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Ladies and gentlemen, good day, and welcome to the GE Power India Limited Earnings Conference Call for the First Quarter of FY 2023, '24. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Prashant Jain, Managing Director, GE Power India Limited. Thank you, and over to you, sir.
Thank you, and a very good evening and warm welcome to you all for joining this discussion on the financial and operational performance for the first quarter of financial year '23, '24. Before we dive into the quarterly performance, I would like to welcome my team, who is joining me today in answering questions, clarifications. I have with me Mr. Yogesh Gupta, the Whole-Time Director and CFO; Mr. Vinit Pant, Chief Commercial Officer; Mr. Raj Raman, Executive Project Portfolio on the [ Cone ]. We will start with the global economy outlook, where there was optimism, which has made notable return to the global trading markets in recent months, bolstered by improved investor sentiment projected for 2023. As energy prices stabilized and major economies witnessed a steadying of inflation, businesses are increasingly positive about growth prospects for the current year and beyond. The correction in commodity prices, including energy, has been a significant trend, and this includes a return to pre-Russia-Ukraine war levels. While the global energy crisis has gradually gained, renewed attrition is now being -- the renewed [ attention ] directed towards the transition to clean energy solutions. Despite the emphasis on expanding renewable energy capacity, utilization of [ coal ] has reached a new peak in 2022. The support [indiscernible] is anticipated to persist throughout 2023 as indicated by IEA. Notably, IEA's latest report indicates that any slight reductions in coal power generation during '23 and '24 are expected to be counterbalanced by increased utilization of coal. The report further underscores that predominant surge in coal consumption will be driven by China, India and Southeast Asian nations. Collectively, these regions are projected to account for a substantial portion of global coal consumption in 2023, with approximately 3 quarters of total coal consumption worldwide expected to happen in these geographies. Shifting focus to India, the period of April to June '23 witnessed a slight 1.8% year-on-year increase in power consumption, reaching [ 408 million ] units according to data from Central Electricity Authority. The growth rate remained modest, primarily attributed to the impacts of the Biparjoy cyclone and unexpected rainfall. Notably, Coal production experienced a robust expansion of 8.5%, reaching 223 million tonnes during this quarter. Conversely, coal imports saw a decline of 13% totaling 14.2 million tonnes. A significant development emerged recently with the government's clarification in the Rajya Sabha yesterday. It was a firm that the government neither has intention, nor has devised a plan to phase out aging coal-based power plants in the country prior to 2030. This decision aligns with the foreseen energy demand landscape and the anticipated capacity augmentation in the years to come. This government's clarification presents a pivotal opportunity for your complete services catering to coal-powered thermal plants. The extension of the deadline for Flue Gas Desulphurization, or FGDs has resulted in dampened order backlog and delayed in ordering cycle, consequently elongating the time line for the company to revitalize its operations. Speaking about the company's performance. In the first quarter of the financial year '23, '24, we are continuing to see that the turnaround is taking longer than anticipated. We are seeing a slight improvement on the FGD market, but conversion to orders is still slower than anticipated. Also for service upgrades, we are seeing a slight upswing, but orders are not yet able to fulfill the gaps that we have from the FGD and new built. Our strategy to focus on core services growth continues to pay. We had an excellent quarter with orders up by 57% quarter-on-quarter, and our performance in core service execution has also been solid with high productivity. We will continue our efforts on core services over the quarters to come.
Our revenue is down 14% versus first quarter period prior year due to lower orders in the previous quarters and project delays. Our efforts on claims settlements are ongoing with the customers. It is a long bound and time-consuming procedure, while we are representing to the ministry and the respective customer organizations. The [ GEPIL ] organization is currently structured to the optimum size to execute existing backlog and with new projects while keeping costs under control. Now for discussing the financial operations, I will call upon our CFO, Mr. Yogesh Gupta, after which we will open the forum for question and answers. Yogesh, over to you.
