Dilip Buildcon Limited (DBL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Dilip Buildcon Limited Q1 FY '25 Earnings Conference Call hosted by S-Ancial Technologies Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Jill Chandrani from S-Ancial Technologies. Thank you, and over to you, ma'am.

Thanks, Shreyas. Good evening, everyone. Welcome to Dilip Buildcon Q1 FY '25 Earnings Call. From the management, we have with us Mr. Devendra Jain, Managing Director and CEO; Mr. Rohan Suryavanshi, Head, Strategy and Planning; Mr. Sanjay Kumar Bansal, Chief Financial Officer. Before we begin this call, let me mention the standard disclaimer. The presentation that we have uploaded on the stock exchange, including the interaction in this call contains or may contain certain forward-looking statements concerning our business prospects and profitability, which are subject to some uncertainties and actual results could differ from this. Now let me hand over the call to Mr. Rohan Suryavanshi for his opening remarks. Thank you, and over to you, sir.

Thank you, Jill. On behalf of Dilip Buildcon Limited, I welcome all the participants in our quarter 1 FY '25 results con call. The results and presentation have been uploaded on the stock exchange, and I hope all of you had a chance to look at it. At the outset, I would like to share some industry updates. It has been evident in the recent union budget that the government has high aspirations for the infrastructure sector with a view to making it a power out in our economy. There has been an allocation of INR 11 lakh crores for the infrastructure sector this year, indicating a growth of 11.1% as compared to last year's budget. This contributes to approximately 3.4% of the GDP. Road Transport and Highway has been allocated INR 2.78 lakh crores. Railway has been allocated INR 2.65 lakh crores. Logistics and supply chain sector has been allocated INR 2 lakh crores, and Metro Rail has been allocated INR 24,900 crores. Cabinet has also approved 8 national high-speed rail corridor projects worth over INR 50,000 crores to improve logistics efficiency and connectivity across the country. All these things are set to have a multiplier effect on our economic growth and also boost employment opportunities. Above all, it will give impetus to India's unwavering commitment to a futuristic and connected India. This scenario definitely augurs well for our growth trajectory given the government's sharp focus on the Infrastructure segment. Now coming to the sector and the company. During the quarter under review, the order activity -- ordering activity was weak across all sectors, which was as expected because of the elections but now is expected to pick up. For us also, we've received a single order in the railway segment of INR 926 crores. But going forward, on the back of a strong order pipeline and across all our segments, we are confident that we will get an order inflow of INR 15,000 crores to INR 16,000 crores for the first -- for the full year. And there is enough orders across the segments like I mentioned, that we look at. On this quarter onwards, in our order book, we've also started including order value from our coal MDOs, which we were not doing in the past. As is the current market practice, players are including that. We've also made changes. And in our current order of INR 18,600 crores we have added 3 years coal MDO order of INR 2,400 crores. So while the total estimated revenue from our coal MDOs would be around INR 5,500 crores over the next 3 years. But this will be accounted at the SPV level, out of which DBL will be getting around INR 2,400 crores, like I mentioned. On the execution front, we have experienced payment-related challenges primarily from JJM project that resulted in higher debtors and stretched working capital. Now it's an tentative phenomena because of election and other things that were happening in the government, but it is the top agenda of the central government and the sector would see a major execution ramp-up soon, along with solution for all these stock payments. So while our debt has temporarily increased, we are very confident that as the financial year goes forward, and the payment from the government gets normalized, we will achieve our target debt level of INR 1,000 crores lent by the end of this fiscal year, as we had indicated on our last call. In our investment portfolio of HAM assets, I'm happy to inform that recently, we have fully concluded the Shrem annual deal with transfer of 51% equity stake in the last asset that is Pathrapali-Katghora project. With this transfer, our entire deal is concluded with the Shrem Group. While we will continue to do O&M of their assets for the live duration of those assets, in other news, in our Alpha InvIT asset deal, we are progressing as per plan. Till now, we have transferred 26% stake in 4 assets out of a total deal of 18 assets. Our InvIT formation process is also progressing well. We have applied to SEBI and we've already received initial remarks. We are still very confident that we will be able to create the InvIT by the end of this financial year. In our coal MDO business that contributes Siarmal coal MDO which is the largest coal MDO in the country, I'm happy to report that we have achieved production of 3.27 million metric tonnes in the last quarter. To give perspective of our execution progress, last year, we had done a total production of 7 million metric tonnes versus contractual requirement of 5 million metric tonnes at Siarmal. This year, our contractual requirement is 10 million metric tonnes, but we are already running with a run rate to achieve 50% more than that, that is 15 million metric tonnes in this financial year. Another good news, Pachhwara MDO we're also progressing as per plan during the quarter under review. We've achieved our coal production of 1.46 million metric tonnes. Here, we are on target to achieve the 7 million metric tonnes, which is a full capacity project. As I've discussed before as well, but just to reiterate, as I conclude my remarks here, this is DBL 2.0 where we are in the process of creating a fully diversified company working across 8, 10 different infrastructure sectors. With an aim to achieve 0 net debt in the next 2 years, along with having a healthy mix of short-term and long-term assured cash flow businesses and industry-leading return ratio. So that is the goal that we're working towards. And we hope to keep delighting you quarter-after-quarter. Now I would like to hand over the call to our CFO for the financial overview. Thank you.

