ISGEC Heavy Engineering Limited — Call Transcript 2024

Aug 21, 2024

ISGEC HEAVY ENGINEERING LTD.

� ~~ISGEC~~ �

A-4, Sector-24, Noida - 201 301 (U.P.) India (GST No.: 09AAACT5540K2Z4) Tel .. +91-120-4085000 I 01102 Fax: +91-120-2412250 E-mail: corpcomm@isgec.com www.isgec.com

Date: August 21, 2024 H0-425-S

To BSE Limited Floor 25, P J Towers, Dalal Street, Mumbai - 400 001

To

National Stock Exchange of India Limited Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (E) Mumbai - 400 051

Company Scrip Code: 533033

Company Symbol: ISGEC

Dear Sir(s)/Madam(s),

Furnishing of Infrmation in terms of Securities and Exchange Board of India (Lsting Oblgations and ~~Discosure Requirements) Regulations, 2015 (~~ " ~~Listng Regulations~~ " ~~)~~

Subject: Transcript of the Conference Call to discuss the financial performance of the Company for the quarter ended June 30, 2024

1. This is in continuation of our intimation dated July 31, 2024 and in compliance with Regulation 30 read with Part A of Schedule III and any other applicable regulation(s) of the Listing Regulations, please find enclosed herewith Transcript of Conference Call organized on Wednesday, August 14, 2024 at 04:00 p.m. i.e., 16:00 hours (1ST) on the financial performance of the Company for the quarter ended on June 30, 2024.

2. This intimation is also being uploaded on the website of the Company at www.isgec.com under "Schedule of Analysts/Investors Meet" section.

3. The above is for your information and records please.

Thanking you,

Yours truly,

For Isgec Heavy Engineering Limited

SACHIN Digitally signed by SACHIN SALUJA SALUJA Date: 2024.08.21 12:35:41 +05'30'

Sachin Saluja Company Secretary & Compliance Officer Membership No. A24269 Address: A-4, Sector-24, Noida-201301, Uttar Pradesh

For Isgec Heavy En i � �� Company Secretary R..."4::-H,"'"'"'e Officer t.t:: Membership No. A24269 Address: A-4, Sector-24, Noida-201301, Uttar Pradesh .AJJtv

Encl.: As above

CIN: L23423HR1933PLC000097

Regd. Office: Radaur Road, Yamunanagar 135 001 (Haryana) India

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“ I SGE C Heav n eerin Limit e d y Engi g Q 1 FY ‘ 2 5 Ear n ings C onference C a ll” Aug u st 14, 2024

MANAGEMENT: MR. ADITYA PURI – MANAGING DIRECTOR MR. KISHORE CHATNANI – WHOLE TIME DIRECTOR AND CHIEF FINANCIAL OFFICER MR. SANJAY GULATI – WHOLE TIME DIRECTOR AND HEAD OF MANUFACTURING UNITS

MODERATOR: MS. NIDHI SHAH – ICICI SECURITIES LIMITED

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Moderator: Ladies an d gentlemen, g o od day and w e lcome to ISG E C Heavy Engi n eering Limite d Q1 FY25 Earnings Call, hosted b y ICICI Secur i ties. As a re m inder, all part i ciple lines wil l be in the listen-onl y mode. As a r e minder, all p a rticipant lines w ill be in the l i sten-only mod e and there will be a n opportunity f or you to ask q uestions after the presentati o n concludes. S hould you need assi s tance during t h e conference c all, please sig n al an operator b y pressing st a r then zero on your t o uchtone phon e . Please note t h at this confere n ce is being re c orded.

I now ha n d the conferen c e over to Ms. N idhi Shah fro m ICICI Secur i ties. Thank yo u , and over to you, m a 'am.

Nidhi Shah:

Thank y o u so much, S h lok. Good ev e ning. On beh a lf of ICICI S e curities, I wo u ld like to welcome you all for the Q1 FY25 Ear n ings Call of I S GEC Heavy E n gineering Li m ited. From the mana g ement today w e have with us Mr. Adity a Puri, Managi n g Director; M r. Kishore Chatnani, Whole-time D irector and C F O; and Mr. S anjay Gulati, W hole-time D i rector and Head of M anufacturing U nits.

I would n ow like to han d over the con f erence to the m anagement fo r opening rem a rks. Thank you.

