Ahluwalia Contracts (India) Limited (532811) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Ahluwalia Contracts India Limited Q1 FY '25 Earnings Conference Call hosted by Ambit Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Yash Jain from Ambit Capital. Thank you, and over to you, Mr. Jain.

Thank you,. Good evening, everyone. Welcome to 1Q FY '25 Earnings Conference Call of Ahluwalia Contracts Limited. From the management today, we have Mr. Shobhit Uppal, Deputy Managing Director; and Mr. Satbeer Singh, CFO of the company. I will now hand over the conference to the management team for their opening remarks, after which, we shall open the floor for Q&A. Thanks, and over to you, sir.

Thank you. Thank you so much. Ahluwalia Contracts India Limited construction company has announced financial results for Q1 FY '25. During Q1 FY '25, the company has achieved a turnover of INR 919.35 crores and PAT of INR 30.60 crores in comparison to a turnover of INR 763.61 crores and a PAT of INR 49.73 crores during Q1 FY '24. The turnover of the company has increased by 20.39% during Q1 FY '25 in comparison to Q1 FY '24. EPS of the company for Q1 FY '25 is INR 4.57 as compared to INR 7.42 in Q1 FY '24. During Q1 FY '25, the company's EBITDA margin is 6.58% as compared to 10.83%, and a PAT margin of 3.33% as compared to 6.51% in the corresponding period. Net order book of the company as on 30th June 2024 is INR 13,143 crores to be executed in the next 2.5 to 3 years. Total order improved during FY '25 is till 30th June, INR 2727.93 crores from first July till date INR 2217.61 crores. So total order inflow during FY '25 till date is INR 4945.54 crores. Thank you. We are open for questions.

[Operator Instructions]. The first question is from the line of Mohit Kumar from ICICI Securities.

My question was on this margin in this fiscal quarter of 6.5% if I'm not wrong. Can you just tell us why it was -- why there is such a low margin in this particular quarter? And how do you think the balance here to pan out. If I remember correctly, I think we had guided for 11% margin for F '25.

So Mohit, there are a couple of reasons, three, four reasons for reduced margins. One primarily is reduced turnover in this quarter. We have been impacted first by the elections. Then -- so pretty much May and June have been heavily impacted, reduced manpower on account of election. Then the CSTM project, that for a variety of reasons, the turnover that we had anticipated or planned for, has not happened. We have done a turnover of about INR 30 crores in CSTM in this quarter. That is on account of design finalization from the client or a lot of changes because the design which was which was given from the concept, which was given was not as per the bylaws that had to be totally revamped. And then there were tree cutting issues in the buildings, which were greenfield buildings there. Then June has been a write-off, especially in Mumbai on account of rains, July also now even in the rest of the country. So these are a few reasons. And then our increased staff costs, which is due to the fact that to execute the projects that we have in hand, we've obviously incorporated or taken in more staff. So that has led to an increased staff cost. So these are the reasons. And then there is one -- there is -- there are a couple of write-offs totaling INR 6.20 crores. Where a couple of our clients have been taken to NCLT. So we've had to put in those write-off. So the sum total or aggregate of all these reasons has led to reduced margin. Did I answer your question?

Yes, you did, sir, partly. What do you think about for the entire fiscal year.

So I think I did -- I would remember mentioning last time also that quarter 1 -- and quarter 1 will be impacted by elections, and quarter 2 to some extent by monsoons. H2, something, Q3 and Q4 is something traditionally where the run rate is higher and the margins are also higher. So we still anticipate that we will cross the double-digit margins in the full financial year. Q2 is also expected to be muted because monsoons have played as I said, not only in Mumbai or Maharashtra, but July has been quite muted in other states also.

Understood. Sir, my second question is on the labor issue. Are -- if there is any labor issues because we have heard from various developers that they have labor issues due to elections. Is the labor issues has got over or you didn't face any challenges as far as the labor availability is concerned.

