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Isgec Heavy Engineering Ltd
Earnings Call Analysis
Q2-2024 Analysis
Isgec Heavy Engineering Ltd
The company has shown resilience with a robust increase in profits for the second quarter (Q2) and the first half (H1) of the fiscal year 2024 (FY '24), despite marginal declines in revenue. Stand-alone profits before tax in Q2 rose by 23%, from INR 57 crores in Q2 of the previous year to INR 70 crores this year. Similarly, consolidated profits before tax soared by 85%, hitting INR 91 crores for Q2 FY '24, up from INR 49 crores in the corresponding quarter of the previous year. Analyses of half-yearly results echoed this trend, with stand-alone profits before tax jumping by 52% and consolidated profits doubling compared to H1 FY '23.
The company’s consolidated order booking rose slightly to INR 1,545 crores in Q2 FY '24, demonstrating a stable inflow despite a high base from the previous year. As of the end of September 2023, the order book is well-diversified and robust, standing at INR 8,667 crores. Breaking it down, 73% is attributed to the project business while 27% comes from manufacturing, with international orders comprising around 15% of the total.
The business has a diversified order book that spans various sectors and customers. Encouragingly, export inquiries are rising. Significant developments include the expansion of the company's manufacturing units and SAP S/4 HANA implementation across all units. Furthermore, Isgec Hitachi Zosen's order book looks promising with INR 842 crores in orders.
Completion of old projects with lower margins is paving the way for new orders with improved profitability. Expectations for margins are between 12% to 13% due to a strong order book and expansion in foundry, boiler tubes, panels, and containers businesses. The management remains cautiously optimistic, with an anticipated margin of around 10% for FY '25, reflecting a positive outlook that balances the current momentum with the unpredictability of the future.
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Good evening, ladies and gentlemen. I'm Pelsia, moderator for the conference call. Welcome to Isgec Heavy Engineering Limited Q2 FY '24 Earnings conference call hosted by ICICI Securities Limited. [Operator Instructions]. Please note this conference is recorded. I would now like to hand over the floor to Mr. Ashwani Sharma from ICICI Securities. Thank you, and over to you, sir.
Yes. Thank you. Thank you very much. Good day, everyone. On behalf of ICICI Securities, I would like to welcome you all for the Q2 and H1 FY '24 Earnings Conference Call of Isgec Heavy Engineering Limited. From the management, we have Mr. Aditya Puri, Managing Director; Mr. Kishore Chatnani, Wholetime Director and CFO; and Mr. Sanjay Gulati, Whole-time Director and Head of Manufacturing units.
So without delaying further, I request Mr. Puri to start the call with his opening remarks on the results, followed by outlook. Post that, we can have the Q&A session. Over to you, sir, and thank you.
Thank you, Ashwin. Good afternoon, everyone, and thank you for joining us on our earnings conference call. I hope that you and your loved ones are all well and safe. We look forward to facilitating a constructive interaction. The quarterly and half yearly financial results were published yesterday. We have uploaded our presentation on BSE, NSE and our website, www.isgec.gom. You may visit our website and follow us on social media platforms for regular updates about the company's quarterly financials.
The stand-alone revenue for Q2 FY '24 is INR 1,120 crores compared to INR 1,160 crores in Q2 FY '23. The stand-alone profit before tax for Q2 FY '24 is INR 70 crores and is 23% higher compared to INR 57 crores for Q2 FY '23. The consolidated revenue for Q2 FY '24 is INR 1,478 crores compared to INR 1,515 crores for Q2 FY '23. The consolidated profit before tax for Q2 FY '24 is 85% higher at INR 91 crores compared to INR 49 crores for Q2 FY '23.
