Suzlon Energy (NSE:SUZLON) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Suzlon Energy Limited Q1 and FY 'twenty seven Earnings Conference Call. During this call, the company management may take certain statement that reflect their outlook for the future. This could be construed as forward looking statement. These statements are based on management current expectation and are associated with uncertainties and risk as detailed in annual report. Actual results may differ, so please statement should be reviewed in conjunction with the risk of the company faces. As a reminder, all participant lines will be in listen only mode. Please signal an operator by pressing star then 0 on your touch tone phone. Please note that this conference is being recorded.

0:46 We will begin with the opening remarks followed by a question and answer session. To be fair to others, we kindly request each participant to ask no more than two or three question. From the management, we have with us mister, group CEO and mister Rahul Jan, group CFO and senior members of the finance team. I now hand the conference over to Mr. Ajay Kapoor, sir. Thank you, and over to you, sir. Thank you. Good evening, everyone, and thank you for joining Suzlon's quarter one FY 'twenty seven earnings call. FY 'twenty seven has started strongly for Suzlon and the Indian wind industry. Even amid global geopolitical tensions in Middle East and resulting supply chain volatility, we have sustained strong execution, demonstrating the resilience of our business model and the strength of India's RE opportunity.

1:45 While Middle East tensions created near term supply chain disruptions, they have also reinforced the strategic importance of energy security, further strengthening the long term investment case for domestic RE, especially wind energy. India's economic growth, rapid electrification, AI led data center expansion, industrial growth, EV adoption and cooling demand continue to drive structural power demand growth. The country's peak power demand has already crossed two seventy plus gigawatts, reinforcing the need for large scale RE capacity additions, especially during nonsolar hours, which is peak demand.

2:31 This momentum sets the stage for a multiyear growth cycle with annual installations expected to cross 10 gigawatt in the near term and reaching 15 gigawatt by FY 'thirty one. With 57 gigawatt already installed and a strong pipeline with STU and PSU bids as well as C and I demand, particularly for wind, India is set to achieve the near term target of 100 gigawatts by 2030. Repowering also started gaining traction, and there is rising customer interest, which gives visibility of several opportunities ramping up in next two to three years. Now taking you through the business highlights.

3:18 Suzlon delivered five zero six megawatts in quarter one, making our highest ever first quarter deliveries. This performance was achieved despite temporary supply chain and logistics disruptions arising from geopolitical tensions in West Asia. These disruptions deferred approximately 10% to 20% of deliveries, which is expected to be recovered in coming quarters. Quarter one FY 'twenty seven, Suzlon installations grew 2.3x from 117 to two sixty nine megawatt COD, With more than twelve fifty seven megawatts of electric but waiting for commissioning turbines, this plays the way for uptick in the COD's going forward.

4:07 Order book is a healthy 6.1 gigawatt, reaffirming our market leadership. In first four months of FY 'twenty seven, we have already secured one gigawatt of orders and continue to have a strong pipeline. Order book is not constrained with DevCo is not constrained with DevCo model in place with 60% new orders from DevCo. Hopefully, this will keep the momentum going in the coming quarters. Market pricing remains healthy and rational. ASP increased from INR 5.6 crores per megawatt in quarter one FY 'twenty six to INR 6.3 crores per megawatt in quarter one FY 'twenty seven aided by project mix. The successful launch and maiden order for S175 in India alongside the Blue Sky platform marks Suzlon's return to advanced global markets With S175 and S163, Suzlon is expanding its technology portfolio with high capacity turbines, and we are pleased to report high and deliver superior yields, better reliability and lower LCOE, unlocking opportunities across repowering and new build projects worldwide.

5:26 4.5 gigawatt manufacturing capacity, fully operational, expanding footprint with three AI enabled smart factories to drive efficiency and scale. On Suzlon two point o, it is translating into tangible growth opportunities across multiple adjacencies. On the RE tech side, we have successfully launched S175 five megawatt turbine and secured the first customer order. On the DevCo, strong market acceptance reflected in 600 plus megawatt of orders booked within the four months, which translates to 60% of the business coming from DevCo led engine. Exports expanding global footprint with a growing opportunity pipeline spanning key international markets with opportunities under evaluation in Europe, Australia, Latin America and Southeast Asia On the best, advanced storage ambitions through strategic technology partnership discussions are ongoing.

6:27 On the solar side, we have identified 20 plus gigawatts serviceable solar asset base, leveraging Suzlon's extensive field presence and infrastructure within 25 kilometer radius of Suzlon's service locations. Our RE AMS portfolio remains strong with 16.1 plus installed base in India and machine availability crossing consistently above 95%. Renov's AUM is consistently growing on the back of steady fleet additions across multi brand and a healthy pipeline. Foundry and Forging continues to scale strongly, revenues at INR 126 crores and EBITDA at INR 22 crores, with continued momentum driven by domestic demand and export growth.

