Cemindia Projects Limited (509496) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to ITD Cementation India Limited Q3 FY '22 Post Results 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. Anshuman Ashit from ICICI Securities Limited. Thank you, and over to you, sir.

Thank you, Lizanne. Ladies and gentlemen, good day, and welcome to the Q3 FY '22 Post Results Conference Call of ITD Cementation India Limited. Today, we are pleased to host senior management of the company represented by Mr. Jayanta Basu, Managing Director; and Mr. Prasad Patwardhan, CFO. The call will begin with a brief introduction by the company, after which we'll open the floor for the Q&A session. I now hand over the call to Mr. Patwardhan for his opening remarks. Thank you, and over to you, sir.

Thank you, Anshuman. Good afternoon, everyone, and thank you for joining us on our Q3 '22 earnings call. This quarter, I will brief you on the financial performance of the company, and then I will hand over to our MD, Mr. Basu, for his initial comments on the operating performance. In the quarter ending December '21, we have had a very robust top line growth amid very challenging market conditions. The company is on track to achieve the 15% to 20% top line growth that we had indicated at the beginning of the year. The real good news during this quarter and up to the end of the quarter is on the new orders that we have secured. In the month of January, we have secured new orders of nearly INR 5,000 crores, and including these orders, our order book today stands at nearly or it is beyond INR 15,000 crores. Now coming to the operational performance in the quarter ending December '21. On a consolidated basis, for the quarter, we have reported total operating income of nearly INR 1,000 crores, which is an increase of about 26% on a Y-on-Y basis. The EBITDA is at about INR 87 crores, and EBITDA margin is about 8.7%. PAT for the quarter is INR 20 crores. Overall, for the 9 months ending December '21, we have reported top line of INR 2,630 crores, which is a 50% increase on a year-on-year basis. EBITDA margin is at INR 245 crores, and margins have come in at about 9.3%. We have seen a little bit of impact on our EBITDA margins largely on account of the increase in the commodity prices that we have seen. PAT for the 9-month period is at INR 53 crores as against a loss of INR 37 crores last year. So overall, we have a pretty satisfactory performance in the quarter. I will now hand over to Mr. Basu for his initial comments, and then we'll take your questions.

Thank you, Prasad, and good evening to all. Thanks for joining this con call. I'd like to brief you about the operating performance for Q3 of this ITD Cementation India Limited. As Prasad has indicated, the progress during third quarter has been good and we have achieved almost INR 1,000 crores of revenue in this third quarter. And if you see the YTD revenue is around INR 2,600 crores in 9 months, which is almost equal to last year's entire revenue. As Prasad has also mentioned that our EBITDA and profit margin has been a little bit less compared to last quarter. The reason behind this is that one is commodity price, which is known to everybody, the steel price, which was 3 months back INR 50,000, INR 55,000, has gone up to INR 65,000. So there is an impact on that. Secondly, that extended monsoon in Southern India. Many of our jobs we are doing in southern part of India like marine jobs in Udangudi, Pamban, and Metro jobs in Bangalore Metro, Vizhinjam Port. So there is some impact of extended monsoon in South India, which has impacted our performance a bit. And third, which I've touched last time as well, many of the jobs we have just started and the list is quite long. As you can see that Dream City Surat Metro, Sikkim University at Gangtok, LNG terminal at Ennore for IOC, Aerospace Museum at Palam, New Delhi, then 1 job in Seabird Karwar for infrastructure development, marine job in Seabird Karwar. And because of our policy, we are still not able to declare the margin, as the threshold limit of 10% hasn't been achieved. So I think all these things will unleash in next quarter and probably marginally better -- not probably marginally, definitely better in next quarter. Coming to the prospects, I think our work in hand is quite healthy. It was INR 11,000 crores last quarter, now it is almost INR 17,000 crores, which is a record in our history of our company. And so far in this year, we have secured more than INR 7,500 crores work in 9 months' time. And there are several other jobs in pipeline, some of them will definitely be converted to orders. As we have mentioned last time, even now also I maintain same time tempo that INR 20,000 crores of jobs are still in pipeline. We hope that some of them will be converted to orders. The future is good. And with the jobs in hand we have, we should do better in next quarter and coming days in next year. With this, I'd also like to touch as usual some projects which are key projects to us as far as progress is concerned. Mumbai Metro, we have already achieved around 86% of progress. Hopefully, by the end of this year the job will be completed. Kolkata Metro almost done, 96% progress. Bangalore Metro, the new underground job we have just started, but already have achieved 20% progress; Udangudi around 55%. Seabird marine job at Karwar just started, around 6% progress we have achieved. Trichy and Pune Airport around 50% to 38% progress. And one information I'd like to share here is that Myanmar job, one of the overseas job which we are doing, there is some reduction in the scope of work. So I think by April or May, the job will be completed. There is some reduction of scope by the client because of their business reason. I think that's all from my side as far as operating brief is concerned. Now we are welcome (sic) [ available ] to address any questions. We'll be happy to address them. Thank you.

