Dhruv Consultancy Services Limited (541302) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '24 Earnings Conference Call of Dhruv Consultancy Services Limited, hosted by Kirin Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Vaishnavi Ambokar from Kirin Advisors Private Limited. Thank you, and over to you, Ms. Vaishnavi.

Thank you. Good afternoon, everyone. And on behalf of Kirin Advisors, I welcome you all to the conference call of Dhruv Consultancy Services Limited. From management side, we have Mr. Pandurang Dandawate, Director; Ms. Tanvi Auti, Managing Director; and Mr. Snehal Patil, Chief Financial Officer. Now I hand over the call to Ms. Tanvi Auti, Managing Director. Over to you, ma'am.

Yes. Thank you, Vaishnavi. Good afternoon, ladies and gentlemen. I extend a hearty welcome to each one of you who has joined us today for the Dhruv Consultancy's Q3 investors call, where we will delve into financial results of the third quarter of financial year 2024. Your participation and interest in our company's performance are highly valued. During this session, we'll offer a concise overview of our Q3 FY '24 financials, providing insights into our achievements, the challenges we have faced and outlining our future strategy. So let us take a moment to reflect in our journey so far. The company was founded in 2003 by the Mr. Pandurang Dandawate, headquartered in Navi, Mumbai. Dhruv consultancy stands as a beacon of excellence in the infrastructure consultancy sector. Our commitment to delivering comprehensive services spanning design, engineering, procurement, construction and project management has positioned us as a trusted partner in the realm of infrastructure development. Our diverse service portfolio includes separation of detailed project reports, conducting feasibility studies, project management consultancy, which includes supervision work as authorities, engineer, independent engineer, as well as operation maintenance work. From project planning and designing to technical and structural audits, we emerge as a strategically positioned for investors navigating the intricacies of infrastructure projects. As an infrastructure consultancy company, Dhruv is positioned well to capitalize the substantial growth potential in the infra sector that has been happening over the past few years, especially with the significant allocations done in the union budget 2024 and the interim budget 2024 for infrastructure projects, particularly in the highways and roads segment. The consultancy services account for 10% to 15% of the project cost, that means consultancy business has enormous growth opportunity in the coming future. Dhruv Consultancy is one of the oldest companies and a pioneer in this segment and currently in our bids, we are scoring about 95 out of 100 marks, which helps us to strongly qualify in most of the bids for new projects. Let us now delve into the prominent achievements and milestones attained during Q3 FY '24. In our recently quartered milestone, the company has achieved significant success by securing multiple projects across various states, solidifying our continuous growth and influence in the infrastructure sector. For FY '24, we have bagged projects of INR 126 crores till date. Notably, highlights encompass securing contracts for projects in Jharkhand, Telangana, Andhra Pradesh, along with authority engineer projects in Uttar Pradesh, Gujarat. These strategic victories highlight our versatile capabilities and reaffirm our standing as a pivotal player in the industry. Additionally, our -- we had also been shortlisted for the Western Urban Corridor Development projects in Nepal. This is a testament to our expanding global presence. Also, in addition to that, we have -- we are in the process of forming a subsidiary in U.K. by the name of Dhruv International Private Limited and are expected to receive orders soon, strengthening its presence in the international market. We look at FY '25 as a full opportunity for growth. These achievements signify that the company's sustained growth trajectory and our unwavering dedication to delivering value to our investors and stakeholders. We eagerly anticipate sharing more details about this accomplishment in the near future and keep our investors updated on a timely basis. Now, let's take a closer look at the company's financial performance. With a 2.1% uptick in the total income, a substantial 94.33% surge in EBITDA, and an enhanced EBITDA margin of 21.73%, our commitment to operational excellence was unmistakable. Notably, our net profit skyrocketed by 48.46%, achieving a commendable net profit margin of 11.86%, while the basic EPS witnessed a significant growth of 47.93%. Turning to the cumulative 9 month FY '24, despite a marginal dip of 5.18% in the total income, our EBITDA has a remarkable growth by 42.09%, accompanied by an improved EBITDA margin of 20.84%. Net profit for 9 month FY' 24 reached INR 5.48 crores, boasting a 15.93% year-on-year growth and a net profit margin of 9.55%. The basic EPS for 9 month FY '24 at INR 3.61 reflects an impressive growth of 15.34%. These figures underscore our steadfast dedication to sustain financial excellence. In both Q3 and the 9 month FY '24, the company has achieved remarkable financial milestones, attesting to our unwavering commitment to excellence. The current order book stands at INR 350 crores, giving future earning visibility for the next 2 to 3 years. As we are growing in revenues, our focus is on expanding our bottom line, which has strengthened our focus to high-value-added projects. The same is visible in our financial performance. Before we proceed to the Q&A, I would like to extend my heartfelt appreciation to our esteemed stakeholders for being indispensable contributors to our journey of growth. Your unwavering support has been cornerstone of our success and we sincerely value the significant role in our achievement. Thank you.

