Ashoka Buildcon Limited (ASHOKA) Earnings Call Transcript & Summary

[Audio Gap] second quarter FY '22 conference call of Ashoka Buildcon. We have with us today Mr. Satish Parakh, Managing Director; and Mr. Paresh Mehta, CFO of Ashoka Buildcon, along with the Investor Relations team of Stellar IR. Without further ado, I'll now hand over the call to Mr. Parakh for his opening remarks, and then we'll follow it up with the Q&A session. Thank you, and over to you, sir.

Thank you, Manish. Good afternoon, everyone. We would like to extend a warm welcome to everyone on our earnings call for the quarter ended September 30, 2021. Along with me, I have Mr. Paresh Mehta, our Chief Financial Officer, on the call. Before I take you through the operational performance highlights, I would like to brief you on the industry updates. Infrastructure development has emerged as a top government priority in recent years and the Prime Minister's unveiling of Gati Shakti plan on Independence Day adds to a new dimension to the entire implementation. This is a critical step towards India's goal of developing INR 100 lakh crores of holistic infrastructure. The plan includes strengthening the national highway network. The plan seeks to add approximately 1 lakh kilometers of road network over next 4 years extending the country's national road network by approximately to 2 lakh kilometers. This will result in significant increase in the road and highway sectors awarding activity. The Gati Shakti plan seeks to integrate 15 ministries, roads and highways, railway, shipping, petroleum, gas, power, telecom, shipping, aviation. with the goal of assuring comprehensive planning and implementation of infrastructure projects. It would ensure more efficient utilization of resources, continued investment in new projects and faster infrastructure construction, hence, creating enormous possibilities for infrastructure sector as a whole. Let me now discuss the construction activity from April to October 22. Highway construction slowed to 4,450 kilometers to 4,956 kilometers in corresponding year last year. The pace of construction was slowed by the second wave of COVID-19, which was followed by a heavy monsoon season in the majority of the country, which put pressure on the execution activity during this period. The awarding activities also remained modest during this period with projects totaling to 4,913 kilometers, down from 577 kilometers in the previous year. We anticipate that execution will accelerate in the remaining period in order to meet the NHAI FY 2022 target of 40 kilometers per day. The awarding activity will also increase in order to meet the NHAI target of 600 kilometers of Bharatmala project in fiscal 2022. Now coming to the company's performance. So beginning with allow me to provide you an update on the positive development of SBI Macquarie transaction. We were able to effectively renegotiate the terms of shareholder agreement with SBI Macquarie, addressing the investor exit from the proceeds of ACL. The commitment to the investor has been revised for INR 1,526 crores to INR 1,100 crores with a cap of INR 1,200 crores under this new agreement. So SBI Macquarie shall be entitled to receive minimum aggregate consideration of INR 1,100 crores in the event of an exit plus an agreed interest component calculated from January 1, 2021, to December 31, 2021, subject to a cap of INR 100 crores and, thereafter, an additional interest, if any, subject to receipt of interest from ACL asset sale proceeds. In conjunction with the BOT asset sale process, we previously entered into SPA with [ IF ] and its subsidiaries to acquire 49% stake in Ashoka Highway Bhandara Limited. Recently, our subsidiary, ACL, has entered into a share purchase agreement with Highway Concessions One Private Limited, HC1 for the acquisition of 49% of stake held in HC1 in Ashoka Highway Durg Limited, along with the zero interest shareholders loan for an aggregate consideration of INR 5 crores. Following the completion of this transaction, the company and its subsidiary will own 100% of Ashoka Highway Durg Limited. The completion of the transaction is subject to the completion of customary condition precedent . With this, the company, along with its subsidiaries would hold 100% stake in all 5 BOT projects and one annuity asset. This will aid the sales process. Now coming to our order book. We received orders of INR 1,869 crores during the quarter, which includes an order from Adani Road Transport Limited for the execution of civil and associated works on Six Laning national highway of NH-19 from Pangarh to Palsit in the state of West Bengal on EPC basis as well as an order from National Highway and Infrastructure Development Corporation on the EPC basis for Package-6 of NH-29 in Assam. Also, we have received a solar park order for EHV substations from Rewa Ultra Megal Solar Limited in Madhya Pradesh. With this, our total order book inflow stands at INR 3,354 crores for the year-to-date. Our total order book as of September 30, 2021, stand at INR 11,830 -- INR 11,883 crores. The order book excludes an order worth of INR 139 crores we received from Assam Power Distribution Company Ltd. Including this, our order book stands at INR 12,222 crores. The breakup of the order book is as follows. The road sector and railway sector comprises of INR 8,061 crores, which is 68% of our total order book. Among the road projects order book HAM road projects are to the tune of INR 2,813 crores. EPC projects are to the tune of INR 4,455 crores and railways is INR 794 crores. Power T&D and others account for around INR 1,850 crores, which is approximately 16% of the total order book. The EPC building segment is around INR 1,912 crores, which is 16% of our total order book and CGD around INR 60 crores. Let me update you on the status of HAM projects. During the quarter, our Khairatunda Barwa Adda project received PCOD on October 9, provisional completion certificate had been awarded. With this, we have achieved COD of 3 HAM projects. And I expect to achieve COD of 3 more HAM projects in near future. Execution across all the HAM projects is proceeding well, except for Tumkur-Shivamogga Package IV. Well, we have submitted FC proposal to NHAI and expect [indiscernible] very soon. In terms of equity investment, the total equity requirement of 10 HAM projects including PIM is about INR 1,437 crores, of which we have already invested INR 942 crores as of September 2021. For the fiscal 2022 and '23, the incremental equity requirement is INR 158 crores and INR 141 crores, respectively. That is all from my side, I would like now to hand over to Paresh Mehta to present the financial performance of Q2 FY '22.

