Operator: Ladies and gentlemen, please stay connected. The call will begin shortly. Thank you. Ladies and gentlemen, good day and welcome to WPIL Limited Q2 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Taparia from MK Global. Thank you, and over to you, sir.
Abhishek Taparia: Good evening, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Prakash Agarwal, Managing Director, and Mr. K.K. Ganeriwala, Executive Director. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.
Prakash Agarwal: Thank you. Good evening, everyone. It is a pleasure to welcome you all to our earnings conference call for the second quarter and H1 of financial year 2027. Let me first take you through the financial performance of the company, followed by the operational highlights. On a consolidated basis, revenue from operations for the quarter under review stood at INR 354 crore, a decline of 17% year on year. On a standalone basis, revenue for the quarter stood at INR 118 crore, down by 33% year on year.
Prakash Agarwal: For the H1 of financial year 2027, our consolidated revenue stood at INR 855 crore, a modest 6% increase year on year. EBITDA was at INR 123 crore, a decline of 5%. EBITDA margins stood at 14.33%, while PAT from continuing operation was at INR 93 crore, a marked increase of 20% year on year. PAT margins for the H1 stood at 10.83.
Prakash Agarwal: The domestic business continued to face near-term execution challenges, particularly in the project division. However, our total domestic order book remains robust at INR 2,423 crores, providing a foundation for an improvement in financial performance during H2 FY27. The product division recorded revenues of approximately INR 62 crores in Q2, compared with INR 86 crores in the corresponding quarter last year. For H1, the revenues were INR 133 crores, compared with INR 151 crores. The division's order backlog remains strong at approximately INR 500 crores, providing healthy business visibility. While a large number of dispatches to customers were deferred during the quarter, the overall outlook remains positive. We continue to focus on export growth alongside domestic opportunities, particularly in the power sector. The domestic project division remains subdued, with revenues of approximately INR 57 crores in Q2, compared with INR 90 crores in Q2 last year.
Prakash Agarwal: Revenue for H1 was INR 100 crores, versus INR 206 crores in the corresponding period. Our focus remains on commissioning ongoing projects and commencing operation and maintenance activities. As more projects are commissioned, O&M revenues are expected to improve during H2 of the year. Our international business continued to demonstrate resilience and remains an important growth driver for the company, with total international order book of INR 2,686 crores. International revenue for H1 increased 38% to INR 626 crores, compared with INR 458 crores in H1 last year. The international business also continues to benefit from a healthy order pipeline across our product and project platforms. On the international project side, the business continues to benefit. Product side, it continues to benefit from opportunities across the MENA region, Australia, and Southeast Asia.
Prakash Agarwal: Gruppo Aturia is expecting a significant order from Kuwait Water Supply, which would further strengthen its position in the international water market. In Australia, the consolidation of the business is contributing to an improvement in the margin profile. Meanwhile, WPIL Thailand continues to see growth opportunities following the introduction of new products in the Thai drainage sector. Our product division order backlog stood at approximately INR 1,000 crores at the end of H1, providing visibility for the coming quarters. International orders account for nearly 52% of this backlog. We remain focused on expanding our export presence and capitalizing on opportunities across key international markets. The international projects business execution momentum continues to improve across the subsidiaries. MISA Italy has successfully completed all legacy projects and booked important orders during the quarter, providing a stronger foundation for future growth.
Prakash Agarwal: PCI Africa has commenced execution of new projects, which are expected to gain further momentum towards the end of the financial year. We remain encouraged by the opportunities available in the South African water infrastructure market. Eigenbau has also strengthened its order book with repeat order from Riverton Water Works, reflecting continued customer engagement. The project division's order backlog stood at approximately INR 4,079 crores at the end of H1, providing substantial visibility for future execution. International projects accounted for approximately 53% of this backlog, highlighting the growing contribution of overseas markets to our project business. Overall, we remain constructive on the international outlook, supported by a strong order book, improving project execution, and opportunities across water infrastructure, drainage, and industrial applications. Looking ahead, our priorities remain focused on strengthening execution, converting the existing order book into revenues, and improving the performance of our domestic business.
Prakash Agarwal: While domestic execution has remained subdued in H1, we expect an improvement during H2, supported by project commissioning, commencement of O&M activities, and a recovery in the water infrastructure business. Our international operations continue to provide growth opportunities across both products and projects. Again, with a substantial order backlog and diversified global presence, we remain focused on improving execution and sustaining our growth momentum. With this, I would like to take questions. Can we take questions now, please?
Operator: Yes, sir. 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 their touchtone telephone. 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Jainam Doshi from KRIIS PMS. Please proceed.
Jainam Doshi: Thank you for the opportunity. Sir, like Q2 of India is usually Q3 of Africa, and usually Q3 has a stronger execution in Africa. Here, we have seen a substantial dip in the project execution from the African business. Can you help us with the reasons for such decline? Whether it was attributable to any labor shortages or kind of sourcing payments from South African government, or there has been any spillover or delay in the execution?
Prakash Agarwal: No, I think these projects are primarily the big growth and jump in the last quarter came from the start of the projects, large projects of PCI. PCI's projects tenure is 48 months, 4 years. It is a bit lumpy initially, and we expect this first year to have, say, about 15% of traction, and the main traction will pick up from next year. I think there is no. It is just related to execution progress considering a project of 4 years. That is the typical timeline for it.
