VA Tech Wabag Limited (NSE: WABAG) Q2 2025 Earnings Call dated Nov. 08, 2024
Corporate Participants:
Rajiv Mittal — Chairman and Managing Director
Skandaprasad Seetharaman — Group Chief Financial Officer
Analysts:
Nidhi Shah — Analyst
Mahirish M — Analyst
Aejas Lakhani — Analyst
Mihir Dhami — Analyst
Chirag Khasgiwala — Analyst
Jainam Jain — Analyst
Dhiraj Ram — Analyst
Harshal Parikh — Analyst
Omkar Chitnis — Analyst
Dhruv Joshi — Analyst
Samarth Kandelwal — Analyst
Kaushik Poddar — Analyst
Basant Bansal — Analyst
Presentation:
Operator
Good evening, and welcome everyone to this Earnings Call Post Announcement of Q2 and H1 FY’25 results of f VA Tech Wabag Limited. On the call today from the management team, we have Mr. Rajiv Mittal, Chairman and Managing Director; and Mr. Skandaprasad Seetharaman, Group Chief Financial Officer.
Kindly note that during this call, the company may make certain forward-looking statements concerning the business prospects and profitability, which were subject to risks and uncertainties and the actual results could materially differ from those in such forward-looking statements. The conference call will be archived and the transcript will be made available on the company’s website. The company’s results update presentation has been uploaded on the website and stock exchanges, which provides an overview about the core offerings and analysis of the results for this period. We trust that you had an opportunity to look through the same. So we will start with the opening remarks from the management, post which we will open up for the interactive Q&A.
I now hand it over to Mr. Mittal to take you through the key business highlights. Over to you, Mr. Mittal.
Rajiv Mittal — Chairman and Managing Director
Thank you. Good evening, ladies and gentlemen. We extend a warm welcome to you all to the earnings call post-announcement of Q2 H1 FY’25 results of VA Tech Wabag Limited. Joining me today for this earnings call is Mr. Skandaprasad Seetharaman, our Group CFO.
We closed another strong quarter of earnings continuing our growth trajectory. We stayed on course in our profitable growth journey while remaining steadyfast to the cornerstones of our long-term strategy. Advanced technology projects, emerging market focus, net cash-positive position, and asset-light approach. This quarter marked a number of significant milestones from an order inflow perspective. Recently, we secured a prestigious 300 mega liters per day seawater desalination plant in Yanbu, Kingdom of Saudi Arabia from Saudi Water Authority worth INR2,700 crores. Saudi Water Authority, formerly known as Saline Water Corporate — Conversion Corporation, SWCC, manages over 15 million cubic meter of water, mainly in 40 desalination plant and also some ground and surface water purification stations.
The plant will employ state of art technologies and will be engineered for exceptional water quality and power efficiency. Scheduled for completion within 30 30-month period, this project commences our relationship as a reliable water partner for Saudi Water Authority. Wabag has also secured a mega order value of INR1,000 crores from Indosol Solar for 100 MLD seawater desalination plant, marking our entry into the Solar PV sector. This project will provide water security for the 10-gigawatt integrated solar premium manufacturing facility of Indosol. The EC project, which is to be delivered over 38 months will be followed by 15 years of operation and maintenance.
Further, reflecting our enduring plant relationship, we secured a large repeat order from Reliance Industries to deliver water system for their Dahej and Nagothane facility and also a repeat order from Chennai Metro Water Supply and Sewerage Board worth INR415 crores to operate and maintain the [Indecipherable] desalination plant, which was built and commissioned by Wabag in 2013 for a further period of seven years, reaffirming the trust and confidence our plant place in Wabag’s reliable performance and expertise.
Looking ahead, we are further enhancing our presence and efforts in the emerging markets like Middle-East, Africa, Indian Subcontinent, Southeast Asia, and CIS countries. This promising order pipeline, we are confident in sustaining our growth momentum through the second half of the financial year and in line with our medium-term outlook. Our focus business development efforts are yielding remarkable results as demonstrated by the order inflow of over INR4,600 crores secured in H1 with 57% coming from international clients and 31% coming from industrial sector. You would recall that we had informed our preferred bidder status in projects was INR6,000 crores and you can see that we have already converted more than 75% of the same.
As we speak today, we are happy to inform you that we are preferred bidder in the orders worth over INR3,500 crores, which we expect to convert through the next couple of months. With over INR8,000 crores order inflow outlook already in sight for this financial year, we are on track to reach our order book position of over INR16,000 crores by the end of this fiscal year. Our order book position, which stands today at over INR14,500 crores as of H1 with a healthy mix of 59% EPC projects and 41% O&M projects provides a robust revenue and growth visibility.
