Ashoka Buildcon Limited (ASHOKA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Ashoka Buildcon Q4 FY '20 Earnings Conference Call, hosted by Antique Stock Broking Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rohit Natarajan from Antique Stock Broking Limited. Thank you, and over to you, sir.

Thank you, Asha. On behalf of Antique Stock Broking, I welcome you all to the 4Q FY '20 post results earnings conference call of Ashoka Buildcon. We thank the management for giving us the opportunity to host the call. Today, we have with us Mr. Satish Parakh, the Managing Director; and Mr. Paresh Mehta, the Chief Financial Officer of Ashoka Buildcon. I will now hand over the call to the management for their opening remarks, post which we can start the Q&A. Over to you, sir.

Thank you, Rohit. Good afternoon, everybody. Welcome you all to our earnings conference call for the quarter and the year ended 31st March 2020. Joining me on the call is Mr. Paresh Mehta, our CFO. I hope you all are staying safe and healthy during these unprecedented times. To start with, I will initially brief you on industry updates, followed by company's performance during the year and other company developments. The current financial year has been challenging for the infrastructure sector. Delayed appointment dates, due delay in land acquisition by NHAI, coupled with prolonged rains has impacted execution during the year. Further outbreak of COVID-19 pandemic has created the short-term disruption in the sector. Construction activities came to grinding halt amid lockdown across the country. It was -- it has impacted the business operations of the company from the last fortnight of March 2020, by way of disruption in construction activities, closing down of toll plazas, supply chain disruption, unavailability of labor, et cetera, due to the nationwide lockdown. However, partial resumption of constructing activities have commenced at the project sites, and tolling activity has been resumed at almost all the toll plazas, while ensuring that all safety measures set out by the government are being adhered to. Presently, we are operating at 60% operational efficiency and expect gradual ramp-up in coming times. Labor availability at site today is between 50% to 65% of the required workforce and expects to reach normalcy in near future. On BOT projects within 3 weeks of resumption of toll, we have reached around 85% pre-COVID toll collection levels. We expect the same to come back to normal in coming months with the overall revival of the economy. The revenue and profitability has been impacted and will be impacted for Q1 FY '21. We expect business to be near to the normalcy in 3 to 4 months. We have made a detailed assessment of our liquidity position and do not foresee any challenge in servicing the debt in near term. During the year, tendering and awarding of projects of NHAI has been subdued, primarily due to lower government spending and delay in land acquisition. With improved scenario in terms of land acquisition and availability of funds, the awarding activities started to pick up towards the end of the year. Furthermore, the ordering activity has impacted on account of the nationwide lockdown. Huge order pipeline was deferred due to the outbreak of COVID-19. We expect the higher awarding activity in the near future. With the view to provide required support to the sector during this challenging time, central government have come up with various slew of measures, like: allowing 3 to 6 months of extension of the project period, in addition to the existing contract period; releasing due payments within the stipulated time frame; releasing pro rata bank guarantees for the value of extent of project work is completed; allowing moratorium period for the repayment of loans and deferment of interest payments; reduction in interest rates; allowing grace period for payment of government duties and taxes to them -- to aid the liquidity. We believe these measures will provide urgent relief in view of prevailing situation of COVID-19. Over the years, road infrastructure has been a key government priority. To give further impetus and to address the various funding issues in the infrastructure sector, the Government of India has introduced National Infrastructure Pipeline, an investment plan with an outlay of INR 111 lakh crores, in which road sector constitutes around INR 20 lakh crores, which is a record highest beneficiary in national infrastructure pipeline. The NIP outline around 1,820 projects with a length of 89,000 kilometers to be implemented by 2025. In the road sector, the projects include construction of new express ways, such as Delhi-Mumbai, Bangalore-Chennai and so on, also to accomplish government ambitious Bharatmala Pariyojana is now Phase 1 in the stipulated time. We expect awarding activity to boost significantly going forward. Now coming to the company's performance during the quarter. Order intake during the quarter, we won Tumkur-Shivamogga Package III, which is a HAM project was INR 1,036 crores from NHAI in Karnataka under Bharatmala Pariyojana. Also, we signed concession agreement for the project. With this, we have signed the construction agreement for all HAM projects, all 3 HAM projects, which we have won in around 1 year. Currently, we are in the process of tying up the debt for the set project and expect to do the financial closuring in near term. The company's total order book as on 31st March 2020 stands at INR 8,379 crores. The order book excludes Tumkur-Shivamogga Package III, worth INR 602 crores. EPC agreement for the same was signed in May '20. Including this order, the order book stands at INR 8,981 crores. The breakout of the order book is as follows: road projects comprise around INR 6,717 crores, which is 80% of our order book. Among the road projects order book, HAM project are to the tune of INR 4,324 crores and EPC projects are INR 2,393 crores. Power T&D and others comprises of around INR 699 crores, which is 8.3% of our order book. Railways contribute around INR 903 crores, which is 10.8% of our order book. And our CGD order balance is around INR 60 crores. Moving on to other key developments. I'm happy to share that our subsidiary, Ashoka Concession Limited, SPV Ashoka Kharar-Ludhiana Road project received the COD on March 31, 2020. The SPV is eligible for receipt of annuity payments from NHAI within the 6 months from the date of achievement of COD. Also, the [ SPV ] has received a provisional completion certificate for completion of 93% length. That is all from my side. I would now request Mr. Paresh Mehta to present the financial performance of Q4 FY '20.