In the stand-alone results, the profitability is better in the manufacturing segment. The increase in consolidated profit is attributed to higher profits in Isgec Heavy Engineering Limited stand-alone and Saraswati Sugar Mills Ltd. The stand-alone revenue for H1 -- now I'm talking about the half yearly results. The stand-alone revenue for H1 FY '24 is INR 2,278 crores compared to INR 2,158 crores for H1 FY '23. The stand-alone profit before tax for H1 FY '23 is INR 148 crores compared to INR 97 crores for H1 FY '23, that is higher by 52%. The consolidated revenue for H1 FY '24 is INR 2,875 crores compared to INR 2,765 crores for H1 FY '23. The consolidated profit before tax for H1 FY '24 is INR 163 crores compared to INR 79 crores for H1 FY '23, that is higher by 100%.
Order booking. The consolidated order booking for Q2 of FY '24 is INR 1,545 crores compared to INR 1,508 crores of orders booked in Q2 of last year. The orders in hand position is strong. Consolidated orders in hand as on 30th September 2023 is INR 8,667 crores. Of the consolidated order book, 73% is from project business and 27% is from manufacturing business. The order book includes INR 1,308 crores for international orders, which is about 15%. The order book for Isgec Hitachi Zosen is also shaping up well. It has INR 842 crores of orders as on 30th September 2023.
The order book is well diversified across various sectors and customers. The overall demand trend is encouraging, and the inquiry position continues to be robust. Export inquiries have also picked up. As informed earlier, we have been implementing SAP S/4 HANA across all the units of our company. The manufacturing units were earlier running on an earlier version of SAP. The project business is running on a different ERP software. We have gone live on SAP S/4 HANA in August 2023, covering all the business segments of Isgec Heavy Engineering Limited. In Saraswati Sugar Mills Ltd. In the sugar factory, we have converted its manufacturing process from double sulphitation to refined sugar. The sugar season 2023/'24 has commenced and the factory has commenced and the factory has started crushing operations on 31st October 2023. We estimate a crushing of 175 lakh quintals this year in comparison to 166 lakh quintals in the previous year. Earlier during the year, we expanded the capacity of the ethanol plant from 100 KLPD to 160 KLPD. The ethanol plant has started for this season on 9 November 2023 and is operating at this expanded capacity.
There is good progress on the construction of the Cavite Biofuel Ethanol Plant in the Philippines. The molasses stream in the plant is complete and a trial run for production of ethanol from molasses has been done. The sugar stream is under construction and will be commissioned in the next few weeks. The plant will start operations in December 2023 after all the required permissions and licenses are received from the government authorities and sugarcane becomes available. My colleagues and I will be happy to answer any questions. Thank you.
[Operator Instructions] First question comes from Pratik Kothari from Unique BMS.
Sir, my first question on the manufacturing side of [indiscernible]. Across industry, we are seeing very strong demand order inflow, et cetera. But if we look at our numbers, it's quite subdued. If you can talk about what is happening, what is the outlook there?
So manufacturing has been strong -- and manufacturing is strong. The order book in manufacturing is also very strong, and we expect to have a good year in manufacturing.
But if you look at the numbers for the first half, we have grown at about 6, 7-odd percent. So what are we missing? I mean I understand that maybe going forward, we'll do it, but what didn't go as per our expectations?
Yes, it is as per our expectations. It is as per our expectations. And you actually cannot see quarter-to-quarter, but the demand is strong, the order book is strong and execution is fine.
And sir, on the EPC side, we were expecting some strong recovery in margins. So where are we in that journey and -- on the margin side in EPC?
Yes. So progressively, all the old projects are getting completed. And the margins are low, we admit that. But as the new orders kick in with better margins, we should start seeing a few quarters improvement in the margin.
So this -- so in terms of new orders that we would be bidding or we would have done in the last 6, 12 months, this will be all at the older range of 8%, 9% EBIT margin.
7% to 8%.
[Operator Instructions] Next question comes from Ashwani from ICICI Securities.