I would also like to share some updates on our key projects. Our prestigious 400 MLD Perur desalination project in Chennai funded by JICA is on track with peak engineering activities underway, civil works progressing well, marine intake and outfall pipe material are received at site and equipment deliveries will commence from H2 this year. Our 200 MLD sewage treatment plant in Pagla, Bangladesh, where we had a couple of months of temporary disruption is largely back on track with construction activities resuming swiftly, procurement activities are also progressing well. Projects like Sibu [Phonetic] and Senegal, where deliveries are largely complete have entered the installation and commissioning phase and are on target. I’m also happy to inform that Kolkata HAM project, our first HAM contract with NMCG has achieved COD, Commercial Operation Date has started. As we advance our mission to shape the future of sustainable water solutions, we are also taking a moment to honor the journey that has brought us here.
This year, Wabag reached his centenary celebration — a centenary year and we commenced the celebration of this landmark milestone with a grand event in Vienna in August, honoring a century of innovation, leadership, and sustainability in water sector. Continuing this centenarial festivities, we hosted our key customers, business partners, bankers and other stakeholders across the Middle East with a vibrant celebration in September in Riyadh, Kingdom of Saudi Arabia. As we look into the future, Wabag remains committed to building on this 100-year legacy, combining innovative technology with resilient strategy to drive growth across emerging markets.
Thank you once again for your continued support and confidence in Wabag. Now I will hand it over to Skanda to take us through the financial highlights. Over to you, Skanda.
Skandaprasad Seetharaman — Group Chief Financial Officer
Thank you, Mr. Mittal. Good evening, everyone. I hope you have had a chance to review our results update presentation, which have been shared on our website and with the stock exchanges. Let me walk you through our performance highlights for the half year and quarter ended 30th September 2024.
Before I move into the numbers, I’m pleased to note that we continue our profitable growth journey into this half year as well with our EBITDA and PAT growing at a rate faster than the top-line, as envisaged in our long-term strategy. With the strong order book position as of H1 and robust pipeline visibility, we are confident of revenue and profit expansion to continue along with a net cash-positive position as we step into the second half of this fiscal year.
Now let me take you through the key financial highlights. Our consolidated H1 revenue, which stood at INR1,327 crores grew 11% year-over-year compared on like to like basis excluding divested European entities. The strong order book position provides us a good visibility of revenue expansion. Our standalone revenue for H1 stood at INR1,159 crores. For the quarter, revenue on consolidated and standalone basis stood at INR700 crores and INR613 crores, respectively.
Our consolidated EBITDA for H1, which stood at INR184 crores grew by around 19% year-over-year compared on like to like basis, excluding divested European entities. We continue to maintain EBITDA margin in line with our medium-term outlook. These strong margins reflect our focus on efficient execution, a good mix of EP, industrial and international projects, as well as a growing share of revenues from O&M. Standalone EBITDA for H1 stood at INR171 crores. For the quarter, EBITDA on consolidated and standalone basis stood at INR103 crores and INR92 crores, respectively.
Our consolidated PAT for H1, which stood at INR126 crores with a PAT margin of 9.5% grew by around 31% year-over-year compared on like to like basis excluding divested European entities. Standalone PAT for H1 stood at INR108 crores for the quarter. PAT on consolidated and standalone basis stood at INR71 crores and INR58 crores, respectively. As you would know, we have been a net cash-positive group for the last four years consecutively. Notably, this quarter marks the seventh consecutive quarter that we have maintained a net cash-positive position, driven by disciplined cash and debt management.
As of H1, our net cash position stands at INR222 crores. Excuring debt on HAM entities, which is transitory in nature, considering our asset-light strategy, our net cash position stood at INR338 crores. We closed H1 with a gross cash position of INR645 crores, which consisted of INR294 crores in cash and bank balances and INR351 crores in term deposits. We are well-placed on the cash front to infuse funds into projects to expedite necessary progress and also we are in the process of enhancing our bank lines both from Indian and international banks to be ready with the non-fund limits to support the next wave of order book growth. We remained steadfast to our asset-light model, delivering a return on capital employed, ROCE, of around 18%. We continue to create long-term shareholder value, generating a return on equity, ROE, of over 14.5%.
Coming to the order book front. Our international business remained robust with 54% of H1 revenue delivered by overseas projects and international projects constituting 39% of our order backlog. We continue to build our O&M business with 41% of our order backlog coming from long-term O&M products. Our order book remained robust at over INR14,500 crores as of H1 with a healthy mix of EP, EPC and O&M projects backed by adequate payment securities. We will continue our emerging market focus on advanced technology projects, particularly in desalination, recycled and reuse and effluent treatment.