Thank you, sir. Good afternoon, everyone. The result presentation and the press release for the quarter have been uploaded on the stock exchanges and on the company's website. I believe you all had an opportunity to go through the same. Now I would present you the financial results for the quarter ended March 31, 2020. Starting with the consolidated results. The total income for Q4 FY '20 stands at INR 1,609 crores as compared to INR 1,624 crores in Q4 FY '19, which are -- the revenues, which were slightly impacted due to the nationwide lockdown imposed by the government to control COVID-19. EBITDA stood at INR 499 crores in Q4 FY '20 with a margin of around 40%. Now coming to the standalone numbers. The total income for Q4 FY '20 stands at INR 1,289 crores as compared to INR 1,345 crores in corresponding quarter last fiscal. During quarter 4 FY '20, BOT division recorded a toll collection of INR 228 crores. EBITDA for the quarter was at INR 264 crores as compared to INR 220 crores in corresponding quarter last year. EBITDA margin was at 20% for Q4 FY '20. The company reported profit after-tax of INR 164 crores in Q4 FY '20. Our PAT margin stood at 12.7%. Total consolidated debt as of March 31, 2020, stood at INR 5,676 crores, of which project debt is INR 5,276 crores, which includes INR 150 crores of NCDs at ACL level. The standalone debt is INR 400 crores, which comprises of INR 231 crores of equipment loan, INR 169 crores of working capital loans. During the quarter, we have made the payment towards redemption of INR 150 crores of NCDs. With this, we now open the floor for question and answers. Thank you.

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

Congratulations on a good set of numbers. I understand it's difficult to forecast or give any guidance at this point of time for FY '21. But sir, can you just comment on how the Q1 is coming up? And how do you -- and what's your expectation for the rest of the year? And when we expect the normal revenue to come back? And secondly, sir, on the asset monetization, is there something which you can guide right now? I do understand it is difficult. But having said that, is there something which is -- which you think can be done over the next 5 to 6 months?

See, if you look at Q1, if you see my -- April has gone completely -- entire into lockdown. May, certain activities have picked up to the level of 30%, 35%. And now activity has gone in June up to 50%. So Q1, we don't expect more than 50% of the last Q1 when you compare. And overall year's guidance, we are hopeful July onwards our entire normal should come or maybe in August. And we should be able to catch up almost the same numbers as last year. So you may not see any growth this year.

Okay. So we are not expecting any growth, am I right, for the FY '20...

I am not expecting growth in this year because of 2 reasons. One is the balance time, included the monsoon, so we will be left with only 2 quarters to really perform.

Right, right. [ Especially ] on the asset monetization, if you can comment, sir?

Asset monetization was in advanced stage. But after the lockdown and this COVID-19, it's under hold. So they'll come back to us when they see the normalcy. And now since we are seeing in toll collections of almost 85% of the toll has come back. So maybe another month's time or 2 months' time, we will restart the negotiations.

Okay. Sir, my last question. Sir, is there -- so how do you were progressing on the east -- the UP Expressways? Has it picked up? We have heard a lot of positive news in the press. Is there something which had contributed significantly in the H1 FY '21?

Yes. On Bundelkhand Expressway, the work has begun and the pace is also very good, almost to the 80%, 85% of the pace has come back.

The next question is from the line of Parikshit Kandpal from HDFC Mutual Fund.

Congratulations on a good set of numbers, sir. Sir, my question was on the liquidity release, which we are expecting. You had briefly touched upon it earlier in the call on the partial bank guarantee, the EBITDA, land and there could be possibly a monthly payment on HAM. So what kind of relief on overall basis on the liquidity side you are expecting to get this year? If you can quantify it in terms of like...

See, overall attitude of NHAI and MoRD to support the system are paying fast. So whatever dues were there were paid at a very fast pace. We have received payments in April. We have received payments in May. [ Government ] is very positive of doing equities in the sector. Various responses and circulars, which have come for releasing of retention money. So we have made applications, but still date we have not received anything.

So what is the -- can you quantify the retention money line with NHAI as of now? And how much we have made the application [Audio Gap] [ for like return ]?

Detailed numbers, we will give later. It is projected at various stages. They look at completion of the project. And if substantial completion has done, then substantial retention money gets released.

Okay. And just Paresh sir, if you can touch upon the one-offs, which have -- the margin for this quarter looks to be very high. So if you can touch upon any one-offs during the quarter and what kind of provisioning you have done in this quarter so that we can understand the results better?

The margins are looking very robust. One of the contributions are basically quite a fewer projects in the power as well as Kharar-Ludhiana and Ranastalam have come to [indiscernible] fag end. So there's some release of contingencies, which are provided for, got released in the revenue side, so that got accounted. And also, certain additional items, which were to be executed for -- of good margins, have also been -- has contributed to this. So release of contingencies, escalations -- release of escalation provisions and this certain change of scope items, which are exhibited, have contributed to this increased margins.

Okay. So if you can quantify like how much of the amount of it [ would be helpful ] to understand the margins better?