No, no. This is -- so two parts. I will answer this question. Yes, election impacted labor in a big way. As I said, May and June we were virtually working at about 40% labor across pan India basis. This obviously now has improved the situation. But we expect that labor is going to be or labor shortage, but still shortage is going to be a perennial problem. With so many projects having been launched and continuously developers are launching new projects. Infrastructure pace picking up once the new government is formed, labor shortage is here to stay. So we will have to find out where the means to come back this. Collectively, all the constituents of the ecosystem will have to come close -- come together to see how we can mitigate this problem.

The next question is from the line of Sunny Roy, who is an individual investor.

Sir, I'm audible?

Yes, Sunny, you are audible.

Yes. I just wanted to -- the reasons for the high subcontract work charges. I mean at about 40% year-on-year increase against a 20% increase in revenue. So what led to that high subcontracting work charges?

Just a second, Sunny I'll come back to you. So this is, again, primarily part of the subcontracting work. This has two parts. One is subcontract with materials and the other is subcontract, which we gave on labor rate. Pay, for instance, to shuttering contractors or [ bar mining ] contractors or stone contractors, which is labor. So part of this includes the labor also. And due to the reduced turnover, that is why this cost is higher.

Okay. Okay. Okay. So going forward, you expect this to normalize going forward.

As I said, in H2, it will, it will. This will continue to be a little higher in Q2 because as I said, 50% of this quarter has already gone and monsoons have impacted us quite badly. But we expect that this will go down to normal levels in the second part of the financial year.

Okay, sir. And given the labor shortage and labor issues, sir, do you think -- I mean, the way we are bidding aggressively for the projects and all, we should get to the double-digit EBITDA margin going forward, I mean for the future?

We think we will. Based on the order book in hand has also the rates that we have managed to get. We factored in the increased costs and these new projects that we won, say, about INR 4,500 or INR 5,000 crores in this financial year. I think in the Q3 -- in Q3 and Q4, these projects will take off and will contribute to an increased margins.

Okay. Okay. And sir, I mean, how are we -- in the -- what is the thinking view regarding the future bidding for the future projects, I mean, should we aggressively now that we have already bagged 4,000-plus in this financial year sir, of orders. So how are we bidding -- will we bid aggressively or we will be much more conservative?

We are not bidding aggressively. Even in this quarter, we have not bid aggressively.

Next question is from the line of Rohan Shah from Dolat Capital.

Sorry sir, Shravan here. Pardon me.

I also was wondering whether you have a brother who is asking a question on your behalf. So.

Yes. Sir, just to confirm, when we say that the Q2 will also be muted due to monsoon, so can we see the similar kind of a margin? Or it would be close to 8%, 9% kind of a number?

Margin will -- we anticipate the margin will go up. Because as I said, May and June were almost total write-offs on account of elections and rains. So elections are behind us now. Labor has started, the labor position has started going up. So we are -- we anticipate a turnover to grow to tightly.

Yes, sir, is it fine?

Yes, it's fine. So -- and there is -- in this quarter, July has been the write-off, but I think September, CSTM and also the progress should pick up substantially. So there will be an increase but not a substantial increase in the margins. But H2, I think we see a substantive increase.

So in H2, then we should have a 10.5% to 11% kind of a margin. So will that -- will that -- will run to...

10% to 11% in H2.

So then that run rate will continue in FY '26. So for FY '26, how one can look at?

It should. It should because as I -- in an answer to the earlier question. No, we are not bidding aggressively. Our focus, which I mentioned last time, has shifted more to the private sector. There is a greater demand for timely delivery, quality delivery, there are only a handful of contractors in the private sector side. The competition is less. The rates that we are able to get are far better than the government projects. So I'm quite hopeful that this run rate, which we are expecting in H2 will continue to FY '26 also.

Okay. And in terms of the revenue guidance that maintains, so we've maintained the same 20% kind of a number for '25 and [indiscernible].