Jainam Doshi: Understood. But like, sir,
Prakash Agarwal: Another clarification is, the project business in South Africa is January to March is their largest quarter, typically, because the financial budgeting happens in post-March.
Jainam Doshi: Okay, fair enough. And sir, like two of the African projects which we won initially had already entered the engineering phase. So, like the peak revenues from such projects will come from next year is what you wish to say?
Prakash Agarwal: Yes, I think the second year is the biggest year in these projects.
Jainam Doshi: Okay, so what would be the annual project execution target which we are targeting in the international piece for the current year?
Prakash Agarwal: It's a bit fragmented. I think we expect a pickup in H2, as mentioned. As I mentioned again, January to March is typically when the budget is to be exhausted. So, I think we should see good growth in H2 and going into next year.
Jainam Doshi: Understood. Sir, for both the entities like PCI and Eigenbau, are we bidding for newer contracts? How is the pipeline there considering the current scenario, if you would like to allude on that part?
Prakash Agarwal: I think we are balancing. Both are having strong order. As I mentioned, Eigenbau, they have got a new contract, reasonably large. So, it strengthens their order book. Both have very strong order books of good margin business, and we expect to see traction. They are bidding, but I think a bidding aggression will pick up once traction on the existing contracts is improved.
Jainam Doshi: Gross margins, like how
Prakash Agarwal: The pipeline remains strong. Sorry, just to. Yeah, the pipeline remains very strong.
Jainam Doshi: Understood. Understood. So, the gross margins which have been impacted this quarter, are we seeing any procurement challenges due to the ongoing geopolitical uncertainties? Freight cost getting
Prakash Agarwal: Sorry, the line is breaking. Can you repeat yourself?
Operator: Mr. Doshi, we cannot hear you properly.
Jainam Doshi: Yeah. Am I audible now?
Operator: Yeah, please continue.
Prakash Agarwal: No, it is cracking. Yeah, okay.
Jainam Doshi: Yeah. Also, the gross margins have been impacted this quarter. Are we facing any procurement challenges due to the ongoing geopolitical uncertainties, like increase in freight cost or the increase in RMs?
Prakash Agarwal: I think if you see, gross margins are actually improved. The revenue is the challenge. There has been a slight dip in the revenue, which is-
Jainam Doshi: Okay
Prakash Agarwal: It is not the gross margin. The gross margins are strong.
Jainam Doshi: Understood. Understood, sir. The margins in the product division have fallen, both year-over-year and quarter-over-quarter. Is it the mix change which has resulted in the dip, or the aftermarket, or as you mentioned, there were certain dispatches which did not happen in the domestic product? Was it due to that thing, or how should we look at the dispatches going ahead? Yeah, yeah.
Prakash Agarwal: Yeah, I think the business should be understood that, we have discussed in the past also, the gross margins, we are happy that the gross margins of the business, and even at the EBITDA level, remain strong. The dip is, fluctuations are primarily due to revenue fluctuations through the year. End of the year, we are completely aligned, and we are very confident of margins and revenue profile. So, I think it is a bit of seasonality rather than anything else.
Jainam Doshi: Understood. Sir, how are we seeing at the opportunities, both in the domestic and the international piece going ahead? How is our strategy pertaining to the international piece, like in regions of MENA as well as US, as the oil and gas and various other infra is picking up? So, how are we positioning ourselves into that space?
Prakash Agarwal: Firstly, we are very strong. I think our international business across the board is very strong. Just now we mentioned regarding Kuwait, where we are expecting a large order. Our Thai business is performing exceedingly well. Our Australian business is performing well. So is the South African business. The growth, I think, is a bit affected. Presently, this quarter, as I mentioned, geopolitically, the Middle East remains an area of flux, and that is affecting new contract finalization, dispatches to that area to some extent. So, I think we will know within the next few months how it plays out.
Jainam Doshi: Got it. Got it. Sir, one more thing is, the dispatches of the product business which we mentioned that got deferred, can you quantify such deferment?
Prakash Agarwal: The product business, I think I don't want to quantify it. It will even out. What basic idea is that a large number of them are now, should be dispatched. I think seasonally, September was a very heavy monsoon month, and therefore the project sites did not accept the goods. I think it will even out in this quarter and surely in the second half.
Jainam Doshi: Understood. Sir, one last question from my end is, with respect to the JJM. Because of the deteriorating macroeconomic conditions, do we think the state has the funds currently to release for these JJM projects, or how are we seeing on that part?
Prakash Agarwal: I think we are personally, we are seeing that there is a change in the mechanism in which they are focusing more on commissioning. Our company is fully aligned. We have been, we slowed down order booking, and then we focused on execution from the last two years. Now, further, we are focusing on commissioning, because they are relating fund release to commissioning of projects. We are well positioned there, and as we are seeing, a couple of large projects got commissioned recently. O&Ms have started in a number of projects. So, we're focusing on commissioning, and once that happens, I think the fund release are along the line. in West Bengal, where we have a considerable exposure, the fund, some amount of funds for smaller vendors was disbursed last month. We expect funds starting next week itself.
