Cemindia Projects Limited (509496) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to ITD Cementation India Limited Q2 FY '22 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Modi from ICICI Securities Limited. Thank you, and over to you, sir.

Thanks, Vipin. Good afternoon, everybody. Thank you for joining us for the Q2 FY '22 post result conference call of ITD Cementation India Limited. On behalf of ICICI Securities, we would like to welcome the ITD Cementation senior management, led by Mr. Jayanta Basu, Managing Director; and Mr. Prasad Patwardhan, CFO. Thank you for your time, sir. I would like to hand over the floor to Mr. Basu, who will give his initial remarks, post which we can have a Q&A session. Thank you, and over to you, sir.

Thank you, Rahul. Good afternoon, everyone, and thank you for joining us on this Q2 FY '22 earnings call. This is Prasad Patwardhan, CFO of the company. I will start with my initial comments and then hand over to our MD, Mr. Basu for his comments. And post that, we'll take your questions. Let me start with the financial performance for the quarter. This quarter, we have reported operating income of INR 811 crores, which is an increase of about 47% on a Y-on-Y basis. EBITDA for the quarter is INR 73 crores as compared to INR 5 crores in Q2 FY '21. EBITDA margin for the quarter stands at about 9%. And we have reported profit after tax of INR 15 crores this quarter as against a loss of INR 51 crores last year in Q2 FY '21. Our debt continues to be at a moderate level and our debt equity ratio is at 0.5x, which is probably the lowest in the industry as of now. In terms of our order book, we have a well-diversified order book of INR 11,500 plus crores, comprising of urban, infra, metro and airport projects, which constitute about 30% of our order book, Marine is at about 27%. Hydro, dams and tunneling is about 18%. And buildings is at about 13%. So that's as far as the operational performance is concerned. In terms of the financial numbers, I will now hand over to Mr. Basu for his initial comments.

Thanks, Prasad. This is Jayanta Basu, and good afternoon to all of you. And thank you for joining this con call for our performance of Q2 FY '22. I would like to highlight our operational performance in a brief for the last quarter, and we'll touch upon a little bit on the order book positions and opportunities lying ahead with us. The key performance, key contributor during this quarter was from Bangalore Metro underground project; Udangudi, which is a marine job; Myanmar overseas job; Calcutta Biman Bandar; Pamban bridge at Rameswaram; JNPT Port work; and Trichy airport. So see, we have got around 52 running projects out of this -- these are the projects which contribute maximum. And if we highlight upon the percentage of completion of major jobs, like Bangalore Metro, we have done around 15%. The tunnel work already commenced, which we have highlighted last time. We have a job in Sivok Rangpo, Sikkim, which was impacted by the monsoon because of severe climatic condition, kept down our progress around 18% to 20%. Mumbai Metro, as we all know that we have completed the tunnel portion long time back. We achieved a progress of around 83%, and Calcutta Metro underground around 95% progress we have achieved. In terms of percentage completion for the elevated structure in Bangalore Metro, we have achieved around 98% completion for 3 major jobs. One job which is lagging behind because of funds not available, we have done around 80%. Marine, Udangudi, we have done around 51%, Myanmar 50%. And one of the major job in Sea Bird at Karwar for Indian Navy has just started, around 2% progress we have achieved. There are a few jobs in division -- I mean, our building division, which is Trichy airport, around 52% progress we have achieved and some of the other jobs, which we have just started, which we'll discuss in detail later on. So this is a brief about the major operational progress during last quarter. And I'll be happy to answer all of your questions. So please feel free to ask any questions. Thank you.

Thank you, Mr. Basu. Rahul, now we can start with the Q&A.

[Operator Instructions] We have the first question from the line of Mr. Mohit from DAM Capital.

Yes. And sir, first question, sir, on the EBITDA margin. So EBITDA margin is slightly, especially on the consolidated numbers, looking at pure EBITDA without adding associate numbers, it declined by quarter-on-quarter from 9.5% to 6.2% in this quarter Q-o-Q. Is there a reason -- is there something which is one-off or something which you have commented on. And the related question is that on the financials itself, the -- you see the debt has gone up, the standalone debt, but we don't see any increase in the receivables. So can you please comment on those 2 line items, yes?

