Ashoka Buildcon Limited (ASHOKA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Ashoka Buildcon Q3 FY '21 Earnings Call hosted by Centrum Broking Limited. [Operator Instructions] I now hand the conference over to Mr. Ashish Shah from Centrum Broking Limited. Thank you, and over to you, sir.

Yes. A very good afternoon to everyone. On behalf of Centrum Broking, I welcome everyone for the Q3 FY '21 results conference Call of Ashoka Buildcon. We have from the management Mr. Satish Parakh, Managing Director; Mr. Paresh Mehta, the Chief Financial Officer of the company; and we also have the Stellar IR agency on the call. So over to you, sir, to begin with the opening remarks. Thank you.

Yes. Thank you, Ashish. Good afternoon, everyone. We welcome you all to our earnings conference call for quarter ended December 31, 2020. I have with me Mr. Paresh Mehta, our CFO. To start with, I initially brief you on the industry updates followed by the company's performance during the quarter gone by. India's overall business environment is on the path of recovery, aided by government expenditure, resumption of private investment and faster pickup in consumption. The rollout of COVID-19 vaccine, followed by growth-oriented union budget, would further accelerate the economic growth. Infrastructure being the foremost pillar for economic growth, we see a massive push in Union Budget 2021. The road sector is leading the way in Union Budget 2021. The government has announced an enhanced outlay of INR 1.18 lakh crores for MoRTH, of which INR 1.08 crores will be capital expenditure. This is the highest ever allocation by MoRTH, signaling strong MoRTH activity in years to come by. The NHAI stepped up its project award target for the current fiscal year to 5,200 kilometers. Authorities have awarded around 4,000 kilometers. This indicates a strong activity in the current quarter. The order pipeline of FY '22 remains bland with ministry's target of awarding 8,500 kilometers in next fiscal, providing visibility for higher order outflow. To support the funding for the robust infrastructure pipeline in the budget, government announced it would set up a development financial institutional with a seed sum of INR 20,000 crores. And this institution will extend funding support of INR 5 lakh crores to the infrastructure sector. Additionally, government has entered into asset monetization through its financing of some new projects. Presently, NHAI is working on an InvIT for 5 projects valued at around INR 5,000 crores. With government stepping up towards project financing, the industry continues to see a positive trend towards project awarding. On construction front, despite disruption caused due to COVID-19 and extended monsoon, the highway construction stood at 8,169 kilometers during the period of April 22, 2020 to January 15, 2021, translating into 28.16 kilometers per day as against 26.11 kilometers per day in the corresponding period last year. Uptake in road construction is emblematic on government's focus on infrastructure creation. The pace of construction is expected to increase further in the remaining months of current financial year. Now coming to the company's performance. With progressive unlocking and magnitude of labor coming back, we have witnessed month-on-month improvement in business operations. We continue to focus on ramping up our execution and deliver better performance going forward. Looking at our order book. During the quarter, we have won an order from NTPC Renewable Energy of INR 503 crores for EPC package in Rajasthan. The project entails the operation and maintenance of Solar PV Plant for a period of 3 years. And now with this, our total order book stands at INR 9,152 crores. The breakup of the order book is as follows. Road projects compromise (sic) [ comprise ] around INR 6,912 crores, which is 76% of our total order book. Among the road projects, HAM projects are around INR 3,923 crores, and EPC projects are around INR 2,988 crores. Power T&D and other compromises (sic) [ comprises ] around INR 1,466 crores, which is total 16% of our total order book. Railways contributed INR 692 crores, which is approximately 8% of our order book. CGD business compromises of balance INR 82 crores. Now coming on toll collection front. With a gradual recovery in economic activities, toll collections have picked up significantly over the last 3 months, thereby surpassing the pre-COVID levels. During the quarter, we have recorded a strong toll collection across the states. With further improvement in the economy, we believe our collections would be further improved. That is all from my side. I would now request Paresh Mehta to present the financial performance for Q3 FY '21.