Jainam Doshi: Okay. Okay. That gives a lot of clarity. Thank you. Thank you, sir, for your time, and I'll join back the queue for other questions.
Prakash Agarwal: Thank you.
Operator: Thank you. The next question is from the line of Deepak from Swan Investments. Please proceed.
Deepak Purswani: Yeah. Hello, sir. Thank you for the opportunity. Sir, firstly, on the product division, like we mentioned about Gruppo Aturia, we are expecting a large order from the Kuwait Water Supply project. Can you please share the further details about it? What could be the size and what are the further opportunities?
Prakash Agarwal: Yeah, it just shows that the traction is there. I think it just shows that the business is aligned and moving well. Do not want to share numbers here. It is a product order, so it is not that impactful on the overall picture.
Deepak Purswani: Okay. And sir, we also mentioned that we are looking opportunity in the power division. If you can share the further detail. I think we also, in one of the comment in the opening remarks, mentioned we are exploring opportunity in the power division.
Prakash Agarwal: We see good opportunities. I think a large number of thermal power plants are, orders are going to be placed. That's a big segment for us, and we expect to get a good share out of this.
Deepak Purswani: Okay. That would be on the domestic side of the pipeline where we are-
Prakash Agarwal: Domestic side, yeah, sorry. On the domestic thermal side.
Deepak Purswani: Okay. Then, sir, now moving to this project business. On the domestic market side, if I were to look into your order book, I mean, it is a INR 1,900-odd crore. If I remove the O&M, it is INR 1,400-odd crore kind of order book we have the project. Now, this quarter, if I can see, there is also reduction, some kind of improvement in the receivable as well. So, would it be fair to say we have started receiving the JJM payment and collection, and now the execution should pick up in the H2? Is it a correct understanding?
Prakash Agarwal: Yes. Our major contracts to execute are in West Bengal, and we have been waiting for the West Bengal funds, and that should be, as I mentioned, to the smaller vendors was released about 15, 20 days ago, and should be released to us starting next week. So, I think we are anxiously waiting to get that funds and start accelerating supplies itself. So, very quickly, you should see results.
Deepak Purswani: Okay. And, sir, from the second half perspective, see, I mean, to be very honest, in the first half from the domestic project business, we had done INR 100-odd crore. Now we have a sizable order book of INR 1,400-odd crore. So, from that perspective, how should we see the execution pacing up once we start receiving the payment?
Prakash Agarwal: I think we will be able to give a clearer picture in the next call, because by that time, we want to get the funds first before we comment on that. But we have plans to accelerate rapidly, and the client is also very keen that we rapidly accelerate. Also, the weather is good. I think this is peak construction period. So, all things aligned, things should pick up, as I said, from next week, and we will be able to give a clearer picture next call.
Deepak Purswani: Okay. On the international market, especially on the South African region, if you can share the perspective. I mean, you did mention about the execution to pick up, but just wanted to check out, is this drop a seasonally weak drop? Because last time we had a INR 216 crore kind of execution in the African project, and now this has suddenly dropped down. Is there any challenges or just a normal drop?
Prakash Agarwal: The South African execution will be lumpy, and it will gain traction, as we have always mentioned, from FY27. It is lumpy. That means big payments at one time. It is not civil construction, steady run rate projects. As we have mentioned, the major traction will pick up FY27, starting from the first quarter itself. Sorry, CY27.
Deepak Purswani: Okay.
Prakash Agarwal: I do not think it should be read quarter on quarter. The order book and margin profile are the two keys for us. The execution will go through some seasonality or cyclicality.
Deepak Purswani: Secondly, sir, just wanted to check out on the price mechanism there, especially in the context of a sudden sharp rise in the raw material prices. Is it a pass-through in major of these contracts, or how does the margin shape up over a period of time on these, especially international projects?
Prakash Agarwal: All our projects are margin pass, cost pass through. There are cost variation clauses in every contract.
Deepak Purswani: Okay.
Prakash Agarwal: For projects.
Deepak Purswani: Okay. From that context, margin profile would be decent enough in this, sir?
Prakash Agarwal: Yeah, we are not worried about the margin.
Deepak Purswani: Okay. Thirdly, sir, just wanted to check it out on the Thailand project. In the annual report, we have mentioned we did a 1 billion THB revenues, and if I were to look into your profitability there last year, we, on the 30% share, we did INR 8.9 crore. This time in the H1 itself, we have done INR 11, 12 crore kind of bottom line, which implies execution of INR 400 plus crore in the INR terms for the H1 itself. So, if you can share, in terms of the overall perspective for the Thailand business, what are the kind of opportunity we are seeing? What is current order book? How should that shape up over the next 2, 3-year perspective? That would be really helpful.
Prakash Agarwal: Actually, it is really accelerating very well. It is one of our strongest performing businesses. As you correctly pointed out, the H1 has been very good there. Unfortunately, we do not consolidate it, otherwise it would directly impact our numbers. However, the traction is very good and opportunity, you saw that there was a huge flooding this year in Bangkok. So I think this is going to be another, a bigger year for us going forward. Their financial year starts in September, so it will gain traction now.