Yes. Thank you for your question. This is Jayanta Basu. Regarding bottom line, which is EBITDA and PAT, there are a few factors which have impacted this bottom line. The generic sector, all you know that material price has impacted everybody. We never expected that steel price will go to this extent. In fact the last 2 con calls, we had some prediction that there will be some impact, which is around 0.7% to 0.8%, going forward, but it has gone beyond that. So that is number one, but that is common for everybody, all the contractors. Apart from that, if you see that as a policy, in our company, we don't recognize the margin unless we achieve the threshold limit of progress, which is 10% of the total contract value. But incidentally, what has happened many of the big jobs we have started very recently. For example, that Sea Bird project in Karwar around INR 1,100 crores job, and another INR 900 crores job in Sea Bird for other segment. Then Kasturba Nagar at Delhi, which is not moving forward causing INR 200 crores; Vizhinjam Break water INR 400 crores; Surat Metro, INR 300 crores; aero space at Delhi, INR 250 crores; all together around 4,100 crores jobs, which have just started, but we are not able to recognize any margin. I mean we could not do it in -- till last quarter. A large chunk of margin will come out going forward in the next 2 quarters from here. So that is second factor. And third factor, of course, there are some provisions we had to make for Bangalore Metro elevated portion, which we thought that will be completed this year, but because of several reasons, which is beyond our control, one of the projects we have just got the front available recently, which will go up to mid of next year or even before -- during that. So these are the factors which have impacted our bottom line in this quarter a little bit. On your question regarding that debt, I request Prasad, if you can highlight on that.

Thank you, Mr. Basu. Just to add to what has been stated. In our view, considering the profit from associate projects, excluding that from the EBITDA calculation is not really the right way to look at our numbers because Mumbai Metro project or even other projects that we are executing as joint venture, we are very much involved in the execution of these projects and, hence, it is not proper to separate out the margins that we report on projects, which are being executed in joint venture. As far as the debt number is concerned, yes, there has been some increase in the debt levels during this quarter and maybe to some extent in the previous quarter as well. But that is a fallout of the second wave of COVID. Some of our payments were delayed a bit, and we had to spend some money on the mobilization of some of the new projects that were awarded to us in the previous quarter. So that is why we have seen some increase in our debt levels. But going forward, we don't expect any significant improvement in the debt levels once these projects start generating cash flow and the billing picks up on these projects when we have incurred the mobilization expenses.

Understood, sir. Is there something to comment on the ordering opportunity? How is it looking right now [indiscernible] where we can participate in second half?

Well, I think that area is quite good. As far as -- order book position is flat, but the opportunities are there. And in Marine sector, I think, around INR 9,000 crores to INR 10,000 crores of work we are pursuing. These are in various stages under either we have submitted our offer or we'll be submitting our offer by this month or so. Similarly, in the Metro sector, in domestic market like underground sector, Kanpur, Delhi Metro, Agra Metro, Chennai Metro, all submitted and it is revolving around INR 15,000 crores. So put together around INR 25,000 crores of order we are pursuing at various stages.

Anything else, sir, we have apart from these 2 segments, Metro and...?

Yes, there are plenty because I just wanted to highlight the major work. Like airport, we are working with the private developer and to associate with them to be part of their development in airport sector like Ahmedabad and Mumbai. Then there are -- also one of the sectors where we have our association with some Japanese company for track laying work, thereafter tunnel work like drilling and blasting tunnel work in Himalayan range for railway project. So those sectors are also we're pursuing. It's not that only underground metro and marine. And if you know that, we are also pursuing some overseas job in Maldives, the Airport job, we are prequalified and some jobs in Bangladesh. So there are some other jobs also there in the pipeline.

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

Prasad, sir, I just wanted to touch upon the margins again. I know you would be expecting questions on that. Sir, basically, 2 things: One is after this provision that we have taken in the Bangalore Metro, first of all, it would be helpful if you could provide -- quantify that what is the amount of provision that we have taken for this Bangalore Metro project? But after that provision, would we end up making any profit -- I mean we had earlier stated that Bangalore Metro is a no profit, no loss project for us now after the provisions that we had earlier taken. Would this end up making Bangalore Metro a loss-making projects for us. And if at all, you could quantify that as well?

