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Isgec Heavy Engineering Ltd
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Ladies and gentlemen, good day, and welcome to the Isgec Heavy Engineering Q4 FY '22 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Modi. Thank you, and over to you, sir.
Thank you, Sima, and good day, everybody. On behalf of ICICI Securities, I would like to welcome all for the Q4 FY '22 Earnings Conference Call of Isgec. The management is being represented by Mr. Aditya Puri, Managing Director; Mr. S.K. Khorana, Executive Director and Company Secretary; Mr. Kishore Chatnani, Whole Time Director and CFO. We will start the call with the opening remarks on the results and the outlook by Mr. Puri. Post that, we can have the Q&A session.
I would like to hand over the call to Mr. Puri for his opening remarks. Thank you, sir. Over to you.
Good afternoon, everyone, and thank you for joining us on our quarterly earnings conference call. I hope that you and your loved ones are all well and safe. We look forward to a fruitful interaction.
We've uploaded our presentation on BSE, NSE and on our own website, www.isgec.com earlier today. There is also much more information about our business on our website.
Let me now talk about our consolidated financial results for the quarter and full financial year. The total consolidated income for Q4 of FY '22 is INR 1,597 crores. which is about 2% lower compared to INR 1,627 crores for Q4 of FY '21. The total consolidated income for 12 months FY '22 is INR 5,512 crores as compared to INR 5,477 crores for 12 months of FY '21.
The consolidated EBITDA for Q4 of FY '22 at INR 108 crores is however lower compared to INR 131 crores for Q4 of FY '21. The consolidated EBITDA for 12 months of FY '22 at INR 325 crores is also lower compared to INR 507 crores for 12 months of FY '21. The consolidated profit after tax for Q4 of FY '22 is INR 39 crores as compared to INR 68 crores for Q4 of FY '21. The consolidated profit after tax for 12 months of FY '22 is INR 115 crores as compared to INR 253 crores for 12 months of FY '21.
The profitability has been sharply lower in the EPC segment. It has also been lower in the Manufacturing segment and in the Sugar segment. The EPC segment has been adversely impacted by: steep increase in material costs due to increase in commodity prices, mainly steel and aluminum, also nickel and copper; time and cost overrunning EPC projects due to the impact of COVID-related disruptions coupled with shortage of skilled manpower; sharp increase in freight cost, both for purchase of materials and supply of goods to the customers; normal employee costs and increments, as you know, last year, we had salary cuts. The lower profitability on the EPC segment will continue for some time as the fixed price longer duration orders presently under institution were booked before the increase in commodity prices.
Profits in the Manufacturing segment are lower because of some impact of commodity prices and normal salary cuts. Profits in the Sugar segment is lower due to lower quantity of sugar sales, that is 16.19 lakh [ vintners ] in FY '22 versus 21.76 lakh [ vintners ] in FY 2021 as there was lower exports. Since we are carrying good profit -- good stocks, the profits will come in as and when the sugar is sold.
Regarding sugar exports, as you know, last year, we exported a good quantity of sugar under the government's export subsidy scheme. This year, there was no government subsidy -- sorry, this year, there was no government export subsidy scheme, and we being located very far from ports find it uneconomical to export sugar in comparison to sugar factories located in coastal states and near to the ports. We have, however, contracted to export small quantity of 10,800 metric tonnes of sugar which has been exported in the current financial year. The consolidated profits have been adversely impacted by interest and other costs in the ethanol plant and under construction in Philippines.
I will now talk about the order booking. The consolidated order booking for Q4 of FY '22 is INR 1,442 crores as compared to INR 147 crores of orders booked in Q4 of last year. The consolidated order booking for 12 months of FY '22 is good at INR 5,608 crores compared to INR 4,863 crores for 12 months of last year. Consolidated orders in hand as on 31st March 2022 are INR 7,322 crores against INR 6,765 crores as on 31st March 2021.
