Ashoka Buildcon Limited (ASHOKA) Earnings Call Transcript & Summary

FY '22 earnings call [indiscernible]. From the management side, we have Mr. Satish Parakh, MD; and Mr. Paresh Mehta, the CFO, with us. We will start with the opening remarks from the management regarding the industry, the results, and post which we will open up for an interactive Q&A. Over to you, sir.

Yes, thank you. Good morning, everyone. We would like to extend a warm welcome to everyone on our earnings conference call for the quarter ended December 31, 2021. Along with me, I have Mr. Paresh Mehta, our CFO. Let me start with the equity sale of ACL projects. We have successfully completed an asset sale transaction of Ashoka Concessions Limited of 5 SPVs by entering into a share subscription and share purchase agreement, with Galaxy Investments II Private Limited, an affiliate entity of KKR. The deal to be completed by September 2022, after receiving required approvals from lenders, NHAI and other relevant stakeholders and completion of certain condition precedents. The deal transferred the entire share capital of these 5 projects, including repayment of shareholders' loan for an aggregate consideration of INR 1,337 crores. The total proceeds received will be utilized to facilitate the exit of SBI Macquarie from Ashoka Concessions limited, allowing SBI Macquarie to exit the company fully. Further, the transfer of these 5 SPV reduce the consolidated project debt of ABL by INR 3,166 crores. Post this transaction, the company will remain with following major projects in highway portfolio: 74% equity stake in one toll project, that is Jaora-Nayagaon in the state of Madhya Pradesh; 4 annuity projects, which includes 50% equity stake in Chennai ORR; and three fully owned projects Hungud Talikot, Bagewadi Saundatti and KSHIP and fully owned portfolio of 10 HAM projects. As mentioned earlier, we are at an advanced stage of discussion for equity sale of Jaora-Nayagaon BOT toll and Chennai ORR BOT annuity. Also, the HAM projects portfolio, we are evaluating to exit options, like Infra INVIT or Sale to Investors. Coming to industry updates. The rise in addition of National Highway is compared to 13,326 kilometers of road constructed in 2021 and 1,237 kilometers in '19, '20. In 2021, the construction of roads per day increased to 36 kilometers per day against 28 kilometers in 2019, '20. In an effort to boost the logistical capacity of India's road network, under the PM Gati Shakti initiative, the Indian government has stated that the national highway network will be expanded by 25,000 kilometers within '22, '23. The government is expected to increase pace of highway construction. Existing highways will be made into a bigger, stronger and new ones to provide connectivity to all economic nodes under PM Gati Shakti initiative. The target national highway expansion of 25,000 kilometers in FY'23 will put an impetus on strong project award. The current expansion plan by government is expected to help the faster movement of people and goods. Coming to HAM projects. We have received appointment date for Ashoka Bettadahalli Shivamogga, that is Tumkur-Shivamogga Package-IV in the month of October. The total equity requirement of all time HAM projects is about INR 1,337 crores, of which already INR 960 crores has been invested as on December 2021. Coming to the order book. As mentioned, we have achieved a robust order inflow of INR 8,526 crores in current financial year. Some of the key large orders are as follows: We have received an order from MCGM for sewage treatment plants of O&M with 15 years, and this order is a breakthrough order in sewage treatment for the company. Along with this, we have achieved work orders, in Goa, on a highway project from MORTH amounting to INR 687 crores. We have also received LOA from NHAI worth INR 829 crores for construction of 6 laning from Belgaum to Sankeshwar Bypas of NH-48 in Karnataka on EPC mode. Recently, we were L-1 for railway electrification order about INR 693 crores. Also, we have received work order of INR 263 crores from Navi Mumbai Airport. The breakup of INR 12,250 crores order book as on December 2021 is, road projects compromised of INR 7,633 crores, which is 62% of our total order book. Among the road projects, the HAM road projects are to the tune of INR 2,638 crores and EPC projects are to the tune of INR 4,995 crores. Power T&D and other projects account for around INR 1,902 crores, which is 16% of our total order book. The EPC Building segment contributed to INR [ 19,050 ] crores which is also 16% of our total order book, while railway stood at INR 729 crores, which is 6% of total order book. The EPC and CGD comprises of balance of around INR 82 crores. The total order book, including the project received and the railway project where we are L-1 in current quarter stand at INR 14,500 crores. Let me reiterate that our focus remains to build strong EPC businesses. In the segments of highway, railways, power T&D, buildings and now water treatment. The current order book of INR 14,500 crores provides us with good visibility of EPC business growth. On asset portfolio front, we have already built 10 HAM projects portfolio. In terms of new project bidding, our priority will remain for HAM projects and standard the HAM project portfolio further. This is all from my side. I would now request Mr. Paresh Mehta to present the financial performance of Q3 FY'22.

