Q1 2027 Engineers India Ltd Earnings Call
Speaker #1: Hi. Thanks, Ananya. And very good afternoon to all of you. Thanks for joining in. So today we have with us the entire management team of engineers in here to discuss the Q1, FY27 results, and post that we'll follow up with the Q&A.
Speaker #1: So from the management, we have with us Mr. Sanjay Jindal, who is our Director of Finance. Mr. Suvendu Padi, who is the company secretary.
Speaker #1: Mr. RP Batra, who is the Executive Director. Mr. Vivek Mehta, the Chief General Manager, Marketing and Business Development. Mr. Amanpreet Chopra, who is the Senior General Manager.
Speaker #1: And Ms. Neha Narula, who is the Senior Manager. With that, I will now like to hand over the conference to the management for the opening remarks.
Speaker #1: Over to you, sir.
Speaker #2: Thank you, Mr. Kishan. Good afternoon, everybody. And a warm welcome to all the members from press, paternity to investors meet. We have declared our first quarter results for the financial year 26-27 yesterday, that is on 30 August 2026.
Speaker #2: Company order book position stands at rupees 14,424 crore as on 30 June 2026, which comprises consultancy segment of rupees 10,498 crore and trunkie segment constitutes of rupees 3,926 crore.
Speaker #2: Order inflow in EL during first quarter of financial year 26-27 stands at rupees 514 crore. With respect to the financial performance for the quarter ended 30 June 2026 on a standalone basis, the company achieved profit before tax of rupees 145 crore in comparison to rupees 94 crore during the first quarter of financial year 25-26, showing an increase of 55% approximately.
Speaker #2: Further, company also achieved profit after tax of rupees 109 crore in Q1 of financial year 26-27, with which rupees 70 crore in the 25-26, showing an increase of 55% approximately.
Speaker #2: Operating margin during the first quarter of 26-27 stood at around 14%, that is rupees 108 crore, as compared to 7%, that is 59 crore, during the quarter ended June 25.
Speaker #2: EBITDA of the company as on 30 June 2026 stood at rupees 155 crore with EBITDA margin of 18.55% in comparison to the rupees 104 crore EBITDA margin 11.72% as on 30 June 2025.
Speaker #2: Further, company achieved a turnover of rupees 801 crore compared with 857 crore achieved during the first quarter of financial year 25-26. The consultancy and engineering segment recorded a turnover of rupees 499 crore during the quarter compared with 400 crore, 408 crore in June 25, representing a growth of approximately 22%.
Speaker #2: Notably, the consultancy and engineering segment has a higher profit margin as compared with trunkie segment. The trunkie segment recorded a turnover of rupees 302 crore in June 26 compared with 449 crore in June 25.
Speaker #2: The decline is primarily attributable to tapering off certain major projects. However, the company has achieved new orders of in the trunkie segment over the last few quarters, these projects are currently in the initial phase of execution, and are expected to gain momentum in the coming quarter.
Speaker #2: As execution progresses, the trunkie segment turnover is expected to increase during third quarter and fourth quarter of financial year 26-27 once these projects reach their planned execution pace.
Speaker #2: On the consolidated basis, the company earned a profit of rupees 157.94 crore for the quarter ended 30 June 2026 in comparison to rupees 60.54 crore earned during the first quarter of financial year 25-26.
Speaker #2: Therefore, there is increase of around 141% in the consolidated profit on year-on-a-year basis. The profit of EL subsidies EL has increased to 6.8 crore, 88 crore in the first quarter of financial year 26-27 as against rupees 2.67, 2.69 crore in the first quarter of financial year 25-26, increased with the increase in margin around 155%.
Speaker #2: The profit from joint venture or associated contributes rupees 42.51 crore in the consolidated profits while there was loss of 7.37 crore from the joint venture in the Q1 of last year 25-26.
Speaker #2: Now I hand over to Mr. Kishan to call further activities.
Speaker #1: Operator, you can begin the question and answer session.
Speaker #3: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question, may press star, and one.
Speaker #3: On their touchstone phone. If you wish to remove yourself from the question queue, you may press star, and two. Participants are requested to use handsets while asking a question.
Speaker #3: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mohit Kumar from ICICI Securities.
Speaker #3: Please go ahead.
Speaker #4: Yeah, good afternoon, sir. Thanks for the opportunity. My first question is, sir, can you just help us with that granular details of the domestic consultancy order prospect, international prospect order, to the extent possible?
Speaker #4: And are you still confident of meeting the order inflow target or target rupees 80 billion for the fiscal? And out of 80 billion, how much do you expect to be consultancy orders?
Speaker #2: Good afternoon, this is Vivek from Marketing and Business Development. With respect to the current business inflow as of today, we are sitting at 2,700, 2,750 crores worth of business, and out of which 1,000, around 1,100 is from the overseas, and the rest is from the domestic segment.
Speaker #2: So that's the current situation. And definitely, when we have talked about the 8,000 crore, we are going to touch upon that. We have not changed the our outlook for the financial year.
Speaker #2: We are just two quarters, almost two quarters down, but still we have two quarters to gain. And many of the projects which we are discussing across the world are there in discussion as well as some of the projects in India are also concerned.
Speaker #2: We are very hopeful that we should be able to meet that target of 8,000. We'll in fact try to cross that target.