Deepak Purswani: Okay. Okay. Sir, if you can also share your thought, I mean, even in this JV, we have a 30% share, and also in the lot of subsidiary, we have a 50% to 70% kind of share. So if you can share your thoughts on the consolidation of stake on various subsidiaries. How should we look from the medium-term perspective on that part?
Prakash Agarwal: In Thailand, we have a 49% share.
Prakash Agarwal: in the JV because it is mandatorily required by Thai law for the local partner to only participate in government tenders.
Deepak Purswani: Hmm. Okay.
Prakash Agarwal: That is, we are restricted there, so 49% is the stake we hold through our international subsidiary.
Deepak Purswani: Okay. Sir, what about the other subsidiaries, especially African?
Prakash Agarwal: Yeah, yeah. I think we are improving. We just improved. I think we will be giving more details later. We are improving our holdings in the African subsidiaries. We are trying to restructure and improve there. We have another JV in Clyde, which is a 60/40 JV. These are the three prominent JVs here. In Africa, in PCI Africa, we have a three-year period after which we will be moving from 55% to 100%.
Deepak Purswani: Okay.
Prakash Agarwal: I think one year is going to be over.
Deepak Purswani: Oh, okay. Thank you and wish you all the best, sir.
Prakash Agarwal: Thank you.
Deepak Purswani: Happy Diwali in advance.
Prakash Agarwal: Happy Diwali to you.
Operator: Thank you. The next question is from the line of Balu Lamkhade from Parami Financial Services. Please proceed.
Balu Lamkhade: Thank you for the opportunity. My question is regarding, we had sold Rutschi business, and some tax reasoning was done, and the tax advisors had advised us that we will get the majority of the money back. So what is the status on that, if you can update, please?
Prakash Agarwal: Yes. The process is that we paid the tax and then have gone for a claim, and that is legally proceeding. We will get it, but it is a 2-year process minimum for that. It will go through different levels, like in India, similar to India. First is the department level, and then at the appeal level, and then the courts. I think, presently, we will have our first feedback sometime this quarter.
Balu Lamkhade: What is the tentative amount, Mr. Agarwal, on this?
Prakash Agarwal: About 6.8, I think, 6.87 million.
Balu Lamkhade: Okay. Also, in this quarter, the margins have, as I heard you said that margins are not a problem this quarter, the sales have been a problem, but margins have dipped a little. What can you attribute that to?
Prakash Agarwal: The gross? The revenue itself. If you take the cost structure on the revenue, the revenues have been lower. We should be at a typically INR 450, INR 500 crore level, so INR 350. But the gross profit levels are good, and the revenue pickup will be. You will see additional margin jump in the future quarters on EBITDA level.
Balu Lamkhade: My last thing was, from the tracking which we do, the JJM West Bengal especially, they have released quite some money, about around INR 4,000 crore approximately.
Prakash Agarwal: That money is lying with the department. The money is lying with the department. They have not disposed it yet.
Balu Lamkhade: We are expecting that to start receiving from coming week only, you are saying?
Prakash Agarwal: Yeah. Correct. Correct.
Balu Lamkhade: I think we have large money stuck with West Bengal government.
Prakash Agarwal: Yes.
Balu Lamkhade: Approximately INR 300 crores plus. Thank you, Mr. Agarwal, and wish you all the best.
Prakash Agarwal: Thank you. Thank you.
Operator: Thank you. The next question is from the line of Nikunj from Carnelian Capital. Please proceed.
Nikunj Sutriya: Yeah. Hi, sir. If we see the segment-wise margins, we see a very high volatility in the margins. In the product business, we saw margins of around 31% in Q1 and it dipped to around 16% in Q2. If you also compare it year-on-year, it was 27% in Q2 FY26. Is there any particular reason for this dip in this quarter?
Prakash Agarwal: No, no reason. Some dispatches got postponed. If you add a significant, we had a revenue loss. We are monitoring at the gross, one is at the gross profit and then on the structure expenses. We are not worried. You will see the jump. We are consistently in our 15% to 20%. If you see the first half itself, we are at 14% on a consolidated basis. We should be up to between 15% to 20%. I think 17%, 18% is our targets.
Nikunj Sutriya: Okay. And-
Prakash Agarwal: Not to be read into.
Nikunj Sutriya: Sorry?
Prakash Agarwal: Sorry, I am saying that the margin is that revenue is our order book, and our margin profile is what we monitor very closely. The revenue moves up and down a bit depending on certain periods. As I mentioned, September this year, this one was a bit worse because of the strong monsoons. I think sometimes postpone that is difficult.
Nikunj Sutriya: Yeah. Also on the project execution which you are seeing in the future, what would be the guidance for FY27 and 28 revenue?
Prakash Agarwal: I think it is strong on all the factors we mentioned. We see a good, strong H2 building traction. Going forward, we will further see the South African revenues improve as the execution improves in CY27. Product business is very strong. The order book was INR 450, now it is INR 500. So, a lot of traction in various areas.
Nikunj Sutriya: Understood. Okay, thank you.
Prakash Agarwal: Thank you.
Operator: Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. The next question is from the line of Saket Kapoor from Kapoor & Co. Please proceed.