7:17 Now I invite Rahul Jain, our Group CFO, to take you through our financial performance. Thank you, Ajay. Good afternoon, ladies and gentlemen. I would be using Slides 20 to 27 of our investor presentation, which has been uploaded to our website as the reference point for my discussion during this presentation. In Q1 FY 'twenty seven, Suzlon delivered five zero six megawatts, marking our highest ever first quarter deliveries in India. Suzlon reported consolidated revenue of INR 3,819 crore in Q1 FY 'twenty seven, a 23% year on year growth, with EBITDA at INR $5.95 crore and PBT at INR $3.90 crore.

8:04 Also, a PAT of INR $30.05 crore was reported during Q1 FY 'twenty seven. EBITDA impact did get impacted on account of some of the factors. Certain deliveries impacted on account of temporary supply chain and logistic disruptions arising from geopolitical tensions in The Middle East, which impacted fuel availability and movement of critical equipment, including cranes, trailers and transport vehicles required for WTG execution. Higher fixed costs reflect investments within to support scale, including the Puducherry facility, new blade plants, leadership strengthening and Suzlon 2.0 initiatives. Q1 FY twenty twenty seven is impacted due to the above factors, and in the long term, we continue to grow in line with our ambitions set up for Suzlon 2.0 at 25% CAGR for the next five years.

9:01 We are pleased to report on our balance sheet as of June 26 reflects a position of exceptional strength with strong consolidated net worth of INR 9,869 crore. Our net cash position of INR 2,322 crore further enhances our financial flexibility and resilience. Adequate working capital limits have been tied up for execution of the current order book. Our integrated business model, backed by robust supply chain, strong execution capabilities and industry leading service network continues to differentiate Suzlon and create a sustainable competitive advantage. With that, I would now like to hand over the call to the operator and open the floor for questions. Thank you.

9:47 Thank you, Rahul, sir. Ladies and gentlemen, we will now begin with the question and answer session. Participants are request to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Our first question comes from the line of Bala Subramanian with Aryan Capital.

10:42 Sir, in Q1, the deliveries are around 106 megawatts and but the commission is only two sixty nine megawatts. So I think it implies the gap of nearly two thirty seven megawatts in Q1 alone. So like what is the typical revenue recognition that between delivery or erection and commissioning? And in total, I think nine seventy three megawatt erectile inventory is expected to convert. I think when we can expect whether it's in Q2 or Q3 to get some clarity on that side? Okay. So let me try and answer that question, please. Q1, what we saw as deliveries was five zero six megawatt.

11:28 Our total COD in Q1 was about two sixty nine megawatt. When we look at it from an overall perspective, the position that we have on RR versus commissioning, there will there is a certain gap, and that will continue to remain. We have to also look at the fact that we have twelve fifty seven megawatts of erected machines. Now as the erection completion happen when when the COD position will likely improve going forward as well. So I think it is it is not the gap to be looked at, but also the RFC stock and the stock of machines that have been commissioned, that have been installed ready for commissioning as well. So I think that is the position to be looked at. From a Q3 and Q4 perspective, if you look at it, the seasonality of the business is such that and historically also we've seen that there is a seasonal trend that works out, that plays out. Historically, what we've seen is, let's say, about 35%, 40% in the H1 versus 60%, 65% in H2. I think that trend still remains.

12:39 Hopefully, that answers your question, sir. Got it, sir. As for my second question, so I think we are making strategic investments in S-one 170 platform and new breed back factories and the Blue Sky European relaunch. So what is that expected payback period for these investments? And we can expect meaningful revenue contribution, whether it's in FY '28 or FY '29? So very good question. You know, Rahul already, you know, gave you an answer to your earlier one that we have twelve fifty erected turbines. So a large part of it is now ready for commissioning. So that should help us, you know, improve the COD and commissioning, part one. Part two, as we migrate to new five megawatt series for Indian market, plus 6.3 megawatt s one six three for international markets, These are the investments being made. Internationally, it takes anywhere between eighteen months to twenty four months to seed the market and start the first shipments.

13:49 So that's the answer for international. For our domestic, we already got the first order of s one seventy five, which will start deliveries end of this year and and next year. Also, the other strategic investments we are making in new factories as part of our expansion. I think all these investments span out over the next twelve to eighteen months, and we're very hopeful that the payback for all these are... It's a very fairly short payback. These are not long investments because as soon as the ramp up happens on the volumes, this already starts paying back. Okay, sir. So my last question, around 85% of book is from PSU and C and I sectors.