Sir, my first question is on the -- again, on the margins. So if I look at the manufacturing margin, it has been pretty robust in the last 2 quarters, Q1 and Q2. This is quite higher compared to what you have been initially guiding, which is around 8% to 9%. So was there any one-off during the quarter? And what are the sustainable margins that you see for the full year and going ahead?
I think we will be continuing with about 12% or so, 12, 13% margins. The order book, as Mr. Puri explained earlier, the order book is good. We have expanded in our foundry as well as the boiler tubes and panels. There's robust order book in the container also. So we have [indiscernible].
Sir, your voice was a bit muffling in between. I could not hear properly.
Okay. So as I said, Mr. Puri explained, we have a good order book. We have increased capacity in foundry in our boiler tubes and panels business, as well as our containers business. So all of these are contributing good margins. Margins should continue at 12%, 13%, if not more.
Can I take this number for '25 as well?
The manufacturing business has typically a shorter cycle. So we cannot commit on '25 numbers as of now, but we don't -- we're not seeing anything negative, let me put it that way, for '25.
In that sense, what should be your outlook for margin in FY '25? Will it come to a normal level of around 8% to 9%?
No, it will be higher. It will be about 10% in manufacturing -- about 10%.
Sir, secondly, if I look at the order inflow on H1 numbers, there is a degrowth of around 5%. What is your outlook? How do you see this number for full year and next year?
So this degrowth is -- there is a degrowth in the orders and the capital goods sector is a bit lumpy. And so 5% here or there or even 10% here, there is nothing very significant. And it's not a sign of anything. It's not indicating toward anything -- any trend. Inquiry inflow continues to be very robust.
Next question comes from Devang Shah from Asit C Mehta Investment Limited.
First of all, congratulations for a good set of numbers Y-o-Y basis. Sir, I have a couple of questions. First, related to the earlier participants have asked you. Sir, do you expect that based on your inquiry or some status that in your H2 also, the strength -- the strong momentum of the order inflow is going to continue? That is my first question. As far as your order inflow is concerned by considering the fact that you are seeing the way the manufacturing facility is picking up and the private CapEx revival is happening. So I just want to know about that thing. So it we maintain some set of -- same set of order book and in terms of revenue visibility also, give some bit idea of futuristic revenue is concerned?
Second, sir, I have a second question, sir, your Philippines plant about the ethanol, it is going to commence on the December-something you have mentioned '23. So it is on the same path? And that is going to be some kind of additional CapEx that you have already incurred over there that will result into some kind of additional revenue that has been mentioned earlier in your commentary? And the last question, sir, by considering the fact the sugar price is prevailing right now, do you expect realization on a sugar front is going to improve from here on. And that will result into some kind of margin expansion as far as the sugar business is concerned? That's it.
Can you repeat your first question? So the inquiry flow is robust. We are selective in taking some orders. Obviously, some orders we win, some orders we lose, but we have every reason to believe that the order booking will remain consistent.
And you will be able to maintain such kind of outstanding order book, right? That is something INR 8,500 crores to INR 8,800 crores. That's what you are maintaining for quite a long time.
On a consolidated basis, yes...
That should be...
We hope to maintain it.
We hope to maintain it. And your second part the Philippines was...
So Philippines, yes, the plant is under completion. We had drawn the last installment of the loan. The money is, of course, being spent as we -- as mentioned by Mr. Puri, it will get completed in -- sometime in December. So next year, first quarter, we hope to get some revenue from there. I think that was your question, you wanted to know...
Yes, I wanted to know, so next -- from next quarter onwards, you are going to realize the -- I mean, so you're going to have a revenue from this Philippines plant and moving forward, you are going to add on furthermore, and you have already earlier mentioned as far as your total revenue is concerned from the Philippines plant as and when your utilization level will increase.
So January to March quarter, we will have some revenue. I think that's what you wanted to know? That's right.
And sir, when it will be a full utilization level somewhere, how long it will take?
It will be -- I mean -- it will reach full utilization in about 1 or 2 -- 1 to 2 months' time.
