Good afternoon, everyone. On behalf of Asian Market Securities, we welcome you all to the Q3 FY26 earnings conference call of Techno Electric & Engineering Company Limited.

We have with us today Mr. P.P.

Gupta, Chairman and Managing Director, and Mr. Ankit Saraiya, Director, and Shivani Chandok, VP Strategic Initiatives and Investor Relationship.

I request Gupta ji to take us through overview of company quarterly results and then begin with the Q&A section. Over to you, sir.

Thank you, Suraj. Very good afternoon to all of you, and thank you for dialing in today.

I appreciate taking the time to join us as we discuss the financial results for the quarter ended December 31, 2025. Before we begin, I would like to make the standard safe harbor statement.

Some of the remarks we make today may contain forward-looking statements, which should be viewed in context of the risks and challenges inherent in our industry or sector. Firstly, I would like to start today's call by setting a broader agenda or context, which is new Techno Electric.

For those of you who have tracked Techno Electric over years, you know us well. Us as a disciplined EPC player, a company with a legacy of 40 to 45 years in power sector, a zero-debt balance sheet, and a dominant share in India's power grid both in generation and transmission, and of course as a participant in distribution reforms post Electricity Act.

Us as the team that built over 50% of more of India's National Grid substations and maybe more than 60% in 400 and above kV category. Us as a company that has never reported a net loss for over maybe 30 years, and we have survived and thrived through multiple commodity cycles, COVID period, where many of our peers have faltered.

Today, I am not here to talk about Techno Electric conventional business, but I am here to introduce you to new Techno Electric. We are currently in the midst of a fundamental transformation.

We are pivoting from being a pure-play EPC into power sector and now transforming to a digital infrastructure platform. This is not just a change in branding, but it's a change in our DNA.

We are leveraging our deep expertise in power sector, which is, after all, the main raw material or input of the digital age to build high-value assets in data centers and smart metering. Our vision is simple: to bridge the gap between traditional power infrastructure and the new digital economy.

We are using technology not just to build, but to own and operate assets that generate long-term annuity-like cash flows. The macro landscape, a tale of two super cycles: Why make this pivot now?

The answer lies in convergence of two massive super cycles currently reshaping the Indian economy. First, the power transmission super cycle: India's power landscape is shifting dramatically.

New Central Electricity Authority has revised the financial year '27 peak demand projection upward to over 277 GW. To meet the national goal of 500 GW of renewable energy by 2030, the country requires a staggering investment of ₹2.5 lakh crore in national transmission infrastructure.

The government is backing this up with unprecedented fiscal support. The union budget recently announced a massive ₹2.99 lakh crore capital outlay for the power sector, a staggering 39% increase over last year.

This includes streamlined right-of-way processes and strong incentives for high-voltage interstate intrastate strengthening schemes also. This is our home turf.

Our historical dominance in EHV substations and particularly in 400 and 765 kV, STATCOM solutions, GIS and AIS solutions and technologies positions us as a primary beneficiaries of these spendings. Second super cycle is of the data center explosion: Simultaneously, India is witnessing a digital explosion.

According to industry reports from CBRE and JLL, operational data center capacity has already crossed 1.2 GW with utilization rates hovering around 80%. The demand is shifting rapidly from basic storage to high-density AI-led computing.

In the budget 20 2026, magically has introduced a tax holiday on qualifying foreign cloud income until 2047, which now has been clarified to be available for domestic players as well, where global workloads are served from India-based data centers via Indian reseller structures. This materially reduces permanent establishment risk for hyperscalers and is expected to accelerate the shift of long-term compute to India, expanding demand for Indian-owned platforms like ours.

Techno Electric sits exactly at the intersection of these two cycles. You cannot have AI without power; you cannot have a stable grid without digital intelligence.

Financial performance, the report card: Let's translate this strategy into numbers. I am proud to report that Q3 financial year '26 has been a period of resilience, growth, and operational normalization, and our year-to-date numbers are best in our history so far.

I am pleased to share that in the 9 months ending December 2025, we have already delivered a revenue of ₹2,200 crore, which is nearly equivalent to the last year's top line. This brings us very close to a full-year revenue of '25 revenue, reflecting the strong momentum in our business and the consistent execution by our teams.