Thank you, Rohanji. Good evening, everyone. I welcome all our stakeholders to our earnings call. Let me present the results of Dilip Builcon Limited for the quarter ended June 30, 2024, and highlights of current financial year. We completed 4 projects aggregating to INR 3,604 crores and one railway projects worth INR 926 crores. On financial side, on year-on-year basis, quarter 1 FY '24 versus quarter 1 FY '25. On revenue front, the revenue has decreased by 9.61% in quarter 1 FY '25 from INR 2,609 crores in quarter 1 FY '24 to INR 2,358 crores. This is mainly due to lesser revenue from growth and other business. EBITDA decreased by 21.62% in quarter 1 FY '25 from INR 335 crores in quarter 1 FY '24 to INR 262 crores in quarter 1 FY '25. The EBITDA margin mainly decreased on account of reduction in revenue and overhead expenses on the reduced revenue. Profit after tax has also decreased by 43.17% in quarter 1 FY '25 from INR 83 crores to INR 47 crores in quarter 1 FY '25. This is mainly on account of reduction in revenue and corresponding EBITDA margin reduction. Thank you all. And now we can open the floor for questions and answers. Thank you, again.

[Operator Instructions] The first question is from Shravan Shah from Dolat Capital.

Sir, first, on the order inflow front, so now we have seen a higher order inflow of INR 15,000 crores to INR 16,000 crores versus last time we say INR 10,000 to INR 12,000-odd crores. So just trying to understand for that how many value of projects we have already begin and which is yet to open. That is one. And second, how much more we are planning to bid. And broadly, if we break up this INR 15,000 crores, INR 16,000 crores order inflow, so how much we are looking in the hand and any other sectors which you want to highlight?

Thank you, Shravanji, for your question. Yes, you're very right. In the last quarter, we had given a more muted guidance. But as the year has progressed and as you are well aware, the sector has seen a depleting order book because of weak ordering from last year to ensure a steady growth going forward. We have reassessed our numbers. And that's why you see the numbers of INR 15,000 crores to INR 16,000 crores that we've done. We are quite confident of reaching these numbers across all the sectors that we are working in. That's the sector that we know that we are in. Beside that we've -- besides the sector that you are aware that the company works in, we've also gone in the optic fiber segment and about INR 50,000 crores worth of orders were floated in that. So we were participating there as well. Those bids also we -- have also already been done. So let's see, we are hoping to have some good news there as well and start that. I can't give you very specifically sector-specific breakup of orders, how it will flow. But like I mentioned, we look across all the sectors, and it has been our endeavor in the last few years to move away from a single sector dependency to a more robust multi-sector sort of order book, and that is what our agenda and aim will be this year as well. Talking about the HAM versus EPC. Our primary focus and our primary liking is always EPC projects. The HAM route has always been used by DBL to fulfill its EPC needs. But even since you are, I think we would still be thinking about at least INR 5,000 crores to INR 6,000 crores of HAMs in this total order book. So to break it up, 2/3 of the order book is straight up EPC, 1/3 would be about would be about bids -- would be HAM/BOT like any kind of PPP project.

Okay. Second, in terms of the -- on the revenue front, so obviously, this quarter was muted one, and we were looking at kind of a flat for full year FY '25 so now is there any upward revision in the revenue also this year or may be if possible for next year, given the order inflow will be higher this year, so FY '26. Is there any kind of guidance that are we likely to give for '26?

Shravanji, it would be too early to give you an indication for '26, but I'm very confident that it will be much better than this year because once the order book formulates, this year, in fact, we've given you a flattish guidance earlier as well. But I think looking at how the ordering is still being weak, till now, we would actually be looking at a 5% degrowth from last year's numbers. I think that would be a better assumption to make at this stage given the order flow sort of phase that has happened. We are expecting it to start much faster. But given that, we think that is a better number. But '26, I think, would be a good year, but we can only -- we'll only be able to comment on that once the end of the year numbers are in hand where we know how the order book looks and stands. Anything earlier than that would be premature.

And in terms of the margins also, so this quarter was 11.1%. So we are looking at 12% to 14%. So given now we are seeing a 5% lower revenue growth or degrowth rather this year. So in terms of the margin also, will it be a kind of 11%?