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 website, too. I believe you all may have gone through the same. Now I would present the financial results for the quarter ended September 30, 2021. Starting with the consolidated results. The total income for Q2 FY '22 grew by 10.1% year-on-year to INR 1,305 crores as compared to INR 1,218 crores in Q2 FY '21. EBITDA stood at INR 448 crores in Q2 FY '22 with a margin of 34.3%. Profit after tax is at INR 78 crores in Q2 FY '22, with a margin -- PAT margin at [indiscernible]. Coming to the stand-alone numbers, the total income for Q2 FY '22 stands at INR 1,976 crores as compared to INR 927 crores in corresponding quarter last fiscal, registering a growth of 5.3%. EBITDA for the quarter was at INR 165 crores and the EBITDA margin stood at 16.9%. The company reported profit after tax of INR 96 crores on Q2 FY '22 with the margin percentage of 9.8%. During Q2 FY '22, BOT division recorded a total collection of INR 243 crores against INR 224 crores in Q2 FY '21 and INR 208 crores in Q1 FY '22. Total consolidated debt as on September 30, 2021, is at INR 6,466 crores, of which project debt is INR 6,082 crores including INR 250 crores of NCDs at ACL level. The stand-alone debt is at INR 383 crores, which comprises of INR 160 crores of equipment loans and INR 223 crores of working capital loans. With this, we may now open the floor for questions and answers. Thank you.

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

So first question is what is the status of progress on SBI Macquarie exit. I am asking about the sales process and the time line. Is the December 21 is a fair time line where you can achieve some part of sales process? And the related question is, why the valuation or revised onwards? Do we expect a lower amount? Is either the reason for the proceeds of this year?

Yes. So from a perspective of HBM equity, we -- as we have disclosed, restructuring agreement has been done where it is negotiated for -- give them an exit at approximately INR 1,100 crores plus interest there on 31 March -- 31 December 2021. In pursuit of that, we are in talks and matured level of discussions on -- with the potential investors to buy into SPVs, which are BOT SPVs or annuity SPVs. And we do expect them to be closing in this year. December deadline may be extended, but there is good visibility of getting the deal done before the year-end.

And why the valuation -- why the exit valuation revised onward? I think a particular reason we are expecting a lower value for the sale proceeds?

This is more of a negotiation like -- I mean between the investor and the move -- the value of what will be got from the sale of proceeds will be determined over a period of time. So it's not directly core. It's more from a perspective of how we can negotiate from the amount to be received by Macquarie.

