VA Tech Wabag Limited (WABAG) Q4 2025 Earnings Call Transcript

VA Tech Wabag Limited (NSE: WABAG) Q4 2025 Earnings Call dated May. 23, 2025

Corporate Participants:

Rajiv Mittal — Chairman & Managing Director

Skandaprasad Seetharaman — Chief Financial Officer

Shailesh Kumar — Chief Executive Officer of India Cluster

Unidentified Speaker

Analysts:

Unidentified Participant

Mihir Dhami — Analyst

Anupam Goswami — Analyst

Vikaram — Analyst

Divesh — Analyst

Omkar — Analyst

Presentation:

Unidentified Participant

Hello here hello everyone we in me to bank and, all of whom taking entire not to be able to be art. I love this lot of attention. A little overview about just found him in 1924. Today, as we speak is a pure-play in financial mode to the change of the technology. As a market-leader in the sector, its operations are spread across all and in 25 countries.

Ranked one of the top 15 global climate operators. And global DC. The company successfully delivered over 1,500 projects over the past 25 plus years across drinking of England water management systems, the Group has played a pivotal role in shaping the landscape of the water sector, while resiliently weathering the ups and downs of the markets over decades.

The brand, the century-old legacy and delivering innovative, affordable and sustainable water solutions touching billions of lives across the world. It is a pleasure to host all of you for this informative and interactive session with the senior management of. From the leadership team, today we have Mr Rajee Mehta, Chairman and Managing Director; Mr S. Raja, Director and Chief Growth Officer; Mr, Chief Financial Officer; Mr Shailesh Kumar, Chief Executive Officer of the India Cluster; and Mr Rohan Mittal, Head Strategy and Business Growth GCC.

Before we begin, I would like to add that presentations and discussions during this meeting may contain certain forward-looking statements about the company and the Group, which are based on beliefs, opinions, expectations as of date. These statements are not a guarantee of future performance and may involve risks and uncertainties that may be difficult to predict. So without much further ado, I would like to now request Mr Rajiv Mittal to kick-off the proceedings.Thank you so much and looking-forward to a wonderful interactive and informediate session. Over to you, Mr Mehta. Thank you.

Rajiv Mittal — Chairman & Managing Director

And good afternoon, ladies and gentlemen, and thank you for taking time to come and be with us, share your views, share your comments and we also get your expectation and suggestions. This is something we do once a year where we come face-to-face with all of you. But other 3/4 we do it on a con-call and we find this very helpful that we could interact with you personally and take your comment suggestion on-board.

As we do every time, we do a small presentation to give you what has been our strategy and also for people who are first time coming to this session to give them a little bit about the company and the strategy of the company, which we have adopted about three to four years back.

Then of course, our CFO, Mr Skandhar Prasad Sitaram, he will go on to go with the financial numbers and some of the commercial issues. Then Mr Sailesh Kumar, who is our India Cluster’s CEO, will talk about India business, India Cluster business and Rohan, who is Head of Strategy for GCC Countries, he will talk a few slides on how the GCC business is shaping us because going-forward, we recognize that this Mia cluster, which is one of the three clusters we have is going to be the next growth engine. We are moving towards it and the expected results are coming, unfolding, which we are sharing with you. So we are very bullish about this MIA sector going-forward and this will help us to reduce the reliance on India Cluster.

So let’s start with the presentation this is a standard statement has already created and this will be the agenda of our presentation I will explain to you little bit about the Baba Group we will talk about as some of you would know and last year we mentioned it we feel very fortunate that we are the ones who get a chance to celebrate the centenary year of the group.

We have just completed 100 years and we have been celebrating and also giving the thanks to all the stakeholders across the globe. That Thanksgiving session we are finished in all four regions where we are, Asia, Europe, Middle-East and India. So we have had four events which we have used to give our thanks and appreciation to all the stakeholders who have enabled us to reach this milestone I think this is again a slide which gives a little bit details about the Group.

