The outstanding order book of Transformers & Rectifiers (India) Ltd crossed the Rs.2,000-crore mark, as of July 31, 2023.
According to an investor presentation discussing the company’s performance during the first quarter (Q1: April to June) of FY24, the company’s order book as of July 31, 2023, stood at Rs.2,149 crore.
During Q1 of FY24, the company’s order inflow was around Rs.377 crore. Besides, during July 2023 (that falls in Q2 of FY24), the company received a major order, valued at around Rs.134 crore, from PGCIL.
According to TRIL’s senior management addressing queries at a recent investor conference, out of the total current order book (of Rs.2,149 crore), around Rs.1,400 crore is expected to be delivered in the remaining months of FY24. Besides, most of the order book – around 95 per cent – represents domestic orders.
Physical sales
In Q1 of FY24, TRIL sold 1,028 MVA of transformers (in the “up to 220kV” class) as against 773 MVA in Q1 of FY23. However, in the “above 220kV” category, sales declined significantly to 1,080 MVA in Q1 of FY24 from 4,682 MVA in the same quarter of FY23.
This resulted in a corresponding year-on-year decline of 48 per cent in the company’s FY24Q1 revenues.
The investor presentation observed the following as reasons for the decline in physical sales and revenues in Q1 of FY24:
- There was a significant built up of inventory; materials were ready for dispatch. However, delivery got delayed due to non-receipt of dispatch instruction from customers. The company was therefore unable to invoice those orders.
- In few instances, orders could not be dispatched and invoiced on account of delay in inspection from the customer’s side.
- Some orders were deliberately slowed down by TRIL as they related to cases of delayed payments by the customer.
- In Q1 of FY24, TRIL did not receive any amount from GETCO, increasing its outstanding receivables from GETCO to Rs.183 crore. This had a significant adverse impact. (See “The GETCO Issue” ahead)
Order pipeline and outlook
TRIL expects an uptick in order inflow in the remaining period of FY24, following a series of factors. The company expects favourable outcome from 2-3 export tenders in which it has participated. TRIL has also bid for domestic tenders valued at over Rs.3,700 crore in Q1 of FY24, the results of which will be finalized in the coming months. TRIL is hopeful of doing well on the exports front and has envisaged major buying from US, European countries, as well as Ukraine. TRIL also sees itself well placed in supplying transformers used for renewable energy evacuation and railway traction.
Also read: TRIL Receives New Orders Worth Over Rs.140 Crore
The GETCO issue
On July 13, 2023, Gujarat Energy Transmission Corporation Ltd (GETCO) issued a “Stop Deal Notice” (not amounting to blacklisting) to TRIL intimating that GETCO has decided to stop dealing with TRIL for a period of three years on grounds that the company had allegedly submitted forged Material Dispatched Clearance Certificate (MDCC) relating to 20 transformers supplied by TRIL under an ongoing contract for supply of 29 transformers and 1 reactor to GETCO.
As per the purchase policy of GETCO’s parent company Gujarat Urja Vikas Nigam Ltd (GUVNL), if a stop-deal order is issued to any supplier, the same will be applicable to new business opportunities or where the tender is not awarded. GUVNL’s policy clearly states that such an order does not have any impact on existing contract or contract which is awarded to supplier and delivery has started under the same, nor will it have any impact on outstanding receivables.
Now, payment from GETCO has been delayed because the transformers that are said to be supplied under the wrong documents are to be re-tested. The re-test of eight transformers has been done successfully and the same has been dispatched under the fresh delivery Instruction (DI) given by GETCO. The balance transformers are already commissioned and are in operational in good condition. TRIL expects the payment process to start by end of August 2023 or early September 2023.
TRIL is representing its case to GETCO management to reconsider the stop-deal order and revoke the same. The TRIL management is hopeful of a favourable outcome.
It may be noted that in TRIL’s current order book of Rs.2,149 crore, as of July 31, 2023, the share of GETCO is around Rs.92 crore, or less than 5 per cent.