Thank you, Prashant. Good evening, everyone. I am pleased to welcome you all to discuss the financial and operational performance for the first quarter of FY 2023 and '24.
Lower-than-expected new build industry demand has resulted into lower order inflow in the last 2 years. This has continued to impact our revenue and margin for the quarter ended 30th June '23. During the quarter, the company got orders worth INR 191 crores against orders of INR 1,008 crores in the quarter 1 of FY '22, '23. This dip in the order intake was primarily on account of [indiscernible] order of INR 860 crores of pump storage that we had booked in Q1 of FY '22, '23. As of June 30, '23, we have order backlog of INR 3,382 crores, which presents active revenue opportunities in hydro, FGD, boilers and service segment. Revenue for Q1 '24 stood at INR 424 crores, down from INR 491 crores in the corresponding quarter of last year, whereas the revenue in Q1 of '23 is like if we compare with Q4 '23, it was only INR 344 crores. Loss before tax for quarter ended 30 June '23, '24 was INR 136 crores against loss before tax for quarter 1 of '22, '23 of INR 63 crores. And a loss of INR 128 crores in Q4 '23. The increase in loss before tax for quarter 1 '23 as compared to the previous quarter '22, '23 is due to onetime provision impact of NTPC Sipat fire incident, which required a provision of INR 69 crores in Q1 '24. Lower volumes under liquidation, lower capacity utilization, delays, inflation and execution challenges at sites impacted the financial performance. Loss before tax for the quarter ended June '23 is mainly due to the following impact on account of lower volumes, project delays and inflation, et cetera, whereas the Sipat fire incident, which impacted us by INR 69 crores, of which 70% is likely to be recovered from the insurance company. Summarizing. Focus areas for the company continues to be volume increased by fresh order intake, claim settlement and cash collections. Now we are open for the forum for the Q&A.
[Operator Instructions] The first question is from the line of Viraj Mahadevia, an individual investor.
Question regarding this loss due to fire of INR 69 crores. Where exactly is it built into the line items in your P&L for the June quarter?
Yes, I got your question. You're saying where is it represented in the June quarter. Yogesh?
Yes. This has been accounted for in cost of materials.
Right. Okay. So that's why you're seeing escalation in cost of materials, very much. So in the...
From 76%, it has increased to 92% because of this...
Okay. That was my next question. But -- okay. So in the absence of that, actually, your net loss would have only -- would have been half, right, about INR 65 crores for the quarter.
Yes, please.
So your net loss has actually come down, which would mean an EPS of -- negative EPS of 10. Okay. That's helpful. My second question, sir, is, to Mr. Jain, the MD. Is your spread between your total income and cost of materials, even stripping out for this onetime loss, is less than or equal to just your employee costs. So fundamentally, something needs to give in the business for the turnaround, right? I mean, one is the revenue side and the FGD business coming in. Two is rightsizing the cost structure of the business, which clearly seems lopsided, as -- keen to get your view on that.
So the current cost structure is optimized to the extent that we have -- let me explain the way we have currently -- to execute the backlog of the projects and recover cash from the existing projects. So therefore, the optimization in terms of the structure has been done with restructuring to retain competence. For example, in Durgapur, we have reduced the capacity from 800,000 hours progressively in the previous quarters down to about 180,000 hours.
Today, the load in the first half is about 52,000 hours in the factory, and there is an underutilization. But the factory is geared up to take growth, and it is not meaningful anymore to downsize that from any further. And therefore, there is an under liquidation from that side that is contributing to -- as a part of the structure cost.
So the balance that we are currently trying to strike is to retain competence both in FGD and the Durgapur factory, while we are waiting for these orders to revive and we get the revenue back on the books. And therefore, I mentioned that it is taking longer to turn around the company because we need the volume and the nature and the stream of the order intake, for example, FGD, it takes at least 6 to 8 months of engineering and then supplies meaningfully start around 12 to 15 months.