Saket Kapoor: Yeah. Namaskar, sir. Hope I am audible.
Prakash Agarwal: Yes, namaste.
Saket Kapoor: Hello. Yes. Sir, firstly, in terms of the restoration of the EBITDA margin, if I could understand from you that, and here as a whole, we should be looking our EBITDA margin trajectory back to the 17% to 18% band. That is what our target had been earlier. Just to take into account even the blips that we have seen for the H1, are we confident to reach and post those numbers with H2 in execution?
Prakash Agarwal: Yes.
Saket Kapoor: Okay. Overall, there should be margin improvement to those numbers?
Prakash Agarwal: Yes.
Saket Kapoor: Sir, secondly, when you mentioned in your presentation that there was some deferment of product schedule from the clients, when we look at our standalone numbers, those numbers on Q-on-Q basis are looking better. If you could just explain what exactly has happened. Then you mentioned that our order booking has improved. I did not get your point. When our orders were not dispatched, the order book remains the same for the domestic operations, I think so. If you could just explain what exactly went wrong in terms of dispatches.
Prakash Agarwal: Nothing has gone wrong. It has just got deferred. What I am trying to say is the backlog has moved up from 450 to 500. That means the backlog remains strong. These dispatches should happen in the H2. So, the H2 should have improving dispatches. Nothing much to be read into it. It just shows that the product division performance should improve in the H2, and we hope to improve over last year because of the strong order book.
Saket Kapoor: So, sir, just to dwell last point on the product part, 1,030 is the number for us in the product division. That is the order backlog split given to us. So, on a conservative basis also, what percentage should get executed for the H2, sir?
Prakash Agarwal: See, I have mentioned the domestic product dispatches were affected. So, on that side, our domestic product dispatches should pick up in the H2, which should help us to exceed our last year's domestic product business numbers. That should be there. Other businesses are looking strong, especially as we have mentioned regarding Gruppo Aturia and Eigenbau. So, that should play out.
Saket Kapoor: Just to get some understanding there, that last year's top-line number of INR 1,036 crore on the product part, we are in a good, strong wicket to supersede that number. That should be a better understanding because there will be variations up and down.
Prakash Agarwal: Yeah, I think we hope to improve on that. That is our target.
Saket Kapoor: Okay. Now, coming to the O&M part, sir. You mentioned that with the execution, and now our focus more on the execution. Firstly, sir, what is the current O&M book we have, and what was the contribution for Q2 and H1, if you could give some color on the operation and maintenance part?
Prakash Agarwal: Projects are one of the areas first is that the JJM fund release and the project monitoring is shifting to commissioning of projects. So, commissioning of projects has been our major focus, and that is gaining traction. More projects are getting commissioned. As the projects are getting commissioned, they go through a defect liability, trial operation period, and then move into O&M. So, projects are moving into O&M. I think we will be able to give a very clear picture on O&M end of this year. So, and we received an order for O&M because one project moved into O&M for about INR 25, 27 crores recently. So I think this is a sector we will be able to give more clearer visibility once more projects are commissioned, finishing the trial operation defect liability period, and moving into O&M.
Saket Kapoor: Okay. Sir, so for as of now for the H1, what is the contribution, sir, for the O&M? Can you specify that, sir?
Prakash Agarwal: It's not significant.
Saket Kapoor: Okay. And the closing number
Prakash Agarwal: It will pick up in the H2. In the H2, it will pick up, and from next year, we'll be able to give a fair picture.
Saket Kapoor: Okay. Out of the total order book position, what is the O&M component, sir, that you can clarify?
Prakash Agarwal: Share, it's about 550 now. 525, we got an order, so 550. Some amount is executed, so 545, 540 something.
Saket Kapoor: Correct, sir. Right, sir. Lastly, sir, when we look at the number disclosed under the JV, this line item, share of profit from associate and joint ventures, this number has also slipped from INR 11 crore to INR 3.5 crore Q1, Q2 basis. If you could just explain to us, and even when we disclose our numbers, if some more color would be given in our presentation of what has contributed to this number, giving us an understanding of the joint ventures and various associate disclosure, that would also suffice, rather than with an only an annual report document. This number decoding is also needed, sir.
Prakash Agarwal: Yes, we will share more details. You are right, it's becoming a significant number because of the performance, but it's primarily due to the performance of WPIL Thailand and how those numbers move.
Saket Kapoor: Okay, so first quarter was also INR 11 crore contribution was from WPIL Thailand, and now INR 3.62 crore is a much lower number.
Prakash Agarwal: This is primarily WPIL Thailand, and it is also our Indian JV, which we have in Delhi. These are the two numbers which come here. We will give more details in the next presentation.
Saket Kapoor: Correct, sir. Right, sir. I will join the queue and all the best to the team, sir, and Shubh Diwali to everybody. Thank you.
Operator: Thank you. The next question is from the line of Balu Lamkhade from Parami Financial Services. Please proceed.
Balu Lamkhade: The last call, Mr. Agarwal, you had mentioned that you are looking for some acquisitions in USA. Any progress on that front?
Prakash Agarwal: No, we have no success. We are working hard in good discussions, but nothing to report as of now.