Speaker #4: And sir, out of 2,700, 2,750 crore, how much is the consultancy as of now?
Speaker #2: The consultancy is in the range of just a sec. Out of 1,500 crores, which is the, which is the domestic business, around 523 is the consultancy.
Speaker #4: 2,700. 2,700.
Speaker #2: 2,700. Oh, sorry. Out of 2,750, 2,750, we have 1,100 is approximately the consultancy. 1,100 is, 1,100 is the overseas, as well as the left out is the domestic, and domestic we have approximately 1,500 crores is from the LSTK, and the rest is from the consultancy.
Speaker #4: And sir, second question is on the Middle East. Of course, we had hoped, I think we had qualified with Aramco for bidding for consultancy projects just the let us know how the things are progressing and are we, and do we expect anything material to get finalized in the fiscal?
Speaker #2: In the Middle East, you know, the market situation is still very grim. Nothing is stabilized. Still, there is, there is, there is not much is happening on the new project side.
Speaker #2: Some repair and modernization projects are still on. In that environment also, we have been able to secure both business for 500 crores from the Abu Dhabi office, as well as from the other, other clients in the Middle East.
Speaker #2: But with respect to the Southeast, Southeast, we are still waiting for some of the good opportunities from them, and some of the business to come from them.
Speaker #2: We are still in the initial stages of discussion with them. The contract has already on. We are waiting for certain inquiries to come. As you know that, there is, there has been a this situation, the new inquiries are a little bit slow from their side.
Speaker #4: Understood, sir. Thank you and best of luck. Thank you.
Speaker #2: Thank you.
Speaker #3: Thank you. The next question is from the line of Deep Sanghi from Dalan and Broker Stock, Broking Private Limited. Please go ahead.
Speaker #2: Yes, thanks so much for the opportunity and congratulations on a good set of numbers. So my first question was regarding the write-backs or change orders.
Speaker #2: So for this fiscal, are you expecting any write-backs or any change orders? So if you look at in June 26, there was HPCL's Bamar, project which got commercialized.
Speaker #2: So for that also, will the write-backs will come this fiscal or next fiscal? In the current quarter, there is no exceptional change order, which is included in the terminals.
Speaker #2: And we are not expecting any write-off as such.
Speaker #4: Sir, the write-backs in this whole fiscal, are you expecting?
Speaker #2: Your advice is not clear. Excuse me.
Speaker #4: Sir, so I was asking, are you expecting any write-backs? The provisioned write-backs for the whole fiscal?
Speaker #2: No, we are not, we are not expecting any write-back of provisions. All the provisions kept for guarantee and warranty are write-off as per accounting standard, and as completion of projects only.
Speaker #4: Okay. So, sir, because in June 26, the HPCL Bammar project got commercialized, so that's, that's what I was asking.
Speaker #2: But we have defect clarity period also. After completion of defect clarity period, all the provisions are reversed.
Speaker #4: Okay, okay, sir. And sir, my next question was regarding the consultancy growth rate. So if you, if you see the, in the Q1, FY 27, the consultancy growth rate was just 2 percentage.
Speaker #4: Despite very big order backlog. So should we, like, how should one assume the full year's growth rate taking into account the, the big order book for consultancy?
Speaker #2: Order book? Wait, so you're talking about the order book execution? You're talking about?
Speaker #4: Yeah, so I'm talking about basically the revenue growth rate for consultancy.
Speaker #2: Revenue growth rate.
Speaker #4: Revenue growth rate definitely we are targeting in the last year, we were having total turnover of 3,800, 50 crore. This time we are targeting at least 10 percent growth.
Speaker #4: And we are keeping close watch on the progress of the projects so this guidance can be improved in the coming quarters also. And we are expecting around more than 50 percent from the consultancy.
Speaker #4: Okay, more than 50 percent. And sir, because so my question was regarding, so the execution rate if you see in consultancy, has been in the range of around 30 percentage.
Speaker #4: Which was, again, 27 percentage last year. So how will the execution rate be if you can just throw some light on that?
Speaker #2: Last year, our consultancy portion was 48 percent in the total turnover.
Speaker #4: Yeah, correct.
Speaker #2: yeah. It was not 23 percent.
Speaker #4: No, sir, I'm talking about the execution rate. So from the closing order book, how much part of.
Speaker #2: Oh, understood, understood. See, this is the, the execution rate which you are talking about is a cyclic in nature. It depends on what stage of the project is.
Speaker #2: So it varies slightly from year to year basis.
Speaker #4: Okay. So sir, is so again, my question is.
Speaker #2: Basically, our total basically whatever jobs are being shown in the order book, these projects are mega projects are typically completed in four to five years.
Speaker #2: And maintain projects are completed in two to three years. And some of the studies like DFR studies and some feed type projects, study type projects, that projects are completed in one year itself.
Speaker #2: So basically it depends on the job whether it is mega job or mid-size job or small job.
Speaker #4: All right. What point of time in the financial year it is received? Like, let me give you an example. So we got a mega project in the month of towards the end of January.
Speaker #4: So you'll not have much of execution in that financial year. So if execution will mostly find in the next financial year.
Speaker #2: But if you calculate the percentage that will destroy the figure.
Speaker #4: Right, right, right. Okay, okay, sir. Sure, no problem. Thank you. I'll come back to the question.