Okay. Okay. And sir, as far as sugar revenue is concerned, in your revenue mix, it will some kind of -- the way the sugar prices are inching up. So you are going to have some good margin in that particular business?
The sugar prices have increased. Sugar revenue -- I mean revenue is, of course, a function of the amount -- the quantities that are released by the government because there is release mechanism which is followed. But we expect good crushing during the year, slightly higher than last year. We expect to produce slightly more sugar than last year. And we certainly expect good profitability.
Okay. Okay. That's what I wanted to know. Yes, sir, you were saying something, continue, sir.
I was saying better profitability than the last year.
Next question comes from Abhineet Anand from 3P Investments.
Yes. So your order book seems to be quite diversified. I just wanted to understand within refineries and power, if you can just highlight what are the type of offerings that we have recently?
So for the refinery sector, we basically supply pressure vessels, heat exchangers and reactors. We also supply boilers, which are based on -- oil and gas side boilers to refineries. As far as power plants are concerned, to the power sector, we supply boilers. We also do air pollution control equipment for the power plants. So these are basically -- occasionally a pressure vessel per power plant, but that's occasionally. So these are the [ offering ].
A typical boiler, what size would that be?
It could vary. It could vary from 600 -- 60 tonnes to 300 tonnes.
And these are all used for small-scale power generation, right?
These are supplied to refineries, some are start-up boilers, some are used by the regular production. So these are supplied to big oil refineries.
So I think you were asking whether they are for power small scale, it's not small scale, is not correct. They are used for -- they are required for steam applications, steam required in the process, and they are, of course, also used for power plants in the refinery.
Okay. So even the power that you write is basically the steam requirements in refineries, it is for that, right?
I think in the refineries, we said the industry segment is refineries. I think Mr. Puri explained, there is process plant equipment that we supply, and we supply boilers. The boilers are for steam applications as well as for power applications. But we don't classify that as power industry. We classify that as refineries. And the power itself is for small power plants and for air pollution control equipment, as we just explained.
Okay. So what size do we provide in power in terms of megawatt I was just trying to understand.
To -- depending on the fuel, but up to about a little over 100 megawatts.
Okay. So if you can just throw some light as to demand scenario in this part of the power sector, where the requirement is still 100-megawatt. So inquiry levels, do you guys track as a Y-o-Y basis, what is the growth or something if you can highlight?
For our boiler business, the inquiry levels are quite robust. We will not be able to give you numbers, but the inquiry levels are okay, are fine.
And is there any way to understand which of the top 4 sectors have better margin versus others?
Which was the 4...
Top 3, 4 sectors, while you do operate across maybe 10, 15 sectors, top 2, 3 sectors where we make better in terms of margin. So the best margin in which sector do you make in all?
So it's -- actually there are offerings in each sector, which are from the manufacturing segment also and from the EPC segment also. So margins are typically based on the products that we are supplying or the order that we are executing rather than the sector. So it's not really -- you can't differentiate between, let's say, that the refinery sector, there is less competition, offers better margins or power sector offers better margin. It doesn't work like that. Or we look at each order on case-to-case basis. The competition is different for different products. Margins are dependent on the intensity of the competition and the timing of [indiscernible] when the customer is ordering actually. How well we are loaded, how well our competitors are loaded that also impacts who's quoting at what price?
And lastly, are you seeing any signs of a slowdown because of the elections that are pending at the end of the year?
Not as yet.
I don't think we have a view that there will be any slowdown. We don't have a view that there will be any slowdown.
Next question comes from Jitendra Sriram from Baroda BNP Paribas Mutual Funds.
I had two questions. First of all, on the order backlog, can you give us one, color between how much would the backlog be from the manufacturing side and how much from the EPC side? And roughly, how should one think about the cycle time of execution? Would it be like a 12-month, 18-month kind of a weighted execution cycle?