15%, 15% to 20%.

And for '26 also similar run rate can be maintained?

Yes.

And then in flow, how much more now we are looking at so what's the bid pipeline and -- so INR 4,950-odd crores we have received. So how much more now we can look at?

I think we can look at about INR 2,500 crores to INR 3,500 crores.

Okay. And the pipeline remains the same for INR 5,000 crores, INR 6,000 crores kind of a pipeline?

Yes.

And subjects in size, some balancing number I needed, inventory data, creditors, mobilization advance, unbilled revenue.

Yes, yes. [ Debt ] is INR 811 crores. Retention is INR 327 crores, including noncurrent. Mobilization is about INR 541 crores.

Sorry, sir, mobilization is?

INR 541 crores.

INR 541 crores, okay.

Yes, INR 541 crores.

And unbilled revenue is?

[indiscernible] trade payable, INR 706 crores.

INR 706 crores trade payable, okay.

INR 354 crores.

Sorry, sir INR 354 crores is what?

Inventory.

Inventory, INR 354 crores is inventory, okay.

Unbilled revenue INR 489 crores.

INR 489 crores is unbilled revenue.

Yes.

And gross debt and cash balance?

Gross -- debt that is INR 100 crores.

INR 100 crores. And cash and cash balance.

Cash and cash balance for moment. Cash balance is INR 248 crores and bank balance of INR 456 crores.

The next question is from the line of Vaibhav Shah from JM Financial.

I wanted an update on a few big ticket projects. So for gems and jewelry, when do we expect to start the work.

So it will be started in about 3 months' time.

And what kind of revenue are we targeting in the first year?

In the first, sorry?

In FY '25.

FY '25 we are targeting a revenue of about INR 125 crores to INR 150 crores.

And it should be a material number in FY '26.

Yes.

Okay. And sir, the second project here in for CSMT. So given the muted the first quarter and also there is the first 2 months of second quarter. What would we -- you would targeting for FY '25 and '26 from there?

We are targeting in FY '25, we are targeting between INR 450 crores to INR 500 crores. And in FY '26, we are targeting about INR 1,000 crores.

And sir, you were talking about run rate of around INR 100 crores per month from 3.5. So that is also from FY '26.

Yes. That will be from FY '26. In this -- as I mentioned earlier on in the call, virtually the entire design had to be revamped because the client had hired an international agency to do the concept, and they have not taken into account the local bylaws. So that has been -- that we had to redo it totally which the client has now accepted. And work has just taken off on the ground, but rains have impacted June and July. So, we are, as I said, in H2, the progress would be substantial, almost to the tune of about 50 -- more than INR 50 crores every month. And yes, run rate about INR 100 crores in FY '26.

For this redesigning, does it impact our cost or the margin of the project.

No. We've -- we've tried to optimally design the project, keeping in mind the various parameters or various items that were there in the original design. If at all some specifications are changing for that, the client will pay it as an extra item.

Okay. And sir, in the animal husbandry project, the execution was a bit softer in the first quarter. So earlier, you were targeting to complete it by next year, I mean, first quarter, so now does it get delayed?

Yes. We have now almost 95% of the land. Because in this project, already a university existed. So by and by, they were vacating the old building, which we were dismantling and which we have to dismantle and construct new buildings. So almost 90% area has been handed over to us. So progress there also will pick up now. It's already picked up, but didn't pick up substantially.

Any payment challenges from particular states, given the election?

So yes, there were challenges. But now there is movement in Bihar also. I think funds from the center have also started flowing. So we expect -- with the bathroom project, veterinary project, funding has not been an issue until now also. But we've seen funding issues on their medical colleges and hospitals. Which the feeling on the ground is that maybe in 1 month, 1.5 months' time our stuck payments should start coming in. And there is only about 10% of these jobs left, Chhapra and Nalanda which we should complete in this financial year.

Okay. And sir, lastly, on the Darbhanga and Varanasi Airport, which have won recently, when will the work start for this?