14:37 So I'm trying to understand whether it's a BSU dominated order book by a structured track on cash conversion or the payment cycles are improving. So what is the difference between like receivable days for BSU contracts or CNI or IPC contracts? So I'm trying to understand whether... Yes, sir. So, basically, it's a... You said fifty fifty mix between PSU and CNI. When we take each order, it has its own uniqueness. Wherever there are payable days more, there's the pricing is adequately done in a manner that it accounts for the days. So I think from that aspect, I think we are well covered. Okay, sir. And the mix will continue or it will change in the coming year, sir?

15:28 The evolving... It's a evolving market. Cannot predict that. But by and large, you know, as part of the journey to RE, we need investments from everyone, including PSUs who have taken larger targets. At the same time, large corporates are repeat customers for us. You would have seen in our various announcements. So very happy to partner with both of them. And I think more or less the same trajectory will continue, but we have a sharp focus on our receivables management, and we are seeing improvement over there also. Got it, sir. Thank you. Thank you. Our next question comes from the line of Mohit Kumar with ICICI Securities. Please go ahead.

16:15 Good evening, and thanks for the opportunity. My first question is, sir, what explains the weakness in EBIT margin during the quarter? I'm talking especially about WPT. On a per megawatt basis, the EBIT has declined from INR 26 lakh per megawatt to INR 52 lakh per megawatt, while the average selling price has only gone up, right? So can we expect it to correct going forward? How do you think this how should we look at it? Okay. So when you look at EBITDA numbers, what we are seeing is roughly about a flattish EBITDA from $5.99 crores, which was Q1 FY 'twenty six to INR $5.95 crores in Q1 FY 'twenty seven.

17:02 The way to look at it is probably this. There are certain investments that we are making for our 2.2 Suzlon strategy. There is strengthening of that position starting to happen. So therefore, some of the expenses have to be up fronted, right? Benefit of these expenses will come over a period of time. Therefore, you are looking at a flattish EBITDA. That's one of the reasons. Second key reason is the fact that what Ajay also mentioned, given the geopolitical position, there were certain lower, let's say, operating leverage playing out this quarter. As we go out in time and as our operating leverage becomes better, some of these positions should be better going forward as well.

17:48 Also, third element of this is when you look at it from a segment perspective, our WTG or the RE solution segment versus the REMS segment. There are higher margins in the AMS segment overall. So as your mix changes, there will be some positive or negative depending about what mix you are at. So that is essentially the reason, Mohit. Mhmm. Understood. My second question is, of course, the ALMM on the wind is expected by, I think, it already got implemented. Right? So I think the c and I c and I deadline is December 25, if I'm not wrong. Right? December 26. And the utility is already... The... It has already been implemented from August 25. What will be... Happens post August 25.

18:40 So in your opinion, are you gaining market share post that? And have you seen the impact on the ground? And second is, do you see that? Do you see the LMM expanding into components like yaw and pitch drives in the next few years? I I I believe that those drives are now... They are not covered as of now. So let me answer at a larger level. First of all, this ALM SOP brings level playing field for the Indian players. Suzlon is fully compliant and well positioned versus import dependent competitors. The SOP provides clear staged requirements for listing and inspection, plus a new import monitoring system, which is I e I m I s. I think this helps us.

19:29 On the second part of your question, we can connect separately. At this moment, maybe we can we can reach out to you separately and answer that question. Understood. Thank you. All the best. Thank you. Our next question comes from the line of Sumit Kishore with Axis Capital. Two questions. The first one is that the fixed cost in WPG business in Q1 seems to be at Q4 FY 'twenty six level despite much lower volume. So you spoke about the advanced investments that you're making for Suzlon 2.0 strategy. How should we think about the full year WTG fixed cost here?

20:17 How much of the impact in Q1 was because of the temporary issues around fuel availability pricing, movement of cranes? So how should we think about the full year fixed cost for WPG business for FY 'twenty seven? So Sumit, to answer your question, the way to look at it is that there are certain onetime costs that have been baked in into the Q1 numbers. Like I said in an answer to a previous question as well, the overall position from a year perspective, there will be some one time or let's say investments that we are making for our future positioning of be it for export, be it for the DevCo model and others. That's something that will come through over the year as well.

21:08 Again, if you look at it, we have always said that our EBITDA margins between 17% to 18% last year was the position that we had taken. My sense is that this year also, plusminus one percent to 2% from there, we should be able to maintain and put strong positioning given as we go out and operating leverage plays out in H2, we will certainly see a better positive change to that. Okay. I mean just the fixed expenses that you have in mind for cultivating exports and Suzlon 2.2, would you like to put a number to that for the full year so that we can track that? Not really, Sumit. I don't want to put a number to it. Let me just say that we are judicious at it. We have the ability to do some of these expenses because we are looking at growth as our key lever going forward.

