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Isgec Heavy Engineering Ltd
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Ladies and gentlemen, good day, and welcome to the Fourth Quarter FY '23 Earnings Conference Call of Isgec Heavy Engineering hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I will now hand the conference over to Mr. Bharat Jain of ICICI Securities. Thank you, and over to you.
Good day, everyone. On behalf of ICICI Securities, I would like to welcome you all for the quarter 4 FY '23 Earnings Conference Call of Isgec Heavy Engineering Limited. Today, from the management, we have Mr. Aditya Puri, Managing Director; Mr. Kishore Chatnani, Full Time Director and CFO; and Mr. Sanjay Gulati, Full Time Director and Head of Manufacturing Units. We will start the call with opening remarks from Mr. Puri, post up we will have the Q&A session. I would now like to hand over the call over to Mr. Puri for his opening remarks. Thank you, and over to you, sir.
Thank you. Thank you, Bharat Ji. 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 a fruitful interaction.
You have seen the quarterly and annual financial results that were published yesterday. We've also 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.
The standalone financial revenue for Q4 FY '23 is INR 1,425 crores compared to INR 1,366 crores in Q4 FY '22. The standalone revenue for the financial year ended 31st March, 2023, is INR 4,687 crores, which is about 5% higher compared to INR 4,470 crores for the financial year ended 31st March, 2022.
The standalone profit before tax for Q4 F '23 is 78% higher at INR 84 crores against INR 47 crores for Q4 FY '22. Further, for the financial year ended 31st March, 2023, the profit before tax is INR 234 crores, which is about 59% higher compared to INR 147 crores for the financial year ended 31st March, 2022.
The consolidated revenue for Q4 FY '23 is INR 2,048 crores, which is about 28% higher compared to INR 1,597 crores for Q4 FY '22. Also for the financial year ended 31st March, 2023, the consolidated revenue is INR 6,412 crores, which is 16% higher compared to INR 5,513 crores for financial year ended 31st March, 2022.
The consolidated profit before tax for Q4 FY '23 is INR 126 crores compared to INR 48 crores for Q4 FY '22. And the consolidated profit before tax for the financial year ending 31st March, 2023 is INR 290 crores as compared to INR 158 crores for the financial year ending 31st March, 2022.
In the standalone results, the profitability is better, both for the manufacturing segment and the EPC segment. The consolidated profit is better because of higher profits in Isgec Heavy Engineering Ltd. standalone and in Saraswati Sugar Mills Ltd. I will now talk about the order book.
The consolidated order booking for Q4 of FY '23 is INR 2,482 crores compared to INR 1,442 crores of orders booked in Q4 of last year. The consolidated orders in hand as on 31st March, 2023, are INR 8,321 crores against INR 7,322 crores as on 31st March, 2022. The order book position is good.
Of the consolidated order book, 79% is for project business and 21% for product business. The order book includes INR 839 crores for international orders, which is about 10%. The order book for Isgec Hitachi Zosen is also good. It has INR 506 crores of orders as of 31st March, 2023.
Philippines project, as informed earlier, the construction is progressing at the Cavite Biofuel ethanol plant in Philippines and is expected to be completed by the end of next quarter. Market demand. The overall demand trend has improved and the inquiry position continues to be good. Export inquiries have picked up, though order [ tractification ] is low. As a leading company providing products and solutions for multiple industries, Isgec Heavy Engineering Ltd. is in a favorable position to participate in India's growth story. My colleagues and I will now be happy to answer any questions.
Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question is from Niteen Dharmawat of Aurum Capital.
Congratulations on a good set of numbers. Just wanted to know, in the past, we have done margins of 9% and 10%. We have improved in this year. But when do we see ourselves getting to those kind of margins, which look a bit healthy than what they are currently?
So I think margins will be -- in the next year will be better than they were this year, largely because of the old orders, which had seen commodity price increases and which had seen, I mean, projects getting a little stressed. Those will get completed over the next few quarters.