So both the projects, designing is happening, our interaction of our design teams with the AAI has started. And we hope to break ground on both the projects in about 2 months' time.

From the line of Raj Shah from Marcellus Investment Managers.

Sir, my question was on the labor side.

Your voice is muffled.

Is it better now?

It's slightly muffled. But go ahead. I can make out what you're saying.

Sir, my question was regarding the labor shortage problem. As you mentioned, it is a current year problem and is here to stay, so the question is in two parts. So first, in our existing orders, at the time of the delivery we would have expected X cost of labor cost, and now it has been going up, so how do you make up for it? And second, for the new projects, how do you factor in this shortage situation?

Yes, it's a good question. Out of the existing projects, some projects -- labor factor or labor cost is definitely going up, right, has gone up. So that has impacted our margin. Labor shortages also impacted our margin. In the existing jobs that we have in hand as a part of our portfolio, some jobs have escalation even for labor. So which are covering these costs. But some jobs do not have the labor escalation clause. So yes, that is what has impacted our margins. Going forward, we are -- when we are calculating our pricing or doing our pricing and submitting our bids, we, based on the increase that we have seen over the past 1 year, we are extrapolating that and building that into our pricing.

One last question was regarding this, I heard somewhere that large hospital is being redeveloped in Mumbai, and we have been one of the bidders over there. Can you confirm? Sion Hospital in Mumbai.

Yes, we are doing Phase 1. And yes, we have bid for the Phase 2 also.

Okay. And will this be a large contract, sir, in north of INR 1,000 crores.

It is a large contract, yes.

The next question is from the line of Rishi Kothari from PI Square Investments.

And I had a couple of questions. First was, in terms of the target that we are concentrating from public sector to private sector contracts. So how much margin difference does it make to go for a public to private back margin?

How much margin? There is a -- if all goes well, there is a difference of a couple of percentage points. Given today's scenario, where we are seeing increased competition in the government sector, and private sector, the contracts being more complex with high-rise buildings coming into play with limited competition there. This -- as things stand today over the next 1 year, I feel that there should be a couple of percentage point difference.

And we do have the technology and capability to execute a complex contracts in private sector right?

We're already doing it. We've done it in the past. We're doing it now.

And my second question is, I read somewhere in one of the industry reports that we as a company are also involved data center segment. Is this true? Or, and if yes, what exactly are we looking at?

It is true. We are doing data centers. Adani, Google, RBI, some of the larger data centers in the country we're doing. But I mentioned in my last call that this is not a focus area for us.

Okay. So that's not a focus are eventually also.

Not really. It takes a lot of that -- it takes up a lot of bandwidth. We feel that the margins are not commensurate that we focus or develop this segment especially. Having said that, one of -- the one-off or the other data centers we will continue to do if it comes our way, but it's not a focus segment for us.

Okay. Got it. And in terms of the private segment, we around or on the position of bought around 40%, 50% in between. So what's the target of getting the private sector more increase from public sector contracts. So any target that we have...

In the long run, 50-50.

In the long run. 50-50. Okay.

The next question will be from the line of Uttam Kumar Srimal from Axis Securities.

Yes, sir, what is the fixed price contract in our current order book currently.

24%.

24%. okay, sir. And sir, 24 or 26?

2-4. 24.

2-4, okay. And sir, given this order book of INR 13,000 crores, this includes the current INR 4,900 crores projects that we have won, and this is separate from that.

No. So this INR 13,000-odd crores is still 30th of June. So if you were to add these jobs of INR 2,200 crores, which have come after that, our total order book will be about INR 15,500 crores.

INR 15,500 crores. Okay, sir. And sir, anyway currently where you are in terms of bidding and all. Any add-on orders?

No, because the bid which has been done in the over the last couple of months, these are primarily private sector bids.

Okay. And sir, all these biddings have been done in the range of EBITDA margin in the range of 11% to 12% or less than that of new orders that you are bidding for?