[Operator Instructions] The first question is from the line of [ Rajneesh Behl ], an Individual Investor.

Congratulations for a good set of results as well as on the order book. So I have a few questions. In the previous con call also, you said that your orders are usually for 2 or 3. But when we see your announcements on the exchanges, some of the orders are for spanning on the 5 years. So what will be the maximum turnover you might have done in 1 year -- in the coming three years? What can be the maximum turnover based on the current order book?

Thank you, sir. Yes, you are absolutely right that the orders that are coming, are coming for 5 years average. But if we average out the entire order book, it comes up to 3 years. So that is why when we say about the unexecuted order book, on an average it is 3 years.

Okay. And how much time it takes you for the initial mobilization for any project once it is awarded?

3 months, sir. 3 months.

And the billing will start after 3 months or after end of 3 months.

No, no, no. Billing doesn't start for 3 months. Billing starts from day 1 itself, but our revenues start from -- it is -- like we can raise our revenues after 3 months. From the first day.

From the first day itself?

Yes.

And you also mentioned that you got shortlisted for the Nepal projects as well as you have set up a company in U.K. So what are the plans at international level?

So this subsidiary has been formed in U.K., in London, okay? So whatever -- in this year, we are expecting significant orders from the international sector. And looking at that, we have -- the company has taken a strategic decision that all the international projects that are going to be executed will be executed from the London office. As there is too much work in India itself, as we can see the union budget provision, the interim budget provision being done in India. So the Indian office will be fully occupied in the domestic project and the international office will be functional for international projects.

Okay. So for this international projects from where you will be providing the manpower locally, or you are allowed to supply the manpower from India?

We are allowed to supply from India. However, there is a combination required of international as well as national. So say suppose, we are working in Africa, so we have to hire local, that's a condition when we have to work. So we have to hire around 50% of manpower locally and 50% we can take from international market.

And what are the margins level expected in the international projects?

EBITDA margin, around 30%, sir.

Okay. And in last con call, you told that there was one traffic survey project, which was undertaken in the last quarter and that revenue will flow into this quarter. But I don't think that revenue has flowed into this quarter also.

Revenue has not flown in quarter 3 because there was some officer changes. So now, in quarter 4, the revenues are realized.

So how much is that revenue?

Snehal, can you tell about the revenue from traffic survey projects?

It will be approximately near INR 4 crores.

Balance revenue.

Yes, balance revenue.

INR 4 crores and this is like 30% EBITDA margin project, no, you were saying last time?

Yes, yes, right.

So your revenue in Q4 will be -- going too much higher than the Q3?

Definitely, it will be in line with whatever has been over the years, but there is a significant improvement in the bottom line as the -- the main reason being that NHI project that was started 2 to 3 years back, which we had backed 2 to 3 years earlier are coming to an end. So the profits are getting released.

Okay. And one more question regarding your -- who are your competitors in this market?

Our competitors in listed, there are no competitors. But privately companies, there is S I Infra, there is L.N. Malviya, there is K&J projects. And I think, yes, Lion Engineering, MSV International, these are our competitors, direct competitors.

Okay. But I can see in the listed market, there is one more competitor called Artefact Projects, which also have got substantial order book.

Yes, Artefact is -- but they don't work directly in -- they don't -- they are not coming in our direct competition right now. Like the bids that we are submitting, we are not seeing Artefact's name there. So I -- we cannot consider them as direct competitor.