The order book position is satisfactory. Of the consolidated order book, 77% is for the project business and 23% for the product business. The board order book includes INR 1,113 crores for export orders, which is just over 15%. The order book for Isgec Hitachi Zosen is also good, it has INR 644 crores of orders as on 31st March 2022.
The overall market demand trend is encouraging, and the inquiry position is very good. Firm inquiries and budgeted inquiries exceed INR 10,000 crores, and export inquiries have also picked up. As our order book is well placed, and we are going slow on order booking in view of the high volatility in commodity price, and also been choosy in booking new orders and focusing on orders which offer reasonable margins.
Some customers are also delaying placement of new orders in view of the high commodity price leading to higher product project costs. Order booking and profitability and orders may improve given the softening of steel prices earlier this year after the month -- earlier this month after the government imposed export duties on steel. As you know, the new 100 KLPD ethanol plant at Saraswati Sugar Mills has been -- has commenced commercial production in December 2021. The plant is operating at full capacity. Regarding the Cavite Biofuel ethanol plant in the Philippines, we will be starting construction in June 2022 and expect to complete the plant by June 2023.
Information technology upgradation by implementing staff. In order to improve our internal processes, controls, project management costing resource planning and financial reporting, we are doing a business process reengineering, BPR led SAP S/4HANA ERP implementation. This should also prepare the company for undertaking a larger scale of business. We've selected and engaged one of the big 4 consultants, MS Ernst & Young, E&Y as the consultant to conduct the BPR assignment and also configure and implement this SAP software. We plant will go live on the new system by 1st April 2023.
My colleagues and I will be happy to answer any questions.
[Operator Instructions] We take the first question from the line of Digant Haria from GreenEdge Wealth.
Sir, first question is on the product division. Sir, if you look at the last 4 years -- 4 or 5 years, we are roughly between INR 300 crores to INR 1,700 crores of revenue in the Products division for the full year. Sir, it's 5 years, and we've not been able to break out of this INR 1,500 crore, INR 1,600 crore band. So -- and now at least we are seeing some uptick in the order book. So could you help us with what are the key sectors which have to do well for this Products division to do well? So 1 or 2 key sectors which -- where a lot of our order book coming from?
Okay. I'll answer that question. The product business derives its orders from diverse -- quite a few diverse sectors, and I will just speak about them. Industrial from the oil and gas, petrochemical and fertilizer industries as the process plant business. Then it does from the automobile sector. And then to some extent from boilers and castings from cement plants, carbon -- cement plants, soda ash plants and steam -- turbine business as it's hydro turbine or steam turbine.
Okay. Sir, the largest 2 would be automobile and this whole oil and gas and refining sector, right? That would be the 2 largest sectors?
Yes, those are the 2 largest sectors, yes.
Okay. Okay, sir. Sir, and in terms of product portfolio, how have you moved in the last 4, 5 years? Because I just see that even there, we are facing margin pressure. Then like can we -- do we have the capacity or the -- even to go to the INR 2,000 crores kind of revenue in the next 1 or 2 years in this product division?
Maybe in the next 3 years, that visibility should be there. We have sort of increased -- made investments in one of our foundries and expanded the capacity which should give an incremental output of above INR 70 crores. And we are also planning to do marginal investments to increase the turnover.
Okay. Okay, okay. Sir, the second question is broadly on -- actually, I've been following this company for around 8 years now. And before the Philippines incident happened, we always used to have 8% or 9% of our revenue in working capital and revenue margins would be between the 6% to 8% range. So versus that backdrop of our history, our first offer on all of the parameters is relatively at the lower end I would say, whatever we have seen from taking the last 8, 9 years. Sir, is it something within the company that needs a lot of improvement because of the environment has significantly improved in terms of ordering? And yet we see that on most of the parameters, we are stuck at the lower end of our historical range in working capital or margins or execution of the orders also.
We take the next question from the line of Viraj Mehta from Equirus PMS.
Sir, I think if you can just answer Digant's question, that would be one of my questions anyways.
Yes. so, would you just to repeat that question?