Speaker #3: Thank you. The next question is from the line of Jenam Jen from Dam Capital. Please go ahead.
Speaker #4: Thank you for the opportunity. So my first question is, given a strong consultancy order book and a book to bill ratio, how are we seeing the gross margins going growing, going forward?
Speaker #2: Segment, you are talking about the segment profit. Already if you see in the last year, our segment profit was 17 percent. In the first quarter of 25, 26.
Speaker #2: But in this in the current quarter, it rose to 24 percent. So gross margin have been improved in the consultancy job. And in the LSTK margin, is also improved and it is currently seven and a half percent in the first quarter of current financial year.
Speaker #4: Okay.
Speaker #2: And we are sure to keep 24, 25 percent segment profit in the consultancy segment.
Speaker #4: Okay, sir. So second question is, how are we seeing the things moving in the mutual fund? Yes, just repeat.
Speaker #2: How are we seeing?
Speaker #4: How are we seeing the things moving in the nuclear segment?
Speaker #2: Nuclear.
Speaker #4: Nuclear, you know that this government has started pushing on the nuclear in a lot of impetus has come after this hormones crisis and all.
Speaker #4: So we have seen a lot of inquiries coming from the nuclear side. In fact, we are doing various environmental studies at this point of time.
Speaker #4: Three projects we are doing for a from a private investor. And one is for from the government side also. We are doing environmental studies.
Speaker #4: So these are the projects on the NWIL at this stage. And there are certain UIs also there in the market. We are also engaged with the NPCI for some of the consultancy assignments at this point of time also.
Speaker #4: Engineering consultancy assignments. We also know that we, we had last year secured the SMR SMR projects from NPCI and other clients. So nuclear is now is on the push.
Speaker #4: Let's hope for the best. It goes fine. Okay, sir. So my last question is, sir, in terms of the revenue contribution, the consultancy order revenue mix has increased to above 60 percent, which used to be earlier stand around 48, 45 percent.
Speaker #4: So how what sort of revenue mix are we expecting from the consultancy side going forward in FY27 or FY28?
Speaker #2: In the financial year, current financial year, we are expecting more than 50 percent, but definitely around 50 to 60 percent we are still expecting from the consultancy segment.
Speaker #2: And balance will come from the LSTK 20 segment.
Speaker #4: Okay, sir. Good answer. Thank you so
Speaker #2: 50 to 50, 55 percent is at least bigger. Yeah.
Speaker #4: Okay, sir. Okay. Thank you. Thank you.
Speaker #3: Thank you. The next question is from the line of Hardik from LARC. Please go ahead.
Speaker #4: Sir, because of the Middle East conflict, have any of the clients put their project on hold as of now?
Speaker #2: Sir, as such, by staying off it, they don't stay anything is being holded. In fact, you won't even see that damage has happened anywhere.
Speaker #2: These days, you don't see any kind of news. But there is there, there is a problem there. The new projects are not coming very fast.
Speaker #2: The new tenders and new projects are not coming very fast. We have got few of the assignments, PMC assignments under the existing select our, our long-term agreement with them, as more than 500, 400 crores worth of assignment, which we have got from the Middle East.
Speaker #2: But there is an impact, definitely.
Speaker #4: But nobody's publishing that it has been on hold.
Speaker #2: On routine basis, we are getting jobs from the Middle East.
Speaker #4: Yeah. Okay. But any large projects?
Speaker #2: Not new mega projects are under hold.
Speaker #4: Yeah. Yeah, yeah. That's what I wanted to understand. Any existing mega projects which the client is not officially saying, but as of now, status quo, like let's not proceed now and we'll see kind of a scenario?
Speaker #2: Wherever we are working, those projects are on. All the existing projects.
Speaker #4: Existing jobs are on. They have not stopped them.
Speaker #2: They have not stopped.
Speaker #4: But new mega projects, we have not seen much. Okay, okay, okay. And what about the impact in India, sir? Because of the current financial position of the oil marketing operation, they think as the Middle East war had any impact on the India business as such?
Speaker #2: See, recently we have received order of. More than 500 crore from the Middle East region itself.
Speaker #4: Okay. In this quarter itself.
Speaker #2: In this quarter, sir. It's quarter only.
Speaker #4: Yeah, got it, sir. Now I'm asking about the India business. Overall, what do you see the impact of all of the India business?
Speaker #2: All the mega projects, which we are having, are on progress path. There is no disturbance to the existing Indian projects.
Speaker #4: And also, sir, the CAPEX investments of the all the OMCs are in place and going ahead.
Speaker #2: Yeah, that's what I wanted to know. Thank you so much, sir. Thank you, sir. That's it. That's what I wanted to know. Thank you, sir.
Speaker #2: Thank you.
Speaker #3: Thank you. The next question is from the line of Shubham Burari from ICICI Securities. Please go ahead.
Speaker #4: Hi. Thanks for taking my question. My question would be, can you please touch upon coal gasification opportunities in consultancy? And are you seeing improvement in order pipeline in that segment?
Speaker #2: The government, as soon as the government has revised this policy and they have said that they will be giving their gas funding of 34,000 crore.
Speaker #2: Many inquiries are there with respect to putting up the feasibility studies. So we are bidding for those ones. At this point of time, in any case, coal gasification, we are doing one project for NPCI and for NTPC.