So these amounts would be in the range of approximately INR 100-odd crores.

Okay. Okay. And just lastly, on the liquidity side, sir. Earlier you said that we have good -- we have done a detailed assessment of the liquidity and you feel comfortable at this position and even NHAI is supportive. So any reason -- specific reason why are we looking to raise funds and basically value [ equity at the current ] levels?

So the decision of raising funds was made in -- just before the COVID set in, like the way it was when the project set in. But we believe that we had already -- last whole year, we had NCD of INR 150 crores, we thought -- which we paid off in March. And in case whenever required, we would raise. So that's one of the reasons of raising any debt instrument in the market, depending on cash flows. So in case higher -- new projects are coming in, if equity is required, then if need is required to fund that equity, we -- it's an [ element inclusion ]. The provision for -- the resolution is more of enabling. So otherwise, liquidity is still comfortable in view of the RBI benefit, which was given for all the toll projects, moratorium and deferment of interest. So that also has helped in probably leasing the liquidity pressure, if any.

The next question is from the line of Ashish Shah from Centrum Broking.

Sir, a couple of questions. One, what was the exact appointed date for the Bundelkhand Expressway?

I think around 15th Jan.

Around 15th Jan?

Yes.

Sir, secondly, on the Tumkur-Shivamogga packages, if you can just update on the Package III as well as Package IV on the FC and the appointed date, land status. So by when can we expect that we'll start getting some revenue out of these 2 packages, and the Kandi Ramsanpalle as well? I mean, where are we in terms of the land there?

These new HAM projects, basically we are supposed to do the FC by June end. But now it will be done by September end because banks were not functioning all along April and May on any of these financial closure works. So anyway we are getting extension of 3 months because of COVID. So we should be able to start work in October on all the 3. And land acquisition position, Kandi Ramsanpalle has 93% of land already in place. Package III of Tumkur-Shivamogga, 89% land in place. Only Package IV has only 64%, but we expect by September end, they should also be 80% plus.

Sir, all this is 3H, right? 3H or 3H-ing?

All this is 3H. This is all 3H.

Right. Fair enough. Sir, also on the cash balances that I see, so standalone cash balance was about INR 291 crores and the -- on a consolidated basis, it is INR 754 crores. So if I see the difference, I think the difference is almost INR 460 crores. And this is the highest that we have seen. So any particular reason we are holding so much cash in the subsidiaries? Is it meant for some CapEx commitment or something? Or the cash is actually available to us to be used? If you can just help clarify that.

Yes. So in -- of the INR 754 crores which you see in the consol number, of which INR 300 crores is Ashoka Buildcon standalone cash, which is almost -- INR 240 crores is almost free cash, INR 60 crores are cash balances which are lean for bank guarantees, FD has lean for bank guarantees. Now when we come back to the other SPVs, which are holding cash, there were payments which was received in a couple of SPVs like Kharar, Ranastalam and Belgaum, where cash was -- almost INR 150 crores of cash is -- was lying as of 31st March, which later on got transferred as EPC payment to Ashoka Buildcon. So from that perspective, that cash, INR 150 crores was cash has finally come back to ABL. And then there are cash, which was created for projects like Bagewadi, Hungud, where requirement of DSRA and MMRA is requirement as per the contract. And because these contracts got over in last year, this reserve buildup is required. Now this has been created in the form of FDRs, so Mudhol, Nipani, Bagewadi and Hungud. And we already have certain cash in Jaora-Nayagaon of around INR 60-odd crores, which is cash accumulated over the period of time.

Okay. Just lastly, so given the moratorium that you would have received and given where the toll collections are, any estimate you have of the loss funding that might be required, any shortfall funding that might be required this year in the BOT projects?

So as of March, we had paid all the interest and principal. For the balance 6 months, we will be paying the interest because there's only a deferment of required. And principal amount installments have been moratoriumed for -- permanently for 6 months over the additional loan period. So from that perspective, we believe that ACL as a holding company will manage its cash flow internally because we'll have certain surplus at Jaora-Nayagaon, which will take care of any cash shortfall at projects like Sambalpur, which generally is still requiring cash. So overall, we will be cash neutral within the portfolio.

Sure. So no incremental support from Ashoka is what you are saying?

Yes, effectively looking...

The next question is from the line of Vibhor Singhal from PhillipCapital.

Sir, so just to harp on what Ashish just left. So basically, if I want to understand correctly, at this point of time for all the SPVs, we are not availing any waiver or deferment of interest, only the principal is being deferred, which is -- which will add up cumulatively to the debt number at the end of the financial year?

Yes. So the deferment of interest we are availing to the extent of whatever is not payable during the intermittent periods, like suppose, for month of April. We hardly collected 7 -- 8 days' toll. So that is being used for interest payment, but balance is being deferred, till whenever cash flow is created, so first application of the money will be towards interest payment. And then the principal amount will definitely be deferred. So that balance will remain for servicing of the project throughout the year-end.

So the interest that we are deferring, so let's say, the interest that in the month of April that we deferred and also in the month of May, so will that be basically a part of cumulative interest that we pay towards the year? Or are we looking to use the provision to convert that into an FITL, as the Ministry had suggested and then increase our debt overall?