Aditya Puri:

Good aft e rnoon, everyo n e, and thank y o u for joining u s for our earni n gs conference call today. I hope thi s message find s you and your loved ones we l l and safe. We look forward t o engaging in a const r uctive discuss i on with you. O ur quarterly fi n ancial results w ere publishe d yesterday. We have uploaded our p resentation on BSE/NSE an d our website w ww.isgec.com today. For regular u p dates about t h e company, please visit our w ebsite and y o u may also follow us on social me d ia platforms.

Quarterly results :

The stan d alone total income increase d by 7% to INR1,243 cro r es in June 2 0 24 quarter compare d to June 2023 q uarter. The st a ndalone profi t before tax increased at 42% to INR111 crores in June 2024 qu a rter compare d to June 2023 quarter. The c onsolidated total income increased by 11% to I N R1,549 crores in June 2024 quarter compa r ed to June 20 2 3 quarter. The cons o lidated profit b efore tax also i ncreased by 3 3 % to INR96 c r ores in June 2 0 24 quarter compare d to June 2023 q uarter.

In the sta n dalone results, manufacturin g revenue has i ncreased as th e re are good or d ers for all products a nd additional capacities cre a ted with investments in the l ast years have come into operation .

Borrowings:

Our fund position has i mproved. On the standalone basis we have closed with June 2024 quarter w ith the net su r plus of INR1 3 3 crores as c o mpared to a n et borrowing o f INR356 crores at the end of Ju n e 2023 quart e r. The consoli d ated net borr o wing has als o improved substanti a lly. Our cons o lidated borro w ing has reduced to INR491 crores on 30/ 0 6/2024 as compare d to INR1,066 crores as at 30/ 0 6/2023, that is lower by 54%.

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Order bookings :

Standalo n e orders book during June 2 024 quarter a re INR1,025 c rores as agai n st INR816 crores in June 2023 qu a rter. The con s olidated orders booked duri n g June 2024 q uarter are INR1,12 4 crores compared to INR1,1 5 2 crores of o r ders booked i n June 2023 q u arter. The orders in hand positio n is strong. C o nsolidated or d ers in hand a s on 30th Ju n e 2024 is INR7,741 crores. Of th e consolidated o rder book, 69 % is for projec t business and 31% is for manufact u ring business.

The orde r book include s INR1,316 cr o res for intern a tional orders w hich is about 17%. The order bo o k includes th e order book o f ISGEC Hit a chi Zosen, w h ich is very g o od. It has INR1,02 2 crores of ord e rs as on 30[th] June 2024. T h e order book i s well diversi f ied across various s e ctors and cust o mers.

Market demand:

The over a ll demand tre n d is encoura g ing, and the inquiry positio n continues to be robust. Export in q uiries have al s o picked up.

Philippines project:

Most of t h e plant relate d construction w orks have be e n completed e x cept for som e portion of piping, e l ectricals, instr u mentation an d partial road, grains, floorin g , painting, et c etera. The plant has manufactured a nd sold about 3.5 million litr e s of ethanol b e tween April 2 0 24 to July 2024 so f a r. The plant is temporarily s h ut for some co r rective action s , for some def i ciencies in affluent t r eatment and d i sposal related m atter pointed out by local g o vernment auth o rities. We hope the p lant can restart later in this m onth. My coll e agues and I will be happy to a nswer any questions .

Moderato

Nirav:

Thank yo u , sir. We will now begin the question-and-answer session. The first quest i on is from the line o f Nirav from A S K Investment Managers, ple a se go ahead.

Sir, first of all, thank you very mu c h for this o p portunity. M y question is s pecifically pertainin g to couple of s egments. So, I just wanted to get some idea how is the ca p tive power market i n India? So, b a sed on your a ssessment for FY25, how b i g can be the market for captive p o wer India, if y ou can help o n this number w ith in terms o f mega wattag e s, it would be really v ery helpful?

Also, acc o rding to you, w hat can be th e outlook for w a ste heat recov e ry plants in In d ia for next couple of years? These a re my few que s tions initially; I will ask further questions.

Aditya Puri:

So, we th i nk that the de m and for capti v e power plant s will remain r o bust. This is a l so because a lot of p r ocess industri e s require stea m in addition t o power. So, it s hould remain robust. So, should th e demand for w aste heat reco v ery boilers be c ause that's an e fficiency incre a sing, it's a move to w ards decarbo n ization. So, p e ople are inve s ting in that. So, we can't gi v e out any specific n u mbers, but w e think it will r e main robust.