So sir, the question was if you were to look at our working capital as a percentage of sales and our margin, we are actually at a much worse stage than what historically we have done over the last 8 years. Whereas if we were to compare ourselves to some of the other product players, and there are a plethora of them, but across the businesses, if you look at them, all of them have significantly improved the margins this year and are guiding better margins next year compared to last year and the year before. But we are not seeing any of that. Can you say why that is happening? Why is there such a vast difference in that?
So it's -- in the EPC business, we have taken a big hit because of the commodity price hikes. We have taken a big hit from the commodity price hike. There is also a bit of cost overruns because of COVID. The projects are taking a much longer duration to complete. We have got delivery extensions in most cases from the clients, but they do not compensate us with the increased costs because of -- due to COVID and other reasons. So as these projects that we are doing are longer-duration projects and what we've been typically doing, the PSU orders are much longer. The payment terms are more stretched. The cash flow is not as good as in the private sector because it's all sort of budged up towards the end of the project.
This year, we hope that most of our -- a lot of our PSU projects that were taken on adverse terms, most of them will be completed or will be substantially completed by the end of this year. So we do think that the working capital position would improve significantly. These projects have also been delayed because the government or the PSUs have been delaying giving approvals because obviously, they also face the same problems as we were faced in COVID.
So we, in some ways, forced to go slower. They have agreed in most cases to increase the time period. But at the same time, the costs at the sites have been mounting. We have now become very selective in taking orders. We are taking orders with better margins now. And we could have taken a lot more orders, but we have reduced the order booking.
Right. So sir, going forward, is it fair to assume that the margins that we did this year both in the product division and in the EPC division is -- is the worst behind us? Like when do we return to the profitability that you mentioned a year back? When do we return to high single digit, 9%, 10% EBIT margin kind of the number for the whole company?
I think we'll be able to give you a clearer picture by Q3 because we'll be sure about the completion of a lot of projects and the commodity price hike and things which have happened. Although commodity prices have softened. If this continue to remain the way they are, then there may be an improvement. But by Q3, we'll definitely be able to give you a much clearer picture.
Right. And sir, we have essentially lost INR 40 crores this year on our ethanol plant in Philippines if I look at the segmental numbers. And on a quarterly basis, we will continue to lose INR 12.5 crores, INR 13 crores, not even counting cost of capital. I mean my sincere request to the management, and I'm sure you're looking at it, but is to have some resolution to it, right? We can't be having so much capital tied up and lose INR 12 crores, INR 13 crores a quarter on a plant, which is under construction.
No, you are absolutely correct. So now that the COVID situation has sort of improved, and Philippines has allowed Indians to come in, our teams have been there. The contractors have been selected. And in June, it's set, we are working starting to complete the plant. I mean we are starting activities to complete the plant, starting activities on the ground to complete the plant. And we hope that within 1 year, the plant will be operational. In the meanwhile, we have inquiries to some people who might be interested in buying the plant. We are evaluating it, but we are working to complete the plant.
Right. And sir, if the prices of steel, where they are -- or the commodities, all the commodity steel, copper, everything put together, where they are today, what kind of -- and we have taken fixed price contracts, even what we have taken in the last 3 to 6 months, we would have taken it at a slightly higher margin or higher commodity prices. Is it fair to assume that if now the commodity prices keep falling, like we actually lost a lot of margins because of fixed price. If the commodity prices fall now, a lot of those fixed price gains should come to us?
They should, but we will evaluate and let you know in the next call or the call after that, yes. Theoretically, what you're saying is correct. And we also feel it will happen. The commodity prices have come off in the last -- very recently. And then prices of things like copper and aluminum have an indirect effect on electricals and other items. So we're just waiting for the market to absorb the reduction and reduced steel prices. So we will have a clearer picture shortly.
Sure. And sir, last one question on INR 5,500 crores top line that we did, we have INR 7,500 crores order book. What do you expect on a rough basis to be growth this year?
This year, the growth would be about 5%.
So INR 5,700 crores, INR 5,800 crores.
Yes.
We take the next question from the line of [ Prakshi ] Chaudhry from Ace Capital.