And even if you book an order within the current quarter, the one that we announced Sikka that will be at least 15 minute away before we can bring that to revenue. So that is the challenge that we are currently balancing in terms of retaining competence, to be able to gear up for the opportunities that we see around the corner, at the same time executing the backlog, which is itself very complex, and there is a lot of cash and working capital that we released with the execution of this backlog.
Understood, sir. But presumably, you've looked at contract versus full-time labor on your books, et cetera. How that...
Yes. This is the biggest focus, and we have exhausted those levers. If you've seen the last 3 years, we have been extremely proactive on rightsizing quarter-on-quarter. And [indiscernible] is, if the biggest issue that we have faced in the current year is the delay of FGD time line by 2 years...
[ I don't see ] the greater traction on this FGD, I read your commentary, but are you seeing meaningful business coming this way? Who are your competitors? Is it just the [ L&Ts ] of the world? Is it limited competition? What is the potential market of this FGD in terms of addressable opportunity? And then how much do you think you can address over the next 2 to 3 years?
Yes. So Vinit, would you address this question. In summary, yes, we are seeing traction. We have seen traction. We have disclosed the order that we have taken from Gujarat, Sikka, in the current month. We will be probably booking that order in this quarter. And the other opportunities in the pipeline will materialize. Before Vinit addresses the other questions on the backlog, I just wanted to come back to the point that, unfortunately, though, we will book these orders, the delay of practically almost 2 years in these orders coming into the books will still continue to impact us for the coming quarters by the time we start seeing meaningful revenue coming from them.
So Vinit, over to you to explain the market related questions.
So on the market, '21, '22, it was only 5 gigawatt, but...
Sorry, I'm losing you. I can't hear you, Vinit.
I'm sorry to interrupt, may I request you to please rejoin the queue?
Can you hear me now?
[Operator Instructions].
So in answer to your question, year '21, '22 was [indiscernible]. But after that, we have seen gradual [indiscernible] in the order intake, order placements. So -- this [indiscernible]. Even though...
Sorry to interrupt, but the line for you is not very clear. It's breaking up in between.
Okay. I will talk later.
Is it better now?
This is slightly better.
Yes. So what I was trying to say is that in 2023, we saw about 20 gigawatt orders, which has -- this year, we expect around 18 gigawatt will still be ordered. And there has been a delay, which has been in the implementation time line. So we really expect ordering to pick up in the next 2 to 3 quarters. So that is about it. And as far as our market share is concerned, we are going to focus on cash accretive deals. We really don't want to go after all orders. We will be selective. And -- but still looking at the overall market, about 114 gigawatts still needs to be ordered. So definitely, we see a lot of prospect going forward. But there is a delay, but I think it is going to pick up in the next 2 to 3 quarters.
The next question is from the line of Ramakrishna V., an individual investor.
Sir, last call, you mentioned that you will become a debt-free company. And there is, I think you have a receivables of INR 1,900 crores or something. So what is the progress on that?
So yes, we're in the -- we are on track to be able to collect the retentions that we mentioned in the previous call.
Yogesh, you want to mention about that?
Yes, please. We had indicated that we will be collecting about INR 1,300 crores in the current financial year from our retention and accounts receivable. And we are very much on track. And if we look at the collections that we have done in the first quarter, they are very much proportionate to what we have indicated. We have collected INR 353 crores from our like receivables and retention, and we are focusing on this. And this loss of Sipat fire has set us back, and we are reevaluating what will be the positioning on being the [indiscernible]. So we are very much on track on what we indicated in the last call on the collection front.
Sir, once you select the full money, then you will become a cash positive company, you should have a INR 400 crores, INR 500 crores cash, or it will be a...
We are still evaluating that. We will update the progress quarterly. We are in a very dynamic situation, and we will update that as we continue.
Sir, can you throw some light on the hydel opportunity for you because there's the [indiscernible]
Yes. So in the pumped hydro storage, we had the order from [indiscernible] last year approximately in the same quarter. That order is currently under suspension due to land issues from the developer. The company is being selective in looking at the opportunities, focusing largely on the private customers.