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Nirav:	Sir, accor ding to you, as compared to la st year, howm uch growth ca n we see, mayb e in terms
	of inquiry , pipeline or so mething like th at? It would be really very hel pful.
Aditya Pu ri:	We can'tg ive you any co ncrete number s. We think the market will rem ain robust.
Nirav:	Got it. Sir , my other que stion would b e pertaining to boilers for the rmal power pla nt. So the
	market fo r thermal pow er plant seems to be buoyant and there seem s to be only one player
	who is ba gging mosto f the orders.J ust wanted to check, do we intend to ge t into that
	particular market as well ?
Aditya Pu ri:	Are you ta lking about tho se large 600M W boiler powe r plants. Arey ou talking abou t those?
Nirav:	Yes, the la st ones, I think the market tre nd is for 800M W boilers.
Aditya Pu ri:	No, wem ay do some sm all packages. We may bidfo r some small packages, but we are not
	planningt o get into those , big plants.
Nirav:	Big ones, like 800 MWb ecause as I bel ieve..
Aditya Pu ri:	We willn ot be doing tha t. We might do some small pa ckages.
Nirav:	What wou ld be the scope of work in the smaller packag es? If you can elaborate a bit .
Aditya Pu ri:	If we are successful, may be INR100 cro res, scope ofw ork may be th ings like handl ing plants,
	maybe som e small air po llution control, material handl ing, some pipin g.
Nirav:	So, youa re saying that your scope of work wouldb e focused mor e towards the balance of
	plant part aspect. Am I ri ght in my asses sment?
Aditya Pu ri:	But onlys ome aspects of the balance of plant, not thec omplete balanc e of plant.
Nirav:	Got it. Th ank you verym uch.
Moderato r:	The nextq uestion is from the line of Ni dhi Shah. Pleas e go ahead.
Nidhi Sha h:	Yes. So,t hank you for t aking my quest ion. My firstq uestion would be the consoli dated PAT
	was 500m illion and the standalone pr ofit was 550m illion. Can you please helpu s with the
	profit of th e subsidiaries? How we mov e from the stan dalone to the co nsolidated?
Kishore C hatnani:	Ma'am, yo u are talkinga bout the quarte rly numbers,c an you repeat the numbers th at you just
	said in mi llion?
Nidhi Sha h:	Yes. Basi cally, could yo u just walk us through this, ho w do we getf rom the standa lone profit
	to the con solidated profit ? As in, what i s the profit of th e subsidiaries?
Kishore C hatnani:	Yes, wec an tell you the profit of the subsidiaries. S o, you will hav e noticed that in ISGEC
	Heavy En gineering Limi ted, standalone , there is an o ther income co mponent of ab out INR28
	crores. Ha ve you noticed that, ma'am?

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Nidhi Sha h:	Nidhi Sha h:	Yes.
Kishore C hatnani:		So, out of that INR28 cro res, about INR 22 crores is div idends from su bsidiary comp anies.
Nidhi Sha h:		Okay, oka y, got it.
Kishore C hatnani:		So, when you consolidat e that, it gets ad justed. But ify ou are looking for profits from different
		subsidiary companies, I'l l just tell you.T here are, Sara swati Sugar Mi lls has done ab out INR20
		crores pro fit in this qua rter before tax . ISGEC Hitac hi Zosen has done INR5 cr ores profit
		before tax . Eagle Press and Equipmen t Co., the Can adian compan y, has done IN R9 crores
		profit befo re tax. ISGEC Redecam, so all the other c ompanies there are minor am ounts, less
		than a cro res each. And there is a los s in the ISGEC Investments which actually holds the
		Philippine s companies. So, there's a lo ss of INR29c rores there,w hich is largely a foreign
		currencym ark-to-market loss. It is not a realized loss; it is a foreign currency mark -to-market
		loss.
		And as I said, the divi dend, whichi s received fro m the subsidia ry companies , that gets
		eliminated in the consoli dated. I hope I'v e been able to answer your qu estion.
Nidhi Sha h:		Yes, yes, thank you. Cou ld you also tell me how is the order pipeline and the enquiri es shaping
		up for this quarter which is Q2 and fort he rest of they ear?
Aditya Pu ri:		It is buoy ant right now. It seems that th e order bookin g for the resto f the year shou ld also be
		good as of today.
Nidhi Sha h:		So, whata re the segmen ts that you're se eing maximum growth from? Could you giv e us some
		colour on how the indust ry looks as ofn ow?
Aditya Pu ri:		Well, you know, we supp ly to a great nu mber of indus tries and we're not dependent on any one
		particular sector. There are some part s of the busin ess that are li ke sugar mach inery and
		ethanol.B ut otherwise, we supply to a large numbe r of industries , and we conti nue to get
		orders, div ersified orders from everywh ere. So, I kno w there is a slo wdown in che micals. So
		maybe we are not gettin g from one po rtion of chemi cals, but wea re getting from the other
		portiono f chemicals o r from oil an d gas. The co mposition of orders has no t changed
		drastically since the lastt ime we spoke.
Nidhi Sha h:		All right. I'll get back in the queue for fu rther questions .
Moderato r:		Thank you . The next que stion is from th e line of Abhi jeet Singh from ICICI Securit ies. Please
		go ahead.
Abhijeet	Singh:	So my qu estion is on the margin. So while them anufacturingb usiness, thes egment of
		manufactu ring has show n pretty mu ch, you know , robust impr ovement in th e margin
		sequential ly. But the Im ean, absolute margin for th e industrial pr ojects business has been
		hoveringa round the sim ilar level of 4% to 5%. So, sir what are thes teps that we ar e taking as
		of now an d what are th e levers we ha ve to improve upon this ma rgin profile of industrial
		projects,i f you can delve upon that?