Okay. And we have seen in the recent past, 2, 3 days ago, there was huge selling by promoter. So what is the reason behind that for that selling?

Dandawate, sir, are you there? Hello? Can the investor call check whether Dandawate sir is there?

Okay, ma'am.

In the meanwhile, I can ask one more question that like we send an email to your investor center, and we don't get back any response from that email, no.

Sir, can you tell us the ID that you are sending?

[email protected] and it was -- I mentioned your name on that email so that it reaches to you. I sent it like after the last con call, but no response was received on that email.

Yes. Was it sent on cs@dhruvconsultancy?

Yes.

Okay. If the company secretary is there on this call, please ensure that it is replied by today itself. We will make sure sir, and take care in the future that all your mails are being replied.

Okay. So Mr. Dandawate is online or not yet?

Yes, we are connecting him. Tanvi ma'am, can you just provide me any alternative number for him?

Yes. I'm just sending it to you.

And for Nepal projects, what is your arrangement with your JV partner?

So JV partner is local. So whatever local support we will require, that he will be providing. And -- but all the execution will be taken care by us. All the final decision making will be with us.

Like is it a 50-50 JV? Or like what kind of percentage JV partner holds in that?

It is usually a 60-40 JV.

60 by you, 40 by local?

Yes. If we are the lead partner, then we. If we are not the lead partner, then we come into 40%. But for the Nepal, we are the lead partner.

Okay. What is the bidding pipeline over there?

So it's 2-stage bidding process. First, we get short-listed. So something called as an expression of interest we have to submit. And based on our technical proposal that we are sending, so they short list us. After that, they give us the RFP, the request for proposal. And then we submit our financials. So we have already been shortlisted in Nepal and the RFP process and the financial opening takes about 4 months.

Okay. And how big is this RFP then?

Sorry?

How big is this RFP?

So this is around INR 20 crores in revenue, sir.

INR 20 crores, okay.

Yes.

Okay. And then like in previous con call, you said you will be getting like -- reaching an order book of something like INR 500 crores in the coming years. So what is the like your strategy for reaching to that level?

So the bidding that we are doing currently in international market add to the tune of INR 100 crores single project. This Nepal one is INR 20 crores. But recently that we have bidded in Africa, they are to the tune of INR 80 crore to INR 100 crores single order. So that's how -- and we are bidding quite actively there. And so even if we get one project, we are definitely crossing revenues of more than INR 200 crores. And order book will also...

Which part of Africa, ma'am?

Eastern Africa, in Mozambique, in Tanzania, Zambia, Uganda, Kenya.

Okay. Okay.

Yes.

Because we were here -- because some companies were -- got hit due to the currency problem in Africa last time, like some pharmaceutical companies got hit very badly due to the currency problem because they did not have the dollars in central bank. So how your payment will be guaranteed from there?

These projects are funded by World Bank, African Development Bank. So there is a security there itself. We are not depending on the local government for it.

That's good. That's good to know.

Yes. Yes.

Okay. So maybe you can -- if you can get Mr. Dandawate online for answering that why promoters selling there?

Yes, I...

Otherwise, I'll join back in the queue.

Yes, yes, yes. Thank you.

Tanvi ma'am, I've connected Mr. Pandurang sir.

Yes. Hello?

Hello? Hello?

Yes, sir, you are audible.

Hello? Yes. Actually, investors want to know about the promoter selling. So if you can answer that?

Yes, sir, the question was -- this is Rajneesh. The question was regarding the recent selling by promoters in open market. So what is the exact reason behind that? Is it for personal purpose? Or like...

It is for personal purpose, yes.

Hello?

Yes, you are audible, sir.

Yes. What is question?

Why this promoter selling, happening in the open market when the future of the company is so bright. So why promoter is selling in the open market?

No, no. Try to understand, it is not selling of the promoter share, number one. It is a promoter group. Number two, it is for the purpose of unwinding our own warrants. If you go through the history of the company equity side, we have to unwind the warrants of about 10 lakh shares amounting to about INR 6.3 crore because at the rate of INR 63, we had issued that warrants to promoters. Now to bring that money in, we are selling the promoter's shares and unwinding the warrants. The last date of it is 15th of March 2004 (sic) [ 2024 ].

