Speaker #1: Ladies and gentlemen, good day and welcome to Skipper Limited Q2 FY27 earnings call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the lesson-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Speaker #1: Should you need assistance during the conference call, please signal and operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded.
Speaker #1: I now hand the conference over to Mr. Naveen Sahade from ICICI Securities. Thank you, and over to you.
Speaker #2: Thank you. Good evening, everyone. On behalf of ICICI Securities, I welcome you all to the conference call of Skipper Limited. Today, we have with us from the management, Mr. Sharon Bunsel, Director; Mr. Shiv Shankar Gupta, Company CFO; and also Mr. Aditya Dujari, AVP Finance and Head IR.
Speaker #2: So without any further ado, I hand over the call to the management for their opening comments. Over to you, sir.
Speaker #3: Good evening, everyone. And thank you for joining today's Skipper on-call for Q2 FY27. Before we proceed, I would like to draw your attention to the fact that certain statements made during the call may be forward-looking in nature, and should be considered in conjunction with the risks and uncertainties associated with our industry and business.
Speaker #3: We are pleased to report another strong quarter with record revenue, sustained margin expansion, robust order inflows, and a significant improvement in our balance sheet.
Speaker #3: Despite inflationary cost environment, continued geopolitical uncertainties, and temporary disruptions in export markets, let me begin with our financial performance. During Q2 FY27, we achieved our highest-ever second-quarter revenue of $1,384 crores, registering 10% year-on-year growth.
Speaker #3: For H1 FY27, revenue reached a record $2,694 crores, growing 7% over the corresponding period last year. Profitability continued to strengthen, reflecting improved execution, favorable project mix, and disciplined cost management.
Speaker #3: Q2 EBITDA grew 11% year-on-year to $145 crores, with margin expanding to 10.5%. Profit before tax increased 25% to $78 crores, while PAC grew a strong 56% to $57.5 crores.
Speaker #3: With PAC margins improving by 130 basis points, to 4.2%, for H1 we delivered our highest-ever half-yearly PAC of $114 crores, representing 40% growth year-on-year.
Speaker #3: An important highlight has been the continued improvement in our financial position. Our finance cost as a percentage of revenue declined to 3.2% in Q2 from 4.2% a year ago, supported by lower borrowings and better financial discipline.
Speaker #3: Our debt-to-equity ratio improved to 0.38x, while gross debt, including interest-bearing acceptances, declined by approximately 358 crores year-on-year to $964 crores. The recent $433.5 crores preferential equity raise and our CRISI rating upgrade to A+ stable further strengthen our financial flexibility.
Speaker #3: Coming to the business performance, our order book reached a new milestone of $10,066 crores, as of September 2026. Providing strong revenue visibility, we secured record Q2 order inflows of $2,111 crores, up 70% year-on-year.
Speaker #3: Taking H1 order inflows to $3,786 crores, up 18%. Our bidding pipeline remains strong at over 35,000 crores, supported by sustained domestic transmission investment and expanding international opportunities.
Speaker #3: Exports remain a key strategic priority for us, and we are particularly encouraged by the changing composition and diversification of our export order book. Our geographical exposure is now well diversified, with the Middle East accounting for less than 18% of our export order book, a majority of our export order inflows are increasingly coming from developed markets, particularly the US and Australia.
Speaker #3: Where we are witnessing strong customer traction, growing engagement, and encouraging order opportunities. Our record quarterly export order inflow of $1,055 crores will surpass the entire export order inflow of FY26, is a strong validation of our growing international competitiveness and expanding global customer relationships.
Speaker #3: We believe this diversification significantly strengthens the quality and resilience of our export portfolio, and positions us well for sustained international growth. Further, the ongoing $75,000 MDPA capacity expansion is on track, and likely to be commissioned and operational in H2 27, taking our total installed capacity to 450,000 MDPA from existing 375,000 MDPA.
Speaker #3: This expansion will strengthen our ability to serve larger orders, improving operating leverage and capitalize on opportunities in both domestic and international markets. We continue to work towards our longer-term capacity roadmap of 600,000 tons by FY29, alongside customer qualification initiatives across developed markets and expansion of our global presence.
Speaker #3: Looking ahead, the structural outlook for power transmission and distribution sector remains encouraging, supported by grid expansion, renewable energy integration, rising electricity demand, and investment in high-voltage transmission infrastructure.