22:01 There will be certain upfront costs. And to be very frank about it, as the group CFO, I'm not very worried. Sure. Just a quick one on the six zero two megawatt DECO EPC contract. What sort of advances have you booked for these contracts? Could you give us some sense of the execution time line versus the non tech order book? And possibly whether this would be margin accretive? Very good question. These are similar contracts as we have been doing in past. Same commercial term, except that here, we have readiness of available land banks and connectivity, working closely with the customer and the client which helps in a faster implementation.

22:47 Other than that, all advances, everything is in the same nature as we have done in past, and they are value accretive. Sure. Thank you. Thank you. Our next question comes from the line of Prakhar Pourwal with Ambit Capital. Please go ahead. Thank you for the opportunity. One question first, and I'm following up with my questions now. Prakhar, your voice is cracking. Could you just I know. Your voice is a bit muffled. Just one second. Am I audible now? Yes, it's private. Yes. So my first question is a follow-up on the previous one. On the DevCo, you mentioned margins and terms on the similar levels what you have on the existing orders.

23:43 But advances, it's on these orders, because I assume the conversion cycle is three, four years. So are these the projects where land has been acquired and the customer is giving an advance for this contract? Three... The 602 megawatt. So the answer is current sales, which is happening, is already the advanced devco sites that we had. Those are the ones we have offered, which are very big. So, you know, whatever investments we already made in the land, in fact, they will get unlocked very soon as the advances start, you know, coming in and increase the site progress. The ERC four five DevCo orders, which is also part of the Suzlon two point o strategy, those are yet to be announced where we have a slightly different strategy. But these are the ones which are more like the current orders, but they have been coming through the pipeline of our devco team. As as you know, we have been working on it for a while. It's not that we started after announcement. So we're already working on it. These are the more baked ones, and and and therefore, there is a very high demand also for these sites from our customers.

24:47 Sure. My second question is on... Again on margins. The fixed cost that you mentioned that you are investing So this is not a coupon code that you mentioned. What type of fixed cost if you can mention maybe some of these? So, basically, we have to incur, for example, new plants we are setting up. We're making investment in technology for the new protos that we are working on international and domestic market, part of marketing and international markets to open up the market. These are all those investments, which are inevitable as part of the growth strategy.

25:35 Sure. And just lastly, on repowering, you mentioned briefly in the opening remarks. If you can highlight some new movement in terms of repowering in India that is happening? And also maybe on the Investor Day, you discussed about the order of repowering opportunity. So any because this question is related to the conference that was held the minister had asked the wind energy wind council prepared to prepare a report for all the empowering potential sites. So maybe anything that you are seeing from there and any type of demand that you expect from that? No. So very good question. In fact, at a high level, repowering has a potential of close to 25 gigawatts in the country.

26:23 And what we have done is significant portion of India's installment fleet was commissioned ten to twenty years ago using relatively small turbines with lower hub heights and lower energy yields. The modern turbines such as the latest generation platforms can generate substantially more energy from the same footprint, and therefore, that's where the whole answer lies. And these are also very good winter, you know, sites because these are the best which were taken in the beginning. And for Suzlon, we have already started working on our s eight eight two one two zero platform. That investments we're already making. It is also part of our Suzlon two point o strategy. I think in the next one or two quarters, I should be able to come out and tell you, you know, the pilots and the orders that we already cracked.

27:14 But the team is very confident that before we end this year, we would have already logged in confirmed order book from the repowering in India first. Within international markets, Australia, very promising market. Europe, very promising market, lot of demand. And the same product that we are launching here in India is what we launched also internationally. So for that permits and all the approvals looking at their local grid and grid requirements are being currently done. These are also the investments which are part of our SUZLON two point o strategy. Sure. Thank you so much. Thank you. Our next question comes from the line of Shweta Jain with Anandrati, Sharon Stockbrokers Limited.

28:01 Please go ahead. Good evening, everyone. So coming back to the fixed cost questions and the follow ups again, I understand that you will not be able to give me an absolute number with respects to, you know, how much of the costs have been up fronted in this quarter. But if you could just help us decipher what margin impact would have been ex of these quotes for the quarter. It's just to assess how the entire year would pan out, frankly. Same question you asked a different way, Shweta. So you're also laughing into it. But... Okay. So since about 40 to 50 crores is what could be the number across various subheads, which I told you. Mhmm. And I think as we ramp up volumes, this should start panning out and should not have such a major impact for the full year.

28:47 So these and direct 40 to 50 crores will be one time for this quarter impact only? See, it's a it's a year long journey, Shweta. It is not a one quarter story. Are... Ajay is not saying that we have we have baked it everything in first quarter. It's a year long journey for for... From where we are coming, but not a big number, I would. And the revenues, if I understood correctly the previous answers, we'll start actually witnessing something materially next year onwards from the Suzlon two point o versions. So, basically, you know, what Rahul was saying, typically, we've been operating at about 17, 18% margin.

