of 8% out of our outstanding order book. 92% is 144 and 8% is for S120. And there is no other model then is to we are offering in the market today.
Puneet Gulati
Understood. And what’s in the pipeline? Any thought rates you can throw on?
J P Chalasani
Yes, pipeline almost, you always work because the product development cycle is long. So obviously, we are working on the next tone depending upon what is — when is the market ready, what happens to 145, we will launch battery larger than if obviously.
Operator
The next question is from the line of Vikram Datwani from Nuvama Institutional Equities. Please go ahead.
Vikram Datwani
Sir, congratulations on a good set of numbers. SP1 two questions from my side. So first is we’ve seen order inflow already at 3.5 to 4 gigawatt in this year, the order book is at roughly 5.5 to 6 gigawatt. So at any point, do you think we will get choosy with our order inflow? Or can we maintain this order inflow run rate? Because you already had visibility for the next 2, 2.5 years. So do you foresee this kind of inflow going forward? Or will we get a net orders in the next couple of years?
J P Chalasani
The moment I say choose, it looks like looks we’ve become arrogant. So obviously, we are not — the customers have a choice, and we have a choice. When we discussed about these projects is that what we look at seriousness of the project is looking at their financial closures, it is PPPs, there or not because all projects is what we acquired from the beta 21%, 22%, all of them have a PPA. And then if it is a non-EPC, it’s acumen supply bears position of land and the substation is what we look at it.
But generally, if you look at it, most players are in the market today, the large equity what we’re entering to. All of them are good people, okay? And as long as we have our own pricing at which we want to offer, if that matches and then we have adequate safeguards in terms of if there are delays, then we just go ahead. I will not use the word that we are choosing at this stage. Obviously, flash of deliveries coming in and being asked for when we can’t do it. And there, it is not Suzlon, but we will tell them we can’t do this. This is what is a delivery schedule. We can adjust to the risk disband otherwise, they have an option to go some there. Those things can happen.
Vikram Datwani
So I was majorly talking about from the capacity standpoint.
J P Chalasani
Therefore, if the delivery schedule is already — we are overloaded during that particular period, then we offer a different delivery schedule to them. We don’t say no, we offer a different delivery schedule. And there are some discussions. Sometimes we agree to a different delivery schedule or sometimes it doesn’t meet. So they say that, sorry, this time it doesn’t meet then I’ll go somewhere else. But that is, again, not in not the word of Suzi, but not able to meet the requirement of the client.
Vikram Datwani
Yes, time ended from a capacity count. My second question is.
J P Chalasani
Yeah, you did happen that way.
Vikram Datwani
Okay, sir. My second question is on margin sustainability. So we’ve had quarters where you’ve not booked EPC revenues, ETC expenses because installations have been weak on a yearly basis, do you have any sustainable margin guidance or any target mix between product delivery and EPC delivery?
Himanshu Mody
So on margin, if we look at the contribution margin for the WTG segment, in the 9 months of this year, we’ve done about 22.7% for the division — for the segment as a whole. Now clearly, the commissioning for reasons we’ve discussed has been a little lower. But having said that, as and when the EPC work and the commissioning completes, that margin may slightly come down. So whilst earlier, we’ve always maintained a margin of late teens, I think it’s safe to say that close to 20% or little over 20% consolidated steady-state basis would be the contribution margin. So that is pretty much, I would say, upping the guidance from a contribution margin perspective by a few percentage points.
Vikram Datwani
Got it. And any reasonable percentage breakup between product versus EPC that you are targeting?
Himanshu Mody
So we don’t — we’ve not yet started giving segmental split of product versus EPC. We just as you know, reporting WTG as a segment, we are not doing the split as of.
Operator
The next question is from the line of Amit Dale from Morgan Stanley. Please go ahead.
Amit Dale
Congratulations a great set of numbers. So my first question is with regards to the realization, it comes to around $52 million per megawatt for this quarter. Now in this, I understand that EPC portion was not there, but then is there any pricing pressure that you’re experiencing with a few other OEMs getting very active in the market?
Himanshu Mody
No, there is no pricing pressure whatsoever. In fact, when J.P. sir mentioned earlier, we don’t want to be arrogant in saying no to certain orders. So clearly, the kind of traction that you see with our order book pretty much there for the next two years. no reason for us to come under pricing pressure and neither is we are seeing that from the competition perspective. So this is merely due to slower execution on the EPC front that you’re seeing the 52 million, which, as always, we mentioned, will be close to about INR6 crores you take steady-state basis, it’s about $58 million to be precise. I think it’s a notch lower largely because of the slower EPC execution.