Vibhor, in this quarter, we have taken a hit of about INR 25 crores on this project. Overall as of now this project is incurring a loss, but we have a substantial amount of claims that we are pursuing with the client at this stage. And these are claims where we feel that we have a very good case and these are likely to materialize in our favor. So that is where things stand now. And once these claims start coming in our favor, we expect the end result of the project to change. But as of now, yes, we have recognized this loss during this quarter.

Sure, sir. So that's very helpful. Sir, an extension of that question is that at many times, at many specific moments during the execution of this Bangalore Metro project, you have said that we believe that, okay, this is it, and we will not be requiring to make any more provisions. But more provisions have come in. Of course, I know this is the nature of the business. Now sir, my question is more on the Kolkata Metro project which had happened almost around 18 months ago. Now there also we maintained that we would not require to take any provision and the client and/or the insurance company should be able to compensate for that. Are there any chances of similar provisions having been required to made in that project because the project is not complete right now. And most of these provisions actually end up surfacing, when we submit the final bills to the client and that is when they refuse and that is when we have to take those provisions. So is there any risk of a similar thing happening in the Kolkata underground metro projects.

Yes. I think -- this is Jayanta Basu. I'll answer these. As I have maintained I still maintain that Calcutta Metro, we have got no issue. We have come out of the critical situation long time back, and we have almost completed 95% of the job, now finishing work is going on. And we still have enough cushion available in this job, and we are already -- got some amount of certification from the insurance company as well very recently. So don't worry about Kolkata Metro at all.

So sir, bills that we are submitting to the State Government, they are being cleared on a regular basis?

Yes, yes. There is no delay in that.

Vibhor...

And even for the -- sure, sir.

Bangalore Metro and Calcutta Metro are 2 different projects and are not comparable in any manner whatsoever. In the Calcutta Metro project, we have -- even after that incident to happen 2 years back, we have never booked a loss on that project till date. The project is profit-making project. So I would request you to keep -- please keep that in mind.

Yes, sure, sir. I think, I really appreciate that. In fact, that is why I mentioned that. Many a times what happens is that when we -- when the project completes and that is when the clients many a times, we've seen this before, not with us, but with other contractors. And that is when some of those provisions come in. But as Basu sir mentioned, I think he's quite confident of no more provisions being required in the project. I think that's pretty much some sums it up, sir. So thanks for that very clear clarification on that front. Sir, my again, another question related to margins, again, is, sir, I think we have maintained this many a times that our accounting policy sometimes leads to this kind of volatility in the margins, that we don't recognize any margins till 10% of the work is complete, and that is also probably one of the factors which led to lower margins in this quarter. But on the flip side is that at some point of time, we have lower margins because a lot of projects are at their initial stages, then at least there would be some quarter or some period of time in which most of those projects would end their nearing phase. And then on those quarters, it would show exceptionally high margin. So that never seems to happen. I mean we tend to get the wrong side -- or the negative side of the margins. But the positive side of the margins, I think, lastly reported margins sort of 12% was probably somewhere in 2018. So I mean for the last 2 to 3 years, we have been hit by multiple things. But the positive side of that, we've never been able to capture or report. Would you like to throw some light on that, sir, how does that mathematics work?

Yes. I think Prasad will come back with detail, if required. I think you -- I differ it to your statement, it will be, if you see our margin in the last quarter of last year, which was pretty good. I think...

RT04.

RT04, that is the Bangalore Metro we have released that time and our margin PAT was around 55 -- INR 54 crores, INR 55 crores. It happens. I think in potentially coming quarters, we'll find this effect also.

Sure, sir. That will be really great. Sir, last question. What would be our debt at the consol level including the [indiscernible]

It's about a little more than INR 500 crores.

Sorry, sir, how much?

A little more than INR 500 crores. It's about INR 520 crores, INR 530 crores.

INR 520 crores. This is on a consol level?

Yes, this is under consol level.

[Operator Instructions] . We have the next question from the line of Prashant Shah, an individual investor.

Basically, I have 2 questions. One is that for this quarter and the half year, first half of this financial year, while the accounting profit is there, the cash flow shows negative cash out from operations of INR 95 crores. How do you -- can you throw some light on how this will play out in the next 2 quarters? And what will be the net cash from operations if in the range -- if you can give a range by end of the year?