Yes. I think given that we've geared up more and the margins should as -- I think, as a good prudent strategy, it will be good to take the current numbers as the EBITDA numbers which is around 11% to 12%. I think that would be a good way to think about it. I think earlier we'd indicated 11% to 13%, but I would say 11%, 12% is a good figure to kind of think about, given the -- like I said, some of the challenges around the depleting order book.

Okay. And sir, on the base front, correct me if I'm wrong. You mentioned this year though this quarter INR 700 crores the gross rate has increased because of the working capital. So I want to understand 2 aspects whether this working capital, particularly data? Have we collected post the June till now and how we look at the working capital by end of FY '25. And broadly, you mentioned INR 1,000 crore gross debt reduction in FY '25.

We have collected some after the June listing. And I didn't mention in terms of like the target debt level you mentioned, so from it, we are looking at a reduction of INR 1,000-plus crores of debt level from where we are standing right now. So you're right about that from the current level, the way we look at it. But I mean I've given you tag around INR 1,000 crores by the year-end, which was INR 1,500 crores as of last financial year. But to elaborate more on collection, I'll hand over to our CFO.

Shravanji, basically, total net debt on 31st March was between INR 10 crores, INR 15 crores. Now it is increased by almost INR 700 crores. The total term loan is only INR 140 crores as on 30th June. So the reduction in debt will happen only in the working capital. So what Rohanji said the deduction in the working capital limit from INR 1,500 crores to INR 1,000 crores. So today, the outstanding is around INR 2,226 crores. So that will be reduced to, say, INR 1,000 crores at the end of this financial year. I feel this is clear.

Okay. Okay. So from INR 1,226 crores, net debt, we will be reducing by close to INR 1,000-odd crores, so around INR 1,200 crores, INR 1,250-odd crores net debt by end of March that we are looking at.

This is right.

Okay. Okay. And then the next year, this will be -- the entire will be kind of -- we will become a net cash kind of a company by FY '26.

Yes, that is the agenda. Okay. So there, I just wanted to elaborate further. So how much in terms of the broadly the alpha alternatives, how much already, obviously, for 4 projects, we have mentioned that INR 161 crores we have received. So how much more cash are we going to receive. So that would be a major driver in terms of the debt reduction and plus the working capital.

I think we mentioned that in the presentation on Page number, let me tell you how that deal which. On Page 26, we have mentioned how the equity would flow from the investment that will come from Alpha in the year. So if you want to look at it, I'm just really explain. So as of 31st March, we had divested assets and this quarter, on July 1, we divested 26% in another asset. So out of this INR 478 crores, which is shown in Page 26 of our investor presentation around INR 160 crores -- INR 190 crores precisely we received in July. So out of the balance, this will be received majorly in this quarter. And one asset may go to early next quarter. So balance money out of INR 477 crores we received INR 190 crores and balance will be received in quarter 2 reason presumably and some money in quarter 3.

Okay. Okay. Understood. Understood. And lastly, just on particularly on the stand-alone in terms of the finance costs and other income. So just wanted to understand. So we were kind of looking at 350-odd kind of total finance cost for this year to stand alone. This quarter, it is because of the data has increased, so finance cost has also increased INR 190-odd crores. So how do we look at for full year the finance cost and in the same way, the other income was just INR 13-odd crores. So there, how much more are we going to receive any kind of a dividend from any of the InvIT, Shrem or any other MDO through where this income order income can go up?

So still, even after increase in debt in first quarter, we still believe the debt cost will be between INR 350 crores to INR 400 crores. This is number one. And in terms of other income, let me tell you, the other income consists of various items like dividend from the existing stream invite units. Distribution are like the distribution and interest on our income tax refund and all. So yes, in quarter one, there is a reduced other income, but we feel this income because last quarter this quarter, the distribution from sale was around INR 5, which is more than our expectation. So going forward, we think whatever we have given in Slide #26, will be more or less achieved.

Next question is from Ishita Lodha from SVAN Investments.

So my first question is on the coal mining business.

Can you be a little loud, please? Your audible, but your voice is very low.

All right. The revenue in coal mining business has actually declined despite like better production volumes. So is this due to lower realization or what has led to the reduction in revenue from INR 163 crores in last quarter to INR 150 crores in current quarter?

Let me answer this question. First of all, we have not given the coal revenue in the investor presentation. What we are saying out of the total order book of the SPV 2 MDOs, INR 5,500 crores is 3 years revenue. Out of that INR 2,400 crores revenue in the next 3 years, we'll accrue to DBL. And we have given the MDO performance in terms of physical. So against 15 million tonne target, we have already done 3.23 million tonnes coal production in quarter 1. And in Pachhwara, we did -- so Pachwara against the 7 million tonne capacity, we did 1.46 million tonnes. So I don't know from where the revenue is taken. If you can elaborate, we can answer further.