Amit Dale
Right, right. So $58 million is a good number to work around with right? And on the contribution margin that you had said in the previous question, 20% a little over is that a sustainable guidance? Or is it only for FY ’25?
Himanshu Mody
So as I mentioned that as we move forward, around, I would say, 20% would be one large component, of course, is steel. So depending on where the utility prices move, whilst that’s a large pass-through item. But consistently, our endeavor will be to deliver a margin of close which we’ve always maintained late teens. So about 20% is what we can consider.
J P Chalasani
From late teens to 20%. Yes. That’s only change in guidance.
Amit Dale
Yes. Got that. And on the previous question, you mentioned that there’s around 1,100 megawatts of advanced development projects that you are offering. So in this how would the realization. Yes. So you’re executing. So how would the realization differ versus the 58 million
J P Chalasani
Let me — I think I explained in the previous quarter’s call also is the development, what happens is that the government wants to do an EPC project with us because the land is an issue. So what they do is start they won’t give an NTP for the lab. And first of all, we are not waiting even for the entity, we have started developing the projects where we start acquiring the land up to a certain extent, then we keep offering in the market in this positive there if you want for development.
Then they come in and give an NTP for land and they start paying for the land from the on — and at appropriate time, the NPP per EPC will be given. And we don’t lose those EPCs because they have not been given. So once the PPC NTP is given advances given for that portion land we already get the cost. So we are [Indecipherable] That’s the big part there are cedent be converted in the EPC contracts. But at what is when it gets converted, we are on to the market.
Amit Dale
So right now, is this, 110 part of your 5.5?
J P Chalasani
No, no, no, no. I said that this will get — as and when gets converted into EPC contract with that one, is when we will announce. Right now, it is not part of 5.5%. Any indicative time in 6 months or one year that this can get converted? — it’s reasonable to expect that next three to four quarters is get converted into EPC contracts. There’ll be EPC.
Amit Dale
All right. And one more question on your delivery time lines. As you mentioned that there is a contractual delivery time line in each of the projects. So how is the time line differing in C&I versus the PSUs. So PS uses four months? Or how is it in C&I, especially in PSU?
J P Chalasani
No, no. You’re asking CNA versus PSU?
Amit Dale
Yes. So is it like the C&I would have a lower contractual delivery time line? Is that the right way to look at it?
J P Chalasani
C&I normally tends not to revise significantly the contractor schedule because this meant for their own consumption. Normally, — but there also, we see that they get started with respect to the land or evacuation, but to a lesser extent. PS, we have to see because we’re just doing a execution of NTPC right now. But on the later projects, obviously, we see a big shift. Right. Broadly, would it be like 12 to 18 months for C&I or lower means, like 12 to 18 months shift?
Amit Dale
So delivery time lines from ordering?
J P Chalasani
Yes, reasonable that’s a reasonable number, 18 months. depending upon the size of the project.
Amit Dale
Right. And for capex, do you have any guidance revised because now that you are adding new late lines, etc? So I recollect that you were guiding around INR400 crores of capex per year. Is there any revision to that?
Himanshu Mody
So Amit, no revision. And we request that this will be your last question. We can, of course, connect offline, if you want. But to quickly answer your question, but no revision and guidance to the same.
Operator
The next question is from the line of Adish Mehta from Motilal Oswal AMC. Please go ahead.
Adish Mehta
So just wanted to understand this margin guidance this aspiration of around 20%. This is on the EBITDA numbers or at the contribution level?
Himanshu Mody
Adish, it’s on the contribution level for WTG. I wish it was EBITDA, but I don’t definitely not. So it is on the contribution margin for DG segment.
Adish Mehta
And other thing which I wanted to understand is that, so far, win installations have broadly lagged our deliveries right? If you see the country level data. So how long do you think this can continue that even as installations are lagging, we will continue delivering our products to our clients.
J P Chalasani
See, obviously, if there is a continuous delay in the land of the reason, there would be — that’s what I said sometime back in another question that there could be potentially a pushback on supplies there to be delays in slides can say that the slow down the supplies. That’s probably can happen. As other even our numbers, what we’re looking at today would have been still higher — so what we — but that is what you need to overcome.