Kalpesh, you're on the call. Will you be able to address this topic?
Kalpesh sir, we are not getting any audio from you.
Hello?
Yes. Go ahead, sir.
Yes. Okay. So in addition to what Prashant mentioned, we follow that policy. And then in talks of the market, currently, government is coming up with [ PSC ] policies and guidelines. So we see a positive development on that side, but we would like to see in terms of the order, how it comes up in the market. So there will be a lag in terms of the orders that will come up in the market because all the developers evaluate the policies and then they will form up their plans. So we will have to wait and watch how the orders come up in the market.
So ultimately, the next 2 to 3 years' time, where do you see that hydel will be, what percentage of your business, like you have service, then FGD and then this hydel.
Yes. So the hydro is around 19%, 18% approximately of the revenue. And we don't anticipate that this will change significantly because these -- normally the hydro projects are long gestation. And as you see, the book order that we booked last year is on suspension now due to land issues. So these are complex projects that take time and therefore, we are very selective in the projects that we bid.
The next question is from the line of Danesh Mistry from First Advisors.
Yes. Actually, I was just referring to the cash that you received this quarter of INR 350 crores. So that's coming from the existing receivables, but I just wanted to understand on the services side. How are we seeing the business pick up, especially now because one side, we've got the Section 11 as well. So is that kind of impacting our service order intake? And do you think it will be more lumpy once things settle on this Section 11 side? That was the first question. And...
What is the Section 11 that you're referring to?
The Electricity Act [indiscernible] to run the plant. So that's one. And second one is the fact that regarding your debt, net debt free, you mentioned that Sipat has impacted it. So is that to the extent only of the INR 69 crores? Or are we talking about something more? That's it.
So first, on the service market. Service, we have 2 components in the service business. One is the core services, which is [ part shipped ] services. And that is consistently quarter-on-quarter, we are reporting growth as per our strategy. The second component is upgrades, where, yes, the section 11 that you referred to, where the government has said that look, you should plan upgrades, but at the same time, because of the must-run condition, the outage is due to be deferred. So that is impacting the upgrades and not the core services. However, we are seeing positive momentum on the rates where we are seeing that especially we have started to book all those and upgrades this year. Last 2 years, you have booked more orders and upgrades, but this year, we are seeing upgrade orders come under contract. So customers are planning for upgrades. The orders are still not meaningful enough. So in terms of lumpiness, the core service is where we are focusing that it should be as stable and consistent as possible. And that is on track. Upgrades will, of course, follow lumpiness as we see the projects unfold.
On what kind of upgrade opportunities we are chasing, Vinit will add some color to that. Vinit, over to you.
Yes. So on upgrades, we are working on the DNOx. NOx market is really picking up as, Prashant mentioned. So that implementation deadline is 2024. So we see a lot of seriousness. Earlier also, we had opportunities, but they are converting into orders now. So the NOx -- DNOx is definitely there, and we are also looking at some of the customers. They are also going to trying to improve their availability. So they are going for the boiler upgrade. So these are the 2 sectors where we see growth. And then flexibility also is something, which is customers have started asking us. It's mainly for studying NOx -- the studies, but it is also going to pick up maybe in the next couple of years...
Flexibility...
Also the turbine upgrade, the government is pushing for revamping the delay in the retirement of the older units. So that is also something which we have started working and seeing traction in the market.
Got it. Got it. Understood. And on your -- on the question regarding the net debt. You said that Sipat [indiscernible] that back a bit. So is it to the extent of the INR 69 CR? Or is it a higher amount? And that...
In terms of cash and cash out, the impact could actually be double because we had to collect the cash. We will not be able to collect the cash on time, but you will have to spend to repair and then collect that. So that is the impact that we see.
Okay. Okay. But that won't be...
[indiscernible] from insurance.
But that can be recovered from the client, right? The cash part -- the claim I think will come from the insurance company.