Speaker #2: Which is for gas to SNG. This we are doing right now. And many of the projects which we are in the bidding stage. So these will be realized in a couple of months.
Speaker #2: We'll get to know the results of those because these are under negotiation and advanced stage. But they are definitely more inquiries on coal gasification at this point of time.
Speaker #4: Okay. That was it from my side. Thanks.
Speaker #3: Thank you. The next question is from the line of Deep Sanvi from the Lallam Broker of Stoking Private Limited. Please go ahead. It is a follow-up question.
Speaker #4: Yeah. Thank you so much for taking my question again. So my first five question was regarding the RFCL. So if you see, even this quarter, they have almost 42 crores of revenue, which was, I think, the last Q3 and Q4 also they got the similar in the range.
Speaker #4: So is this can this be considered like sustainable, this kind of profit?
Speaker #2: Yes, RFCL project is a running well. And now we are expecting this kind of profit on regular basis.
Speaker #4: So we are expecting.
Speaker #2: Some kind of dividend in the current financial year also.
Speaker #4: Okay. Sir, in the in the last call, you also said that there will be some smaller kind of their like technical thing you have to do in December as well.
Speaker #4: In that.
Speaker #2: that will be done. But that will be done during the regular shutdown period. And there will not be impact on the profitability of the project.
Speaker #4: okay, sir. And.
Speaker #2: Generally, generally, plans such kind of fertilizer plants are run for 330 days in the financial year. So within that window of 35 days or 30 days, which is kept for the regular shutdown period, during that period, all the activities will be carried out so that regular profitability will not be hurt.
Speaker #4: Right. Okay, sir. And another question was that was regarding the major projects which are which will be coming this year. So one is BPCL Andhra, IOCL Paradeep, and another one is ONGC, there's some tech sector chemical plant, right?
Speaker #4: So where do all of these projects stand right now? And when could we realistically see you know, them coming into the order net flows?
Speaker #2: देखिए, आंध्रा feasibility was on. They are now maybe anticipating towards the site development activities and all. So probably the execution tender would come towards the end of this financial year.
Speaker #2: So if it is settled before the financial year, then depending on the competition, if we get it, it will come within this financial year or otherwise, it's early next financial year.
Speaker #2: First quarter, it should be reflected. But on the ONGC part, we are still not listing anything. Feasibility study is on, and it's just in the process.
Speaker #2: But it is going to take time.
Speaker #4: Okay. And sir, what about IOCL's Paradeep phase two?
Speaker #2: IOCL Paradeep phase two is again it's under their approval. It is their management has to take a call. We have not anything heard from them also.
Speaker #2: The phase one is completed, and rest they have to decide because there were certain land issues and all. We understand that they are trying to settle.
Speaker #2: And then this project for the phase two will start.
Speaker #4: Right. And sir, even like without even if they don't contribute to the order inflows, still we will reach the 8,000 crore mark, like are you confident with that?
Speaker #2: It's not only those projects which we target. We target number of projects. We don't focus on those two. Many of the projects which cannot disclosed at this point of time, we keep on discussing.
Speaker #2: So you can see something coming there.
Speaker #4: Right. So can you also talk about the pipeline? If you can, please throw some light on that.
Speaker #2: On the pipeline side?
Speaker #4: Yeah.
Speaker #2: Are you talking about the pipeline? On the pipeline side, or projects you're talking about, or the order pipeline?
Speaker #4: Yeah, sir. The order pipeline, which like which kind of projects are you targeting? Like for the.
Speaker #2: No, because it is both. It is I'll tell you that now we are targeting hydrocarbon is definitely there. Hydrocarbon primarily the pet chem project, whichever are going to come.
Speaker #2: Those are there. We are also focusing on nuclear. I told you in the earlier call, in the earlier question also that nuclear, there are a lot of inquiries which are coming in the market.
Speaker #2: We're already doing EIS environmental impact assessment studies. We are moving towards coal gasification also. A lot of coal gasification inquiries are there. Even though they are in the initial nascent stages, infrastructure, you know, is a very good segment for us.
Speaker #2: We have just got a major assignment in the data center from Powertel. So similar kind of projects which we are targeting apart from hydrocarbon also.
Speaker #2: We have a lot of opportunities in this segment also.
Speaker #4: Right, sir. And just to sorry, just the last question, regarding the infrastructure, so the mostly the infrastructure projects are mainly in the kind of the LSTK job, right?
Speaker #4: Or?
Speaker #2: It is a mix actually. It is a mix. Somewhere it is project management services, somewhere we get those assignments as an OB under the OB, or somewhere on the depository mode.
Speaker #2: So it's always mixed. But last couple of years, more of them are coming on the the major ones are coming on the LS OB basis or on the depository.
Speaker #2: There are PMC assignments also. Those are smaller in size.
Speaker #4: Smaller ones. Okay. Okay, sir. Okay. Thank you.
Speaker #1: Thank you. The next question is from the line of Jayesh Gandhi from Harshad Gandhi Securities. Please go ahead.
Speaker #3: Congratulations and good set of numbers. A couple of questions from my side. I want to understand the progress on the nominative order. In Nigeria, if I'm not wrong, revenue recognition there is going to be on percentage of completion method, right?
Speaker #2: Yeah, it's a progress percentage. Fast progress. Fast progress.
Speaker #3: Okay. And since the project is like three to four years, I mean, revenue recognition, I mean, revenue will be recognized in I mean, it will be like front-loaded or back-loaded?