Thank you, sir. Good morning, everyone. The result presentation and press release for the quarter have been uploaded on the stock exchanges and on the company website. I believe you all may have gone through the same. Now, I will present the financial results for the quarter ended December 31, 2021. Starting with the consolidated results. The total income of Q3 FY'22 grew by 10.8% year-on-year to INR 1,475 crores as compared to INR 1,331 crores in Q3 FY'21. EBITDA stood at INR 433 crores in Q3 FY'22 with a margin of 29.4%. Profit after tax is at INR 389 crores in Q3 FY'22. The exceptional item in the consolidated financials is write-back of INR 326 crores on account of remeasurement of obligation towards investors in ACL. We have entered into agreement with SBI Macquarie through which we have reduced obligation to INR 1,200 crores from INR 1,526 crores. Now coming to the standalone numbers, the total income of Q3 FY'22 stands at INR 1,133 crores as compared to INR 1,028 crores in the corresponding quarter last fiscal, registering a growth of 10.2%. EBITDA for the quarter was at INR 150 crores with EBITDA margin of 13.2%. The company reported a loss of INR 694 crores in Q3 FY'22, as we have recognized exceptional item of INR 796 crores -- INR 769 crores. The exceptional item in stand-alone financials is expense of INR 769 crores towards impairment of its investments in equity shares, CCDs and loans given to ACL. This is mainly due to sale of equity of 5 BOT projects to KKR from aggregate consideration of -- for an aggregate consideration of 1,337 crores and giving exit to Macquarie. During Q3 FY'22, BOT division recorded a toll collection of INR 257 crores as against INR 260 crores in Q3 FY'21 and INR 243 crores in Q2 FY'22. Total consolidated debt as on December 31, 2021, is at INR 6,822 crores, of which project debt is INR 5,923 crores, of which INR 3,166 crores stands for project debt of 5 projects. LCD stood at INR 250 crores at ACL level. The stand-alone debt is at INR 649 crores, which comprises of INR 140 crores of equipment loans and INR 509 crores of working capital loans. Out of the total consolidated debt of INR 6,822 crores, INR 3,166 crores will be transferred along with the 5 SPVs of BOT projects. Post the sale of transaction, effective consolidated debt will be at INR 3,656 crores. With this, we now open the floor for question and answers. Thank you.

[Operator Instructions] The first question is from the line of Vibhor Singhal from PhillipCapital.

Congrats on great execution in this quarter. Sir, just wanted to confirm on one thing. I think when we have this call regarding the sale of the 5 assets to KKR group entity. We have mentioned that I think we're expecting the write-off to the tune of INR 500 crores to INR 600 crores. Any specific reason that it ended up being significantly higher than what was estimated?

So when we had the call, post the transaction, the amount was not including any provision for exit for the SBI Macquarie, was only talking about the projects on an estimated basis on the projects of the 5 BOT projects. So from that perspective, additional provisioning is on account of the exit to be given to SBI Macquarie, which was accounted in this quarter.

But sir, why would that lead to an incremental provision in stand-alone books. I can understand there could be some provision, but why would it be required in our stand-alone books?

So what happens is the total obligation to be paid to Macquarie will depend on the ACL's network, which -- the ACL's realizable value. The balance has to be funded from ABL holding in ACL. So from that perspective, this provision of a total INR 770 crores has been provided for -- in Q3. Probably, we can discuss on a one-to-one basis also.

And this is the total provision, sir, do we expect any more provision after this or this takes care of the entire transaction requirement?

This is the total provision for the valuation of ACL on these 5 BOT projects, then we are left with one project that is Jaora-Nayagaon, which will typically fetch more value than its book. And also then there are the HAM projects which are at book, almost.

So we do not expect any more write-offs maybe going forward, even if we want to sell Jaora-Nayagaon, Chennai ORR projects?

Nothing very significant.

Got it, sir, got it. Sir, in terms of the order book, if I could basically get Satish sir maybe comment. Sir, I think we've had very strong order inflow. But even then, I think sir our order book right now, which is around INR 12,000 crores and -- maybe INR 14,000 crores including the L-1, we basically are looking at an order book which is slightly on the software side of more like 2.5, 2.8x book to sale. So are we looking at basically aggressively for more kind other projects, I think it will sometimes we won some HAM project? One is on that front? And second is I just wanted to check again on the fact that recently the mega projects of Ganga Expressway were awarded to IRB and Adani Group. If it works for us, would we be open to working for them as a subcontractor given that our 5 projects were there?