Yes, but it will take time when we have to complete the work to collect cash, right? So we will have to first spend to rectify and then recover from the insurance and customer.
Got it. Got it. And when do you think this project would be complete for you to be able to recover the funds?
The current destination is 6 to 8 months. We're still working on it being -- challenge is very complex because it's certain components of a package, which has been damaged and the bill of quantity, it is a bit complex, but our teams are working to resolve it. Estimate is 6 to 8 months.
Fair enough. Fair enough. And if I can ask 1 last question. I don't know if you'll be able to answer it or not. But [indiscernible] about 18 months ago had interest to kind of exit the company...
Sorry. Mr. Mistry, we lost you. Can you repeat, please?
Sorry. Your promoter about 18 months ago had said that they wanted to exit the company, GE. So any update on that? Any progress that you can share?
No, there is no update on that one.
The next question is from the line of Viraj Mahadevia, an individual investor.
Just picking up from where I left off. One of the individuals mentioned there's a 114 gig opportunity. What does that translate into rupee crores in terms of market size and FGD in the next couple of years? And what reasonably do we think we can garner off that market share?
Vinit? It is not next couple of years, while Vinit is coming online. The opportunity will be spread since the government has not only delayed the implementation by 2 years, but they have also set up 3 zones in how the implementation to have to happen. So that will be spread over the next 5 to 7 years is our estimate. And the number in terms of the gigawatt market share, we want to retain is about 10%. And in the volume, it will be lower.
So Vinit, are you online?
Yes, so I think it would be around -- maybe around INR 60,000 crores, that is...
INR 60,000 crore opportunity over a 5-year period.
That's the market level, total...
That is the total market corresponding to this one.
Understood. And what do we think we can garner based on who offers this product competitive situation? Is it sort of 20%?
So we have currently -- as I said, we are currently -- BHEL and L&T are the 2 major players, and there are Chinese players in certain states who are now...
Chinese won't get it. So it's BHEL...
They are participating now via local partners, they are back, unfortunately. So -- and we have a plan to stay in the gigawatt terms at about 10%, but that will not translate to volume because we are not going to pick up EPC for all the projects. So we might pick up ET. The way we see the market progressing is the NTPC [indiscernible] EPC. But as we see now the trend customers are splitting packages and they are asking a little bit of scope. So the scope will not be for EPC to be a part score that we see will be ordered in the future. So in the gigawatt terms, maybe 10%, but in the value terms, it will be less than half of that.
Understood. So if I'm just doing this math very quickly, INR 60,000 crore opportunity over 5 years is just for average sake, it's INR 12,000 crores annually. You are saying at best, we are getting a 10% share of this in value.
No, not value, gigawatts. Value will be lower, as I said. It is not a...
So let's call it, of INR 12,000 crores annually, if we are even saying 5%, that's only a INR 600 crore opportunity, not very large. How does that get you out of your current debt situation and the setup?
So yes, we are focusing on -- as I said, that we are currently focusing on 3 levers in the turnaround. One of course is to develop the services, and services is currently growing core services at rate of 20%. And the second is to focus on industrial segment with certain opportunities that we are focusing from Durgapur. And the third one is to focus on the private customers or again in terms of opportunities that we see coming from industrial [indiscernible] from Durgapur. So those are the 3 areas we're focusing currently on. And as we are able to come to a stable operating size, we will be optimizing the organization front. So we will go through this transition in the next couple of years.
Okay. Understood. But at INR 600 crore annual opportunity for yourself, the INR 150 crores a quarter, even if you strip out for the loss due to fire this quarter that barely brings you into the black at an EBIT level. So still not...
I would like to add here, like we have hydro [indiscernible] like 14 that will be there. So this will be also reasonably, I would say, a decent rate.
Right. Okay. So there is some other opportunity also.
Yes, please.
Okay. Thank you. All the very best.
Plus, we have the backlog as well, which will be taking us in good strategies for the remaining 9 months.
The next question is from the line of [ Murthy Valora ], an Individual Investor.