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Aditya Pu ri:	Aditya Pu ri:	So, we ha ve dwelt on th is earlier also i n earlier calls. We have as as trategy decided not to go
		in for very long duration projects. Wea re going in for smaller durati on projects, we are going
		in for proj ects which hav e a comparativ ely lesser porti on of civil and site work. Bec ause that's
		where you know, mosto f the difficultie s are being fel t. And as thisp roportion of th ese orders
		reduces,w e can expects lowly, but we can expect som e improvemen t in the margin s. We are
		focusingm ore on techno logy led projec ts, industrial pr ojects.
Abhijeet	Singh:	Right. So can we expect margins movin g towards doub le digits in the next two, thre e years? Is
		that somet hing that we ar e targeting aso f now?
Aditya Pu ri:		Marginsw ill improve. B ut in projects b usiness, double digits are very difficult.
Abhijeet	Singh:	Right, sir. Also I mean,b arring this qua rter, if we talk about FY25 as a whole andm aybe even
		the nexty ear. Sir, what kind of execu tion do we ex pect in the in dustrial project s business
		particularl y? Because he re, do you see any risks toe xecution, like you know, bec ause there
		have been some modera tion in growth in Q1 across the industry.S o, how do you look at it
		going forw ard on a one t o two year basi s?
Aditya Pu ri:		So, I thin k, moderation is probably because of the elections an d because of the global
		environme nt. So, I can'tc omment on wh at happens in the world. I kn ow there are un certainties
		in the wo rld, but we d o not foresee any significant changes in th e demand.W e are also
		concentra ting more on ex ports, so if the re is some fall in domestic de mand, we hope that we'll
		get compe nsated from ex ports.
Abhijeet	Singh:	Right, sir. I'll come back in queue, sir.T hanks for answ ering the ques tions.
Moderato r:		Thank you . The next que stion is from th e line of theD eepesh Agarwa l from UTI AM C. Please
		go ahead.
Deepesh	A garwal:	Yes, good evening, gentl emen. My first question is on the sustainabil ity of the prese nt margin.
		So, this qu arter you repo rted a very str ong margin in the project bus iness on the co nsolidated
		basis. So, this 13.5% kin d of margin, ho w sustainablei s this? Sorry,m anufacturing.
Kishore C hatnani:		You are ta lking about the manufacturing ?
Deepesh	A garwal:	Manufactu ring, right. Ma nufacturing.
Aditya Pu ri:		Yes. They are going to b e sustainable.T hey will be aro und this figure .
Deepesh	A garwal:	So, going ahead, we sh ould be doing a 13.5% kind of margin in manufacturing . Is that a
		guidance?
Aditya Pu ri:		Somewhe re there. Somew here there. So mewhere, doub le digit.
Deepesh	A garwal:	Double di git. Sir, the oth er question iso n Philippines. Is that underst anding correct? Whatever
		the lossw e see in the Ph ilippines proje ct plant and th e construction, that is purely because of
		forex?