Speaker #3: I mean, you can give any picture on that.
Speaker #2: It is never on the front-loaded or back-loaded. Depending on the progress of the project, basically. They are not will be recognized based on the cost progress achieved during the quarter.
Speaker #2: If it is 10%, then turnover will be 10% of the contract value. If cost progress is 20%, turnover will be on cumulative basis 20% of the contract value.
Speaker #2: So this is the mess. So how turnover will be booked within I think four years, four years span of time.
Speaker #3: Got it. And sir, do we do we see any opportunity in this deep water drilling? I mean, the project which government has recently announced.
Speaker #2: Sir, we are not into the drilling part of it. We get involved in the offshore segment. We are involved when the oil is out.
Speaker #2: In the processing of the oil. So we are not into deep drilling, drink water drilling and all in that segment.
Speaker #3: Got it. And one last question is, since currently the order mix is more tilted towards consultancy, do you think this is going to be I mean, will it be the strategy of the management to keep consultancy in the mix higher, or it's going to be as the orders we will I mean, there's no strategy as such.
Speaker #3: Whatever order comes, we'll take it.
Speaker #2: Definitely, it is the strategy of the company to keep consultancy business on her side, since we are having margin strong margin in the consultancy segment.
Speaker #2: So a management efforts are always there to keep to grab the consultancy business first.
Speaker #3: Got it, sir. Thank you. Thank you for sharing your views, sir. Good luck for future.
Speaker #2: Okay.
Speaker #1: Thank you. The next question is from the line of Kunal Bhatia from the Lal Broker. Please go ahead.
Speaker #4: Yeah, sir. Thank you so much for the opportunity, and congrats on a good set of numbers. Sir, I just had one one or two clarifications.
Speaker #4: Sir, in case of consultancy, you did mention that the growth targeted for the year is approximately 10 odd percentage. So but however, looking at our say first quarter sort of a run rate, we could do approximately around 200 odd crores on a folio basis.
Speaker #4: That in fact is a higher growth rate vis-à-vis what you have been talking about. So sir, just wanted to get a sense, like even if we consider a 10,000 crore order book which we have in case of consultancy, and we take a 20% kind of an execution in the current year out of that, we would be almost at around 2,000 odd crores of total top line in consultancy.
Speaker #4: So is that the right number, or a directional right number to work with? Just wanted to get your thoughts on that, sir.
Speaker #2: I mean, yes, we have already given target of more than 10% in the increase in the turnover. Which is in the total turnover, which sets around 4,200 crore.
Speaker #2: And we are expecting more than 50% turnover from the consultancy segment as our I have already said it may be around 55% also. So definitely our consultancy segment turnover will be more than 2,000 crore.
Speaker #2: It will be around 23 and 2400 crore. So you are on right path, sir.
Speaker #4: Okay. Okay. So meaning consultancy could have a higher growth rate, right?
Speaker #2: Definitely consultancy will be higher. Higher than LSA.
Speaker #4: Okay. Okay. And sir, secondly, you did talk about coal gasification as a new segment opening up. And from our previous conference call, we what we understand is normally a coal gasification coal gasification kind of an order could be anywhere close to around 10,000 to 30,000 crores in terms of the overall order size.
Speaker #4: So out of that, EIL could get what percentage for say a consultancy slash donkey or any other order?
Speaker #2: Right. It's like this. It depends on the kind of service we are going to offer. Many of them many of these coal gasification projects are at the feasibility stage at this point of time.
Speaker #2: They are submitting the study to get the VGF funding from the government, and then probably towards the end of it, they will realize and they will go for the implementation.
Speaker #2: So typical consultancy for us remains in the same zone only, which we get it from any hydrocarbon. Doesn't matter to us that it's hydrocarbon and all.
Speaker #2: So we target the same kind of business from them, whether it is on the PMC mode, EPCM mode. Mode of execution of these projects remains the same.
Speaker #4: Okay. So probably our average has been around three to five percent. So one could work approximately with that.
Speaker #2: So you can guess just guess estimate from the past progress what the past past in the consultancy is almost remains.
Speaker #4: Okay. Okay. And sir, the 5,000 crore revenue target FY28, we maintain that, or we would be escalating on that?
Speaker #2: We are still maintaining that. And definitely we will try to improve it. Yeah.
Speaker #4: Okay. Okay. And sir, final question from my side. Sir, you did give some glimpse on the areas of business such as hydrocarbon, nuclear, environmental coal gasification.
Speaker #4: Sir, but if ballpark one wants to understand what would be your pipeline in terms of the bidding you have currently in terms of an approximate ballpark number, how much would that be, sir?
Speaker #2: Sir, all these projects are multi-million dollar multi-crore projects. So it's because it's very difficult to tell which segment how much we are going to bid.
Speaker #2: We want to bid for everything, whatever we can. Because when you bid for 10 projects, you can get one. It all depends on the competition in segment.
Speaker #2: So it's very difficult to tell what is the total business for which we will be bidding.
Speaker #4: Okay. Okay. And sir, finally, sir, in terms of competition, do like for us, the competitive intensity would be quite low vis-à-vis any other industry.
Speaker #4: So with that in mind, what would be say a success ratio we could work with?