Balu Lamkhade: Okay. Thank you, Mr. Agarwal.
Operator: Thank you. The next question is from the line of Abhishek Taparia from MK Global. Please proceed.
Abhishek Taparia: Sir, out of the total order backlog in the domestic project of INR 1,900 crore, INR 550 crore pertains to O&M. This O&M is going to be for how many years? It is to be executed over how many years?
Prakash Agarwal: It is a mix. Some projects are 2 years, some are 5, some are 10, in different projects. So it is tough to quantify as such.
Abhishek Taparia: Okay. The INR 100 crores which is left on the JJM project side, that is to be executed by when? You will be having an execution timeline, right?
Prakash Agarwal: Which ones?
Abhishek Taparia: The JJM domestic INR 1,400 crores backlog, which the domestic JJM has, that is to be executed by what time?
Prakash Agarwal: Actually, one of the main areas in that has been, like in West Bengal, we have not received payments for the last two years. That has shifted the timeline. It is a shifting timeline. But we are, as we mentioned, critically in all other projects, all except West Bengal, we are moving quite well into commissioning and into O&M of the projects. We are meeting the timelines, which is our major target. West Bengal, once we have more clarity, post receiving payments, and as I said, the money is lying with the client, the client should be dispersing it, and the client wants more work done. We will be able to give a better light on this execution phase next quarter.
Abhishek Taparia: Okay, understood. As soon as the payment is released from the West Bengal government, we are in a position to execute projects in the West Bengal state. We can expect a huge ramp-up once the payment is released on the domestic project side, right?
Prakash Agarwal: Yes.
Abhishek Taparia: Okay. Moving forward, if we are expecting the funds to be released in the coming week or in the coming month, out of that INR 1,400 crores backlog, how much JJM is from the West Bengal government?
Prakash Agarwal: I think we should look at it as fact that we will improve the performance in execution in the projects. One, the West Bengal fund should be released. Second, the weather is good. Third, we are gaining traction in the commissioning projects in MP and other states. All this should lead to a strong performance in the H2.
Abhishek Taparia: Okay, sir. Understood. Coming to the international project division. In Q1, we had done a revenue of INR 220 crores, somewhere around INR 220 crores, and that was majorly because the projects got started and we booked revenue on the engineering front and the designing front. Going forward, you had mentioned it is going to be at a similar rate of INR 150 to 200 crores. So we can assume an INR 700 to 800 crores revenue on the international project side?
Prakash Agarwal: No, I want to say that we have been very clear that these are a bit lumpy projects. They are over four years. It is not a steady state, quarter-on-quarter, month-on-month project. So the revenues will come in batches. As I said, typically the second to third year are the major years. First year, as you correctly said, is engineering, planning, et cetera. So I do not think it should be taken as a month-on-month area. But the good thing is the margin profile is good, the order backlog is strong, and gives us good revenue visibility. So our results as such should be taken on an annualized basis and in both revenues and margins. Our target is always, and we have been able to successfully do it, stay within 15% to 20% EBITDA range.
Abhishek Taparia: Okay, understood. Sir, do we have any capacity concern or anything like that? Since last, I guess, eight quarters, I have seen the international product division revenue at around INR 160 to 180 crores. So, do we have any capacity constraint, or is this how we need to evaluate the international product business, somewhere around INR 160 to 180 crores every quarter?
Prakash Agarwal: You see, that is why internationally, our product businesses are stable. Unfortunately, one of the areas has been that our businesses are quite dependent on the MENA region. So we are hoping for traction in the MENA region to pick up. As I mentioned, Kuwait is a project which was first started three years ago, which is now crystallizing. So, there has been a lot of postponement of projects in MENA region. As we see some amount of normalcy returning there, then we will see a growth in MENA region. Besides that, we made an acquisition, as you said, in Europe on MISA. MISA needs pumps, so that will give us a boost. Similarly, Thailand, which is unfortunately not recorded in the consolidated basis, is moving strong. I think we are looking at more acquisitions, but mostly these businesses are stable and incrementally growing rather than aggressive growth.
Abhishek Taparia: Okay, understood. Sir, on the power industry side, which you have mentioned that we are going to see demand on the thermal side in the domestic product business. Apart from the power side, do you see any opportunity in the lift irrigation and river linking projects? How can we evaluate the market for domestic products?
Prakash Agarwal: The market for domestic products remains very strong. You have to understand that over the last 6 months since this war has started and crude oil prices have gone up, there are fiscal constraints, and these are all public infrastructure expenditure made by either state or central governments. Considering the environment, there is a huge demand for pumps, huge demand, but the funding resources are a bit of a challenge presently. Therefore, what happens is the demand gets postponed. These will come back with a bang as soon as the global scenario is improved. There is no concern at all from our side. It is a timing issue.
Abhishek Taparia: Okay, so the demand stays resilient, and we do have an order book of INR 1,000 crores in the product division. Typically, what I have seen is we need a year to execute the total backlog in the product side. Over the next 4 quarters, we can expect an execution of INR 1,000 crores, right? On the domestic and as well as international product side.