Okay. So it means that -- is directly means that promoter is selling it -- the share at higher price and getting the shares at lower price?

Promoter is selling, yes, but it is for the purpose of unwinding the warrants which are at the rates of INR 63 right now and the rate we are trading today at INR 85.

Yes. I know that, sir, that you have issued the warrants at INR 63. And now the -- when we issue the warrants to like a person, so person at that point of time, person is required to pay some money upfront and the person should have the money. Now it's like promoter is selling at like -- signal goes to the market...

Try to understand the warrants are issued to the promoters only. So I'm the person.

No, but the warrants issued were issued to the non-promoter also. I see one more name of lady under the public category.

No, no, no.

There is no non-promoters.

All our promoters.

No, no, I see in the last December...

I will tell you the names. Sandeep Dandawate, Executive Director, Pandurang Dandawate, I, myself, Jayashree Dandawate, my wife, promoter. Then Anjali Dandawate, my brother's wife, all are promoters. All are Dandawate.

And who is this Reena Nitin Shinde?

That is not -- that is preferential issue, not warrants...

You're mixing everything. That is a preferential issue. That was closed 18 months back.

Okay. Okay. Okay. Understood. Understood. Understood. That clears my doubt.

[Operator Instructions] The next question is from the line of [ Yashwanti ] from Kojin.

Congratulations for the good of numbers. We have seen a dramatic increase in your EBITDA margins. So just wanted to understand what are the reasons for it? And what outlook -- future outlook you would like to give about the profitability margin, whether they're sustainable at this level, there is a headroom for improvement or what it is?

Yes. Okay. Thank you for your question. So the main reason for the increase in profitability has been that the NHI project, which we had started 2 to 3 years back as well as the traffic survey projects which we started at the beginning of the year, have come to an end and all the revenues and profits are getting realized now. That is why there is an increase in the bottom line. Going ahead in -- for FY '24, '25, the company is targeting larger ticket size project. As you can see in our disclosures, the company bagging orders to the tune of INR 3 crores to INR 5 crores to INR 10 crores, even INR 20 crores being the highest. This year onwards, we have made a strategic decision to take orders INR 50 crores and above, which will help in increasing our bottom line as well as our top line by a significant margin. And the main contributors to this being iconic projects in the country itself, like coastal road projects, expressways, cable-stayed bridge projects. In Maharashtra itself, in Mumbai, if you see there are so many coastal road projects coming up, sea-link projects coming up. So the company is actively targeting these projects under central as well as state governments all across the country. Secondly, as we have already formed the subsidiary in U.K., through that, we are going to execute larger ticket size to the tune of INR 80 crore to INR 100 crore assignment outside the country. These projects are being funded by World Bank, Asian Development Bank, African Development Bank. And we are actively targeting projects in the gulf, in Eastern Africa and in South Asian countries like Cambodia, Vietnam, Bangladesh and Nepal.

Okay. So ma'am, out of the total order size of INR 350 crore, how much is the international order book?

No. From the INR 350 crores unexecuted, as on date, it is 0, but we are expecting in a month or so, the orders. And we haven't got any orders...

Okay. So we haven't got any order there?

No, no, no. We haven't got any orders, but we have been shortlisted in 17 projects right now. And out of 17, even if we get one project, our revenues will increase significantly, revenues and profits.

Okay. But I think ma'am, we're talking about it for last 2 to 3 con call that we have been shortlisted in the international market and [indiscernible]. So what is the exact time line you expect this business to be coming in company's pool?

Yes. When we started bagging international assignments. So at that time, people were recovering out of COVID because we had just started in 2021. We were exploring international markets. So -- but recently, in the past 6 months, there has been significant visits by our team to these countries as well as a lot of meetings have been done with these international clients. Secondly, we have hired a vice president, business development in-house who has worked in the international market in our competitor firm. And he is actively seeking these international projects. And with the help of him, we are confident that now this will bring into results as well.

Okay. So FY '25, we may see some international contribution.