Speaker #2: But who says that competitive intensity is less? If competitive and competition intensity is very high in all the segments, wherever we are working, all the assignments which we are getting is mostly on the competitive business, including the public sector.
Speaker #2: They are they are there consultants are there. In those segments. And we have been able to get the assignments from them. In competition.
Speaker #4: Okay. Okay. Fine, sir. Thank you, sir.
Speaker #1: Thank you. The next question is from the line of Amit Anwani from PL Capital. Please go ahead.
Speaker #4: Hi, sir. Good afternoon. Thank you for the opportunity.
Speaker #2: Hi. Good afternoon.
Speaker #4: Hi. So first question on the Aramco agreement which you spoke about last time.
Speaker #2: Yeah.
Speaker #4: Any development on that front? And second, because of the Middle East, probably we have some 12, 15 percent exposure there. You were kind of cautious in last quarter in terms of guidance.
Speaker #4: And this time you have suggested that probably the guidance can upgrade. So just wanted to understand since the war is still continuing, what is your thoughts on that as a company?
Speaker #4: Are we on track or still there are some concerns on the execution? And second, first was on the Aramco agreement here.
Speaker #2: On the Aramco side, we are still to get something from them. We are still in the initial stages. We are we have not got any major inquiry from them.
Speaker #2: Because I told you, you know, many of the projects have been slowed. They have been they have been in there is a slowdown on the new project.
Speaker #2: Which they are not issuing. So if something starts, then it will come under those inquiries. And this with respect to the general guidance about the Middle East.
Speaker #2: Middle East, you have a situation which is a little bit grim. But our teams are already stationed there. Our full-fledged team which was there earlier, it's still there in Abu Dhabi.
Speaker #2: And we have already indicated that we have got the business for 500 crores in first quarter itself from the Middle East side. So at the same time, there is a cautiousness.
Speaker #2: Businesses are new projects are less, but still we are continuing to target the project and have been successful in doing so.
Speaker #4: Right. So you have highlighted the consultancy revenue contribution can be more than 50 percent and probably 55 percent. And that's the segment where we really earn very good margins.
Speaker #4: So can we assume last time you highlighted operating margin with other income probably you can hit 18, 19 percent. Can that number now since consulting is will be more be revised to probably 20, 21 percent including other income?
Speaker #4: What is your thought on that?
Speaker #2: Last year our operating margin was 15 percent. And definitely we will try to hit that target. In the current financial year also.
Speaker #4: Can it be better? Because consultancy now you're guiding that could be contributing.
Speaker #2: Yeah. Definitely. We are we are finalizing some change orders with our clients also. If it is metalized, our operating margin may be more even more with the previous year.
Speaker #4: Right. So I think you you said somewhere that probably 18 to 19 percent. So that's the guidance for this year, right?
Speaker #2: Yeah. Most of it. Most of it. Most of it.
Speaker #4: Including other income, I'm saying. Yeah.
Speaker #2: Most of it. Most of it. This year, we are targeting the operating margin of 16 percent, which we have achieved the last year also.
Speaker #2: There may be a possibility if we settle the change order with our clients, we may achieve more. But definitely we right now we are saying since it is the first quarter of the financial year, we we are maintaining the figure of 16 percent operating profit.
Speaker #4: Okay. And lastly, sir, on the intake, you did explain that you're still maintaining 8,000. So does that mean that the lumpy orders and you saw the execution delays or what is the YTD order, if I might have missed, in order inflow?
Speaker #4: And for the remaining of the year, what are the orders we are looking for conversion? Is it more exports or consultancy or turnkey if you could highlight that?
Speaker #2: Primarily could be in the consultancy or it could be in the overseas it could be more towards towards consultancy and overseas. So let's see how it goes.
Speaker #4: So probably the lumpy order?
Speaker #2: We will see how it goes. The number of things that are in negotiation.
Speaker #4: Right. What is the YTD order inflow?
Speaker #2: You say during the current year also means are we told you that we have already had the 2,750 at this point in time?
Speaker #4: Okay.
Speaker #2: Okay.
Speaker #4: Understood. Thank you, sir. Thanks and all the best. Thank you.
Speaker #1: Thank you very much. The next question is from the line of Viraj from Simple. Please go ahead.
Speaker #3: Yeah. Thank you for the opportunity. A couple of questions. See, when we talk about the new non-oil and gas initiatives, can you give some color in terms of what is our you know, right to win here, because see, in oil and gas, we have a quite sizable, you know, quantum of credentials and built over the years.
Speaker #3: But when it comes to the non-oil and gas, especially say nuclear, or coal gasification, or other segments, what is our right to win here and what is our communication to the customers?
Speaker #3: So that is one. And what kind of a sorry, just what kind of a you know, what initiatives or what steps we have been taking with capabilities or skill sets in these in a new segments?
Speaker #2: Yeah. With respect to the hydrocarbon, we are not saying that we are leaving hydrocarbon. We are going beyond hydrocarbon. Hydrocarbon is going to be it's all at the core.
Speaker #2: But there is always a time lag when the project is not there. Not we have not seen in this financial as of now the mega project which is there.
Speaker #2: They are still in the initial stages now. So you have to target other businesses outside the hydrocarbon ones. So that's how we are focusing on the other segments which we have explained in the earlier segment.
Speaker #2: You already know that infrastructure is one of the major part of our business today. Today, in this this financial year itself, it is around 45 percent which is contributing to infrastructure.