And I think as most of you know and Savli mentioned, we are a pure-play water company. There are very few companies who have this profile of what we have not only in India, but globally we are a one-stop shop in terms of water. But other than water, we don’t do anything and neither we aspire to do anything. We are Happy to remain a pure-play water company. We see more than adequate opportunities there, which is growing every day, both India and globally. So we are very convinced there is enough business to grow and meet the aspiration we have without diversifying into other areas which is not our core strength. We are best-in water and we want to use that strength in our future growth. Sustainable solutions, you all come from investment community. You know sustainability is a big topic. Green is a green, all these are big topics, circular economy. And this is where your company is right in the thick of such things where our business is only doing that. We don’t have to do any special effort to be in this sustainability circular economy, resource recovery, reducing the greenhouse gases, Climate change, exactly we do this for our living, this for the business which we run. This is very important that you know this and there are lots and lots of funds, which are specialized funds who are approaching us with a view to invest in this kind of companies, which they don’t find many. And we also see that there are lot of investors who are focused on these topics. We are an Indian multinational with presence in over 25 countries, close to about 2,000 employees globally. Most important is we are a technology company. We invest in our R&D. Not many companies in India do that. We have been doing it for ages and we continue to do that. We do both in Europe and in India, this development exercise and this has worked very well for us today. We have more than 125 IPI rights, which we use it for our proprietary projects. We don’t license it, we don’t sell it. It’s only used for projects where we are working on it. Our order book is very robust. You will see it in our financial presentation also. It gives us a clear visibility of next three, four years so that the predictability is there. We don’t have to book orders to give the revenues and the bottom-line and the cash flows. We have enough order to execute over the next three to four years. I think another important thing which we feel very proud of is manufactured water. Last-time also I briefly explained to you what is manufactured water because you would say that manufacturing water is the bottle what you have on your table. To me this is not manufacturing water. This is bottling water. They don’t manufacture water, they bottle the water and then what is manufacturing water? Only God has a proprietary rights to manufacture water whether it comes from our glaciers or it comes from a rain, this is the water which is God given. Now question is can we support the almighty in meeting this increasing demand or we are going to load God and keep praying to give us more rain and more glaciers water. So we have taken a position that being a water manager, it is our equal responsibility to find alternate sources of water. It cannot be only the glaciers, 3, Gango 3, Jo Pani Aiga, yeah,, Pani Aiga, that is the only water we can get. We say that let’s work on water which is normally not usable, not portable and make that portable. So what is that water, which is today, water is there, but it is not — can be used. One simple example is we heard and we listen to it water everywhere but not a drop to drink. That’s the big ocean. See, India has a 7,500 kilometers of coastline and this water, the sea water is a perennial source of water is completely drought proof even in drought you will have sea water. Now only you need technology to convert this salty water or sea seawater to a portable sweet water, which can be made portable. And that is what today your company is globally top three to convert this water to a our drinking water. So this is called manufactured water. We are not bottling it. We are manufacturing water. We are bringing water from a non-usable, non-portable source and making it portable. That way we are reducing our reliance on groundwater, rainwater and that is what we are proud of and that is what is expected of a water manager to reduce the water stress. What is the other source which is giving you manufactured water? All the used water, which goes from our houses, from our offices, from your washrooms, from your kitchens, from your showers this water is not used so-far it was just dump open rain you have rivers you have sea it just enters there on key cleaning program Ganda kisney Maliki clean key is the absolutely crystal-clear water now on the way we are responsible to put all dirty things into the river or Ganga to Hamari firstnelia are a project we have number of projects, More than a dozen projects where we clean Ganga and Ganga cleaning is not taking the river water and clean. Cleaning means you don’t allow dirty solid waste or liquid waste to enter the river. And Ganga will remain clean as it is at Ganga 3. So that is the job we do we tap all those streams which are entering and making it dirty we take it to a treatment plant and clean it and what we do we just don’t clean it and dump it again. I told many years back, 15 years back that water is too precious to be used once. Let’s understand it’s not an infinite resource. Water is a limited resource. Use it with respect, conserve water. And that is the reason I said it’s too precious to be used once. It has to be reused. And I always say it’s a used water, it’s not waste. The moment we say waste, our graces, things is a waste or scope. I don’t say it’s waste, it’s just used. You have used it, you want to reuse it. And that is the technology we are top globally again where we have technologies to get portable water, I repeat portable water from used water. There are many plants globally. We were the first company globally to have a direct portable reuse. This is in Namibia, capital city of Windu, 25 years back and people last 25 years for generation have been drinking this water and they are healthy. So that clearly demonstrates you have a technology, it’s been tried, tested and used. And that is the next alternate source of water we have created. Again, drought proof, as long as we all are there, we’ll continue to use water, whether we brush our teeth, we wash our face, we take a shower, we use our washrooms, kitchens are used, water will be produced and that water is an asset I repeat is an Asset is not waste and that has to be reused. And that we have demonstrated even recently couple of weeks back, we were in Paris where the biggest Water expo happens and that’s where we got award for one of our projects in Ghaziabad, which is a water reuse project. At the global forum, our project in India was recognized and awarded and that is where the globe is going to and that is what we mean by manufactured water, okay again you see sustainable development, the goals are there, UN had come up with SB key goals and water is right in the thick of the things. And that’s where your company has the sustainable goals is our goals and also ESG. We don’t have to do against something special. Our normal business will take us to meet the SDG goals and also ESG goals. And that is where whether we are in our projects or in our service business or operation and maintenance, we try to reduce waste, reduce the power consumption to recycle and recover most of the water and solid waste so that it’s a completely a circular economy with a resource recovery and not generate more waste. The next one is our board, the top row. You see Mr here and the second one is our senior management team. Ms Kandhar Prasad, our CFO, is here., our CEO, India Cluster is here. Could not come. He is heading our Europe cluster and then we have Rohan, who is handling the strategy and heading the GCC this is our client and as you would see most of the names you would expect are there, whether they are industrial clients or municipal clients globally. But more important, I want you to see at the bottom of the slide, you see the funding agencies, the ADB, World Bank, IFC, KFW, all these agencies, when they fund you, I’m sure you know, they have a very elaborate due-diligence process, legal, environmental, all that they do and see the governance of the company, the management before they put any money into it. And that’s something we have won the confidence of such global multilateral companies or Funding agencies who have funded us either in terms of loan or in terms of debt for our special projects or just funding the projects to the government. So we have worked with all of them and most of our projects today are funded by one of these agencies. Next slide, you will remember this, this is after some time over four, five years, we had given you a guidance. And this is the guidance we have not given for one year because we believe the project business is not a quarter-on-quarter or year-on-year business. It is at least a medium-term and that is the guidance we gave you last year, same time, same room for next three to five years. And you have seen and I’ll show you the guidance which we have given for next three to five years where we stand with respect to the performance we have achieved in the very first year. Now these are the slide which talks about our long-term goals. And today, as we have discussed earlier, we are a global leader. We are not a national leader. Today, at the global level, we are recognized. We started as a small startup with six guys 27 years back. And in 27 years, we have become an institution, a cooperation with a global recognition and global footprint. More than 25 countries we are present. And that today we are growing that market. We are coming out of markets which are stagnant, are not growing and mainly we are focusing on emerging world. We are today the most valued company globally. We try to create wealth for all the stakeholders, collaborate as I said, with multilateral agencies and other partners and try to increase the institution holding in the Group. We always aim for growth. Growth is just not growth of top-line or bottom-line, we Call-IT profitable growth, which means that our profits should grow faster than our top-line. And that you have seen in the last three to four years, We have consistently demonstrated that our bottom-line is growing faster than the top-line and that is what we want to continue to focus on. We talked about sustainability and circular economy. I’ll not repeat that. We also talked about how we advocate efficiency improvement with our R&D, new technologies, which reduces the life-cycle cost of producing water and develop both proprietary processes and equipments. And obviously, our business is all about human asset. We say we always have two assets only. You know we are asset-light company, so we don’t believe in asset ownership, but our two biggest assets, which keeps us going, one, of course is our technology basket. That gives us a huge advantage in the market where we have proprietary technology. We don’t have to go and out for new technologies, buy technologies, collaborate with somebody, license from somebody. We have — most of these technologies are proprietary to us. The second asset we have in the group is our human resource because all the knowledge and experience resides in people. So for us, that human asset is very important, very precious for us and we do everything to keep them motivated, keep them engaged and hence, we also did a survey and we are treated as one of the employer of choice. The next one is our strategy which we told you before also with the and this is what we implemented it from FY ’22 onwards. So, ’22, ’23, ’24, this is the fourth year and you have seen the performance since we implemented this strategy, how the things have changed, how the complete turnaround has happened. So we believe in it, we are on it and make sure that we stay on it another — at least few more years to come till we find something better to do. It’s a very heartening to say that we are in our centenary year looking at our cash position and the performance, Which has been the highest-ever historical best 4th-quarter, historical best annual performance, historical best order backlog, historical best cash. We have almost close to INR1,000 crore gross cash-in our balance sheet. We have more than INR700 crores net cash. We have more than INR350 odd crores free-cash. So in last three, four years, I’ve been telling you we are conserving cash to invest in our finance projects like HAM or Boat, which we have done already four, five projects. So this year with such a fantastic performance and having so much cash, our Board had no hesitation in saying we can afford and we should reward our shareholders and they have agreed to give 200% a dividend after four years and we are happy that this is happening in our centenary year. So very pleased with the decision on the Board and I’m sure this Will go for voting where you all will have to do and you will be kind enough to vote for it so that we can share this dividend with our shareholders. So with that, I would like to pass-on to our CFO, Mr Skanda for his financial performance.

Skandaprasad Seetharaman — Chief Financial Officer

Thank you, Mr I’ll quickly take you through the slides relating to the strategy and finance, which will cover our performance in-line with our strategy, in-line with our medium-term outlook and also a slippet of this year’s performance. So this was a strategy that we brought out and explained to all of you over the last three, four years.

There are five broad pillars, go-to-market, building teams that will go-to-market on an agile way, nimble way and develop projects, O&M looking at building the O&M to 20% of overall revenues, which will give stability, predictability, cash flows, low-risk, low asset model. EP, industrial and international, primarily the margin and EBITDA kickers, which will EP derisking us from construction, industrial giving us technology appreciation,

International giving us geographical diversification and all of these helping us climb the bladder. Fourth is partnerships being asset-light, we do not want to own things which we do not need to own, people, technology, this we’d like to have on the books, but not assets on our books, while not compromising on the business.

So we work on construction partnerships to help in our EV projects, financial partnerships to ensure we remain asset-light, but relevant in the capital projects market and technology partnerships wherever required to use technology other than what we proprietary own more than 125 IPs. So we collaborate to ensure that we are able to succeed in the strategy without having to compromise on our. Global delivery centers, we are spread around the world in over 25 countries.

That means the hub-and-spoke model is important to be implemented, having excellent centers in regions which are competitive and having execution centers where the jobs are actually executed on-the-ground, we have found a way to make this a good mix to establish engineering proposal procurement centers while putting the construction team and the front-facing sales team on-the-ground to get us jobs and execute the jobs. Now against this strategy, over the last four to five years,

This has been the performance. We have — we have been able to reach every metric that we envisage to reach, whether it is industrial, where we said that we will be around 30% of our overall business. We are at 28%. Industrial — international, we said we will progress over the four, five years to get to 50% or more. We are well on-track.

We are at 41% in terms of average. EP, we said we will derisk ourselves from construction, more than one-third of our EPC revenues come from EP denominated projects. O&M, we are on-track to get to the 20%, which is our medium-term target to have O&M revenues at 20% of our overall revenues. And you can see all the return metrics, ROCE, ROE, EBITDA, PAT, all of them have near doubled or more than doubled. We have generated free-cash flow, as Mr Mittal mentioned, in this year of INR353 crores. A gross cash position we ended with of almost INR1,000 crores and a net cash of INR700 crores. So this strategy has been successful, very successful for us to get to a position which we envisage,

Which puts us in a very good track for further growth. This is a summary of the Q4 and FY ’25 results. This year has been a historic high on every single metric that you see on the screen, whether it is quarter or year, highest-ever order book position, highest-ever sales, highest-ever EBITDA, highest-ever PAT, highest-ever net cash and highest-ever free-cash flow. And on the return metrics, we have delivered that 15% on ROE while continuing to remain

Operationally efficient by delivering a working capital days of 110. Our PAT at 10% and EBITDA at 13% is in-line with the medium-term outlook that we had given to all of you. And with this, you can see that even externally, our credit rating has been upgraded to double-A from A, especially I would believe that you all understand from an EPC company’s perspective, AA is gold standard. You require a lot of things going your way and discipline to get to a AA.