Yes. So see our focus will always remain on highways and budget also shows very optimistic aggression by government to build highways. This will come on EPC as well as BOT mode. Recently, also, we have one EPC, 2 highways, one in Goa and other in Karnataka. So our participation is going to be there in all these highways. And the projects which are won by major players like Adani and all, we are also taking interest in participating trying to get EPC part of this portion. So we are open to such offers in the market.

Got it. Got it, sir. So just last connected question. We recently won this project on BOT business, the sewage treatment plan. I think we've been testing those waters with -- earlier with CGD and now with garbage sewage treatment. Will we be looking for similar kind of more projects on a BOT basis? I thought that we were basically looking more like either HAM projects or more EPC projects only. But if similar kind of projects, let's say, come in sewage treatment, CGD or water or mining, are we open to bidding for these kinds of projects on BOT business?

So let me clarify, this is a pure EPC project. with operation maintenance only, not to paid operation maintenance for 15 years. So this is not a BOT project. And your question on whether we will be open to bidding any of these kind of projects, it will all depend upon structures, availability of finance, if it is available and our role is to be a major EPC contractor, then definitely we'll be entering in there.

[Operator Instructions] The next question is from the line of B Vijay from Spark Capital.

So are we interested in bidding for developing solar projects because I saw our name in one of the recent solar bids. And if so, why are we bidding for being a developer on the solar side?

We are not trying to be a developer in solar side. What we have done is we have been participating for EPC part of solar projects.

Okay. Because I remember seeing Ashoka's name in -- one of the hybrid solar come storage bids recently. That is as a developer, right? If I'm not wrong.

See, there are arrangements where finance is made available, and we have to play our EPC part in most of these projects. So that's -- the structure is available, where we actually pay our EPC part and not the investment part.

Sure, so the idea...

Always to remain more of an EPC player than a developer.

Sure. So the idea behind this bid was someone else will bring in the investment, so who would that be?

Right. Absolutely, absolutely.

Who would that be? Sir.

We cannot disclose very strategic names behind this. That's something that we're not able to disclose, yes.

And we'll continue to bid for such projects in the future?

Yes, if EPC -- EPC is our strength. And definitely, we would like to encash that.

Okay. So even on the solar, EPC side, we are building our capabilities? Because I don't think we have solar project significant in the past?

No, we are already executing a solar project for NTPC on EPC basis. So already, we have experience, now executing so that, yes.

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

And congratulations on an excellent quarter, especially on the order inflow. Sir, my first question is, I think you received a pointed date for all the projects, and I assume that the work on the Panagarh to Palsit that also started. How do you expect the FY'23 to pan out in Q4? Can we expect in FY'23 INR 5,000 crores kind of the top line?

Yes. So let me clarify on pointed dates. Panagarh to Palsit, we have still not received a pointed date, but we expect that to receive in this Q4. and other projects where we are L-1, but we are not -- or we have got LOA also, but a pointed date yet to be declared like Mopa highway at -- Mopa Airport highway at Goa. We've still not received a pointed date. Sankeshwar, we have got LOA but we are yet to receive a pointed date. So all this, we will receive either in Q4 or Q1 of next year. And definitely, these all orders will pick up as we go along in Q1, Q2, Q3, Q4. So next year, we see good growth looking at the order book available in hand and picking about the projects.

Can I expect to it help some growth over FY'20 to '22?

I think we can easily target around 25% to 30% for '23, yes.

Okay. Sir, I think, we...

25% to 30% in next year, yes.

Understood. Sir, I think we were advanced just to complete Jaora-Nayagaon, Chennai ORR. Can you expect this in Q4? And the related question is, what will you do with the 6 Jaora-Nayagaon. Will this use to reduce the stand-on debt?

Yes. So Jaora-Nayagaon and Chennai ORR, we do and we do target to get these deals signed out before 31st March, so that is what is our focus. Definitely, what cash will come in -- will come in at heavy level somewhere around in the Q2, probably Q2 of next year. at that moment, definitely, a debt reduction would be one of the targets at the stand-alone level. And depending on possibility and the new contracts being available, we may decide allocation of the capital either for debt or for investors depending on how the execution pans out.