So we should look at normal margins during this -- in this financial year.
Okay. And what about execution? Our order book, is it -- what I mean what is the executable period for this order book? Or is there any guidance on what revenue growth we will be able to do in FY '24 and FY '25?
As a practice, we don't give a guidance because different orders have different execution life cycles. But there will certainly be -- there will certainly be growth in the next year.
The next question is from [indiscernible] of Sunidhi Securities.
Congratulations for a good set of numbers. Sir, if you could just take us through the -- especially the follow-up to the last question that what sort of margins that we are anticipating for both the segments, which is the EPC segment and the product business. If you could just take us through some broad ballpark purposes, because now, the order book is with us with a lot of new orders that we have booked in the recent past. So some sense on that?
And what is the strategy that we follow? Because earlier, we used to take fixed price contracts, where the commodity prices used to disturb demand trajectory. So the -- your thought process change that has happened in the past couple of quarters that you have guided. So how are we placed in terms of tackling the changes in the raw material prices and the eventual margin trajectory for us, for both the businesses, EPC and products, that will be helpful.
So at this point, we can say that we expect that this year, we'll have better margins in both the EPC business and in the manufacturing business. And as regards your question about fixed price contracts, we have to take the contracts, which are there in the market, and we cannot say that we will not take fixed price contracts.
Are there any conscious decision, we are trying to take projects with a slightly smaller duration. So that the risk element reduces. And we should lead to better margins -- we should ultimately lead to better margins. But we cannot sort of get away from fixed price contracts. That's the reality. A lot of contracts are fixed price.
I can add to that to say that a significant portion of our order book, around 46%, 45%, is PSU -- from PSUs. And therefore, there is -- there are indexing the costs, which can be passed on. I mean, that there is a price erosion clause there.
So while 100% of the change doesn't get passed on, but 50%, 60% off of price cost variation can be passed on. The other thing is that I think we are keeping slightly, as Mr. Puri said, we are taking orders with comparatively lesser duration than we were taking earlier. And also, we are keeping a slightly higher contingency margins. So that we can protect the margins that -- that we thought we will get when we book the orders.
Got it. So broadly, if you see on console numbers, we are closer to 7% kind of margins. Can we expect this margin to be 100 to 150 bps higher in this financial year? Will that be something that you can help us to write?
For console, obviously, is a function of Isgec Heavy Engineering plus Saraswati Sugar Mills. Which is a significant portion there, and also Isgec Hitachi Zosen. So -- but we hope to be there, the number that you mentioned now, we hope to be there.
Okay. And sir, if you see in this balance sheet, the datas have gone up significantly despite the EPC top line becoming there only not much of a growth. So could you guide, why that has happened? And when can we expect this receivable days to come down again?
So some of the longer-duration projects, where there are significant milestone in payments, those projects are -- some of those projects are expected to be completed during the current year. And therefore, by the end of this year, we expect the debtors to come down.
Okay. Because it's almost INR 500 crore plus increase in this balance sheet. So can we expect to go back to those numbers like INR 2,000 crore or INR 2,200 crore odd debtors in this financial year?
They will certainly be down. But when you say INR 2,000 crores, INR 2,200 crores, it was -- another function is what is the -- what is the billing in the last quarter of the next year and how much growth we have in the turnovers. But yes, in terms of number of days, we'll certainly be done.
So 140 days, we went up to almost 160. So we expect that to come down to again 140 sort of?
I find it very difficult to give a number, but I can say with surety that they will be down.
Okay. And sir, my last question pertains to the Philippines, the project. Because you have already guided that by next quarter-end, we'll be starting the project, which is clearly sitting very heavy on our balance sheet right now with a lot of CWIP, which has got stuck. So can you guide what sort of plan that we are having, either we are planning to sell it or any way we said that they're going to start it? But in some sense, what sort of profitability that we are looking at?
Because in India, most of the ethanol plants, if we see they are substantially better because government has got a policy to buy the ethanol and most plants are making decent ROEs at this point of time. So how that particular thing is there in Philippines? If you could just guide to some sense will be really helpful for us.