That is where I said that we have now been working with one is on the development side. Second thing, what is we’re looking ahead is that if you look at next year, it is not going to change in a quarter or two quarters, but it will definitely change in FY ’26 significantly. These are plans coming from development. Second also is that some of the clients that we have now contracted how land in position. For example, we just did the current power contract of 482 megawatt, which is meant for the captive — for the distribution business.
We already have 50% of flat along with the right of way. No, as I said that we are developing ourselves like NTPC has — whatever we are not expecting the volume, getting the land in advance position. Sorin for Karnataka, which got delayed the EPC project, we are doing EPC. So therefore, we acquired the land almost for about 150 megawatts are already out of tea. So these things will result into a better project execution, quicker product efficient moving ahead. But are we — do we see a significant change in Q4? No.
Are you seeing some gain in Q1 next year? No. I think gradually from starting from Q2 next year awards, you will see an improvement, pushbacks are coming down. FY ’26 will be definitely better than FY ’25 because of these reasons. And FY ’21 onwards, I don’t think at least as to the one we will see initio with respect to the land. — vacation, we still — of course, it’s pure not control. But on the brand delaying the projects will not happen, significantly come on effect of the can guarantee. And FY ’27, it would practically be not there.
Adish Mehta
And sir, do we see this being a hiccup over the next 6 to 12 months because the execution run rate is very strong from our side, do you think given the progress report you are seeing at your client level, you can continue delivering this number of equipments.
J P Chalasani
Yes. See, what happens is that the real multiple clients, okay? If it is only one project, two products will continue to supply, then there is a saturation point you is filling because you have multiple projects and multiple clients — so while I do agree that there will be some pushback, which is what we talked about contracted gating device. But then we don’t see it to that extent, impacting our supplies significantly in the next few quarters. And by then, we would be when we — not only we sector as a whole realize, this has an issue, land in row.
So most people are actually investing in land materials. Like I said, the three clients, which we are working with right now for this 1,100 megawatts, they’re spending on land much advance with us. So I think things would change. Today, I completely agree that that’s not just the land, including the evacuation is an issue today. We are nowhere near our ambition of reaching about 8 gigawatts a year run rate. But I think the things would change expected to change in FY ’26 and FY ’27.
Operator
[Operator Instructions] The next question is from the line of Dheeraj Kripalani from Avendus Capital. Please go ahead.
Dheeraj Kripalani
So my question is on the industry level. If you look at the wind capacity additions in India, hotel FY ’25, only 2 gigawatt has been added. So my question is that I just want to know your view at what capacity additions in India, you will see in the next, let’s say, three years? And what are the challenges, of course, in the capacity additions?
J P Chalasani
Yes, as I said, okay, we talked about — we’re not talking about the industry. But I also said some time back that not just we and the other industry players also working towards reducing the risk of land, okay? So therefore, this year, we still see though we’re [Indecipherable] 2.3 gigawatts in first 9 months. It will be anywhere between 3.5 to 4 gigawatts is what we see. There’s a large capacity. Like we also sell, as I said, as we speak itself, we have more than 200 megawatts precommissioned, means that you can just get onto the grid any day, so it’s available. So other people also have it. So we all hopeful that 3.5 to 4 gigawatts is what we achieved this year. And then next year, we should I think all the efforts that people are putting it should be around 60 watts. And then we, hopefully, FY — at least affected onwards, we reached 7 to 8 gigawatts.
Operator
The next question is from the line of Arun Kailasan from Geojit Financial Services. Please go ahead.
Arun Kailasan
So first of all congratulations on a good set of numbers. And I’m still a novice in understanding this industry. So I just wanted to know that earlier in one of the con calls you had mentioned that the capacity addition would be set around 5 to 7 gigawatts in 2026, ’27 for India in general. And then from then, it would be around the range of 10 gigawatts, right? I just wanted to add what amount of capacity addition, do we see the tariffs go to a range where like it turns less profitable for the developers? Because — is there a concern of oversupply so that is my case, we are seeing solar module prices correcting and corresponding to the tariffs have also come down the use margin. And if that is then how would we look at negating that?
J P Chalasani
See, the last that in the tariff goes up, but the demand will drop, okay? Demand is a function of the tariff. The demand velocity gets prevented if the tariff goes up. Having said that, if you look at the savings, if you look at the exchange and look at the demand and the price when wind generates is constantly high SP-33. Okay?