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

Yes. Congratulations on a decent set of numbers. My first question is what is the average life of the order book? And what is the kind of growth possible in FY '23 and FY '23 (sic) [ FY '24 ] based on the time lines?

Yes. On an average, I think it is around 3 to 3.5 years for the large projects. And growth, definitely with the order book, we can expect a growth of around 20% plus in the coming quarters.

And sir, can we expect the EBITDA margin to move back to a lower double digit. We've been struggling with single digit for a very long time? Can we expect it to move -- based on the order book and the knowledge we have of the inflation, can we expect it to move back to 11% in FY...

Yes, it will go to double digit maybe from second quarter of next year. As I have explained that all the companies are suffering because of commodity price, there is definitely an impact of that. Though last time I had mentioned that part of them has been covered by escalation, but now it is still going upward. There is no downward trend. So that has impacted. If you see the material price of any contract, it is around more than 50%. But we hope that new contracts, where we have taken care of cognizance of this inflation of material price, will not be impacted. The next year, it will be better.

Given the fact that we have a large order book, do we have an appetite to keep taking orders for the next sort of Q4 in FY '22? Or do you want to wait for some time? And can you just please elaborate on the ordering opportunity outlook for the next fiscal?

Well, we'll keep on pursuing the niche area of marine and some underground jobs. The good thing is that the government has realized that -- to ease the contractor's liability on nonfunding facility, most of the bank guarantees or personal bank guarantees, they've reduced to 3%. So that is one good thing. So I think the niche area, airport, marine, and of course underground metro, we'll keep on pursuing. And in the pipeline, if you see, for marine, we have got BMCT port, that is JNPT port BMCT job, 3 tenders we have just submitted last week. And Gujarat, GCPTCL, I've mentioned last time, we are discussing with the client. It's going on for a long time. I hope something will be finalized by next month. There is a job from Tata Chemicals in Mithapur, and of course, Colombo port from Adani at Sri Lanka are also under discussion. In terms of underground metro, we have got Kanpur Metro and Agra Metro, which we have lost today to our comps. But there are several other jobs in Kolkata Metro, Chennai Metro, and in road sector, Ganga Expressway from Adani also is under our radar. So likewise, there are good jobs in pipeline and we'll keep on pursuing them.

Mohit, just to add further, some of our larger projects will get completed or will be nearing completion in the next year or so, projects like Bangalore Metro elevated, underground metro in Kolkata and in Mumbai. So that will free up a lot of resources, which we can deploy on the newer projects that we have won or we will bid for in future.

Understood. Is there a reason for us to going back to the road sector?

Well, the main reason of road sector, why we are not interested, because most of the time we found that the right opportunities are not available, number one. Number two, the terms and conditions by National Highway, directly working with them also not sometimes, I mean, favorable. But this is a job which will be from Adani Group. They have secured 3 contracts in UP. And they want us to be part of their journey and our relationship with this group is quite good. We will take a chance, and most importantly, it is a totally greenfield, new road, so the cycle access are available. So that is why we'll be interested to participate in this job.

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

Congrats on great execution and order inflow also in the month of January. Sir, my question was just to basically understand, right now we've won almost INR 4,800 crores of orders in January and the order book at almost INR 16,000 crores provides a very good revenue visibility. You listed all the opportunities that we are chasing right now. But with this kind of an order book, do you think we would be more selective in picking orders and only go for orders which are, I mean, of course, which basically are overall, generally, our threshold rate and all. So do you think a change in strategy? Or do you think we'll probably continue with the same strategy as we were doing before?