Sir, I would like to know your outlook on FGD segment with [indiscernible] making some big announcement related to it recently. And also if you can give some color on the kind of opportunity you are likely to capture in this segment?
FGDs, the market is still there for FGDs, and we are continuing to bid for FGDs. We have seen some private sector interest in FGDs, there's still some government interest in FGDs. The market is lumpy because they are high-value projects. So if you get one, it's a high value, so if we don't get it -- it's not that high value. But we are buoyed on that market, and we do hope to do some orders in the next few quarters.
Okay. Sir, I would also like to know your plans on the ethanol business.
So our own ethanol plant or selling ethanol plants to others?
Sir, your own.
So our own ethanol plant is working at capacity. And ever since we got on our approvals in December, and the plant is running very well, both in terms of capacity utilization which is close to 100% and in terms of efficiencies.
We take the next question from the line of Abhishek Kale, individual investor.
Am I audible?
Yes.
Okay. Sir, what is the feedstock for our ethanol production at Saraswati Sugar Mills? Is it sugarcane juice or B-heavy?
B-heavy.
Okay. And are there any plans for capacity expansion of the ethanol plant at Saraswati Sugar Mills?
We are looking at a potential capacity expansion, which should allow us to produce more per day, but the season may get shorter because the economics will improve with that. The total that we produced in a year may remain the same. We've applied for an extension. But whatever we do, we are not going to make very heavy investments into it. We are looking at some approvals coming by December, January, whereby we may be able to produce more ethanol, but it's going to be very marginal investments.
Okay. Sir, if I may ask,this is a question regarding the Philippines plant. Like you said, there are some inquiries that we have received. So how much ballpark do we expect if and when that plant gets sold? Or I think in the previous con calls, you have also indicated that if operationally, you think that it would be more profitable operating it ourselves. We would rather consider that as well. So where are we on that? I mean, I would like to know the ballpark number first.
So ballpark, I think we have no number. But we can only say that we expect the valuations to increase considerably once the plant is completed. Or we can demonstrate that the plant is going to be completed soon.
Okay. And sir, from -- in the next 3 quarters, how much do you think would be our average cash burn in order to set up the plant or we have accounted for that already?
This is Kishore Chatnani here. So we have a loan sanction from a bank in Philippines. We will not be putting in any money from here. The loan will be taken by the Philippines company on its own books. By [indiscernible], but we will not [indiscernible] money from them.
I think significant amounts of money on this.
We take the next question from the line of Digant Haria, GreenEdge Wealth.
Yes. Yes, sir. Sir, you mentioned that because of the slow moving orders and especially in the public sector also we are facing challenges in margins, working capital, everything. Sir, what would that be as a proportion of the total order backlog of INR 7,300 crores?
So today, our PSU order book is about 39% of our total order book. And due to COVID, we are thankful to get orders from the PSUs because export orders had totally dried up. But we are hoping that these core orders proportion in our order book increases. They are, of course, a better margin also. And the PSU order book should come down to 25%, 30%.
But when you say 39% is the current order book, would that -- would all of that INR 2,800 crores of the PSU would qualify as fixed trade, low margin, high working capital orders?
They are not fixed price. They -- most of them have a price revision clause. And price revision clauses work both ways, which means if the commodity prices go up, you get higher realization. And if they go down, they go down. But there are almost all of them high working capital requirement because PSU payments only come on achievement of milestones.
Right. And then assuming a normal world, not like COVID, what would the proportion of these public sector orders be for Isgec in the coming years? Because as far as I remember, before 2018, this number used to be significantly lower than 39%, 40% also.
That's right. That was because we were having maybe more than 20% as export order book. And typically, the PSU order book used to be 20-odd percent, and the balance was coming from private sector. So, there is, as you know, something good about the PSUs. They always have the budget and the money to give orders. But they are very demanding customers in terms of lower prices and cash flows.
Right. Sir, but yes, they are demanding, that's fine. But the thing is that will we as a company see a reduction in this order book as our export order book and domestic order books from private sector go up?