Speaker #3: We believe Skipper is well positioned to benefit from these opportunities through its integrated manufacturing capabilities, execution track record, expanding capacity, and growing international footprint.
Speaker #3: With a record order book improving profitability, a stronger balance sheet, and increasing traction in developed export markets, we remain focused on delivering sustained growth and creating long-term shareholder value.
Speaker #3: With the opening remarks, I would like to hand over the call for follow-up questions from participants.
Speaker #1: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question, may press star and 1 on the touchstone telephone.
Speaker #1: If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question.
Speaker #1: Ladies and gentlemen, we will wait for a moment while a question queue assembles. The first question is on the line of Dheeraj Mali from Wheatfield.
Speaker #1: Please go ahead.
Speaker #2: Good evening, and thank you for the opportunity. My question is, in the previous phone call, you maintained your FY27 revenue growth of 15%, as said.
Speaker #2: You are confident of achieving it. However, F1 revenue growth is currently around 7.1%. To achieve the 15% full-year target, you would need around 21.6% growth in H2.
Speaker #2: Are you still confident of achieving this target? And what factor will be drive the higher growth in the second half?
Speaker #3: Yes, thank you for the question. We are largely aligned to achieve our 15% growth target for the full year. However, there are continued geopolitical uncertainties and shipping line shipping freight remains elevated across the world.
Speaker #3: So yes, we are facing shipment deferrals from a lot of customers who are waiting for the prices to come down. So yes, at worst, we may see one or two percent the drop from our 15% guidance.
Speaker #3: But however, we are optimistic that we are largely on track to achieve our revenue growth.
Speaker #2: Okay, so you mean 13 to 14 percent will be your target.
Speaker #3: At worst, yes, at worst.
Speaker #2: Okay. Okay, got it. Thank you.
Speaker #1: Thank you. A reminder to all the participants to press star and 1 to ask a question. The next question is from the line of Naveen Sahadeo from ICICI Securities.
Speaker #1: Please go ahead.
Speaker #4: Yeah, good evening, Sharanjit. So a couple of questions. My first question was to understand that this is the first quarter in which the export share of the order book has swelled to 17%.
Speaker #4: So how should one look at it more so in the in light of the recent order that you won, but also at the same time, the challenges that we are seeing at the global level?
Speaker #3: Sure. Thank you, Naveen. You are right that our traditional market, which is Middle East, there we have so which is why right from the beginning of the year, we took a keen focus to diversify our export order breakup.
Speaker #3: And we are very happy that we have been able to achieve that to a large extent. As we have been sharing for the last several quarters, that our focus continues to be on developed markets.
Speaker #3: Particularly US, Canada, Australia, and European region. And there we have started seeing a good order inflow. So in fact, now North America, makes up almost about 44% of our total export order book.
Speaker #3: Australia, makes up almost 18 to 19%. So combining all of these now 60% plus of our order book is now coming from developed markets.
Speaker #3: And Middle East is now only 18%. So I think this is something that we are very happy about. And we hope to see further business coming from the developed geographies, particularly USA, where AI-led data center power transmission investments are seeing very, very strong momentum.
Speaker #3: So I think we are we have a large bidding pipeline in these markets, and we should see further conversion taking place in the subsequent quarters.
Speaker #3: So that is what the export side is concerned. Middle East continues to remain a bit of a challenge. So we are not very optimistic in that geography.
Speaker #3: But I think if this war situation gets better, then we should start seeing that region revive again.
Speaker #4: Thank you.
Speaker #1: Thank you. A reminder to all the participants to press star and 1 to ask a question. Ladies and gentlemen, if you wish to ask a question, you may press star and 1.
Speaker #1: The next question is from the line of Ashwini Agarwal from Demita Advisors LLP. Please go ahead.
Speaker #5: Good evening. Just some more color on the export order book. I mean, are these orders all FOB, or they are cost including freight and if it is the latter, how you managing the freight is one question.
Speaker #5: And second is, you know, if there are delays to the to the international orders, do you have some flex in supplying the local orders to be able to meet your revenue targets?
Speaker #5: How you internally thinking about all this?
Speaker #3: Okay, so on the first part, yes, largely the new orders that we are taking, we are taking with either on FOB basis. With the ocean freight to be taken care by the customer, or even if we are taking the sea freight, the understanding is that it is variable and to be finalized to be frozen at the time of shipment.