At this point in time, no, I think so the cash flows of the SPVs will be sufficient to pay off the interest and because there's no other application for that money, it will be useful service their debt. So we don't want to increase any debt unless it has any alternative use. Because SPVs are escrow managed. Money will be used for servicing the debt, first interest and then principal, if there be any extra left.

Sure. And all this will -- just to mention -- repeat, all this will easily be managed by without any support from the parent company?

Yes, yes, because JTCL is already creating surplus with this.

Right. And sir, at the parent company level, are we looking to avail the moratorium, either have we availed it or are we looking to avail it some point of time? Or no, we are happy with the way things are at this point of time?

As a parent company, we don't have any long-term debt, so except for equipment loan, where we have not opted because it is small amount. And our cash flow is also easily supporting it. So we don't -- we want to remain as disciplined as possible and maintain the cash flows, which is required not to defer anything. And cash flows being so comfortable, I think so the parent does not require. We do have opted for additional loans, cc -- 10% of cc loans for -- from the bankers -- existing bankers, but we'll be using them only when we require them. Presently, we are cash surplus.

Sure, sir. And also, sir, on the payments from the -- I mean, the debtor side, we saw the debtor numbers in fairly good control. So any place or any specific segment or state that you are facing some payment in delays either, let's say, in the month of -- either at the end of Q4 or as of now, where we stand in Q1?

See, in most of the sectors, road sector is the -- as our MD had already suggested that -- told that payments have come very comfortably from NHAI or MoRTH. On the power side, some challenges at the UP project. But otherwise, there's a reduction in the debtors in the last year of almost [ INR 100 crores ].

INR 100 crores. Right. Sure, sir. Lastly, sir, just -- I think I missed that part. You mentioned something on that Macquarie deal that, are we speak -- have the conversations with potential buyers begun again? Or are they looking to, let's say, wait for the traffic to stabilize and only then there will be conversations start?

Yes. Basically, as sir has said [Foreign Language] as soon as the traffic comes to normalization, the potential investors will start again -- we'll start discussing with the potential investors again. Of course, other investors are also interested at looking at the portfolio. So that will -- options will be kept open. But the existing potential investor, who has already done diligence, will definitely would like to start discussions as soon as he sees comfort in the traffic.

So as of now there are no discussions which are going on, right?

Yes. I mean, there's a hold now on discussion.

The next question is from the line of Ankita Shah from Elara Capital.

Sir, you mentioned that the FC for the 3 HAM projects to be completed by September. So when are you expecting the appointed date to come through for these projects? Will it come in this financial year?

Yes, yes. The appointed -- as soon as we complete the FC, so we intend to start the project by October.

Okay. Okay. So it's delayed only because of the current situation, that is the reason?

Particularly 2 projects because of the current situation and Package IV because of land acquisition, which will happen [ after ] September.

So 2 of these -- 2 of the 3 projects should start by October, right? The third one will still take time, right?

Third one, also, we expect to start thereafter.

Okay. Okay. All 3 of them. Fine. And sir, there are a couple of projects -- operational projects where you take toll rate hike from 1st of April. Did we manage to take this time or it's delayed now? And will it happen this year?

All those toll rates have already been given.

So you've taken toll rate hikes?

Yes, yes, yes.

In the similar range, what you took last year?

Yes, around 3.5% to 4%.

Okay. From 1st of April.

Right.

Okay. Okay. And sir, how is execution on railway projects panning out? And are there any more opportunities on that segment?

Yes. Railway, the pace has now picked up. And Punjab, Bihar and Jharkhand, all 3 projects now pace has picked up. And new projects, no clarity yet. Either they are differing the investment or projects around INR 8,000 crores of projects were lined up in coming 2 months. But we are not sure whether they will see the light of the day.

And payments?

Payments are being made in time in railway.

Okay. Okay. And sir, any equity requirement numbers for this year, next year? And how much is total invested in all projects put together, [ if you can just ] that?

So that's not very much incremental equity requirement in the last quarter. But 2021 overall equity requirement would be approximately INR 300 crores. And the next year, it would -- for '21, '22, it would be approximately INR 130 crores. Some deferment would happen for '20/'21 to '21/'22. So overall, till date, we have -- up to March '20, we have put in, in the existing HAM projects, approximately 850 -- INR 650 crores.

HAM projects only?

Yes. Yes. HAM projects.

Okay. Sure. You're saying something, sir?

Yes, INR 650 crores, including the annuity projects also of INR 140 crores. So you may take approximately INR 500-odd crores for the HAM project, specifically NHAI-based HAM projects.

The next question is from the line of Jiten Rushi from Axis Capital.

Sir, all congratulations on good set of numbers. Sir, my question is regarding the revenue breakup between Power -- road, power and railways for Q4 and FY '20, please?

So for the Q4, the road revenue was INR 980 crores. The power revenue was INR 137 crores. And the railway revenue was INR 90 crores was the basic [ measures ]...

And for the full year, sir?

On a cumulative basis, the road revenue was INR 2,975 crores. The power segment was INR 475 crores. And the railway sector was INR 210 crores.

INR 210 crores for the full year. This is for the full year, you are saying, right, sir?

Then there's certain miscellaneous turnover of CGD and others of around INR 100 crores.

INR 100 crores. So sir, this is for FY '20, right, sir?