Prakash Agarwal: We are expecting a strong H2 based on some of the factors which we have done. The product division in India remains very strong. There are different factors for the Indian product division and international business. International business, as I mentioned, with good orders expected in Algeria and should be strong. Now, the good things for us, if I have to sum it up, is the domestic product business, which will have a strong H2. The domestic project business, where we should see a marked improvement as soon as the Westinghouse funds are received. Third, South Africa will gradually, progressively increase its execution.
Abhishek Taparia: Okay. Thank you, sir.
Prakash Agarwal: Thank you.
Operator: Thank you. The next question is from the line of Saket Kapoor from Kapoor & Co. Please proceed.
Saket Kapoor: Yes, sir. Just in continuation to what you were just referring to, that we see a strong ramp-up for the project business, especially for the domestic market. Sir, out of the closing order book of INR 1,400 crore unexecutable, what percentage is skewed towards the, especially for the West Bengal government? If you can give the split, just a ballpark number in percentage terms.
Prakash Agarwal: I think about 50% plus, 50%, 60%.
Saket Kapoor: That is a huge number. So the dependence is much higher on the same. Sir, we have the capability of executing the bulk of it if the payment terms are aligned as you are expecting to complete it over the H2 itself, or that will roll over?
Prakash Agarwal: Please do not jump to these things. We are yet to receive funds. We will receive funds, we will give our outlook. Please do not speculate.
Saket Kapoor: Very rightly said. Factoring into the other portion of the order book that is from the international operations, last year, sir, we closed at 820 in number. This year already we have done 400. On the revenue growth part, sir, you mentioned restoration of margins going ahead. On the revenue growth front, what should be the ballpark growth that we should expect for H2 revenue on what H1 we have done, sir? In the vicinity, if you could give us some sense.
Prakash Agarwal: We expect a strong H2, which should be driven by primarily the pickup in the domestic business from both product and project, and some ramp-up from South Africa, which should give us a strong H2. That will, the growth in revenues should improve margins itself, and the margins remain strong.
Saket Kapoor: Okay. Lastly, sir, about the increase in stake in our subsidiary and the JV part. If you could just give us some more timeline, what is the thought process currently, and what kind of funds are we anticipating to allocate in raising up the stake? African part of the story is clear that there is a path to reach that 100% number. Barring others and with the type of mandate from the government for participation, what are we looking at in terms of this non-controlling interest part going down from these levels?
Prakash Agarwal: You said correctly that there is a requirement by the South African government for black empowerment, which means ownership. So we are exploring various options, and it will, to try to improve our percentage to the optimum level.
Saket Kapoor: No, sir. Other than that also, sir, I think so we have one wherein the promoters hold stake as non-controlling, I think so, in one of the JVs, if I am not wrong, and through a Singapore holding company.
Prakash Agarwal: The promoter is partner in the international subsidiary in Singapore, which is approximately 60/40, 60% WPIL and 40% promoter. There is no it is a usage of cash. Is that the best usage of cash or not, we have to see. It is considerably highly valued right now. I do not think it is something we are going to be doing right now because we need cash. If we do, the biggest plans for us is to grow by M&A. We are looking at acquisition targets, so that will be the deployment for our cash.
Saket Kapoor: Right, sir. Theek hai, sir. Thank you once again, sir, and all the best to the team. Hope to hear from you more further, and I hope that for the whatever suggestions participants have given, sir, that will be deliberated on, especially for the JV part and associate also, sir, going ahead. Hope to speak you in Q3 con call. Thank you.
Operator: Thank you. The next question is from the line of Amit from MK Global. Please proceed.
Amit Lahoti: Yeah. Hi, sir. Thanks for the opportunity. Is it possible to share the order inflow number for this particular quarter?
Prakash Agarwal: No, it is not readily available with us. It has been stable in line with
Amit Lahoti: Okay. Sir, out of this international order backlog of INR 2,100 odd crore, is it possible to break it down region-wise? How much is from South Africa, how much from Italy, and the rest of the region?
Prakash Agarwal: Just a minute. We do it from product and project.
Amit Lahoti: Okay.
Prakash Agarwal: Yeah, approximately, these are approximate figures, just to
Amit Lahoti: Yeah, that would work.
Prakash Agarwal: South Africa is, because of the project there, is the largest.
Amit Lahoti: Yeah.
Prakash Agarwal: Approximately INR 2,400 crore, I think. That is the project long-term orders. Italy is approximately INR 350 crore, because those are shorter duration orders. Australia is approximately INR 80 crore to INR 90 crore.
Amit Lahoti: Okay.
Prakash Agarwal: These are the three entities we report.
Amit Lahoti: Okay. So, sir, you mentioned INR 2,400 crores for South Africa, is it?
Prakash Agarwal: Yeah.
Amit Lahoti: Okay. And this will be both product as well as project?
Prakash Agarwal: Yes.
Amit Lahoti: Put together.
Prakash Agarwal: But the project is the larger share. The product share would be approximately, I think, 250 or 300. Because again, the products are six-month cycles.
Amit Lahoti: Correct. Sir, this almost like INR 1,800, INR 1,900 crores kind of a project level order backlog at South Africa, what is the execution timeline? As you mentioned that, CY27 should be a bumper year for South African entity. So what is the kind of revenue booking that we anticipate in this particular region? If you can just highlight that would be helpful, sir.