So Philippines, of course, also has government protection and government promotion for ethanol. So there is a 10% reservation, 10% blending requirement for ethanol. And the country's current production is only about 5%. So market for ethanol is absolutely assured.
The second point is the price for ethanol. So just like in India, the government fixes a price for ethanol. In Philippines, there is a price mix, but it is a variable price, and it is revised every 15 days. So there is a government body called the National Bioethanol Board, which revises the price every 15 days. And that -- the price takes into account, it gives 50% weightage for sugarcane as feedstock and 50% weightage to molasses as feedstock.
So effectively, the cost of the feedstock in terms of pass-through in the price. And besides the feedstock, there is a [ 22 ] conversion rate to cover the fixed costs in the margin. And to our estimate today, the EBITDA margin is close to 25% to 26%, 27% per liter in ethanol in Philippines.
The next question is from Umesh Raut of PhillipCapital. .
I just wanted to have some broader idea about the demand outlook, especially from the core industries like oil and gas, metal, cement in the domestic market and as well as on the export side as well as a few of the European countries are now again planning to invest into the old economy industries like oil and gas. So how are you seeing pipelines from the domestic agile of the export markets?
So even when the economy in the last few years, the government sector, the public sector had been investing in India. But increasingly, we are seeing that the private sector is also enthusiastic to invest, and they are taking decisions. So we think that the demand is going to -- India is growing. For India to grow, capital goods have to be produced, and we are optimistic about the domestic demand scenario for capital goods. As far as overseas is concerned, we are seeing that interest is increasing. There are a lot of budgetary and firm inquiries. However, the decision making is getting delayed. In some cases, it's getting delayed because their banks are not giving them credit or loans for the capital investment or are demanding much more information from them banks are becoming more demanding of the project finances.
So there may be -- there is a problem in people tying up finances, or there may be other reason, uncertainties. So decision-making is getting delayed. Would we think that these inquiries will be decided, but with a delay. So I can say that there are green shoots in the export market with situation in terms of inquiries is better than before, but it's not a very robust market at this point in time.
Okay. And sir, also, if you can highlight your market share, especially in the oil and gas segment. And also, you were ordering for contribution from some of the sectors like sugar, oil and gas, metal and cement?
It's very difficult to quantify, because there are so many players. And there are so many products in these areas, it's very difficult to quantify what our market share in sort of particular sector would be. But we have fairly high market shares in some of these sectors for the products that meet the plan.
Got it. And last question is, sir, on the FGD side. How are you looking at the pipeline now? And what is your experience about the competitive intensity over there as we are observing that pricing sanity is relatively better now in the case of FG deposits?
Yes, it is better. And if inquiries do -- if there are going to be inquiries, we do expect inquiries from the state sector. The NTPC projects have all been awarded. We do expect inquiries from the state sector. And based on those inquiries and based on our experience with the past SUVs and our costing, we'll decide how much we have to participate in the market.
We will participate, but let me put it on our terms. But we are -- has informed the Board earlier. We have got orders to some other sort of technologies for air condition control, which are shorter duration projects. And we are actively participating in those projects. And we are executing some of the orders based on those technologies.
Competition is also less for those technologies because these are niche technologies.
[Operator Instructions] Our next question is from Khadija Mantri of Sharekhan.
Congratulations on good set of numbers. So my first question is that if you think Q4 growth was largely driven by manufacturing segment, I just wanted to know how is it likely to be in the coming quarters, whether we would have more of execution from the EPC segment?
Also, I would like to know CapEx plan for the next 2 years and also current utilization level?
So we will not be able to give you information of -- for the next quarter per se. But we expect this financial year, the percentage of revenue coming from manufacturing will be slightly higher than what it was in the previous year. So that is one guidance that we can give you.