FY '20.

INR 2,975 crores is for roads, INR 475 crores power and INR 210 crores railways and INR 100 crores is CGD?

Correct.

Right. And sir, can you give me the breakup for the unbilled revenues and the mobilization advance as on March and retention money as on March? And what is the [ mobilization advance ] we are expecting this year, sir?

So mobilization advance for March end was approximately INR 390-odd crores. And what was the other question, which you asked?

Sir, unbilled revenues and retention money as on March? And mobilization advance expected from [ new project ] this year?

Unbilled revenue was INR 367 crores.

INR 367 crores. And retention?

Retention, I would not have it off hand.

And sir, how much mobilization advance you will expect now from the newer project this year?

Pardon?

How much additional mobilization advance we are expecting this year because now 3 projects started, right...

So of the 3 projects, Kandi basically one [indiscernible] [ INR 300 crores ].

Sorry, how much, sir?

Around INR 300 crores.

All 3 put together, right, sir?

And for Bundelkhand, another INR 58 crores.

Bundelkhand is INR 58 crores. Okay, Bundelkhand INR 58 crores. So sir, this INR 300 crores is for only Kandi. The Tumkur-Shivamogga III and IV, any mobilization advance? Hello?

Yes. Can you repeat the question?

Sir, my question was like Bundelkhand, I think, INR 58 crores is pending. And then there are 3 HAM projects of Tumkur-Shivamogga Package III and IV...

INR 300 crores.

[Foreign Language] and one is Kandi. So I was asking how much for these 3 HAM projects together?

Together, INR 300 crores. For Kandi, TS-4 and TS-3.

Okay. Got it. Three HAM projects. Okay. And sir, the last quarter in the call, you have said, there were some receivables which were pending for the power T&D projects. And that was around big number actually if you ask me like, you had said some 6 -- INR 500 crores to INR 600 crores were pending from the power T&D projects. So now what is the outstanding overdue from power T&D as on March? Or anything we have received in Q1 so far?

In this 2 months, we have received around INR 70-odd crores. The total outstanding is around INR 689 crores in the power sector as of FY '20.

And our figure is still INR 70 crores, so almost INR 620 crores is outstanding?

Yes, it will come in over a period of time. And again, there'll be some advance also received approximately...

In power sector, we have unbilled also of around INR 200 crores.

So -- and you had asked for the retention amount, that is approximately INR 195 crores.

This receivables in Power T&D usually takes how much time to get like in the normal season, right?

See, they should -- because there's good billing has happened, so they should come -- post this COVID impact should come by 3 to 4 months' time. Once these -- these 3 projects, once they stabilize, I think they should come in place.

Usually 90 days to 120 days is the billing cycle for power payment cycle.

Payment cycle generally is 5 to 6 months. So...

The next question is from the line of Charanjit Singh from DSP Mutual Fund.

Sir, if you can just help us understand now going forward in terms of the working capital, how do you see the requirement? And do you see some kind of elongation in the working capital cycle? What's your view on that?

See, our major constituent of the order book is 80% is roads. So at the present turnover of INR 4,000-odd crores, which we have received this year and next year also, as we have indicated, probably, we'll try to achieve 1x. I think so our working capital requirement at this level should be sufficient to take us through this year as well as '20/'21 as well as '21/'22.

Okay. And sir, from the prospect perspective, now there are 3 different sectors, which we will be targeting: one is roads and then Power T&D and maybe to railways also to some extent. So how do you see like the tender flow can start coming in? Or you think that it could be only in the second half that things can only pick up? What could be the scenario on the order inflow perspective pipeline?

See, as far as roads are concerned, NHAI is already -- NHAI, MoRTH ready with bids of around INR 70,000 crores. So this is a good pipeline, which we'll see in the next quarter. Already dates have been announced from INR 70,000 crores of project. Then there are states like UP, which are coming up with huge makeup project of Ganga Expressway, which is around INR 30,000 crores. So we also expect to participate there and win something. As far as railways is concerned, there's not much of a clarity, around INR 8,000 crores to INR 10,000 crores of roads work were ready. But whether there will be bid out in immediate near future? There's not much of clarity. Power distribution, also, we are not seeing much of bidding activity to happen in maybe next 1 or 2 quarters. So overall, we expect around -- to back orders around INR 5,000 crores to INR 6,000 crores, state as well as NHAI.

But sir, don't you think that states now with their fiscal position, they may not go in for the new project ordering? And already, we have seen some reports coming from UP that they want to stop any new project or just focus on the existing project completions?

Since they are in very much in advance stage of land acquisition, we feel that they are likely to come out with the next

Expressway.

A lot of money is already is spent on land acquisition.

How is the funding for this particular project?

Presently, we are not seeing any funding shortfall on our current Bundelkhand Expressway. They have been paying very much in time. And this is all state funding, which is happening.

The next question is from the line of Dhananjay Mishra from Sunidhi Securities.

Congratulations on strong operating performance. You said current activity level across the project is 20%, right? Or 50%, 60% of normal?

In June, we have almost reached 60% now.

60% activity level as well as labor availability, right?

Right, both.

And you are expecting things to normalize by August, September, maybe? You can be sure...