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Kishore Chatnani: So, there as you know, t he plant oper a ted for some t i me. It was no t operated at f u ll capacity because w e caught the s u gar season lat e . There is a IN R 29 crores los s that I spoke a b out a little while ag o for the quarte r . Out of that a b out INR22 cr o res loss is for e x mark to ma r ket, which is basical l y because the Philippines P e sos depreciat e d more again s t the dollar c o mpared to dollar to I NR. So, it's a m ark to market loss, it's not a realised loss, b u t it's a reporte d loss. Deepesh Agarwal: Understo o d. And so, once this plant g e ts operational after these hi c cups, should w e still see that INR 5 00 crores - IN R 600 crores ki n d of a top line a nd probably 25%, 30%? Kishore Chatnani: We continue to expect that when th e plant will o p erate at full capacity starti n g mid of Novembe r it will be ab o ut INR500 cr o res in revenu e for a year an d it will conti n ue to have 23% - 24 % kind of EBI T DA. Deepesh Agarwal: Okay, ok a y. And sir, I w ant to underst a nd what is th e thought proc e ss now about e xiting this plant bec a use now the p l ant is operatio n al and it's bee n a drag for us f or quite a whi l e and I am sure man a ging it from I n dia, the Philip p ines plant wo u ld be also a c h allenge. So, w hat are the steps you are taking to a c tually sell you r stake in this p lant to some st r ategic partner s ? Kishore Chatnani: As of no w we are focusi n g on running t he plant well. Y ou are right, i t is not the easi e st thing to run a pla n t in a foreign c ountry sitting here. So, we a re working an d focusing on r unning the plant wel l . As and when we have any n e ws about disp o sing the plant, we will certai n ly share at the appro p riate time. Deepesh Agarwal: Sure, sur e . The other q u estion is to M r . Puri, if I look at your orde r book over th e last three years, it i s flat. So, the n u mber, or the b ook number is flat. I underst a nd you are foc u sing more on the m a nufacturing o r ders over the p roject orders, b ut I don't see such a sharp j u mp in the manufact u ring order b o ok also. So, w hat are your thoughts wit h respect to y o ur growth appetite? Would we see the growth c o ming back for ISGEC like it used to see o v er the last decade or how? Aditya Puri: So it's not that we are f avouring man u facturing ove r projects, but i t is also true t hat we are concentrating on techno l ogy-led, short e r duration pr oj ects with co m paratively less site work. And I th i nk in spite o f narrowing do w n the breadt h of the proje c t business, w e have still managed t o have a good order book in t he project busi n ess, and we w ill grow this. So, it's li k e saying that w e have exite d from certain t ypes of projec t business, but in spite of that, we' v e had a reaso n able order bo o king from the other projects, industrial projects where we are ex e cuting. Deepesh Agarwal: Sure. An d lastly, if yo u can share w h at is the curre n t outstanding order book o n FGD and where are we on comple t ion of those le g acy FGD ord e rs? Aditya Puri: So excep t for one FGD plant, two out of the three s h ould be comp l eted within th i s financial year or t h e first quarter o f next year. Y es, actually wi t hin this year t h e third one w i ll continue for some t ime.

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Deepesh A garwal:	And how much of them oney would be stuck in these projects in ter ms of retention s or these
	receivable s?
Kishore C hatnani:	So, the tw o that we arew e are expectin g to completei n this year, we are hoping, th ere's about
	INR400c rores of milest one link paym ents which ist o be received. And we are ex pecting to
	receive ou t of that INR40 0 crores to ma ybe INR325 cr ores to INR35 0 crores out of that in this
	current ye ar. And maybe INR50 crores or so will spill over into the ne xt year.
Deepesh A garwal:	Okay, sur e. I'll join theq ueue.
Moderato r:	Thank you . The next qu estion is fromt he line of Sand eep Bait, an in dividual inves tor. Please
	go ahead.
Sandeep B ait:	Yes, good afternoon, sir . A couple ofq uestions. The first one is on the Philippine s business.
	Can your epeat how muc h was the sale of ethanol in th e first quarter?
Kishore C hatnani:	3.5 million litres.
Sandeep B ait:	But it's no t reflecting int he revenue oft he…
Kishore C hatnani:	Yes, yes. Because as Mr . Puri mention ed in his rema rks, there is st ill some amou nt of work
	requiredt o complete the plant. The plan t is operationa l, but there iss till some amou nt of work
	requiredt o complete the power plant.A nd therefore,o ur auditors, bo th in Philippin es, KPMG
	and here, they are contin uing to show it in current CW IP and the re venue, since th ey are not
	capitalizin g the CWIP,t hey will be do ing that in thi s quarter andi n the Septemb er quarter,
	where the y are not repo rting it as a co mmercial reve nue. Revenueg enerated durin g the trial
	run and co mmissioningp eriod.
Sandeep B ait:	So that'sg etting adjusted against the CW IP, is it?
Kishore C hatnani:	That is no , that is…
Sandeep B ait:	No, sorry. So the revenu e, which is bein g generated,h ow are you sho wing it in your accounts?
	I wantedt o understand th at.
Kishore C hatnani:	It is reduc ing the net mar gin in the CWI P.
Sandeep B ait:	It is reduc ing the?
Kishore C hatnani:	It is reduc ing the CWIPb y net margin.
Sandeep B ait:	So, it is ge tting adjusted against your CW IP.
Kishore C hatnani:	That's righ t.
Sandeep B ait:	Okay. An d in September quarter, will y ou start bookin g it as revenue or it will contin ue?
Kishore C hatnani:	We expec t to capitalizea nd start bookin g revenue.