Sir, what is the reason for participating in the round-the-clock tender for power by SECI? Are we looking to enter into some power generation from the sector?

No, there is no such [indiscernible] EPC works.

So there's some RTC tender, right, floated by SECI where we have participated. Is my understanding right?

No. You've just taken [indiscernible] here.

Maybe I'll check off line. Sir, coming back to the solar contract which you have right now, given the fact that the model price have gone upwards, is there any risk to the margin, especially with the NTPC contract? And is there any clause which allows us to pass through the model prices?

Yes, overall sector has suffered on module prices. So we are in discussion with NTPC as well as MNRE to find a solution to the situation. So the entire industry is in discussion, and we are hopeful of getting a good solution. As of now, there is no clause in the contract where it can give us relaxation.

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

I'm so sorry. I was on mute. Am I audible now?

Yes, you're audible.

I have 2 questions from my side. One is on the execution front. Just wanted to check after provision of Q2 and almost half of Q3, what would be the -- our guidance of revenue for fiscal year and margins as well?

From an execution point of view, most of the projects have delayed started. So we are now going to see most of the execution in Q4 and, of course part of Q3. But overall guidance, which was INR 25 crores will now go to around 20% up than the last year. Margins will remain in a similar range.

Okay. So execution wise we're expecting maybe 20% growth now as compared to 25% every year.

Right.

Got it. Sir, my second question was on, again, sorry harping on the Macquarie deal again. So I think one of the clauses in the rearrangement in the negotiation of the press release that we have mentioned is that we have also entered into an agreement for an asset swap to provide an SBI Macquarie. So just wanted to pick your brains on that. So basically, is it that we are kind of really finding it difficult for a buyer for all the projects or some of the projects? And is asset stuff also a very likelihood outcome of this entire transaction, in which we don't end up paying SBI Macquarie entire INR 1200 crores but instead, maybe part cash and part of some projects or some [indiscernible] projects. So how is this entire thing for likely to pan out given the new clause that we have?

So from the time line perspective, what SBI Macquarie has in mind, they -- and as per the negotiations in the agreement, we have presumed that some certain -- definitely certain sale of assets will happen. And in case there is any delay in one of a few of the assets not happening in time, they will probably swap into one of the assets, and then they would take an exit. So that is the idea behind a mix of cash and swap. And so they're typically eyeing for a cash deal only, full cash deal, but they have kept this option open. So in the perspective of exit, they would prefer to not stop and do a full cash deal. But the provision is included in the agreement.

And let's say, for example, hypothetically speaking, if there is the requirement of some asset swap. Was that a 100% asset swap? Or could it be that [indiscernible] stake in some projects and the rest remaining cash or it be like cash plus complete stake in some of our projects? Is there any reason on that part [indiscernible]?

Generally, they would like to do a 100% swap, but I think in certain assets, there would be option for they probably would like to take a majority stake and a mix of majority stake and cash.

Right. And the last thing on that front, there is nothing in the pipeline on the sale of HAM projects, right? At this point of time, we are focusing only on the sale of BOT and annuity projects and for providing the exit in the quarter.

So HAM projects are also on the annual, but they are probably -- at a later stage, they will come up for sale because quite a few of assets are yet to achieve COD. We have 2 assets that achieve COD. So on the priority, definitely, the BOT projects and annuity projects are there and the potential investors are also definitely looking at HAM projects.

[Operator Instructions] The next question is from the line of [indiscernible] from Edelweiss.

So my first question is what is the EPC requirement for the CGD business and in the HAM projects? And also if you can give the BOT portfolio debt amount?

So as far as the CGD business is concerned, we have already invested INR 67 crores. And based on the 3 GAs which we have, our total liquidity requirement is approximately INR 200 crores. So from that perspective, the requirement of another -- the balance INR 130 crores will be coming post -- will start from '22-'23, in '21-'22 and almost sufficient part of '22-'23, H1 of '22-'23, there will be no requirement of any equity in build because you already invested, and now we are drawing on debt funds for executing the project.

Okay. Okay. And the BOT requirements for the HAM projects and BOT portfolio debt?