Speaker #3: So I would say that we are quite well covered in term we don't have a risk on account of further escalation in the shipping freight.
Speaker #3: Though I do believe that globally we have seen a more or less a, you know, a peak peak of the shipping rates already. And now from here on, definitely we are expecting reductions to take place.
Speaker #3: On the second part of your question, that if we continue to face challenges, then what is our plan for domestic? So I would say the domestic market will also quite vibrant and last year we did see muted ordering in the domestic side.
Speaker #3: But I think this year the domestic order inflow has been also quite robust. And there are tremendous amount of opportunities in the domestic side also.
Speaker #3: We have also secured good number of orders in the first half. We are looking at more orders in the second half, our total order inflow target for the year is 7,500, for which we are well on track to achieve that.
Speaker #3: So I'd say that now in the domestic also, there are enough opportunities for us to make up if in case there are further hindrances to export order shipment.
Speaker #5: And of your export order book, how much of that would be CIF? What you already have in the bag, the 17% of your total, 10,000 odd gross.
Speaker #5: How much of that is CIF where you might have to take the hit on freight?
Speaker #3: Maybe about less than 25 to 30%.
Speaker #5: Okay. Okay. And the margins, profile of the new orders that's coming in, both from outside India, as well as within India, how do they the margins on the new orders compare with, you know, what you've reported in the first quarter, 10, 10 and a half percent?
Speaker #5: I mean, how do you think about that number changing as we go ahead?
Speaker #3: We have been you know, last year also we delivered a good increase in our EBITDA margins. And this year also in both the quarters, we have seen EBITDA margins improve.
Speaker #3: Though we would have liked to see the EBITDA margins improve further, but we are facing some cost pressures due to fuel price increase and other commodity price increases.
Speaker #3: Otherwise, the EBITDA price increase possibly could have been even higher. Sorry, the EBITDA overall EBITDA increase could have been higher. So I'd say the new orders coming in definitely are coming with good margins.
Speaker #3: We are steadily moving towards our long-term aspirational margins of 12%. So we definitely will move there. And now with exports coming in with good volumes, we definitely feel that that journey towards 12% will be faster.
Speaker #3: So that is definitely the margin trajectory will continue to be upwards.
Speaker #4: Okay. Okay, thank you. I'll come back in the queue. Thank you.
Speaker #1: Thank you. A reminder to all the participants to press star and 1 to ask a question. Ladies and gentlemen, if you wish to ask a question, you may press star and 1 on your touchstone telephone.
Speaker #1: The next question is from the line of Naveen Sahadeo from ICICI Securities. Please go ahead.
Speaker #5: Yeah, hi. So my question was around the employee cost. This quarter, we are seeing a fair amount of jump in this particular cost. I just wanted to understand, is this the rate run rate that we should pencil in for the balance two quarters in the fiscal?
Speaker #3: This quarter particularly, I think the employee cost the cost they were increments done in the quarter quarter two. So the areas of quarter one were also paid out along with the salaries in quarter two.
Speaker #3: So I think that was also that also had an effect. So I would say probably quarter three will be lower. Quarter three should be yeah, quarter three we should expect about a 5.5% as a percentage of revenue for the employee cost.
Speaker #5: Understood. My second question then, was about the segmental revenue breakup, because now that like, you know, it's quite encouraging, heartening to know that you're still broadly sticking with the revenue growth guidance, which also then implies a much higher ask in the second half.
Speaker #3: Correct.
Speaker #5: My question was, my question was around the segmental breakup, because in distinctly in the first half, bulk of your revenue contribution is from engineering products, where the growth year on year I'm saying is fairly muted and EPC or the infrastructure projects is driving the revenue growth for us.
Speaker #5: So in the second half, how should one look at growth? Will it be same like, you know, wherein the infrastructure project segments will drive growth, or even the equipment or the engineering products as the businesses?
Speaker #5: That will drive revenue growth.
Speaker #3: See, overall in the year, definitely infra as a segment is going to be seeing a large growth this year. That is something that, you know, we saw right from the beginning of the year.
Speaker #3: And that's also playing out in the actual execution in H1 also and similarly in H2 also. We will likely see infra playing a major lead in the revenue growth.