29:34 Our endeavor will be to remain in that realm. Okay. But we can give or take point 5% up and down. I mean, that's that's the way we would like to go. You've seen a strong delivery in the first quarter. This is the highest ever in the June series for Suzlon since inception. 23% on revenue and 12% on RR. More importantly, 230% on commissioning. And on top of it, another 1,250 erected, ready to be commissioned. So I think these are good numbers. I believe they are going to be all value accretive for the business going forward on top of investments for current and future years, think, which is going to pay us rich dividends because if I have to achieve 20, 31 goals, I need to start, and I think we already started the year. Correct. Absolutely. Absolutely. That's fair point.

30:23 Thank you so much for that answer. The next is on foundry and forging. I think since last year, we've been tracking and say... Stating that, you know, this business is expanding into the different verticals targeting aerospace, other foundry verticals in automobiles, etcetera. But if we see, also, long share has continuously been inching up on a quarterly basis. Any thoughts with respect to how the utilization can be actually ramped up up to 50% or something material number? Sure. It's a very good question. This is one business which gets more impacted with the geopolitical issues which were happening in the recent past. We're trying to also increase the share of exports. Some of the big customers we found got into the the Gulf crisis.

31:13 What the business is looking at is distinct three segments, foundry, forging, and bearing. And we have started talking to more customers, more order pipelines. In fact, in the coming quarters, you'll see the whole strategy panning out beautifully well. And, obviously, while Suzlon will be a big buyer, but we want to actually increase the share of non Suzlon. Non wind. And non wind and export. So these are the three or four KPIs given to them with a very clear three business models of foundry, forging, bearing. I'm very confident this business has a lot of promise in time to come. Okay. Thank you, and all the best for future. Thank you. Thank you. Our next question comes from the line of with Ishaan Ventures. Please go ahead.

32:06 Hi, sir. Good evening. First of all, I would like to ask that there has been a, you know, unconfirmed news in the market that there is some kind of foreign holding cap that the company has placed. Can you confirm that if there is a cap on the amount of holdings in the company, which can be held by foreign FPAs and FPAs? Not really. I don't think there is any any such thing that... In fact, I can't place a cap on it. That's the Okay. Okay. That is what my Nothing else. Uh-huh. Hello? Hello? That's all? Hello? Hello? Yeah., any further question you have? Any Yeah.

32:52 Yeah. I I lost you. So as regards the installed capacity, there was a of JPC, sir, which is... Like, said... Which was held at the campus, where he said that once the five gigawatt machines are are, like, the... Are started... When the production is started, The product... The install capacity will automatically go up from 4,500 megawatt to 7,500 megawatt. Am I wrong in in somewhat of understanding of that statement? I'll I'll not give you a number from 4,500 to 7,500, but if the current capacity, everything shifts to, let's say, the five megawatt, yes, that is that is the way it has to be looked at. That is much higher. That takes time. No? Because your current order book, if you see of the 6.1 gigawatt is largely, you know, s one four four three three series, and some part of it is also, you know, where the retail demand and some customers and some orders are there of two megawatts.

33:49 So I think it's a mix and it's a transition as it happens. So when when you finally transit, it will go up, obviously. You're right. Okay. Okay. So when I go go on a line by line comparison of the profit loss account, the majority of expense that has increased is in material consumed. I... I'm still trying to understand what would be the expenditures that would have been incurred in... Like, have been moved into material consumption. Basically, it is the EPC. If you see last year, same quarter, we were 22% share of EPC. And this year, we have 32% share of EPC. There's a substantial shift. Right, sir. Thank you for the opportunity. Thank you very much.

34:39 Thank you. Our next question comes from the line of Raj Shah with Inam AMC. Please go ahead. Thank you, sir, for the opportunity. So my question is related to the realization that has increased from INR 5.6 crores per megawatt to INR 6.3 crores. As you mentioned in the opening comments, this is part of result of a project mix change. If you can throw some light on how should we think about this number as EPC business is increasing and for the entire year, how should we think about this number? Basically, you're right. I mean, the EPC share has gone up from the base year where I said it was 22%. It's gone up to 32%. So that's that's what is translating into the higher revenue. EPC and project business. And also project business.

35:28 So so this upward movement shall continue going forward as well, sir? Because the scope has increased, so the revenue has increased. So as our project business will be higher, we will see this number in that range. Again, this is also a judgmental number overall is is what I would like to say. So the ASPs are are in fairly good shape is is is we are... Is what we are saying here. Got it. Got it. And, sir, for the asset management business as well, we saw margin expansion in this quarter. So my question was, now do we see that this can be a sustainable margin level of 33, 34% going forward as well?

