G R Infraprojects Limited ($GRINFRA)

Ladies and gentlemen, good day, and welcome to the GR Infraprojects Limited Q4 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Aditya Sahu from HDFC Securities. Thank you, and over to you, sir.

Thank you, Swapnali. On behalf of HDFC Securities, I welcome everybody to Q4 and FY '26 earnings conference call for GR Infraprojects Limited. From the management, we are joined by Mr. Ajendra Kumar Agarwal, Managing Director; Mr. Anand Rathi, Group CFO. I now hand over the call to the management for your opening remarks, followed by the Q&A session. Over to you, sir.

Thank you, Adityaji. Good afternoon, ladies and gentlemen, and a warm welcome to the Q4 financial year '26 earnings conference call of GR Infraprojects Limited. Thank you for taking the time to join us today. I hope you and your families are keeping well. I'm joined on this call by Anand Rathi, CFO; and Ankit Maheshwari, Deputy CFO of the company. I will begin by sharing an overview of our operational performance during the quarter, along with our perspective on the infrastructure sector. Thereafter, Ankitji will take you through the financial performance in detail, following which we will open the floor for questions. As we all know, today's business environment is becoming increasingly interconnected and volatile. Global uncertainty arising from geopolitical tension, ongoing conflicts, changing trade dynamics and tariff-related measures continue to create challenges across sectors and economies. These developments are placing pressure on business worldwide and impacting supply chain. Commodity prices and investment decisions in response to such evolving challenges. The company continued to maintain a robust enterprise risk management framework that enabled us to effectively monitor and manage multiple categories of risk. Despite the uncertain environment, I believe the company has delivered a resilient performance during the year. During Q4 financial year '26, the company recorded revenue from operations and approximately INR 2,521 crores, representing a growth of 27% compared to corresponding quarter of the previous financial year. Adjusted EBITDA margin stood at 11% approximately for the quarter as against 15.5% in the corresponding period last year. During the year, the company repaid debt amount to approximately INR 262 crores, resulting in further improvement in our debt equity ratio to 0.03, which is continuing to remain among the best in the sector. During the year, the company has secured new order amount to INR 10,700 crores of which in Q4, the company has secured 3 new projects comprising 1 tunnel project and HAM road projects, aggregating approximately INR 5,500 crores in addition to about 2 HAM projects. Appointed date of the 1 DBFOT project worth around INR 3,600 crores is also awaited. As on date, our order book stands at approximately INR 26,470 crores, further which aggregating to approximately INR 13,500 crores are yet to be opened. During the year PWD of 5 HAM projects has been received. We also successfully monetized 4 HAM assets to Indus Infra Trust for total consideration of INR 321 crores and recorded an exceptional gain of INR 253 crores. I would also like to reiterate that the company growth strategy is not limited to the road sector alone. We continue to see growing opportunities across metro and railway, power transmission, battery energy storage system, telecom infrastructure, oil and gas, logistics and warehousing and tunnel projects. Pace of projects award may vary across sectors, the overall infrastructure outlook for India remains positive. We believe the country's long-term infrastructure requirement continue to be substantial and companies with strong execution capabilities, disciplined bidding practices and healthy balance sheet will be well positioned to benefit from these opportunities. Let me now briefly touch upon key sector developments. In transport sector, roads and railways got about INR 6 lakh crores approximately in financial year '27 union budget. We see a strong pipeline of INR 7.6 lakh crores [indiscernible] project, including HAM, BOT, EPC and railways. Hence, we expect order inflow in the sector to grow by around 10% to 15% in financial year '27. The railway sector also continued to move towards corridor gauge capacity vision, freight decongestion and technology-led operations. A significant recent development is the approval of 6 private rail projects worth approximately INR 18,000 crores and multi-tracking projects worth around INR 27,000 crores. During the year, order book of transport view increased by 25% approximately. We target a new order book of INR 12,000 crores to INR 14,000 crores in current financial year '27. In power and transmission, India's power sector is expected to attract investment potential of nearly INR 45 lakh crores over the next 7 years across generation, transmission and energy storage. Renewable energy allocation continue to be drive transmission investment. Our focus would be on 20% of the bid pipeline of INR 120,000 crores with a target new order book of [ INR 5,000 ] crores financial year '27. In tunnels and hydro, the government is targeting tunnel projects worth approximately INR 3 lakh crores over the next decade. The CCEA has also recently approved 2 large hydroelectric project in Arunachal Pradesh worth around INR 40,000 crores. Bid pipeline looks promising at INR 87,000 crores but company focus on INR 23,000 crores bids. We are targeting a new order book of INR 2,000 crores to INR 3,000 crores worth project in financial year '27. In oil and gas, Brent crude price touched nearly USD 126 per barrel during the late April '26 amid high geopolitical tension, creating a volatility in the energy market. Despite these near-term challenges, we continue to remain positive on the long-term outlook of the sector. Bid pipeline remain healthy and we target a new order book of INR 2,000 crores to INR 3,000 crores in financial year '27. Similarly, for other sectors, including ropeway, telecom and renewables, we are targeting a new order book of INR 1,000 crores to INR 2,000 crores in financial year '27. Our focus throughout the year has remained on ensuring business continuity, protecting execution time lines and maintain financial discipline. As the external environment evolves, we will continue to take timely and strategic decisions to safeguard the company's interest and deliver sustainable value to stakeholders. Financial '26 has been an important year for us during which we maintain a prudent balance sheet between execution, order book expansion, diversification and financial discipline. As we enter financial year '27, considering the economic and geopolitical situation, we remain optimistic about the opportunities ahead and expect to grow our top line in the range of 15% and strengthen the order book with a target of new wins by INR 20,000 crores to INR 22,000 crores approximately, while continuing to remain selective and disciplined in our project bidding approach. I would like to thank our clients, lenders, partners, employees and shareholders for their continued trust and support. With that, I now request Ankitji to take you through the financial performance in detail. Thank you.