We have also identified future growth opportunities in ultra-pure water for semiconductor manufacturing, Solar PV and green hydrogen and also generating clean fuel from biogas, which will propel the Group through its next growth wave. Business development efforts are being invested on these opportunities and already the first success is witnessed through the desalination order for Indosol Solar. These opportunities are perfectly in our sweet spot of contributing to — to creating a greener, cleaner and bluer climate. We are deeply grateful for the trust and support proposed in us by our bankers, investors, Wabag and all stakeholders who continue to champion our vision.
With this, we’ll be pleased to open the floor for questions. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nidhi Shah from ICICI Securities. Please go ahead.
Nidhi Shah
Hi, thank you so much for taking my question. First of all, I’d like to congratulate you on the excellent order inflow that we’ve seen this quarter. I had a couple of questions on the new projects that we have won. Firstly, the Indosol plant, this 100 MLD is for the entire 10-gigawatt line that we’re putting or is it only partial and we can expect more orders from this plant?
Rajiv Mittal
So this is for the complete line. This will be implemented in about four or five phases as they keep on investing towards that. And that’s the reason the timeframe we mentioned will be over 38 months and after we have built this plant for the full 100 MLD, then our O&M period of 15 years start.
Nidhi Shah
All right. And on the [Indecipherable] order that we received recently what is basically — in India the order that we have received there, what is the financial for execution of that order?
Rajiv Mittal
As I mentioned in my speech earlier, it’s about 30 months.
Nidhi Shah
And is it for the 30 months, do we see that there will be, say, execution in equal parts, you say in 6 or 10 months loss or do we see that execution is heavier towards the second half?
Rajiv Mittal
It never projects of this magnitude and if you have been following the company over the years. The first part, which is 50%, 20% of the time, it’s normally for engineering it. And during that time, the numbers you see, the invoicing you see will not be proportionate. Then the pace comes up about 50% to 60% of the project time where things pick up, the construction, the supplies, and everything. And then again towards the end, 15%, 20% of the time, it’s the installation and commissioning phase, again, it will slow down. So it is like a slow start picking up and again slow end.
Nidhi Shah
All right. And also the company that we have received this order from…
Operator
But may I request you to please limit your questions to two? You may [Indecipherable] queue. Thank you. We’ll move to the next question, which is from the line of Mahirish M, an Individual Investor. Please go ahead.
Mahirish M
Thank you. Am I audible?
Rajiv Mittal
Yes, you are.
Mahirish M
Yes. First of all, congratulations for the order — orders one in this quarter and the visibility of the grade order book that we have in FY’25. I have noticed that we have been winning orders. The order book has always been muddy fold. It was around INR9,000 crores in FY’22. It has — it is almost — it has crossed INR15,000 crores now, but the execution has remained the same, close to a bit less than INR3,000 crores every year. So I just wanted to know the reason why the execution base hasn’t increased, the same as the order book. And what are we doing to increase the execution pace and what could be the revenues in the coming years?
Rajiv Mittal
Very good question. And that’s for all our business here. I think I’m sure the question you have is very valid for many of our other friends. See, as I said to the earlier participant that whenever we get an order as it is a design, construct and operation and maintenance, more than half of the — or almost half of our order book is because of operation and maintenance, which can only start generating revenues after we finish the construction and commissioning of the plant. Generally, it takes anything between 3 years, 3.5 years to complete the construction and commissioning of the plant.
So now we talk about the rest of the half of the order book or new orders even we get. The first 20-odd percent of the time, as I said will take to set up the project, do the site investigation to do the design, get the designs approved, then start ordering and then start doing the civil construction physically at site. So that is the reason you will see a little lag in the initial phases for any order to pick up. But post that initial 20%, 25% of the time, it picks up exponentially. And that goes on for the 50% to 60% of the time when construction is happening, equipment are getting delivered. And then again towards the last 20 odd percent when installation and commissioning happening, again, the revenues will come down.
So this is the nature of the business we are in and you will see that some of the large projects which we got almost a year back have finished that initial 20% period. And now it is picking up because the construction, as I said in my speech was in full swing, say, in Perur, in Chennai, the ordering has started, the orders will start getting delivered in the H2. So naturally, we’ll see the revenues picking up from the orders which we booked over the last one year. And orders which we have booked in this quarter, maybe it will take another two quarters to start generating appreciable revenues.
Mahirish M
Thank you. Thank you for this clarification. So what kind of revenue visibility do we see in the next two years considering the backlog of the orders we already — or we are going to execute in the next few quarters and then we start the maintenance for the same?
Rajiv Mittal
So this we have discussed with all of you when we had a physical meeting in Mumbai after our annual results in the month of May and earlier this year. And we had given a clear medium-term outlook. And that we said that we are very, very bullish on not only our order intake, but also the revenue growth and we had given a number of 15% to 20% CAGR for a medium-term, which is three to five years. This is the number we expect the top line to grow.