Segment wise, I think it's there on our presentation. The backlog from the project side is 73%, and from the manufacturing side is 27%. Total order book of about INR 8,667 crores.
About a $1 billion, yes, I saw that, yes.
The 27% is from manufacturing and 73% is from projects. In terms of...
And how should one -- yes, cycle time of execution?
In terms of cycle time, it varies across products.
Yes. So typically for manufacturing, it could -- it's a very wide band. It could be from 3 months to 15 months. You could take the average is about 9 months.
Got it.
And then part of the -- yes, I'll just tell you for the projects business, it would be average would be about 15 to 18 months current. It used to be longer, it's current.
Got it. The second part I wanted to understand was if you could also talk to us about your -- how have the receivables moved at an aggregate level for the company, what was it, say, a year back? And what is it now in terms of receivable situation? The working capital cycle?
I think -- I don't know if you've noticed, our net borrowing is sharply down. Our net borrowing as of 30th of September was only INR 46 crores on a stand-alone basis because there was some borrowing and there was also temporary surplus money which was in bank, whatever was connected in the last few days was there in the bank accounts. So our borrowings have reduced by close to INR 262 crores -- INR 262 crores, if I remember the figure rightly in the last 6 months. Receivables, there is movement on collection of the milestone payments. They have reduced by about INR 200 crores in the last 6 months. And there are a number of milestones which are getting achieved in the next 6 months, and the payments are going to be -- I'm talking about the milestone-related payments, the retentions. We call them as retentions, they are actually milestone related payments. So they are going to -- a large number of them are going to come in the next 6 months or so.
[Operator Instructions] Next question comes from Manish Goyal from Thinqwise Wealth Managers.
A couple of clarifications. Sorry, there was a disturbance in the -- earlier while you were answering. So sir, on -- first on EPC margin, which are at 4% level, did we mention that going forward, the new orders will help us reach 7% to 8% margin?
I think we said 6% to 7%. But yes, Manish, it will happen. It is taking some time, but it is certainly going to happen.
Right. Okay. So ideally, would it mean that some of the legacy orders probably with low margins, particularly FGD, it should probably see lower contribution and new orders contribution going higher. Is it a fair assessment? And how much of the FGD is pending also?
I don't...
So FGD, if you're talking about the NTPC FGDs, public sector FGDs, the commissioning are going to now start in the next -- I think, in 6 to 8 weeks we'll have the first of them commissioned. And we hope that in the next 8 to 9 months, or 10 months all the NTPC work will be commissioned. We do have 1 or 2 orders in the private sector, they will go on a little longer -- in the private sector, 1 in the state government sector, those will go on a little longer.
Okay. Got it, sir. And on manufacturing margins, you mentioned we expect 12% to 13% in the near term. And you also commented something -- a number of 10%. Was it for entire FY '24? Or what was it related to, sir?
It was -- somebody was asking about what will be in FY '25. So Mr. Puri was mentioning that certainly more than 10%.
Okay. Okay. Okay. Fine, sir. And sir, on the -- continuing on the strong cash flow, what we are seeing in the first 6 months. So you did mention that receivables have declined. But one more reason probably I see is that other liabilities have increased significantly that has helped net current assets to fall and cash flows have improved. So is it on account of advances we would have received from the customer, if you can clarify.
Manish, you are right, you are analyzing our balance sheet well. But there are 4, 5 factors. One is a receipt of advances because we have more [indiscernible] point of time than earlier. So there are advances which have been received. The second is, of course, the profits which have been approved less pretax and the dividend that profit is available to us in cash terms. But a function of having more orders under execution is also that inventories are up by about INR 190 crores -- INR 189 crores. Inventories are up by INR 189 crores. Advances to -- are up by about INR 67 crores. So it's not that simply advances have come from customers and they are available to us in cash. They are getting used up in building up inventories. They are used up in giving advances to our suppliers. So the receivers, the collection of the milestone payments has also helped in positive cash flow in this period.