Usually it is an A or lesser when it comes to EPC companies. So we also did the non-binding equity partnership to establish a municipal platform for capital project investments, again in-line with our asset-light strategy, while remaining ready and relevant for accessing hand jobs without having to go for each job to a new investor. The year we had an order intake of around INR6,000 crores and we are a preferred bidder in jobs worth INR3,000 crores as we speak.

This is our closing order backlog position and here you can see whether it is from an EPC O&M mix, a municipal industrial mix and India ROW mix and the growth year-over-year, it is very satisfying. We are on the right track. We’d like to keep the ROW more towards the 50%, which we are working. The municipal industrial in the 70-30 band, again, we are working towards that. And the EPC O&M backlog, the 43% O&M gives a very strong predictability for future revenues and close to INR7,000 crores INR8,000 crores of EPC backlog will be very well enough for the next two to three years of revenues.

Now this was the medium-term outlook that we gave last year, which is a multi-annual outlook. As a EPC company, there is no point of us giving you an annual outlook. We believe in decade and views for a business like this. So on a three to five-year scale on the first-line, first row, you see what were the targets that we gave. On the second-line, you see what we have performed against those targets. And you can see almost on every single parameter,

We have either achieved, surpassed or in the direction of the target that we had given. I think you — it is important also to understand that this is a five-year range that we had given and right in the first year, we have been able to strike in most of the parameters that we gave you as a target. This is an important slide which shows the transition for us. From years of being net-debt, we moved to a net cash company, but that was not enough for us.

We wanted to keep improving on the net cash position. And here you can see over the last five years from a net cash-positive position of INR44 crores that we had in March ’21. We are today at INR705 crores, which is a 16 times improvement over a five-year period, clearly demonstrating the kind of changes we have brought in-line with strategy, whether it is how we execute, how we collect and what kind of quality of jobs that we are taking.

All of these are demonstrated in a single slide, which is the most important metric for us because sales, margins, orders, these are all consequences. I think the business is strong enough to do it, but this is where the real operational efficiency indicator is. Thank you. Thank you very much. I will now leave the to Mr. Shailesh to take Take you through the India cluster presentation.

Shailesh Kumar — Chief Executive Officer of India Cluster

Thank you Ms good evening ladies and gentlemen. I will be covering basically three aspects, the prospects, potential of the Indian cluster market where we operate in. Second aspect which we would be talking is our robustness, agility, our strength, our competitive edge. That is what helps us in performing better and I’ll also give you update on some of the key projects that we are executing.

So first of all, as we was the fourth largest global economy, both sectors, social sector and industrial sector is definitely powering the economy. And as a part of that, we see a lot of potential. The government’s flagship program of Namami Gange, her Javan Mishan, then Amrud Bharat all are throwing immense potential for us and we are working on many facets of it to come to our way in terms of delivering the business on them.

While we are working on the social sector, our industrial growth is at its peak. Today, the country’s power generation capacity is around 240 gigawatt and in next five years, we are going to add something like 80 gigawatt. And as you all know, power sector is a water guzzler. In next three, four years, that is the humongous amount of investment is going to happen. We have started talking to people, people have started talking to us and we see a lot of prospects in power sector.

As we all know, by 2050, India’s energy demand is going to double. And from that point-of-view, refining and petrochemical sector, that also is poised for around 25% growth. Today, the country has a refining capacity of 80 million metric ton per annum, which is going to go to 98 in next four, five years. And that is again fueling demand for water and that doomed tail with petrol chemical, what we see in refining and petrochemical sector is their demand.

And that is water desalinated water and treatment all are taken into ambit in terms of refining petrochemical prospects. And then as Chairman talked, water is a precious to be used only once and we are seeing a lot of interest in this aspect. Many of the industrial projects are talking about in water reuse and we have delivered our project. We are the one who have delivered these projects, demonstrated our capability multiple times and we are very much in forefront to capture market in this sector. Then we remain focused on the way market is shaping up, whether it is bio-CNG, whether it is hydrogen,

Whether it is semiconductor that remains on our horizon that remains on our radar and as it progress hydrogen sector that is evolving, we are connected with this sector and we look at the prospects in this. In terms of India cluster manages some of the more geographies across the globe, Indonesia is another country where after India, that is a sweet-spot for global growth. And we have a lot of prospects there and we are working in that country. We are looking at, we are connected with the people and we see some of the prospects coming in that sector. Singapore, we are very much there.

There you know Singapore has its own success story, the way they have reused the water for portable purpose and they are going to go from 40% to 55% of Singapore water is going to be reused from the present capacity of 40% and that is the aspect which will fuel demand for prospects for our interest. So Vietnam is another country which is going — growing and correspondingly watered sector demand is there and this again is the market that we are focused on.

Malaysia, another country, which is under our — under Responsibility of India and we see that there is a growth prospect and growth is to the scale of 4.2% in this market. So all are throwing opportunities. We are working closely in this. Beyond, we are working also in Russia where present geopolitical situation, it has and the interest-rate there are prospects. We are working with customers. There is a gestation period considering the fluidity there,

But we remain focused in that area also. In terms of number, this is our interest, INR35,800 crore of market prospect, what we see is of our interest, which is of our relevance. And out of that around INR24,000 crore is municipal and INR11,000 is industrial. And what you can see, the breakup of it is different components of it. So we, as we have always been talking, we are very selective in choosing the project. We — we have a very robust risk assessment of the prospects that we look at and we accordingly bid for it, but these are the number and the market potential which is there in this market or of our interest.

And we will be chasing most of these prospects in coming days. Now beyond market prospect in terms of our competitive edge, the agility, the robustness of. Be it water sector, any sector, the biggest differentiator for an EPC company is the people and to be precise engineering people, they create value. So what is write AI is, yes, we all talk about artificial, but we have an actual intelligence of more than 1,000 engineers who are working with us and they are real value creator.

They are the ones who create that differentiator and we are proud of that technological prowess that they have, they are our crown individual or Jewer in the town. And that is what is the our edge what we have in the market. They — then we have a — those people, we have innovation talk with R&D and the patents, they come as an inherent part of our solution and we create value out of our value engineering. There are prospects market organizations who work-in this and for EPC company, it’s very important that we learn from our own projects and continual improvement is a part of our life.

And this is a full life-cycle is that we have — we are so confident of our capabilities that we take long-term responsibility of O&M. That is our strength. And over those 20 years, we learn and every day improve on our project delivery. And that is what is our differentiator. Nobody takes such a long view of the project and nobody has that deep strength, deep capability, deep confidence in itself the way we have that we take such a long-term view of the project.

And that not only gives us the edge that also bestows responsibility on us that the quality of project that we deliver and that wins customer satisfaction. So that’s our competitive edge. Yes, we are present on — in 25 countries and we bring best at all locations. We bring the best practices, best learning out of all locations. We are managing more than 50 sites in terms of O&M in this country only and all these sites give us a lot of learning, which is a preserve of very few of the organization.

What is — that is what is our edge. Yes, we have a diverse portfolio, industrial, municipal, desalination, turtle treatment. So this helps us in getting over cyclicity of the business. All none of this works in a complete CD way. As you know, business has its own cyclicity. But since portfolio is so diversified that our predictability, our horizon is very clear that we work on either of the areas to remain intact on our promises. So digitization and AI driven, we have keep Our ears and eyes open that we continue to create differentiator. We have embraced this AI. We have developed solution for our customer. We are working on B2B as well as B2C. And when we are working in B2C, we have a couple of applications developed on AI, which is creating value for our customer and for ourselves. Yes, we talked about new energy frontiers. That is what is the agility in us, while we continue to work on these projects, but any of that hydrogen, bio-CNG, those prospects we are — our team is very well geared up and equipped to look into that and that is what is the wide range what we have in terms of our capability. And as Chairman said, we — people are our biggest asset and great place to Work Institute has certified that, yes, they see the enthusiasm of people working with us and they proudly take forward the nation every day they work with us. So that’s on our competitive edge. Now I’ll give you some of the highlights of the project that we are working on. This is a cargent project that we are working to root desalination project. I’ll leave you with a video and maybe Chairman will explain he was that is another aspect that even the management and the Chairman, he is on the forefront when this line was being laid right through the night, right from 4 a.m. till 24 hours, he was on-site to ensure that it goes smoothly and that is a wide range of our capability what we have. So this is the project as he was — most of the orders have been done, engineering is almost done, engineering is done. Most of the supplies are intact and progressing well. And some of the site construction is happening and that video will tell you what is the of the project in which we are. And this is one of the biggest project of the ACI in terms of capability and the scale and the magnitude. And this is real infrastructure scale project that we are constructing this is the project we were we are working on Bangladesh this it has progressing well in-spite of the turmoil that we saw in political situation. We have got over that. Now the project is smoothened, engineering is matured. We have started supplies, we have started the field work, piling work is doing. So in challenges are part of our life, but we are getting over every day and in-spite of the political situation there, we are finding our way to deliver this project. This is another project we are working in Nepal and progressing well. By next year, we are going to complete this project and interact in Nepal. So beyond India, these are some of the geographies that we are working on. And this is another water treatment project, which is we are working in area and this is also progressing well. So that’s the brief about the projects. And now I’ll leave you with a video which you’ll see that the magnitude that we are creating as a team can you switch on the reader later biggest in Asia the pipe is 2.5 meters you can walk-through the pipe

Unidentified Speaker

. Diameter is 2.5 meter you see all the concrete blocks and you see how the pipe is sinking to the bed of the sea started from here you can see it’s going down go back and you go this is the toughest job in-building this plant because this is 20 meters into the sea, into the bed, first we have to create a trench where it has to sink exactly into that trench.