Yes, yes. We are definitely confident. In fact, before this financial year ends, we are hoping at least one assignment.

Okay. That is -- includes Nepal or that is excluding Nepal?

Sorry?

That is excluding Nepal?

Excluding Nepal, yes.

Okay. And you expect that minimum size should be around INR 54 crores to INR 84 crores...

30%.

Sorry?

30% EBITDA.

30% EBITDA.

Yes, yes.

So there is a very good headroom to move even from the 21%, which was reported in the latest concluded quarter...

Yes. So when we bag international projects, there might be a possibility that the initial mobilization expenditure are higher size. But going ahead, say, once we have settled there in a period of 3 to 4 months, as I said, initial mobilization takes 3 to 4 months. So after that, our revenues and our profits will be stable. So that happens with any project, whether international or domestic.

Okay. Just wanted to understand, you said that you start billing from the day one but you present your bill after 3 months. So is this anything like an advance you receive and then the payment happens in the milestone basis? Or how does this happen?

No, it's not advance. So it's a monthly-based payment. It's your reimbursement of our salaries of key professionals and the reimbursables that we are doing. We can raise our bills on a monthly basis. However, for the first 3 months, once the complete setup is there, then we can raise the bill. Sometimes, it is done in 1 or 2 months also, not always it is 3 months, but yes, in large -- in most cases, it is 3 months, yes.

Okay. And then if you can just throw some light on what is your sole capacity to take the project right now? And what is the biggest project you were handed over in terms of the size till date?

Yes. So the largest project that we are handling right now is the Ganga Expressway project, which is a total revenue of INR 22 crores. And as far as our sole bidding capacity is concerned, we definitely have a full bidding -- significant bidding capacity open in the domestic market. And for supervision, 4 lane, 6 lane assignments, we do qualify solely. For operation maintenance, DPR projects, also, the company qualifies solely. That's not a problem. The company secures 95 to 96 marks on its sole credentials. However, for the international market, we will have to start with a local consultant there and in a JV or in an association format. So once we are established in that country, we can go sole there as well.

Okay. And ma'am, what you will classify as your strength as we work with your competitors ?

So our strength would be our manpower. If you see the company's attrition rate also, it is to the tune of 4% to 5% only, which is very low as compared to the industry standard. So our employee is our USP, we have a combination of retired government professionals as well as professionals from the private sector. Our entire second line of leaders, CEO, CTO, COO have worked in multinational companies or have been chief engineers in Government of Maharashtra. Then, in addition to that, we have a combination of youth as well as experienced people. So large amount of new youth recruitment is being done from Tier 2, Tier 3 cities and that's our strength.

The next question is from the line of [ Neha Ahuja from Suraj Enterprises ].

My question is, please explain your order book time completion for the current order book?

Okay. So our unexecuted order book stands at INR 350 crores, and we are expecting it to go around 3 years for total 2.5 to 3 years. So these are the projects, which we have bagged last 1, 1.5 years as well as in the current financial year. So what happens is that most of them are supervision assignments. And the contract period, however, is 5 years. But why we consider it as 3 years, the reason being the 5-year is divided into 2 phases. First phase being the construction phase, which goes up to a period of 2 to 2.5 years and the balance being the defect liability period. But maximum revenues to the tune of 80% of the project of our fee is we receive it in the construction period itself, that is in the first 2 to 2.5 years. And balance 20%, we receive it in the -- receive it in phases in the defect liability period. So this is how our revenue -- our order book breakup and the time line.

Okay. And can you please highlight the steps for international presence?

Yes. So presently, we are in talks in African countries like Tanzania. There is Zambia, Uganda, Mozambique and Kenya. These are the targets in Africa. In Gulf, we are in talks with Saudi Arabia and in Dubai. In Southeast Asia, in Nepal, Bangladesh, Cambodia, Vietnam, we have been shortlisted everywhere. However, we are expecting an order in next 1 to 2 months.

The next question is from the line of [ Ritika Jain ], an Individual Investor.

How does the company plan to leverage its retail success in FY '24 to sustain and enhance the growth?

Can you repeat your question?