We have achieved a robust 26% year-on-year growth in revenue, clocking ₹857 crore for the quarter. This validates the hasty execution effort we had anticipated.

More importantly, look at our profitability. The Q4, in addition, will be a growth over the last year, which will be, as is always the best among all the key quarters of a year.

Our profit after tax grew by an impressive 45% to ₹151 crore. The fact that profit growth is outpacing revenue growth determines significant operating leverage and productivity benefits in our model.

Consequently, our EPS for the quarter stands at ₹13, up 45% from ₹9 last year. Yeah.

Ma'am, would you like to take up now?

Thank you, sir. Looking at our 9 months performance, our revenue stands at ₹2,209 crores, which is up in 39% from last year.

Our core EBITDA has grown 40% to ₹315 crores, our core PAT has surged 49% to ₹373 crores, and our EPS for the 9-month period stands at 34.3 34.3. As you'll notice that our core EBITDA margin normalized to 14.14% this quarter, I want to address this directly.

This is not a slip, but it's a systematic upgrade. During the quarter, while in the process of digitization, we have rolled out our EBS connect platform to institutionalize data accuracy across our projects.

Our initial operating expenditure associated with this deployment led to a marginal decline in EBITDA margin. However, this strategic investment enables us to capture site-level variables with 100% fidelity, elevating reporting blind spots typical in EPC operations and strengthening governance to manage our 10,000-plus crores of order book going forward.

Our financial strength lies in the cash and liquid investments, which stand at close to ₹1,925 crores. This liquidity is our strategic edge, as it provides us with a flexibility to fund our investment plan in digital infrastructure without diluting our equity or taking high-cost debt.

Ma'am, let me take over now.

Yes, sir.

Coming to strategic pillars now, the data center growth engine, which you all know. Now let's deep dive into our growth engine, starting with data centers.

This is where the true reputing story begins. We are not just building shells; we are building AI-ready high-density ecosystems.

Our strategy is a dual-prolonged, hyperscalers plus edge. Our first hyperscale projects in Chennai, the flagship facility with a total planned capacity of 36 MW continues to be a key milestone in our growth journey.

I am pleased to share that the phase one with a with 6 MW capacity has been fully operational, operationally ready since September '25. This facility is delivering an industry-leading PUE of 1.3 and better, reflecting our strong focus on operational efficiency and sustainability.

Based on the current demand visibility and recent budget announcements supporting digital infrastructure, our discussions with both global and domestic cloud operators have accelerated meaningfully. We expect phase one to be fully utilized by the first half of the financial year '27.

With increasing interest from hyperscalers, we are optimistic about commenting new strategic business relationships during financial year '27. In line with this demand momentum, we are initiating construction of the next phase at Chennai in financial year in the coming financial year.

Beyond Chennai, we are moving fast. In Noida, construction is progressing at full pace.

We expect the first 500 kW or 0.5 MW to become operational by March this year, followed by an additional 5 MW getting ready by March '27. In Kolkata, we have commenced construction of a 16 MW facility spread across a 4-acre plot within a prime data center cluster called Silicon Valley.

Phase one commissioning is targeted during 2027 late late 2027. Given we are power engineers, we use our in-house EPC expertise to build these centers in shortest time with significant cost savings and faster time to adapt markets.

The second, the edge network: This is our unique differentiator. We have a 20-year revenue-sharing partnership with RailTel to deploy 100-plus data centers, edge data centers across India.

The Gurugram facility is already live and fully occupied. Mumbai goes live by end of this month and will be occupied before close of this year.

The economics here are compelling. RailTel utilizes about 60% of the capacity, we monetize the rest.

Here is the key metric: per meg revenue in these edge facilities is better and we are selling managed cloud services, not just space. We have already onboarded our first cloud customer and the response is extremely encouraging.

While financial '26-year revenue will be very modest due to initial migration timelines, we are at an inflection point. We are working hard to ensure that in financial '27, we must achieve a ₹100 crore-plus revenue as a top line.

Look at the quality of that. The revenue These revenues comes with 50% to 60% EBITDA margins, nearly 4x of our EPC margins.

This is the quality of earnings shift we are driving. The next pillar is smart metering and annuity income.

Our second digital pillar is smart meter, AMI. This segment transformed us from a contractor to a service provider.