Sir, this is Deepak this side. Just continuing on that part in the stand-alone revenue on the vertical wise, we have shown the segmental breakup, where we have shown road special bridges and tunnels revenues of INR 1,081 crore, which has declined 43%. And mining has come down to INR 150 crores, which has declined by 6.4%. So on the stand-alone basis, this quarter, there has been a decline on the vertical-wise so just wanted to understand on that part.

So Ishita and Deepak we had given the total -- I mean the total revenue of DBL. So nowhere we have given the coal revenue separately. We had -- even given the order book breakup, so in order book breakup, as Rohanji, explained, we have added INR 2,400 crores revenue from SPV. 2 SPVs to DBL for the order book purposes. But revenue which page you are referring to? Can you please tell me?

So basically, in the press release, we have given the segmental breakup, just a second, I'm sharing the details, on Page #20 of the press release.

So basically, you are referring to the -- so if you can see my order book position out of the someone -- so for order book, basically, the total order book, which we are referring, see I am not getting...

So I think you're looking at press release, right? You're looking at the press release?

Yes. Press release segmental contract revenue breakup on the Page 22.

Right, right, right. So there, why the reduction you think is because besides the 2 coal MDOs, where we are doing well, there were also EPC contracts that we do, which are finished. So the two -- Nigahi an Samleswari are finished, that is why you are looking at that number because the revenue that was contributed by Nigahi and Samleswari is over now. That's why there is that reduction because of the other projects getting done. But those are very small contracts compared to the MDO contract that we'll be doing, where we mentioned the revenue potential is INR 5,500 crores for the next 3 years.

So basically, in the Mining division, our external orders have been finished. Now internal orders will get executed over a period of next 3 years, which will drive the revenue growth. Would that be correct?

It is not an internal orders. This is MDO is also an external order. So it's just the nature of the contract is different. And MDO is a long-term contract. So one, the Siarmal project is a 25-year contract and Pachhwara project is a 5-year contract. So it's just the nature of the contract. This is not an internal mine for us. This is ultimately with the plan to the government pre-determined price, which also includes inflation indexes. So that's what we are doing in the MBA process. So the thing that it does for us, it gives us predictability of revenue and the stability of sort of income coming on a long-term basis.

And secondly, looking at the debt position debts on the last quarter from INR 1,392 crores, it has moved to INR 70 crores, INR 66 crores I do understand you mentioned about the payment-related this thing. But just wanted to get the sense, what is the updated position at the current juncture? Has there been any further reduction in this and in the current basis of INR 70 crores, INR 66 crores, how much is from the JJM projects?

Sir, there is a reduction on this from the numbers where we are looking at what you're looking at there is definitely. We don't provide security breakups on that. But if we want to get in touch with my team separately, you can talk about it separately. But JJM is the larger bit of it. The reason -- big reason for this increase.

Sure. And finally, on the guidance, just wanted to check it again from the -- on the revenue basis, we maintain the flattish revenue growth? Or would we expect some decline in this year? And what is our current bid pipeline from the order inflow perspective at the current venture.

Sir, like you mentioned, I think it would be prudent right now to take a more measured approach to our revenue. And we at we said instead of the flattish, we should account for it a sort of a growth of 5% given the weak order book that has happened. But going forward, there is a very good order book that we see in front of us. So the road sector alone has a very decent order book, along with the other sectors that we are working in. So we are confident that we will be able to do INR 15,000 crores to INR 16,000 crores in new orders in this financial year.

How much is our current bid pipeline, the projects where we have done the base at the current juncture?

I think less than INR 25,000 crores where we've already bid out.

Okay. And finally, just wanted to check it out. In this quarter, our margin profile has come down to 11.1%. And here, I can see other expenses has increased to 4% of the revenues. So just wanted to check is there any one-off in this quarter in the other expenses in terms of provisioning or any other expenses? And what would be the broader margin we should be looking out for the year as a whole?

Sir, margin profile is weak because of the lower execution and we've guided towards an 11% EBITDA only going forward, 11%,12% EBITDA that I have mentioned. So that should be the guidance going forward. Any larger details that you want, you can get it back to my team and they can explain to you all.

Next question is from Darshil Jhaveri from Crown Capital.

A lot of my questions have already been answered. So just want to like understand like now we are also now getting into another segment of optic fiber how are things looking out there, sir, like just like a brief, like what will our strategy because there might be some infant competition out there or no? How is it so?

So yes, thank you for your question. We've already bid out on those projects, the one that optic fiber. So there were 16 packages and in total, about INR 5,000 crores plus of order book for us, and I'm sure a few of our PS also bid in it. We went on a joint venture module in those projects. In the next couple of months, as they open up, then we'll be able to give you updates, but those projects have already been bidded for.

Okay. Fair enough, sir. And sir, just wanted to understand, I understand you're being a bit conservative like maybe how our Q1 has been, but is there a possibility of a good surprising edge to -- pick up an order pickup? Like is that a fair assumption? How are we looking at that so.