Mahirish M
Alright, thank you. Thank you very much for the answers. That’s all from my side.
Rajiv Mittal
Thank you.
Operator
Thank you. The next question is from the line of Aejas Lakhani from Unifi Capital. Please go ahead.
Aejas Lakhani
Yeah, congratulations team on the order. Mittal sir, I had two queries. First one being that if I take your revenue guidance of 15% to 20% for the year, you know that effectively means that the second half delivery of about INR2,000 crores in the second half. So could you specifically talk about your projects? You had mentioned in the last quarter, for example, of how two projects were coming on-stream where you are executing. Similarly, could you just sort of call out which projects are coming on stream, revenues of which you will book in the second half?
Rajiv Mittal
Yeah, I think earlier I said and to the — just before you, the participant, I mentioned that like the biggest project we have today in our order book is Chennai Desal project. So that will start now peaking. So for the next four quarters, you will see this project really peaking because that is where next four to six quarters, you will see lot of construction happening. Luckily, the monsoon is out of our way, peaking will start, the marine work where we have to go offshore, that should start early next year. Our equipments will start getting delivered from next quarter onwards. So lot of this will happen. Same will happen with our Pagla project in Bangladesh. It would have started a few months earlier because of the reasons known to all of us. A couple of months, there was disturbance and the work has to slow down. But luckily, everything is settled. We are back on the track. Our people are back on-site, work is happening.
Reliance projects, which we recently won. Reliance projects are always and always on fast track. We will see good revenues coming in. Indosol, at least the first phase we have a very challenging timeline to do the first phase and give them some water. So that will start peaking at least a part of that project. So this we are very hopeful and very rightly said that we expect H2 close to INR2,000 crores of revenues.
Aejas Lakhani
Okay. Got it, sir. That was very helpful. Sir, we had three HAM projects and congratulations on COD of one of the of the Kolkata project. So could you just call out now the — I mean, we had debt against all the three HAM projects. So has the HAM — the Kolkata project debt that we had invested, have we plowed it back? That’s point number one. And what is the stage of the other two HAM projects and when do you expect COD and when do you expect the release of our funds there?
Skandaprasad Seetharaman
Aejas, I think first to clarify, of the three HAM projects, two have been already divested, there is no HAM debt on our books. Number two, the way that the concession agreement works here is that we can plow our cash-out only at COD plus three years. So we have already invested only a small amount. We have explained it earlier also. Our strategy means that we take minority economic interest and we are there only to put our skin in the game, maybe 3%, 4%, of the project value is the maximum we invest. And this amount is also flowed back at COD plus three years. And, let’s say, our remit in the project or our interest in this project is only because we get the EPC and own them. We are a technical partner and there is a financial partner who holds majority.
So even in this case, we have breached COD and the financial partner has an option to buy us out at COD plus three. This is the same case for the other two HAM projects. Now out-of-the three projects, two are divested, there is no HAM debt. The third project also we will look to divest very soon. The first project has achieved COD, Kolkata. The second project Digha, Kankarbagh and the third project is Ghaziabad. Ghaziabad is largely complete in terms of the project activities. Digha also is in a very, very advanced stage of completion. So we would expect also to complete these projects in H2, more expected in H2. So our interest would be that all these projects are completed within this year at all. So that then we have three years of stabilization and we will flow back our capital.
Aejas Lakhani
Got it, Skanda. Thanks. Just a follow-up. So the INR117 crores of debt today is against Kolkata or all the three?
Skandaprasad Seetharaman
Only Gaziabad is consolidated today and that also once divested will go out. And that is why I mentioned in my speech, Aejas, that the debt if excluded since it is transitory in nature, our core business has close to a INR340 crore net cash position.
Aejas Lakhani
Got it. Thanks so much and all the best.
Skandaprasad Seetharaman
Thank you.
Operator
Thank you. The next question is from the line of Mihir Dhami from Sharekhan. Please go ahead.
Mihir Dhami
Sir, thanks for the opportunity. I had a few questions on financial line items. The employee of — the expenses has increased this quarter from the last — from the previous quarter and other expenses has gone down. Sir, particularly what was the reason for this?
Skandaprasad Seetharaman
I think the reason — as we had informed to the stock exchange few months back. This is our centenary year and the Board had approved an ESOP scheme for our employers for motivating and retaining them. So a part of this increase what you are seeing is because of the provision as per the rules we have to provide for the ESOPs which we have granted to our employees.
Mihir Dhami
Okay, so they are one-off in this than?