SP1 Only thing what you’re seeing is the tariffs during the solar time coming down because the supply is higher and the demand is less. So I think there is enough appetite in the market to meet the current load profile the wind capacity. And the wind tariffs are not we’re not going up. I don’t think any tariffs are going up because tariffs are only falling even for FDD because the solar prices are falling. On the case of solar, the tariffs have gone up because of the restrictions of this, and that has significantly gone up.
If I remember right, the last alone now is almost INR3 because of the domestic content criteria. So that can increase the tariffs, but the wind tariffs are not increasing, wind tariffs remain the same [Indecipherable]. So the demand does exist for round-the-clock power because as we’re growing, the demand is going to keep increasing. To some extent, there was impact of solar tariffs going up because of the domestic content. But I think to that extent, the storage prices, water coming down should be able to compensate.
Arun Kailasan
So this about 10 gigawatts of addition post 2028 that we are factoring in is sustainable, right?
J P Chalasani
Sustainable is different. We always said that in for us to meet the 100 gigawatts 30, these are unrated we expected that — in fact, even compared to our expectations for this year, it is less of the fact that we thought that we’ll touch about 4.5 gigawatts, which we now revert to 3.5 to 4 gigawatts. Next year, I just had some time back 6 than 8 in is still feasible in FY ’28 with advanced actions what everybody is taking.
Operator
The next question is from the line of Jinesh Shah from SK Investments. Please go ahead.
Analyst
Yes. So my question would be like, as you mentioned, that we have ramped up the capacity from 3.1 to 4.5. So I would just — because of which our depreciation also increased. So I would just like to understand that are all the assets operational and live? Or are we expecting much more capex, which will increase the depreciation going forward?
Himanshu Mody
So as I said earlier, we are looking at close to about INR350 crores to INR400 crores of annual capex for the next two to three years, which will all go towards capacity augmentation. Of course, as a result of in the older asset base will get depreciated completely. To answer your earlier question, whether all the capex that we’ve got to date is operational, most of it is, and some of it is getting operational as we speak. So for the next few quarters, including, of course, the Genomic acquisition charge about INR65 crores of depreciation on a quarterly basis is a steady state that one should assume.
Analyst
Okay. Okay. And my second question would be with respect to the interest income of INR70 crores like I was just validating with respect to — since in our book member, we had boring of approximately INR232 crores gross debt. So I would just like to understand that how do we validate like the interest of INR70 crores, if you can just say a bit about that.
Himanshu Mody
Yes. So of course, the interest cost is largely due to the LC and BG commissions that we have to pay to our lenders. And there is the INR232 crores debt that you’re referring to is working capital that sits in our two subsidiaries, which is Sorger and Renom. So they have their cash credit facilities as wing capital which attract a normal interest rate. And the other is, of course, LCBG charges at the stand-alone level, which we pay for giving guarantees to our customers and LCs to our suppliers. That, of course, only gets netted off with the interest income that we are able to generate with the cash balance that we have in the company.
Operator
The next question is from the line of Jayesh Shah from ASK Investment. Please go ahead.
Analyst
It is always a pleasure to talk to you J.P. sir. You are one of the corporate leaders will deliver their performances quarter-on-quarter. Sir, can you help me understand the impact of the Trump era on renewable energy sector in India? Do we see a reduction of prices of the product if Chinese and European players start dumping in Indian markets?
J P Chalasani
See, the Chinese are already there and Chinese are not there any way significantly in the U.S. at this stage. So U.S. market is mainly with GE and [Indecipherable] so I don’t think that would make a difference. European significantly present today that manufacturing use amount of quantities in India, but they are exporting because they’re able to compete in India. So therefore, either way, it should not to make a difference. I only look at it is that in case the opportunities for — first of all, I have no clue about what is going to be impact because every day you’re reading a clarification.
So always the extent of EVs. It’s an evolving situation and there is a clear view that onshore wind price won’t get impacted. It’s only the offshore is going to get impacted. So therefore, whether you speak or I speak, it is more of a transiting between 12% both premium Therefore, I think we should wait for a few more weeks before we see any impact on India. But if at all, there is going to be an impact in my open, it will be a positive impact, but not the negative impact — comes down in U.S., there will be more investment opportunities coming down here coming in India. So I can only see the positive side of it. At this stage, I’m not seeing anything significantly negative for us.
Analyst
My second question would be since we have 18 to 24 months of normal period of conversion of any contract, plus they are usually delays from the side of the customer now that we have an executable capacity of, say, 4,000 megawatt, as you mentioned in some other discussions previously, was there a number of around 10,000 megawatts — in the order book, the right number where we can think of coming at full capacity.