Sir, in terms of revenue pickup, I don't see a lot to happen there because the point of time where we are sitting in the financial year right now with ordering still sort of not opened up completely. Had orders opened up a little bit more. There were more of a chance while someone would -- like we would always like to be optimistic. The realistic picture, and I think that would be very sort of up at this stage. So let's see how the year shapes out, but our trains, our progress happens if any unique surprises happen anyway. Let's see how that progresses out. But while what we have in hand, we are looking to do it with our efforts. What we don't have in our hands currently but we are very optimistic about is the large order book typically in a year after an let we see the orders really flowing out far. And usually the second half of any financial year is heavier in terms of ordering. So that is what gives us that comfort and confidence.

Fair enough, sir, just like last question. So there are some state elections coming up. So will that also impact order inflow or majorly ours will be related to center? Or it kind of positive or negative impact because maybe center as to allocate more projects. So just like any idea on that, sir?

There are only a few states that are going to election and we are not very big on the state order book anyway. So we don't foresee that as a challenge, a large challenge anyway. So I think because the larger order book from our part is from the national government and other government subsidies. So I don't foresee that as a large challenge.

The next question is from Parikshit Kandpal. HDFC Securities.

I'm looking at your slide number I'm looking at the Slide #36. Sorry, is -- on the stream nit part and the Alfa DBL unit. So it looks like you will be recording almost 20 plus 90, almost INR 375 crores of distribution in FY '26. So this will get reflected in your stand-alone other income?

So basically, out of the -- you must have seen in the stream invite units as well. So distributions are in 3 pro forms. One is dividend, interest and capital return. So we are talking about the total distribution. So in 26 Slide number is showing total distribution. So we don't know today whether it will be interest or dividend or capital later. So an actual breakup will be in the time of distribution, but this is projected distributions from Shrem, we have taken around 13% distribution. First quarter was higher than we expected. And the Alpha DBL we have taken 10%, 11% distribution on conservative side. So these are the distributions we have taken into account.

Then given the nature of the capital structure of these net, so how much do you think can accrue to your P&L out of this INR 380-odd crores in FY '26 summer, do you think can come into P&L.

So the though that is not known to us now, but if you can see last year, it is 2/3, 1/3 in the income and 1/3 as a capital return, but this ratio will change best to various parameters. So I don't know everyone today.

This is a substantial number coming accruing to our profitability. That's why I was questioning. And so I understood you said 23 May, as of now, given the historical capital structure and distribution. It could be 2/3, but it will be known closer to when it gets distributed. Second question is on the MDOs. Now these MDOs, we are at least in CRM, we are ahead of actual contracted production. And in Pachhwara we lagging. So just wanted to understand why -- so if you can give us what was the total profitability of MDO in the last financial year. And in this one quarter, how much these 2 MDs would have contributed? And given that there is a significant ramp-up happening. So how do we see the profitability of these MDO over the next few years?

Sir, partially, we are not lagging in the Pachwara. We are on track how much we have to deliver. And we have to do only 7 million metric tonnes of coal production in the financial year. So we are on track to achieve that. So there is no lag there. Show there is some discommission. But that is completely true, like I said in my opening remarks as well. Yes. We are 50% above target.

Target, but in FY '24, I saw the number of FY '24 well 7 metric tonne was in tube.

It was the first year Parikshitji, that was the first year of the starting of the mine. So there were so many problems in the road transport. But now this year, year acute a full ahead of ever will.

Making ramp up over this -- I mean we can share some numbers on how the profitability has been in Q1 because they are ahead of schedule and your profit is at preponed, and also if you can throw some light on how much CapEx is spending to ramp up to the full potential in both the mines.

Sir, let's say, we don't share profitability by projects or by sector. So as I combined it would be a better way to look at it. But the projects are better profitable than are number that we mentioned. So EBITDA is better. So -- but we should look at the company from mines.

And pending CapEx keen no project not to ramp up to the full potential, like how much would mean the CapEx you need to ramp up the mine?

So Parikshitji, the Pachhwara, we have no CapEx. And in terms of see our multi -- total CapEx originally projected was around INR 2,700 crores out of that, around INR 280 crores is already done, which is HAM we have bought in the SPV and once the coal handling plant will start, then there will be more CapEx. But let's say which will be out of the total INR 2,700 crores, INR 240 crores financial tie up is already done in FY '22 with SBI UnionBank and Power Finance Corporation. So that will be funded from and that CapEx is in SPV level not entitles. Now the 2040 project finance uptake against that you have given the equity outflow, I think your slide where you show the human so total INR 412, INR 419 crores equity requirement balance and balance INR 100 crores debt will be INR crores so total, I said INR 2,700 crores. Out of that equity is INR 576 crores, around INR 2,042 crores is the debt and above debt, we have already taken disbursement of INR 224 crores, and we have invested equity INR 157 crores. So total INR 380 crores has already been out of INR 2,700 crores.