So for the HAM projects, the equity requirement balance for '21-'22 is approximately INR 158 crores. and for '22-'23, INR 141 crores. This is based on the present existing balance projects which we have under hand.

Okay, sir. And so think of the BOT portfolio debt amount?

BOT portfolio will probably require approximately INR 40 crores -- INR 50 crores of support on a yearly basis.

Okay. And what is the current debt that we have?

Current debt on?

On the BOT portfolio?

On the BOT portfolio, we have INR [ 2,356 ] crores. And on HAM project is around INR 2,000 crores.

Okay. Okay, sir. And sir, on the ACL portfolio, what is the equity and the debt amounts like the equity invested sale date and the debt?

So debt is -- there's only one debt on ACL's balance sheet. That is the INR 250 crores of NCD, which we have raised in the last quarter. Otherwise, total equity, which has been infused is around INR 2,650 crores, INR 2,700 crores approximately.

Okay. Okay. And sir, my next question is what is the land basis for the Tumkur-Shivamogga Package III and Package IV and also for the Memmadpur-Banur-Kharar Corridor project?

Hello.

Hello. Yes, sir?

Just could you repeat your question?

I don't know the land status for the Tumkur-Shivamogga Package III and Package IV and also for the Memmadpur-Banur-Kharar Corridor project?

PS3, we have almost 87.85% of land available to us. And PS4, around 80.05% is available. So PS4 now they are in the process of giving appointed date.

Okay. And for that corridor subject?

Which corridor?

Memmadpur-Banur-Kharar.

IT corridor, Punjab?

Yes.

In Punjab they are -- actually, they have done 90% of 3G, and they're in process of doing 3H. 3H is getting a bit delayed because of the availability of manpower by the state, has now already gone into election mode. So 3H is getting delayed in the IT corridor project.

Okay. And sir, about the CapEx thing, so what is the CapEx that we have done in Q2? And what are we planning for the next half of the year?

Okay, Paresh.

Other than the equity requirement, CapEx level is not very significant. It would be within the range of INR 20 crores, INR 25 crores.

Okay. Okay. Got it, sir. And lastly, sir, if you can give me the revenue breakup segment-wise for the second quarter?

So for the second quarter, on the roads front, it is INR 816 crores. On the power front, it is INR 38 crores. Railway front, it is INR 98 crores; CGD, approximately INR 6 crores; and others -- RMC would be INR 25 crores; and others, around INR [ 15 ] crores.

Yes. Okay. And one last question, sir, what is the order intake that you are planning for the second half?

Order intake, we are looking at INR 2,000 crores to INR 3,000 crores.

Okay. INR 2,000 crores to INR 3,000 crores.

INR 3,500 crores, already we have done, so INR 3,000 crores should be.

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

Sir, my first question will be on the outstanding in the power T&D business. So there were some data which were outstanding in the last quarter also. So what is the status as of now in the power T&D outstanding, sir, that we see this?

So on the power, net position is approximately INR 130 crores. And anything else on this front you wanted?

So you said that in the last time we had around INR 198 crores spending from the [indiscernible] in that kind of 13% also at around INR 250 crores.

Yes, on a gross basis, there are a number -- this is a net basis, our net of advances and unearned WIP. If you -- on a gross basis, power is INR 315 crores, which includes regular receivables, hold amounts, retentions.

Okay. Any state-wise breakup if possible as of now or we can take it offline?

Yes, yes. We can take it offline, but it will be just [indiscernible]

No. On the state, we have approximately -- this is by roads and power and railway, BR will be approximately INR 157 crores. [indiscernible] would be INR 143 crores, that made them all.

INR 143 crores.

So we can take it offline [indiscernible].

I'll take it offline. No problem, sir. And on the Tumkur-Shivamogga Package III, we have received [indiscernible] first package or you said that I expect soon. So what about Package III have we received?

3, we have received, yes.

So what is the date, sir?

Right, 9th July.

9th day of July, okay. On the balance sheet side, can you give us the number of mobilization advance outstanding retention and unbilled revenues as of September?

On the mobilization side, I'll give you the total number is INR 278 crores for roads as well as power, all included.

And retention and unbilled?