J P Chalasani
Come again? 10,000 megawatts?
Analyst
Now we say when we say that we have restored the capacity of 4.5 megawatt, and we are targeting 90 — to achieve 90% of that. Given the 18- to 24-month conversion period and the delays that normally happen to come at full capacity an order book of about 10,000 megawatts would be the right number?
J P Chalasani
No, no, no. Let me clarify. Today, we have an outstanding order book of 5.5 gigawatts as we speak. And obviously, at any point in time, there will be a number of orders which we are negotiating, we’ll keep getting come in the future. okay? So this 5.5 gigawatts is in orders which have confirmed orders at by the full advance. What mentioned is that — somebody asked me the question is that how much of it will be for next year, I said contractually, it could be anything, but let us wait and see that what happens in terms of reality of projects. So we have not given any guidance with respect to out of this 5 gigawatt, how much will be done next year. But I only said this 5.5 gigawatt will definitely get executed in FY ’26 and in FY ’27. That was my answer.
Analyst
No, no, what I’m saying is now that we have a capacity of 4,000 — only 4 gigawatts. What we are targeting is an order book of something like 10 gigawatts?
J P Chalasani
You’re saying that because we manufacturing capacity of 4.5. I may have a manufacturing capacity, but they should offer projects should be offtake, ready to offtake so obviously, yes, your part is right that you lowered our manufacturing capacity, the 90%. So then obviously, about 4 gigawatts is what we should supply every year. But that capacity comes only when you manufacturing plant is loaded on a consistent basis every month, but that doesn’t happen. Your offtake are different. So your project offtake is what decides how much capacity utilization happens.
Operator
The next question is from the line of Depesh Kashyap from Invesco. Please go ahead.
Depesh Kashyap
Just a clarification on the interest cost of INR70 crores. I think last quarter, you highlighted that there’s INR10 crores to INR11 crores of one-off expenses due to a new contract that you have got, right? So the normal run rate INR44 crores, INR45 crores of interest cost. So is this INR700 crores now a new normal that you think? Or if there’s any one-off setting here?
Himanshu Mody
No, no, INR70 crores is not a new normal Dipesh. There is close to about — of course, in this INR15 crores gets added in a quarter because of the net lease cost that currently that is there close to about INR15 crores a quarter. That will get on a continuous basis quarter-on-quarter. In addition to that, there is the Renom working capital cost that is getting added. As I said, Renom has about INR120 crores of working capital facilities with it, which they utilize on a cash credit basis. So of course, whilst we look at optimizing the cost, but we will also look at increased cash balances going forward. So the net interest cost would probably be in the normal region of around INR40 crores a quarter give or take. But that we will manage through, of course, whether increased interest cost or increased interest income, both net basis, we should assume about INR40 crores.
Depesh Kashyap
Understood. Understood. Understood. Secondly, when do you expect the normal taxation to start hitting your P&L?
Himanshu Mody
So I think that, of course, is very difficult for me to give you any guidance on that. But safe to say that I don’t see that hitting us in FY ’26, at least, can’t say about FY ’27 at this stage.
Depesh Kashyap
Understood. And lastly, any plans on utilization of cash, any inorganic opportunities you’re looking at? Or any dividend payments you’re thinking about because now you are a INR400 crores plus net worth rate, that’s how things happen.
Himanshu Mody
So inorganic, of course, we are keep looking on. We’ll be very selective. We won’t go very aggressive any inorganic opportunities. any return or payback to the shareholders. Well, of course, at the time of annual results, will be deliberated and discussed at the board before recommending to the shareholders. We’ll, of course, need to see the reserves. So as you know, we have — there is a scheme which is impending that requires for a reclassification of reserves. So once that is done, is when we can have the dividend-paying capabilities. I hope and assume that, that should be completed, that scheme should go through by June, July. Once that is ready and the business exigency is permitting any dividend payout and the Board approval, we would then only be able to recommend the same process to shareholders.
Operator
The next question is from the line of Rohan Vora from Envision Capital. Please go ahead.
Rohan Vora
Congratulations on the numbers. Just wanted to check on the Siemens, are you still looking at it? Or what is the update?
Operator
I’m sorry to interrupt you, but can you speak a bit louder, Mr. Rohan Vohra.
Rohan Vora
Is it better?
J P Chalasani
Yes, please.
Rohan Vora
So sir, I just wanted to check around Siemens Gamesa. So what is the update around that? And are we looking at that particular?