Speaker #2: Infrastructure is contributing to our business inflow. With respect to the nuclear and the other area, like coal gasification, we have the strengths available within the company to handle those kind of projects which we have people who have worked in the nuclear segment.
Speaker #2: We have people who have worked in the hydrocarbon. And hydrocarbon and coal gasification is not much of a difference because the you need the same skill set and same technology a little bit is different.
Speaker #2: But the skill sets are available to handle all this kind of stuff. And we have been involved in coal gasification for quite some time, many years, in this segment because however there was not much of a project.
Speaker #2: There are smaller projects were there. We have been doing some R&D work in-house also on this. So there's no problem of skill. We keep on upgrading the skills of our people.
Speaker #2: Like we keep on sending them on the training for the relevant areas wherein they have to strengthen their skills in that new area which we are doing.
Speaker #2: We are also open and we are recruiting people from the at the mid-level also wherever it is required, the specialization is required. So that all kind of strategies we adopt to develop the skill set within the company.
Speaker #3: So see, I know that's very elaborate answer. Thanks for that. But see, one has to understand outside of hydrocarbons, what kind of a guardrails you have in place you know, because we are already doing new segments for you and even from the customer you know, they would have a steady state of vendors.
Speaker #3: You know, Camille will have a good execution track record, right, which for us, we are just starting out. So in that sense, you know, when it comes to communication or, you know, putting that value proposition to the customer, what is that based on?
Speaker #3: And internally, what kind of a guardrails you have in place to make sure that, you know, you hit the internal profitability or the return targets?
Speaker #2: Thank you. Whenever you go into the new segment, you always use your existing capabilities to emphasize on the clients. You know that we are a 60-year-old company and handled all kind of complex projects.
Speaker #2: So if you talk about the infrastructure, it's not a very complex project. We have the skill set available for project management everywhere. And we have done a lot of projects in infrastructure.
Speaker #2: So we nobody questions the cavity of EIL in those segments. In fact, we have a choosy in the infrastructure. We go go into the specific segments only.
Speaker #2: We don't go into the regular building construction and any kind of road construction and all. We go into the specific like data centers. We go into the work like research and development facilities of the client.
Speaker #2: We go into the projects which are related to the IMs, IITs. Construction, we are buildings and all. Going into the if some kind of convention centers, wherein you have skill sets available and many of these projects are from the oil oil and gas companies also.
Speaker #2: Like we have been associated with ONGC in development of the convention center. We are also engaged with NTPC for development of their township. So we are we are targeting the clients which are in the hydrocarbon segment only and outside segment also.
Speaker #2: Who need the infrastructure support. And they know our capabilities. So there is no dears of that issue. Going into the new segment like coal gasification all, we have people.
Speaker #2: We have people trained with us. And they know there is nobody like EIL in the hydrocarbon segment available because you know hydrocarbon segment is much more complex than any other segment.
Speaker #2: Like coal gasification or maybe other segments. Nuclear is a it's a new area. So we wherein we are developing our skills and we're gradually entering into the area wherein primarily we focus on the balance of plant which is balance of plant is it's a non non-core nuclear which is it's almost similar to what we do in the hydrocarbon.
Speaker #2: So those skills are available. And the client understands all the relevant client understands that they can do it. And that's how we get the assignment.
Speaker #3: So just one follow-up on this. See, if you look at our own journey in the fertilizer space, especially in India, you know, just to make a very strong point in terms of building that credential, we also co-invested in the project, right?
Speaker #3: So when it comes to these new centers, especially say coal gasification or clean energy you know, be it green hydrogen or green ammonia or and you know, nuclear projects, would we be also co-investing in those projects to build those credentials?
Speaker #3: Or the approach would still largely be more on the execution side and not participate financially?
Speaker #2: It's not like that. It is depending on the kind of opportunity and the profitability in that segment which is established. Fertilizer we have seen fertilizer we had the experience.
Speaker #2: We have implemented it in non-core. You can see that we are setting up in CBG plant where investing our own money to set up that plant.
Speaker #2: So those non-hydrocarbon investments we are also taking. But you know that's a public sector company. We have to take guidance and work under the guidance and kind of money available with us.
Speaker #2: Those decisions and number of proposals are always under consideration. So we'll see what fits best and where the project is of our interest and where it where we can have the like the the way we utilize our capability in the fertilizer and we we became the partner in that project.
Speaker #2: If this kind of opportunity comes, we are open to thinking about it.
Speaker #3: Okay. I just have two three more questions. Can I ask?
Speaker #2: Yeah, please go ahead.
Speaker #3: So see, in domestic market also, you know, you have this new inner urea policy being rolled out by the government recently. And so in that sense, you know, you have a multiple sectors outside of core hydrocarbons for you to clean.
Speaker #3: Where will the larger focus of the management lie? You know, would it be more on consultancy? Would it be more on LSCK projects or I mean, since there's so much of correct me, but there's so much of inquiry or opportunity available for you, what is typically your approach?
Speaker #3: Because, you know, you have a steady only a limited base of skilled manpower for you to deploy. So how are you going about with that project selection or, you know, end sector selection?
Speaker #2: We have a we have extensive manpower available with us. Plus, we take people from outside. We have been recruiting people from outside. We take the support of the specialized agencies for the non-critical work.