Lastly, sir, water sewage order, which you received from MCGM of 10.5 [ billion. ] I think the order which you mentioned in the presentation is around 6 [ billion. ] So, should I assume that 4 [ billion ] is for O&M for 15 years? Or is it in JV and somebody else has to do the balance work?

Yes, yes. It's a joint venture. So we have captured in our presentation, only our portion of the execution because that's the EPC. The work is INR 1,046 crores, which we have -- in joint venture. So that's what we have declared in the stock exchange. It's a joint venture with another party.

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

Congratulations on a decent quarter. My first question is on the bid pipeline. So if you can highlight the bid pipeline on segment wise? And how much of the bids have we submitted with this have to be opened?

Yes. bid pipeline, as we explained, NHAI is aggressive on putting up a lot of bids and we are participating in most of the HAM and EPC projects. So could you just repeat what exactly...

So I was asking if you can give us segment-wise like building, T&D, railways, highways. So what kind of ordering or bid pipeline is there for the fourth quarter? And also if you can highlight how much of bids we have already submitted, which is yet to be opened?

So bids submitted and to be opened, there are a few bids, of course, which are yet to be opened. Around INR 9,000 crores bids are there, which are yet to be opened. These are basically into highway sectors.

What about railways, T&D and other segments, sir?

Railway, there are no significant bid, which are yet to be opened.

So other question is on margin. So you have your guided for 25% to 30% in stand-alone increasing revenue growth for next year. So for next year, given the commodity headwinds and some of the other peers reporting drop in margins. So how do you see the margin -- EBITDA margin for the year, if you can give some guidance there?

I think margins will be able to maintain because we also are taking into consideration while building the commodity price variation, which is really affecting the sector. So these are part of our bid inputs and most of the bids have price variation clauses, a very few which are like fixed-price contracts.

So what is the total fixed price contracts percentage in our order book? And is it safe to assume that next year you can do 12% to 13% EBITDA margin?

The road projects, most of the projects you may call HAM or you may call the EPC contracts. Most of the projects have escalation clauses. Other projects, most of them are in the fixed price nature.

Okay. And sir, next year, EBITDA margin would be in the range of the 12%, 13% or more like 11% to 12%?

It would be in the range of 11% to 12%. That's what we have -- 11.5% is what this -- 9 months, is going up and probably that would be range, which will be maintained for '22,'23.

Okay. So just lastly, if you guys note down, who is the joint venture partner in the MCGM. So, I mean, just wanted to understand, is it more for technical scoring that's why we partnered with them? Or what's the reason for doing it and so, if you just highlight?

For MCGM?

Yes, yes, yes.

Yes. Basically, from a qualification perspective, certain requirements are there. So we need -- and also bringing experience of this new segment for us. So the JV partner updation, the experience and also the qualification.

And who is the JV partner here?

Gondwana Engineers is the JV partner who had been have been doing sewage treatment plant since long.

Gondwana Engineers?

Yes.

The next question is from the line of Ranjeet from Mahindra Manulife Mutual Fund.

Sir, if you can throw some more clarity regarding the equity infusion, excluding the PIM portion in the hybrid annuities that would be required?

Sorry, I was on mute. I'm sorry. So the equity infusion for the balance HAM projects in the coming '21, '22 and '22, '23, where in most of the HAM projects -- all the HAM will be funded for equity. Other than PIM would be INR 145 crores for this year balance in the next 1.5 months and INR 139 crores for '22/'23. So total investment yet to be done in these HAM projects is INR 284 crores. So maybe some of the equity for '21, '22 may get filled over for '22, '23, depending on execution and requirement of the project.

Okay. And what's the update on this Maldives social housing project?

So on this project, the government -- Maldives government is in the process of tying up debt with [ Exim.] We'll have to wait till then unless -- I mean, if they are successfully tying up, then this contract will continue.

Okay. And any more large orders in the international geographies we are looking at?

Yes, we have been participating in international geography. So Bangladesh, we are L-1 for INR 500 crores job.

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

So I think you've already given a guidance of about 25% to 30% growth in sales, I'm sorry, I may have missed some of the details. So just reiterating here, that are we looking at this kind of a growth for both FY'23 and '24?

With current order book, looking at the government focus on highway sector, we feel we should be comfortably able to grow by 25% to 30% for both years.

Understood. And any target order the inflow that you have in mind for FY'23, '24?

Yes, like INR 9,000 crores is yet to be opened. That is all highway sectors. That is where we are quite optimistic of getting something and also some portion in the expressway, which could be an EPC part for us.