J P Chalasani
Obviously, Siemens Gamesa, we will not have an update because that that company to provide. We are not looking at it. We said absolutely.
Rohan Vora
Are we looking at it is what I’m trying to understand?
Himanshu Mody
No, no. We’ve always been on record. We never changed our stance. So we are not looking at that asset.
Operator
The next question is from the line of Deepak Purswani from Swan Investments. Please go ahead.
Analyst
Congratulations for good set of numbers. Sir, just wanted to check it out eventually, when we would be looking at 4 gigawatt of execution on a year-on basis. From the order inflow point of view, at some point of time, we are also or considering export market to be tacked going ahead, if you can throw some light on that?
J P Chalasani
Our manufacturing capacity is 4.5 gigawatts. So therefore, we are in a position to supply 4 gigawatts a year if there is a demand extend in India. So when that I really won’t be able to answer that because it depends upon various external factors, okay? But we do have a capacity to supply 4 gigawatts a year as we speak today. As far as the integration is concerned, sometime back two different questions. I mentioned that the right now, there’s so much happening in India. However, we will — we are evaluating that what are the opportunities available outside India, if at all the today is only a valuation phase. So in case — because we have a capacity that India offtake gets to certain level, can we actually do an incremental capacity and that’s a lot side. But right now, there is no solid proposal to that it’s only an evaluation cost. And by then, we don’t know really all depends upon the market valuation.
Operator
The next question is from the line of [Indecipherable]. Please go ahead.
Analyst
I just have one question. Is it possible to give volume guidance for FY ’26? We have not been providing that volume guidance for — not just for the FY ’26, they’re not even providing for the next quarter. So I think we will maintain that over [Indecipherable] because it depends upon various factors because we don’t want to give guidance and then are giving the reasons why it has been resumed or over acute because the market is so dynamic outside in terms of execution. So you mean to say because of the execution issue
J P Chalasani
Yes. But you’re seeing the growth. So therefore, obviously, you can [Indecipherable].
Operator
Ladies and gentlemen, due to the time constraint, this will be the last question, which is from the line of Rusmik Oza from 9 Rays EquiResearch. Please go ahead.
Rusmik Oza
Sir, I wanted to check up in next fiscal year, if industry does around 6 gigawatts, can we maintain the market share of 40%, which we — I think last quarter, we were above 40% market share. If you can just give some color on the kind of market share it would retain next year?
J P Chalasani
Can you please come again?
Rusmik Oza
Sorry. I just wanted to understand what kind of market share would you be able to retain next year, that’s FY ’26 industry?
J P Chalasani
Market share of what? WTG?
Rusmik Oza
I mean your order booking supply or come supply suppliers or commissioning of wind energy.
J P Chalasani
Right now, the publicly available number is only the commissioning okay? So there is no data nobody is monitoring in data in terms of order book or in terms of for the supplies. Right now, this year, obviously, the — but we’re pursuing is not there at all. We are much more than that at this stage number because we also can’t — we can’t measure last time month, I mentioned, measure the performance based on the market share of COD for us because as you see in our composition, only 20 — around 20%, 22% is what is EPC, rest all are non-EPC where we really don’t have the full control. So therefore, our — now the main indicator is in terms of supply. So that’s what we’ll decide what is going to be our financial performance than the commission number.
Rusmik Oza
Okay. Okay. And second question, sir, was on the foundry and forging business. utilization level right now is around 19%. Just wanted to get a feel how much can this utilization go up next fiscal year and the margins, which say at around 12.5%, can they go back to 15%, 16%?
J P Chalasani
We’re working towards that. We are working towards the processing of order book in terms of non-wind as well as exports. And also the — we are trying to see that we increase our machine capacity so that we don’t need to outsource machining so that we increase the margins. You will see the improvement part of the quarter from now onwards.
Operator
Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Himanshu Mody for closing comments.
Himanshu Mody
Thank you, everyone, for joining the call. And I know there is a question queue still pending. My apologies to all those investors. We are unable to take all the questions at this stage. However, I request please do write to us on our e-mail ID investorrelations@suzlon.com or reach out to my colleagues Siddharth and Krishna with your questions, and we will be happy to answer those. But apologies, we won’t be able to take any further questions at this stage. Thank you very much for being patient hearing us out, and I look forward to being in touch with you all. Thank you so much.
Operator
Thank you. Ladies and gentlemen, on behalf of Suzlon Energy Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.