Okay. So sir, once on the InvIT, if you start getting this invites dividend, so what will be your impact on because will it pass on to the investors as dividend or you will reinvest it into business? How do you look because this will be substantial cash flow, which will come accrued to us because INR 400-odd crores. Exactly FY '27 numbers, you are already showing INR 450-odd crores of inflows.

Absolutely right. There will be a significant inflow to the company. In terms of how we think about money that comes into the company, it will be dependent on the opportunity that will be in front of the company, whether we want to -- whether it's we see that we don't have any good opportunity. We might end up getting the dividends to our shareholders. If we see there is a better opportunity, a higher return ratio, higher ROE for us and for our shareholders and what they're looking at us from and we might look at investing in those assets. But let me tell you a few things, very categorically, number one, our intent for the next, like we mentioned for the next 2 years is to reduce debt completely. So our intent is very good. So whatever money that comes to the company. Currently, first and foremost will be used for debt reduction to make the company debt-free at a stand-alone level. So that's happening on the standalone. Number two, our intent is to make sure that the consolidated debt keeps on going to the InvIT. So even the consolidated balance sheet of detail looks good. And wherever we have debt, it is all backed by the project financials. That would be our number two intent. After that, whatever cash flows are coming, we will look to see whether we can deploy it in long-term assets, which will keep generating returns for the shareholders of the company over a long term and a bit higher return ratios like I mentioned. If not, then we will take a call of distributing it to shareholders as dividend. So it will all depend at that time. But our intent is and sort of articulating to you.

On the all these InvIT units that you receive, I understand INR 4,000 or INR 5,000 , INR 40 crores, INR 5,000 crores, I think put together, is it right like the number will be close about INR 4,500. And if you then will you be consolidating this -- that of this InvIT or it become an associate once the InvIT is operational?

No. No, the debt does not come to -- we are only the unit holders of that inventory. The debt is not that, debt goes to the InvIT level. We are just like a shareholder. So company will just be a unit holder.

So that the HAM that which you are currently carrying on will get knocked down because of consolidation. So it will not reflect in your consolidated balance sheet, right?

The asset level that you're talking about, so number 1 sir is, the assets that we transfer to the InvIT. The debt will transfer there. Instead of the equity that we've invested against that, we will get the units. So INR 4000 crores plus of units in the Alpha and DBL, InvIT and the INR 800-odd crores of like units in InvIT, those are all equity instrument. They have -- that's not any debt instrument. So that will be -- those will be the equity holdings of DBL.

That means your console will closely mirror your stand-alone debt, which will be anyways net cash by then in 2 years, which you are guiding. So you will be hardly carrying some debt on your MDO, which may be you said INR 2,000 crores and plus something in other coal mines. So that could be what will remain debt will largely remain right, just all that will get down.

Debt will remain. And if any new projects come to us, that will come, but then go will only have a churning time. So every time we are using you should think of it like diesel will be holding that debt for any time of 3 years from the time we win a project to the time we are able to finally sort of move it to InvIT. So from getting it in, to finally getting rid of the projects to the inventory, that time frame is 3, 3.5 years from the start of the dead date. That's roughly you should sort of think about.

Sir, just my last question on balance sheet and where one thing which always creates, I mean, kind of like which I'm very much, very not much comfortable is your inventory levels. Now you've started doing tailor growth. But still your inventory is not coming down, it's still at INR 334 crores, which is almost 1/3 of your sales may potentially for this year. So it is like -- and this is the highest in the industry. When the industry is running at 40 days or 25, 30 days, still at 110, 120 days. So now we don't get any bonuses also from any of our early completion models, where we used to maintain aggregate inventory and roads as a percentage has also come down. Just wanted to get a sense on guidance on how will be the rundown of this inventory because this is what is depleting our return ratios and elevating our working capital. So this is not there. I mean, so why still so much of inventory you're carrying on your books? If you can you give some more color, that will be helpful. And where do you see that by year end, I mean, FY '27?

Thank you for your question. I understand this has been a case of concern for people. But like I mentioned, we look at one bit of it is in the industry. When you look at the working capital level, our working capital days are in line with the industry only how we are kind of sort of converting our sales. That line -- that cycle is in line with the industry. Now obviously, DBL, our business model, our way of working has been of one time for a very long time. It's a big ship, and we are turning around as we are making amends to the way that we do things as we also explore many, many sectors it will take time. So while there are amendments and there are different targets that we have. This also will complete -- conceive all coming down over the next 2 years to give you a target right now because as the mix of projects change and all those other things change, our strategies keep on changing around how we are doing projects. These all single change but it would be early for me to give a target. But yes, we are aiming for a reduction of that also.