Retention and unbilled would be approximately INR 338 crores in retention and unbilled would be another INR 387 crores.

Unbilled around INR 387 crores, okay. And sir, on the execution front, so certainly...

Unbilled would be INR 460 crores.

INR 460 crores. And sir, on the order inflow, as you said...

One second. Let me just rectify, unbilled WIP is INR 779 crores, I think, is what I got.

That's pretty high. So we have to break up for unbilled between power and road?

So this major lease in roads because these are certainly -- in certain cases, there are milestone payments. So they will get released in this quarter. EPC and HAM, EPC road and HAM is approximately INR 570 crores.

Okay. That is EPC plus HAM.

Yes.

And sir, on the order inflow as you said, we have received around INR 3,500 crores interest. What you see with the announcement, it comes to almost like INR 4,800 crores to INR 5,000 crores because you had received [indiscernible] INR 7,000 crores in this Ambala project, Punjab INR 648 crores is gone. So I just consider like your inflow has been good. So is there any cancellation of projects in the order inflow? Or what is the status like?

No, numbers are absolutely correct, whatever has been announced, and whatever we are seeing are absolutely matching. There is the cancellation or nothing.

Yes. So any progress on the Maldives project and the hospital project, which is up and then in the West Bengal road Adani? So what are the status on these projects? Because the typical order seems to be lower compared to the order backlog overall. So when can we see the outer backlog to be actually visible.

Execution of Maldvies or Adani project or in Assam, which we have got EPS for Punjab project. All these are starting in Q4.

And sir, banking, finally banking utilized and unutilized portion, funding?

Hello. Yes. So you're asking for banking limits [indiscernible]? We have almost -- non-fund base, almost around INR 2,000-odd crores and fund-based around INR 200 crores unutilized.

Fund limit would be how much for nonfund-based and fund-based?

For nonfund-based, it would be approximately INR 4,000 crores. And fund base would be -- CC limits would be around INR 350 crores.

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

I just have one question. I wanted to understand the contract between the HAM SPVs and the EPC. So how is the -- how do you account for the raw material installation which is there? Where does [indiscernible] book, whether in the HAM SPV or whether it gets in the EPC?

So the acquisition is -- which is the estimated escalation above the projected escalation is passed on to the EPC contractor.

Okay. So the HAM -- overall project cost for the HAM remains the same and EPC margins contract.

Yes. If contracts or increase depending on -- yes, it gets compensated if there's an excess escalation received from NHAI vis-a-vis the projected project cost at the time of financial closure.

Okay. But you -- there is no possibility of increasing the debt portion sanction from the banks for the higher cost, right? That is not a [indiscernible] .

No, no, no.

The next question is from the line of Bharani Vijay from Spark Capital.

Sir, regarding the hybrid projects, there were 2 concerns, especially when it comes to valuation and the sale of these assets. One was this GST on the annuity payments. I think that is resolved now. Second is this bank rate, which reduced, which resulted in the overall [ IRS ] getting impacted. And because we have in our portfolio, a lot of projects which we won in the initial 2017-'18 period, so how do you see this affecting our ability to monetize these assets going forward? And what is the way out for this?

So there are 2 or 3 assets which were bid where the difference of RBL lending rate was slightly sizable. So definitely, it has taken some hit on the valuation of those SPVs. But accordingly, we'll have to take a step and bite the bullet if it is required. Then we'll return the asset and try to ride the wave of the RBL lending rate. But if we get a good valuation, which is closer to the estimated -- because investors also, from a futuristic aspect, they consider a higher RBL lending rate in future. So from that perspective, we are closer to our initial value expectations. We may monetize that asset, too. So that negotiation definitely is going on now.

Essentially waiting for the interest rates in the economy going up would be one of the ways.

Yes, including the valuations.

Right. Correct. Secondly, on the debt that we have outside the EPC business, so you mentioned the BOT portfolio has a debt of INR 3,156 crores and the HAM project so far, we have about INR 2,000 crores, so after this SBI Macquarie deal, say, in the next 1 or 2 quarters, this BOT portfolio debt would be totally out of the consolidated number, correct?

Right, right.

And you were telling the cash support from the parent to all these assets put together is around INR 50 crores per year?