We hold a massive order book of 2.24 million meters and out of valued at ₹2,612 crores under the RDSS scheme having already deployed 2.5 lakh meters under PM-DevINE scheme. As of December, we have executed approximately 50% of this order book, and we are targeting the completion of the Indore and Ranchi Indore facility by March end and Ranchi projects by June '26.

The Kashmir and Tripura projects will be completed by December '26. However, I want to highlight a a strategic shift here.

We are seeing margin pressures in some new tenders in this space as of now. We are keenly watching them, and we have adopted a profit-over-volume strategy, as usual.

We are becoming selective. We are we will not be chasing every opportunity, but the right ones to continue to be giving a stronger bottom line.

The long-term value here is a annuity model. Once installed, these projects shift to an O&M phase providing steady, predictable cash flows that will balance the lumpiness of our traditional EPC business.

The conventional business and our cash cow as of today is the EPC in power sector. While we reach for the digital sky, our feet are firmly planted on our EPC bedrock.

This business generates the cash that funds our transformation. As of December 31, 2025, our order book stands at ₹10,200 crores.

Between April '25 and February '26, we secured a order book of roughly about ₹3,500 crores in new confirmed orders, and we are additionally placed L1 in tenders worth another ₹750 crores. This positions us well to achieve our target of ₹3,000 crore in new orders during the current financial year.

Our fundamentals remain strong. We are not a commodity player.

We focus on complex, high-altitude, high-voltage projects, challenging opportunities in EHV segments of 765 or 400 kV categories. We avoid low-margin transmission line businesses.

The technical entry barriers allows us to consistently deliver EBITDA margin of 13% to 15%, while industry peers struggle at single digits. We are acutely aware that growth cannot come at the expense of stability.

We have identified key risks and have active migration mitigation strategies in place. Client concentration: Historically, we had top two clients, but now we have more than five five of them, and we are also actively diluting this by scaling up our data center and smart metering verticals, diversifying our revenue base.

Large-scale digital projects face global supply constraints. Our our mitigation is our legacy in this space.

We have 40 years of relationships with global OEMs like Schneider, Vertiv, GE, Siemens. This gives us a supply priority over new entrants.

In data center, technology moves fast. That's why our new designs are Nvidia GB200 certified and built for high-density cooling from day one.

We are not retrofitting old designs. We are building for the future.

What is how I'm talking of future outlook? Where are we heading?

We For '26, my guidance will continue to be on revenue of ₹3,300 to ₹3,400 crores at an EPS of nearly ₹50, around ₹50. In In brief, I would like to say that Techno Electric is at the most exciting juncture in its four-decade history.

We have the technical expertise, having built more than 50% of India's grid. We have financial muscle with zero debt and ₹2,600 in cash at the console levels.

We have the digital strategy spanning data centers, cloud, and smart meters. We have the market tailwind fueled by budget '26, which have made data centers tax-free, and the power super cycle.

We are not just observing the digital revolution; we are building the infrastructure that powers it. With this, I open the floor for any more clarifications.

Yeah. Good afternoon, sir, and thanks for the opportunity.

My first question is, sir, what kind of revenue growth we expect in FY27 given the current order book? Are we facing any execution challenges which can lead to some kind of downward revision in our EPS guidance of ₹75 in FY27?

As of now, we are not anticipating any challenges. Then mostly every opportunity becomes a challenge by virtue of delayed availability of land parcels from the asset owners.

Other than that, we generally don't see any challenge likely.

Understood, sir. We are maintaining the guidance of 75 bucks in FY27.

Is that correct, sir?

Absolute.

My second question, sir, the order inflow has been subdued in the last 9 months compared to what we did in FY24 and FY25. Can you just talk about the order prospect in transmission for FY27?

How do you think about the FY27 in terms of the order inflow? Mohit,

this is a little double-edged question to my mind. There is a ample opportunities in the market, but we are becoming more choosy till we build up our ability to deliver more in the sector.

We are a man-based industry. You can see in 3 years what we used to deliver in a year has become a quarterly output.

That is the kind of growth we have seen in last 3 years. Sustaining this level of growth often can be prejudicial at times.

We believe in discipline and continuity of performance. We would like to limit our order intake and learn to say no to many orders unless they are juicy and bottom-line accretive.