Speaker #3: Engineering segment shall be growing also. However, the muted order inflows of last year and the ongoing export hindrances are playing a part. And not allowing the engineering revenues to grow as much as what we would like.
Speaker #3: I would say that this both these challenges would probably be much better addressed in the coming financial year, when because of all these new export order inflows from other geographies, we should be seeing, you know, more even growth across the segment in our overall company.
Speaker #5: So I appreciate only arithmetically, I just wanted to check, because infrastructure as a as a segment, has much lower you know, EBITDA margins. And if that is driving growth, then how can you like, you know, I'll just request you to convince a little convince us a little more on the margin stability in the second half, with infra structure driving growth.
Speaker #5: Thanks.
Speaker #3: Even in the first half, you know, okay, we've seen that infra has been the main driver of revenue, but despite that, we have grown.
Speaker #3: EBITDA margins overall. So I'd say that the quality of the contract is getting better. And that applies to both engineering and infra. So for sure, we are confident that despite whether it is in engineering leading the growth or infra leading the growth, overall in the company, we will see EBITDA margin improvement.
Speaker #5: Thank you.
Speaker #1: Thank you. A reminder to all the participants to press star and 1 to ask a question. The next question is from the line of Ashwini Agarwar from Demeter Advisors LLP.
Speaker #1: Please go ahead.
Speaker #4: Yeah, hi. So thanks for taking my question again. So, you know, the major concern, if you just go through the first few questions on this call, is really about whether the growth rate will pick up in the second half or not.
Speaker #4: And I just wanted to sort of dig a little bit deeper there. If the growth is largely going to be driven by the domestic market or domestic supplies, and these are infra projects typically have visibility ahead of time because you would know which lines are coming up, you would know where right of way has been secured, etc., etc., how much visibility do you have of the, you know, revenue target that you have for the full year?
Speaker #4: Or if you back out the first half of it, the revenue target for the second half, how much visibility do you have at this point?
Speaker #4: And how much of it is sort of contingent upon events that are still to unfold?
Speaker #3: So I would say that we have a good amount of visibility, and which is why we are maintaining our guidance of 15% leave aside at at worst a drop of 1 or 2% growth.
Speaker #3: So, you know, we are well aware of what our order book is and what is up for execution. So I say that we have full visibility.
Speaker #3: And execution remains robust. So in that sense, we don't see a challenge anywhere in hitting that overall growth target, both in terms of top line as well as bottom line.
Speaker #3: And so if you can see the bottom line number also, with a so firstly, let me start about top line. In the first quarter, we saw about just a 4 to 5% increase.
Speaker #3: But in the second quarter, we've seen already an improvement of about 10%. So that trend obviously will be much better in quarter three, quarter four, quarter these are always the H2 is heavier for execution.
Speaker #3: And on the bottom line side, if you see on overall on H1, we've delivered almost a 50% increase in bottom line. So I'd say that we are on the right track.
Speaker #3: And we definitely have a very good visibility considering the orders that are to be executed in H2 to be giving the guidance that we are giving.
Speaker #4: Okay. No, that's very comforting. And the other thing is that, you know, the capacity expansion that you're talking about, how much will it cost?
Speaker #4: And will you have will you be able to generate enough cash flows to to fund that? Or would you be borrowing money? Could you provide some guidance on capex over the next two to three years?
Speaker #3: Yeah, so our annual capex has been in the range of approximately 250 to 300 crores. And that's what we have been investing to add capacity.
Speaker #3: Our current expansion is also costing us just about that much. And in terms of funding, the company is quite comfortable. We recently did a fundraise also preferential equity raise.
Speaker #3: Of about 430 crores, which has brought down our debt equity to 0.38. Now it's below 0.5. So obviously it's very, very comfortable for us.
Speaker #3: I'd say the balance sheet has got a lot of strength. And with the operating cash flows also improving, this year we do expect the operating cash flow to be at least 75% of our total cash flows.
Speaker #3: So I'd say that we're quite in a comfortable position to meet all our capex requirements.
Speaker #4: And last question from my side. Exports cash flows, how do they work? I mean, these are long shipping cycles and long receivables. So do you discount bills with or without recourse?
Speaker #4: How do you manage the working capital cycle with rising export as in the revenue mix?