Thank you, sir. So here are the key highlights of quarter 4 performance. The stand-alone revenue from operations was INR 2,521 crores in quarter ended March '26, which has increased by 27% approximately year-over-year compared to INR 1,990 crores in the quarter ended March '25. The stand-alone revenue from operations was INR 7,620 crores in the year ended March '26, which has increased by 17% year-over-year compared to INR 6,515 crores in the year ended March '25. The increase is primarily on account of better execution of the oil and gas and power transmission projects. The consolidated revenue from operations was INR 2,500 crores in quarter ended March '26, which has increased by 10% approximately year-over-year compared to INR 2,275 crores in quarter ended March '25. The consolidated revenue from operations was INR 8,398 crores in the year ended March '26, which has increased by 13.5% year-over-year compared to INR 7,395 crores in the year ended March '25. The stand-alone EBITDA margin stood at 10.85% in quarter ended March '26 from 17.5% in quarter ended March '25. The decrease was primarily due to onetime claims income recognized amounting to INR 47.5 crores in quarter ended March '25. The stand-alone EBITDA margin stood at 11% approximately in the year ended March '26 from 13.88% in the year ended March '25. The decrease was primarily due to onetime claim income recognized amounting to INR 123 crores in the year ended March '25 and higher construction costs in the current year. The EBITDA margin at group level has marginally decreased to 14.73% in quarter ended March '26 from 23.96% in quarter ended March '25. The EBITDA margin at group level has decreased to 19.31% in the year ended March '26 from 22% in the year ended March '25. Profit after tax at stand-alone level increased to INR 1,417 crores in quarter ended March '26 as compared to INR 371 crores in quarter ended March '25. The PAT includes INR 182 crores approximately net of tax of exceptional gain on sale of 4 subsidiaries to Indus Infra Trust. Profit after tax at consolidated level decreased to INR 209.86 crores in quarter ended March '26 as compared to INR 403 crores in quarter ended March '25. The stand-alone net worth stood at INR 8,869 crores at the end of March '26. It was INR 7,888 crores at the end of fiscal 2025. The net worth at consolidated level is INR 9,391 crores at the end of March '26. It was INR 8,503 crores at the end of fiscal '25. The total stand-alone borrowing outstanding at the end of fiscal 2026 is INR 234 crores with debt to equity of 0.03x. The consolidated borrowing outstanding at the end of fiscal '26 is INR 4,845 crores with debt to equity of 0.52x. During the quarter, the company has made additions to the fixed assets amounting to INR 36 crores approximately and in the entire year, around INR 133 crores. The net block of property, plant and equipment, including work in progress and intangibles is INR 1,057 crores approximately at the end of current fiscal. The investments in our subsidiary companies in the form of loans and equity are INR 2,271 crores at the end of March '26. The balance promoter contribution required to be made for our operational HAM and BOT projects is INR 3,486 crores, of which we are expecting contribution of approximately INR 1,000 crores in the current fiscal '27. Working capital in days at the end of March 2026 is 128 days as compared to 117 days at the end of fiscal '25 and the increase is primarily on account of the debtors days. The trade receivable at stand-alone basis are INR 2,372 crores, including INR 1,667 crores HAM debtors at end of March '26 and the trade receivables at the consolidated level are INR 745 crores at the end of March '26. The unbilled revenue at the stand-alone basis is INR 808 crores approximately at the end of March '26, whereas the unbilled revenue at the consolidated level is INR 436 crores at the end of March '26. The inventory are at INR 739 crores at the end of March '26 compared to INR 538 crores at the end of fiscal 2025. I sincerely thank to all our stakeholders, including employees, business partners, vendors, bankers and auditors who have supported the company. On behalf of GR Infraprojects Limited, I thank everybody. Thank you. Over to you.