Thank you for your question, Prashant. We'll not be able to provide individual numbers as such. But in terms of the cash flow, the payments from our customers were delayed a bit because of the second wave of COVID. And that is why you are seeing delays in inflows, whereas we have continued to honor our commitment and payments to vendors, suppliers and the financial institutions as well. And that is why you see a negative operating cash flow coming out in the 6-month period. But hopefully, as things progress and the project execution picks up, we'll see an improvement in our operating cash flow in the coming quarters.

So is it fair to assume that, I mean, the debtors which were -- no, I meant consolidators, which were around INR 530 crores and which have gone up to INR 553 crores, will again revert to the earlier position and -- or I mean, we still expect the debtors to keep increasing?

No we expect the payments to start coming through now and the debtors position should improve going forward. That is our expectation.

Okay. My second question is relating to the Myanmar project. Now I mean the geopolitical situation is in a flux and has remained in a flux for quite some time. Basu sir and Prasad sir, how do you expect that project panning out going forward? Have we taken any provision till now? And do we expect to take a provision on that project in the coming quarters?

This is Jayanta Basu. In fact, this is a talk of -- recently, everybody is talking about Myanmar project. But I should assure you that there is no issue with Myanmar project because the work is going on very smoothly despite of unrest in the local government, despite of pandemic and despite of all the rumors. And I think in last quarter, we have been paid properly, around INR 42 crores payment we have received. And from the top level, of Adani, they have confirmed us, we must continue the work with full swing, in fact, expedite the job to complete as early as possible. So in ground reality is that there is no issue, and we don't foresee any issue with this project at all.

Sir, one question aligned to that, there have been, I mean, news reports that the principal contractor Adani Group is now exploring to come out of that project. How will that affect our work and our service delivery going forward, if that pans out?

Yes. Let me explain this in the detailed manner. See, there are 2 ways this type of business runs. One is to build up the facility. And the second stage is to operate the facility what is being built up by somebody else. Now we are in the first, that we are part of the building of the facility. And somebody will operate either Adani or they'll sell to somebody else. Like as you know, that GVK has scaled down to Adani has taken over like Dhamra port was with L&T, Adani has taken over. Like Adani may want to discontinue their operation in Myanmar after some time, but definitely, they'll complete the project as a package. I mean who will believe that a company like Adani will half-way leave the job and not complete the entire project. That is not going to happen and that assurance we have from the client. So as far as we are concerned, we are supposed to construct the JP, which will be done. And by mid of next year, we will be out of this project.

[Operator Instructions] The next question is from the line of Parikshit Kandpal from HDFC Securities.

Sir, my first question is on the execution. So if I go over [indiscernible] revenues of about INR 3,000 crores on an order book of about INR 5000 crores to INR 6,000 crores. Now the order book has doubled, but our revenues are still struggling to reach that INR 3,000 crores mark. So [indiscernible] you had a INR 5,000 crore order book now, we have INR 11,500 crores order book. We have revenues up INR 3,100 crores [indiscernible] and we are still just about running that kind of run rate now. Just wanted to understand why the execution has not been catching up with the growth in the order book. Our book-to-bill ratio has been expanding from almost 1.7, it's almost 3 now. Just wanted to pick your brain that, has the nature of the work changed or there are payment issues? So what are the issues behind the extension of the execution tenure of the order book?

Okay. Parikshit, thank you for your question. And there are many issues which is impacting -- which has impacted the last quarter revenue. And if I can explain to you in detail, but in brief, the first and foremost is, as I have mentioned that some of the big jobs, which we have just started. And when you start the job, initial period, the progress is less like Sea Bird at Karwar, like one more job in Karwar and then one job in Delhi. So that has caused some less stress because of the initial phase of the project. That is number one. Number two, we all know that we have just crossed the monsoon. So many marine jobs and some tunneling jobs in North of India, we could not do much because of adverse climatic condition. Now after September from October onwards, the climates are much better and we are having good working season. So definitely, progress will pick up and revenue will ramp up. Like one more thing I'd like to highlight here, the Delhi job, which you are listening for many months, many years, actually 1.5 years from -- out of 1,100 crore job was cut off, we could not do anything. Only last month, we got permission from the Forest Department to cut the trees and now the work will pick up. So those are the factors, which have impacted the revenue last quarter, which will not be there in coming quarters as well.