Okay. I think this is the one last thing which you should -- I mean, if you're able to tackle it, I think then it could be substantially.

We were 100%, that is also a work in progress, and we are doing that work in progress. So you will see that will also keep on progressively happening over the course of the next 2 years, as -- like we mentioned, as we keep on changing the direction of the ship, this will also happen.

The next question is from Vishal Periwal from Antique Stock Broking.

A couple of questions. First, you mentioned on the coal side that we'll do something like INR 5,500 crores kind of top line for the next 3 years accumulated. So is that fair to say because the order book for this coal is 2,500, which is kind of OpEx for the MDO. So I mean, we can make an EBITDA of like INR 3,000 crores cumulative for the coal business for us?

Well, I'm not sure what calculation doing. But EBITDA, we're not giving a sector-wise breakup we're not doing SP62041657 No, no. I think basically, based on the numbers, whatever is shared by you and that's what like INR 5,500 crores the top line for 3 years.

You mentioned INR 5,500 crores is what we'll do for the coal MDO business level.

Yes. And then you thought like because of...

So I'm answering your question. Vishalji, basically, this INR 5,500 crores is the total revenue of SPV. Out of this INR 2,400 crores, what scope is given to DBL, balance scope is directly done by SPV. So it is not correct to say if the EBITDA is INR 2,400 crores, it can't be, right? So there is only some scope given to DBL, which is INR 2,400 crores.

Okay. Okay. Got it. And second, you mentioned that the optic fiber cable, 16 packages that we have bidded I know, I mean, like though outcome will be known in times to come. But in terms of -- is it like what exactly our role in this, it's in a -- I mean, any JV that we have done? What is our share? Would it be okay to share that?

Sure. So the site construction thing, which is trenching and laying of optic fiber, all those will be done by deal beside construction operations.

Okay. And is this done like we have on our own, we are doing it? Or is it some JV, whatever the order that we get is JV that will be getting booked?

Yes. So it's an EPC project, sir, but it's a JV with stabilized.

So Vishalji, the total optical fiber business, as Rohanji said be punching and laying of optical fiber will be done by us. And balance like supply was like optic fiber and routers and all will be supplied by our JV partners optical. So there is a split between what we partner the scope is split.

And maybe 2 bookkeeping sort of question. So in terms of tax rate, how exactly we see for FY '25 and '26 for us? This quarter, it was something like 14% or so this quarter check.

Around 23%.

Okay. So it will be 33% for FY '25 and it's similar for next year, right, sir?

Yes. Yes.

Okay. And then one last thing on -- even on depreciation, I mean, sharp reduction that we are seeing -- is it just because -- I mean, the gross block is seeing a reduction or you changed our defection rate also?

There is no change in depreciation rate. The only reason is net block is reduced because we have not bought price equipment in the last 2 years, whereas the depreciation is going on. So net lock itself is producing.

The next question is from the line of Vaibhav Shah from JM Financial.

So in the equity tracker sheet, we have mentioned that the investor equity till June is INR 1,646 crores. So what could be the same number as on March '24?

Allow some moment, Sir. Will tell you, yes. So around INR 160 crores, INR 165 crores is invested into -- in this quarter. So you can minus that from the total equity. So it is INR 1,645 crores -- say, minus INR 1,800 crores minus INR 160 crores. So around INR 1,540 crores.

So you invested something in Siarmal in this quarter? I wanted to AM equity as of March.

I'm just opening the last quarter transition.

In the last quarter of the presentation, it was for 16M. So it is not comparable, that's why...

No, no, there's a reason for that because we changed it because of feedback from market participants that maybe the way that we were explaining was not giving -- that's how we change.

So Vaibhav, you can see there is INR 164 crores investment in quarter 1 FY '25. So you can mine up from INR 1,800 crores. So it is INR 1,540 crores as of March 31, 2024, out of 19M projects in Siarmal.

So the HAM project number, the investment in HAM projects in first quarter would be how much out of that INR 165 crores is important. That is all my questions.

It's all largely to have project funding. CRO might be very negligible, less than INR 5 crores and things.

And secondly, the incremental INR 760 crores will be spending. So that would be done from the stand-alone books now or some subsidies also would be investing incrementally? Some what would be investing?

Subsidiary. We have invested certain parts from we are proposing to invest the balance equity from DBL from now onwards.

Okay. Okay. Sir, secondly, on the units, which we are expecting the distribution from units of Shrem and Alpha, you have indicated the number. So what would be the tax complication on this?

So the tax is the interest is taxable in the hands of the receiver at the maximum tax rate. So if brewing the interest, then it is taxable deals tax rate. Dividend is free because Shrem is into the old tax design. And then principal return, there is no tax. So we can say out of the 13%, 14% distribution from Shrem, the net return is around 11%.

And the same number for Alpha?