So it’s all GIs controlled. You see number of boats and number of divers which are ensuring that it sinks into the trench you see the number of boats which are helping. You see from this side, the pipe has already gone under sea, the block is going down. This is thinking and it’s going to the bed sea bed so that the boats can still go without affecting the pipe.

It’s not going to be. And this is my mouth construction. I only request you all to find some time during the next six months, please come and witness what is going on. Such things can also happen in India. It’s a mammoth construction work you can see not only in the sea, but also on the shore, tremendous work is going on and this is Asia’s largest desalination plant and Chennai is going to be the India’s and Asia’s diesel capital, almost 40% to 50% is already being served and with completion of this plant,

It will be almost 70%, 75% of the population which will be served. I’ll pass it on to Rohan to take you through the Middle-East operation good afternoon everyone so Middle-East is as stated in our strategy,,

It is a growth engine for Waba. We have been focusing in the last two, three years. We have been working hard to grow in the market. We have a robust team. We have applied all the strategies that we had laid, all the five. And we are saying that the fruit that of applying this strategy, Radhi. Saudi has a market, a very promising — I mean, GCC as a market is very promising in which Saudi is contributing a lot. Also Africa.

Africa is seeing a lot of light due to the funding from various institutions, whether you Call-IT Jaika, you Call-IT funding by you Call-IT EBRD we are getting a lot of funds in Africa which is giving us a lot of security. So Middle-East yes water consumption it’s a growing economy, rapid urbanization is going on. We are seeing a lot of water demand.

By 2025, we expect 62% that the water demand will go up. So this is something really for a water company, we have seen that there’s a lot of projects over there, a technologically advanced projects, not just projects that are mundane, they are also not just looking at building projects, but being more advanced, more digitized.

So these are good projects that we are seeing in Middle-East. So 63%, as you know, there is no perennial source in maximum of the countries in Middle-East. Saudi and UAE are becoming self-reliant by desalination and reuse. The Green initiative, we have seen a lot of our STP treated water. We have executed many projects over there,, Jedda, all of this water goes for the development of the country. With the Green initiative, all of this water goes for watering the crops. So we are seeing an initial push on reuse in Saudi a lot, which is a good thing because they have so much of diesel water that is getting treated through waste.

Africa, like I said, we have a lot of investments. PBP projects, EPCF projects, not only that, we are also focusing on those countries that are very secure, which were — which is in the northern sides, we are predominantly in Tunisia, Senegal, we — where we have done two diesel jobs. One is

Unidentified Speaker

Nearing completion, the PGTR is over. Other, we are executing. It’s on its final stages, Senegal. And we have recently — in the past year, we had won a job Zambia, which is one of its kind. It is the first STP in the country, which your company is building. Now obviously, Saudi is the main country that as a cluster we are focusing.

Saudi is a place where we see a lot of investments going, not just in water, but in other sectors, we all know the new cities that they are developing, NEOM, you Call-IT Kidia, you Call-IT the whole industrial belt in Juveil,, all these are guzzlers in water because of the industrialization and we see a lot of scope in securing better technological projects in those belts. So UAE, yes, so Dubai, Abu Dhabi, there have been projects in the past.

They — they are because they are coming to an equilibrium, but we are seeing the other with Jera, Rasal, we are seeing a lot of promising projects that have started to come up, especially with the focus that they want to develop Rasal Karima and a lot. Ajman, Shahar, yes, we see few projects but these two are promising now.

Africa yes it’s the focus. All the projects get a lot of backing, a lot of funding from all the institutions as I told earlier. So this is the market size that we are interested in. These are all-in USD million. So if you can see the total market size that we see in the next two, three years coming as RFQ is coming as a consultants getting appointed, this is the market size that is actually moving. So $4.6 billion is the market size and in which Middle-East has around $3.2 billion, obviously, diesel and wastewater,

Both are in focus like due to various sustainability goals, NEOM is also looking to do more sustainable business. Africa, yes, it will be in a stable market, a very good market for. We have been present there for many years and now we see a lot of traction, lot of movement in the market. So what is helping us to expand in the market? Our company — your company has always been a four front-runner in the market. We were present — we are present for the past four years in countries like Saudi.

We have done some strategic jobs. We have done some good technological jobs. We have worked with the best of the customers. We have — we are number three in, we are number three in O&M. The brand is well reputed. So it was not very difficult for us to venture into the market with such a big brand. So our strategy, we are looking to grow sustainably. We are not looking to take projects that increase the risk. We are selecting our projects.

We are not going for those projects that are very aggressive. Yes, Middle-East is competitive, but we know-how our technology is supporting us. All the jobs that we are winning is on a technological edge. So that is our focus in the cluster. New market, yes, we are — while we are very focused on markets in Africa, Tunisia, Senegal and in Saudi, we are looking to venture in new markets like told you that and Rasal are looking for rapid expansion, urbanization, new hotels getting built, restaurant, people moving to these Emirates, we see a lot of water demand.

So this is good. So now we feel that UAE has a lot of potential. So this is a market that we are focusing in. Kuwait, as a market has always — it’s one of the most water stressed market in GCC. But we are not seeing a lot of decisions being made. We are seeing a lot of decisions. It takes a lot of time to make any decision and whether you Call-IT on the projects getting released or it getting retendered so while the market has a potential because it is the most water stressed. Jordan, yes, we are seeing a lot of traction in Jordan.

We have three projects in which one major project is — we are keeping an eye on it. Morocco, there is a lot of water scarcity. We are seeing a lot of movement in Morocco where we are also now focusing. Uzbekistan, Kazakistan are these countries where the whole even players from GCC are focusing. This market has a lot of promise. Wastewater treatment, you Call-IT, big projects are all coming there. In all our 500 MLD plus, we have at least three, four projects.

So this is a very, very promising market that we are looking to venture into. So global strategy. We are — globally, we are doing things, but we don’t forget that we have already a base in India. We have a strengths which we are using to our advantage in the market. We have built an onshore and offshore team, which gives us a very good competitive edge over others.

So this has been our strategy in Middle-East. We are putting our frontline runners, we are recruiting guys in business development. And that is the next point team development. We have put in a lot of effort in developing and building a local team with a local sales and marketing team, a local execution team, the market demands us to build a local team because of the localization that is their target. Saudi is very aggressive on it.

We are seeing even Middle-East being starting or UAE starting to get these local content so this is something that we are focused on. So we are also a big part in the Middle-East are the O&M jobs that are coming up. So the old O&M jobs what we have built-in the past, they are not performing to its capacity, quality. So we are seeing that NWC, a well-known client in the region. He has come up with a program called LTOM where your company is qualified to bid on these all.

There was a first package that came in where there were nine projects. These projects are huge with our 20-year O&M. So that is something that we can see our chances to increase our O&M portfolio in Middle-East because this is something that they are looking to improve the plants. There is a rehab portion, plus there is a, 15 20-year O&M portion. EP, yes, we are already doing an EP job with Aramco, where-is our EPC. This is a 20 — this is a 20 MLD Rastal Nura where it is a very technically advanced project. And we all know Aramko. They are very choosy, they are very stringent, very careful when they are selecting a contractor, a vendor. So in this project, we could see that they had immense regard for what we have done in the past in Jazan for them.