Sir, shall we open the floor for questions?

Sure.

We will now begin the question-and-answer session. [Operator Instructions] We will take the first question from the line of Shravan Shah from Dolat Capital.

Good commentary in terms of the segment-wise and in terms of inflow that we are looking at. Just a couple of things. So whatever sir has said in the opening remarks, so broadly now we are looking at INR 22,000 crores to INR 25,000 crores inflow in this entire year. So -- and particularly the major still the chunk is from the road INR 12,000 crores, INR 14,000-odd crores. So there, I just wanted to understand given still the NHAI, the activity has not picked up. So this entire -- are we looking at the major would be the BOT toll form or it would be kind of equally the HAM and BOT toll.

[Foreign Language]

[Foreign Language] And even for FY '26, actually the exact number is still not clear how much they have awarded in terms of kilometers. So if you have you can share also.

[Foreign Language]

But NHAI, specifically, sir [Foreign Language]

[Foreign Language]

[Foreign Language] in terms of whatever we were thinking execution. So can we look at even 20% kind of possibility is also there. [Foreign Language]

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And CapEx for FY '27?

[Foreign Language]

We take the next question from the line of Abhinav from ICICI Securities.

My first question is on the execution front. You had guided for about INR 3,000 crores of revenue in Q4. What has impacted the execution? We were expecting about INR 600 crores from oil and gas as well. So how it has impacted execution in that segment.

[Foreign Language]

Understood. And sir, how is the execution in oil and gas segment? [indiscernible]

[Foreign Language] And largely, because of change in prices, there is a drastic change in the prices, what increased in the prices actually resulted in slow execution. [Foreign Language] was supposed to be given by the authorities in terms of price variation and cost. [Foreign Language] That's the main reason. [Foreign Language].

Understood. Second is on BOT projects from NHAI [Foreign Language]. So are we keen on bidding this higher value projects given the higher equity requirement for these projects.

We are evaluating subject to, of course, I mean, if it sticks to our metrics, then certainly we'll be keen. [Foreign Language] Depend on the return on those investments and all, right?

Sir, last question on the 3 projects, Agra-Gwalior BOT and 2 HAM projects. When can we start -- expect the execution to start?

[Foreign Language] Agra-Gwalior is already delayed. So there is no point in starting even if let's say, we'll try [Foreign Language] appointed date should be in sync with our execution period as well.

The Agra-Gwalior one getting canceled or anything of that, sir.

[Foreign Language] It is already expired, right? [Foreign Language] So these kind of indications so far, we haven't received from the authorities. [Foreign Language] they have to pay the claim also, right? It is not as simple as that. So I think the risk will be minimal. But yes, it depends totally in the control of NHAI. So far, whatever discussion we are having with NHAI people [Foreign Language] we will be able to get that appointed date maybe -- and there I mean, [Foreign Language] there would be [Foreign Language].

[Operator Instructions] We have the next question from the line of Mohit Kumar from ICICI Securities.

[Foreign Language] Oil and gas project contribution, how do you see it contributing in FY '27? And are we ready to bid on our own for this oil and gas pipeline project?

For '27, our target for this sector is around INR 1,200 crores target for this particular sector. In terms of that bidding, so what we are evaluating is to participate with the technical member who can make us eligible for direct bidding as well. So we are just evaluating to directly and we are actually active on this front as well. So maybe in the next 6 months of time, we'll be able to bid directly as well. That's our intention as we aspire to we are targeting as well.