Understood, sir. And sir, as I probably look at your order book breakup, what I see is that particularly in sugar, we have seen 71% Y-o-Y increase in order book outstanding to roughly INR 1,400 crores compared to INR 800 crores. So does it also include the ethanol part or it is pure sugar machinery only?
So sugar includes ethanol certainly. So we classify sugar as sugar machinery. Also -- so these are actually composition by industry. So when we say sugar industry, we may be supplying sugar machines, we may be supplying boilers to the sugar industry or we may be supplying refineries to the sugar industry. This composition is by industry, not by product.
Okay. Okay. Okay. So it will have -- apart from boilers, it will have other...
It will have machinery, sugar pants, the boilers as well as the refined sugar and ethanol plants.
Sure, sir. And coming back on the margin, sir, for subsidiary now, we have seen Hitachi JV order book growing very strongly, I believe even the execution would have picked up. But somehow, it looks like the margin is still not improving significantly. So -- and also what we probably see is that international share of the order book also increasing at Hitachi. So maybe when do we see improvement in our JVs profitability and also in our subsidiary Eagle, maybe if you can highlight that?
So Sanjay, can you answer?
Yes. So the JV's profitability is expected to be good in the coming year in FY '25. In this year, we are expected to maintain the level of the profits that we currently are. So this is -- so the last year, the profitability was low because of the sharp increase in material prices.
But in current year, we have seen that stand-alone segment has definitely shown improvement for manufacturing segment, but we don't see that happening for -- particularly for Hitachi JV, I believe that is a larger pie of the JV share. So just wondering what could be the reason? And if we look to -- second question is, we expect improvement. So what kind of margins can probably we see double-digit margins in JV next year?
We could see a profitability of around 7% in the coming year, in the year FY '25, in the next year.
What level of these margins, will it be what EBITDA, PBIT, PBT...
About -- PBT would be about 7%, yes, in the coming year, in the next year.
And so no, but in current year, why are we not yet seeing, is it because of some issues or...
Okay, let me add to that. The order book has grown, as you -- as Mr. Puri mentioned in his speech also. And of course, we've also noted INR 840-odd crores. Execution time for these orders is typically 15 months to 18 months. So the revenue and the margins will accrue over the period when these orders get executed. That's why Mr. Sanjay Gulati is mentioning more about next year rather than this year.
Okay. Okay. And sir, you did mention...
Sorry to interrupt you sir. Sir, can you please join back the queue sir? I request the participants to stick with 2 questions in the initial round, and join back the queue for more questions.
Next question comes from Nilesh Doshi from GL Capital.
Just two questions. One on the Philippine ethanol plant, as you explained that it's under commissioning, then why do we have -- because I thought that the entire cost of project we would be capitalizing. Then why are we having a loss in EBIT in the segmental view?
So there are 2 or 3 companies there. There are 3 companies there. So there are -- so the plant itself is getting capitalized. There is also a company in which the sugarcane farming is being done. So there are salaries and there are costs. There are farm machinery, tractors, all of that [indiscernible] those is there. So it's not only 1 single plant, which is getting capitalized.
So once we complete the commissioning and start operation, all these losses would also be covered up, right?
That's -- they will be covered up by running the business, that's right?
Right. Okay. Second is on the export orders. I mean, all these orders are generally on the manufacturing side or there are some EPC also?
There are some on the project side. And there are some on large manufacturing.
Largely manufacturing. Now when you say order book under manufacturing and under EPC, I would presume that those manufacturing orders will be pure manufacturing supply of equipment. Whereas EPC also would have some manufacturing activity, but that's being bifurcated and provided under EPC. Is that correct understanding?
EPC would not have any manufacturing.
Next question comes from [ Nihar Shah ] from [ Crown Capital ].
Two small questions. One is on the revenue front, like we have...
Can you speak a little louder please?
Am I audible now?
Yes, yes.