Yes. The last 3 months, 3 to 4 months, yes. The EBITDA margins, that is what the target is.

The next question is from Prem Khurana from Anand Rathi.

I have three questions. So the first question was, I mean, when I look at our order backlog today, I mean, we have two very large orders in our order backlog, I mean exceeding INR 2,000 crores each. And would you say there was a conscious decision to kind of try and scale up on an average project size so as to try and consolidate number of sites, and also, I mean, to address this labor issue that you spoke about because it won't be required, going to spread too thin across a number of sites? Or is it I mean these opportunities are available and you went and wait for these as a conscious decision on our part to consolidate the number of sites.

No, it is. It's a consolidated -- sorry, we want to consolidate. We want the average ticket size to go up. And we have -- this has been a conscious decision, and we've been kind of building towards it over the last 4 to 5 years. We've built in in-house capabilities that an EPC company has to have or should have. We have different disciplines where we've developed expertise other than Core & Shell also, and that has led us to being able to qualify for larger jobs, both in the government and the private sector. So yes, it's been a conscious decision.

Sure. In terms of in the risk profile, so how do you differentiate between, let's say, smaller order multiple orders where if one site stops, I mean, you still have three, four sites still continuing and giving you some numbers. So do we tend to build higher contingencies when you get to have these sort of larger sized projects and also because of the fact that I mean, theoretically, at least the competition also should be lower on -- I mean, lower for these sort of larger projects.

So there are a few factors that we focus in when we bid for a job aggressively or otherwise, if you were to track our company's geographical -- growth of our company's geographical footprint, you would see that it's been a bit of an organic growth, planned growth, and we've tried to hedge our risks precisely by doing what you said, having multiple projects in a particular geographical location, right? So that is how in each of the states that we are working in 17 states that we are working in, we have multiple projects and if I were to give you an example of, say, even Haryana or Gurgaon or NCR, within a radius of about 15 to 20 kilometers, we would be doing nearly 20 million square feet. So obviously, the overhead can be spread, the cost can be reduced. So it's a conscious decision, yes. And there are a few steps that we take to bring. Yes.

And any thoughts on distribution to shareholders? I mean we have INR 700 crores plus sort of cash balance on our balance sheet and our operations continue to generate positive OCF, which essentially would mean, I mean, we would keep on generating more funds. I mean, any thoughts on -- I mean do we have any number in mind where the cash balance cross that number you would start distributing. I know I may -- we only start giving out dividends, but the number is still very small.

So yes, as we I explained last time that the company to build up its inherent capabilities is spending money but by way of increased mechanization also we have undertaken a digital transformation exercise, one part of which is implementing SAP along with certain other IT initiatives. So all this will entail an expenditure, we are trying to make the company ready for a quantum jump, right? So, we would continue to be a dividend paying company. We haven't thought beyond that. As distributing funds to the shareholders is concerned.

And, sir, I mean, how much are we planning to spend towards CapEx this year? And how much is already spent in Q1?

CapEx is INR 54 crores.

INR 54 crores.

54.

And how much do we intend to spend over the balance 9 months? How much more are we planning to spend this year, sir, INR 5 crores is what you've already spent, right, in Q1.

We would be spending. In addition to this, we would be spending about INR 120 crores.

Sure. And just on last time in small clarification, we were supposed to receive some money from Emaar towards that settlement in the month of August. So has that money come or it is yet to come.

That date is 31st of August. So I'm not in a position to comment. But yes, it's a signed and filed agreement. So.

Next question will be from the line of Mr. Sunny Roy, who is an individual investor.

I was just seeing your unexecuted order book and the contribution from the hotels is only about 1.5% or INR 195 crores. So is it this a conscious decision, I mean, not to focus on this hotel sector much or it's just like that.