No, strategy is a function of situation. So if we have now around INR 17,000 crores of orders, naturally our strategy will vary accordingly. But as I just mentioned that the area of marine and underground metro and some other market projects, which we feel, will definitely be pursued by us. And if we can see that CapEx are getting released from previous projects and this job value is big, we'll definitely pursue, but we'll be a little bit selective quite naturally.

Got it, sir. Got it. And sir, in terms of -- you mentioned that basically the raw material cost is also impacting the margins. Would you be able to give a broad breakup as to how much of our order book will have fixed price contracts in which we have to bear the entire raw material cost?

Well, all of the government projects, what we have secured right now like Chennai Metro, Indian Oil Corporation at Ennore, there escalation clauses are available, so it is protected. But private jobs like the airport at Ahmedabad, or some job from Adani in marine sector, there we have to build up the escalation costs at price. So I would say around 60% government jobs, which is covered by escalation clause, 40% is not covered, where we have to take the cost in our bid price.

Okay. Sir, if I remember correctly, sir, our order book breakup is that we have only 10% private. Around 45% reach is from government or public sector undertakings. So if 40% of the order book is exposed to fixed price contracts, then apart from 10% private, would the remaining 30% be equally divided within government and PSU or is it more PSU than government?

Yes, it is a mix of PSU and government. But I'd like to say that whether PSU or government or private, there are 2 criteria. One is that escalation is payable as per the formula. So that takes care of the escalated costs. Secondly, whenever it is fixed price contract, there is a criteria. Sometimes we try to follow with the client that we work on a basis of star price, that we say that our bid is based on the cement per metric ton is this much, and porcelain per metric ton is this much. If there is additional price, because of that, we pay back; if the negative pricing, they pay back to us. It is like that. And if it is a fixed price contract, definitely we have to assess during bidding stage what would be the likely escalation we may face, which we bid in our bid price itself.

Right. Right. Got it. Got it. And sir, as you mentioned that we are looking to basically explore the possibility of working with the Adani Group on the Ganga Expressway, that's a huge project, around INR 5,000 crores to INR 6,000 crores kind of a project. Would that also be a kind of a fixed price contract? Or would there be a different treatment in that given that we are entering into the road segment after a long period of time?

No, definitely, that will not be fixed price contract. We have our star price model in that, that our price today is based on the porcelain price this much, cement this much, material, so it is like that. Whatever actual price increase will be compensated by the client.

Okay. So you are saying it will not be a fixed price contract?

It's not fixed price contract, but not the escalation formula contract. It's a star price contract.

Got it, got it. Sir, I just missed out on a couple of numbers that you had mentioned. If you can please repeat them again. Just wanted what percentage of work has been done on Kolkata and Bangalore Metro? And when do we expect that to be completed?

Kolkata Metro, 96% plus work has been completed. I think it will be another 8 to 9 months' time when the entire work will be completed. As you know that tunneling has been done a long time back. And we are in the process of retrieving this TBM, which was affected there. But finishing work takes time, because we have got electromechanical and various other interface activities, depends up on various vendors. But part of the metro will run, I think, by another 1 or 2 months' time from a place called Swabhumi to Salt Lake. So that is already under plan. Balance work by another 8 to 9 months' time will be completed. And when I say Bangalore Metro, you are asking about elevated one or underground one?

Sir both?

So elevated metro, as we have told last time, out of 4 contracts, 3 we have already completed, and we got the extension of time deal that we have done the work. So that is done. Only 1 project is still going on, which may go up to end of this year.

End of the financial year?

Yes, 2022.

Okay. By March 2022, we should be able to do?

No, no, not March, calendar year '22.

Oh, calendar year '22. And Bangalore underground, sir?

Underground has just started, but still, I mean, we have actually done good progress. Financial progress is around 20% so far. And this will go through the end of December 2024.

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

Congratulations on a decent number in this quarter. So my first question is, if I go back little in the history. So we used to do execution of about INR 3,000 crores on an order book of INR 6,000 crores. So now we are at INR 17,000 crores and add some more orders. We are already at INR 1,000 crores run rate on this quarter. So do you think that we can do that INR 7,000 to INR 8,000 crores execution on this order book?

You are so demanding every time.

You have very long order book.

Yes, yes. You're right, absolutely right, and revenue has to increase next year. And we have to do our total budget and we have to come back to the number exactly. But yes, definitely, it will be more next year.

Because 20% guidance looks to be a little on the lower side. So I was looking more at like we should be averaging at about INR 1,500 crores quarter should be the new base of execution from the current order book. This is broadly I was thinking in the numbers.