And as far as the capacity utilization is concerned, our shops in most businesses are fairly well occupied, are fairly heavily occupied. As far as capital expenditure is concerned, it's going to be normal capital expenditure as of now. If there are any changes and if -- yes.
In sugar, if we expect any major changes, we obviously let you know. But as of now, it will be a normal capital expenditure. In sugar, we are investing about INR 65 crores through internal accruals for converting our process, which is a double sulphitation process to process that will manufacture refined sugar.
Okay, sir. And also one more thing that I've observed in the results is that employee costs have gone down in proportion to the sales, so for FY '23 as a whole. So is there any retrenchment exercise that we have done? Or is said that the productivity has increased?
No, no, we have not done any retrenchment exercise.
Our next question is from Ashwani Sharma Same of ICICI Securities.
So my first question is on the guidance. So last year, we had guided for a 5% kind of growth on the top line. If you could give us a similar guidance for this year as well, that will be helpful.
So you will see that our order book is higher. So we certainly expect growth; we don't actually have a practice synergy of giving out a number. But still, I say it will be in double digits. So certainly more than 10%.
Sir, on the -- see, if you look at the order book, we also have some exposure to railways and defense. So there has been a larger CapEx happening on the railways and defense. Is there a possibility that we get some large order from railways and defense, so that our overall order inflow order backlog improves?
It is a possibility. It is certainly a possibility. You can't rule it out. It depends on what projects there are in the market. But yes, it's a possibility.
So railways, we have been doing projects to supply factories for the railways. So we're an actual plant coach repair factory, coach building factory, those kind of projects we've been doing for the railway companies, not really for the railways directly, but for the railway companies. And we'll continue to bid for those projects in the market.
The next question is from [ Anupam Goswami ] of ACT Life.
So my question is on the longer horizon. Now we don't have an order book of about [ INR 815 million. ] But what's -- how sustainable is the order inflow? And where do you think the industry is to grow and have a sustainable growth for us?
I think, the order booking is sustainable, but I did not get your last question. I'm sorry for that. What is your last question? Sustainable...
I wanted to understand like, where do you see the outlook from this point? How sustainable is the order rates you're going to get, which are the industry is going to lead that for us?
So at this point in time, there are a lot of industries that are investing. Steel is investing. Cement is investing refineries, oil and gas, fertilizers then there is power for air pollution control equipment, automobiles is also seeing an uptick.
So all these industries are growing. Specialty chemicals, all the industries are growing.
Such we're having a strong growth in the industry and quite a strong outlook, then why do we -- our guidance are providing around 5%, 6% sort of. Shouldn't we grow at a higher rate?
So, I think the guidance right now is given as double digit, right? So that's in the guidance.
Okay. So at least for the next 2 years?
We hope so, but we have -- yes, we hope so.
Yes. Okay. And the timeline for this order book?
Pardon?
Length of this order book?
I couldn't hear you. Operator, what of the order book?
What is the execution timeline of -- for this order book?
So execution time is different for different orders. If you are trying to get back to what is going to be the revenue next year, we have already answered that, that we are going to see double-digit growth.
As you know, different products have different execution timelines. So for example, a simple casting may take 3 or 4 months, a complex casting will take 6, 7 months, a sugar plant will take 11 months, 12 months. Distillery will take 11, 12 months. A boiler will take 14 months. DSI air pollution control project will take about 1.5 years. Some of the more complex ones will take 2 years. So there are a variety of -- across the different product lines. There is -- there are different execution cycles and orders are in different stages of execution.
Our next question is from Digant Haria of GreenEdge Wealth.
Sir, wanted to check that some of those slow-moving, long-duration orders, they were about to go. We were about to reach very large milestones like have we reach there, and that has resulted in this improvement in margins or that milestones we are yet to reach in those large projects?
So do you know the milestones keep accumulating in terms of the fact that you achieved some milestones, but there you'll get many more milestones to achieve. But what we are saying is that progressively, the share will keep coming down of these long-duration projects, these milestone-based projects.