Yes. By July end, we should cross 75% because labor and all started returning. There are signals given from them if transportation is arranged, they are ready to come back. So as soon as little movement starts from state government side, we'll start getting the labor force back. So July, we'll reach. But July -- again, July, August would be monsoon season. So even the labor comes, the activity will remain depressed as it is there in the industry in Q2. But [ Q3, ] Q4 should be completely normal.

And sir, regarding this arbitration award, have we received the money of INR 200 crores, which we own? Or this is still pending?

No, we haven't received any arbitration award money in last.

Okay. So when can we expect this money to be received, any timeline or any indication you have got?

We are going for consolation process with NHAI, which will happen in this quarter. So if NHAI and consolation if we are able to reach to certain figure, then monetization will happen fast. Otherwise, we'll have approach courts, and then it may take it some time.

So this 75% immediate payment rule is not, I mean, happening as such. Even if...

The rule is there, but then banks for -- this is against bank guarantee. And bank guarantee, banks are giving only on -- almost equal amount of deposit. So it doesn't really help liquidity. So it's better to reconcile and get settled, so that the money comes in without bank guarantee.

The next question is from the line of Anupam Gupta from IIFL Securities.

Sir, just wanted some clarity on the monetization deal, which you are trying to do, so on 2 aspects. First is for the BOT projects, are you seeing -- do you expect any correction in valuations because of the traffic impact expected because of COVID? And secondly, on the HAM, because of the difference in the interest rates, which is hurting the returns, will that also play a role in the overall valuation, which you may get for the portfolio?

So on the BOT projects, what we understand is we'll get compensated for at least the lockdown period and certain project period. So that will not destroy the value for that extent. Second impact of the COVID is probably some growth impact, which probably someone -- some -- today or tomorrow will get even down. So a small correction could be a possibility from the potential investor side, but we don't think so we'll probably push for not much correction in the price because everything will get factored as today or tomorrow. It's a matter of time. And if you ask from the HAM perspective, see, HAM perspective, interest rate -- the bank rates have definitely gone down by more than 1 percentage in 1 year's time. But bankers -- the lenders have typically yet to pass on that. They hardly passed on 15 to 20 basis points. But we believe that they will pass it on over a period of time. What happens is from a valuation perspective, the valuation of any HAM project sale, which are existing in the market, the structures which are available, is typically on the date of the COD, what are the bank rates and the lending rates, which will define the value of the project. So I think we should -- today, we don't have to freeze on the value. We can freeze on the structure, but the value can be defined by the bank rate and lending rate at the time of COD.

Okay. Okay. Understand. And secondly, this question on the EPC business. So obviously, this quarter, margins were pretty healthy because of the one-off which you mentioned. But let's say, next year, end of November, only, let's say, April, May, when there were no revenues and you still had cost. In a normal scenario, will that 13%, 14% margin is still doable? Or that is under risk because of the flat revenues?

We will be able to achieve 12% to 13% on the EBITDA margins and including other income would be in the range of 13% to 14%. It should not be much of -- maybe 0.5% split up due to COVID is overall possible. But otherwise, ex COVID , I think, so the impact will continue -- there's no impact on that.

The next question is from the line of [ Chenna Avinash from Spark Capital. ]

Sir, can we -- can I know the CapEx that was done in FY '20 and the guidance for next 2 years?

Pardon?

CapEx done on -- in FY '20 and FY '21, '22 guidance, capital investment?

CapEx in FY '20 in ABL, they follow [ machinery ] and other, were around INR 83 crores. And for FY '21, we will be in the range of around INR 50-odd crores, new machinery.

Okay. Will it be the same in FY '22 as well, sir?

'22, it will depend on how new project process come in and how this project take off on our industry's economic flow.

Yes. Yes. Sir, next question is, you have addressed the order book sector-wide. I just want to know any active tenders that you are pursuing right now from NHAI, which will flow to the next 1 to 2 months?

Yes. As I said, by August end, they are bidding out around INR 72,000 crores of projects, NHAI and MoRTH together. So majority is NHAI; 90% of it is NHAI projects. There is 2 EPC as well as HAM projects.

Okay. Okay. We have any preference over HAM or we'll continue the same way like...

Yes. We are basically EPC and HAM, both are what we bid. We participate equally. It all depends upon selection of a project from site perspective and execution perspective, yes.

The next question is from the line of Prem Khurana from Anand Rathi.

So I had 3 questions. So first, I mean, if I were to begin with, recently, we released our financial results for Ashoka Concessions, the disclosures that you gave out as a part of your entities, which are listed. And what I realized there, there's an exceptional item around INR 155-odd crore and the explanation says it is impairment in value of investments that you've done and set down subsidiaries. Would you be able to give us the names and which all subsidiaries would -- we have provided for -- I mean INR 155 crores would reflect which all subsidiaries?

See how it happens is at the AC level, there is an investment made. And based on the amount invested asset-wise, this impairment has triggered. Overall, the portfolio does not have a trigger. Some value -- some are far above the cost of acquisition and [indiscernible] the total is around INR 155 crores and majorly contributed by [indiscernible].