Skandaprasad Seetharaman
And also I think some of the other expenses which you are seeing is reduced is also because of the three European subsidiaries which we have divested. So some of the cost of those subsidiaries you are not seeing in this quarter.
Mihir Dhami
Okay. And on the working capital side, the payables have — it reduced this quarter because of some payments which are made. Do we see that having — do we see payable days continuing with this number? And also if you can give some guidance on the receivable days as well, would they remain at a similar number going forward?
Skandaprasad Seetharaman
See, Mihir, we usually H1 versus H2, if you see, H2 is the more stronger quarter. H1 is more in terms of putting in cash into the projects, expediting it because you know you have the monsoon, you have just off the budget. So there is requirement of working capital investment. And in any case, our payables have remained on track. We have been very timely in paying our vendors because we know that’s going to expedite the progress, number one. Number two, you will see that this will also pay off into the H2 when monsoons are done, deliveries of some of the projects which Mr. Mittal also mentioned will start — will start, construction can run at good pace. So this is a cycle. H1 versus H2, 40, 60 — 45, 65 is the usual mix of revenues and we have more pumping of cash in H1 and more recovery of cash in H2.
And because I think what you should also see here is despite this trend, we have even in H1, maintained a net cash position. We had about INR340 crores, if you see in March excluding HAM. And in September also, we have a similar number. So we have also managed that cash well. We have also improved the collection cycle. You will also see that the trade receivables have come down by 5% despite our revenues growing by 10%. So the cash cycle is improving, the vendors are being funded for progress and you would see that H2 revenue expansion will also start as a result of this.
Mihir Dhami
Okay. Thanks, sir. That’s all from my side. Thank you.
Skandaprasad Seetharaman
Thank you, Mihir.
Operator
Thank you. The next question is from the line of Chirag from Neo Asset Management. Please go ahead.
Chirag Khasgiwala
Yeah. Hi. So I mean if you — as you just explained regarding the working capital positioning. So if you look at your operating cash flow, that has continued to remain a negative territory. Given all the working capital investment that you are talking about, is there any roadmap to bring this operating cash flow in the positive territory or it will continue to remain negative?
Skandaprasad Seetharaman
See, I think history is testament of what we deliver. You have seen in the last years, we have generated free cash last three, four years you can check even in present history. We have generated free cash, we have generated operating cash and I have explained H1 versus H2, usually this is the case. Look at it at a full-year basis, you will surely see that we will generate cash, number one. Number two, as I said, the vectors, trade receivables reduction, you are seeing cycles improving. H1, you have to invest cash. This is the nature of the business that contractors have to be fed to keep the projects ongoing. And we’ve also still kept a net cash position. That means on an overall basis, we are doing well from the working capital front, considering the context.
But yes, you should see it on an annual basis. You should also see — compare how historically we have done. We have generated free cash and we will continue to generate because that is the core of our business.
Chirag Khasgiwala
So for execution of the future projects, are you sufficiently funded or will you be required to go for fundraising?
Skandaprasad Seetharaman
We have INR600 plus crores of cash, Chirag, and we have cash — liquid cash in our bank, which will fund the projects. We have long term deposits of INR350 crores. I mentioned this in my call — in my speech, which we will use at appropriate time. We have INR4,000 crores of bank lines. We can go — we have already applied for another INR1,000. We came to the shareholders for enhancement this AGM and we have an enhanced unit of up to INR6,000 crores. So there is enough and sufficient buffer for all the order book growth that we are envisaging. We don’t need to raise any cash.
Chirag Khasgiwala
And lastly, sir, as you have been guiding that your revenue could go by around, 15%, 20% CAVR over the next three to five years. But on a quarterly basis, if I look this last quarter, so the revenue growth has been just mid-single digits. So this quarterly — I mean variation will be there or is it something one off?
Skandaprasad Seetharaman
See, I think we have explained enough this change. We are not into a consumer business as a quarter-on-quarter company. That is the reason we have not even given an annual guideline — guidance. We have given us medium-term guidance for three to five years. So if you track the company that way and as we said that you will see the growth over the next two quarters and H2, you will see that we achieved this 15%, 20% number which we have given and we expressed our confidence. Yes, we know we have to achieve INR2,000 crores revenue in the next two quarters and we are confident of it.
Rajiv Mittal
And just to document Mr. Chirag, you have seen our investor presentation, you’ve seen in the last four years, our PAT has grown at a CAGR of 45%. We concentrate on profitable growth. Sales is a consequence, but profitable growth, cash growth is what we focus on and that is what is our strategy to deliver on.