Understood. So what I was basically trying to understand is there any overall targeted order inflow or annual order inflow number that you have in mind going into the next 2 years that annually we would like to reach a targeted order inflow of a certain number.

So like this year, we have already done around INR 8,500. So INR 8,000 to INR 10,000 should be -- like we should be able to cross INR 10,000 this year and then next year maybe even more... Now the focus of government is on major highways like expressways, which really are of good size and they give good fast turner also. So looking at the spending of the government, we feel coming 2 to 3 years will be a very good growth in the highway sector.

Okay. And lastly, with regard to the solar EPC project that we are doing for NTPC, I think in the last call, you mentioned that the modules for the same is still to be procured. Is the status still the same? Or have you already...

Status is still the same, and we are discussing with NTPC on how to resolve this ordering issue? Or will take extension from them?

So is there any possible penalty that could come up in this particular project? And what is the last, let's say, quarter by which you would have to procure the modules to finish it on -- by deadline?

So basically, we are in discussion with the authorities and till date, there is no such indication. And because this is a complete problem for all the entire sector for all the projects. So this is being discussed at policy level to resolve this issue.

Okay. So your best guess would be that the deadlines would get extended on this one?

Yes, definitely. Balance of work is absolutely as per targeted timelines. So all balance EPC is being done, except for the model, everything is being kept ready, and this is very well understood by the authorities also. Because for them, it's not -- they have a large portfolio, and they understand it across the sector.

[Operator Instructions] The next question is from the line of Vibhor Singhal from PhillipCapital.

Just I think I missed out on the guidance front. You mentioned 25% to 30% kind of a growth in FY'23, but what are we looking more like a FY'22? I mean what is the guidance for FY'22 in terms of revenues?

'22, we would cross around 15% to 20% is what we still feel we will be able to achieve.

Got it, sir. Also, sir, just a small bookkeeping question. Our debt at the stand-alone level appears to have gone up this quarter, I think as the standalone, what you repeat that we're talking about. So any specific reason on that? And if you could just maybe tie it up with how the payment cycle looking? How are the payments from various government bodies looking at?

Yes. So basically, there is realization which are happening in Q3, which will take care of the slightly higher debt, incited debt on the working capital, which more of catching up with the billing payments.

More of a timing issue?

Yes.

Got it. And sir, the pay cycle from NHAI from other foreign bodies, are they on track? Or any specific delays that you might want to plan on?

No, nothing very significant on NHAI payments once they are approved. So that way, that's comfortable.

Okay. And the power T&D projects in Bihar and Jharkhand, other states also on time, sir?

Yes, we have received interest -- few collections which were pending for last in this quarter. And definitely, some payments are in due course and they'll come in. There are retention payments, which is coming when they are due. So there is still some time to go for...

But nothing that is out of the ordinary that is being delayed?

There is one state, Jharkhand where there is a bit delay, but then that we are following up keenly.

Got it. Right. So just one last question from my side. Basically, now that we have managed to basically close this deal with the KKR Group. And as we mentioned, that we will also -- we should be able to wrap up Jaora-Nayagaon and the Chennai ORR project by March. That gives us a good amount of, let's say, headroom in terms of our bidding ability. So could we see more HAM projects going forward? And could we also look at some of the BOT projects as we had bid for the -- some of the NHAI positions West Bengal. Are we -- would we be looking at bidding for BOT projects also? Or is it going to be the same waterfall that we have chosen before EPC, HAM, and BOT?

So basically, it will be more of EPC and HAM, and very selectively where we have some structured arrangements for investments and all, we will participate in BOT where investments are taken care by the investors.

Right, sir. And the BOT would be depending on the -- let's say if I'm talking about BOT growth, would that be in JV with somebody or would that be just your...

It all depend upon -- yes, yes, project to project completely.

One clarification. The West Bengal project is not a BOT for us. It's an EPC for us. It's a BOT for Adani projects.

Right, sir. But I think last year we had bid for couple of projects on the BOT business but not able to get. I was talking about our overall strategy of bidding for BOT projects. West Bengal is EPC, yes, got it.

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

Sir, can you give me the revenue breakup segment-wise, sir, for the quarter, for 9 months?

Yes. So road front, the total revenue was INR 898 crores for the quarter. Power was INR 49 crores. Railway was INR 70 crores. CGD and smart infra was INR 37 crores.

Can you repeat the road sector again, sir?

INR 889 crores.