Thank you, sir. Good afternoon, everyone. The result presentation and press release for the quarter have been uploaded on the stock exchanges and on the company's website. I believe you all may have gone through the same. Now I will present the financial results for the quarter ended 31st December 2020. Starting with the consolidated results. The total income of Q3 FY '21 stood at INR 1,331 crores as compared to INR 1,303 crores in Q3 FY '20. EBITDA stood at INR 442 crores in Q3 FY '21 with a margin of 33%, a growth of 10% year-on-year. Profit after tax is at INR 87 crores in Q3 FY '21 as against INR 25 crores in the corresponding period last year. PAT margin is at 6.6%. Coming to the stand-alone numbers. The total income for Q3 FY '21 stands at INR 1,028 crores as compared to INR 1,021 crores in the corresponding quarter last fiscal. EBITDA for the quarter was at INR 153 crores as compared to INR 161 crores in the corresponding quarter last year. EBITDA margins were approximately 14.9% for Q3 FY '21. The company reported profit after tax of INR 86 crores for Q3 FY '21 with a margin of 8.3%. During Q3 FY '21, BOT division recorded a toll collection of INR 260 crores, recorded a growth of 16% Q-on-Q over INR 224 crores in Q2 FY '21 and 12% year-on-year as against INR 231 crores in Q3 FY '20. Total consolidated debt as of 31st December 2020 is at INR 5,976 crores, of which project debt is INR 5,627 crores, which includes INR 150 crores of NCDs at ACL level. The stand-alone debt is at INR 350 crores, which comprises of INR 173 crores of equipment loans and INR 177 crores of working capital loans. With this, we now open the floor for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Mohit Kumar from DAM Capital.

Yes. Congratulation on a good set of numbers. My first question is, sir, is there -- so we have been guiding for a while on the asset monetization. Sir, is there something which you can update now is something we should believe that we should be -- can expect in this quarter? And secondly, on this guidance for FY '21, we have maintained that we'll be able to do the similar numbers with FY '20. Given that our revenue is slightly on the weakish side in Q3, can we expect -- or do you maintain the guidance for FY '21? And thirdly, sir, on the solar side, on the solar EPC contracts you won, can we expect a similar margin like we do in our other contracts? Or should we expect slightly muted margin? Those are my 3 questions, sir.

I think maybe I'll take that. Your first question relating to the monetization of assets, as we have already indicated in our last quarter call that we are in the process of diligence for the monetization of assets of ACL. And a few investors are already -- were already looking at it. The present status is that substantial diligence is already over. We have already received binding offers from our potential investors. And we are in the process [Technical Difficulty]

Ladies and gentlemen, we have Mr. Mehta reconnected to the call. Thank you, and over to you, sir.

Hello? Hello?

Yes, sir, you're connected.

Yes. So continuing on the update on the monetization of assets, we are in the process of evaluating the offers received from the potential investors, and we expect to soon close out on that and start documentation. So we are quite hopeful of getting outcome in the near future. On the execution side, we continue to maintain that we would try to achieve 1x revenue for this year in spite of the pandemic. And this will typically be contributed by couple -- your last -- our 3 projects, which will start giving contribution to our -- additional contribution to our execution. That is the Kandi project and the 2 Bihar projects, which are yet to start. So Kandi project has already started, but the 2 Bihar projects are yet to start. Appointed date, we will expect any time. So from that perspective, we still maintain that the execution levels will be achieved, and we'll achieve 1x of FY '20. For the...

EPC margin.

For...

Margin for the solar EPC contract which you won in this quarter.

Right. So solar project is like on a larger scale, we have taken up for the first time. We have done a few smaller projects of approximately 4 megawatts in the past. And we believe that we should be able to take up at least 10% margins -- EBITDA margins in this -- 10% to 11% EBITDA margins in the solar project and quite hopeful to grow this EPC arm also. These are purely EPC contracts.

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

Congratulations on a decent set of numbers. So now you said that for the ACL monetization, you have received a binding offer. But have you entered into exclusivity with any investor or still not reached that state?

Yes. So as I said, we have received by -- so during the diligence stage, we were under a non-exclusivity process where a few of the investors were looking at the portfolio. The binding offers is also -- is at a non-exclusive stage, and we are negotiating on that. Once we do that, then it could get into an exclusive phase for documentation and final conclusion.

So any time lines you are looking at concluding this negotiation and reaching a binding offer and exclusivity?

So we are targeting documentation to get over by March. That means negotiation in the coming couple of weeks in February then get into documentation.

Okay. And sir, second question was on the loss funding for the portfolio. So how much do you think in FY '21 and '22, '23, how much will be the funding requirements for the portfolio?

So presently, for these HAM projects where investment is still pending, we have a total outlay of -- at present of outstanding of INR 164 crores for 2021 and INR 160 crores for '21/'22. This is the total outlay for the HAM projects outstanding for specific...

No. I'm talking about BOT loss funding, not HAM projects. I'm not asking about the CP requirement. I'm asking on how much will be the shortfall servicing interest and debt treatment for the ACL BOT portfolio.

So we are -- we have a shortfall of funding for basically only Sambalpur project where after seeing the kind of revival in the toll revenue, we should be in the range of around INR 35 to INR 40 for Sambalpur project funding and a few assets for marginal funding for around INR 45 crores to INR 50 crores for major maintenance of a couple of projects.