Speaker #3: So this is a mixed of contracts. In certain countries, we get LCs where we discount them, upon shipment itself. And in certain mostly in the developed countries, where we don't have LCs, there the shipment the payments could be a function of direct payments against shipment, or then even other discounting options are available because the customer quality generally tends to be of the highest standard.
Speaker #3: So I would say that there isn't a very long cash conversion cycle in the export orders, despite the long shipping time. Generally, our payments are generally, our payments are available to the company upon shipment.
Speaker #4: So your working capital cycle won't materially change as the export in the revenue mix goes up?
Speaker #3: Not really. What typically happens is that and I've shared this earlier, that exports we see collections happening sooner. But the inventory cycle expands a bit because just in terms of the value added grades etc., and the inspection and shipping requirements, so the inventory we probably have to hold on to a little longer.
Speaker #3: And the production time cycles are also longer. So and the domestic side, the inventory cycles are shorter, but the collection cycles tends to be a little longer.
Speaker #3: So overall, they're both comparable, both domestic and export are comparable from a working capital perspective.
Speaker #4: Okay. Perfect. Thank you. Thank you so much. All the best.
Speaker #3: Surely.
Speaker #1: Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. The next question is from the line of Aditya Velekar from Fires AMC.
Speaker #1: Please go ahead. Sorry to interrupt you, sir. Aditya, your voice is breaking.
Speaker #3: Hello, Aditya. Hello.
Speaker #1: It's sounding a bit muffled.
Speaker #3: Is it okay?
Speaker #1: Still muffled.
Speaker #3: We can try let's try hearing him, ma'am. Let him say his question. It's okay now? Just continue. It's not very clear, but we'll try.
Speaker #3: Please go ahead.
Speaker #2: Yeah, sir, I want to understand the phasing of the capacity expansion. Means we are expanding from, say, 45 KT to 60 KT. So what is the status?
Speaker #2: Means in terms of is there means this will be a greenfield capex. So is the land finalized? And by when we are expecting phase one of that and phase two?
Speaker #2: So a little bit of more detail detail in terms of capacity expansion, if you can put light on that.
Speaker #3: Sure. So actually, the phase one was when we moved from 300,000 tons a year to 375,000 tons last year. Phase two is when we are moving from 375 to 450,000 tons.
Speaker #3: And that will happen in H2 this year. And all of these have been mostly in brownfield expansion so far. In the companies existing plants, the further expansion could possibly be greenfield, so we are on the lookout for new land etc.
Speaker #3: And that will our plan is to take this ultimate capacity to 600,000 tons. So that should happen over the next two to three years.
Speaker #3: And for which we are looking out for greenfield investment land options.
Speaker #2: So this greenfield capex, what will be the capex intensity? Means so far we have been doing brownfield capex. So going forward, our capex intensity will rise as we go for the phase up to 60 KT?
Speaker #3: No. The capex intensity will not rise much, but only the cost of land will possibly be added. So far, it was being done on largely existing land.
Speaker #3: But I think going forward in the future, we possibly could be acquiring some land. So the cost of land might be added onto the capex.
Speaker #2: And what kind of timelines can we factor in? Means by when you can go for a land acquisition and anything material we can you can throw some light on that?
Speaker #3: We are in advanced stages of identification. And I think very soon we should be within the target is that within this quarter, we identify a new location.
Speaker #3: So possibly the first phase of that, we could start by the end of next financial year. And the second phase could be the end of subsequent financial year.
Speaker #3: So by end of FY 28 and FY 29, we should be able to fully operate the new unit.
Speaker #2: Understood. And my last question is with respect to the overall macro and capex cycle of transmission infra. So means do you see the means as we will be going for greenfield capex also in future?
Speaker #2: So the book to bill ratio will we be able to maintain at the current levels? Means I understand we have a bid pipeline of more than 30,000 CR, but this at what stage of transmission overall capex cycle we are currently and do we have a long runway to justify this kind of a greenfield capex which will come up in next couple of years?
Speaker #3: Yes, absolutely. Because transmission outlook is extremely robust, not just in India, but in several parts of the globe where we are already active. So I would say that even in India itself, we do expect to see at least or the lower side, 1 lakh crores plus of bidding every year.
Speaker #3: Up till 2032, 33. And some accounts suggest that even up till 2035, we should continue to see at least 1 lakh crores of investment annually, if not more.