It is because what we tell we're doing, a, the size of the projects that are coming, doesn't excite us. Secondly, they are -- the hoteliers are cannibalizing these projects. So it all comes down to scale. We feel that it takes up a lot of bandwidth. So we are not looking at this segment also prepared early.

Okay. And sir, lastly, given the balance in the residential real estate market, Don't you think this 13.7% in the residential market is -- I mean we can go much higher? Or you want to keep it like around this only less than 15%.

No, no, it will go up. It will cross 20%. As I said, the private sector, the share of the total pie will also go up to about 50%. That's what we are targeting and hoping to maintain an equal balance between private and public. So yes, today, the focus is on residential and commercial. So yes, this will also go up.

The next question is from the line of Ketan Jain from Avendus Spark.

Sir, my question is on working capital. With a big ticket size in terms of order that we are you looking, are you looking at any working capital issues? Or how are you planning for working capital?

No, we are not looking at -- I don't think there's going to be any working capital issues. As I said, we are now focused more on the private sector. So with the demand in RERA coming into play, some of the developers that we are working with blue-chip developers, cash flows don't seem to be issue, and I think all the projects that we've taken on and are bidding for, they would need -- as per RERA, they would have to be handed over in about 3, 3.5 years. So there is a robust demand for these residential units, commercial units. So I don't see a working capital issue, plus the reserves are healthy. So we are focused on not -- sort of it is virtually a zero debt company. Whatever debt is there, a little debt is there. We are focused on reducing it, not increasing it. If that answers your question.

The next question is from the line of Vaibhav Shah from JM Financial.

Sir, you indicated that the CapEx would be around INR 175 crores for the entire year FY '25. So this should further grow in '26, '25 or it may come down given the share.

'26, it will come down.

Any ballpark number of INR 120 crore, INR 130-odd crores?

It's-It should be -- earlier on, I projected about INR 125 crores yearly. So it should be in that ballpark for FY '26.

Okay. And sir, secondly, out of a more advance of around INR 540-odd crores. What would be the interest-bearing portion of it?

54%.

The next question will be from the line of Parikshit Kandpal from HDFC Securities.

And my first question is on this gems and jewelry project. So I just wanted to understand on who's funding this project and is the financial closure achieved in this project?

So this is on the lines of the Bharat Diamond Bourse, BDB project, it's a conglomerate of the gems and jewelry people. I think Vikas is connected on the line. Vikas, would you like to take this question?

Hello, can you hear me?

So my question was on who is funding the just gems and jewelry, because in the past, we have seen, in jewelry, there has been challenges because the project was funded by someone in the real estate shops and other things to the...

No, no, no. So this is an autonomous body under the Ministry of Economic Affairs and the project is funded by a group of Rami jewelers across from India -- in India, basically based out of Gujarat and some of them are from South. And there is some portion of equity with the Government of India also. And the state government is also participating in terms of -- so it's an autonomous, but it has a Board. So there is a Board member from the state, there is a Board member from the center and industries.

So it doesn't involve like the money coming in is not contingent to the sales of the units...

No, no.

Irrespective of that, you will keep getting your payments at clearly.

So it is dependent on the Board, how much Board pay by some things in that.

Okay. Got it. So my second question is on the southern markets, again, which I keep asking every time. So we're not seeing any significant ramp-up in that market in terms of private orders. So what is your thought process right now? Because you did allude that the RERA is now there in place and you're looking to ramp up. So how do you see -- how do we see the pickup happening in the southern markets in terms of new order flow coming in?

We've recently bagged the contract from Birla Realty, it's a company of the Kumar Mangalam Birla table. We have a couple of private bids, which have gone out. I would not name the developers, not like to name them. So we are slowly growing in the southern market. Also, our focus areas are Bangalore, where we have a regional office and Hyderabad.

Because the issue is since I tracked that sector, so what I hear from the entire supply chain or developers that they want someone who will stick around. So in terms of business development, what kind of commitments you're giving more of a long-term presence in South now because you're making a comeback. It used to be there in the past. So how much confident the developed communities that you will stay here for long term?