Speaker #2: So those manpower is not a dears for us. And with respect to going for the EPC or LSCK, we choose depending on what kind of projects which where the risk is minimized we try to choose that kind of segment for us.
Speaker #2: Because you know that most of the EPC projects we do it on OB basis. It's an open book estimate basis. Our preferred choice is that.
Speaker #2: And most of the contracts which have been entering into the segment are OB. So we choose if we get an opportunity on the risk basis, OP basis or in such a area wherein we have the scale and we know that we don't need any we have minimum dependence on the other agencies, other execution agencies.
Speaker #2: Then we also bid for the EPC. It's all choice. Depending on the type of the project, depending on the skill set available within the company itself, which we choose.
Speaker #3: Okay. But do you do you think it's a problem where I mean, it's a good problem to have, but is it a scenario where you're seeing many inquiries or pipeline being very strong across existing core and non-core you know, segments?
Speaker #3: Based on what are you seeing right now?
Speaker #2: There is there are inquiries in the core and non-core segments definitely. That's how we are getting the business.
Speaker #3: Okay. So this annual flow of 8,000 crore kind of order book this should be able to sustain for next few years.
Speaker #2: Yes. We will. We will. That's what we are working towards.
Speaker #3: Okay. Last two questions. One is on the investment book. See, we invested in the fertilizer project and there's another investment as well. Any thoughts in terms of monetization?
Speaker #3: Because, you know, it has served as a utility in terms of the credential building. Incrementally, how you do you look at it?
Speaker #2: No, it is not the purpose of credentials building. It is an investment also. We are getting money out of it. It's an investment a safe investment for us.
Speaker #2: We're getting dividends from the NRS since times to come we'll be getting good dividends from RSPL as soon as the plant is started working and process the capacity limits.
Speaker #2: So this is an investment. It's not only for the PTR. We we didn't need the PTR for getting into the fertilizer. Fertilizer we already had the PTR earlier.
Speaker #2: And NRL we have the extensive experience. It's all strategic investments. So we will not I don't think we are at this point of thing thinking about in cashing this.
Speaker #3: But but you know, in the cash position, would just keep on building up, you know, I mean, outside of these investments, we have a sizable surplus.
Speaker #3: Cash. And given the nature of the business, this will only further increase. So is there any concrete thinking around, you know, sharing this cash with shareholders?
Speaker #2: No, definitely we are having cash reserves. But certain other investment plans are also under consideration with management. Whenever these plans will be concreted, definitely we will let you know.
Speaker #2: But as of now, there is no such plans to distribute the entire reserves to the shareholders.
Speaker #3: Okay. Last question was on the overseas book.
Speaker #2: We are already seeing good dividend to our shareholders. It is in the range of 100% in the current financial year.
Speaker #3: No, that is really appreciative. But you know, as I said, given the nature of the business, this will only further keep building up. So and as minority shareholders, we would also prefer instead of say investments in some of the.
Speaker #2: We're looking for the opportunity for investment. Definitely we are fulfilling the expectation of our minor shareholders also by way of division.
Speaker #3: Okay. Last so last question was on the overseas book. See, traditionally Middle East is a region we have had a very little penetration right.
Speaker #3: We have been making efforts to further penetrate you know and get approved with most of the you know global players. Can you give some color more elaborate color in terms of you know what exactly so what initiatives we have been taking you know where are we in that whole journey right now?
Speaker #3: And how do we see this scaling up over next three, five years?
Speaker #2: So you must have seen that in last three years where we have grown in the international market in this particularly in the Middle East.
Speaker #2: We have already declared how much business we have received from Middle East specifically from the Abu Dhabi in last three years. We have grown in from 30 crores to 1,000 crores.
Speaker #2: Three, four years itself. So you can understand from the that kind of business initiatives and a lot of frame agreements which we have entered with all the clients and all we are not struggling for it but we have already signed all those agreements and mega projects mega mega contracts we have signed.
Speaker #2: So we are on a good path and we are on a progressive path. This this hormone thing would not have happened the business scenario would have been different.
Speaker #2: You know all everybody knows about what is happening there.
Speaker #3: So are we now entitled to approve with all the major players?
Speaker #2: Yes. We entitled with all the consultant. All all the major national oil companies we are empowered.
Speaker #3: Okay. And then the discussion on projects, is it more based on pricing or there's a lot of hard sale you have to do in terms of capability?
Speaker #2: You don't have to.
Speaker #3: Showcase?
Speaker #2: No, no, no. Wait a minute. We don't have to hard sell. We are entitled and you don't have to hard sell. It's a competition.
Speaker #2: Again, when you get empowered, it's a competition. They have empowered 10 parties. There will be competition. That's true everywhere. Whether it's in India or outside India.
Speaker #2: It's a competitive world.
Speaker #3: Got it. Thank you very much.
Speaker #2: Yes.
Speaker #1: Thank you very much. That was the last question for today. I now hand the conference over to the management for closing remarks.
Speaker #2: Thank you everyone. Thank you so much for your participation and let's hope the the current financial year will be much more profitable and better than the last financial year.
Speaker #2: So we our all our companies efforts are in that direction. Jinda sir, you would like.
Speaker #3: No, that's thank you.
Speaker #1: On behalf of Tam Capital, that concludes this conference. Thank you for joining us and you may now disconnect your lines.