For FY '21, you are saying?

FY '22. FY '21, I think, major -- I mean FY '21 balance would be in the range of around, say, INR 15 crores.

Total of about INR 90 crores you were saying for FY '22 possibility, including the MMR and the Sambalpur project. Okay.

Right, right.

And sir, just my last question would be on the building segment and the diversification part. Sir, I think last call, you touched upon that you have started building a team for setting up for the building segment, and also for the water, you're looking to bid out. Have you submitted any bids for this segment? And at what stage our teams are? I mean how is the ramp-up of the manpower for this segment? If you could just throw some light on the non-road segment ramp-up.

Yes. Still looking at the...

So we are looking at -- yes, I apologize.

Yes.

We are looking at the various segments like building, water and solar EPC and all EPC basically. So our focus will, of course, remain on highways, but primarily, we are also developing other EPC sectors. So we have been participating in that. Like solar is the first transactions where we have got. Buildings also, we are participating. Maybe quarter or 2, we'll start these segments.

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

Sir, my question was broadly on the performance in this quarter. Our revenue performance in this quarter was slightly on the weaker side, I mean, especially also as compared to...

This is the operator. So there is a disturbance coming from your line, sir.

Yes, just a minute. Yes. Am I audible now?

Yes, sir. You may go ahead.

Yes, sorry for that. Sir, my first question was on the performance in this quarter. So execution seems to be on the weakish side in this quarter given that we are only flat Y-on-Y. So was it due to some of, let's say, labor or supply side issues that we faced in our portfolio? Or do you think there were some other reasons behind it? And basically, how do you think we can -- yes. We can...

Basically, projects started late, and the other projects which were awarded also started too late. They did not actually start in last quarter. They have now started in this quarter. So this quarter, we'll be able to make up, yes.

Okay. So -- but there are no labor or supply chain issues that we are facing, right?

Almost these all labor issues have been sorted out now. This completely normal environment of working is now restored.

Right. Sure, sir. Sir, my related question is on the order book. So if you look at the order book right now, it's, sir, almost around 2.5x approximately just to sales, I mean giving us -- I mean slightly -- I mean I'm sure -- I mean this does give us a visibility of around 2 years. But I'm sure -- I think we would have loved to have it on a -- slightly on the higher side, giving us more comfort. And so that, let's say, because of one project getting delayed like [ Kandi ], we were not able to execute this quarter. A higher order book would have probably meant that we would -- other projects might have compensated for that. Sir, what is our outlook on this? What is the kind of order inflow that we are looking at? This year hasn't really done great for us in terms of order inflow. So is it like that the competitive intensity seems to be higher on the EPC or HAM projects from NHAI or we haven't bid out on some of the projects that we wanted to? So what is your take on that? And how do you look at the order inflow for the remaining 2 months of this year and in FY '22?

Yes. So looking at the building pipeline, that is going to be much better than what we had this year. And if you talk about competitive, yes, competition is there at NHAI projects particularly, NHAI and MoRTH projects because there has been dilution in the qualification norms, and we are seeing a lot of new players coming in. So we are feeling very safe, and we definitely are confident of building up our order book going ahead, which is now we have become a complete full-range EPC player. That is one. And also, we are participating in increased [ bids] as well as national highways. And national highways [ projects from NHAI ] is now almost getting doubled. So going out, I don't see any challenge in building a good order book.

Sir, any numerical guidance that you will be able to provide for the inflow that we are targeting for the remaining part of this year and in FY '22?

The remaining part of this year, we should be able to gather around INR 2,000 crores to INR 3,000 crores of orders, and next year, definitely around INR 5,000 crores to INR 6,000 crores.

So next year, we're looking at around INR 5,000 crores to INR 6,000 crores of order inflow for the full year.

Yes, yes.

The next question is from the line of [ Anubhav Agarwal ] from AUM Advisors.

Sir, congratulations for the excellent results.

Sorry to interrupt, Mr. [ Agarwal ]. So your voice is not audible. I would request you to come closer to the phone and speak, sir.

I'm audible now?

Yes, sir.

So congratulations, sir, again, I mean, for the excellent results. And if you compare on a year-to-year basis and also on a quarter-to-quarter basis, there has been a substantial increase in the profit. So sir, again, my -- for the sake of repetition, my question again the same. For the coming 2 months which are left of the current financial year, what's the new order we're expecting from the government, number one; and number two, again, for the next year also? Third, I mean if -- post-budget, if you see the -- I mean the sentiment in the market, so I mean there has been a substantial increase in the, I mean, infra sentiments in the market. So I mean what's your thinking about that? I want -- we want to know.