36:13 This is actually much higher, 43%, but we believe this should be more like, you know, higher thirties, 39, 38, 39. You're seeing the segment revenue. What what is the question? Can you repeat? I think I may have got it wrong. Can you repeat your question, please? Yes, sir. I'm asking about the OMS business and the O and M business. You're talking of the OMS business. EBITDA margin or the share of OMS business or the total business? No. No. EBITDA margin. EBITDA margin. Yeah. So that... It's right. In this quarter, it's slightly elevated at 43%. I believe it should be more or less in the higher thirties and closer to 40. That's the way we'll endeavor to move on. That's right. And this is all, you know, timing issue sometimes.

36:59 Got it. Got it. Thank you very much. Thank you. Our next question comes from the line of Amit Binde with Axis Capital. Please go ahead. Hello. Sir. I just want to understand your movement on interest expense that seems to be pretty high, almost up 30% Y o Y. So what's exactly, resulting in this increase? And, secondly, some outlook on, the tax rate that we should consider for the full year. This time as well, including deferred tax, the tax rate is close to around 22% versus the other initial commentary of there being no tax for the next one or two years on the income statement. So can you... If if you can expand on those two points?

37:46 Okay. The way to look at it is that when you think about from Q1 to Q1, my revenue is higher by about 23%. To a certain extent, that will also go into the interest cost as well. Given where our overall working capital utilization is, which is flat to slightly higher and tracking that number, this number is overall dependent on the overall utilization of working capital, which is leading to a slightly higher interest cost. Now I can also tell you that when we look at it from a line by line item from an interest cost perspective, our overall rates that we can command from the market has actually come down. So that's a positive change that has happened. That's probably the explanation I would give to you from an interest cost perspective. When you look at it from a tax perspective, all the tax charge that you see on our P and L is the recognition and the, let's say, the rundown of the deferred tax assets that have been recognized in the past.

38:44 None of these are cash items. Minor cash could be there, but nothing major. So largely, these are noncash items is what I would say. Right. Correct. And just to clarify, you had been mentioning that you would invest money on the AliDevco site. So surely, there would have been some investments done. Can you quantify how much have we done on that side? And has that also contributed to the increase in the interest cost? See, again, that it's an overall cash utilization position. So so our overall DevCo investment is expected to be about INR 500 crore on a revolving in nature. Currently, we will probably in the range of 200 to 300 crores. So it remains like that. If there was no investment in DevCo, obviously, there would have been a better cash position that was available with us. But I don't think we need to look at it from that perspective.

39:36 It's an overall working capital position that has led to slightly higher interest costs. Like I said, our overall rates are lower than what we had started the year with and last year as well. So positives more than negatives. Right. Got it. Just one more thing, if you can just talk us through the CapEx plan because now we have sufficient capacity of 4.5 gigawatt at hand for the domestic market, but now we're launching newer turbines on the export side, etcetera. So how should one think about your CapEx investment or any capacity addition on that front? So CapEx, we had guided even earlier calls also, closer to 700 crores plus minus maybe 100 crores depending on the timing and, you know, sometimes permits and local issues. So by and large, that the guidance remains intact.

40:30 And and just to add to what Ajay said, Amit, the point is that the CapEx is to support our growth and capacity expansion. And the five megawatt series and others, as they come in, they will need certain grade factories, which we are we are now investing in AI enabled blade factories as well, like we said in our opening remarks as well. So it's investing into the future rather than just looking at the current 4.5 gigawatt capacity. Is any of these investments closer to the end market, like, in the foreign geographies that you're making to No. These are all currently in India. As of now, the foreign strategy is to be able to manufacture in India and sell globally. And the products that we are making are for the global markets as well.

41:28 Our Our next question comes from the line of Nikol Avayankar with UTI Mutual Fund. Please go ahead. Sir, a couple of questions. First question in line with the earlier question regarding the gross margin. So is it fair to assume that the impact on the gross margin was largely because of the change in mix and loss and none of it was regarding the commodity inflation? No. I didn't get the question. Could you No. No. I think the question was commodity mix. Impact on gross margin was largely owing to the change in mix between EPC and WTB supply or what? There was also some component because of the commodity inflation. So again, yes, I understand your question now.

42:13 Thank you. The mix with respect to the AMS business, which is a higher margin business versus supply of, let's say, the I. E. Business is the one that has impacted it. Obviously, there is some impact of onetime cost as well, like some of the other participants have talked about. But yes, largely to what you're saying is right. Okay. And, sir, under the current... Under the DevCo model, we have already booked around 600 megawatt of orders. So, I mean, just want to understand how much land bank is available with us and any trajectory if you can have in terms of land back land back development in this year and couple of years.

42:58 So as a thumb rule, we earmark up to 25% for a project, which is fully baked to invest in the land. Then at a... And we do stage gating depending on where we are. At the second stage gate, we increase this from 25 to 50%. And by then, we would already sign the term sheet with the customer, and then we start also transferring the land in the name of the customer, thereby recycling the money, which Rahul was earlier mentioning that we have earmarked about 500 as a packet for this particular initiative. Currently, we have not reached the special of that 500. We are much below that. Mhmm. Yep. And, sir, the CapEx plan of 700 of crores, that's also include the investment? No. No. That's separate. This is CapEx. Pure CapEx.