Yes, sure. How does the company plan to leverage its recent successes in FY '24 to sustain and enhance the growth?

Yes. So the recent -- not even the recent, I would say, from a past few years only, from FY '16, '17, since we have got listed, we were earlier being eligible for only 2 lane projects. Since we got listed after our IPO, then we got eligible for 4 lane, 6 lane, 8 lane assignment. And earlier, we used to do it in association or in JV. Today, we qualify on our sole credential. So this is how we have developed our experience and our expertise over the past. That time, our employee strength was to the tune of 100, 150. Today, it is almost reaching 500. So we being the top 5 consultants in India as well, the higher authorities, including the Chairman NHI has appreciated the company at significant intervals to us. So with this recent successes, we are trying to replicate this into the international market, where the revenues are in multifolds. So if here, we are getting a project of INR 5 crores, for the similar kind of work, there the fees is INR 15 crores. So that's how -- although the expenditure would be also higher, but the profits are also much higher.

Okay. Got it. Can you throw some light on the acquisition of equity shares by the promoter and Director aligned with the company's broader objective for FY '24?

Yes. So for FY '24, the company -- we had already announced that the company is issuing warrants to the promoter and promoter group in 9 lakh shares, thereby increasing the stake of promoters in the company. So this will be closed before the end of FY '24.

The next question is from the line of [ Shivam Sharma from PCR Capital ].

So ma'am, my question was any big project handled by us till date and what is the size of the same?

Yes. So the largest projects that we are currently handling is the Ganga Expressway project from Meerut to Prayagraj. It is being executed by Adani and IRB Infra and the client is UPEIDA, UP Industrial Expressway Authority. And that's our largest assignment, and it is completed 50% as on date.

Okay. And what is our overall outlook and strategic focus for the FY '24, considering the recent achievements and acquisition?

Yes. So for FY '24 as well as for FY '25, the company has decided to shift its focus from the domestic market to the international market. Also, in domestic market, our focus would be large ticket size projects to the tune of INR 50 crores and above, namely coastal roads, more expressway projects, iconic bridge projects, sea-links. So these are much -- there are much prestigious projects being lined up by the government. And now that the company has so much credentials and which it has built over the years, the company is very hopeful of bagging such large prestigious awards in FY '24 as well as FY '25, mostly in FY '25. For international markets, we are just entering there. However, the profitability and the revenues are already INR 50 crores, an average INR 50 crores. Starting with INR 20 crores, it may go up INR 100 crore, INR 120 crores also single project.

[Operator Instructions] The next question is from the line of [ Pradeep Chaudhary from Saamarthya Capital ].

You informed that this Ganga Expressway, the scope of the consultancy is supervisory.

Yes. Correct.

I wish to understand what different scopes you have? And out of the INR 350 crore of order book, if you can bifurcate as to what is the value on each scope?

Sure. So at present, we have 3 services that we are providing. First is the preparation of detailed project report and feasibility study. Right now, it is contributing to 10% of our revenue. And the payments here are on a milestone basis. So as and when we submit the reports, our payments are released. Secondly, we have project management consultancy, wherein we act as an independent engineer in case of BOT and HAM projects and authorities engineer in case of EPC projects. So here we do the supervision. And right now, this contributes to 85% of our revenue. These payments are on a monthly basis. So we claim our bills on a monthly basis and around 45 to 60 days' time, we'll receive our payment. Third type of service is techno advisory services when we carry out structural audits, technical audits, road safety work. So these are to the tune of 5%, and this is a single onetime payment after the completion of the activity. And -- but the revenues are not very large here. It is not more than INR 1 crore.

And when you're moving to greater than INR 50 crore order, how the pipeline would look like? Because you must have planned that how would be doing this INR 50 crore plus?

Yes. So with respect to the services or the portfolio, these INR 50 crore, INR 100 crore assignments are project management consultancy only. So -- because they are large size projects, larger staff and expert staffs are required like if there is a tunnel or there is a sea-link. So I will have to hire geologists, tunnel experts, bridge experts, in cable stayed bridges, some international expertise, software, equipments might be required. Hence, the revenues are larger. But these are mostly project management consultancy, supervision assignments only.

And in this, the selection criteria, you already have?