So as Mr. Parakh has already commented that for this year, for the balance 2 months, which we are yet to see go through, we expect around INR 2,000 crores to INR 2,500 crores of order book intake for the -- and for '21-'22, we expect around INR 5,000 crores to INR 6,000 crores of order book intake in the following year. And as you said -- rightly said, with the sentiment being very high on the infrastructure, we will continue to concentrate on EPC book buildup and see that we get orders that are at the right price and we are in the frame.

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

Yes. Sir, the first question would be on the revenue breakup for Q3 for roads, power, railways and CGD.

So for Q3, the revenue on the road EPC was INR 715 crores, okay? Power, it was around INR 55 crores. On the railway, around INR 89 crores. In fact -- sorry, for the power, it is around INR 127 crores, power and others. And -- that's the breakup typically.

And railways is INR 89 crores, right?

Railways, INR 89 crores, yes.

And CGD, sir?

CGD is approximately INR 12 crores.

And sir, if you can give us for the last -- same period last time, sir, if it is possible.

Same, that is Q3 FY...

Q3 2020.

Yes. So that was -- for the road, it was INR 742 crores.

Okay.

For the power and others, it was approximately INR 120 crores.

Okay.

Railways was INR 24 crores.

And CGD, sir?

INR 4 crores.

How much, sir? I didn't get that.

INR 4 crores.

INR 4 crores, okay. And sir, on the HAM projects of Tumkur-Shivamogga, sir, the 2 projects, so when is the opportunity expected on the launch [indiscernible]? And have you completed the financial closure?

So for the 2 projects, Tumkur III and IV, Tumkur-Shivamogga III, that is Package III, we have -- it is almost at the fact stage of completion. We have already received a sanction from the bank, and documents are with NHAI for approval. So that should be done -- anytime this month, we should get the FC as well as the appointed date. Tumkur-Shivamogga IV is under financial closure. There is a challenge of land. Approximately, our land available is around 60%. So we are trying to see how we pass the both things, the land availability and the FC can be done.

In the, sir, package, almost we are about 80% plus land.

Yes. Plus land, yes.

And sir, on the balance sheet numbers, if you can provide what has the CapEx done so far and likely CapEx for the balance period of this year and next year, the outstanding mobilization advance, retention money and unbilled revenues and latest data if it is possible.

So on the CapEx for the year, it's approximately -- on the EPC front, it's approximately INR 14 crores to INR 15 crores only. It's a small number because during the pandemic, no major capital action took place. As far as the trade receivables are concerned, the trade receivables remain almost similar in the range of INR 1,447 crores for all verticals put together. And the unbilled revenue is to the extent of INR 88 crores.

And mobilization advance and retention on trade receivables?

Mobilization advance is -- outstanding as of date is INR 291 crores, all projects put together.

Okay. And sir, any retention money and trade receivables number exactly?

Retention on trade receivable, I think retention on receivables is included in the INR 1,447 crores.

Any -- do you have the number kindly on the breakup?

So typically, if you'd ask me, the noncurrent data are typically that, approximately INR 188 crores.

Sorry to interrupt, Mr. Rushi. Sir, I would request you to rejoin the queue for more questions.

Yes. I will just finish the question -- the answer to the question, and then I will -- and [ trade ], the last question is, sir, [indiscernible]. Hello?

Yes. I can't hear you.

Okay. Just the number, if it's possible to give, sir.

Yes. Just come back.

And that CapEx, you said INR 14 crores, INR 15 crores for '21 and '22...

INR 781 crores approximately.

INR 781 crores, okay. And you said INR 14 crores to INR 15 crores in '21 so far. And next year, how much will it be, sir?

Next year, based on order book and others, I think we believe -- we generally have a target of around INR 680 crores to INR 685 crores of CapEx. It will all depend on how order books also build up on the projects.

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

Yes. A couple of questions from my side. First, I just wanted to get a sense on what is the kind of margin trajectory that we see going ahead considering the recent hike in commodity prices that we have seen. Also, I mean, what is the kind of tax rate that we see at -- in FY '21 and '22? And lastly, in Q3, did we include any equity in our projects? And if yes, I mean, what was the quantum for that?

Yes. So on the margins estimates, if you -- we expect approximately a blended EBITDA margins of around 11% to 11.5% going forward considering the -- whatever inflation which is already factored in this margin. So this is our expected EPC margins. On the equity funded for this -- in quarter 3 was approximately INR 10 crores. And in between the end of quarter 3 and till date, approximately INR 32 crores. So total till date post Q2, we have funded INR 42 crores.

Sure. And sir, tax rate?