Speaker #3: And on the global side, as you have seen in H1, we have started securing good amount of orders now from the developed countries, including US, Canada, Australia, etc.
Speaker #3: So I would say that trend should also continue. And overall, every market where we are active whether it is Africa, Middle East, South America, everywhere we are seeing very excellent opportunities for power transmission.
Speaker #3: Because all countries are trying to move for more electrification, more renewable integration into the grid. And also more transmission systems to cater to the AI data centers.
Speaker #3: So I would say that this trend should definitely continue. And business outlook will not have any challenge for this new greenfield capacity.
Speaker #2: Understood. Just one last question, if I can squeeze in. With respect to our contract assets and contract liabilities, means any guardrail or as we expand and as we grow in terms of top lines and we explore into exports market, so how will you see the working capital?
Speaker #2: Especially in terms of contract assets and liabilities.
Speaker #3: In terms of working capital, over the last four to five years, we have been able to bring it down from earlier almost about 200 days.
Speaker #3: We have been able to bring it down quite nicely to almost close to about 90 days. And I say I believe that this is the best in the industry.
Speaker #3: If you see all our peers, they are all operating at 120 days plus. And 90 to 95 days is a reasonable stable working capital day for the company.
Speaker #3: So as the companies operations continue to grow, the contract assets and liabilities will grow in proportion to the operations. But I would say that the net working capital days of the company should be in this 90 to 100 days stable region.
Speaker #2: Understood, understood. That's it. Thank you very much for this detailed answers.
Speaker #1: Thank you. The next question is from the line of Darshal Pandya from Pinterest Capital. Please go ahead.
Speaker #4: Hello. Hi. Am I audible?
Speaker #1: Yes, sir.
Speaker #4: Yeah. Thank you. Shalanji, just one question. Sir, what was the capacity utilization during this quarter, if you can just tell us? Hello.
Speaker #3: Approximately 80%.
Speaker #4: Approximately 80%. And sir, this is on 3.75 lakh capacity that we are doing, right?
Speaker #3: Correct.
Speaker #4: Right. So this is the maximum that we can do from this capacity? Or there is some heterogeneity?
Speaker #3: No. We can possibly no. We can we have in the past gone up to 90% also. For I think 90% is quite doable. But because as I mentioned earlier, because of the export challenges, right now we are not able to push for full capacity utilization.
Speaker #4: Sir, what is this export issues that we are facing in what products or what is it something that we are facing this issue?
Speaker #3: So mainly it's on the account of shipment deferrals, which are happening. In many cases, customers are choosing to defer shipments because right now the shipping rates are very high.
Speaker #3: And if the customer has to bear the shipping increase, then they are choosing to defer and wait for the prices to come down before they allow further shipment.
Speaker #3: So that is all that is happening. I mean, that's the main reason for this reduction in exports. If you see in this quarter also, exports declined about 46% year on year.
Speaker #3: To about 106 crores versus 198 crores in previous year quarter two.
Speaker #4: Correct. Okay, sir. One last question. When is this new capacity expected to be? Because we are already in it's two now. So if you can just share some timeline with regards to this.
Speaker #3: It could possibly take place in the end of quarter three itself or latest in the beginning part of quarter four.
Speaker #4: Okay. All right. Thank you so much for answering my question.
Speaker #1: Thank you. A reminder to all the participants to press star and one to ask a question. Ladies and gentlemen, if you wish to ask a question, you may press star and one.
Speaker #1: The next question is from the line of Vinay Chaudhary from Invexa Capital LLP. Please go ahead.
Speaker #5: Hello. Yeah. Thank you for the opportunity. You know, congratulations on the set of the numbers. And the fundraise. So just wanted to understand the utilization of the funds.
Speaker #5: What we did in terms of the preferentials equity raise. And what's our strategy on the debt going forward?
Speaker #3: Yeah. Thank you. So the debt, even before the fundraise, the company was in a very comfortable position where debt was concerned. We were at 0.64 debt equity ratio before the fundraise, which after the fundraise it has come to 0.38.
Speaker #3: So the main idea behind the fundraise was to strengthen the balance sheet and so that because we do have decent amount of capex in the next couple of years.
Speaker #3: So the idea was that we strengthen the balance sheet and be ready for any new opportunities that may come about in business, whether it is M&A or new plants, etc.