Major. And sir, just to understand this better, I mean we've given out our consol numbers for Ashoka Buildcon. So why is it not reflecting as a part of our consol number? Or is it that -- I mean the net worth -- since the net worth has already deteriorated because of the losses that we would have booked over all these years, which is why we were not required to kind of have it as a part of exceptional item, which is because it is already taken care of as a part of your losses that you booked in earlier years?

Exactly, exactly. That's right. The assets have been depreciated on a yearly basis. From that perspective, there is no deferment -- there is no impairment.

And this INR 155 crores would include the impact for the traffic disruption that we would have seen because of COVID, right? There won't be any incremental provisioning that you would have to do?

Yes. I mean as of date, we don't believe that there is anything else, [ the quarter as ] required has been impaired. So as of coming quarter, we don't require anything of that quarter.

And sir, would you be able to give me the breakup in terms of -- the debt breakup in terms of how much is it for hybrid annuities and how much is for the other operational assets?

On the overall side, presently I don't have a breakup, that is INR 5,600 crores is total debt on the project, with release on HAM and NHAI projects, nothing more. Of course, BOT project is also there's no -- and I have to give you a specific breakup.

Sir, I'll take that off-line, sir. And just one last, if I may. I mean Tumkur-Shivamogga Package III, our EPC size around INR 600-odd crore. But when I look at the BPC, it's around INR 1,035 crore, so which gives me a number of around 60% EPC as a percentage of BPC. When I look at -- I mean these figures for some of our peers, I mean, generally, we don't get to have this big a difference. And at least for us, I mean when I look at all the Tumkur-Shivamogga packages, I mean it's been anywhere between 60% to 67-odd percent of the BPC. So I understand a part of this would be explained by IDC, but what would you attribute the remaining part to?

See, the remaining part is of -- maintenance is also there in the EPC.

Okay. So during the construction, the maintenance that you do is again a part of this?

And it varies from player to player as how the estimate and build format is.

No, but I [ always thought, I mean, the O&M that you do ] during the construction is also given to Ashoka Buildcon. So that, again, the company needs to come as a part of EPC only, right? Or you're keeping it to the ACL only and -- which is how you generate some money in ACL to be able to meet obligations there as well?

Yes. So the O&M contract for this project is still not given to ABL, right? It will be given in due course. The INR 602 crores is only the concession cost and this INR 602 crores is typically the net cost. So if we add 12% GST, it is approximately another, say, INR 80 crores, INR 85 crores. So project of INR 1,300 crores is almost INR 700 crores.

Okay. Okay. And just one last from my side, sir. And if you help me with -- so Kharar-Ludhiana is now complete, right? I mean we already have PCOD in place and we would soon start receiving annuity. So I'm sure you would have already started some dialogues with your bankers to be able to kind of get the repricing done. So any indicative rates that you have in mind for the repricing that you would be able to manage on the interest rates because it was 9% plus earlier, right, during construction. I'm sure, I mean, given the fact that the asset is operational and cash flow visibility is better and execution risk is taken care of, the numbers should ideally come down.

Right, right. So on the first annuity, which will be received, we'll have a 0.25 automatic step down in the interest rate, whatever rate is there at that moment of time. And then we'll definitely try to refinance it through somebody else with a lower rate. The ballpark rate would be in the range of 8.75% -- 8.5% to 8.75%.

The next question is from the line of Parvez Akhtar from Edelweiss.

A couple of questions from my side. Sir, considering that we still have to include almost like INR 430-odd crores equity in an HAM project, what is the kind of order intake that we will be comfortable in the HAM side going ahead?

See we'll -- see presently, existing [ equity definitely, we have already ] arranged for INR 100 crores with the opening cash balance and the execution, which will happen, that cash will be generated, which we will utilize for the project. So keeping a perspective of the profit will be generated over a period of time, I think so INR 3,000 crores of HAM projects should be -- would be a good number where we'll build and get for that [ include this as much equity is available from our end also ] and balance will be -- definitely will be for EPC contract.

Okay. And sir, this quarter, our equity infusion would have been, I think, only minimal, right? Only INR 15 crores, INR 20-odd crores. Is that number right?

Yes. Only INR 15-odd crores -- it's quite small amount.

Okay. And last, sir, what would be -- I mean I know it is difficult to probably say at this point in time, but what is, let's say, our thought process about what could be the kind of debt levels at the end of FY '21?

At the end of FY '21, we should be approximately, say, around, say, 5,000 -- around INR 6,000-odd crores.

And sir, at the [ standalone level ]?

Pardon?

Debt at FY '21 and at the standalone level -- ABL level?

So this will be debt drawn on the new HAM project, executing HAM projects also, but there will be repayment of debt on our BOT projects. So we believe we should be around, say, INR 6,000-odd crores.

Sir, I was asking about at the standalone level?

At a standalone level? I think at the standalone level, we should be in the range of INR 500-odd crores, last year's level.

The next question is from the line of Tejas Shah from Axis Bank.

Can you hear me?

Yes.

Yes. I just wanted to understand what are the nature of impairment that you have booked on standalone and control cash flow of over INR 55 crores?

Impairment in?

Yes. So there is an item of impairment allowances of INR 14 crores and receivables written-off of around INR 43 crores. So could you shed some light on this?