Skandaprasad Seetharaman
And also, we had mentioned earlier that our strategy is to move away from EPC to EP. So we may see a little subdued top line. In spite of that, we are still given an outlook of 15%, 20% growth because what we are as a technology company, we excel in advanced technology where we hold the patents and trademarks for more than 125 products and processes. This is what we want to leverage and improve our margin and working capital and we have demonstrated that in the last few years.
Chirag Khasgiwala
Okay, thank you.
Operator
Thank you. The next question is from the line of Jaynam Jain from ICICI Securities. Please go ahead.
Jainam Jain
Thank you so much for taking my questions. Sir, can we expect the margins to touch 15% in FY’25?
Rajiv Mittal
Can you please repeat your question?
Jainam Jain
Yes, sir. Can we expect the margins to touch 15% in FY’25?
Operator
Sorry to interrupt you, Mr. Jainam, but your voice is not audible.
Skandaprasad Seetharaman
Okay. Ridhi, I’ve got the question. Jainam, we have guided a 13% to 15% EBITDA margin and this is for the three to five year period and we are confident and comfortable that we will be in this range.
Jainam Jain
Okay, sir. And how is the Italyst market looking like in terms of orders?
Skandaprasad Seetharaman
Can you complain about this market? There is enough and more. It is so abundant that, I mean we are lucky to choose projects which are in our sweet spot.
Rajiv Mittal
And this we had also mentioned we were also lucky as India was going through general election, we expected a slowdown in India for two to three quarters and we could shift some of our resources to this market. And you can see the results, the resources which we shifted timely to the Middle East market is giving the necessary results what we expected to give. So I think, of course, we were smart to shift it, but we were also thankful that the country was going through a general election.
Jainam Jain
Okay, sir. And sir, how does the margin profile looks like in the new order that we received during this quarter that’s pertening to 300 MLD plant in Saudi?
Skandaprasad Seetharaman
See, we don’t do a project-wise margin guidance. I think if you have been in the previous calls, we’ve always said that we pick projects only which meet our threshold margin requirements. We are in more desperation to pick projects for the sake of top line. We want advanced technology projects. We want good cash flow projects. We want projects to be in the emerging markets and with adequate payment securities, either backed by multilateral, backed by bilateral funding, sovereign fund, or letters of credit. These are our criteria. And any project that we picked will meet a certain internal threshold margin and you have seen in the past years how our contribution margin and EBITDA have grown, this project will be more different.
Jainam Jain
Okay, sir, that answers my question. Thank you so much.
Skandaprasad Seetharaman
Thank you.
Operator
Thank you. Thank you. The next question is from the line of Dhiraj Ram from Ashika Institutional Equities. Please go ahead.
Dhiraj Ram
Hi, sir. Thank you for the opportunity. First of all, congratulations for…
Operator
Mr. Dhiraj, may I request you please speak a bit louder.
Dhiraj Ram
Can you hear me now?
Operator
Yes, please go ahead.
Dhiraj Ram
Yeah. First of all, congratulations, sir, for the fantastic result. So just wanted to know what is the amount of client retention money that is expected to be released in H2 FY’25?
Skandaprasad Seetharaman
See, there are — this is a cycle, Dhiraj, at least two, three projects which where we see retentions are there should get liquidated I mean, if it’s okay, I have — you can connect with the team to understand it a little better. I don’t have a number off the cup now, but our team can help you.
Dhiraj Ram
Got it, sir. And one last question. Sir, are we facing any receivable delays from this particular Senegal project?
Rajiv Mittal
Not at all. This is again a multilaterally funded project and this project as soon as the work is certified by our client, our bills are sent to JICA, Tokyo, and the payments are received directly from JICA, Tokyo.
Dhiraj Ram
Got it, sir. Got it. Yes, sir. That’s it. Thank you. All the best for the H2.
Rajiv Mittal
Thank you.
Operator
Thank you. The next question is from the line of Harshal Parikh from Equitas Capital. Please go ahead. Hi, sir. Thanks for the opportunity. My question was mainly related to our domestic execution. So if I see this quarter, we de-grew by some 7%. Is it related to election-related execution issues or there is anything specific that we would like to disclose?
Rajiv Mittal
See, also you have seen a trend. Our order intake has also moved more internationally. So naturally the revenues will also come more international. This is obvious. So there is no delay in India and we have not seen delays because of election because there was adequate budgets available. So whatever we have executed, we are getting paid as per our expectation.
Harshal Parikh
Sir, my question was that the domestic revenues have de-grown by some 7% in Q2. So I understand the international mix going up because of higher-growth in international. Sir, my specific question was on the domestic revenues being de-grown.
