FY24 was marked by a good amount of order inflow for you, but in FY25, what do the prospects look like? What kind of order inflow and order book are you targeting this year?
Himanshu Mody: We started the year with the highest-ever order book in the history of Suzlon. We started the year with 3.3 gigawatts of order books. There is also quite an active pipeline that we are under negotiation with our customers. The existing order book needs to be executed over the next two financial years. So, whilst I cannot give you the exact numbers on what we expect for FY25, we will have a healthy order book currently and also a very good active pipeline.
In your conference call, you did allude to the fact that the India wind capacity addition is likely to increase quite a fair bit. How does it translate into business for you and what kind of numbers are we looking at by the end of FY25?
Himanshu Mody: The India wind capacity addition was about 3.3 gigawatts in FY24 as compared to 2.2 gigawatts in FY23. So, that is close to a 43% increase year-on-year. Our estimates as a company is that the country would add about 5 gigawatts in FY25, therefore, another 50% increase from FY24. Now from a Suzlon perspective, of course, historically or in FY24, we have had a 27% market share and our endeavour would be to meet that market share and if not, increase the market share.
You had also flagged off in your answer about a strong order book and how that is looking quite healthy in terms of your order inflow rather. Can you give us a little bit more perspective in terms of the tender pipeline for wind, hybrid, what that is potentially looking like in terms of numbers?
Himanshu Mody: Most of the tenders are largely hybrid. There is no solar only bid that is being issued by SECI or other nodal authorities. Also, a lot of the C&I customers who we talk to directly are looking at a hybrid between solar and wind. So, clearly both sources of renewable energy are complementary rather than contradictory to popular perception that it is competitive. Close to 15 to 20 gigawatts of a wind pipeline annually is being added.
There is a calendar that is being issued by SECI where 10 gigawatts of pure wind energy is there and the balance 40 gigawatts is hybrid. So, even if one were to assume a minimum 25% in the hybrid of wind capacity, then we are looking at close to 20 gigawatts of wind orders or bids year-on-year. All this is of course towards the trajectory that wind installations in India need to go to about 100 gigawatts by 2030 from the current 45-46 gigawatts. So, that is an addition of about 55 gigawatts over the next six years.
Where are the challenges because while it is a given that the regulatory policy and the kind of government initiative definitely is auguring well and well-intended, they are upping the wind capacity almost on an annual basis?
Himanshu Mody: The challenge lies in project execution. As compared to solar, it is obviously a much more complex execution on the ground. Land availability is not a problem. There are plenty of land banks available in the country with good windy speeds. It is the process of acquiring that land and ROW for that land for project execution which would be a time-consuming process and the good part is that in the entire value chain with project companies like us, our customers, that realisation is set in, which is why we see that a lot of the customers that are placing orders with us is well in advance of the actual project commissioning. So, people have started to factor in those potential delays or timeline that will be required for project execution, including land acquisition or even power evacuation network, the substation readiness from power grid, etc.Land acquisition issue will concern the Street purely because we have been scarred by the last cycle when there was that humongous amount of delay in delivery. Is it a repeat of last time or is it much better versus the last time? Also, do you expect the realisation to fall off further? It is right now around 5.6 crore per megawatt, thereabouts?
Himanshu Mody: Again, I do not think the past is a barometer for what the future holds. The country added about 5.5 gigawatts as capacity in 2017. And yes, you may be right that at that time, the realisation on how much time a land acquisition or project execution will take may not have been there. But today, in project execution companies like ours, for customers, that realisation is there.
So, when we model the project execution schedule, that timeline is very clearly factored in and as you can see, the country has grown 43% in installations already as compared to last year. So far as our selling price per megawatt is concerned, the order book that we have is just short of about six crores per megawatt. So, it may differ quarter-on-quarter, but in the ballpark, it will just be shy of six crores per megawatt in terms of selling price.
FY25 was expected to be a turnaround year for you and if you look at the exit rate of Q4, there was that 30% year-on-year growth in terms of revenue. Of course, the profitability was much higher, the net cash situation had improved, and the EBITDA was up 53%. For FY25, what should be a realistic estimate in terms of, let us say, the top line growth, margins and the cash position?
Himanshu Mody: Again, that is difficult for me. We do not provide any guidance to the street as a matter of policy. As I said earlier, in our manufacturing business, the country will add about 5 gigawatts in FY25 and we have close to a 27% to 30% market share historically.
Our endeavour will be to continue with that market share. Our O&M business will continue inflationary growth on the top line and deliver healthy margins close to about 40%. So, depending on the volumes that we end up at in FY25, I think we should be looking at a much stronger balance sheet at the end of this fiscal year.
What about the transmission access because that is a bit of a challenge. Of course, the government is working a lot in terms of integrating all of that together, but do you foresee that it is going to take a bit longer for all of that to work out?
Himanshu Mody: I do not think so. The policymakers are quite intent on all of this. As I said, the end objective, the goal, the entire stakeholder chain or the value chain is working towards making the 100 gigawatt dream by 2030 a reality.
I also want a sense from you with respect to the consolidation which is happening in the industry. Siemens is selling its wind energy business in the country. There are a lot more available on the ground. How do you see the entire industry dynamics shaping up?
Himanshu Mody: Competition is always healthy. Given the demand that we are seeing over the next few years, I think there is room for everyone to play. So far as Suzlon is concerned, we have our product and market strategies very clearly laid out. We have a large set of customers who have been Suzlon loyalists over the years and we really are grateful to them.
I would also say that Suzlon is the only turbine in India which is a Make in India, Atmanirbhar Bharat, our technology is our USP. It is the only turbine that is tailor-made or customised for India’s weather conditions, whereas most of our competition whether from the west or the east really do not have that product advantage.
Is it fair to say that Suzlon, at least for now, is not in the market for any inorganic acquisition of sorts?
Himanshu Mody: It is difficult to comment yes or no, like is the case with probably any business we are always on the lookout opportunistically to see if there are any organic, inorganic growth opportunities that make sense for the company, for growth of the shareholders’ value. So, I would never say that we are not in the market. We do keep our eyes and ears open. If any opportunity comes by which makes sense and fits in with our strategy, we will give it a serious shot.
Anything at a very advanced stage of discussion?
Himanshu Mody: No, nothing at this advanced stage right now.