Speaker #3: So I think that was the idea. This quarter also today also we have announced the acquisition of a small manufacturing company in South India.
Speaker #3: So that's a small acquisition. It's about 15 to 16 crores. But I think more such opportunities may come about in the future. So we want to be ready and that's why the idea behind the fundraise was that we strengthen the balance sheet and be ready for all opportunities.
Speaker #5: Sure. Yes. Thank you for answering the question.
Speaker #1: Thank you. The next question is from the line of Navin Sahadiyar from ICICI Securities. Please go ahead.
Speaker #4: Yeah. Hi. So having done a reasonably good order intake in the first half, what is now the full year order inflow guidance for us, sir?
Speaker #3: We maintain our order inflow guidance of 7,500 crores. Hopefully, we should be able to do much better than this. But as of now, we want to maintain the guidance given last time, at 7,500.
Speaker #4: And when we.
Speaker #3: Is to get more and more export orders in the mix.
Speaker #4: Yeah. Exactly. That's what my question was. That is there a because the recent order was a very good accrual that we got from exports.
Speaker #4: So I was just wondering if we is there more visibility that you have that can convince on order book order inflow exceeding largely from export sections?
Speaker #3: It is definitely possible. Our idea would be that, of course, we'd like to see more and more export orders coming because anyway they come with better margins.
Speaker #3: And developed country exports come with even better margins. So it's hard to say because export orders tend to have a little bit of an uncertain time timeline of finalization.
Speaker #3: Many times we feel okay that the order is about to be finalized and we are favorably placed. But then again, another two quarters pass and the order is not finalized.
Speaker #3: So again, I think keeping all optimistic views I'd say that for the subsequent quarters also, we should be taking in a similar amount of export orders which we have already taken.
Speaker #3: Though officially, we will maintain that, okay, for the full year, we should take in about 1,500 crores of export orders. Out of which we've already taken about 1,000, 1,100 crores already.
Speaker #3: So but we'd maintain a guidance of 1,500 crores of total export order inflow this year.
Speaker #4: Yeah. Helpful. My last question then, was about the margins or risk to margins in light of the in general inflationary cost environment. So if you could just talk about how much percentage of the order book is fixed or something which can on a what do you say, wherein it's flexible in nature, wherein we can pass on the cost impact, to customers and also the same that when we go for export orders and when we say that they are fetching much higher margins, are these also on fixed basis or they are on flexible contract basis?
Speaker #3: So our orders are now majority on fixed price basis. But because the margin profiles are comfortable and whenever we have a firm price order, we do get a sufficient amount of buffer from the customer in the pricing and also we are able to secure higher amount of down payment to secure a good portion of that inventory.
Speaker #3: So I'd say that the risk to margin is nil because even in the first half of the year, despite the cost inflationary pressure has been there, pretty much right from the beginning of this year, so possibly what can happen is that our overall target for margin in expansion may see some hit and but definitely there's no chance of any dropping of our margin.
Speaker #3: So like what we have done for overall for H1, we have improved margin by about 20 basis, 20 to 30 basis points. So I'd say that that at least should continue our target would be to improve margins further.
Speaker #3: That's what our order book does have those kind of margins available. But of course, look, if cost pressures continue the way they are, then perhaps the margin expansion will not be as high as what we had targeted for in the beginning of the year.
Speaker #3: That's about it. But as with more and more export orders now coming in, where the execution will likely take place next year, we definitely will be moving gradually and steadily towards our aspirational margins of 12%.
Speaker #4: So in the interim, is it safe to say that they will be in the range of 10 to 11 percent to come what may?
Speaker #3: Absolutely. Absolutely.
Speaker #4: Understood. Thank you, sir. Those were my questions.
Speaker #1: Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. A reminder to all the participants to press star and one to ask a question.
Speaker #1: As there are no further questions from the participants, I now hand the conference to the management for the closing comments.
Speaker #3: Thank you, everyone. Looking ahead, we are confident of delivering a significantly better H2. A multi-year growth runway ahead, lies ahead for us. With the record order book rising capacity utilization, improving margin profile, expanding export footprint, and a structurally scalable manufacturing base, Skipper is entering a phase where growth, profitability, and return ratios are set to compound together.
Speaker #3: We appreciate your continued support and look forward to interacting with you again in the next quarter. Thank you.