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Sandeep B ait:	Okay. An d how much is the total capita l employed int he Philippines project as of da te?
Kishore C hatnani:	Let me ge t the figure, ma ybe we'll answ er you in a few minutes.
Sandeep B ait:	Or you ca n give me thec apital asset figu re that's alsoo kay?
Kishore C hatnani:	That is IN R900 crores.
Sandeep B ait:	INR900c rores. Okay.A nd secondly, question forM r. Puri. Woul d you like to, given that
	trade, this is the first qua rter for the ye ar. Would you like to give so me revenue gu idance for
	the fully ear on a cons olidated basis? And what ki nd of margins can we look at for the
	industrial project busines s on a full year basis?
Aditya Pu ri:	So industr ial project bus iness we justs aid that it will be around 13% , it will be do uble digits
	the margi n in the manuf acturing. And as far as the re venue for the year is concern ed I think
	last year,l ast meeting we said it will be up about 7% to 10%.
Kishore C hatnani:	Revenuef or the year sho uld be early do uble digits.
Aditya Pu ri:	Early dou ble digits. Yes.
Sandeep B ait:	Sorry, you 're saying reve nue guidance i s early double-d igit growth?
Aditya Pu ri:	Yes.
Sandeep B ait:	And marg in? Sorry, I was asking ab out the indus trial projectb usiness, not th e product
	business. You mentioned about…
Kishore C hatnani:	Product bu siness, we hav e already said the margin tha t is shown in th is quarter, we are hoping
	to be able to maintain tha t.
Sandeep B ait:	Yes. I und erstand that, bu t on the indust rial project, ho w much are you guiding for?
Kishore C hatnani:	For the cu rrent year, it's going to be aro und the samel evel. As Mr. Pu ri said, we hav e changed
	into then ew philosophy of order book ing on technol ogy-led orders . The revenue is going to
	keep onc oming in thec oming quarters . Some of itw ill get reflecte d in this curren t year and
	more of it will be reflect ed in the comi ng years. So,f or this year, it will be close t o the same
	level also.
Sandeep B ait:	So, about 5%, is that wha t you are sayin g?
Kishore C hatnani:	Yes, pleas e.
Sandeep B ait:	5% EBIT margin. Okay. Thank you. So rry. One lastq uestion. On the sugar busines s for India,
	if you can comment ony our outlook for the current yea r?
Aditya Pu ri:	We would not like to co mment right no w because itd epends upon th e cane price,t he ethanol
	policy. It will depend on that. As of now , the agroclim atic conditions for sugarcane seem to be

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good, till date. The agro c limatic condit i ons are good. T he cane crop i s , in our area, slightly less than last y ear. But the a g roclimatic con d itions are bett e r.