Yes. Probably will be for.

Yes, that will also be...

That will also go away.

Yes, that will also go away.

Correct.

So what we left with probably in the next year is INR 2,000 crores of HAM which it will, of course, be increasing as we execute more, right? So what is the nature of debt repayment in these SPVs? Is it the ballooning structure? Is it -- how is it? Just trying to understand.

It's a ballooning structure because the annuity and the interest has to be serviced over a period of time. So there is a bit of a ballooning structure in the repayment schedule. Because if you see the annuity also, the principal amount is ballooning. Similarly, here also, it would be ballooning structure or [indiscernible].

Yes. Why I'm asking this, whatever cash is required for these HAM projects would be generated by each of the SPVs. You don't foresee any shortfall?

No, no, we don't, no. We don't foresee any shortfall.

Right, sir. I basically require yearly repayment schedule of these assets, probably for which I will get in touch with you, sir, offline.

[Operator Instructions] The next question is from the line of [ Sushant Varma ], retail investor.

I have been attending your conference calls for the last couple of quarters. And I always see you talking about -- pretty good about the pipeline and the number of projects, the support from the government and everything else. And your order book is also pretty good, actually, but somehow, I find your performance to be a bit lackluster. I don't see that kind of confidence, which I had got about maybe 3 quarters back from the management team. So is there a problem in terms of executing the project? Or is it just -- I mean, the nature of the business right now, I'm really worried as an individual investor.

The nature of business is such that the starting of the project is very important, winning and then starting. So there has been a delay to start in most of the projects due to the land acquisition issues and other issues in most of the projects. So if you see, Q4 is very optimistic, around 6 projects are starting in Q4, which was supposed to start in Q2 and Q3. Particularly, 2 consumer [indiscernible] almost by a year on various issues, COVID and then land acquisition. So this business is all about the entire highway sector business is completely dependent upon land acquisition. Though NHAI always says they would have a lot of 80%. But then getting this 80% actually on ground does take time.

Understood, sir. So that would eventually mean that even Q3 performance may not be great, I mean if I am to extrapolate that.

Q3, we are having good projection and to execute in Q3 like Bundelkhand, PS 3, 2 VR packages, [indiscernible] projects, these are all -- at all stage of execution. So they will throw up a good number. But Q4 will -- again will be starting of the projects. So execution will start, but numbers will always pick up when projects are really like 6 months down the line.

Okay. Okay. Sir, the next question is about the SBI Macquarie deal. I mean, of course, you have been sharing everything openly in all the calls. But somehow I feel it's a moving target. I mean, I think we thought it would probably get over by Q2. Now it's probably Q4. So I mean, is there a major struggle in that? Or again, it's all to do with the market dynamics right now?

So basically, these are a set of projects where we have annuity, where we have BOT projects, where we have hybrid annuity projects. So evaluation and due diligence of these projects take huge time for the investors. And then there is a process for getting permissions from the authorities. So basically, due diligence because of the nature of projects are varied and the mix is completely from [ speed ] to NHAI from hybrid to BOT. So the whole evaluation process does take time.

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

Yes. So 2 more questions from my side. One is on the overall strategy of business that I would want to take a picture based on. So right now, we have now ventured post roads. We have ventured in the railways, power, transition and now the [indiscernible] building segments also. Of course, we used to be building as well. So at a company level, what -- are we now looking to actively move, let's say, actively diversify beyond the growth segments, given the competition that we are seeing in NHAI projects and more and more orders going forward in the next 1 or 2 years, you could expect a larger share of orders as compared to before coming from these non-road segments?

So overall, the strategy is, as I explained last time also, it will be 70%, 30%, 70% will always comprise of roads and railways. And 30% would be new sectors like buildings is giving us a very good impetus, and the part is already there. The railway is always a mix of semi nonelectrical or electromechanical depending upon which projects we get. But normally, the ratio would be like 70-30 for at least the next 2 years.