And the treatment scheme that we gave, it is — they really liked it. It’s a 12 barrier stream where we are treating a cocktail of nine plants, all the worst of the effluent is getting mixed and we are treating it. So this is a — you know, like I say, then also moving towards

Unidentified Speaker

Towards sustainability. So this is a project where that shows that technology know-how. So we have always been a technology company. And what you would say, how is competitive with so many Chinese in the play — in the market, so many old players. So today, the technologies that we have are really which we use for our captive use like few examples, flat walls or you take it Nareda that we have already supplied in Jeda,

We were confident enough to go with that and are more competitive even though they quote at lower margins because of these technologies. So this is an advantage that your company has we are not aggressive as them but we use our technology for a competitive edge. So the SCP, this project we had backed in the last year.

Obviously, it was — it was a finance project. It took it — it’s time to come to us because Ona was doing the financial closure, but we didn’t wait for it. We went ahead proactively. We have a relation with them and we have completed the basic engineering. The project now it is financially closed and we are executing it on full fledge.

The basic engineering package is approved the site and office is mobilized, some excavation has started so this project is underway this is our project in Senegal where we are doing the EP in Africa where our partner is a big French construction company. Ordering is complete, major equipments are delivered, installation is going on. We expect Q2 FY ’26 for this project to come to its close with PGTR handing over.

This is. Capacity would be small, but as a project, it really excites us as a technology company to do a project of this caliber and that too with a good client like Aramco. So this engineering has come — is about to be completed in Q1. This quarter it should complete. We have placed major orders. So pre-commissioning, construction activities is going on, but we are talking about commissioning, pre-commissioning proactively with the client and Nexus.

So this is a — we will say entry project. This is O&M, where we have — so this is a WWTP. We have also got an industrial job in where this is the first O&M with — in our — from our inception in getting an industrial client in. So that is also there. But this is another bigger one. Amas, we are very proud of this project. This is a showcase project for us. We have built this project. The customer is extremely happy with us. And we have been getting repeat orders. We have completed the five-year contract.

We have proved our performance. Treated quality is fully complied. This has a solar dryer with 90% accuracy and everything is achieved in it. The main important part is that we have achieved 0.6 million safe hours from the inception of this project without LTI. So we are very proud of this project. With this, this we open the floor for interactive Q&A.

Operator

Thank you hi, thank you Ron. We’ll now take questions. Please state your phone name and the name of your organization as well. Thank you.

Questions and Answers:

Unidentified Participant

Yeah, hi. This is from Neo Asset Management. So I have few questions. So first, sure. So first is regarding the Middle-East opportunity. So as you are increasing more-and-more exposure towards the international market, so what stops you from achieving, let’s say, more than 20% CAGR and revenues and maybe 15% — more than 15% margins?

And just line to this, so in the Middle-East, so since oil prices are going down, so is there a possibility or risk that the funding might get delayed in these projects because of those? And secondly, any update on the Norfund JV where any successful orders being received over there?

Rajiv Mittal

Yeah. The first thing about your margins, why can’t we go for higher margins? Yeah. As they say, Dil mall, we can go for higher margins, but we also have to sink in with the reality. We are not the only player in the market and we don’t want to go for higher margins and lose business because we have to see what is sustainable,

What is the competition is doing because the competition is even lower-margin than us, but their overheads are much higher than us. So even with the higher-margin because our overheads are less, we are competitive in the market. So we want to keep that situation and we are guessing each time what competition is going to do.

And tactically, we are placing our price sometimes just less than 1% lower than the next bidder. So we are not leaving a lot of money on the table. So it is all competitive bid and we have to ensure that we are the lowest bidder. And for that, a lot of work the team does to see that we are not leaving a lot of money on the cable because most of the European companies work with a single-digit margin. For them, 3%, 5% margin is a good margin.

In India, if you talk about 3% or 5%, somebody will throw us out-of-the boardroom. So we have to go to a double-digit already. Now should we go higher double-digit, should we go to 20s? Yes, if the market has that potential to get it, of course, we’ll go. Of course, we’ll not leave the money on the table, but that has to be seen as a continuous effort and a development what we do.

Unidentified Participant

And the top-line grew more than 20% C easier with the more international exclusion.

Rajiv Mittal

I think top-line can go infinite if you are willing to take a hit on the bottom-line. But as we had announced a couple of years back, we are not going to focus on-bottom — top-line. We are more focused on-bottom line and more specially on cash. So even if you see our cash to profit ratio is 1.2%

That shows that it’s not only a book profit, it’s actually the cash we have generated for the profit, 20% more than the book profit. So that’s the business we want to do. We don’t want to just have a book profit. So this is very clear. Our targets are clear. I hope you agree with our strategy that top-line should be incident what we will get, but if we remain top-line focus, we can go and book orders with a 3%, 5% margins,but we are not going to.

Unidentified Participant

Book so on, the consortium, right now the due-diligence is on, technical is largely done, financial is majority done and we have already started discussing with them on the legal and the contracting part. In the next few months, we should be able to close that formally. But in the meantime, of course, we continue to scout for good capital projects.

And now that this — this is only a formality to take it to conclusion, our partners are also looking at projects which can be brought into this platform, so that the platform can start running from day-one. The risk of the Middle-East, you know funding getting screw may be tight because of oil market going down. Is there a?

Rajiv Mittal

This oil is a very temporary phenomenon because of the disturbances of the geopolitical and the US creating those disturbances. We strongly believe that it’s a very, very limited time phenomenon and this oil Prices have not gone substantially down margin and today the cost of production of oil, especially in Saudi Arabia is far, far lower than what they sell. So there’s enough money on the table for the government to invest in infrastructure. Also, you must note that today in Saudi, most of their infrastructure development is on a private finance projects. So they are not putting a lot of their money into this project. Is the private sector who is putting the money and they get a revenue over the next 25 years. So the oil prices today will have no impact on the projects going-forward. Their affordability over next 25 years to repay that is important first of all congratulations to what the management has achieved.

Unidentified Participant

It’s commendable to have INR1,000 crores in EPC business from where we started. So congratulations on that. Just two quick questions. First, how is our Blue seed venture spanning out. Are we evaluating some good opportunities there where we can continue to have those IP-related edges? That’s part one.

A second part again related to the funding, but what we are seeing is that the World Bank IMF, which was so-far considered like gold standard of, there was no doubt of payment, but US tightening everywhere, do we see any impact that could flow-through to these agencies. And if, yes, how we want to protect ourselves in that case?

Rajiv Mittal

Good. Let me first talk about Blue seed. I think it’s purely a initiative we have taken that what we have got from the society, we want to give it back, especially in our centenary year. Today, when I started, there were some people — I didn’t have enough wealth, I didn’t have enough courage, but somebody held our finger and told, go-ahead, child, we are going to support you.

So we got lot of support, whether it’s from a financial institutions or from our clients, encouraged us to grow. And we thought it’s just appropriate to give back what we have received from the society. So this initiative is to give back to the society that we help this young budding entrepreneurs who have a brilliant idea and have been working on it, but they don’t have money. So we have developed this initiative to have a pre-startup and startup money, it’s more than a money.

It’s not that we are one of the biggest people who are going to invest in this initiative, but what we are bringing value to this is to this entrepreneurs, our technology guys are going to work along with them. Once we select a few companies where we are going to invest, our technology guys are going to work with them to fast-track their development and guide them to have a product which is marketable.

Once that prototype is done, we are going to open them our 25 offices around the globe for marketing. So this is what the support we want to give it to the youngsters who have this good technologies. We have done already three sessions. One, we did it in-house, another thing we did with Wash initiative from Hyderabad and the last one, we did it with IT Madras.

And today we have selected almost half a dozen companies where we have found that they are investable. Already three, we have put up to the Board and got in-principle, okay, we are starting the due-diligence and the other three we are doing little more work. Maybe in next quarter, we’ll have another three, which will go to this. So I believe in next two quarters, we’ll have at least five or six companies where we are starting to invest and work with this young budding entrepreneurs or technocrats who have this thing and we will help them to make this commercially successful.

So that is about blue seed. The second you talked about with Mr Trump, everyday morning, I don’t know he drinks coffee or tea, what ideas he comes with God knows. So we all pray that some days he does don’t come with any idea at all is better than coming with ideas, which shakes all of us. But one thing is clear with US money or without US money, this is clearly a priority sector funding. And this multilaterals are not funding any commercial costs.