There's no dearth of business in this marketplace given the business profile. We will not like to book more than ₹3,000 to ₹3,500 crores going forward until such time my top line grows to ₹5,000 crore and beyond.

Understood. My last question, sir, how much you invested in the smart meter and TBCB till date?

In smart meters, we have already invested about ₹1,000 cr. You can take.

In TBCB, our investment is about ₹500 cr.

Understood, sir. Thank you and all the best, sir.

Thank you.

[unclear]

Sorry. Now you won't be get any disturbance.

Sir, it is a really, I can say, fantastic result so far. Sir, how much debtors outstanding since long in our books like Bengal Energy Limited and this Afghanistan projects?

How can we say how much is pending?

They are very little in amount. Bengal Energy is a very legacy issue of where they did not pay our retention money of ₹15 cr only.

Arbitration is going on. I think any day we'll get the award.

In Afghanistan, it is much better, much advanced now. Our total outstandings of $8 million-plus have been certified by DABS, and forwarded to US for payment.

We trust in Q1 we should get this money.

Okay. Sir, please tell some detail commentary about data center.

How our Chennai is working? How is the top line and bottom line of Chennai?

It's a bit early to talk, Mr. Naredi.

It is still work in progress, if you ask me. Demands more hard work.

I think this market of data centers is very different than power sector. I think we'll be more in a position to speak on it by September '26.

September '26, it will be fully gearing up, right?

We'll be have a lot more clarity to say clearly that this is how it will plan out. I am very sure about one thing, if you ask me, by 28-29, digital infra will become the face of the company.

It will be other way around. Yeah.

Okay. Sir, some data center we are planning with RailTel also?

Absolutely. Noida is with RailTel.

Edge data centers are all with RailTel.

Okay. Thank you.

All the best, sir.

Thank you for the opportunity. My question is regarding the data center segment.

How much capex are we planning for the next year for Chennai, Kolkata, and Noida, if you can give a brief, phase-wise?

Our planning is around ₹500 to ₹600 cr in data centers in 26-27.

Can you give a brief how much in Chennai, in Kolkata, and Noida in phase one and phase two? Okay.

As far Chennai is concerned is a part of the audited accounts in the March, and you will see we have spent by now about ₹550 cr in Chennai and maybe another ₹50 cr more if required to build to some hyperscalers requirements. Additionally, I'm giving these budgets for 26-27, April to March '27.

That will be another about ₹600 cr in Noida and Calcutta and also maybe three to four edge data centers.

Okay. How are we planning to depreciate the data center?

What is our policy regarding that?

There's no policy as of now. We like to hold on it and build on it, as I've already stated in my submissions.

Okay. How is the customer onboarding going right now in Chennai?

Have we acquired any big player?

We are in a silent period with some hyperscaler. We cannot announce, but discussions are going on with many more.

If there is a very active interest. I can share that with you.

Okay. My last question is how are we seizing the opportunity if the Google has announced that they are setting up a data center, how are we seeing our pie of share?

Can you repeat your question?

How are we looking at the opportunity of the data center segment in which the Google has announced $1 billion investment in Visakhapatnam? How are we looking at our pie in that?

1 GW.

In Vizag.

We won't be interested in doing any EPC for Google, but if they need any data center as a suit to build, we will be very keen to be partner with them. We are talking to them.

Anyway, they will need a lot of power infra behind it.

Okay. Thank you.

That's all from my side. All the best.

Good afternoon, sir. Thank you for the opportunity.

My first question is regarding in the commentary given guidance often focus on standalone performance. Could you please explain why standalone is preferred metric for tracking business health and whether consolidated number will become more relevant going forward?

My mind, both are relevant, yes. It depends on the investor which one he wants to rely more because console also in-builds the future, whereas standalone is of the very period of the entity as a Holdco as a face of the entity or conventional entity.

Sir. Can you provide Q4 FY 2026 guidance on revenue and PAT separately for standalone as well as consolidated operation?

What are the key assumptions behind the guidance?

I thought I have already shared with you. I said Q4 will be upside over the last year, and our target is to achieve ₹3,400 cr around, and the EPS of ₹50 as a standalone.

Sir. On the other income part, it is a meaningful contributor to overall profitability.

Could you please share a future outlook on how much other income can we take in next quarter or in next year also?

You can take the same amount here year-on-year. It is well-managed treasury with us, very secure.