Right. So the margin seen should actually improve, right? If those projects run down, the margin and working capital should progressively improve over the coming quarters? Like we already had a...
In response to one of the earlier questions, somebody asked whether margins will increase 1%, 1.5%. We said we are hopeful for that. And I also said that receivable days will come down.
Right. So second question is, see in this manufacturing -- in the manufacturing business, after a long time, you've crossed the INR 2,000 crores kind of an annual number. And the growth rates are almost in double digits. So what has led to that? And even on this base, we are expecting double-digit growth in the manufacturing business as well?
Yes. So on a standalone basis, yes. On a console basis, may not be, but will be close to double-digits.
All right, sir, that's really good to know. And sir, last -- my final question would be any update on the Philippines plan? I'm not sure if it's asked again, because I joined late. But are buyers or are we operating it we will start soon?
We are getting ready to operate the plant. The plant construction is going. As we said, by the end of next quarter, we'll be ready to commission the plant.
Our next question is from Rikesh Parikh of Rockstud Capital.
Largely, just relating with the Philippines project. Sir, I just wanted to understand now we are very close to operationalizing this project. So I mean, how are the dynamics over there in terms of profitability or something if you can throw some highlight?
I think that question on profitability was answered just a few minutes ago. I can repeat that in terms of Philippines has a 10% blending requirement as per government regulation. So petrol needs to be blended with 10% of ethanol. The country's existing production is only about 5%. So there is now short demand for ethanol that we will be producing.
The pricing of the ethanol is controlled, regulated and decided on every 15-day basis, updated every 15 days by the government they called National Bio-ethanol Board.
When they decide the price, they give weightage to the feedstock 50% [indiscernible] and 50% sugarcane. And so effectively, the feedstock cost becomes a pass-through to the ethanol price. There is a PHP 22 conversion margin, which is given in the rate for the ethanol. So by our estimates, the EBITDA per liter ethanol is about between 25% and 28%.
And lastly, any -- I mean, is the negotiation going on right now on this? Anything of the content?
So, we are preparing to run the plant.
The next question is from Manish Goyal of [ Finance ] Wealth Managers.
Hope you can you hear me. So I just wanted to clarify the order inflow number for quarter 4, which was mentioned earlier. And maybe if you can share FY '23 order inflow number, that is the first question.
Then on order pipeline, you'd probably get -- would like to get more perspective as to, which of the segments we see pipeline to be stronger for altering in the near term. Are we seeing any slowdown in oil and gas segment from the [indiscernible] and petrogas projects in [indiscernible]? Or also, if you can headlight which are the areas we see growth coming from.
I probably see that the manufacturing business has seen a very strong dispatches on the Hitachi Zosen because our subsidiary or the balancing figure in the segment has gone up to INR 395 crores. So I believe there was some delay in the Hitachi. So if you can share the Hitachi numbers as well will be very helpful and outlook from the Hitachi, particularly on the margin region. Because if I look at full year numbers, it seems to be very low margins for the JV performance.
Also, if you can highlight legal press performance. Have we seen any turnaround over there? And one more question on the ethanol business, which we started last year, it seems to be looking at the full year numbers, the profitability looks quite low. So is it that probably in the first year of operation, we are seeing there? Or maybe if you can help us how do we see the profitability in the ethanol project going forward?
And last question, how much investments have we -- from the Isgec balance sheet will or exposure from the Isgec balance sheet will be there in the carrying?
Thank you, Manish Ji. I'll try to remember all the questions. You asked a lot of questions, which is very nice. You're taking interest in our company. You continue to take interest. I know you've been taking interest in our company for a long, long time.
So as we pick consolidated order booking for Q4 was INR 2,482 crores, INR 2,482 crores. And this compares to INR 1,442 crores in the same quarter last year. The consolidated order booking for the full year is INR 6,599 crores, really INR 6,600 crores. And then you asked about?
Order pipeline, sir, and particularly oil and gas, refineries and which are the growth areas. Please we probably look forward.