Yes. Sir, I have a question regarding this hydro market. Sir, now the pump storage market is evolving? And how good are we to capture that market.
Yes, Kalpesh will add. But currently, we do not participate directly with the market before we work with the developers. And as a part of the strategy, we are going to focus with private developers for the opportunity, and we will be selective in the opportunity where it is margin accretive and cash accretive. And the terms and conditions are fairly low risky. So that is what we will see because these are all projects, which require land clearances, et cetera. And that is where we need to be careful in sort of...
Right now the bids -- for electrical and mechanical equipment, right now, bids are not coming?
Sorry?
Right now, E and M bids are not coming from hydropower side, pumped storage.
They are, but the -- as we said, Kalpesh will add further to that. But as I said, we will be selective in this opportunity? Maybe Kalpesh, you want to repeat what you mentioned regarding the hydro opportunities?
Yes, sure, Prashant. So as you highlighted that there is currently market evolving on the pumped storage. But still in terms of market development, it is still at a very initial stage. The developers are evaluating their proposals and then they need time to form up their investment. So it takes some time, and then we are yet to see orders coming up in terms of this new guidelines. So we will have to wait and watch how it comes up in the market. But for sure, there are some positive development on the government side, but we will have to see how it translates into the order.
Sir, But actually, the hydro equipment is manufactured at Vadodara...
No, No, no. The factory was closed. Sorry.
It was closed in August 2018.
It has been sold out?
No. It was shut down, the land was sold yes, but the factory was closed in 2018.
Okay. Now then where do you manufacture this hydro service? In Durgapur?
No, this has been outsourced to suppliers. We don't produce it only more in India.
And we don't have any plans to make this equipment, hydro equipment?
It is too premature because for the factory limit of...
So [indiscernible] all the equipment will be manufactured in our plant.
No, no, no. I think -- no, no, no. Kalpesh, you want to clarify?
Yes, yes. Currently, there is no proposal for us to consider the factory manufacturing. We received [indiscernible], but as I mentioned, it's just 1 order. We will have to see how the new orders comes up in the future.
The next question is from the line of Vivek Kumar from Bestpals Research And Advisory.
I am new to the company. So my first question is on FGD orders. You have receivables around INR [ 1,300 ] crores you are saying you will receive. So if you keep on winning with FGD orders, should we assume that this is the kind of receivables and retention money that would be struck, and this is something that even though we receive today, next year onwards, again, it may go into retention or these are different kinds of products.
Yes, therefore, we have been selective. As Vinit mentioned earlier, we will be selective. We will select customers where we think we can negotiate and maintain cash accretive deals. So that is our objective. Therefore, we are not going for all the volume. We are being selective in margin and cash accretive deals that we can convert largely into cash with a 3-month period.
So let's say we receive this, so the whole thing will again go back to retention new projects? Or it will be largely useful for us to the...
No, the retention will be in the range of 5% to 10% in the new projects. The earlier projects have the larger retention. In the new projects, we are negotiating and maintaining that we should -- we will not take projects with high retention. That is our goal.
So the INR 1,300 crores, we can assume that it's part of your cash at least INR 800, INR 900 crores, we can use it for other things. Can we assume that?
No, no. I think we are mixing up. The INR 1,300 crores is a cumulative of all the collection that we are getting for the past backlog.
So -- no, no. Sir, my question is, I understand INR 1,300 crores, let's say, you receive by the end of this year. Will it get back into receivables or retention, again, immediately in the next month, or it largely can be used for other purposes? That's my question. That's my understanding.
Yogesh?
Yes. Thank you, Prashant. So the money that you collect will be used to obtain our payables and other expenses that we'll be incurring. And we will be using a substantial portion of that to repay the debt as well.
But definitely, the new orders will not request such amount of retention, right, that I can take it, right?
