GK Energy Limited — Q2 FY26 earnings call

Thanks. Basically, is not because of that. It is about the mix of the 3, 5 and 7.5 HP. So, the little bit volume of 3 HP has been increased. So, 3 HP have the less price, 5 HP is more price and 7.5 HP is more price, right. So, when we project, we talk on the average, and when we complete the project, that time we get to know exactly how much 5 HP we have, how much 3 and how much 7.5. So, it is a conservative number per pump we arrive for the calculation.

Clarifies that the perceived decline in realization per pump is due to product mix shift towards lower HP pumps, not pricing pressure, which is crucial for margin outlook.

Asked by Aditya Vora

See, improvement, what we are talking about the volume, improvement is all about how the expertise has been involved by the complete team. So, it is a team effort to bring the overall organization to upside. So, volume has given the growth and when we have comparison, we are able to achieve the more numbers, and this is a market-mode business, we never get the direct allocation, so it is a farmer side, basically, it is a D2C kind of the business. So, the volume has been increased into the same area again and again. So, our overall cost of the operation goes down and the margin is going up, and there is the level what we already came with whatever the best we can bring into the segment and supply chain control is another area where we have taken the dominance.

Explains the key factors behind the significant margin improvement, attributing it to volume growth, operational efficiency, and supply chain control in a D2C model, assuring investors of sustainability.

Asked by Tanmay Jhaveri

See, if I talk about the receivable, definitely, as I have already given the input that we are going to have the positivity on that. In a layman language, if I talk about, because of the Quarter 3 business is expected to be higher than the Quarter 2, in totality, you would see that yes, net debt has been increased because of the higher volume.

Addresses concerns about rising debt levels, linking it to increased business volume and expected normalization of receivables, providing context for the company's capital structure.

Asked by Aditya Vora

See, number one thing, we are the asset light company. Number two, we are pure play EPC player. So, our core and main business is to do the EPC. It is not to do the manufacturing anything. Number three, on the profit side, see, whenever I get the order and my income, so my sales price goes down, I go back and negotiate with my vendor, see, this sales price is this, now, we sit, we understand and we go ahead. So, I do not get that pressure of the margin going down, that pressure gets transferred in the whole ecosystem. So, if I am a manufacturer, then everything comes on my head. When I am not a manufacturer, I am getting manufacturing sourcing done, then it gets transferred. In bad time, asset light model... bad time in the sense, less margin time I would say. Asset light model, make sure the margin remain intact.

Highlights the company's competitive advantage through its asset-light EPC model, which allows for better margin protection and flexibility compared to manufacturing-heavy peers.

Asked by Achuth

See, initially it was, but because the demand is so high and the farmer also needed because he lost his crops, right, so, he needs the water, and for the water pumping, we are giving the solution. So, we are trying to help out them as much as farmer we can by doing the fast execution. So, we would like to cover up whatever the time has been lapsed due to the monsoon. But yes, definitely, initial few days has been lost, again, the monsoon was hitting our door again.

Acknowledges initial delays due to monsoon but indicates strong demand and proactive measures to mitigate impact, suggesting resilience in execution despite weather challenges.

Asked by Amit Mehta

See, opportunity size is officially yet to be announced. But if you very briefly see, the success of the PM-KUSUM has been demonstrated in the (ISA), International Solar Alliance, very openly by the government of India and it has given the suggestive direction to the other peer countries to implement the solar Agri-pump. So, it shows very much positive belief of the segment from the government side. So, we are expecting a very good number and it is not less than 3x of the last PM-KUSUM what we have, this is what the industry believe I am having it.

Provides a strong directional indication of the significant growth potential from PM-KUSUM 2.0, with industry expectations of 3x the previous scheme, offering long-term visibility.

Asked by Aditya Vora

Okay. So, the question is very good for the whole industry, not for the GK Energy. My answer may give the answer to many of the industry players as well as many of the S&A as well. See, why Maharashtra is leading, there is a very simplified answer. It is a win-win-win situation. The state discoms are reducing their huge losses. State has to place the upfront investment to place the infrastructure for providing the agriculture connection, as well as we have some kind of the problems for the weighing of the electricity bill, load shedding, irregular power supply. So, these all are so many questions. Considering the time, I will try to be very limited in answering my question. But I would say that it is very much important for the discom to understand because they are recovering their huge losses. So, discom want to become profitable. They are giving the power at very low cost to the farmer where if the same power they give to the residential, commercial, institutional, they can make more money. So, they want to do it. Farmer wants because he want the assurance source of the water over the year and assurance source of the power supply, that is why they are doing it. Plus, the central government is supporting for our national commitment towards the CO2. Plus, major thing I would say that we are bringing the food security because there is a fertile land which is available, is not electrified. So, this pump can go with a very fast pace, like in Maharashtra we are going around 3 lakh, 4 lakh pumps a year, whereas, the DCL can give only 1 lakh new connection. So, bringing the prosperity into the states, bringing the carbon neutrality into the state, bringing the food security, these are the add-on I think I would say because I know we are from the commercial mindset discussion this right now we have. But practically, it is a all win plus, the RPO obligation also there is obligatory, so, MERC has already given them clarification that, yes, they can use the solar agriculture pump installed capacity under the RPO. So, distributions are having the 100% win from the day-one. Plus, let us assume if they are going to have 1 lakh new connection, so they could have to employ around 300 to 500 new employees, right, so, their cost and everything. So, this all economics has been understood by the state discom. That is why apart from the PM-KUSUM, they came up with their own scheme saying that, okay, if PM-KUSUM has the limitation to give 5.5 lakh pump to the Maharashtra, we will bring our own scheme and they have brought their own scheme. And still, I would say in one and two years, you can see the books of the state distribution company has been improvised because of the PM-KUSUM. Recently, the distribution companies annual conference has been held in Mumbai. If someone attended, you would have got the glimpse from there how much success and what are the deep detail that can be shared with the distribution company only. The same thing will get repeated in the other states. States like we have the mindset to see someone succeed, then we will follow. So, the leadership thing has been taken by the Maharashtra. Now, it is going to be following the other states. So, now coming to the GK Energy, how GK Energy is going to get the business out of it, okay? So, we have practically got expanded into the state wherever we know that the small marginal landholders are there, the number is higher, these states are typically UP, MP, Rajasthan after Maharashtra I would say. So, we have created our presence there.

Provides a comprehensive explanation of the favorable ecosystem in Maharashtra for solar pump adoption, highlighting the 'win-win' for various stakeholders and indicating a model that other states are likely to emulate, which is key for the company's expansion strategy.

Asked by Jenna