Sandeep Bait: Okay. Th a nk you. Moderator: Thank yo u . The next question is from t he line of Amit Kumar from Determined I n vestments. Please go ahead. Amit Kumar: Yes, hi, t h ank you so m u ch for the op p ortunity, team. I just had one question, you k now, just, you kno w , hopping ba c k on the ma n ufacturing ver t ical margin. S o, when I lo o k at on a quarter-o n -quarter, you k now, basis, yo u r revenue is d o wn from INR 7 40 odd crores to INR540 crores. M argins are up 3 70 basis poin t s. So, how do you explain t h at? And speci f ically, was there any special high m a rgin executio n or delivery in this particular q uarter? Aditya Puri: So manu f acturing consi s ts of a numbe r of equipment s . And therefor e , sometimes h i gh margin orders ge t bunched, so m etimes they d o n't get bunche d . So there is n othing very ex t raordinary over here . Kishore Chatnani: Except w hen you're tal k ing about th e consolidated. You're talkin g about the c o nsolidated numbers h ere. Now the r e is better pro f itability in the ISGEC Hitac h i Zosen, whic h is part of the manu f acturing seg m ent and there i s a profit this quarter in the Eagle Press I N R9 crores profit in t his quarter. F o r the March q uarter, they h a d a loss. So t h ese two are c o ntributing, besides t h e contributio n from ISGEC standalone it s elf, into the m argin score. T hat is the reason w h y the margins a re better. Amit Kumar: So actual l y, again, I'm s ort of comin g back to the p oint which ha s been asked e arlier, that 13.5% m a rgin in recent t imes, I don't t h ink we have s e en that. What is the sustaina b le level of margin t h at we should a ssume, either for this year o r for a medium term, two, t hree years perspecti v e? Kishore Chatnani: Let us re p eat there that t h is kind of ma r gin we expect to sustain. That is one. Secon d , Mr. Puri mentione d in his remarks, we have bee n making inve s tments in incr e asing capacity for certain products in our manuf a cturing busin e ss, particularl y the iron fou n dry. Also, th e container business, we have expa n ded capacity t h ere. We have e xpanded capa c ity in the boile r tubes and panel an d those places. S o, all of that c apacity is ha v ing a good or d er book, and o rders have been boo k ed at good pri c es, good marg i ns. So, that is r eflected in the numbers. Amit Kumar: All right. Understood. T h at's very, very helpful. Than k you so much. Moderator: Thank yo u . The next qu e stion is from t h e line of Man a s Thakkar fro m MT Advisor s . Please go ahead. Manas Thakkar: Hello, th a nks for the o p portunity. So, I had just on e question on C apex, like w h at is your guidance o n the capex f o r this year and the upcoming f inancial year ' 2 6? Aditya Puri: About IN R 60 crores in t h e engineering business in IS G EC, this year. Manas Thakkar: For this y e ar?

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Aditya Puri: Yes. Manas Thakkar: And any p lan for the ne x t year, like till n ow has it bee n planned? Aditya Puri: Still to m a ke. Still to de c ide on that. Manas Thakkar: Okay. So , this is INR60 c rores in engin e ering busines s for this year, r ight? Aditya Puri: Yes. Manas Thakkar: Okay. Th a nk you. Aditya Puri: INR60 cr o res we plan t o spend, the ex e cution may ge t spilled over t o the next year, but as you see, we p r obably will de c ide about IN R 60 crores of th e investment. Manas Thakkar: Okay. Okay. Understoo d . Thank you. Moderator: The next q uestion is fro m the line of Ja i nam Jain from ICICI Securiti e s. Please go a h ead. Jainam Jain: Good ev e ning, manage m ent. I had a c o uple of questi o ns for the ma n agement. Firs t ly, starting with wha t was the order inflow of Hita c hi Zosen subsi d iary? Kishore Chatnani: Order in f low of Hitach i Zosen in thi s quarter? Is y our question a bout order in f low about Hitachi Z o sen in this qu a rter? Jainam Jain: Yes. Kishore Chatnani: So, this q u arter inflow w as INR71 cror e s. I'll just put i t in perspectiv e . We have lar g e orders in ISGEC H itachi Zosen. A s of 31st of March, we ar e well booked with INR1,05 0 crores of orders. S o , in this quart e r we booked o n ly INR71 cro r es and as of e n d of June 202 4 the order in hand i s INR1,022 cro r es. Because w e are well boo k ed, we did no t book too ma n y orders in this quart e r. Jainam Jain: What is t h e status of CB P I Philippines? Aditya Puri: We've just gone through that just now. Kishore Chatnani: The plant has started operations. It ha d trial operatio n s and commis s ioning and ge n erated 3.5 million li t res of ethanol. They sold us that ethanol. T he plant will run at full ca p acity from Novembe r , mid-Novem b er on sugarca n e. Jainam Jain: Okay. Kishore Chatnani: Just to su m marize what a ll we said earl i er. Jainam Jain: Okay. A n d my last question is what d o you think a bout the profi t ability of Eag l e Press & Equipme n t, considering i t made losses i n the last two y ears?