They are funding a social cost. And our strong belief is not only World Bank who is putting the money, but it’s also Asian Development Bank, Jaika, Japanese Bank, German, KFW, this is not going to come down at all because every organization has a target to meet to support the social funding. And we have only seen this funding has gone up year-on-year and we believe that will continue to happen. Yeah, please. Please give the micro. You are there? Yeah. Please go-ahead. Sorry, we’ll come back to you.

Mihir Dhami

This is Mihir Rami from Sheikan. Sir, in the RFQs, which are going to come in Middle-East in the next few years, how much do you all expect to win the order book size as a — and typically what has been the win rate in Middle-East for you?

Rajiv Mittal

So RFQ is getting moving in the Middle-East, we are seeing a lot of them. The main clients where we see a lot of traction, one is obviously Saudi Water Authority, where we are seeing many projects getting finalized. Second is SWPC. Now these are PPP projects where one of them we have won already hire. We are seeing a lot of traction in the market, especially from SWPC.

They have already announced a list of jobs that would be out in the market and they are going as per their plan. They have also told which quarter, which job would be out. So even though they have a long — longest duration of first pre-qualification, then the tenders are coming to the pre-qualified developers. So we are seeing a lot of traction in that. So if you see the numbers, we have shown 4.6 billion, but some of this is in ideation stage in PQ stage.

And okay. So our win rate, our win rate in the market has been, 25% 30% these are some projects that we decide that, okay, because being PPP, we have seen some projects do have — do carry their risk. Some clients like Mia look is adding value in capex, OpEx, that’s where we thrive on.

So our win ratios are generally 25% 30% in the region?

Mihir Dhami

Yes. And another question was, can you all give an order book guidance for FY ’26.

Rajiv Mittal

Order book, yes, we have internal targets. The only issue with Middle-East is that many of the customers, NEOM, we are not seeing a lot of movement of the budgeting, they are going through their clearance. So somewhere around at least we believe that $300 million, $400 million US dollars we could do in the Middle-East.

Mihir Dhami

Okay. Got it. And company-wise? Okay. See, you already have a medium-term outlook that we have given and at least 3x of our revenues is what we would like to maintain our order backlog position at. And we are today at 4 times. So if you consider the CAGR plus the 3x of backlog, I’m sure it’s simple math, you would know what kind of booking that we are targeting and what kind of backlog that we are aspiring to be over the next three to five years. Okay. All right.

Rajiv Mittal

Thank you. Yeah, please.. Yeah, yeah, gentlemen.

Unidentified Speaker

Yeah, please. Sir,

Operator

From Meta and.

Unidentified Participant

First and foremost, my heartiest congratulations on 100 successful years of a 100% Indian company, which is a multinational true sense spirit of the word and action, 25 countries and 125 plus IP rights with

Unidentified Participant

1,500 plants. The audio-video which you showed us the 400 million desalination — 400 million liters per desalination plant in Chennai, I believe will become a showcase capsule for many state in India as well as outside going-forward. Of course, you also indicated to us a 260 million liters per day desalination plant in Mumbai. So Maharashtra government is very proactive despite having good rainfall and having a sea cost.

But that’s the question, two thoughts came to my mind. We have a 7,500 kilometer coastline of it so at the same time the second-highest rainfall comes in Assam but that whole water goes away into the sea annually in the irony office situation of two excesses, now the thought which came to me was, sir, you mentioned you are having a 110 days working capital cycle. Can that be — I mean, you have an 80% order from Munspartis.

So take a longer period of time to pay. So can this 110 days of working capital cycle, can it be compressed, say, by 10%?

Rajiv Mittal

Can I answer. I’d say you have seen this year our cash has increased. Yes, our working capital cycle has substantially reduced from the past. Yes. So already we are on-the-job doing exactly what you expect us to do. And definitely answer is why it cannot be reduced, it should be reduced, it must be reduced. Now you talked about municiple corporations take a lot of time to pay. I want all of you to note, though we have said multiple times, we don’t work with multiple corporations payment guarantees.

We don’t work with them because they are not credit-worthy to work with them. Because in India, water is a state subject, we are forced to take contracts from them. But the payment guarantee doesn’t come from them. It comes from multilateral institutions. As per our constitution, only Ministry of Finance, central government is allowed to sign this multilateral loan agreement.

So the guarantee is from the central government, not from the state government and the multilaterals which they fund this municiple corporations or state is — cannot be siphoned of this money, which they used to do earlier. Now it is in a dedicated escrow account and only has to be used for a project and every quarter they have to give a disbursement statement to the funding authority for them to release the next tranche.

So our payment security is not muncible. Authorities, it is the central and the multilateral funding agency. Mentioned you about Bangladesh. Yeah. Now we know in last six months the amount of disturbance in Bangladesh. But the project is on, yes, it’s little bit slowed down, but project is not canceled or suspended because it is funded by World Bank. Yeah. So Bangladesh has no guts to cancel this project because the World Bank is involved. If it was India or something else, they may have canceled it, but it is World Bank. So the project is on. So that is the reason 95% of our order book is funded from World Bank — sorry, from multilaterals or sovereignality like Namami. It’s not again a state guarantee.

We may be working for Bihar, we may be working for UP Uttra, but the guarantee comes from Namami, which is a central government Jal Shapti Ministry and backed-up by World Bank. So that is a difference you must know. Short answer is, yes, working capital has to come down, must come down.

Unidentified Participant

Wonderful. Excellent. Thank you very much. All the best.

Rajiv Mittal

Yeah, gentlemen here. Please come forward.

Unidentified Participant

Can I come forward?

Rajiv Mittal

Yeah, go-ahead. You have a mic, you go-ahead.

Unidentified Participant

Yeah. This is Naas from Dalal. Two questions closer and little louder. Sure. I have two questions. Firstly, there is a other expense — another expense item for this quarter. This is a booking question. There is a posit — the other expenses have been negative — negative of INR13.5 crore. Can you explain this item?

That is the first question. And secondly, any update on the Saudi Arab project of INR2,700 crores, which went for rebuilding. Is there any chance of that coming back or at least a part of it coming back-in the near-future?

Rajiv Mittal

Yeah. I think Sandra will answer you on the other expense negative.

Skandaprasad Seetharaman

See, this is the other expense negative that you see is primarily because of the ECL provisions, the provisions for receivables, which are reversed. You know the quality of the order book and quality of receivables have been improving. So whenever we are able to collect and you’ve already seen the free-cash flow generation, which has come through, the cash that we have closed with, all of this have helped us recalibrate our provisions and that provision reversal comes through in the other expenses.

So that is what has happened during Q4 and that’s why your overall other expenses is negative. Other than that, there is no inordinate increase or decrease in the other expenses. This reversal has happened based on items that has happened in this last financial year itself or the previous financial year.

So it could be accumulation of provisions. We recalibrate our provisions every quarter, there could be addition or that could be released, but you can see that our receivable days have come down, our working capital days have improved. So obviously, my provisions also will get reversed because I don’t — I don’t have that kind of age in my receivables, right? So that reversal has to come to P&L and it gets booked in other expenses and that is why other expenses as a number shows as negative. But there are two-parts.

If you take-out the ECL provisions, the rest of the other expense, which is our overheads and things, there is nothing inordinate in that. That’s — that’s fairly the same or normal increase year-over-year. Okay. Regarding your second question on this Saudi order, I think there was always a talk of down when this order was postponed. We always told the project is getting postponed, but some or many of you and the media started talking about cancellation.

Rajiv Mittal

So I don’t know English is always a funny language, whether we Call-IT cancellation or postponement, but it turned out to be right. What we told, it was only the government was recalibrating. I think you all have read in the newspaper the strategy which was developed for Saudi Arabia by Mackenzie was thrown out-of-the window by the Saudi government few months back and contract of McKenzie can go through Google and see was terminated and McKenzie was blacklisted in Saudi Arabia saying that you have advised us wrongly on the strategy.

And they started their own consulting firms from Saudi working on this strategy and lot of these projects came back, some with small changes, some with big changes. And our project in question what you’re asking came back with very minor, not even small minor changes. So you will be happy to know we have rebid it.

There were five bidders and we are confident that the evaluation is going on, we will remain a preferred bidder. We are keeping our fingers crossed and we are very confident and hopeful that we should be able to share a good news with you very soon, not in months, maybe weeks.

Unidentified Participant

Okay. Thank you so much hello, sir. Anupam Guswami from SUD Life. Little louder.