If private sector investment increases, we would look at sort of decreasing the share of PSUs. But it is a fact that PSU in the recent past, I mean, in the last year, 1.5 years, the PSUs are also sort of becoming more liberal in their payment terms. The FGD orders that we took in round 1 or round 2 had much worse payment terms than what they were in the last few rounds.
We take the next question from the line of [indiscernible] from ICICI Securities.
Sir, my first question is on the Philippines plant. So what is the total investment that we have done on the plant till date?
We have a large outstanding amount from the plant -- from that company. We acquired it after the dispute with the customers and we acquired it and became our subsidiary. After acquisition, we have given out loans of about INR 50 crores to sustain till now. But further investment is going to be done out of a loan to be taken by that company there in Philippines.
And what is the expected amount of the loan for the balance construction of that pending?
It is about INR 100 crores to INR 180 crores.
Okay. And sir, out of this INR 50 crore outstanding amount, how much is tied for the OpEx cost and how much would be towards the CapEx of the plant?
It is largely OpEx or salaries, or upkeep of the plant, for insurance, it's largely OpEx.
And as per your recent order book, your railway order book has been on a declining trend for past couple of quarters. So what would be the reason for that? Is it that the ordering has been slow or recent billing [indiscernible] would be less.
So as we said earlier, we've become very selective in taking orders. And so wherever we see the competition intensity to be high, and the prices to fall because as you know, this is also the tender route. There is no premium for better quality or better execution. We are staying away from those projects.
Also, it has come down because we have completed certain projects recently.
Okay, sir. Sir, then going forward, are we seeing any opportunity once things stabilize and once commodity prices also stabilize? Any opportunities from the -- when we have added...
Opportunities for?
When we've added the program.
Yes, we do see some opportunities. We are evaluating them. And there could be opportunities, but they have to be -- as and when the opportunities come, they have to be very critically evaluated.
Okay. Okay, sir. And sir, in the ethanol distillery that you mentioned that you've started operating in previous quarters. Sir, what would be the average capacity utilization for the full quarter? Was it 100% for the entire quarter?
It was 99.9% something.
Okay, okay. So when can we expect it to breakeven or like currently, it is posting losses. So...
We it posted a loss in the first quarter because of the lower sales and booking on the full interest and depreciation and so on. But it should be profitable from the current quarter.
Okay. And sir, if you can repeat the order intake number for the quarter.
Order intake for the quarter on a consolidated basis, it was INR 1,442 crores.
Okay. And sir, similar numbers for Hitachi for this quarter and for March '21?
I have the total orders in hand for Hitachi, but I can get -- give you in a couple of -- I'll answer it after the...
Okay. And sir, overall, how is the profitability looking for Hitachi? You last time -- you had mentioned that some high complex machinery equipment is what Hitachi has been working on. So if you could throw some light on that.
So we expect the profitability this year to be much better. It was hit last year partly because of commodity pricing and partly because of shipping disruptions, which -- shipping, which is in the scope of the customer. He could not lift -- customers could not lift a lot of the cargo. So this year certainly looks better than last.
Regarding Hitachi, the order booking that you are asking for this quarter was INR 70 crores. And for the full year, it booked INR 520 crores of orders, new orders. Compared to that, for the last year, their order booking was INR 250 crores. So order booking in the current year is twice of what it booked in the previous year.
We take the next question from the line of Viraj Mehta from Equirus PMS.
My questions have been answered.
We take the next question from the line of Mr. Harish from HS Investments.
I basically have 2 questions. What was the total CapEx of last year? And could you share the CapEx plan for the coming year?
And my another question is, if you can please elaborate on your technology tie-up with UCC environmental U.S.A., which was mentioned in the investor presentation. And how it will be helping us in the future?
Total CapEx this year was INR 56 crores in Isgec Engineering stand-alone. And this year, the coming year would be probably in the same range.