You can take around ₹150 cr per year.

₹150 cr. Sir.

Thank you.

Yeah. Good afternoon, sir.

I had a question on the data center strategy. Just trying to understand, are we in the future looking to dispose of these assets like we did for the power transmission assets, maybe lease it out?

Otherwise, it's like a big capex-heavy business where we'll probably need to raise money. How are you looking at that strategy?

Can you repeat your question? I think your question is a little confusing.

No, what I meant is once you have your data center ready and leased out, are you looking to sell it how we did for the transmission assets where we get the higher return and then we sell it out to some infrastructure trust or something like that?

Not for next 2-3 years, as of now. We first want to build the scale as a platform.

We may look for investors at the platform levels and not exit the asset like transmission.

Got it. Okay.

What kind of capex are you looking at in the next 3 to 5 years in this segment then?

We have stated our outlook that we are looking for a capex in data centers of no less than ₹5,000 cr by 2030.

Okay. Sir, and previously you had mentioned that the margins would be around 70% to 80%.

This call you said it's around 60%. I don't know if those are comparable or I'm understanding differently.

No, you look, these margins are

Let me answer that. Basically, you see, when we talk about a margin of 70-odd percent, we talk about in a situation where the data center is getting purely leased out or only on a pure lease model.

When we start building services on top of the data center, such as bare-metal services or cloud services, it ends up improving the top line, but obviously, it also impacts the EBITDA. Though the absolute number in EBITDA and top line improves, the margin levels are not the same comparable to a pure-play colocation lease.

Oh, I see. We're not providing racks as such, we're providing additional services?

If you could elaborate on that, that is not something that I

Yes. We are building on additional services.

Today, we target to generate at least 20% to 30% of our revenue out of additional services, while 70% to 80% might come out of pure-play colocation.

Got it. That's good to know.

I think in the beginning of the call during the introduction phase, we also mentioned that we've already onboarded our first customer for bare-metal services, and we have also onboarded our first customer for cloud services.

Got it. How long would it take to operationalize the entire 36 MW in Chennai?

Would it be as and when you get customers, or is it going to be like one-shot kind of an expansion?

It will largely depend on how smoothly and how fast we are able to acquire customers. We will not be expanding speculatively, but given the way industry is evolving and rapidly evolving, I believe that we should be commissioning the entire capacity and maybe more within the next 2.5-3 years.

We might just be required to expand our Chennai project beyond what we initially envisaged.

Okay. We have additional capacity that we can expand to?

Yeah. The project can actually be expanded up to at least 45 MW, whereas we have currently executed somewhere around 34 to 36 as of now.

Okay. Got it.

That's good to know. That's all from my end.

That's why I

Sir, can you provide approximate per megawatt cost for your data centers now?

You can assume around ₹40 cr safely.

Okay. That helps.

Thanks.

Hello. Am I audible?

Yes.

Congratulations for good set of numbers, and thank you for giving the opportunity. Sir, when we see the result in standalone mode and consolidated mode, depreciation is different.

Standalone ₹2 crore and in consolidated ₹9 crore. Please explain this, sir.

It ought to be different here because in standalone is a EPC piece, and we don't own many heavy-value equipments. They are mostly rented out for the purpose of construction.

When you console, the assets deployed or owned by those subsidiaries or SPVs, they have to have a impact of the depreciation of the equipments. Obviously, in a console mode, the depreciation will always be higher and growing more in going forward.

Sir. Sir, the guidance which you have given for ₹50 EPS, that is consolidated mode or standalone mode?

I have given on standalone mode. Console mode will also not be very different.

It will be within plus-minus 5% only.

Yes, that is why ₹7 crore difference is made in PAT also. Okay.

Thank you, sir.

Yeah.

Hello. Am I audible?

Ma'am.

Yeah.

Hi, sir. I'm actually new to the company, some basic questions.

Sir, my first question was on smart meters. In smart meters, we are saying that we have more than ₹2,000 crores of order book where we would be installing more than 2 million meters.

Sir, here how much capex we would be doing per meter, how much revenue we are generating, and what are the EBITDA margins here? That was my first question.

You have more questions, or you are this question only?

No, there are more questions too, but on smart meters, this was the question.

Ma'am, the question is a little tricky. I think you need to see the whole value chain of it.