Anupam Goswami

Hi, sir. Anupam Guswami from SUD Life. Sir, my first question is on the gross margin decrease that we have seen in Q4. If you we avoid the other expenses, just at the gross margin level, we have about 500 basis-points came down. What is the reason for that first? And in India, with our peers, which are not, of course at our size, but do we see any competition from them in projects in India?

Rajiv Mittal

So second question first, I don’t know who are my peers because we don’t see any of the Indian competition when we go for bidding the kind of projects that we are bidding. We are a completely — a different company. We focus on technology. We are not a contractor. Our strength is EP. Our strength is technology. We like to Call ourselves as a technology system integrator. We are not an engineering procurement and construction contractor. So — and hence, I will — I will leave it there. So we don’t really compare with — and then we’ll see, we’ll see over a five, seven-year period who is there, who’s not there, who’s performing the way it is. Second, on the gross margins, as you know, with this, this broadly depends on the mix of projects. So when we have — and that’s why we gave you a range of guidance, EBITDA between 13% to 15. When it is more of EBC where construction will pass-through our books, it will be closer to the lower-end. And when there is a higher mix of EV, it will be closer to the higher-end. So all this is driven by the mix of projects. But every project we take, you need to understand that we have certain seeds through which we pass the project. Payment security, advanced technology, margins which meet our threshold and also emerging and also being in the emerging economies. So all the projects, the key projects, especially that we have, all of these have passed the scene. There are no projects with low margins below our strategic margin targets. It’s only the mix of projects, but you will see this swing between 13% and 15% depending on whether it is more EPC or more EP. We had a target that to reduce our EPCC part in our orders. So should we say that Q4 was a little reverse to that or there would be more EPC

Anupam Goswami

Happened what sort of a mix are we looking at as minimum as possible? How do we take that mix?

Rajiv Mittal

Mathematically, statistically, you are right, but I will not evaluate the company on a quarterly basis. Look at it on a multi-annual, if you saw the figures that we presented on-strategy, on a five-year basis, we still have one-third of our EPC coming from EP. So there may be a year where I will have 80% of my EPC coming from EP revenues. There’ll be a year where it will be the other way. So that’s why we’ve given you a range and we are in that range.

But yes, you are right, in Q4, projects like Peru, Pagla, all of these which are EPC heavy into execution, you saw the pipe sinking, you see the amount of construction that is going on. So the quantum of EPC projects is higher in-quarter four, but you have to see it over a two, three-year period where you will see these margins normalize.

And we cannot completely eliminate EPC because some places client requires a single-point responsibility like the very mega project like Peru 400 MLDD cell is Jaika funded. We are not allowed to break-up the EP and C. so we had to take a total responsibility of C also, including the work, which is a very complex, I would say, very technically challenging work. We have taken that and we have shown you how successfully we have completed it. It’s not that we don’t have the skills to do the sea.

We have the skills, but we want to refrain from it to improve our valuation, improve our cash-flow and reduce our delays because most of the delays happen in sea because of ROW and those things we want to reduce it. So it’s by choice, it’s not by compulsion. Next piece. Gentlemen, next somebody.

Unidentified Participant

Yeah, please yeah my question was on

Rajiv Mittal

The please your name and your organization little closer and louder

Vikaram

This is Vikram from Prodigy Investment Management. So my question was on the market size risk that you showed us. So out of this INR70,000 crore opportunity combining both the class flows, what percentage share would you expect to capture or would you be targeting that about 1 and 3 25% to 30% has been our hit ratio. So we don’t see that why we should be very different in this coming year. So we can technically take it that at least 35%, we should be able to get that. And this is how we years over five years, 10 years?

This market size opportunity of INR70,000 crores to a 10 years

Rajiv Mittal

Is something every year, you will have something coming in, something getting done and something is replacing. So whatever we bid as a project, we will bid anything between INR15,000 crores to INR20,000 crores every year, of which we should be able to take 30% to 35%.

Vikaram

Thank you.

Unidentified Participant

Good, please.,

Rajiv Mittal

Good evening. Sir, congratulations on a little louder please or take the mic closer to your mouth. Am I audible now? Better.

Vikaram

Yeah. Many, congratulations on the delivery. Although we started on a week lag and initially the 4th-quarter has been really, really on what you had promised. Sir, my questions is, could you speak little in detail about the factors that could hamper our margins or could support our margins going-forward or what initiatives we have taken to improve our margins or would be taking.

Rajiv Mittal

I think we can talk about it for next 15 minutes. It’s definitely not one of the factors, okay. It starts right from our business development efforts to improve the margin, we have to develop a project. We can’t bid a plane one project and expect to be L1 and improve the margin. You know that. So if we want to have a margin improvement, we have to develop the project. We have to ensure that we limit the competition. We have to ensure that we have competition what we like.

We don’t have a competition, which we don’t want to compete. So all that needs a huge marketing effort right, which is what Skandaj showed you, the go-to-market teams we are developing, technology, we are advocating to our client and consultants because these are some of the things which put barriers to some of the companies which we don’t like to compete, okay. If it’s plain contractor, we don’t like to compete. We like to compete with companies of equal capability.

So these starts from there. Then obviously during bidding, it’s all your how smart you can structure your bid, conceptualize your bit, select the right technologies, do the value engineering and put in a price. And post that its tremendous effort goes into value engineering. This I believe is our strength and will remain as our strength where we improve the margin during execution. Invariably, most of the projects from the sale to execution, we improve the margin.

And it’s all because the way we execute the projects, the way we control our margins, the way we do value engineering, the way we do our procurement, control the cost at site, the number — number of factors which go in margin improvement. That in fact itself is one of the big topics in the company, which is continuously debated, discussed and improved quarter-on-quarter.

Operator

Next, please. Hello, sir. Divesh yeah. Divesh from Capital.

Divesh

I want — I was asking about balance sheet. Sir, in your balance sheet, if you could give clarity about loans and advances, which have increased to say INR800 crores. So if you could clarity on that INR800 crores. Loans and advances in your balance sheet have increased to INR800 crores.

Now maybe you can answer that, sir.

Skandaprasad Seetharaman

No, I’d like to see that.

Rajiv Mittal

But anyway, I think forget about the number, you can say what is the loans and advances. If you would just say loans and advances has only two corporates. Whatever we give to our subsidiaries, whatever we have given to our HAM SPVs. So — and our suppliers are contractors.

Skandaprasad Seetharaman

Yes, that’s what we have in that. So if you take the supplier advances, those are in the normal-course of business. Apart from that, some of the

Rajiv Mittal

Investments into our SPVs will be structured in this form. Legally, it has to be represented there, but I don’t recollect anything else that is inordinate. But yeah, we can take it offline, show-me the number, I can explain it to you with the.

Unidentified Participant

Definitely sir.

Unidentified Speaker

During the dinner break, please talk to Skanda, show the number, we can give a detailed explanation.

Unidentified Participant

Okay, sir. And my second question was, you have been mentioning about the free-cash flow increasing and also about your free-cash flow increasing and borrowings getting reduced if you have free-cash flow. So you are mentioning about the bottom-line impact, you have to increase the bottom-line more than the top-line.

So do we aim to reduce your borrowings in coming further times?

Unidentified Speaker

We have reduced our borrowings. We use only short-term wherever it is required. But if you see, if you have INR1,000 crore cash and a INR700 crore net cash, I mean, INR200 crore INR300 crores of borrowing to run a INR3,500 crore business is just transitory in nature, right? So we don’t have any long-term borrowings today.

We are only working capital, only working capital for the bridge, that is all we have. And our continual endeavor has been and will continue to be reducing the borrowing usage because as the organization keeps increasing the accruals, our need to borrow will be lesser. Our dependency on banks is only for the non-fund limits.

That’s the lifeline of — of the business, guarantees, LCs and that’s what we want the banks to do, which we have sufficient lines for. When it comes to funded limits, we’ll use it to the minimum levels. And as we have accruals, our endeavor is also to see that, that is reduced to as less as possible.

Unidentified Participant

Okay, sir. Thank you. Thank you. That’s it from my side

Unidentified Speaker

. Anybody else? Yeah, please.

Omkar

Sir, 100 years of my — my name is Onkar. I’m an individual investor. First of all, congratulation to you, 100 years of INR100 crores of net profit in-quarter four. It was an amazing achievement. So congratulation to you and entire team first of all. And I’m having two questions. As very much mentioned in the presentation where you are a preferred bidder for a INR3,000 crore order book. So to that order includes one of the big order of Saudi INR2,700 crore.