And as far as the UCC tie-up is concerned, this is another technology, which is -- so in India, there are some thermal plants based on coal as their fuel which -- their residue life is not very high. So for them, there is this alternative technology which is low on investment, low on CapEx, but high on OpEx. So if the residual life is less than the plant, it's going to stay shut down in the next 5 years, 6 years, then the plants prefer to go this route. The route of lower CapEx and higher OpEx. It makes more sense to them. So we have tied up with them and we've got our first order for such a plant.
We take the next question from the line of Aditya Mehta, Dynamic Investments.
Yes, am I audible?
Yes, you are audible, yes.
I'm sorry, I joined the call a bit late, but I just had one question. Sir, I wanted to know the reason for no export of sugar last year and also like to know the outlook for the business for next year or, let's say, for next 2 years?
So let me talk about export of sugar. So as you know, in the earlier years, the central government was giving a subsidy for exports. During the current year, there was no subsidy for exports. So most of the sugar that is getting supported out of India is being exported from the coastal state of Maharashtra and Karnataka. We, as you know, are situated in Haryana, we are about 1,500 kilometers on the nearest viable port. So our realization on export was not working out to be good compared to the prices that can be offered -- export prices that can be offered by the coastal states. So that is one.
The second is these -- most of the sugar that's exported from India was raw sugar. We could have chosen to make raw sugar, but we can only make it at the beginning of the season or end of the season. Since we did not have viable -- visibility of viable prices, we did not make raw sugar. The sugar that we make goes to largely 3 countries, Afghanistan, Sri Lanka and Indonesia. So you saw difficult -- political difficulties in Afghanistan and in Sri Lanka, so they were not really buying our kind of sugar. So there was not so much demand for our sugar.
But nevertheless, there are pockets in the world. Some countries where our sugar is very popular. So in spite of our prices being higher, we have booked some orders of about 10,800 tonnes. Mr. Puri talked about it in the earnings book. And those have been dispatched this year. In any case, our realization has been good. So while quantity of sugar sold is less, our realization has been good, and we are carrying a large stock of sugar, which the profits will come in when we sell the sugar.
Okay. Okay, sir. So sir, the profits that you are talking about should be maybe in next year or, let's say, in 2 years?
During the current year, sir, sugar is getting sold every month, so current year.
We take the next question from the line of Rita from MBS Research.
Sir, I wanted to understand what is the outlook of margins for next year. Is the worst of margin pressure due to raw material price inflation behind us?
So we -- in the beginning, we said that the prices -- the partly inflation was unprecedented, it's unprecedented in my understanding. But prices have cooled down last [ 15 ] days or so. We are still evaluating it. And in the next call, we will let you -- we'll have a P&L up. As of now, the commodity prices have cooled down. How long this stays this way, we are yet to evaluate.
Okay. Okay. All right. My next question is what percentage of your orders are fixed price? And could we see more margin pressure in future because of similar orders booked earlier?
We have some fixed price contracts and on that because it's a [ combination ] 60%. Because of that, the commodity pricing softening, there would be an impact. But we will evaluate everything and let you know next quarter or the quarter after that.
All right. If I may ask one more question. We've seen that exports have been falling since last 4, 5 years. What is the reason for the same in your outlook?
So last 2 years, because of COVID, there was no travel, and there was no -- we could not meet the customers physically. That has -- since the last few months, travel has commenced, and this situation on exports is looking [indiscernible] Order booking this year will be better than [indiscernible].
We take the next question from the line of Mr. VP Rajesh from [ BanyanTree ] Capital.
As a new investor, I'm trying to understand the investment we have made in the Philippines plant. So what is the loan outstanding as on date, including the INR 50 crores you mentioned earlier on the call? And how much more will you be investing this year, i.e., the loan amount that you are getting from the Philippines bank to complete the plant? So just trying to get an idea of what is our total cost going to be in this plant.
Sir, the -- since you are a new investor, nevertheless, you may have read that this was a plant we were constructing for a customer. And we had a disagreement with the customer in cases and so on. And in the end, we ended up acquiring the plant and the assets. Before the assets came with certain loans on them. So the loan is roughly equal to USD 36 million. It's in pesos, it's from a local bank, local development bank in Philippines, but it's roughly equal to USD 36 million. And the loan that we are going to be taking now going to be something like INR 180 crores, something equal to USD 24 million.