Understood. I can just help us with your outlook on the transmission project pipeline. [Foreign Language] Do you expect the entire thing to get bid out in FY '27? Or do you think part of it will go in FY '28?

So current year, our target is to basically -- our target, our focus pipeline is around INR 25,000 crores only. So we are not targeting INR 1.2 lakh crores, right. So it is only INR 25,000 crores, INR 30,000 crores, out of which we are targeting, we'll be able to get around INR 5,000 crores of order. This is our basically plan.

So how do you decide -- it is a large pipeline, how do you select this INR 25,000 crores? Is it based on the bid value? Is it based on the areas you want to work? How do you decide -- arrive with these numbers?

So it's a combination of both actually. Sometimes it is area, sometimes it is value because we may not be willing to bid for INR20,000, INR 30,000 kind of project value. But at the same time, sometimes we are also not willing to go into such kind of area where execution is difficult, right? So it's a mix of projects.

And what was the equity investment in HAM and transmission projects at the end of FY '26? And how much you're looking to invest in F '27, F '28. Is that number handy with you?

Yes, yes. So the total contribution, which was required was approximately INR 5,400 crores, of which already INR 2,055 crores has been contributed and the remaining contribution is INR 3,486 crores approximately, of which in the current financial year '26, '27, we estimate a contribution of INR 1,000 crores.

We will take the next question from the line of Bhavin Modi from Anand Rathi.

Just wanted to dwell on your logistics and warehousing business. So I think there are 3 parts, right, forward, which is MMLP Indore, and there's a foresee, which I think is in Guwahati and Sambhaji Nagar and the foreign -- there are some 15 operational dark stores. So just wanted to understand, I also saw your results and there's this one already warehousing SPV is already created. So have we already acquired some land and are we have started working on it on the warehousing thing? What are our plans in terms of investments? And since these are you can say front heavy CapEx investment, is it going to affect our ROE for some period of time?

[Foreign Language]

[Foreign Language] our target is to invest in terms of equity INR 500 crores to INR 700 crores of equity, which we are targeting in next.

Total investment, we are targeting INR 600 crores, of which around 25%, INR 200 crores to INR 250 crores would be equity.

For current year, right?

For current year.

So I'm giving the basically the number for next [indiscernible] of that, right, so this is the plan for in this particular sector where we are targeting almost INR 600 crores or INR 700 crores equity investment in next 3 years of time. What you ask for is that it would be impacting that return on equity on -- yes, for the current year, it may because it will take time once it is completed and we'll be able to monetize it through some other vehicle, then certainly, it will give that flip also, right, to equity return. But yes, it may take time for -- in the next 2 years of time, that would be -- I mean for current year, certainly, we'll be developing. And then in next 2 years' time, we'll be focusing on monetizing as well. Then it will certainly -- so this is, of course, a long gestation period. It is not that in the current year itself, we'll be getting the result.

So when you say this INR 600 crores equity investment, it's from our side, right, from the promoter side? Or are we also engaging some partner like 50-50 partnership or something or this INR 600 crores is totally from our side.

This is our own plan, maybe depending on the project, right, where, let's say, because of the project size or where we believe that we need some partner, we can get them also along with us. And then probably the total investment in that project would be more than what we are assuming, right, on our own.

Okay. And also this investment also includes the foreign, right, where you have already sustained operational dark stores. So are these dark stores, are we owning these dark stores or we have taken on lease? So how is that model working?

No. These dark stores are actually on lease. So it's not much investment over there, which we are anticipating, right? So these all are on lease, yes.

Last 2 questions. I think NHAI has come up with a new BOT RFP and there are many like stringent consideration and conditions involved. Just wanted to understand, we have already placed bid for the Nashik Phata or Phata-Khed project, which is something around INR 7,300 crores. So do you think we will again go for the rebidding or now it will directly go for the financial evaluation stage?

It's something which NHAI, I may not be that privy, I mean to that extent, I'm not privy to, because that bid has already been received by the NHAI. Probably I believe that, that would be under evaluation. I don't think they would be annulling this process. And I mean I haven't heard so far about this.

Okay. And sir, last point is just a bookkeeping question. So you have given the profit on the sale of monetization. So does this profit also includes from the deferred consideration, whatever you have mentioned? And what is the color of this deferred consideration, if you can throw some light on that?

Can you repeat the question?

Deferred consideration, yes, of course...