On the tax rate, we will continue to be in the range of 24.5%. We have opted for the revised tax regime. So in the new tax regime, so we will be in the range of 24.5%.

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

Yes. So 2 questions from my side. So first one was on the said monetization efforts that are underway as of now. I was wondering, maybe you could help us understand this a little better. I mean I understand you spoke about some offers about [ ECOM ] to you. But internally, I mean, how are we approaching this? Essentially, you want to exit the entire portfolio, including HAM, or we've received bids only for those operational assets and you would wait for the hybrid entities to kind of attain CODs and then, of course, a market. And if it is a complete exit or we would still be willing to then retain a stake in the portfolio.

Based on the offers received and whatever discussions going on, of course our target is to monetize all the completed projects. On the under construction projects, generally, there would be an understanding of takeover by -- as the construction is over. So that's how our thought process is, that we would intend to have all the completed projects, and the uncompleted projects we'll retain till the COD date or whatever conditions are there under the construction agreement.

Sure. And so Khrar-Ludhiana, wherein we already received CODs, of which -- again would be a part of the transaction, I mean, if you were to decide to kind of monetize that because CODs or [ ECOM ] for that as well, right?

Kharar-Ludhiana, Ranastalam, these are 2 projects going forward. So there, we would like to invite an investor for a 100% takeover.

Sure. And sir, last quarter, you spoke about some delays in recoveries from some power T&D projects in Bihar and UP. How is the status now, whether we have started seeing these payments or it still is a little slow?

In the -- in UP, a slight improvement is there in this month. So in January and February, we have received some money -- a larger chunk of money. We have -- we continue to -- so there are certain challenges on recovery, but I think -- so by February-end, we should get substantial amount. That's the target. I think -- so states are also now in a better position to -- they're also in -- their revenues are also improving, so they will -- so probably we'll get a collection.

Sure. And were there any incremental orders in power T&D segment this quarter and UP especially? Because when I look at the moment in our UP exposure in power T&D, there appears to be some increase there.

Yes. So we have received smaller contracts in UP of approximately INR 150-odd crores -- or INR 180-odd crores.

Okay.

I think we had approximately INR 140 crores.

Sure. And just one last from my side, if I may. The margins were under pressure during the quarter. So any specific reason? Because last 2 quarters, I mean, the margins were extraordinary because of the write-backs. And sadly, the number has come down substantially. So any reason in particular? Or it is only seasonality, I mean, some activity that we would have done during the quarter would be kind of low margin and which is why the margins were under duress this quarter and below our guided range that you spoke about, 11%, on the lower side?

See, I mean, last quarter, we have seen a couple of projects which have not achieved the threshold recognition of profitability from the point of construction activity. Generally below 5%, we don't consider any margin. So there are a couple of assets which have not -- a couple of contracts with pressure of not -- and so profit has not been recognized. And also, project mix is -- compared -- is slightly different from what -- so in certain contracts, the margins are lower and certain are higher. So based on an average, we will continue to be in the range of 11%, 11.5% going forward.

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

5 Yes. Sir, first question is on the BOT EPC that we have. That doesn't seem to be progressing at that rate at which we probably expected earlier. So any views on that? And when do we expect that to work?

On the BOT EPC, a lot of challenges in strong -- plus having planned for a new plaza and some structures, okay? This is getting delayed beyond the time lines. We expect it to get sorted out in another 2 quarters.

Okay. So we expect the project to be completed in a couple of quarters or the issues will take a couple of quarters to solve and maybe by end of '22 we'll be able to close the...

Yes. Maybe by the end of '22, we will close on this or close it if the land not is available in time. So again, we will need 2 quarters to make it available. If it's not made available, then it will be scoped again. Then [indiscernible].

So what could be the new scope value, sir, if it is possible to give any...

Should be around INR 150 crores to INR 200 crores.

Okay. Okay. So that will be in a couple of quarters, right. Secondly, on the CGD business sir, if you can briefly just talk about how we are progressing in our commercial -- commercially operating area of Dhankuni as well as the newer areas. What is the capital expenditure incurred so far? Any debt drawdown? And how is it generally progressing? How is that business progressing?

Well, we have already invested approximately INR 130 crores. We expect to close this year by doing a revenue of around INR 26 crores, which is typically a lower side revenue collection because capitalization is an ongoing process. We expect by 2024, '25 to achieve almost a substantial portion of CapEx, by which we should be in the range of around INR 350-plus crore turnover. So this is how we reach -- next year probably, we'll be in the range of around INR 90 crores of revenues.

Okay. So what is the total CapEx that we are talking about here? We said we have invested INR 130 crores so far.