Okay. So USD 36 million plus USD 24 million to USD 60 million is the cost plus whatever you have to spend on the OpEx side that you mentioned earlier, right, that's sort of the total?
In fact, there is also the earlier investment by the earlier owners of the plant, and valued much more than that.
Okay. So would you say that whatever you have put in so far, is the market value higher than what you have put in? Or do you think the returns on this plant will be significantly higher? And therefore, continuing with this CapEx makes sense? I'm just trying to understand why would you not look to exit this or look for some kind of JV sector, so that our financial exposure is limited?
Actually sir, we have been trying -- what you are saying, we have been trying for it. The market value is higher. But because of COVID, there was a lot of poor economics that is sentiment in Philippines. And therefore, in spite of our trying, we could not get higher at a reasonable price. Also, we have revised that any perspective why we see the plant at a standstill a plant under construction at a standstill, it was to offer a lower valuation than if the plant is being constructed or completed. So that's how we are proceeding towards the plant.
And we think, of course, to answer your first question, the valuation is higher than -- substantially higher than that.
Mr. Puri also mentioned that work can now start in Philippines because the Indians are now allowed since April. Our teams have been there. We are proceeding to start construction on the plant in June.
Right. And it will take about a year to complete. And then my question is that how long will it take from thereon to start showing, let's say, positive EBITDA?
So if we -- we have examined the economics, and we are willing to run the plant. But we are also open to sell the plant if we can find a buyer at a reasonable price.
No, no, I understand that, but I'm just trying to understand, let's say you'll spend now INR 180 crores to construct that plant. And then before it starts turning positive cash flow for us, we will have to invest some more. So I'm just trying to understand what that amount could be in fiscal year '24.
No, we believe that this INR 180 crores will largely cover the investment required. It will require working capital loans to operate the plant, which we can hope to get from Philippine banks.
We take the next question from the line of Mr. Anurag Patil from Roha Asset Managers.
Sir, for the Saraswati ethanol plant, next year, what kind of EBIT margins we can expect for utilization?
EBIT margins on the ethanol plant?
Yes, sir.
Right. So it is already turning -- EBIT margins are already positive. And the EBIT margin is already positive. And how much can we expect EBIT margins next year? We are still working on the fact that what is the maximum that we can subject to getting some approvals that we expect in the course of the next month. What is the maximum we can run the plant and what is the alternative need. We also, for instance, looking at whether we can use to make ethanol. So we'll give you a figure next time, but the EBIT margins are not bad.
Okay. And sir, you said in FY '23, you're expecting 5% revenue growth. So am I correct in seeing that?
Yes.
So sir, if you run the ethanol plant for 4 quarters, at least INR 100 crore incremental revenues will be added. So rest of the segments, are you expecting only INR 100 crores to INR 150 crores?
The 5% was talked about in terms of Isgec as a whole, as a consolidated entity. It was not about the sugar plant or ethanol plant.
That I understand, sir. But at consolidated level, 5% revenue growth should translate to INR 250-odd crores or something. And ethanol plant only can contribute at least INR 100 crores incremental. So my question is that whether...
That is not the right way to look at it, sir. Because when you use B-heavy molasses, we're actually consuming sugar, which normally have been produced and sold. But taking that sugar and putting into the ethanol. So that's not the right way to look at it.
But sir, still at an overall level given additional...
Additional turnover that comes from ethanol, maybe 70% of it is actually coming from high reduction of the sugar revenue.
Yes, sir. Understood. But sir, given the strong INR 7,200 crore order book, still I feel that the guidance is kind of very conservative.
Many of our orders are longer duration orders. The typical order execution cycle particularly for the project business can be 24 months to 30 months, 35 months.
The next question from the line of Mr. Nishith from Aequitas Investments.