Yes. So your question, I think, what -- are we seeing a slowdown in orders from oil and gas, it's going according to plan, because we know roughly when the orders are going to be decided, and there is no major disruption.
I know one particular project within the country has got delayed, but that will also now coming up in the next 45 days or soon. I mean, this is a formality only the formalities are less. So we are not seeing any unusual movements with respect to oil and gas compared to what we had thought would be. And we are seeing movements in -- on using orders from oil and gas, boilers because of steam requirements they are increasing. And also automobile is doing better than what it was doing before the investments have started happening over there. And as I said, speciality chemicals, cement. So these are the sectors from where the pipeline projects will come.
And sir, on -- from the sugar sector...
One more would be your ethanol plants.
Yes. That is what I was trying to refer. Okay. Okay. And on the JV performance, sir, probably seeing that Hitachi seems to be, no doubt, has done a large dispatch. But maybe if you can share some numbers.
So the revenue is about a little less than INR 600 crores, for Isgec Hitachi Zosen. And the profit is, you're right, it's close to about [ 2% ].
So how do we see this going forward? I believe there were some challenges in the recent past order. But now with INR 500 crore order book, how do you see outlook for this?
We see it improving during this year. We see it improving during this financial year. And as we've seen, we hope to improve this year. I think that's all about -- that's about all that we can say right now.
You largely referred to profitability, sir?
Yes.
And sir, how [indiscernible] done, sir?
Sorry?
The Eagle Press subsidiary in Canada, how is it done, sir?
So Eagle subsidiary, this year was not good. The year that went by was not good because we told we've been saying it earlier conference call, that the order booking was low because of the automotive sector not picking up in the U.S., which is a function of both the recession in the U.S. and the trips projects. However, sales have improved, and there has been a very good order booking in the last few months, and we hope to see a turnaround in Eagle price this year, this current year.
Perfect. Wonderful, sir. And last question, sir, on the ethanol project, what we started last year. The segmental shows that margins are a bit lower at PBIT margin at 3.5% and ROCE seems to be just 6%. So is it -- maybe if you can comment on that as well.
So the ethanol project, so there are 2 things that have happened. One is that we had said -- we have said in the -- I think, it was in the last conference call or the call previous to that, there has been a shift in the feedstock in terms of C molasses and B-heavy molasses. We have gone to B-heavy molasses, and we, with some marginal investment, I won't call the margin, about INR 15 crores of investment has increased the capacity of the plant by about 50%.
The plant capacity has been increased recently. There are some permissions that are required, and we hope that we should be able to get this permission in the next fortnight or so. Once we get those permissions, the plant will run at a higher capacity and profitability would certainly improve.
The other thing is that the profitability of the ethanol plant cannot be taken into -- taken in isolation of the sugar plant. Because when sugar prices rise, the feedstock which is -- which goes to the ethanol plant is valued at a much higher price. Because sugar price is higher so the amount of sugar that you are losing out as we value at a much higher price.
However, there are many other things, because of which the ethanol plant impacts the sugar plant in a positive way. Because there is less sugar produced, you get a higher realization of sugar, which is not quantified or captured anywhere. Or there is less molasses produced, so the molasses price is -- had this not happened, the molasses price would have been lower. But we are valuing it at the market price.
So all these things impact. In times, the sugar prices are going to be lower or lower than what -- not today, but lower prices relatively. We will see the gain in ethanol to be much more. So I think we have to see it as a combined unit. And when you see it as a combined unit, the ethanol plant is certainly helped in the economics of the Saraswati Sugar Mills.
Actually, Mr. Chatnani, if you can answer the last thing on the exposure of Isgec in the carrier in biofuel.
So the exposure continues to be the same in terms of U.S. dollars. And because of the currency fluctuation, it is looking larger at some [ INR 304 ] crores. But we have provided INR 45 crores on that already over the last -- I mean, we have got carrying a -- expected credit loss revenues of INR 45 crores on that.