Road, INR 889 crores. RMC INR 48 crores, okay. So power INR 49 crores, railways INR 70 crores, CGD and smart INR 37 crores, RMC INR 48 crores and road INR 898 crores? Right, Sir?

Right.

Okay. And sir, can you give me a few bookkeeping numbers being debtors, creditors, mobilization advance, unbilled revenue retention and inventory as on December?

So total debtors is in the range of INR 1,094 crores. Unbilled revenue is INR 1,071 crores. That's the reason this -- as we said, -- there is a slight jump in the working capital requirement. Advance is around INR 360 crores, to be recovered. So this is on the debtor side and on the creditor side, INR 733 crores is what is outstanding.

Inventory, sir, inventory and retention money?

Inventory is small, INR 165 crores.

And retention also INR 500 crores?

Retention is around INR 209 crores. So this is inclusive in the debtor, INR 1,094 crores...

Sorry, sir?

INR 1,094 crores of debtors includes INR 209 crores of retention.

Got it, sir. Sir, this debt level, which has gone up. So now obviously, our privation mix is changing going forward because the share of other segments is going up. So do we see these debt levels to remain elevated because the payment cycle in other segment as always, like 3 to 4 months while in road it has been faster. So this will be the consistent phenomena working capital remaining elevated in debt level that -- this level? Or you are expecting the debt level to come down by March? And what is your view, sir?

So maybe 50% of the impact of debt level being higher is a mismatch in the payment of road sector. Once that is -- which is being taken care in Q3 so from that perspective, the impact on the work capital requirement and the debtor level could increase marginally because of the other sectors, which will have increased working capital by approximately INR 150 crores.

So we can see debt levels of INR 650 crores to INR 700 crores by March end. It will not change significantly what I see?

I didn't get you, what was that?

Sir, the current stand-alone debt is of INR 650 crores. So we can expect the same number being on...

No, no, excuse, because the road sector mismatch will get resolved. So then it should be in the range of INR 500-odd crores.

Okay. Okay. Okay. INR 500 crores, right. And sir, And, obviously, you've given the order inflow guidance for this year you are targeting INR 10,000 crores. So we are expecting INR [ 15 crores ] more orders from the road sector. Is my understanding correct, sir?

Right.

And sir, now what kind of revenue, going forward, you have guided for INR 12,000 crores of inflows next year. So what kind of mix do we see in this, like from the roads and the non-road segment, sir?

So basically, we expect 75% to 80%, again, roads. And 20%, 25% other sectors.

Okay. Okay. And sir, are we going to participate in any BOT projects because as you said correctly, you might go selectively for BOT projects, we saw Ganga Expressway. So any BOT bundles or any future NHAI BOT bundles we would like to participate in?

As of now, we are not analyzing anything.

Okay. And sir, last question from myself. CapEx for 9 months and for full year guidance and next year CapEx guidance and the current bank limits fund, nonfund with a utilization level, sir?

So the CapEx for 9 months was very significant. But by end of this quarter, we'll have a CapEx of around INR 50 crores to INR 60 crores on machinery side and -- machinery and, what you call, [indiscernible] and other things. And on the -- as I said, debt utilization, we've already given INR 650 crores -- INR 648 crores and BG -- bank guarantee limits utilized in the range of around INR 2,600 crores...

What is the total limit is, sir?

INR 3,600 which will get enhanced by another 700, 800 in the coming months. We've got sanctions...

working capital, we have used almost INR 500 crores plus, our limit is about INR 1,000 crores in working capital?

No. So this is in two forms. Our -- basically working capital loan is INR 350 crores. We have dipped into a base on our NPS and our -- we have dipped into working capital demand loans with bankers at a very fine rate in the range of 4.25. So that's kept the interest rate also lower, but this will be liquidated over period of time as these realizations, which will come from the mismatch in the road sector, so that will go down. Otherwise, our working capital limit for fund base is INR 350 crores.

And sir, the CapEx guidance for next year, like this year, you said INR 50 crore, INR 60 crore total CapEx. Next year would be how much, same number or we can expect more?

Depending on the mix of projects, which has been -- so in the road sector and others, I think so we'll continue to -- we will probably have a total CapEx of around INR 80 crores, INR 100 crores.

And sir, any refinancing opportunity in the hampers. What is the refinancing rate we're getting now or for the new hampers, what are the financial closure rates we are getting now, sir, from the banks?