Yes. We are eligible for these projects now. We were not 1 year back, but after completion of so many expressway projects in India itself, we now qualify for these large assignments as well.

Okay. And how many of these projects you have already placed your bidding or participated?

So there are greenfield projects under the Bharatmala Pariyojna, 8-lane expressway projects there. In addition to that, the bids have not yet come, but the projects that we are targeting are the Alibaug-Virar Corridor, the Jalna-Nanded Express project, Nagpur-Goa Expressway. Yes, these are the namely a few. And few in UP also, the extension of the Ganga Expressway. There are few border road assignments also in Northeast.

And for all these 4 projects you have just mentioned, the tenders are still to be...

Yes, they are still to be floated, yes. The contractors are there. So contractor tenders are already there and out. But once the contractor is appointed, after that, the consultants are appointed.

And if I wish to understand that whenever the government announces some major project, then how does it flow in terms of time lines that you have the construction companies being awarded, then comes companies like you. How do I understand this whole time line?

So it depends on how the project is being executed. If it's a PPP, like a public-private partnership, whether it's an EPC project or a hybrid annuity model, the time line differs for each one of them because there needs to be a financial closure between the government, the bankers and the contractor who is there. Then the land acquisition status that is there. But once all that is there, in a month or 2 months' time, the consultant is appointed. However, from the announcement of the project through the appointment of consultant, it takes 6 months.

Okay. And you also mentioned that you do DPR also.

Yes, yes. Right.

So any of The DPR projects, though currently, you have 10%.

10%, yes. But they are very small and smaller in revenues. And there are 10 to 15 DPR projects going on, but not more than INR 2 crores to INR 3 crores in revenue.

But usually, doesn't it help that if you have done the DPR, then getting a project management would be much more easier for you?

No. That's not a criteria as such. But if we have done a DPR, we get the edge there. But it helps to keep our technical capabilities alive because there is a lot of expertise and technicalities involved, while we are doing a feasibility study, or a DPR project. So there needs to be a combination of both. But however, right now, the government focus is on completing the project faster, so there are less number of DPRs coming as compared to when -- in FY 2016-'17, '17-'18, we had 80% DPR projects and 20% supervision projects. So it depends on what the government wants and how projects are coming.

And if I wish to understand that what is the philosophy or the strategic direction that going from, say, a INR 20 crore to not even attempting for a INR 20 crore project, what is the thought process of the management?

So right now, for this financial year, we are targeting less of INR 5 crore or INR 8 crore -- or below INR 5 crore project and more on INR 10 crores and above project, more focus on international assignments. But while we choose a project that whether we want to go ahead or not, we see the financial. So once our team of -- our sales team works out the financials of it, suppose it is doable or not, then we decide whether we want to do this assignment or not. Because there is an estimated budget that is being given along with the tender. So if the company is confident enough that in this budget with good profits, we can execute the project, then we go ahead.

The next question is from the line of [ Hemani Oban from Suraj Enterprises ].

Hi, am I audible?

Yes, you are audible.

Yes. So my question is any churning on addition at key management levels?

Additional key management level, yes. So right now, we have hired a general manager finance and account, yes, just last week. And this is the only addition in the leadership level. Otherwise, the entire leadership as mentioned in our annual report remains the same.

Okay. And what is our working capital?

Working capital, Snehal, can you highlight?

Yes. The working capital requirement is of around INR 10 crores to INR 12 crores.

What is the current working capital, they want to know. The fund-based and nonfund-based limits, yes.

Okay. The current working capital nonfund base is INR 36 crores, the fund-based is INR 9 crores.

[Operator Instructions] The next question is from the line of [ Ajit Surya from Opal Kalia Company ].

So my question is what are the main risks for the business including potential impacts from changes in government regulations? And could you provide any revenue projections for financial year '25 and [ restricted to be at 25 ] for the upcoming year?