Yes. Total expected is approximately -- for the full project is around INR 800 crores that we expect over the next 3 years, so 3 to 4 years' time now.

Right. And this would be funded roughly, let's say, INR 300 crores by equity and INR 500 or so by debt, right?

INR 550 crores of debt has already been approved, in the process of documentation where we should get release of the debt from this month onwards.

[Operator Instructions] The next question is from the line of Anupam Gupta from IIFL Capital.

Sir, 2 questions. First, on the debt. We have seen a sharp spike in debt in the last quarter from around INR 120 crores net debt stand-alone level to INR 280 crores. What's driven that increase in debt in a single quarter?

This is basically -- as the execution picks up, debt will probably increase. And as we have already indicated in our previous calls, the working capital debt will be in the range of INR 200 crores in last 3 quarters or last 3 to 4 quarters. Generally, we have been showing very low debt. So -- and another reason for the high debt as of 31st December is certain receivables which were to be received in December got received somewhere in the second week of January. Otherwise, we could have continued to show a similar trend in the last 3 quarters. But we -- but what we estimate as that's going on, with pickup in execution, certain working capital funding will continue to remain in the range of INR 200 crores and INR 250 crores debt load.

So current level of debt should sustain in this year is what we are saying basically broadly in that?

Pardon?

So current level of debt will sustain for a few quarters is what we are saying?

Yes. Yes.

Okay.

And during the working capital cycle, so probably it's fully covered by the working capital margins.

Okay. Okay. And secondly, sir, just looking at your margin guidance, which has come down from earlier 12%, 13% to 11%, 11.5%, what has changed in a quarter to lower the guidance? Is it because your diversification into newer areas and significant competition in the road space? Or what is basically driving the margin guidance cut?

Basically, the big -- the older projects had slightly higher margins. And also, another is that certain projects' margins get released later on, and that impacts the overall margin. But on a -- based on a conservative contingency policy, we expect the remaining contracts and the new contracts in the range of 11.5%.

But in terms of bidding, are you seeing at the bidding stage itself you're able to bid at a lower margin because of increased competition? Is that the case?

That is -- marginally. This is not a significant drop in the expected margins, maybe from 12% to -- a percentage or more, not more.

The next question is from the line of [ Mahindra Panraktur ], a retail investor.

I have 2 questions. First, in the December quarter, we had a very -- I mean, almost 0 order inflows. Only we got 1, I think, from NTPC. And that was a -- what is our future growth expectations of the new orders? And the second question is regarding the SBI Macquarie [indiscernible]. So where we stand on that. Those are my 2 questions.

As already explained, in the last quarter, we had certain small order intake in the power sector and also 1 order intake of the solar power EPC contract of INR 501 crores. The expectation is in the coming 2 months, we expect certain road projects to kick in, and roads plus railways put together would be in the range of 2 -- expected range of INR 2,000 crores to INR 2,500 crores of order intake in the coming 2 months. Bidding activity, expect to go up. So from that perspective, we have that expectation. As explained also on the SBI Macquarie exit, I mean, status, we are already under negotiation with the potential investors who have given their offers. And for that, we expect by March we should complete documentation and get to procedural part to complete the deal.

Okay. Are there any projects for which we have built and we are waiting for the bids to open? Or...

Nothing very significant with the projects.

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

Sir, my question was on this -- you said that completed projects are getting monetized. So as of December, how much would be the equity invested in all these completed projects which are going to get monetized?

As of December, all the HAM projects, as I said, we have invested approximately INR 780-odd crores, including the INR 150 crores put in the ABL project. So if you ask me, approximately INR 600 crores in the HAM projects. And other completed projects is in the range of INR 1,800 crores. So overall -- and overall equity invested in all projects put together under construction and completed would be in the range of INR 2,700 crores.

So there is quite a cash which may come to us, so -- given this March time line. And so from March, how much time do you think -- if everything goes on track, by when can we target the cash to come in post NHAI and [indiscernible]? So do you think by next year in FY '22 by December we can get the money or it will go towards March '22?

Yes. We are targeting Q2 as the peak quarter.

For the receipt of the funds inflows?

Yes.

And so any plans as of now to how -- what will be the utilization? Because this may run into -- I mean a lot of INR 100 crores. I can see the utilization, and I don't think I'll ask you right now because it's still in negotiation. But quite a large sum of money coming in. So any plans as of now how are you going to deploy it in the business? So any sense? Have you decided anything on that?

Yes. We take -- we have our thoughts when we'll take -- right, when exactly we see good visibility of the amount as well as the timing.