We haven't received that 100% amount in cash so far. Reason being INR 63 crores is -- reason being there are something at SPV level, which is to be settled by NHAI. These are the for example, in terms of fixation of the amended or revised bid project cost, right, there are some GST claims, which are yet to be released by the NHAI over there, right? So these -- as and when those claims or those settlements happen over there on the SPVs, we'll get that payment.

But have we incorporated this...

Profit in our P&L.

So sorry, your voice is not audible.

I was mentioning that -- yes, this deferred consideration is already included in the profit in the current year's P&L.

Okay. And you are showing as a receivable in the balance sheet.

We will take the next question from the line of Parvez Qazi from Nuvama Group.

First is, just wanted to get update on the BSNL project and also the MSRDC.

See on BSNL project, we are waiting for ROW clearance. So far, we have not received the ROW. So maintenance activity has already started over there on existing stretch. I mean that existing project, which was handed over by local authority to us. We are maintaining -- we started maintaining those equipments and those lines, right? And because of that election right, that was the reason that ROW also get delayed by another 1, 1.5 months. So probably what we are expecting is that in next 1 month of time, we start receiving ROW clearances and we'll be starting execution as well, right? And the second question was related to...

MSRDC. [Foreign Language]

And sir, you had given a guidance of INR 20,000 crores to INR 22,000 crores of order intake. [Foreign Language]

Power transmission is there. [Foreign Language] of power transmission is also there, right. And tunnel, hydro, there we are targeting INR 2,500 crores of orders, right. Similarly, [Foreign Language]. And oil and gas is also there, right. Renewable is also there. [Foreign Language]

We will take the next question from the line of Vaibhav Shah from JM Financial.

Firstly on oil and gas. So we are targeting revenue of close to INR 200 crores in '27. So is it a part of our order book, our order book doesn't include oil and gas for March '26?

[Foreign Language] INR 1,200, right?

INR 1,200 crores.

INR 1,200 crores. Yes. Some part of it is already part of our order book and [Foreign Language] INR 1,000 crores will be actually targeting for this current year itself.

From the new order.

From the new order and new order, I would say it is more -- I mean it is already existing order where we have to continue our engagement, right, with the same company. So that's why...

So March '26, are we [Foreign Language] order book, which is there in the oil and gas.

Right, right.

Okay. Sir, secondly, on the appointed date for the new 2 HAM assets, so should come sometime in next year, first quarter?

Appointed date, I mean, depending on the land availability can be third quarter or maybe depending on October -- I mean, October to January, February, that's the which we are expecting.

You are expecting within this year itself?

Yes, this year.

Sir, and what is the land status current in both the HAMs.

[Foreign Language]

That we can let you offline. You can send us an e-mail.

Okay. Okay. Sure. Sir, lastly, on the depreciation part, we have seen a very sharp reduction on a quarterly basis, which has gone down to roughly INR 45-odd crores now versus our peak numbers of roughly INR 60 crores, INR 65-odd crores. So incrementally, now this should jump significantly given the higher CapEx plans we have in the next couple of years.

No, no. So CapEx is basically for the plant and machinery and certain other specialized equipment, which we are planning for our tunnel project and power transmission projects. And this inventory pile up is basically to execute our existing power transmission projects.

Right now, on a quarterly basis of INR 46 crores for Q4. So incrementally similar we can see a big jump.

Yes, you can see a jump because the in inventory, right? Inventory you are asking, correct?

CapEx -- depreciation.

Depreciation, yes. So depreciation, as sir already mentioned that we are planning the new CapEx in the range of INR 300 crores to INR 350 crores. Correct. But at the same time, we will also recycle our old equipment. So depreciation will remain more or less in the same range.

Okay. And we can expect a similar number of CapEx in FY '28 as well or it can taper off?

'28, is too far to -- right now, CapEx for this current year, what we are targeting is basically as we are going on power transmission, right, on tunneling also, we have taken project [Foreign Language] still some equipment is required for those projects, right, which may not be required for those kind of CapEx may not be required for '28, right? But for '28, then if we are going from other sector, then probably -- I mean, so as of now, we -- what we are saying is this is one-off kind of investment because for last 3, 4 years, at least for last 3 years, our CapEx was in the range of INR 100-odd crores, right?

Correct.

This time we are targeting in the range of INR 300 crores, INR 400 crores, right? It's only because we [ dived ] into different sectors, right, and we have taken this project also. Next year, it is too early to say. But yes, as of now, we don't see that INR 300 crores, INR 400 crores project CapEx will be there in FY '28 as of now.