When the concession is given to us by the customer, it is always on a per-month, per-meter basis with some grant inbuilt into the concession. Now, this is also inclusive of GST also.

It's a bit difficult to compute per se, but whatever concessions we have got with us, you can easily say that our EBITDA margin will be around, you can say, 20%. We are not recognizing in the books again.

That is a difficulty. Because it involves a lot of time discounting, because they happen over 10 years and 94 months.

There are a lot of computations involved in terms of the time value, in terms of the taxes, in terms of the back-to-back arrangements with the people providing their services to us. Sometime they are upfront, and sometime they are also staggered on month-on-month basis.

Different business models are deployed in it. Overall, I can say we are in a good shape in this space.

Like transmission, we'll be exiting on profit only, if we decide to.

It would be difficult to give capex per meter?

No there no difficulty, ma'am, but there can be different modes of computing it, and their numbers can again change.

Okay. Sir, how much capex we would be doing going ahead in this space?

Like we have already done some ₹1,000 crores, you said. Going ahead, we would do more capex in this space, smart meters?

We have to complete our assignment of 2. 24 million meters.

Definitely, our total capex would be around ₹1,500 cr.

Okay. Total.

Yeah.

Yeah. My next question was on the data center.

You said the per megawatt cost is around ₹40 crores. How much revenue can we generate per megawatt?

You can take a revenue if you're doing a pure colocation, you may take a revenue of about I would say ₹8-odd cr. Moment we bring in bare-metal services and cloud services, it is three times.

Okay. Those were the two questions for now.

Yeah. Thank you for answering my questions.

With this the new data center policy, do you think you'll want to expand more into data center against your stated goal of 250 MW by I think 2030?

I think we need to firstly see the impact of the announced policy. It sounds very motivating and very encouraging to the industry and specially global players who were refraining, if at all, because of taxation inequalities.

If it truly makes a difference, we will surely expand beyond what we planned when we entered the industry in '21. As we speak, we are seeing good interest from large-scale data center users, whether it is hyperscalers or neo cloud, into the Indian market, and they're looking at capacities of very, very large size.

It is quite possible that very soon we might have to revise our entire plan. Hope to be so.

Just another question on this Google setting up 1 giga gigawatt in I think Vizag. What sort of services, if at all, you want to do for other customers like that?

Will you be from your gamut of services you'd like to do, which is not, I think some clarity was given by Gupta sir, but I didn't understand what are we planning to play there or what we don't want to play in this space for other customers?

See, we want to remain to participate in this industry as a developer, as a operator, and going forward, as a managed service provider and a network service provider. These are the four products and services that we want to keep providing.

Within that, there are many products and services, but these are the four verticals. That's the reason in our entire discussion, we try to keep EPC out of the content of the discussion itself, because we want to limit to be a developer today.

While having said that, because when large-scale data centers of gigawatt capacity or even half a gigawatt capacity comes up, there is a larger requirement for power infrastructure. If we are playing as a power infrastructure provider, over there we can look at providing our conventional or traditional business services like EPC.

When it comes to data center itself, these are the four buckets I would put it.

In next 2-3 years, what's the mix in terms of business you are anticipating right now in data center and your core business, or maybe including smart meter in the core?

I didn't get your question. Could you repeat?

In what terms?

Okay. In terms of a percentage of revenue or the profitability in 2-3 years, where do you see data center mix like 30%, 40% sort of thing compared to your core services, including smart metering, let's say?

You see, data center balance sheet will look very different than what we have in EPC because profit margins are different. Top lines are quite different.

They are not very heavy on top line, but they give good EBITDA margins. The PAT gets subdued because of depreciation, but it's always positive cash flow.

Therefore, the contribution towards the total balance sheet from data centers might look different at different line items. I would be confident to say that within 2-3 years of time, we should target a top line from data centers of close to around maybe around ₹400-odd crores.

Maybe ₹300 to ₹400 crores.

Can you elaborate on this networking services you spoke about the service for data center? What exactly do you want to do there?

Yeah. We have recently been awarded a license.

We've actually succeeded in getting a license from Department of Telecom to provide network services within the city of Chennai. What it helps us to do is aggregate bandwidth into our data centers and sell that bandwidth to the end customer who's leasing racks or end services within those data centers from us.