So that is reflected by the order win that we've got now, Birla. Birla has a significant presence there. They've acquired large chunks of land, and it is one of the few corporatized real estate development company. And we have -- we've obviously, in the private sector, they invite you to bid. So we're bidding for three or four other large players there. We've also bid for a couple of private sector hospital projects, large projects. So -- but from our end, we also don't want to grow indiscriminately. Given our experience there the last time that we were around, we feel that it's better to take a cautious approach. More so when our belly is full, more so when we have a healthy order book.

So a question on the margin. So I mean, every quarter, we talk about double digit and some of the other factors impact us performance this quarter, there was, I think, a one-off plus most of other reasons which you gave. And you also said that new orders are better margins, the competitive intensity is reducing, which is still not reflecting in margins. We used to historically 12% to 13%. We are now high single-digit, and we have been like every quarter, the margins have been very volatile. And even in this year, you said that maybe you'll end up with close to amount double-digit margins and next to 11%. So what gives you confidence that worst is behind and either in terms of pricing, in terms of execution. So how do you think -- I mean when do you think you'll be confident that you can say now we are there and now probably these are the bottom margins?

So our healthy order book, this will start reflecting an increased margin and this is not something I'm saying now. I said I think during the last con call also, that H2 traditionally, both the margins, the turnover, the top line as well as margin is always higher. And I had predicted what, at least everybody has said, elections are going to impact both the productivity and the margins. That is what happened. Monsoons have also impacted our production in the last couple of months. CSTM, I mentioned the reason if you were there on the call earlier.

Yes, yes, yes.

So all this now seems we should in the second half of this financial year, we should have put this behind us. Labor, while the position on the ground is improving, it is always better in H2, but that will continue to be a bit of an issue in terms of -- because there is a skill shortage, right? So -- but now that is something which the entire ecosystem is aware, what the contractors have been saying for the last couple of years, that this is an epidemic waiting to happen now while we struggle with labor on the ground, this is something which the developer or the clients have realized, the government is also beginning to realize. So the ecosystem all the constituents are coming together to try and work together to mitigate this problem by standardizing design by the clients also, especially in the private sector, agreeing to compensate for escalation. So all this will we see yield results going forward, but labor shortage is here to stay. Let me qualify that.

Just the last question. I think you mentioned about some NCLT, you've taken a couple of stance to NCLT. You mentioned about INR 7.2 crores one-off, what does it mean, so 7.2 is the number? .

6.2.

6.2.

6.2, okay. And so what is the nature of this NCLT, any more negative surprises to come in from one-offs, the rest order book or you have provided everything now?

Look, we can't really say what happens is that if -- how does the blue client is taken into NCLT, right? I had mentioned in my last call also that there should not be any more surprises. But this is a surprise. If there are certain clients who we feel are going to pay off. But if one or the other if they're creditors, takes them to court or takes them to NCLT. When we have to make [indiscernible] make a provision in our balance sheet. Some of them in the long run, we still may feel will honor their commitments. But we have to make provisions.

The next question is from the line of Ketan Jain from Avendus Spark.

Sir, just one follow-up question. The Emaar receivables, which we received in FY '25, will it be booked as other income or how it will be recognized? In financial year '24.

[Foreign Language] where will be booking other income. Future inflow. That regarding Emaar, you are asking about? That are all exceptional gains. That has been recognized in there.

Exceptional items. Okay.

In financial '24.

Okay. Already recognized. So there's no other exceptional items to be recognized in FY '25.

Now at present, we are basically that amount is INR 174 crores is reflecting in outstanding.

The next question is from the line of Gaurav Gandhi from [ Clauridial ] Capital Management.

The government's efforts are towards making India a developed country. So there will be a lot of state-of-the-art construction buildings or structures will be on focus to build. How big do you think this opportunity will be because there is a lot of work to be done for modernizing the infrastructure. So can you share your thoughts about this? And I understand that we are taking a major growth approach. But if conditions warrant more growth, are we looking for higher order inflows than currently projected.