Impairment is -- ECL impairment, which happens on debtors along time cost of money, that is a portion of INR 14 crores. And INR 43 crores are certain receivables, which we have provided for in a couple of projects, which we expect to get detail. But this year, as per the guidance from the auditors, we have provided that INR 43 crores.

The next question is from the line of Mohit Kumar from IDFC Securities.

Sir, my question is regarding this -- the force majeure. Is it settled now? This is a political or unpolitical force majeure? I'm talking about COVID update, COVID.

For BOT projects?

Yes, yes, in general. Is this COVID classified as political force majeure or unpolitical force majeure?

So as such NHAI has not done any classification. But whatever relief they are guaranteeing is as per force majeure. The circular indicate the relief, which indicate they are considering it as of political force majeure.

So would you get the interest cost and the other one...

Yes. Various circulars, which they have issued, says we'll get the interest cost and O&M cost and extension in period.

Okay. And sir, is there any update on the CGD side, which you can share upon the revenue and top revenue and profit for the FY '20 and FY '21? How it is shaping up? [ Or any update on the client, customer? ]

Yes, for this year, we could do a turnout of only INR 8 crores. This coming 2021, we expect around INR 50 crores of revenue with, say, around 20% of EBITDA margins in this year. Capitalization in this business could happen to the tune of around, say, INR 150-odd crores during 2021.

[ And sir, how is ] the progress in all the 4 geographical areas, qualitatively? Is it...

All the 3 projects, and the initial thrust will be on the transportation segment. And then later on, we'll touch on the domestic as well as the industrial consumption.

The next question is from the line of Jiten Rushi from Axis Capital.

Sir, I want to have the breakup of the -- I want to have the enterprise value for the SBI Macquarie portfolio of 7 projects. That is the equity invested so far, plus this subject for loss funding and the outstanding debt as on date, sir?

So can we take it off-line because that would be quite a bit of numbers.

No problem. Sir, I just -- I don't want project part. If you can give me the total number is also fine, if it is possible. Otherwise, I will take it off-line. No problem, sir.

Yes. I think we will take it off-line.

And sir, the next question is on the arbitration, which was going, so almost INR 5.5 billion of arbitration of this INR 200 crore, as you said, with [indiscernible] reconciliations. One more project is still in arbitration. So what is the status of that, sir?

So we have applied all 4 projects for reconciliation.

Okay. All 4 projects. Okay. And sir, the employee cost for this quarter was down. So if you see, sequentially, it has come down. So any reason for that, sir? Like why it was down? Because it was INR 42 crores this quarter. It was INR 53 crores in Q3 '20. So I just want to understand because of the -- any impact because of the COVID, have you brought down the employee cost away, but the employees cost or something like that, and this could be the new normal?

Yes. So in Q3, there was certain provisions for the year where the wage division was affected in Q3. So that number looks a bit higher. Otherwise, it's just -- it's regular. There's no specific reason for up and down in the numbers.

It's more of provision of the Q1, Q2 division in salary, which happens in -- which had happened in Q3.

All right. And sir, last question on bank limits. The nonfund limit and the fund limit and the percentage utilized so far.

So on the fund base limit, we have around INR 350 crores, of which approximately -- as of the date of the balance sheet -- on the face of the balance sheet, there's the INR 40 crores utilization against which we definitely have cash available. But as on the last date of balance sheet, there was a INR 40 crores utilization. And on the non-fund based, we have a limit of around INR 3,550 crores, of which utilization would be to the tune of around 60%.

Okay. So fund is INR 40 crore is utilized and non-fund is 60% utilized, right, sir?

Yes, yes, yes.

INR 40 crore is utilized or nonutilized, sir? Just so confused.

Which one?

INR 40 crore is utilized or nonutilized? The fund is...

It is utilized. So that is what is happening on the cc side on the balance sheet borrowings.

Okay. Okay. Got it. So only INR 310 crore is still unutilized.

The next question is from the line of Ashish Shah from Centrum Broking.

Sir, I just wanted to touch upon the distribution -- power distribution business. So yes, can you just briefly update on how the progress is going in the UP, Bihar, Jharkhand and in the other projects? So I mean based on the values, can one reasonably expect that these -- at least the projects in these 3 states should get the -- should get completed within FY '21 and hand it over?

Yes, yes, definitely. So Bihar will definitely get away. UP also 80%, 85% will get over in the next 2021.

Right. Also, are you seeing any change in the terms for financial closure, the 3 projects that we are now in discussion with the banks...

Similar terms. Interest rates we are negotiating for a lesser rate because, obviously, some rates have come down in the past few weeks. So we are expecting something like sub-9% interest rate and -- but otherwise, same terms.

Okay. So no material change in the equity contribution. That could be 12% to 15% as it was, right, of the total project cost? Hello? Sorry. Hello?

Hello.

Yes. Sorry. I didn't hear your answer, sir.

That will be 20% of the fund debt cost or approximately 11% to 12% of the total project cost.

As there are no further questions, I now hand the conference over to Mr. Rohit Natarajan for closing comments.

Thank you for the management for taking opportunity to give us -- host the conference call. Sir, would you want to make any concluding remarks?

So we thank everybody for attending this conference call. We are available for any queries, which is available on our website, the contact numbers of Stellar Investor Relationship, our Investor Relationship person, as well as I am also available on a call away for any queries. Thank you.

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