Got it, sir. And sir, in terms of HAM projects, I mean given that right now, we are, let's say, very close to some deal, at least is not a complete portfolio sales -- at least some asset sale in the BOT segment. And as we just mentioned, that probably HAM asset sale will take a priority later on. And also, I think in the market, there is a new supply of projects which other developers also have put to sale. So any transaction in that case also looks not easy to materialize. So going forward, would we be open to taking more and more acquisition in the road segment? Or will we find a way to reduce the equity requirement for them [indiscernible] balance sheet?

No, going ahead, we would be definitely bidding for EPC as well as we will be participating in the HAM projects because anyway HAM is going to remain as a business strategy going ahead.

Right, sir. So just -- just my last question is the trend. Sir, given that we are looking for, let's say, again, moving on a complete BOT portfolio sales, and if next year, for example, we end up selling some of the good BOT projects, which are relating good cash flows and let's say maybe Sambalpur or some other project which are not generating cash flows are not the ones which we are able to sell off, then we might end up in a situation in which about INR 40 crores to INR 50 crores of annual funding requirement, which is the net funding requirement might actually increase because positive cash flow from the good assets might no longer be there, and we might actually have to fund a higher loss making position from our stand-alone numbers. So -- and then on top of that, we also have the equity requirement of current HAM projects and the future HAM projects as well. So do you foresee that situation leading us to maybe more incremental debt of stand-alone and shares on the balance sheet?

No, we don't age that any of the projects which we have put on the block will not sell. So there's always a value and discovery will be there, and we'll be able to sell. So we really don't envisage that any of the projects will be left out in the process. It may be a couple of months plus minus, but otherwise, it will definitely happen.

The next question is from the line of Subhadip Mitra from JM Financial.

I'm sorry, I joined the call a little late, so my questions might be a repeat of something you've already answered before. My first question is with regard to what is your guidance with regard to the current year's revenue for the full year, for FY '22? And the margin guidance, has there been any change?

So guidance, we had said we will be around 20% in the guidance. Margins will remain in the same region as they are today.

Okay, the same range as what we have done in the first half.

Right. Right.

Understood. Secondly, you also had a solar EPC project for NTPC, which we were executing. If I remember correctly, I think last time we spoke what you were mentioning is you were still to procure the module. So has there been any progress on that in terms of mortgage procurement? Are you looking at any loss on this given that module prices have spiked?

Yes. So there was a sudden spike in the module prices all across and the entire industry is suffering on that. As an industry, as a whole, we have taken up with NTPC and MNRE, and they are trying to find out a solution for this particular problem of spike of modules. No purchase order has been placed yet.

The next question is from the line of Mangesh Bhadang from Nirmal Bang Equities.

Sir, a couple of questions from my side. Sir, so I just wanted to know how much is the subordinated debt as well as the loans and advances that we have given for the assets that we are planning to [indiscernible]. And what is the realistic assumption of how much of that will come back to the company if it's 100%? Or you think that there could be lower than that? And second question is, after the deal, how do we expect the capital allocation of the company is going to be. So basically, whether the focus would be on roads and then followed by EPC or probably something like CGD or any venture wherein capital commitment is on the higher side, what we looked at?

On the subordinate debt, as we have already said, ABL has supported ACL for approximately INR 950 crores odd, of which approximately INR 200 crores is interest of INR 750 crores in cash. So that is supporting the SPVs through ACL or equity structurized in the form of equity or equity or debt structure. So that's how it works at -- between ABL, ACL and the SPVs.

So that money will come back, right? So I'm saying post the deal, including the interest income which [indiscernible]?

All the valuations stack up and what we actually -- we close the deal.

Okay. And on the capital allocation, sir, so would we be looking at any opportunities in the spaces where in we have to say airports or any other space wherein the capital commitment would be there? Or you would be sticking with EPC or maximum HAM?

Our major focus will be EPC, but HAM, which is another model of EPC road project, we'll definitely look at -- continue to build for HAM projects, where probably we'll get into structures with long-term equity investment, HAM and on equity. It will depend in future, but otherwise, I keep definitely. Other areas, we are typically focusing on cash equity contract.

As there are no further questions in queue, I now hand the conference over to the management for their closing comments.

We thank everybody for joining this call, and we are open for any questions and answers offline. You can get in touch with myself or our IR agency, Stellar. Thank you, and good afternoon.

Thank you, everyone.