Secondly, the loans that we have given to the Singapore company and through the Singapore company to the Cavite Biofuel Project continue at the same amount of INR 50 crores. That company is borrowing from Senator -- from a bank in Philippines, and we have guaranteed those loans. So as of now, it has drawn about INR 90 crores loans, and those new INR 90 crore loans are guaranteed by us. The balance loan has still to borrow.
How much more, sir, roughly?
Another INR 90 crores to be borrowed.
The next question is from Rabindra Nath Nayak of Sunidhi Securities.
Sir, regarding the silicon profits alone. So what is the normal CapEx for FY '24? And what is going to be -- for different plant? And secondly, the -- value are the -- already you have spoken that you are going to operate the plant. So what would be the capital structure of the plant after the completion? And what is the ROCE of the plant. You have already given the EBITDA margin. So what would be the ROCE of this plant as compared to a [indiscernible] plant that we are having in India, what is the comparison you can [indiscernible] what front. So when the line item that is appearing in the segment reporting after the completion, will it vanish or it will remain to some extent? And if it remains and whether it will be positive or going ahead, that I'm asking.
So I mean, capital expenditure is still in progress. As I mentioned, about INR 90 crores loan is yet to be borrowed. But we expect capital expenditure to be something like INR 110 crores, INR 115 crores total. More capital expenditures during FY '24 on the Philippines plant.
On the ROCE, I don't have numbers readily. But I did mention the EBITDA, we haven't done the calculations on ROCE. But we had seen that we by operating the plant, there is enough revenue and enough cash profits to be generated to pay the loans and to refine our investment there over a period of 5 or 6 years.
Last point about the line item that is appearing. Obviously, in operating segments, you try to distinguish. We have not decided yet. I don't think we'll be combining. And I'm just giving you an impression now without having really completed our study on that, is that we will keep it separate from the ethanol in India, because ethanol in Philippines will have different economics.
Okay. And for the plant is not -- you have not calculated the ROCE of the plant as compared to whatever plants we are operating. Whether it will be a better ROCE plant or it is a similar kind of ROCE you'll operate?
Sir, I haven't calculated so I can't answer that question. I can only say that we will be able to service our loans, and we'll be able to get FGS investment back.
So, if at all you're going to operate the plant and also for what is the casual payback period you are looking at, at the current price of this plant?
I'm sorry, I didn't get your question. Can you say it again.
Payback period, whatever equity investments that you have made and what are the payback period you are looking at from this plant?
I had said 5 to 6 years.
Our next question is from [indiscernible] of Sunidhi Securities.
Sir, just sorry to ask these repetitive questions on the Philippines side. I think it's sort of some sort of -- you could say that every analyst is a little bit worried on this investment, which has not yet fructified in terms of profitability for the company.
So I was just asking, but my line got disconnected. So if you could just guide us what sort of revenue that you are looking at from this plant? And by when you expect to attain the full utilization? Are there offtake arrangements are there with the government or some private body there? So how it is going to function and what could be the potential revenue and when we are expected to achieve that?
We expect the plant to operate at full capacity for the full years from November onwards and also, fulfill capacity is 42 million liters of ethanol a year. Also, in terms of revenue, I think because the revenue is a function of the ethanol price and the ethanol price is revised every 15 days. So I can only give you today's price is PHP 83. PHP 83 is equal to about INR 125 a liter. So about INR 600 crores plus is the revenue on an annual basis.
Got it. So it can generate maybe INR 150 crore kind of number even if we achieve 25% kind of margin considering today's price?
25% margin, I don't know. I talked about EBITDA, yes. So there is...
Yes, 25% EBITDA margin, that is what you talked about. So INR 600 crores top line at the today's price can generate close to INR 150 crores kind of EBITDA, right, at full capacity. And that should be possible maybe in the second half of the year.
I know you are interested in those calculations, but we are still a little time away...
Just to get a sense because yes, it's sort of confusion in the minds of all of us. So we just wanted to get more clarity on that because the rest of the business is more or less well understood by all of us and there are a lot of good things that are happening there, barring this investment, which is sitting on our balance sheet.