So I will not be able to give a specific answer. I'll give you a couple of general replies. Yes, buildings are becoming more complex. Based on our expertise of having delivered large building projects and continuing to deliver projects, we feel we are in a unique position to handle such projects. So like, say, for instance, we have done high-rise buildings in Mumbai. Now you see every other launch in NCR, in Gurgaon, especially is a project which is in excess of 40, 45 storey. So with our experience of having executed these jobs, we are continuing to build on this experience. We are continuing to take on more mechanization. And as I mentioned earlier, the digital tools that are available to us, wherein we can go to the client and offer an entire bouquet of services, we are doing that. So yes, we are in a unique position, and we continue to develop our company to be able to handle more and more complex jobs. Does that make sense? Have I answered your question?

Yes, the second part was if the conditions warrant for more growth, are we looking for higher order inflows than currently projected. I mean we are just -- I mean, more INR 3,000 crore orders you are expecting during the year. So if conditions warrant for more order, let's say, INR 7,000 crores, do we have capacity? Or are we looking for such kind of things then.

At the moment, we are proceeding with a degree of caution, especially keeping in mind that we have a healthy order book. we feel that all the efforts that the various constituents are making of this ecosystem to overcome the labor issue, but it will still take some time. So we are bidding cautiously.

Got you. All right. And just for clarity, do you think this India Jewelery Park project in Mumbai is politically sensitive project? I mean do you see any possibility of slow execution if the state government changes.

Mr. Vikas Ahluwalia will answer this question. Vikas, over to you.

No, this is not a political cost. It is not a state political-driven project. Hello, can you hear me?

Yes, yes, yes, yes.

It has really no influence of politics on it. Like I said, it's an autonomous body and largely the members of this body are private.

I think one of the Deputy CMs post this project a lot. So that's why I was asking that is a slow execution in the government. But that's fine.

Come again, come again, deputy CM I didn't hear that.

One of the Deputy CM I think is pushing for the project more. That's why I was asking that...

That is because this project is scheduled to create at least 40,000 jobs in the area. Or maybe more. So that is why we must be doing, said that.

Next question is from the line of Parvez Qazi who is an individual.

Sorry, I joined the call a little late, so pardon if you have answered this question. Earlier, we had alluded to facing payment issues in some of the states like Bihar, et cetera. Now after the election, what is our thought process about taking state government funded projects, whether in Bihar or in other states.

So our thought process continues to be the same for ways we've had this interaction before. We are very of states which are at lower head with the center and are fast track, that is why we do not have any new government projects in Bengal. Bihar, and the project we were waiting and watching now with the same government being there at the center and being a part of the state government, so there is -- the fund position seems to be improving. So while over the last 1 year or so, we had not bid very aggressively. We've in fact not bided all the state government projects there, but we are open now. So we see the position improving in Bihar. Assam has been a focus state for us. We have projects in excess of about INR 2,000 crores. And the fund position there also seems to be okay since both at the state and the center as the same government is there. So it's pretty much the same policy that we are taking forward.

Sure. And your views about bidding for projects in Andra, especially the Amaravati capital city.

Not a focus for us. I did mention to one of the participants who asked this earlier as to what our approach down South is we are more focused on the private sector there. That also we aim to grow cautiously. Our past experience being what it was last time around. Government projects down South are not a focus area for us.

Sure. And beyond the near-term issues on the margins, labor availability front, over the medium term, let's say, FY '26 and '27, where do we expect our EBITDA margin to be.

Double digit.

Thank you very much. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing remarks.

Thank you, everybody, for participating. Whatever questions, the follow-up questions were there. So we'd be willing to take them. You can write to us. Thank you so much, and talk to you again in for the next quarter. Thank you. Bye.

Thank you. On behalf of Ambit Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.