Apart from that INR3,000 crores or that INR3,000 preferred bidder, you are already including that INR2,700 crores in that INR3,000, that is point number-one. And I’m asking for particular this financial year, my second question, what are the — what expecting we are in India, specifically India, what orders we are expecting?

Because overseas we are doing very well from last couple of years. So any specific orders we are expecting from India in this particular financial year and major orders will come in first-half or second-half?

Unidentified Speaker

See, I think the last one first-in India or why globally we focus on both industrial orders as well as the municiple orders. And municiple orders, again, I repeat, they have to be multilaterally funded or there has to be a sovereign backup for that. So, the orders which we have targeted for this year will include both.

The industrial orders, mainly the industrial orders will come from the power plant, which is getting revived, the thermal power plants and also from oil and gas, companies like IOCL,, which we are getting and we’ll continue to get that. And municipal orders is regular run-of-the mill for some of the states where we like to work. We want to work from those states, the municipal orders will also come. Now if we target INR6,000, INR7,000 crores of order,

I think India should give us at least half of that and half of it has to come from international. So that is the breakup what you are looking for. Now on the INR3,000 crores, we have maintained the number 3,000 and just now with the, let’s keep the fingers crossed for Saudi order because lot of people talked about it, various comments were coming.

We didn’t respond to it. Let the results respond. We are very hopeful that what was due to us will come back to us. It’s only a matter of weeks. We believe that we’ll be declared as a preferred bidder and this will be able to give you back more or less the same order of magnitude what you mentioned. So I’m saying that as of now, I’m assuming that INR2,700 crores is always I’m just saying. But I’m saying apart from that, any overseas orders that INR3,000 crore order is a part of some other orders also or that order includes

— there are other orders but as a conservative company,, what are the number both there.

Omkar

Thank you. Thanks for taking my question.

Unidentified Participant

Anikesh from Securities. Anikesh from Securities. I wanted to — it looks like that order backlog for Bangladesh and Zambia project has increased by almost INR45 crores to INR50 crores. I wanted to like, is it mainly because of increase in our current — is it because of currency depreciation or is there any increase in scope of — see, when it comes to Bangladesh, obviously there is a ForEx element which will increase the order backlog you’ve seen from where we book to now.

In case of Zambia, we have also received a variation order, which is about INR8 million, 9 million, if I remember right and that has increased the order backlog. So the scope in the Zambia order has increased. And in case of Bangladesh is primarily because of the ForEx translation. Thank you, sir. That’s it from me. Yeah, please. Hi, this is. I’m an individual investor.

Unidentified Speaker

It is louder and closer. Hi, this is,?

Unidentified Participant

Sir, a lot of us in the room are good with the numbers crunching and understanding the company at a balance sheet P&L level. However, I would want to know in this — in these past 12 months, I mean, we got an opportunity to meet the management last year at the same place. So in these past 12 months, what were those few key moments which added the feather in your hat at the company-level? And maybe a few two key instances which you felt shouldn’t have happened have hampered the growth of the company, if you could reflect on those thoughts. Maybe my colleagues here, you want to start? What is that weather in-cap?

Unidentified Speaker

Yeah. As I was telling you, a good part what we are doing is we remain focused on what we are doing. We never lose sight of what is the business and we never lose sight of what we should be doing. The whole team, we have activated in such a way that we are on-the-job, on the toes and there is a lot of enthusiasm in the team. This is the buzz what we have created and that is what is helping us in remaining intact on our commitment. As far as the challenges are concerned, yes, that’s the part of EPC life. Surprises will hit you, they can — they hit us also. We are — we are not insulated from there, but we know-how to handle those surprises. There are many sites, many situations it comes to you. It — it is about to knock you down, but we know-how to handle this. This is what is our robustness.

This is what is the differentiator what we have and we continue our journey accordingly. No, you are talking about a feather in the camp. Maybe as CFO, I expected him to say you got AA rating during the year which you mentioned and you also mentioned about you got certified as Great Place to Walk.

And so as an organization, you know your rating and you also mentioned about an international award for a reuse plant in. So these are all possible feathers in the gap that international or external agencies are certifying that you are doing well. What should possibly we have to learn and work on not sure what is that because there’s so many learnings which we entirely discuss and but what is that we should share here, I don’t know, but then we’re working on many things.

One is on succession plan, okay, that’s a learning from the past. And so we have brought in about 200 plus, 250 odd trainees, which we never did in the past, which is making the organization very young, okay. We have done about 60, 70, 80 kind of fresh trainees from the best of the colleges. But this year we decided to go big

Unidentified Speaker

And making the organization very young. And we are also wanting to — we have engaged in organization which is putting its search for the best of the, which are very young so that we can give them a development path which is fast and which is accelerated. These are learning what we have failed in the past and we are trying to learn from it and do something about it.

So these are some things which I can I think we are all used to see outcomes, the feather of the cap is an outcome, but what’s not seen is those small changes every day that we do, the discipline that we have had. So I won’t beg it on any single or two or three events. I think all of these are combination of the discipline of the organization that — and it’s not just this year.

You’ve seen over — this has gone over decades, more importantly over the last five years where we have — we have been very true and firm in our actions towards the strategy. And that’s all the reflections that I heard, whether it is Great Place to go, whether it is the Ghaziabad project being awarded.

I mean, for us, I would say, I would look at those small efforts that we do and remain true and committed to our strategy. And more importantly, I think what we did, we always had the confidence that this is what we would deliver on an annual basis. Maybe for you, it took a year. We always were working towards this and this was the cycle of projects, right?

I mean, if I could have delivered 30% in-quarter one, why would I deliver anything lesser? That’s a cycle of projects. We were always confident. We are very happy that we are able to come here one year later and show you that we have delivered what you promised. That’s more important for me, the smaller steps, which has led to what we internally thought we will deliver and we have delivered that.

So yeah, I mean, the whole organization has been upbeat. I think we are all waiting. We did have some rough patch in the past, but now we are up and running. So the whole organization, all the department, we are a very connected organization. We are a very emotionally connected. We have people from — with us from 25 years.

They are all looking to scale-up and everybody saw the opportunity this year. Not just you would see that Middle-East also we are upbeat, we have got good jobs. So it’s not just a single department, but the whole organization was really excited to do much better. Every year it’s been in the moto, but this year they have done a lot of hard work because they wanted the organization to perform. I think that is one of the — and obviously you could see that we have got an award that substantiates that our organization is well-connected, well, we call our guys and we have got the Great Place to Work Award.

So that substantiates that our people have done a lot of hard work. And we cannot single out any department, everybody has given their best. So I feel that we have seen a lot of fire in the belly this year and we expect to keep that momentum, keep that fire in the belly and do much better next year.yeah. Running out of time. So I would say one, you saw passionately we projected thinking of pipe for our largest diesel plant is definitely an achievement. Nobody has done that before, a 2.5 meter, 1.2 kilometer for a 400 MLD pin pipe sinking 20 meters under the sea.

That is a major achievement, winning about $0.5 billion project from Middle-East was also a great achievement. Starting execution in Middle-East after a long, long-time of a $200 million project. We have not done in the recent past, we were always like a specialist contractor, not a general contractor.

So that’s another one which we see is something which we are very, very proud of. I think another thing which we are definitely you want to call a feathering cap or something which we feel proud of that we are celebrating our centenary year, okay, that is something which not many individuals or company have the ability to survive 100 years.

We are happy that we have survived. We are live, kicking, performing and celebrating our cementary year. Now some of the things which did go wrong, we didn’t expect it to go wrong. Somebody talked about the Saudi order. We didn’t expect to postpone because it postponed by at least six months. Otherwise, we would have started the revenues this quarter of that order. Now probably we will go into the second-quarter to start our revenues, that’s fine.

That’s the thing you have to reconcile, but we are happy that we will get it back. So some things like that do go wrong, but I think the most important aspect of Waba, we’re a very resilient organization. We don’t give up. We — things can happen, mishaps can happen, accidents can happen but we quickly get up and start running again.

And this attitude that we can and we will is something very unique with. We don’t accept the defeat. We don’t throw our towels and we just fight till the last and make sure we are successful. And that’s one of the great reasons why Wabag is successful. Again, I say we are very resilient organization.

Unidentified Participant

And all the best, sir.

Unidentified Speaker

Anybody else or should we break for dinner and then we can continue our discussion unless somebody wants to ask the last one we can okay let’s break for dinner and we’ll continue our discussion thank you gentlemen thank you ladies