So most of my questions are answered. So one thing I noted that our stand-alone manufacturing revenue is around INR 460 crores, which is higher than our recent numbers. So is there anything one-off or can we sustain this number going forward?
No, the manufacturing revenue actually depends on what equipment and machines get delivered. Because in manufacturing, we are following the sale of goods accounting. So on an annual basis, if you see on a stand-alone manufacturing is about INR 1,295 crores. We can expect this to grow a bit. But quarter-to-quarter is not the right way of looking at it.
Okay. Understood that. And sir, lastly, what is the outlook for Eagle Press?
Outlook for Eagle. So Eagle did go through a difficult time because of first COVID and then because its main customers are automobile -- it's based on automobile output. And because of the chip shortage in North America, the production of cars is not going up. But the outlook has improved recently, and we have booked some orders, and we expect to book some good orders. The inquiry flow is good. So this year should be much better than the last year.
[Operator Instructions] We take the next question from the line of Mr. Mihir from Desai Investments.
So I have 2 macro questions. So starting with sugar industry. Sir, as we see that the Brazil crop is going to come, which was in a deficit last season. So sir, will this impact the realization practically for sugar? I just wanted to -- understanding from your end, sir.
So the international market has been deficit for the last few years. That's why you are seeing that the export prices realized by us, by India are decent. The international dynamics are also Brazil, the mills have a lot of flexibility into making sugar or making ethanol. They can use the same juice to make -- they can switch very easily. And given today's position of higher oil prices, one would expect Brazil to divert more sugar content towards ethanol. And that will leave a good opportunity for us, for India to export sugar.
Okay. Sure, sir. So we are on the safer side is what I understand?
Yes. If you notice the government is saying that the India exported this year already about 82 million tonnes -- pardon me, 82 lakh tonnes of sugar. And the government has now restricted exports to 100 lakh tonnes. The government wants to leave enough sugar in the country for the next 2 months consumption. So -- but next year's production is expected to be high. And therefore, it will be enough to cover the domestic requirement. And India should be -- I think India has established itself very well in the export market for the last 3, 4 years exports have been going up. So we should see good exports from India.
Yes. Sir, my next question is around the defense sector, sir. As India is -- a make in India, India is going aggressively in boosting the defense sector. So do we have any opportunity to participate or some pockets which we can explore in this sector?
So as far as defense is concerned, we continue to get small value orders periodically for defense. And these orders are for sophisticated manufacturing. But we are not entering into any long-term tie-up for one particular product because the gestation period -- the investments are heavy, the gestation period is high and the market is also uncertain. So we are not gambling on the defense sector in a big way. But opportunistically when there are inquiries, we quote for them, and we're getting some success there.
Sure, sir. Sir, lastly, I just wanted to ask on our revenue mix. So the current revenue mix, which is there -- which comprises of manufacturing, EPC and sugar. So going forward, after 2 to 3 years down the line, do we see this mix changing or it would be in this range only?
So we are trying to look for opportunities to increase manufacturing. And we are planning to make marginal investments as we -- Mr. Chatnani gave the figure for last year's investments, capital investments. This year, also we might do some investments to increase the manufacturing base.
As far as the projects business is concerned, because in the projects business, a lot is outside our control because raw material is a very major component of the total contract price. We will be selective -- we are ourselves looking at costs very carefully, and we will be selective in taking orders where the margins are reasonable.
We take the next question from the line of Ms. Ashna from ICICI Securities.
Sir, just one clarification I needed. In the beginning of the call, you mentioned that order intake expectation growth for FY '23 is close to 5%. Is that correct?
No. I think Mr. Chatnani spoke about this. The 5% was the increase in revenue.
Okay. And sir, FY '24, we can have...
Can give you guidance later on that aspect, yes.
As there no further questions, I would now like to hand over the conference to the management for closing comments.
Thank you. Thank you very much, all the investors or potential investors for joining this conference, wishing you all the best, and then we will again touch base roughly 3 months from now. Thank you very much.
Thank you, sir. On behalf of ICICI Securities, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.
Thank you.