Rajiv Mittal
See, domestic revenues can only grow if our order backlog will also grows. Here our order backlog has not grown to the same extent as international order backlog. So naturally, you will see the international revenue growth will be higher and maybe the Indian degrowth will happen. And as my colleagues, Skanda mentioned that this second quarter is always a little difficult quarter from two points of view. One, the construction activity is slow down because the country is going through monsoon where the construction gets slowed down. Second, also the budgets are getting approved towards the April, May and finally they get implemented. So the speed of that execution because of budget is also a little bit slower. Always in the second quarter, you will see this happening.
Skandaprasad Seetharaman
And I shall just to supplement Mr. Mittal, you also kind of explained earlier, it is also the stage that the project is in. And we are not a quarter-over-quarter company. We could have projects in procurement phase in the last year. They are maybe in the installation and commissioning phase this year. So it depends on the mix of projects and the phase in which the projects are. One is the international project mix and second is also you have to see us more on an annuated basis. Look at us more in a one, two, three year range at least instead of just looking at it quarter-to-quarter segmented so much.
Harshal Parikh
Understood, sir. Thank you. Thank you.
Skandaprasad Seetharaman
Thank you.
Operator
Thank you. The next question is from the line of Omkar Chitnis from Trade Brains Private Limited. Please go ahead.
Omkar Chitnis
Sir, my first question is, with operations spanning across multiple countries you have, how are you managing geopolitical risk that might impact present executions and profitability in the coming future? And what are the regulatory challenges you are facing in different countries as of now?
Rajiv Mittal
As you know, Wabag has been a multinational company and for decades we have been doing this business, somehow we have mastered this part of managing this geopolitical risk, simple rather than giving too much detail into our business USPs like we do. Simple is we take the payment security, like as Skanda mentioned earlier we take contracts where the payment guarantees there, like multilaterals are told that some of this, it goes to Tokyo and JICA is paying directly, it is not coming through local governments. So that is number one. Second, we take sovereign guarantees like Saudi Arabia, it’s directly the Government of Saudi Arabia who’s placing these orders on us and they will pay us directly.
Thirdly, where we don’t have both this available, we go for letters of credit, plus we always try to split the contracts to the extent possible and between offshore and onshore. So we try to take a local currency for onshore activity and we take in US dollar for offshore activities. So that also protects us against currency risk, payment risk. And we have seen over the years that this strategy has fully worked for us and protected us against that. And where we find that there is some risk, the Indian government provides us with each PCGC coverage for the projects, which provides us again both the commercial risk and the political risk. So these are some of the instruments we use to mitigate this risk.
Omkar Chitnis
Okay, sir. And my second question is, are we expecting any projects in energy generations like in thermal of nuclear from PSU companies in India over the upcoming financial years?
Rajiv Mittal
Are you asking us whether we would get into this?
Omkar Chitnis
Are you expecting any projects from PSU companies?
Rajiv Mittal
From PSU companies?
Omkar Chitnis
That is thermal and nuclear wastewater management.
Rajiv Mittal
Yeah, if you are talking about the PSU companies, yes, I think we see some traction starting on again thermal, okay, and thermal plants need a tremendous amount of water and there is a clear guideline from Government of India and NITI Aayog that all these plants will have to use to recycle water for their car plants from a sewage treatment plant, which is in the radius of I think 25 or 50 kilometers, okay. So if they are going for expansion, they are not going to get fresh water, they are going to depend on recycled water. So naturally, these are all going to give us a tremendous business to provide them water, which is the core of our technology recycle of water.
So this is what we have done. And if you see other oil and gas sector, companies like IOCL, companies like MRCL, they are investing in the growth. As we speak, we are working for a few projects in IOCL where they are putting up the additional capacities and additional lines. Same is with MRPLs, they have gone for desalination plant to have a water security. So yes, we do work with PSUs and have successfully executed these jobs.
Omkar Chitnis
Okay, sir. Thanks, sir.
Operator
Thank you. The next question is from the line of Dhruv Joshi from Nuvama Wealth and Investments. Please go ahead.
Dhruv Joshi
Hello. Yeah. Thank you for taking my question. I just had one query on the future prospects of the business that we’re getting into. So primarily, we had tied up with peak sustainability ventures where we are planning to establish about 100 CBG plants. Just wanted to understand when and how much can this contribute to our business.
Rajiv Mittal
It’s not about again a top line. It is more about our commitment to sustainability, our commitment to climate change. This CBG plants are not which are going to give you a huge top line, because what we are trying to do, okay, this is the value adder for such plants is getting this power of fuel, which is green, clean, and sustainable rather than going for conventional thermal fuels. So we need to reduce the greenhouse gases to have a cleaner environment that most MOC is there. So that is where we are coming in as a sustainability company. And I think this plants we have started educating the clients to see that it is also a win-win for them. There is in it something for them also, not only for us. So I think that is working very well. There are at least four projects which have moved well. I hope in the next few quarters, we will be able to announce a few orders based on this CBG technology what we have.