But is it -- are you going to build any alternate equity portfolio? Or is it -- I mean, will you deploy somewhere -- into nonroads equity kind of investment and some other segments, so or any BOT? So anything related to any other asset that this money comes in and then we deploy it somewhere into -- again, some other assets or nonrelated road assets? So at least any thought on that?

Presently, we don't expect much to be put in any developmental projects. So we see how to use that money more -- better in the EPC contracts, how we can improve that or some other alternatives.

And lastly about EPC growth. So that large part here would be growth [indiscernible].

Sorry to interrupt, sir. There is a disturbance coming from your line. I would request you to mute yourself while the management answers your questions.

I think the large part of that was your -- was the EPC business growth, right...

Right.

If I'm understanding it...

Yes, it is.

The next question is from the line of Rachit Kamath from Anand Rathi.

Yes. My question pertains to the fact that you used to guide last quarter that we would be looking at inflows of almost some INR 4,000-odd crores by -- in H2. And we also had a healthy bid pattern line in that time. The healthy bid pattern is still there in the market, but we are kind of -- we are still -- we're guiding right now around INR 2,000 crores, INR 3,000-odd crores. But at the same time, we have lowered our margin threshold. I think you used to say EPC margins of almost 12% to 13% before, and now we're seeing 11% to 11.5%. So basically, my question is basically whether you took -- are we -- is there a higher competition in the market because of which we are having such a bad phase, like -- and I think as we are having to lower our margins? And as such, actually what is the scenario on the ground? Yes.

So competition is one of the factors determining pricing. But our range, we have put the range of -- so we have a mix of projects under power and under roads. Roads are generally slightly higher and power and other sectors are generally lower because there is no much CapEx in those projects. So if you see the EBITDA margins could be because the project mix would be slightly lower for roads, but the component of roads will be slightly lower. So this range would be in the range of 11.5%. Maybe marginal decrease in the margins due to competition but not a major setback.

Okay. So if you can -- like -- so basically, you're saying the -- we had then higher competition because of which you're losing your projects like I was thinking in terms of you're targeting INR 4,000 crores kind of inflows, but inflows are staying kind of soft in H2 day-to-day? So there's a higher level of competition affecting the market? Is that understanding correct, sir?

So what we were typically doing is we're trying to ensure that even if the EBITDA is slightly lower, but we've ensured that our PBT and PAT margins are -- remain intact so they don't go below. So try to more improve on the working capital panning and maintain the profitability.

Sure, sir. Sure. Sir, my second question pertains to the fact if you have a breakup of the total receivables, like you had monthly only INR 440-odd crores in terms of segmental breakup.

So if you have -- our major receivables would be around INR 796 crores in roads and INR 486 crores in power. And balance in the other sectors will be INR 43 crores in receivables and others.

Okay. But you're saying -- but you said during the call that post quarter, we received some healthy month from power sector, especially in the state of UP. So that amount is, sir? So if I have any color.

So that would be approximately almost all put together would be -- we must have received maybe to 31st December almost INR 135 crores to INR 140 crores.

That's for all segments put together?

Yes.

Okay. Sure. And sir, this amount that you said would be net of mobilization launches?

No. This is gross. So -- I'm sorry, what did you say? Which amount?

This trade receivable amount, was it net of mobilization launches? Or was it just gross receivables?

It would be gross.

Gross. Gross. Sure, sir. Sure, sir. And sir, I think my last question was that you said the debt would -- or for this year, you would likely close at around INR 400-odd crores, right? You said that your working capital limits, you might utilize more. We might take it up by INR 50-odd crores. So...

We may close maybe at the same level or slightly more by INR 50-odd crores but the same level as it is in December.

Sure, sir. I think in CGD, sir, of that INR 130 crores that you're putting, that is totally our own money or it's including the partners' money in it as well?

It is 49 51 at announcement. So that is the gross number.

That's the gross number. Sure, sir. So we'll be only down almost on INR 65 crores, INR 64-odd crores over there, right?

Yes.

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

Yes. Sir, on the solar project, so this is a pure EPC project. But sir, we shall be improving the panels. So with the increase in customization, how do we see this project phasing out? Because this project would include almost 70% commodity and investing with the [indiscernible]. So can you just throw some light on this project and the O&M part, whether this is one of the -- wherein the...

Sorry to interrupt, Mr. Rushi. There's a disturbance coming from your line, sir, in the background.

Yes. Yes. So now can you hear me well? Yes.

Hello?

Yes. Yes.

So...

Yes, sir. And so the O&M part would be included or excluded in this order backlog of INR 500 crore-plus?