Yes. Here, there is little technical issue. If you see, out of the order book, we have got INR 6,000 crore order from underground metro, INR 4,000 crores in Chennai and almost INR 2,000 crores in Bengaluru metro. Though Bengaluru has started, but Chennai will take some time. As you know, the tunneling activity, which is by distribution of TBM, will take at least another 1 year to start. So genuine revenue starts when TBM starts working. So that factor is there. If it is not INR 1,500 crores per quarter, it will be close to that. It has to be close to that.

So about INR 1,200 to INR 1,300 is what at least we can see should be the run rate going ahead?

I think it should be close to around that number. We'll work it out.

Okay, sir, sure. Sir, second question is you said that I think this week you have submitted that BMCT project. And so how big is this project? And if you can highlight how many bidders have -- because I think this is a very highly specialized job, even when we had got it long back, only 2, 3 players who were technically qualified. Could you give some sense on how many number of bidders have submitted their bids and what is the total order size?

Total order size comprising 3 package would be close to INR 4,500 crores.

Okay.

And this is not the end because there will be one more package, which would be close to INR 1,000 crores, which is coming now. And the bidders, yes, all the bidders are there like AFCONS, ourselves, local bidders, but not for all packages. There is a wharf package, that is building of the jetty and wharf. I think only 4 bidders are there, that is AFCONS, L&T, ourselves, and NCC, a newcomer in this field. But other packages like material supply and ground improvement, there are some other local bidders as well.

Okay. You said NCC is also bidding, Nagarjuna Construction is also there?

Yes, Nagarjuna also.

Good, sir. Good to hear that. My other question is on margins. Now we have on the employee cost side, so that we have been having under absorption of overheads given the growth was not there and now things are getting more normalized. So I see a significant room on improvement in margins. Maybe, as you said double digit, this seems to be a likely profitability from second quarter of next financial year. But do you think it can go between like 10% to 15%, somewhere close to about 12% because we will get a huge operating leverage when this growth kicks up, which you mentioned earlier, INR 1,300 crore, INR 1,400 crore, in that range, if you do quarterly execution. So can we be closer to about like 12%, 13% kind of margin or it will be more like between 10% to 12%?

Well, again, margin also is a function of when the job starts. The large chunk of job is TBM related job where the threshold limit of 10% to achieve that will take some time. That is why the effect of Chennai Metro 2 jobs will not come very soon. Otherwise, yes margins should be better than this year, at least double digits or slightly more than double digits we should expect.

Okay. And just lastly, any conclusion that accident we had [indiscernible]. So any settlement or any claim with the insurance company, any potential liability, which may come because I think the fourth quarter, we'll again do some CTC related measurements on cost to completion. So do you think any negative surprises that can spring up in the fourth quarter, or it's largely behind and we are on path to recovery?

I'll answer your last question first. We don't expect any hit on our CTC because of that issue, because whatever expenses we have to incur, already we have incurred and booked and there is no further surprise in this because it has been done and taken care of a long time back. So coming back to insurance, yes, they have certified certain amounts from third party the amount I think. So we are working with the insurance company, but definitely they have certified some amount and it will be paid to us very soon. That is only for the third party. Car policy is still waiting. We are working with the insurance company. Let us see how it goes. It's going well, but let us see what is the time line.

Okay. But sir, largely on the entire order book, which is right now. So do you think any more negative surprises can come in, in terms of CTC provision for the CTC provision requirement? Or it's largely like we have everything provided and no surprises can spring up in the fourth quarter?

See, as you know very well that CC26 and Bangalore Metro has affected us during last several quarters. So those things are now almost behind us. And the new job what we have secured, we are very conscious about that. We had robust tender analysis. And so I don't think there will be a surprise available now.

Great to hear that. And just one last thing for Prasad. So Prasad, this claim thing, you're still tackling it out, but do you think that there's a potential reversal in any provision, which you may have earlier done it, which will add to the overall profitability, if any claims come to us?

Well, we have had some success on a few of the receivables that we had written off in earlier years. So in fact, we have seen some realization coming through in this financial year. We have entered into some sort of settlement agreements with a few of our customers where the deals are not coming through or were written off in earlier years. So we are pursuing these matters and we are hoping that we'll see larger realizations in the next financial year.