43:45 So is essentially buying the the land and and connectivity and others. Right? That is essentially inventorized. Our Our next question comes from the line of Priyesh Babaria with Mahindra Manulife Mutual Fund. Please go ahead. Hello. Thank you so much sir for giving me an opportunity. So just one question with respect to DevCo model. Earlier we were actually expected to limit our investment to let's say to INR 50 to INR 300 crore.

44:31 Now we are expecting to actually increase it to 500 crore. I mean, do we have any kind of a restriction in terms of how much we can invest in this particular business? Or this can actually go beyond INR 500 crore as well? Krish, thank you for the question. I think the INR $2.50 crore number that you are talking about is a very long back number. I think we have come to a state where we I think even when we were talking about Suzlon 2.0 strategy, we have talked about this as a 500 crore number even at that point in time. As of now, that's the cap that we have. If there is a change on it, we'll certainly come back and give you the positioning around it, but that's what we've kept our, let's say, financial guardrail around. Our next question comes from the line of Neel Oswal with PGIM India Asset Management. Please go ahead.

45:31 Yes. Hi, sir. Thank you for the opportunity. Two questions. First, your share of EPC increases, do you expect the working capital cycle to worsen materially? And second, if you can share some details on the best side, I mean, specifics regarding the partnership that you're exploring, if you can share something. Let me just answer the working capital question first, and then I'll give it over to Ajay to answer the the other question. On the working capital cycle, again, I don't think EPC creates a negative. The working capital cycle is what it is, right? We are working on various tracks to improve the working capital cycle. And I'm happy to report that when you look at our numbers and when you look at our statement that has been the investor presentation, you will see a significant reduction in the receivable number.

46:24 Right? So I think EPC or non EPC working capital cycle is is what it is. It is not negatively impacted by EPC. Ajay? Yep. That's very true. As regarding BEST, we are currently in a state where we are discussing with our various potential partners. We already had few rounds. Some of them are quite, you know Correct. Encouraging. And I think that in the next couple of months, we should be able to close those partnership and first cut arrangements. Our target is that FY '31, we want to come with 3.1 gigawatts, and we are working in that direction. So, basically, we are looking at tying up with with some partners and some meetings, as I mentioned, already happened. So it will take time, but we want to do it right because, again, in this sector, if you don't get it right, you you end up not creating value accretive, and we want to do that. Because for us, the core of the whole strategy is that our Ali solutions is to enable us to optimize the wind sites in the DevCo model, and at the same time, solve the customer's pinpoint where he's looking at a complete RE end to end versus pure win. And, therefore, we are doing best and then also solar and hybrid.

47:46 What we have also done is hybrid controllers through our central r and d. A few customers have already signed up with us for pilot orders. So I think that's something we are already progressing ahead of time. Sure, sir. Thank you so much for the insights. Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address all the questions from the participant, we request you to kindly limit your question to two question per participant. If you have a follow-up question, you may rejoin the queue. Our next question comes from the line of Abhishek from. Please go ahead. Yeah. Hi. So two questions. First, can you tell us a little bit about the pricing difference versus the global WTT market? Because, you know, you're trying to go into Australia and Europe and and all these places. What kind of competition are you facing from the local players, from the Chinese?

48:43 So so that's my first question. So, Abhishek, when we are looking at the international market, we are... When we talk to our customers there, it's not just Chinese. It's basically you... In every country, have two or three big players. Suzlon has been there at some point or the other in the past. So they are looking at as a good alternative to those two or three. Some of them are already, you know, using Suzlon turbine, which is supplied long back. Some of them already have Suzlon fleet, which is being managed by our international operations and maintenance teams. So it's... I think we are we are also picking up our markets where, for example, smaller turbines, two megawatt series for repowering is something in order we believe we should be able to procure from Europe and Australia. So here, we don't compete with Chinese or we don't compete with the, you know, on price alone. We purely compete on the product and on the delivery.

49:45 And finally, I think it will be all coming out of India, and we should be pricing at par with the local players, give or take, you know, something which will be done as part of the marketing strategy. But we're not really looking at, you know, competing on price. We are purely looking at competing on total value add, the energy. Got it. It. It. And and the second question is that, you know, if I look at the local market, then utility scale ordering has come off quite significantly from now 50 gigawatt almost two years back. And there has also been some minor depreciation. So how has pricing moved in the domestic market? Has there been some pressure over there? Wind is traction. So there is a good traction Realization is okay.