Just to put the numbers, sir, for how much you've moved the order book, which would have moved into execution during this quarter. So out of INR 11,500 crores, if I have to say how much of the running order book at the start of the quarter and at the end of the quarter, or is the entire order book now into execution? Could you just quantify that number?

Yes, our order book is about INR 11,500 crores or INR 11,600 crores. In that, except 2 jobs, which is Sivok Metro and 1 job in Delhi, all the work we have just started. All the work started. One job, which is not moving, that is Chhara project in Gujarat, which is not moving because of local issues of client issue for a long time. Apart from that, all the jobs we have just started are going normal.

So my question was, sir, in the second quarter, how much was the order, which would have contributed for the first time to the execution out of the INR 11,500 crores. So at the end of 1Q, was it like we were executing only about INR 5,000 crores of orders and the rest of the orders started contributing to the execution from the second quarter? Because you said a lot of projects did start from the second quarter. So if you can just quantify how much was the executable order book, which had got added in second quarter?

Well, I mean, if I go one by one, Sea Bird may be job INR 1,150 crores; Sea Bird, the land-based work, INR 900 crores, which is INR 2,000 crores; then Kasturba Nagar at Delhi, INR 1,200 crores; Beijing job INR 400 crores. So likewise, that should be around INR 3,500 crores job, which has just started in the second quarter or sometime during first quarter, for which we are not able to recognize the bottom line.

Okay. Just my last question, sir. So now COVID is largely behind. Most of the company did mention that supply chain issues have been ironed out, labor is back to pre-COVID level and monsoon is behind. So now for this kind of order book which we have, so what should be the idle execution rate per quarter, which we can do? So I remember you did mention about hitting a INR 1,000 crore of revenue, that was a target. So just wanted to get your sense now most of the order book is now executable, so how much would be on the order book quarterly execution kind of a run rate now?

I still maintain whatever I have told last time that from quarter 3 onwards it will be on INR 1,000 crores per quarter.

And on the CTC basis, all the provisionings have taken given that raw material prices have gone up. So we have everything provided now. So is it right to expect that from third quarter, we won't expect any negative surprising on EBITDA margin now if the commodity prices stay at the current levels of second quarter?

See something like commodity price is where we do not have much control. It is not only the price of only steel item. Because of steel items, many other items are getting affected like electromechanical where you have to buy cable for some job, where you have to buy some transformer. Everybody has -- because of steel, the price is going up. And unfortunately, it is not stopping anywhere. It is going up and going up. So that element of additional cost, maybe I don't know, would be there. Otherwise, balance things are under control.

So about 11%, I think you've been talking earlier, I think, 11% band of margin. So that should be doable, right, if commodity prices remain at these levels, at current levels?

Yes. Actually, double digits should be achievable. That is right, I believe. Yes.

Okay. And will you be in a position to disclose the insurance settlement? Has it happened -- not the number, if you don't want to disclose the number, but at what percentage of level of claims like [indiscernible]. So possibly, there could be any positive surprise coming out of -- because you did have surplus cash flow in that project that was more than INR 100 crores, which you will definitely utilize towards -- for [indiscernible] project. So if you can just quantify what kind of claims you have got or percentage of claims so far?

Parikshit, when there has been a positive development on the insurance claim, I think it will be premature for us to quantify or give out any numbers at this stage. Let the entire process to get progressed further and let it be concluded and then the numbers will be on the table for everyone to see.

Okay. Just last thing, sir. As you probably know out of the INR 11,500 crores, what percentage of the order book has got passthrough projects?? And what should be the fixed price contract share in the order book, if you can just quantify that number?

Okay. This order book, what we have now, I think 20% are from the private client, where escalations are not there in the contract, balance 70% to 80% contracts are provided with escalation clause.

The next question is from the line of Mr. Viral Shah from YES Securities.

Yes, a couple of questions. One, in terms of Calcutta Metro, since we are nearing completion, Sir, what is the update on the dispute and arbitration claim with the insurance what we had. So what is your update on that?