Okay. Because I think your Mumbai project is also coming to a closure and there should be potential reversal of liquidity, which provisioning of LDs which we keep. So is it right to assume that maybe next year will be much better once these reversals happen since these projects are coming to a closure and we typically be very conservative and keep some buffer out there. So next year from the margin perspective would be really good for us?

Well, we have been releasing the margins on some of these projects. While I won't speak about any one particular project, but generally you're right. We will see some release of margins as the project nears completion and we should see that impact in the next year.

But in this quarter, the margins were lower to 8%, but there was nothing related to any write-offs or any provisioning on any particular project, right? This was normal course of business.

There has been no write-off nothing in this quarter.

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

Sir, I just want to understand the ordering profile. The ordering has been good so far. So what kind of additional ordering can expect in the next one-and-a-half months, and probably the guidance for the next year?

Jiten, let us first digest this order book. We had given a guidance of INR 5,000 crores, we have already received orders for INR 7,500 crores, but now you are asking us about the order inflow in the next years.

But at least -- as you said that we are expecting a good run rate in terms of top line. So probably we are getting exhausted with other metro projects, so we shall be looking to add -- because Chennai Metro is the single largest project we have. Then there are other metro projects in the geographies getting over by next 6 months to 8 months. That was the only thought in terms of how we can see revenue accretion coming entering FY '24. Anyways. So probably we can expect a run rate of INR 5,000 crores to INR 7,000 crores next year also, hopefully.

Yes. I think Prasad has answered your question. But still, I can say that maybe another INR 1,500 crore to INR 2,000 crore order we may expect in this quarter.

And sir, we have seen profit from JVs falling down this quarter. I understand it could be because of revenue booking threshold or some reversal of cost. So this kind of volatility will remain going forward? How should we see this JV profits like?

Well, there will be some element of volatility in the JV in some of the margins that we declare. Especially on these metro projects, when we have completed some part of work, where we thought that we might be exposed to some larger amount of risk, where we would have kept some provisions, and once that event is behind us, we would have released the margins. So that is what you would have seen in the September quarter where there was a little bit of a bump as far as the margins from the JVs were concerned. And you are not seeing that in this quarter. So it is event-based and it is likely to happen whenever such event occurs and we overcome it.

Okay. So basically next quarter also we don't know. Like it's something based on the completion stage. We can see that way?

That's correct.

Sir, on the bookkeeping point, I would need some numbers, like mobilization advance outstanding, unbilled revenue, retention money, debtors, creditors inventory. And if I would have missed on cash bank and gross debt numbers?

Well, gross debt is INR 550 crores. Net debt is about INR 350 crores. Mobilization advances is about INR 480 crores.

INR 480 crores, okay.

I don't have the other figures with me right now. Maybe we can share that with you offline.

Okay. Okay. And sir, just 1 last question. So the bids which we have won recently and the bids we are targeting to bid. So we know the competition intensity is really high. But there are a few niche projects which we are able to win, like the marine projects, which we have won for INR 900 crores. So what kind of margin do we carry in such projects, and what kind of opportunity we see in this segment going forward, sir?

Yes, marine projects opportunities are limited, but we are lucky to have most of them, and we can say margin of around slightly more than double-digit at site level, and underground metro also we have so far secured 3 jobs, Bangalore and Chennai jobs. So further jobs not much except 1 Kolkata Metro and Bangalore Metro. And there also we are able to do better compared to other segments. So around 10% to 12% margin you can expect in such jobs.

And sir, on the subcontracting work which you're planning to take from Adani. So the competition also is very high for that particular project from various other regional players. But sir, then how are we placed like in terms of our experience, the margin capability, the CapEx. What new CapEx we will have to do, something which can -- if you have a better margin, but the CapEx net-net level, probably the earnings would come down from that particular project. So how are you planning to bid for that project?

Well, the level what we have reached today, if you see that CapEx is mostly required in underground metro, where 1 TBM will cost you around INR 50 crore, INR 60 crores; like that we have 4, 5 TBMs, trench cutters, et cetera. Compared to that, even the job value of Adani will be INR 6,000 crores, INR 7,000 crores plus. But the CapEx requirement will not be that much compared to the revenue. So that is in manageable limit. And as far as competition is concerned, yes, competition is there. We've put our price. If we get the job, we'll get the job at our price, not others' price.

So that is a fast-track job, sir? 2-year project or 3-year kind?