50:35 Yeah. So I'm saying there's a good traction. Realization has gone up from five point... So sorry. From 5.2 to 6.2. But if we exclude EPC and just talk about WTG, then then how is that coming along? Sorry. Yeah. Go ahead, please. So when we look at the current bids in the market, you know, they're almost five gigawatt of bids in the market right now as I speak to you. Government's ambition is also to take it to a 10 gigawatt market by FY thirty. And on top, another five gigawatt, say, 15 gigawatt by FY 3435. That's what we are seeing in in the industry. So we are finding very good traction on wind. With the DevCo led model, we want to solve the challenge of your long lead time for wind assets to be put in place.

51:26 So I think the question is not about the demand. I think the question is execution. Since in the evening hours, wind is the only solution in the space. So I think that... That's where the the opportunity at the same time challenge lies. I don't know if I've answered your question, Abhishek. Yeah. No. I was just asking about, you know, the the pricing movement in the domestic market. And is there... Has there been any pressure because of INR More or less same. More or less same. I mean, yeah, your INR depreciation has happened. For example, at the same time, as we, you know, ramp up our volumes, for example, our nine... Our our three megawatt series, we already done nine gigawatt of orders. So that also gives you alternate suppliers. You also develop your ecosystems of, you know, supplier databases, and you keep optimizing your cost. So I think it's constant movement on cost optimization, volume and it's end of the day volume gain.

52:31 As you ramp up volumes, you also bring your unit cost down. Thank you. Next question comes from the line of with FN Capital Private Limited. Good evening, everyone. Thanks for the opportunity. Sir, my question was regarding Suzlon Energy Limited presentation in which you mentioned We cannot hear you. This time, can you can you can you be more audible, please?

53:17 We cannot hear you properly. Sorry. Is it audible now? Still not very clear. Kindly kindly speak louder or... I don't know. Your connectivity is pretty weak. We are not able to hear you. Sir, is it audible now? Yeah. Please try now. We'll we'll we'll see. My question was regarding the investor presentation in which you mentioned the renewable energy sales of 10 gigawatt, which is for the current amount. So sir, I was asking that your current capacity is 4.5 gigawatts. So how would you achieve that 10 gigawatt sales? Even if you consider a capacity expansion, won't it take some time to properly ramp up the additional capacity?

54:09 Very, very, very good question, Nitin. I'm glad you asked it. Presentation for Investor Day was for FY '31, which is five years from now. And we said we'll do 10 gigawatt sales of RE, which would include wind as well as solar and best. We also mentioned that it it... You can take a $75.25 breakup. So we are looking at 7,500 wind, and we are five years from now with capacity is already 4,500. We are making investments in new plants. As we migrate to higher turbines, the same plants will start making from three to five and then onwards. So I think... And this question is also asked by somebody else at the current current capacity.

54:54 If you start making, you know, different turbines, translates to only 7,500. And we have enough time for, you know, transition towards our FY '31 ambition. And right now, we are focusing on FY '27 and '28. And I think with every passing year, we will keep updating our FY '31 forecast, which we had made only two months back. However, let's try... Clarified your... Yeah. You. Yeah. Thank you, sir. Our next question comes from the line of Nikhil Toptani with Kizuka. Our first question is, like you said that our 10% to 20% deliveries were deferred to subsequent grades. So can we assume that in Q2, those deliveries will happen?

55:54 Nishil, to just quickly answer your question, I think we have to look at it from a H1, H2 perspective. Like I answered one of the previous questions, we are roughly about 35, 40 in H1 and H2 is typically about, let's say, 60%, 65%. I think that trend continues, Nikhil. Okay, sir. And so my second question is beyond the lines of contribution margin. Did I... With the line of I didn't get the question. Sir, I wanted to ask the second question on lines of contribution margin. The contribution margin came down because of EBITDA mix going up. And let's assume that we have a 50% mix of the EPC business and 50% of the Brent power deliveries.

56:43 So what are the steady state margin that we are looking at? The way to look at it is not EPC versus non EPC. The way to look at it is the RE solutions business and the RE AMS business. We've said this in the past, the AMS business typically has higher margins because of the service nature of the business. As, let's say, the volumes of the sales on the WTG ramps up, the mix changes, which leads to a slightly lower margin. I think that is the way to look at not looking at it from an EPC, non EPC perspective. Thank you. You. Ladies and gentlemen, that was the last question for today.

57:30 I now hand the conference over to the management for the closing remarks. Thank you, and over to you, sir. Thank you very much, everyone, for participating on Suzlon Energy's Q1 FY 'twenty seven call. We hope to have answered most of your questions. If not, please do connect with our Investor Relations team, and we will be happy to answer the questions that you have in for information in the public domain. Thank you very much. Bye bye. Thank you so much, sir. Ladies and gentlemen, on behalf of Suzlon Energy Limited, that concludes today's conference. Thank you for joining us, and you may now disconnect your line.