First question will be on the line of the revenue. Like we have seen good order book growth. So what kind of revenue do we expect in H2? Like could you give a number, a ballpark figure for that?
I think we have mentioned in one of our earlier calls last time, that this year, we are expecting revenue to be up by about 10% or so.
Okay. Okay. And the margin, do we see them being maintained around 9%?
I -- what margin are you talking about, sir?
The entire margin, considering all the segments.
I -- actually, I.
EBITDA margin. I'm really sorry , EBITDA margin, I am talking.
Should be around that range. The profitability, as you know, is better this year than last year. But it should be around that range, yes.
The next question comes from Jagvir Singh from Shade Capital.
My question is related to the ethanol plant in the Philippines. At full capacity, what kind of revenue we can do over there and what kind of margins we will make?
So based on today's prices of ethanol in the Philippines, the revenue is -- should be around INR 530 crore, INR 540 crores, INR 550 crores a year on an annual basis. And EBITDA should be close to -- between INR 140 crores and INR 145 crores a year.
Okay. And sir, in the EPC business, we are talking about the 6% to 7% margins. So there will be some improvement in the next year itself or not in FY '25?
As I mentioned earlier, it's taking time, but it's going to happen for sure in FY '24.
So next year onwards, there will be some improvement.
I'm not able to say which particular quarter, but yes, there will be improvement.
No, no, I'm talking about the FY '25. I'm not talking about the quarter. FY '25 as a whole.
So answering about FY '25. So there will be improvement. I'm not able to say which quarter it will show.
[Operator Instructions] Next question comes from [ Sanjit Vaid ], an investor.
I needed a clarification. You mentioned that next year, you're looking at a consolidated margin of 10% plus. That's what you said, right?
No, we did not talk about any consolidated margin, sir.
10% plus was reference to the manufacturing business.
Manufacturing segment in the stand-alone company.
Okay. And that you referred to EBIT or you referred to EBIDT.
EBIT.
And okay. So assuming 10% plus for the manufacturing business and 6% to 7% for the EPC business? And lastly, for the sugar and the ethanol business, I guess, it will be in excess of 20%. Given that the Philippines, we are talking of 26% or 27%, 28% INR 140-odd crores on INR 550 crore turnover?
The sugar plant -- the ethanol plant in Philippines, we are -- as of now, it's in a different segment. We are calling it ethanol plant under construction. When I talk about the...
Sorry, next year, it will be fully operational, right?
Next year it will be fully operational. The EBITDA. EBIDTA, E-B-I-D-T-A is close to about 25% based on today's prices of ethanol. In the sugar business here, the EBITDA is close to 12% -- 12%, 13%.
Right. So I'm sorry, I don't have the exact numbers for the Indian revenue and the Philippines revenue. But would it be fair to say that the EBITDA for the consolidated sugar and ethanol business will be about 17%, 18% then?
This is not -- it's not right to consolidate two very different businesses, one in India and one in the Philippines.
Okay. Let's keep it separate. So we are talking of...
I have mentioned both to you. In India, it will be 12% to 13% for the sugar and ethanol plant, which is in our subsidiary company, Saraswati Sugar Mills Limited. In the Philippines the plant is yet to start. We have projections. So I'm telling you about the projections, which the annual revenue should be between INR 530 crores to INR 540 crores, INR 550 crores. the EBITDA should be around INR 140 crores or so.
[Operator Instructions] We have a follow-up question from Manish Goyal from Thinqwise Wealth Managers.
Sir, in our sugar factory, how much of the produce we will be using for ethanol and how much would go for sugar production?
So what is happening over there right now is, as you know, that the sugar plant -- sorry, the ethanol plant can use molasses as well as syrup for manufacture of ethanol. And this year, the government has not come out with the pricing. They are yet to announce the pricing of ethanol. And as you know, the pricing of ethanol varies according to the feedstock. In the absence of that pricing, we have started the ethanol plant based on B-heavy molasses. So typically speaking, about 16 to 17 -- let me put it this way that the ethanol plant would not have been there, if we would have produced about maybe about 16% more sugar.