So And so I think in this case, this order is including our O&M part. But O&M money will be paid separately, first. Secondly, on the cost, there is already built in -- or there is a built in for contingencies in this cost. And we also expect that there could be -- there will be claims of the change in UP and otherwise. So out contingent book put together should not put any difficulty to execute a project at expected margins of 10% to 11%.

So what was the O&M portion in this?

I do not have it off my head.

Okay. No worries. Okay. Okay. So you mean to say that at least the new [indiscernible] building, sir we should not find any difficulty to -- on 10% to 11% margin?

That's correct?

And sir, on the revenue guidance, can you throw some light for this year and next year?

Sorry to interrupt, Mr. Rushi, I would request you to mute your line while the management answers your question, sir.

Okay. Sir, on the revenue guidance for this year and next year?

So as we said, on this year, you would -- we are targeting to close that -- last year's revenues of around INR 4,000-plus revenues. And we expect that we should -- based on this order book and the coming order book, we should at least grow by 20% to 25% in '21, '22 in the EPC sector.

Can you update on the bank limits, nonfund and fund limit and utilization levels and the outstanding bid pipeline, if any, of the bids for any projects?

So no, nothing significant in projects bid and, what do you call -- on the financial limits which we have, as we have said, we have working capital mix of around INR 350 crores and nonfund base of around INR 3,800 crores. And on the working capital, we are generally in the range of -- in the last 1 year, it has been quite significantly low. But on an average, we should be around 60% utilization. And on the BG utilization, we are around 55% to 60% utilization.

One last question on the arbitration -- pending arbitration of [indiscernible].

At SPV projects, also we have -- BOT projects, we have claims pending and others.

And can you talk of a total number which you can tell and when we expect to -- what is the state of something like that?

I mean maybe in the range of INR 1,500-odd crores is a kind of plays which are under arbitration and other stages. So it will take its own time to realize those.

And we are still [indiscernible]?

Generally, on account of ABL, the EPC business, majorly [indiscernible].

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

Sir, just one last question, bookkeeping question from my side. What is the equity requirement for our HAM projects for FY '21, '22 and '23?

For '21, balance requirement is -- so for '21, it could be approximately 161 -- INR 164 crores; and for '21, '22, around INR 160 crores.

Okay. And this does not include the 2 packages which have not been closed financially, right?

So this includes both.

Includes. And so this means...

And so we still have projects we're building.

Okay.

I mean, I...

All the business?

Yes.

The next question is from the line of [ Ishan Varma ], an individual investor.

Mr. Parakh and Mr. Mehta, as a retail investor, I'm slightly concerned with the tone of your future guidance. Till now, I actually was assuming that the company is on the right path and probably it could be among the top companies executing the infra projects. But somehow, unfortunately, I'm not getting that comfort factor. So are you being conservative? Or has the landscape changed for you?

I think what we had -- from a guidance, because what we have stated for '21, '22, approximately a growth of around 25 to -- 25-odd percent, 25% to 30% growth, is something -- is more based on what visibility of order book we see and execution. The moment the order book visibility is higher and the competition is not very high, so we -- and still we get projects, we could show up our largest performance. But I think -- so 25%, 30% is something which is achievable and doable in the coming '21, '22.

Sir, that is definitely a very good number. Why I am -- what I'm checking is probably -- are you being more conservative than, let's say, last quarter? Because that's how I'm actually sensing. Till now, I never had that doubt. But unfortunately, sorry to say, but, I mean, as a retail investor, I'm still being uncomfortable. So I just need assurance from you that things are good and would improve in future. I think as long as you make that statement, I will definitely take your word. That's the only reason I'm asking.

We are very confident of taking projects at the right margins. And we want to ensure that we deliver the top line as well as the bottom line as required. And we said this last quarter and this quarter. Probably you may say, okay, we -- orders have not been -- picked up. Of course, bidding activity was slightly slower in the last quarter. A lot of it has got postponed. We believe that once the order book picks up, that the execution also will -- accordingly then, projects will add on because as already indicated, for 3 of our projects, appointed date were shifted to this quarter. Like the Kandi project, in December, we got the project bid. And for the 2 Bihar projects, we expect anytime now. So the execution which was expected to start in Q3 has got shifted to Q4. But otherwise, the order book is there. It has not gone. So that execution will come in. And the order intake, which will again give new businesses, new execution, these will now come in these coming 2 months or the next quarter. So we continue to believe that we will keep on chasing good orders and continue to grow with minimum 25% to 30%.

As there are no further questions, I would now like to hand the conference over to Mr. Ashish Shah from Centrum Broking Limited for closing comments.

So a big thank you to all the participants for attending the call, and a special thank you to the management for giving us the opportunity to host the call. Thank you, sir.

Thank you.

Yes.

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