Dhruv Joshi
All right, sir, that’s basically what I wanted to know. Thank you.
Operator
Thank you. The next question is from the line of Samarth Kandelwal from ICICI Securities. Please go ahead.
Samarth Kandelwal
Hello. Yes, thank you for taking my questions. Sir, most of my questions are already been answered and you have answered them very patiently. Sir, I wanted to understand how ultra-pure water would be different from the current desalination water that we are supplying?
Rajiv Mittal
See, ultra-pure water is an ultra-pure water. Now obviously there are industries which need ultra-pure water is growing. Take an example of semiconductor is growing at a brisk pace. Example of PV, it is growing at a brisk pace. The new line-of-business, which is green hydrogen, which is again growing swiftly and very soon it will be economically viable. All this needs ultra-pure water. What is ultra-pure water? Ultra-pure water is like a distilled water where you do not have salts, inorganic salts in the water, we remove those salts so that it does not result in scaling, scaling of your cell, scaling of your electrodes. So does the life and efficiency of your plant goes up. And that is what we — is our business like desalination, we have 40,000, 50,000 of salt in a seawater. We bring it down to 200, 300 and now ultra-pure water we will have to bring that 200, 300 down to what is required by clients somewhere insist for 5, 10, 20, that is what we say is ultra-pure water. We see a huge transaction in ultra-pure water, UPW, as we call it short form and you will see in the next few years, this business will really pick up globally.
Samarth Kandelwal
Okay, sir, that was very helpful. Thank you, sir. And all the very best.
Operator
Thank you. The next question is from the line of Kaushik Poddar from KB Capital Markets. Please go ahead.
Kaushik Poddar
This year going by the figures you have supplied, it looks like you’ll be getting INR8,000 crore-plus worth of orders. Can we have similar run rates for next few years?
Rajiv Mittal
Why not as we are now in Middle East, we say Inshallah, God willing, why not?
Kaushik Poddar
Okay, okay, okay. Yeah, in that case, your guided the level of three times your order — three times your turnover being order book, it will be exceeded by a substantial measure.
Rajiv Mittal
I think that’s good.
Kaushik Poddar
Okay.
Rajiv Mittal
We over-deliver than what we commit.
Kaushik Poddar
So can we take it that whatever the table you have given at the end of your presentation, these are the medium-term goals? That is your — I mean that is the minimum we can expect.
Rajiv Mittal
I think we are not saying that, but I’m sure you’re smart enough to make your judgment.
Kaushik Poddar
Okay, okay. Thank you. Thank you. That’s it.
Operator
Thank you. The next question is from the line of Basant Bansal an Individual Investor. Please go ahead.
Basant Bansal
Yeah, thank you for taking my questions. My — when I see your segment results, I see that the margin on the rest of the world is increasing, whereas on the India operation, it is coming down. So last year, that is September ’23, the margin was around 24%, which now stands at around 14%. So can you give some color on it?
Rajiv Mittal
See, India is a mother company. So there are a lot of corporate expenditures which are booked in India. And because we don’t wake up so much on India and international because we are permitting consolidated results and if the revenues of India are coming down, our overheads will not come down proportionally because some of the overheads are fixed, okay? So that should not be at all a concern area. Those overheads will remain. That doesn’t necessarily mean the project margins are coming down.
Basant Bansal
Okay. Got it. And second question is your billion in the rest of the world is all into US dollar or they are into different currencies?
Rajiv Mittal
Some of them — or most of them is US dollars, but some of the subsidiaries that we have in the Central and Western Europe like Austria and others, they do billing in Euro.
Basant Bansal
Okay. And how do you raise your receivables?
Rajiv Mittal
Sorry?
Basant Bansal
How do you raise your receivables? I mean from foreign currency fluctuation point-of-view, how do you raise your foreign currency receivables?
Skandaprasad Seetharaman
We do a lot of imports also and also we buy or also we borrow in foreign currency, packing credit, foreign currency. So there is a natural hedge that is created and hence we don’t have too much that is left unhedged. So what the packaging is not — I mean, it’s a natural hedge. You don’t need to typically hedge your receivables.
Basant Bansal
Okay. Okay. Thank you very much. That’s all from my side.
Operator
Thank you. [Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Mittal for closing comments.
Rajiv Mittal
Thank you. Thanks for your active interaction. And I thank you once again for your participation in our Q2 H1 FY’25 earnings call. We have uploaded the analyst presentation in our website. In case you have any further queries, you may get in touch directly with Adfactors our Investor Relations Advisor based in Mumbai or you can also get in touch with us directly. Thank you. Bye for now.
Operator
[Operator Closing Remarks]