Sorry, you would have produced how much?
About 16% more sugar.
Okay. And you mentioned that this year the season we'll see 175 lakh quintals crushing as compared to 166 lakhs quintals crushing.
Right.
We have a follow-up question from Nilesh Doshi from GL Capital.
Sir, in the last call, you mentioned about you see good visibility and order in polysilicon area. Can you help us understand what kind of equipment you supply for -- because this is a very upcoming thing in India? And what kind of opportunity we could have in that space?
Sanjay?
So in the polysilicon plants, we supply the main reactor, the HCR reactor, hydrochlorination reactor. We supply the CVD reactors. We supply critical heat exchangers that is the ones working at the highest temperature with Incoloy material as well as duplex, the double pipe exchanger. So all the process equipment for the -- that is right from the most critical to the medium level of criticality all the equipment are supplied by different divisions in our works.
These different divisions are all subsidiary with Hitachi Rosen?
Yes, they are subsidiaries together. That's right. So together, we supply the range of the most critical equipment and the medium level of equipment.
Sir, can you help me understand like what kind of, I mean size of opportunity coming because I believe there are 4 or 5 companies looking at putting up polysilicon manufacturing in India. So is this all with respect to Indian opportunity or we also have an export opportunity in this?
We also have an export opportunity. At the moment, 90% of the world's polysilicon is probably produced by China. A lot of countries are planning to be independent because this polysilicon is used for manufacturing these solar panels, that is the wafers for the solar panels. So India is investing. U.S. is also investing. And several others -- in Europe also, there are a few plants coming up.
So sir, is it possible to understand what could be this opportunity? And in terms of design of these equipment, the process design would be coming from the technology licensor, and we would be doing more of a mechanical design and fabrication, is that correct understanding? This is a very upcoming opportunity for us in India. So how do you see this over the next couple of years?
We expect this sector to grow substantially in the coming years.
Any ballpark opportunity size you could...
It's very difficult to ascertain at the moment. This is an upcoming sector, and having any estimates at the moment would be clearly difficult. But we see that this will have a good growth in the future.
And there will be limited competition and to say, I would believe.
Pardon me for interrupting, but I would like to sort of say again, our capabilities for manufacturing products span across multiple industries. The idea is that capital goods sometimes something is doing well, sometimes something else is doing well. So we have consciously built capabilities to address multiple industries. So what you are mentioning is only one of the opportunities in front of us. There are many other opportunities.
Okay. And sir, lastly, on this acquisition on Titan. Just can you help us what exactly we are planning in that area? I mean we don't have a capability in terms of nickel alloy or titanium manufacturing? Or how do you see that? Because what was the motive behind going into that.
We are expanding the -- we have a capability. As of now, it is small, the company has been doing around INR 65 crores a year. We are looking at larger order book. We are planning to expand the capacity in order to address the market which is coming up.
However, we will expand the capacity only after we get these orders. We are doing some preparatory work, but the expansion will happen subject to orders coming in.
And that would be next year?
No, if the orders come, they could come in the next few months.
[Operator Instructions] We have a follow-up question from Ashwani Sharma from ICICI Securities.
On your retention, just a clarification. You mentioned about receiving some money during the quarter. If you can share the number, what was this money -- this number at the end of FY '23? And how much it stands now?
Pardon me, I'm not going to be able to share any particular numbers at the moment.
Okay. And sir, on the revenue guidance, I think, if I look at the stand-alone revenue growth, it's 5% for H1, and you're guiding for 10% growth. So will you be -- so basically, you are guiding for 14% growth in the second half. So this will be coming from manufacturing or EPC?
From both.
[Operator Instructions] There are no further questions. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha Conference Call Service. You may disconnect your lines now. Thank you, and have a good day.
Thank you.