Sure. So the risks associated are, yes, there is definitely, if any change in government policies happen, there might be a risk associated with that. That is why the company has taken a strategic call not just to depend on 1 or 2 particular clients and have a large, diversified portfolio as well as geography. That is the main reason behind expanding globally. So in order to mitigate these risks, at present levels, yes, if any change in government policies happen, not change in government. If there is a change in government, there will be no impact as we have orders in hand for the next 5 to 6 years. So that won't be impacted. But if any policy changes there with respect to the execution, there might be an impact there. As far as revenue projections are concerned, if we bag an international assignment, there will be definitely a very big surge in the revenues. If not, then the year-on-year growth would be to the tune of 10% to 15%.

And what about the EBITDA? Would it clock [ 25 ]?

Yes. So if there is an international assignment or a larger ticket size assignment in India itself, so these revenues -- these EBITDA margins would definitely go up around 20% -- 15% to 20% year-on-year.

The next question is from the line of [ Pradeep Chaudhary from Saamarthya Capital ].

Are there any bank guarantees that you have to give while participating?

While participating, we don't need to give, but there is a performance bank guarantee we have to give while we are awarded the project. When we are awarded the project, it is to the tune of 3% of our consultancy fee.

So which means if I look at your INR 350 crore order book, so 3% of that, you would have given as bank guarantee?

Yes, right.

And what are the expenses of that?

It is 1% commission and 15% margins in FDR.

The next question is from the line of [ Rahil Shah from Crown Capital ].

So firstly, on the -- you mentioned earlier that the NHAI project which started 2 to 3 years back, it's giving you revenues and profits now which led to better margins. So is this the normal course of business? Was it because of the duration of the project that you're recognizing now, or there was a delay? How does it work?

So because the company had bagged so many orders 2 to 3 years back, because earlier 2 to 3 years, we were receiving INR 25 crore or INR 50 crore order in a single year. But since last 2 to 3 years, the company INR 50 crore, INR 80 crore, now today, INR 125 crore. So it is increasing year-on-year. So what happens is that all the projects are getting completed also, but there are new projects also coming in where expenditures are higher. But in quarter 3, more number of projects have ended. Now election also coming up in the central government. So NHI is also more focused on completing whatever projects are there. Hence, the profitability is being recognized right now.

So is it fair to say that because you had more number of projects compared to earlier, the completion -- the duration of completion was prolonged or something like that?

No, no, no. So 2 to 3 years construction period, of course, they are completed, but the defect liability is still going on. For another 3 years, it is going to go on. But 80% of the revenues, we have already recognized.

Right, right, right. Okay. Okay. And your projections based on EBITDA margins, you said 15% to 20% year-on-year we can consider. Was this including the international projects, which are higher margins?

Yes. Including. So an international assignment, yes, it will have an EBITDA of 30%. But if considering the initial mobilization expenses and everything, so any infrastructure project, be it India or abroad, the initial expenditures are higher because there's a lot of setup to be done. And now, when it is overseas, these setup costs would be higher. Then there is bank guarantees also to be given. So there are financial bank guarantees also being issued sometime for mobilization advances, which carries a 10% interest. So the initial expenditure for the first year is on the higher side, but slowly, slowly, slowly, the profit starts recognizing.

But given the initial expenses also, 15% is a minimum range we can expect. And from there on, we will see that going upwards.

Yes, because there will be -- now -- right now, the case was or till last year, I would say that there was dependability on the central government or the state governments in India. So with this dependability being removed, the diverse portfolio being there, diversification into different sectors. So this combination of all this, the risks also gets mitigated. And then there is a balance of revenues and profits.

Okay. And lastly, I believe in the last con call, you mentioned about some INR 1,000 crores order book target in next I believe 5 years, was it?

10 years. Yes. Market cap, yes, 10 -- INR 1,000 crores in 10 years.

Okay. Any near-term outlook? Like you have -- you said INR 350 crores now expecting a large international order in the coming months. So...

These international orders that we are bidding are to the tune of INR 100 crore, single order. Yes. Even if we get one order for a year, it is more than enough to reach INR 1,000 crores.

Thank you. As there are no further questions from the participants, I now hand the conference over to Ms. Vaishnavi Ambokar for closing comments.

Thank you for joining the conference call of Dhruv Consultancy of Services Limited. If you have any queries, you can write us at [email protected]. Once again, thank you, everyone, for joining the conference call. Thank you.

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