So we -- the completed growth projects, we have two totally completed and one yet -- one completed, but annuity yet to come, where we have opportunity for refinancing. These are due in May '21 for reset. So from -- on that date, we'll do a refinancing with the -- probably with the existing. So this would be in the range of -- in today's rates, compared to today's rate range of 6.9 to 7.1. Where we are -- today's financing rate is at 7.9. So that will be a [indiscernible] point.

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

So my question is, what is the equity that will infused in HAM this quarter?

This quarter, there was not significant infusion, around only INR 14 crores. But post that, in Q4, we have already invested INR 55 crores, which includes major in TS-IV that is Bettadahalli Shivamogga.

Okay. Have we received the appointed date for the [ Bannur Kharar ] project?

No, we have not yet received.

So is that the...

Post-election, we'll get this, yes.

So of the INR 12,000-odd crores on the book that was there at the end of December, is that the only project where appointed date is still pending? Or are there any other policies?

No, that is the only project where appointed date it is spending. And the others which we have received in Q4 that appointed dates are pending, which I mentioned, the Mopa Airport and Belgaum to Sankeshwar. And of course Panagarh to Palsit which we are expecting now.

The next question is from the line of [indiscernible], Individual Investor.

I had a couple of questions. Just wanted to know what is the debt position on the HAM portfolio is as of date, the HAM portfolio under ACL and also on the 2 projects that you said are at advanced stage basically.

Mr. Parakh, Mr. Mehta, we are not able to hear you.

Sorry, I was on mute, again. What is the question again? Can you just get back?

Yes. I just wanted to know what is the debt position on the 10 HAM projects you have as of December? And also the external debt on the 2 projects that you said we are in advanced stages of selling?

So the debt -- as of date is approximately INR 2,000-odd crores and which on the two assets -- one second, I'll just get you. I'll just get back, maybe you can come...

Yes. So one other question that I had was you mentioned in your opening comments and also in your investor presentation, around the monetization of the HAM projects. So I just wanted to check, given that most of these projects are still like in under construction stage. Is this like a viable monetization near term? Or like is this something that we are looking out, say, 1, 2 years down the line basically?

This should be in a range of around not more than 1-year time for the completed project.

Okay. And is there any early thought process around like the monetization? Because I'm assuming even in an invest, you would like end up owning most of the stake. So like would the eventual decision be driven by what is the value you're getting? Or like do you want to like -- do you have a preference to continue ownership of these assets for the maintenance work, et cetera?

So transferring to an INVIT probably will not entail substantial stake on our side, maybe in the range of 25 to 30 on a revalued basis, not more. So some cash will definitely be monetized. Definitely, if we have the sponsors, we will definitely continue to maintain the assets and have revenue from that side. And coming back on the debt on the two projects which are completed, the Kharar Ludhiana, the debt is around INR 568 crores. And on the Ranastalam project, it is INR 391 crores. Total debt is INR 2,200 crores as of December.

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

Sir, just this question was asked in a slightly different way earlier, but in this total INR 1,337 crores of equity that we are investing in the HAM projects, what is the PIM component, what is the actual investment that we will end up making, everything put together?

So on a total equity of INR 1,337 crores, which is envisaged, the PIM contribution would be around INR 386 crores.

Okay. And the balance is the cash flow invested from your balance sheet?

Yes, share capital [indiscernible].

Sure. And sir, when you are evaluating or you're talking to an investor in terms of the monetization potential of these projects, the benchmark would be INR 1,337 crores of equity invested, right? I mean at a fully invested obviously Because at the end of the day, the PIM, which has got invested in the assets is actually the equity capital, which otherwise, you could have kind of captured it elsewhere in the EPC, right? Am I getting it right?

Yes. So finally, end of the day, when the valuations will be right, it will be based on the future cash flows. So it will represent both the share capital and the PIM.

Right. So basically, you're retaining the entire PIM component in the asset, that leaves more value on the table and the assets, is that the point I'm trying to get.

Yes.

Okay. And sir, directionally on the margin component, we have -- we have been diversifying and we have indicated our intention to keep getting more and more diversified. So on an ongoing basis, what is the kind of margin trajectory one should expect? Should we be more in the range of like 10%, 11%, 11%, 12%, let's say, medium-term perspective.

This will be generally in the range of 10% to 12%. The road will be slightly higher because that's a high expertise field of ours, some projects may have a lower margin based on competition or as a new entrant. So the range will be in the range of 10% to 12% and the mix probably would be in the range of 11.25% to 12%.

And sir, also on the MCGM project that we have got. So if you can talk on what is going to be our role, what is going to be our share of the EPC? And how does it help us in the future? What is our whole thought process behind that project?