Prakash Agarwal: Most of these orders have been received this year
Amit Lahoti: Okay
Prakash Agarwal: from the first 9 months. Typically, the projects are 4 years timeframe, 48 months. In a typical 4-year project, you expect the peak revenue to be in the second year.
Amit Lahoti: Okay.
Prakash Agarwal: Because first year is engineering, then supply, then erection, commissioning. In that light, we anticipate next year, as we move into the second year, to be the strongest year. There are projects, it is a continuous cycle also, with the business ramping up now with the credentials they have. I think the idea is to see an outlook. The strong order book gives you visibility. I think rather than trying to time it is more important to see the visibility of order book and the margin profile.
Amit Lahoti: And sir, when you execute it, say, over a period of 4 years, you mentioned that second year is typically maximum revenue bookings happen. So, in a 4-year timeframe, the first year might contribute, say, somewhere around about 10%, 15% odd. Second year, can we expect somewhere around about 25%, 30% of the overall order backlog to get executed?
Prakash Agarwal: It's difficult, because it's not one project, it's a multiple of projects. So different projects have different speeds, because there are approvals, there are sometimes some projects get held up for some reason. So I don't think it's very good to try to quantify it. It's better to
Amit Lahoti: No, Sir, I'm not trying to quantify the revenue. I'm just trying to understand how the project execution works. So in a typical project
Prakash Agarwal: If it goes well, you are assuming it will be smooth. It is not smooth. That means, say some of the projects are fast-tracked, the client wants to fast-track. Sometimes there are some clearance issues, so that's why. Suppose a large project has a clearance issue, or suppose a large project is fast-tracked, it changes the timeline.
Amit Lahoti: Okay. But in an ideal scenario, sir, first year might be 10% to 15%, and second year 25% to 30%.
Prakash Agarwal: I think the second year is the strongest, so typically the second year is 30%, as you say, 35%, 50%.
Amit Lahoti: Okay. And, sir, do we have any retention in the project, or there is no retention money out there in the project execution, sir?
Prakash Agarwal: I think most of them are contract recognition, so retention is a part of billing. The invoicing itself is a When you finish all the liabilities, you bill it. So I do not think the parts are retained. It is not a debtor issue.
Amit Lahoti: Okay. Sir, just wanted to understand, in this particular quarter, although your project revenue has witnessed a sharp decline, your margins are pretty strong in this particular quarter. So be it on a sequential basis or a year-on-year basis, when I look at your project margins, they are very healthy. So any particular reason, has any particular project crossed the margin threshold limit, and that is the reason your margins are far superior? If you can throw some light on that.
Prakash Agarwal: No, I think, as you mentioned, we are not seeing. We are at 75% completion on most projects, except some West Bengal projects. Therefore, we have a clear visibility. We do not see much margin pressure. More importantly is cash flow issue by closing the, commissioning the projects and recovering our dues.
Amit Lahoti: Okay. Sir, when I look at your H1 cash flow, you have generated a very healthy cash flow from operation as against the negative number in H1 FY26. This year, you have posted very strong cash flow generation. So, is the working capital cycle or receivable cycle improving for you? What is the reason for your working capital cycle to come down in H1? If you can just highlight that.
Prakash Agarwal: The international business working capital cycles are very good. We have mentioned this. That is why, we personally, we focused on South Africa and international project businesses because they have a different profile, margin profile, and cash flow profile, and we are lucky to have very strong businesses there. So it completely differs from India, and I think it offsets the Indian cash flow challenge as well as the margin challenge. So I think it is a very good, strong profile that we have in the project business. We are very happy that it is moving in the way it is, the South African business and Italian business offsetting the Indian cash flows.
Amit Lahoti: Got it. And sir, in the product business, we have seen a very sharp increase in the material cost over the last one year. So, in the product business, do we take price hikes to Because of the raw material price increase, the cost would have increased drastically for us. So in the product business, do we take a regular price hike? And if yes, what is the kind of price increase that we have taken on the product side?
Prakash Agarwal: I do not think I am not sure where you are getting this data, but I think the product business is very strong domestically. And I think we have had a little dip in the revenue in Q2, which should improve in H2. So, there is nothing more to read into that. I do not think there is any price concern as such to us.
Amit Lahoti: No, I was just asking because margin pressure has been witnessed in Q2. So I was just trying to understand whether it is because of the material cost increase and we have not been able to take commensurate price hikes.
Prakash Agarwal: It is not that significant for us.
Amit Lahoti: Okay
Prakash Agarwal: because of the type of products we make. We are not concerned about it. We see it going strong.
Amit Lahoti: Got it, sir. Sir, thank you. This is really helpful. Thank you for answering the question, and wish you a very happy Diwali.
Prakash Agarwal: Thank you. Thank you. Same to you.
Operator: Thank you. Ladies and gentlemen, we will take that as our last question for today. I now hand the conference over to the management for closing comments.
Prakash Agarwal: Thank you very much. I hope we have been able to answer most of your questions. For any more information, you can contact Valorem Advisors, our investment guide. Thank you. Good evening. Shubh Diwali to everyone.
Operator: Thank you very much. On behalf of MK Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