Yes. We are planning that the new orders will have a lower retention amount in the range of 10% and unlike the NTPC projects, which we are still executing, where the retentions were not higher. The new projects we are anticipating will have lower retentions. Here, we are making sure that we don't take high retention rates.
So second question, sir, you have said that the services are 2 components, and then it's hydro and you're talking about FGD. So are there any other opportunities over the next 2, 3 years? What kind of growth do you think you will expect in terms of revenues? And when do you think you will post at least EBITDA profits in the next 2, 3 years? Or can you guide us on the -- any other new things that you -- new opportunities that you may be considering in terms of exports? Or these 3 are the things that you have to depend on in the next 2 years?
Yes. So we will -- the current focus is on these 3 areas. We are evaluating certain additional opportunities where it is premature at this point in time for us to be able to come back. But yes, we are consciously looking at certain opportunities. I mentioned a bit earlier, especially with the factory in Durgapur, we are exploring options to be able to produce for non-power related CapEx. So we have received some success there, about 20,000 to 30,000 hours you have been able to bring for metals industry, fabrication, and we are looking at additional fabrication opportunities, which are noncoal for the factory in the Durgapur. So those opportunities are premature. We are working to get the factory qualified, qualification process with EIA and all the players, it takes about 6 months to 1 year.
So currently, there are plans, yes, we are testing our markets. We are conducting [indiscernible] as it is premature, but yes, we're working to find a way to be able to fill back. But in our estimate, these measures will take at least 1.5 to 2 years for them to materialize. That is the reason why we have said it is taking longer than anticipated to turn around. Had the FGD orders not gone delayed, maybe that would have been sooner, unfortunately because of the delay in FGD orders. The time to bring the other additional opportunities and develop the new areas of business will take time. And we are focusing on certain ideas. We will share with you the progress as we move forward.
So you will not be able to say when the revenue in the next 2, 3 years, right? You're not giving any guidance. But as the guidance...
[indiscernible].
Yes. No, why I'm asking is all power companies, if you see the worldwide [indiscernible] that is required and there's a huge boom in both in terms of steam, maybe non-coal-related steam and renewable transition. This looks like a big opportunity. Are we trying to [indiscernible]? Or this is something that we are not part of -- which will not give us -- which is not an opportunity for us because...
No, we have mentioned -- sir, we have mentioned 2 areas. One area is the integration of biomass, integration [indiscernible] into the existing coal fire power plants. This is an opportunity that we're exploring and working. We have signed an MOU with NTPC. And we mentioned about that in the previous call. That is an area that we are working on. For that to meaningfully translate into some revenues, it will take about 2 years because these are exploratory, we will do a pilot, test it out how it looks, what is the impact.
The second area that we're working upon is flexibility. Again, flexibility, the orders that we are seeing currently in the market are the orders for study, where the customers are wanting to test in their system for the boilers, turbine and [indiscernible] system, the auxillary power, whether the system is stable at 40%, what are the changes that are required. Now these studies when we do, that will then create opportunity 3 to 6 months [indiscernible] studies under an opportunity and at the time then approval process. So we expect flexibility will start into meaningful opportunity again in about approximately a year from now. So there is an interest and we have seen that interest increasing.
Can you throw more light on what this flexibility means, if you don't mind, because I am new to the company.
So during the day when there is more solar or wind, the coal-fired stations have to go down to 40% of the rated capacity. Otherwise -- and then in the evening, when there is a big demand, the coal station have to come back to full power. So in order to make this transition from fuller to low load, the coal stations are all designed to operate at 100%. They are not designed to operate at variable rates. But because of the renewable integration on the grid, now the core stations have to be more flexible. And that requires certain modifications in the plant, and those modifications is what we are talking about to ensure that these coal-fired programs become flexible, so that they can [indiscernible] more renewable electricity to [indiscernible] the grid.
[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Prashant Jain for closing comments. Over to you, sir.
Thank you all for joining and asking these questions, and thank you team for being with me. And we will talk to you soon. Thank you all. Have a good evening.
Thank you. On behalf of GE Power India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.