There is no arbitration -- this is Jayanta Basu. There is no arbitration with the insurance authority. We're just discussing and negotiating -- negotiation is going on with the insurance company. And there is some positive development, which I have just mentioned. So it's okay as far as insurance matters are concerned, it is going well. There is no issue.

And sir, if we recollect correctly, for Bangalore, we had already made provisions which were enough, right? And the current version is over and above that provision, right?

Yes, that's correct.

That's correct. That's correct.

That's correct, right. And no more surprises expected for this or we can expect some more surprises or negative surprises on this one as well.

Bangalore Metro was silver lining, as we have mentioned, that we have come to a situation where we could raise a lot of our bill for the variation work what we have done, which are still not certified, and some of them are in variation of work, some of them are clean. So now we are pursuing them. We are pursuing with the client. Those are In various stages. So that is worked. And if we can complete the job based on the latest schedule what we have agreed this next year around June, July, there should not be any problem unless otherwise there is some issues regarding front availability again.

Okay. And sir, this front availability issue which we had, that has compensated, right? Because it is a delay from there end, not ours, right?

Yes, there is a gray area. Contract is not very clear on that. But definitely, there is some avenues to which we have claimed and we hope that it will be, I mean, acceptable to clients at some point of time.

And finally, sir, if you could put the total, not the separate amount, but all total amount put together for the Bangalore Metro, what is the claim amount which we are discussing with the client? Only the amount is fine, whether it is passed or not, that is second issue, but a number that would be helpful to us?

Actually, at this stage, it will not be fair on my part to talk about that because all are in discussion stages, some will be acceptable, some may not be acceptable, some we are still working out. So once we go forward a little bit, we'll come to know, we'll definitely share with you.

[Operator Instructions] The next question is from the line of Mitesh Mehta from MNM Financial Services Limited.

Mr. Basu and Mr. Patwardhan, this is Mitesh here. So -- hello, can you hear me?

Yes, yes.

Please go ahead.

Please go ahead.

Yes. Yes. So with respect to this new infra reform, which came in last week of October, by which this L1 thing has been, to some extent, dismantled, and the QCBS method will be adopted for the government orders or entities or government, how do you see that what kind of benefits do ITD as a company will gain in this change of criteria? This is my first question. Then I'll ask another one.

I think this is very impressive and very good proposal by the government because many times, we will find that we are not able to compete with many other contractors because of a certain cost level. And as we believe that we are a good contractor and our prequalification, our credibility in the market is good. So this will definitely help us to secure more contracts from the government.

Excellent. So one more question was with respect to the existing order book that we are having in and around INR 11,500 crores. And the fact that we are now bidding for projects worth INR 25,000 crores. Can we, as investors, expect a 15% CAGR growth over the next 3 years? And Irrespective, the margins may fluctuate, we all understand the kind of business we are in. But if we are talking of an 11%, 12% band of a margin and a 15% CAGR growth over next 3 years, is this something obviously, some variation may happen because of something which is not in our control, but can we look like this as a small vision statement going forward?

Yes, sure. On top line, definitely 15% to 25% growth is quite achievable considering the potential what we have and considering the opportunity what is lying ahead of us. I think it's quite reasonable to say that we'll be able to achieve that number.

And 11%, 12% EBITDA margin is also something in line.

Well, as you have seen in the past, double digit, yes.

Yes, yes, yes. Subject to some issues which are not in our control that always you have to take care of.

[Operator Instructions] We have a follow-on question from the line of Vibhor Singhal from PhillipCapital.

Sir, just a quick question. What would be the pending order size of Myanmar project in our order book?

Total value of the job is around INR 560 crores. And so far, we have completed around INR 270 crores till September.

Okay. So INR 290 crores would be left in the project as of now?

Around INR 270 crores, INR 280 crores left out.

And sir, overall, we are comfortable with the earlier guidance of 15% to 20% top line growth this year?

Yes, we still maintain that.

We have a follow-on question from the line of Mr. Mohit from DAM Capital.

Sir, do you have any number for order inflow for FY '22? And how do you see the H2 panning out? That's the first question.

Yes. Actually, so far, we have received...