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Aditya Puri: So, this q uarter, Eagle h as shown a p r ofit, and prob a bly, for the w h ole year, it m ay show a profit. W e are putting o u r best effort t o see that the p lant runs well . There is a sh o rtage over there in t h e north Amer i can market, p e ople are not d e ciding orders. Partially it is b ecause the EV car m arket is not picking up as peo p le were expe c ting. And the s econd thing is, there's the uncertain t y of the electi o ns. So, the pr o spect is a littl e uncertain. Bu t we are puttin g efforts to run it wel l . Jainam Jain: Okay, sir. Thank you an d all the best. Moderator: Thank yo u . The next question is from t he line of San d eep Bait, an i n dividual inve s tor. Please go ahead. Sandeep Bait: Yes. Tha n ks for taking t h at question again. You mentioned that you' r e looking at ea r ly doubledigit gro w th of revenue on a consoli d ated basis for the full year. Can one assu m e that the growth r a tes will be si m ilar for both y our industrial p roject and for manufacturin g business? Or do yo u expect manuf a cturing business to grow fast e r? Kishore Chatnani: The man u facturing bus i ness, I'm repe a ting, what w e have been i n forming earli e r. We still think that ' s what it's goi n g to do on a st a ndalone basis . Last year we d id INR1,700 c rores. This year we'l l be doing IN R 2,000 crores. I 'm talking ab o ut the standal o ne basis. ISG E C Hitachi Zosen is g oing to do be t ter than last y e ar. So, on a c o nsolidated bas i s also we are g oing to be doing bet t er. On the pr o ject business, we are going t o be almost at t he same level. In percentage t erms we'll growth fr o m the manufa c turing will be h igher than the growth on the projects busin e ss. Sandeep Bait: Right. A n d when you ta l k of early dou b le-digit growt h , are you inclu d ing the sale o f ethanol in Philippin e s? Kishore Chatnani: No. We a r e not factorin g that in. Sandeep Bait: Okay. A n d you menti o ned 23% - 2 4 % margin o n a INR520 odd crores tur n over from Philippin e s on a full ca p acity utilizati o n basis. Earlie r , you had tal k ed about 30% margin, in one of th e previous calls . Kishore Chatnani: We had spoken about 27% - 28% m argin. At th e moment, thi s is what app e ars to be, dependin g on the preva i ling prices of f eed stock and other things, t h is is what ap p ears to be, what slig h tly. Sandeep Bait: So, on a I NR500 crores basis turnover, 23% - 24% w o uld add up to , say, INR120 o dd crores. And on a capital employ e d maybe of a b out INR1,000 c rores, that wo u ld translate in t o 12% -- Kishore Chatnani: Capital e m ployed; we've got the figure s . You had ask e d earlier. Its I N R743 crores. Sandeep Bait: INR743 c rores. Okay. W ill it be possi b le for you to g uide on depre c iation and int e rest on the Philippin e s asset once. Kishore Chatnani: It's a new plant which h a s come up. We won't be able t o guide you, e x act numbers like that.

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Sandeep Bait: Rough es t imate if you c a n tell? Kishore Chatnani: I don't ha v e anything m o re, that I can a d d here. Sandeep Bait: Okay. A n d lastly, you m entioned that on a consoli d ated basis, th e net debt figu r e is about INR490 o dd crores, as o f day or at the J une 30th. By t h e end of the year, would yo u expect the company to be debt free on a consolida t ed basis, on a n et debt basis? Kishore Chatnani: No, it is n ot going to b e debt free. T h ere will be de b t, certainly I S GEC Heavy E ngineering itself is d ebt free as of now, and it w ill certainly b e debt free by the end of th e year, the standalon e company. The Philippines c o mpany will h a ve its loans. T h e sugar seaso n should be on, and s u gar stocks wi l l be at peak a t end of Marc h . It will have its working ca p ital loans. ISGEC Hitachi Zosen will have small a mounts of loa n s. But the ove r all debt positi o n is going to be less than what it is n ow. Sandeep Bait: On a net d ebt basis, you' r e talking abou t ? Kishore Chatnani: On net de b t basis. That's right. Sandeep Bait: Okay. Th a nk you so mu c h. Moderator: Thank y o u. In the interest of time, this was the las t question for t oday's confer e nce call. I would no w like to hand t he conference o ver to the ma n agement for c l osing commen t s. Aditya Puri: I would li k e to thank ev e rybody for att e nding the conf e rence. Thank y ou and have a good day. Moderator: Thank you, sir. On beh a lf of ICICI S e curities that c o ncludes this c o nference. Th a nk you for joining u s and you may n ow disconnec t your lines.

Disclaimer: This document h as been edited f or readability pu r pose.

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