This becomes an additional set of revenue for us apart from what traditionally data center brings. It's a good achievement because getting a license is also a procedure.

It requires you to achieve certain qualifications, and we've been able to break through that. We've finally got the license, and we'll be starting generating revenue out of network services, though very, very small, but from this quarter itself.

That will be only for Chennai, or do you think it will be expanded to wherever you're going to operate your data center?

We will expand the license itself. That is under planning.

We are starting with Chennai because that is the commissioned capacity today with us.

How much margins there? Or is this a add-on service you are thinking right now?

We can expect a margin of around 40% to 50% from network services.

Okay. It will be miniscule portion of your data center revenues or if you include, right, overall revenues wise?

It may not be a significant portion, but it will have a significant contribution to EBITDA of the data center.

Sir. Thanks, and all the best.

Thank you.

Good afternoon, sir. Sir, my question is with regards to smart meters.

I just wanted to understand that you said you have done a capex of ₹1,000 crores and there is ₹1,500 capex. There's incremental ₹500 or incremental ₹1,500 crore capex to be done in smart meters?

No. We said total is ₹1,500, and out of that, ₹1,000 is committed already.

That is what we are talking. That will be the number by the may be close of the year also.

Okay. How do we follow the

It is nothing quarter-specific. I must make it clear.

Capex is not on quarter basis.

Right. I understand that.

In terms of accounting, how are we following the accounting? Because as you said you are getting it per-meter basis and then capex, it's not the part of your fixed assets, I assume.

I see from the annual report. How are you following the accounting in terms of revenue, capex, as well as expensing out the entire thing?

There are separate SPVs for each concession and they are doing their own accounting, which becomes part of the console.

No, but the amount you get while installing the smart meter, you show it in your revenue? You are still capitalizing the entire thing?

No,

the cost of deployment becomes part of the revenue for a EPC company. It is capitalized in the SPV per se.

Then SPV generates its own revenue as a grant and on PMPM basis as a leasehold.

That SPV would be depreciating the meter over a period of 10 years, right?

Yeah. Actually, in this case, I don't think depreciation is required.

Basically, it is amortized, you can say.

Okay. Eventually in the consolidated balance sheet, this number should be there, now?

Capitalized capex of ₹1,000 crores or work in progress of ₹1,000 crores either of the two. It should be there in the consolidated balance sheet, right?

It will come. When only they go live, like I said, one concession go live in March, one goes live in June-July, and rest two will happen in December.

You are right. When they go live, it will happen like that.

Till then, it is in deployment mode.

Okay. Revenue will start flowing once it goes live.

Even in the top line on the consolidated basis, there won't be any revenue as of now.

Again, this is the dubious ness in our government policies. Government start using even a say I have to deploy in a given concession half a million meter, but even if I have deployed, say, 50,000 meter, the revenue starts there.

Definitely, the whole scheme is not complete. Those contractual obligations stands.

As a conservative approach is to capitalize them when whole deployment happens and go-live certificate is obtained from the customer. Revenue happens on system acceptance test record, SAT.

Okay. How many are expected to be deployed in March, number of meters?

In March, it should be about 1.4 million.

1.4 million in March. Okay.

Up to March.

Up to March. Total it's 2.5 million, right?

2.

No, 2.24 million.

2.24. Plus

there is a amendment to it. Customers also, seeing the progress, can enhance the requirement by 25%.

That is a part of the contract.

Okay. By '25, we are saying we want to target up to 5 million by 2031 in the previous calls, right?

Just confirming that.

No, no, no. We have never set a target on AMI to be 5 million or so.

We'll continue to scout for good opportunities. If we find it rewarding, we may do 5 million or maybe more.

As of now, the government is more keen to deploy whatever stands ordered, and very few new tenders are happening in this space as of today, because the performance of the industry is not very good. Probably Techno is the best where we have deployed more than 50% of the concessions, and backed by us, others' performance is only ranging from 15% to 25%.

Okay. Thank you so much.

That was helpful.

Yeah. Just a minute, Suresh.

I would like to thank you for your continued trust and partnership and I was really delighted for insight questions being sought by all of you. I am now happy to say that you are welcome to visit us whenever you are this side of the country, either to our Gurgaon office or to Calcutta, and we'll be happy to address any other questions you have for our ongoing work.

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