About INR 1,800 crores.

INR 1,800 crores.

And INR 200 crores L1.

And INR 200 crores -- so INR 2,000 crores. I think it will reach up to around INR 5,000 crores this year based on the opportunity what we have and the tenders what are in pipeline.

[Operator Instructions] Your next question is from the line of Mr. Anshuman Ashit from ICICI Securities.

Sir, first question is on the Mumbai Metro project. So you had informed that you've taken a provision on Bangalore Metro, and there's no issue in the Kolkata Metro project. But could you throw some light on what is the status currently on the Mumbai Metro? And will we have to take any provisions over there? And by when will the project be completed?

Mumbai Metro, the critical part was the tunneling, which we have done, completed 4, 5 months back. And so far, we have achieved around 83% of the financial progress. And I think it will be sometime during 2023, June, July, the project should be completed. And now the critical phase is over, we'll be doing only the civil work and the finishing work and M&A work that is mainly technical work. So there is no provision request for this job, and we are in a comfortable position as far as Mumbai Metro is concerned.

And Mumbai Metro project has been generating profits right since the beginning. We have never had -- we have never booked any loss on this project so far.

Okay, sir. Okay. That's helpful. Sir, secondly, you had mentioned that our consolidated debt stands at INR 520 crores currently. And basically, it was raised due to some payments issue. So sir, by FY '22 -- and where do you see the debt levels to stand at? And when you see the payments coming back to us, improving?

Well, the payments have -- whatever payments are getting delayed because of the second wave of COVID have already started materializing. We don't expect the debt levels to increase from these levels. Although the level of operations, we expect to go up from Q3 onwards. We don't expect any significant movement in the debt. If at all, the debt may come off a bit because of the cash flows that our projects will generate.

Okay. So we can assume a debt of -- INR 500 crores of debt at the end of FY '22 as well?

I'm sorry, I couldn't hear you. Can you repeat that?

Sir, we can assume INR 500 crores of debt at FY '22 end as well?

Right, right. I think it should be around that number, if not lower.

Okay. Question is on the opportunity side, which you had mentioned like INR 25,000 crores. So how much do you expect to be awarded in FY '22 and FY '23? And what will be our market share in that, any ballpark figures if you can provide?

Okay. If you see our success to secure the job, it varies from 15% to 20%. So if it is INR 25,000 crores, so it will be around INR 4,000 crores to INR 5,000 crores, maybe the order we can book. I'll not be able to comment on the timing because it depends upon how employer takes up their project. So bulk of them should come by this year.

Okay. So majority of the INR 25,000 crores to be awarded in FY '22 itself?

Yes.

We have the next question from the line of Venkat Subramanian Raman from Organic Capital.

Now when you speak to competitors and even when we actually broadly look at the company, we only come with a lot of admiration for the kind of skill sets the company has. But -- and also given the kind of complexity of many of our projects and the kind of value addition that we give to our clients, I see a small dichotomy. Are we getting sufficiently paid because our margins never get into double digits? Our PAT margins have probably come a bit lower than some of our competitors. Where do you think is the issue? Meaning are we bidding a little too aggressively because in any case, we don't bill more than about INR 800 crores, INR 900 crores in a quarter. So to that extent, there's probably no need to be as aggressive as probably we have been in terms of what the numbers have finally turned out to be. Is -- I don't know how to look at this. Do you have any thoughts?

Yes. I think this is a very common question by all the investors for some time. If we leave 1 or 2 jobs, one-off jobs, then you'll find our performance is quite good. And for the last several years, we are not able to do good in a particular segment, which we're trying to, I mean, almost not pursue much. So those particular segment is basically one of the -- before it was road and then elevated metro. So if I'm very specific about that, Delhi Metro has created some problem in last 2, 3 years back. And now Bangalore Metro elevated also has some effect on our bottom line. And unfortunately, the value of the job was substantial. When we took Bangalore Metro, all the 4 jobs came together, around INR 2,400 crores. But because we have now concerns about this issue, we are very careful not to pursue such job further because one-off job can create a lot of issues in our bottom line. That is the reality, and I hope that we will be able to come out very soon from this situation because whatever we have now are good segment like underground metro, airports, marine segment.