Alpha, we have projected or estimated around say more percentage. So the net tax written would be lower than even 10%.

Okay. Okay. And sir, lastly, what would -- what are our CapEx plans on the stand-alone business for FY '25 and '26?

So FY '25, we can guide you now because the total CapEx would be in the range of INR 150 crores to INR 170 crores. Out of this INR 30 crores is already done in quarter.

And sir, earlier, they indicated that over a longer term, we are targeting EBITDA margins of, say, 12% to 14-odd percent on the stand-alone DBL so this year has been weak in the first quarter, and we are expecting somewhere around 11% to 12% for FY '25. But once the execution takes up say '26 or '27 are over the next 2 to 3 years, what would be our margin rate?

Yes, sir, once the order book is in line and once you have good orders and once the cycle goes back again, that is the margin profile that we think that is very achievable, and that's what we're targeting.

So to all the achievable, maybe over the longer term?

Yes, yes, yes, sir. Those are my questions.

Next question is from Prem Khurana from Anand Rathi Shares & Stock Brokers.

Most of my questions are already answered. Just 1 small clarification on our financials that we've reported. So when consolidated numbers that you reported, the segment highlights, there is this INR 510 crores of loss in annuity projects and others go what exactly will this be? And even on the EPC side, the margin seems to be almost around to the extent of 30-odd percent, which generally used to be sub 10%. Would you be able to kind of clarify these 2 please?

Which base are you referring to?

This is -- so the results release that you had. The release. 15 of 19. The segment highlights consolidated.

No. No, you're talking, looking at -- you said the segment, on the -- which page you are looking for?

15 of 19 of the PDF.

Allow us a moment, we're just looking at it. So I think primarily what you're referring to is the losses that are on project during construction period. I think those are because of India's rules. But why don't you have a separate call with my finance team to understand it in detail yes?

Because when I look at the comparable quarter, I mean, this number was not this large, I mean any time in the past. And even the EPP side, INR 920 crores on INR 3,000 crores is of top line, again, seems to be on a higher side versus the when you look at Q4 or Q1 last year? Was sub 10% sort of number.

So no worry on I'll take it off -- why don't you take it separately because...

On more small clarification. I think the money that we said were supposed to receive from Alpha Alternatives, right, for the 26% stake INR 478 crores that you show on Slide 27 is adjusted for the INR 160 crores that we've received, right?

Out of the INR 478 crores, we received INR 190 crores this the current quarter in July 2020 for INR 190 crores in Q2, you're saying? Yes. And balance will be received majorly in this quarter and one asset probably may go to early next quarter. So the balance revenue around INR 300-odd crores will be received during this quarter and early next quarter.

The next question is from Shravan Shah from Dolat Capital.

Sir, this net distribution that we have spoken, and we have what is there in the Page '26 of presentation. So broadly, how one can look at in terms of how much this will come to stand-alone PML because something will also go to DBL that can help in terms of percentage, broader percentage will help.

Surely, out of these 18 assets, these units will come from DBL Alpha. 26% is held by Alpha, but balance 74% is held by us. 51% is direct DBL and 23% by the subsidiary to DBL. So directly in the DBL, you can see the ratio of 51% to 23% in total 74%.

Sorry, sir. Can you repeat the last one?

I'm saying in the DBL, the shareholding is like 74% by DBL Group and 26% by Alpha Group. So the units will be 74% of the event. And the 74% is split between 51% by DBL and 23% by a subsidiary of DBL. So direct out of this 4%. So if I'm holding 74 units, then to be one from DBL to dive.

Okay. Okay. So broadly, kind of 60%, if I broadly look at 51% of 74%, broadly 64-odd-percent that DBL. And force stream, how one can look at?

Same 60-40, 60 DBL and 40 DBL infrastructure.

Okay. So same rate for both broadly 80% to 60% that we will be receiving that stand-alone?

Right.

Okay. And sir, though we have said I just wanted to further clarify in terms of data -- on the working capital, obviously, you've explained the inventory at that wanted to reduce. But in terms of the particular the data, will it come back to the normal as of March, it was 48 days. So now as you are saying you have received some money in terms of back to -- by end of March 25, we will be having the similar 50-odd days data base.

Yes. Yes.

Okay. And overall total, whatever the increase has happened 15, 18 days. So that should also come back to the normal level in terms of the working capital days by end of March?

Yes, Shravan.

Okay. Okay.

That was the last question in queue. I would now like to hand the conference over to Mr. Rohan Suryavanshi for closing comments.

On behalf of the whole DBL family, I'd like to thank all of you guys for coming here and asking your questions. In case the questions that we were unable to answer, if you were unable to ask, please feel free to reach out towards person, and we would be happy to answer any questions. I look forward to seeing all of you guys in our next quarter call.

Thank you very much. On behalf of Dilip Buildcon Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.