As far as Adani is concerned, it is 2 years job, but then definitely it will go slightly more than that.

Sir, 1 last question, if I can squeeze. Sir, what is the CapEx done so far and likely in Q4 and next year, sir?

CapEx what we have done so far is about INR 65 crores.

Any additional CapEx in Q4?

Well, it may not be in Q4, but next year, there will certainly be CapEx, because for this underground Chennai metro that we have got, we'll have to invest in acquisition of tunnel boring machines and trench cutters and some other equipment. So that CapEx will be...

How many new TBMs we can go for Chennai?

Sorry.

How many new TBMs we will go for? Because from Mumbai Metro we will be transferring it to Bangalore to Chennai, so how many new TBMs we need at Chennai Metro?

We need one new TBM, but there is some other equipment that we may need to purchase. Of course, the pricing may not be that much as compared to a TBM, but there will be some other CapEx that we'll have to incur.

So about INR 100 crores CapEx we can see next year probably.

Yes, easily. Maybe a little more than that as well.

The next question is from the line of Amish Chandarana from Tata Capital Financial Services Limited. As there is no response from the current participant, we'll move on to the next. That is from the line of Pritesh Vora from Mission Holdings.

Sir, what are the opportunities apart from tunnel making? What are the major areas we are present as far as order book is concerned?

Okay, you are talking about order book. Apart from the Chennai Metro, where we have got tunneling to be done, we have a marine job that is at Ennore, which is close to INR 900 crores, we just secured from Indian Oil Corporation. Thereafter, we have got 1 construction of university in Gangtok that is Sikkim, close to INR 400 crores. We have also secured Ahmedabad Airport from Adani, INR 300 crores one job, another INR 172 crores. So these are the jobs we have just recently secured.

In terms of percentage of revenue, other than the tunneling job for Metro, what percentage of the revenue other jobs will be contributing?

See, I think marine and tunnel job put together contributes around 60% of the revenue. And so the remaining jobs like airport, building, specialized jobs, and elevated metro and road will be contributing 35% to 40%.

Okay. Sir, why -- I mean, is the operating margin, are you not passing steel and cement price hike in your contract? And are you taking more of a fixed price contract? Because at this level of INR 1,000 crores revenue, most of the contractors build in the escalation for the steel and cement going into the project. So can you elaborate on that? What made you to take the contract on a fixed price basis?

Yes, I think you're absolutely right. The concept what we are executing now, the revenue what we're getting now, those are all old contracts, we might have secured 1 year or 1.5 years back. And some of them are fixed contracts, some of them are with the escalation formula. But even the escalation formula or fixed contract, the amount of price hike has happened recently, during the last 6, 7 months, none of the formula is also working, because we can expect a price hike of 10%, 15%, 20%, but if you see, the steel price has gone from INR 45,000 to INR 65,000, which is something beyond an imagination. But when we are bidding now, recently, in the last 3 months, we have taken care of all these escalation prices of the steel and all, so going forward as a new job, we will not have any problem. That is what is the situation now.

Right, right, right. And sir, Metro, what are the projects in the pipeline? And who do you generally compete with in the metro job. I mean, who would you see on the bid, is it a L&T, Afcons, or there are other people also?

Metro, L&T, Afcons, J Kumar, Gulermak from Turkey, Tata projects, so they are the main competitor in metro. I mean talking about underground metro. And pipeline, there are not many left out now. Delhi Metro, there are 2, 3 contracts left out; Chennai Metro may be 1; Bangalore Metro I don't think anything is left out.

The next question is from the line of Amish Chandarana from Tata Capital Financial Services Limited.

My question to you is, out of your total works, what is the quantum of the work you give for subcontract? And what is the quantum of the work you take it in your own books? Because more you give works on subcontract may impact on your margin?

Well, in our model of working once upon a time, 100% work we used to do on our own. But there are certain jobs like road, if you do, or certain earth work related work or where we have got electromechanical activities involved, you have to go for subcontracting. So today, I'll not be able to tell the exact number, but I guess around 10% to 12% job we give for subcontract.

Okay. Okay, sir. Okay. And this percentage will remain the same going forward considering the new works which you have undertaken or it will increase by some percentage?

Our bottom line has been impacted because of additional steel price. Hopefully, going forward it will be better than what we have.