That's really helpful, Mr. Basu. And therefore, if you try and press the reset button now and if you go across and say now whatever we've seen in the recent past is an aberration. On a normalized basis, therefore, should we look at double-digit margins for the kind of order book that we are carrying?

Yes, actually the EBITDA should be double digit. That is what we maintain always. And we should be able to achieve that. Yes.

We have the next question from the line of Meet Parikh from Anand Rathi.

This is Prem Khurana. Basu, sir, I think -- so when I look at the quarter, it's been a little dull for us in terms of new additions. And if I remember correctly, last call we've spoken, you gave us a sense that you're looking at almost around INR 30,000-odd crores with new tenders. So what actually went wrong during the way? Is it that the clients were a little slower in terms of giving on projects or we went a little slow because of some or other reasons? Or I mean, these orders are pushed down further?

Basically, it is a client-driven issue. If you see one by one, there are four: BMRC, the Delhi Metro job, which we have tendered 2 months back, nothing has come out. We have tendered for 2 underground metro at Chennai, a month back or so. So far, there is no movement from the client side. Similarly, in the private sector also, one job in Gujarat, and other job in Colombo, these are moving a little slow because of whatever may be the reason from the client. So that is why last quarter you see there is not much order inflow.

And how about the new -- I mean, do you get to see any issues with these as well? Or I mean these are largely at advanced stages. Or if you could share anything in terms of how much of these are essentially the bids wherein [indiscernible] and you're sure that, I mean, would get to have it in some time from now.

Well, I think, now this all will come out now because I don't know about Delhi Metro, but at least Agra Metro, Kanpur Metro, Bangalore -- sorry, Chennai Metro will be -- as I know that, very soon, they will be -- tender will be open. And as you know, for the Columbo job, Adani, they had faced some problems, which are government to government, now that is sorted out. So they have geared up now, which should come by this year at least. And BMCT, I was just talking to the employer this morning, they wanted to change some orientation of the project location, which has been approved now, which also should come by this year. So I'm quite hopeful that by another 2, 3 months' time, the situation will be better.

And sorry, I mean, if I'm repeating this, I actually missed your opening remarks. Any update on the Bangalore underground metro. Any -- I mean, I hope, in terms of geological surprises or are we going smooth with this project?

Bangalore Metro, we have already started the tunnel boring operation by TBM machines, and it is quite going smooth, no issue on that.

Sure. And just one last from my side. On this Bangalore elevated metro, the fourth package wherein we still -- I mean, what's the status on the balance work from -- is it still not available with us? Or it's been made available and now you need to finish it. And if that is not available, how long would -- do you -- I mean, would you be willing to kind of wait for the work front?

Yes. Good thing about this last -- this package, we just received the front a month back. And now I have to agree that we have got all the -- entire front available with us. The second thing is that as the front availability was delayed, there have been some changes in the engineering side, engineering drawing because this is getting connected to the other line. So if we get the drawing on time, I think it is through now.

[Operator Instructions] We have a follow-on question from the line of Mr. Mohit from DAM Capital.

One question, sir. Sir, how effective is the price variation clause in protecting our margins especially in our variable contracts?

See, if you are lucky, then you'll find that whatever escalation is paid by the client, the expenditure is less than that. But in today's scenario, it is not like that because steel price has gone up to such an extent, what about escalation provision, which is based on the Reserve Bank of India and wholesale price index that doesn't really cover the entire escalation cost. So yes, there is a bit of additional cost towards that as well.

What would be that gap, sir, can you please quantify that is the sense of basis points?

If I remember, last quarter, I have quantified it is affecting around 0.5% to 0.7%, so which was under control. But now recently, one month or so, the price has gone up a little bit more. So we have to, again, work it out the effect of that.

As there are no further questions, I would like to hand the conference over to Mr. Rahul Modi for closing comments.

Thank you, Vipin. So, I would like to thank Mr. Basu and Mr. Patwardhan for a very detailed call. It was actually a very, very good interaction. Thank you very much, sir, for giving us the opportunity. I hand it over to you for any closing comments.

Thank you, Rahul, and everyone for their continued interest in our company. We look forward to interacting with you again next quarter. Thank you.

Thank you. Thank you.

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