See, basically, this is all sewage treatment plant. And entire civil works are being done by us. So it's all 65, 35 sharing, JV ratio. And this also gives us a good amount of qualification going ahead, bidding in these kind of projects.

So going ahead, sir, are we indicating that we are looking at sewage treatment or maybe desalination. I mean is that the area that we are trying to build up the qualifications for?

Yes. As a strategy, you see 70% would always remain 70% to 80% percentage, it was 20%, we are trying to enter into EPC segment of buildings, sewerage treatment, water treatment and railways. Yes. So this require similar kind of skill set, which we already have. They all have a lot of civil portion in the like railways of civil as well as electrification and telecommunication, which we are already doing, sewage have this and treatment part is also not like very difficult to pick up and execute.

So who are our partners in this? Because we said we got it in the...

Gondwana Engineers is our JV partner in this, and they have been doing these treatment plants snice more than three decades now.

Sure. And sir, lastly, can you just talk about your thoughts on the CGD business going forward? Because in the recently concluded bids, we haven't sort of got anything. So what is your whole thought process on that business going forward?

So here, we have 3 GA with us approximately with a project cost of around INR 850 crores and all the 3 GAs are operational and they have started revenues. We haven't invested Morgan Stanley also in the joint venture. So they definitely will be looking out for an exit in a year or two's time, that is generally their horizon of 4 to 5 years. So from that perspective, this set of projects could be taken up for monetizing too. Presently because in view of most of the GAs have already been bid out and allotted. The next round of bidding may take a lot of time because most of it is almost covered now, most of India.

So basically, sir, is it safe to say we are looking at an exit from this business? Because you said the partner also wants to exist and monetizing this -- yes.

There is one possibility. We don't mind running it, but a good possibility that in case the existing partner also wants to exit, it would make sense if we get a good balance sheet.

And there is no guaranteed IRR obligation, et cetera, to the Morgan Stanley investment, right?

No.

Okay. And just last thing, sorry, how much have we invested so far?

So at present, we have invested approximately INR 140 crores.

Okay. And your investment is also a matching amount right, around 150 or so?

No, no, no, put together.

Put together, sorry, it's 140. And is it equally split between them -- between you and Macquarie -- sorry, Morgan?

51:49.

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

Sir, one last question from my side is, what is the outstanding equity in Jaora-Nayagaon, including sub debt and loss if any and in Chennai ORR and the outstanding debt balance as on December, sir?

So on Jaora-Nayagaon, the basic equity is INR 287 crores, which is intact, and there is no funding -- additional funding on the project -- yes.

So basically, Jaora-Nayagaon is total investment is INR 287 crores, right? Including sub debt and actual equity, right, sir?

Yes, yes, yes. There's a sub debt, pure equity of INR 287 crores.

Pure equity. Okay. And sir, what about Chennai ORR?

Chennai ORR, INR 189 crores is the pure equity and there is a debt of around INR 240 crores.

INR 240 crores is the sub debt?

Yes.

So sir, this INR 287 crores Jaora-Nayagaon is 100% level or it is 74% our stake, sir?

It is 100%.

And Chennai ORR also 100%, right, sir?

Yes, that is also 100%. But the debt which we are talking about has been funded by APL.

Noninterest bearing, sir?

Noninterest bearing.

Noninterest bearing. And sir, what is the outstanding gross debt?

Interest-bearing, sorry.

Interest bearing, around 10%, 12% kind of, okay.

Slightly larger, yes.

And sir, what is the gross outstanding borrowings in both the projects as of December?

On both the projects, on Jaora-Nayagaon it's approximately INR 187 crores. And on Chennai ORR it's approximately INR 850 crores.

But it is excluding the INR 240 crores, right, sir?

No, this is external, which I'm talking about, term loans from lenders. These both numbers of INR 187 crores and INR 850 crores. These are term lender's money.

Okay. So basically, sir, if you have go through the transaction, probably just INR 240 crores of loan will come back to and any additional equity over and above what you are [indiscernible] share. So this 50% partner in Chennai ORR, what is the status like JV, like you were supposed to -- the stake of ours was supposed to go back to 100%. So the company was in NCLT, so any update on that, sir?

The talks are on.

That was the last question. As there are no further questions. I will now hand over to management for closing comments.

We thank all the investors for joining on this call. We would be happy to take any other queries. We are available, our -- still our relations are also available for queries. That's all from our side. Thank you very much.

Thank you. Thank you, everyone.

Thank you very much on behalf of [indiscernible].