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

Are there any other large opportunities for railways for tunneling, which is coming up in the next fiscal year? I think we have one, right, where we last year we won Sikkim one. Is there anything else on the radar?

I mean not in radar, but there are a lot of prospects in this segment because it has been emphasized by the government of India to lay railway lines across the Himalayan range in many places to go to the border. So in Rishikesh area, in Himachal Pradesh, a lot of new railway lines through the tunnels will happen. But we don't have much appetite in this segment, to be very frank, because we have enough job now. We'll have to handle them, complete them, then only we will try for such job.

Understood, sir. How many TBMs we own at this point of time? And do we need to have more TBMs for taking all these underground contracts? Or there is no need or there's little need for extra TBMs?

Well, the job we secured from Chennai Metro, we require around 4 TBMs. We have 3 TBMs from existing Mumbai metro job, which will go there. We may have to buy one new. So unless we have some more new underground job, we don't require any TBMs to be purchased at this stage.

So we should not expect a major CapEx in FY '23 and FY '24 for executing these large contracts?

No, the TBM what is required in Chennai Metro, one TBM. But apart from that, there is another machine called trench cutter, which is especially required for Chennai Metro, those are very costly also. So there will be some CapEx, as Prasad just mentioned, I mean, we have to spend in the next year.

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

Sorry for harping on this. But sir, with the kind of order book that we have in hand and with our execution capabilities, can we expect to reach a top line of INR 5,000 crores by FY '24. And once we reach that, with the escalation clauses and the commodity price pass-through, which we have incorporated in our newly won project, can we see a margin of around 12%, 13% by FY '24?

Very definite question. Top line, what you have mentioned, I hope that we'll be able to achieve. Margin, yes, but always in civil engineering construction, there are uncertainties involved, but it will be double digits. I think we can expect slightly more than double digits going forward.

Okay, sir. And sir, we'll require higher working capital limit and bank limits for executing these orders. So can you please tell us what the limits are currently? And what are we seeking for in the next few years, in FY '23 and '24?

Today, we have fund-based limits -- fund plus nonfund based limits of about INR 4,000-plus crores and we are already in discussion with our banks for further increasing the limits given the new orders that we have received. So we are pretty hopeful that our banks will come to our support and sanction the enhanced limits at the earliest.

And sir, what will be that regular limit that you will be seeking for, can you give me the ballpark?

So as I said, I won't be able to comment on that. We have been in discussion with our banks for an increase in our limits. And hopefully, that should come through in the next few months. So I don't see any challenge in getting bank limits to support the projects that we are winning.

Okay, sir. Sir, another question is on the high-speed rail opportunities, which are about to come up. So the ministry has started preparing the DPRs for the rest of the projects. There are several projects which are under consideration. So sir, any view on the size of the projects, which may come up for bids and whether we will be participating in those projects given the order book that we have in hand and our execution capabilities?

Well, as far as Ahmedabad to Mumbai high-speed rail, I think there are few tenders yet to come. One of them will be the tunnel in this area, BKC to Thane, which will be around INR 15,000 crores. Apart from that, most of the job will be of top layer that is track laying, I will not be able to comment on that what will be the value. Rest any high-speed railways, that is too early to say about that. But we will definitely keep our eyes open. And if there's a good opportunity, we'll try to pursue.

Okay. But sir, going forward, are we building our capabilities more towards metros and high-speed rails versus the rest of the areas? Is it so?

Well, our capability in underground metro is already established and that is being demonstrated also through Kolkata Metro, Mumbai Metro, before that Delhi Metro, now Chennai Metro and Bangalore Metro. So yes, we rely on our capability in underground metro. And high-speed rail is a specialized job. If you come to the track laying. Otherwise, it is a simple job and a matter of volume. So we have to see how we can go ahead with that, how our appetite on that, because last bid, 2, 3 tenders in high-speed rail was very competitive. L&T has taken in a cut-throat price. We won't be able to complete to that level.

Sir, could you give us the margin at which those projects were awarded? Would it be possible?

See, we are in a competitive market. So as you know, construction industry margin, how much, close to double digit, around double digit.

Ladies and gentlemen, that is the last question. I now hand the conference over to the management for the closing comments.

Thank you, Anshuman, for hosting our call. And I would like to thank all the investors for their continued interest and support to our company. We look forward to interacting with you again next quarter. Thank you.

Thank you. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference call. We thank you for joining us and you may now disconnect your lines. Thank you.