So once it starts generating the cash flows, I think overall, cash flow situation and the ROE profile for the company will improve dramatically. So that is why you might be hearing multiple questions from our side.
And our last question is from [indiscernible].
What is our recent corporate guarantee that we have a huge amount refer all of the subsidiaries? Because we're also talking about the reasonable fees sending some guarantee for the Philippines entity as well. So that's one.
You want to know what are the corporate guarantees we have given?
Yes. Firstly on this. And how much will be sending more [indiscernible] will be in total?
Corporate guarantee we have given is equal to about INR 90 crores. For the INR 90 crores, it's not actually a corporate guarantee, it's a standard letter of credit from the bank. So total guarantees that we're willing to giving will -- after we give the new guarantee will be INR 180 crores.
Other subsidiaries, how much will be corporate guarantees?
The subsidiaries, we have given corporate guarantees for Isgec Hitachi Zosen INR 547 crores. You'll have to give me a minute to find the number. It's INR 47 crores for Isgec Titan Metal fabricator is INR 79 crores. And for Isgec Redecam, INR 20 crores.
Can you just speak [indiscernible] for the Isgec Hitachi?
Isgec Hitachi is INR 549 crores.
INR 549 crores for the Isgec Hitachi?
Yes, please. .
Another INR 180 crores will be for?
INR 180 crores will be for the Philippines plant. INR 79 crores is for the Isgec Titan Metal Fabricators. And INR 20 crores is for the Isgec Redecam Enviro solutions.
I just want to clarify that these are the total limits we have guaranteed. But when we say Isgec Hitachi Zosen will be INR 547 crores, that doesn't mean that their exposure is INR 547 crores. They may have used only about INR 300-something crores of limits out of that.
And other thing, just wanted to know because the receiving idea is still right [indiscernible] is there any complete projects we have not received, I'm learning from the last 6 to 12 months?
I'm sorry, I can't you'll have to speak a little louder, sir, I can't hear you at all.
So we have approximately 28 [indiscernible] of book debt, right? So of this good debt, is there any deal which is more than 6 months, where on with we haven't taken them because the amount is [indiscernible].
Because there are some news, which are more than 6 months. But let me tell you, there are deals, which are in the nature of milestone payments, which become due after milestones are achieved, and there are some retention payments. There are certain news, which are more than 6 months. But they're all booked.
Yes. Normally, we expect that all the mine will be coming [indiscernible].
So we have a practice of doing provisions under the expected credit loss system, which is -- and we do give out our information to outside valuers, who advise us what expected credit loss after an assessment they would advice us what expected credit loss provisions we need to make. So while there are some amounts, which are due over 6 months, but we are also carrying certain providence.
One more thing, just want to turnaround the exact capacity size. Because you have said that like INR 549 crores of [indiscernible]...
Louder and slower. We can't hear you. We can't hear what you are saying, sorry.
Okay. I will repeat it again, I think. Now it's okay? So, Isgec Hitachi is having a INR 549 crores of corporate guarantee with them the limit will be obviously lesser than what we have told right now. But continuing the same, it is an important utilities for the Isgec. And we -- somewhere we have told that there will be 10% of growth in -- on standalone basis, but on the console basis, it will be close to 10%, not more than 10%. So for the Isgec Hitachi pricing, what is the revenue growth you expect?
We are not able to answer that question.
We are not able to answer that question because Isgec Hitachi don't -- yes.
We are not able to answer specific questions about like that.
Ladies and gentlemen, that ends our questions for today. And I'd like to hand the call back to Mr. Jain from ICICI Securities for some closing remarks.
I would like to thank the management for taking time out to this call -- attending this call. I would like to handover the call to Mr. Puri for his closing comments.
Thank you, everybody, for joining this conference call, and we hope to meet you again next quarter. Thank you.
Ladies and gentlemen, that then concludes today's event, and you may now disconnect your lines.