We will take the next question from the line of Ayush Goyal from CAVI Capital.

So I just wanted to ask that will we be transferring any projects to the InvIT during this financial year?

This is ongoing process. So I think we'll continue with this. I mean we'll be transferring certainly at least 3, 4 projects which we have completed, which we received the COD at least 1 year before, right? It's only after 1 year of completion of operation period we are eligible to transfer, right? So we can transfer.

Okay, sir. And like if you could explain the multiple at which we transfer these projects to the InvIT, that would be really helpful.

See multiple -- I mean, this is a cash flow discounting method, right? So it is not that we have agreed to a certain multiple while transferring any project. So depending on the future cash flow and depending on the market condition at that point of time, right, that valuation is done by the independent valuer and this is that we are transferring the asset.

Okay. So like there's no ballpark multiple that we can think of or that you see.

This is a big range. I mean it can be between 1.25 to 2.25. That's a big range, right? So there is no point...

Okay. And sir, about the cash flows in this year, the cash flow from operations is like really low compared to the previous years. So how are we going to manage the working capital going on forward?

So far, we are comfortable with our working capital. We haven't utilized our bank limit as well, right? And this year, because we have entered into different -- diversify into different sectors, right? And that may be the reason which I believe that is actually pushing us to invest more in the first year or second year. And maybe in next -- over the period of next 1 or 2 years, we will be again normalized in terms of our working capital utilization and all that.

Okay. So it's just because of accelerated execution?

Accelerated execution. I won't say, but it is more kind of because of diversification. We are entering into different sectors, right? So that is where we have to invest more.

Okay. And like do we have a plan to monetize the InvIT units if we require in the future? Like we have INR 2,400 crores worth of investment in that.

Depending on -- I mean we just don't have think through it so far. But yes, of course, I mean, to a certain extent, maybe INR 100 crores, INR 200 crores is a different -- I mean we can think at any given point of time. But yes, we just don't have that confidence where we have to offload 50% of the unit which we are holding on our balance sheet. So far, we haven't had -- but yes, of course, a piecemeal of that, a small piece of that, we can certainly look to divest.

We will take the next question from the line of from Girija Ray from Nirmal Bang.

Sir, I have couple of questions. [Foreign Language] I believe the execution rate as compared to order book came down. So where exactly we are stuck so that our order book is strong, but whereas our execution rate is coming down. That is first question. Second question related to the previous participant, the 3 assets, HAM assets what we transferred to InvIT, the multiple specifically if you can throw some light on price to book value kind of things, that will be helpful. And third question is related to construction cost. So, I can see around, you are saying the construction cost has increased and in fact for full year this also it is increased. So as a percentage of sales, I can say it is 75%, it has increased around 3%, 4% as compared to prior year. So is there any initiative or anything we can do to reduce this construction cost so that our margin will expand? I'm happy that we are maintaining margin 10% to 12%. And gradually we are focusing that to improve the margin. So is there anything -- any initiative we are taking to expand the margin by reducing the cost? So these are my questions.

So let me take your question in the order you have raised, right? One, first is that execution, we have gone down. So execution, issue is in last, I would say, a couple of years, what we have seen is that generally, land -- see, when this model came up, right, in what has happened when this industry was actually back on track in initial years in 2017, '18, '19, that point of time, it was a lull period, right? Between 2010, '11, there was no execution at all, no awarding at all. So at that point of time, generally, authority, what did they do at that point of time was they were just accumulating the land. And there was no awarding, there was no taker. There was no lender was supporting. But once they started, so that was the backlog which was pushed actually into this sector and the 100% land was made available and all the contractors started executing fast with new strength or whatever you say. But over the period, what has happened is that they could not keep the same pace of accumulating land. Land is a big issue in the country, right? And Bengal map you have seen or news article you might have read that Bengal land is now pending because of so many projects are stuck in the state because of land only, right. Similarly, that is the case for Punjab also, right? So land aggregation is the biggest challenge in the sector. And of late, what has happened is that piecemeal [Foreign Language] and we are not able to execute at the same speed, right? Because if we are getting in the piecemeal, different, different pocket map when we are executing the project, it is also increasing the cost and it is also taking time as well, right? Because time-wise be to execute, right, a continuous strength of 5 kilometers versus 5 different paces of 1 kilometer. So they are taking time. So [Foreign Language] off-late challenge we are facing execution and of course appointed, [Foreign Language] project was there, but appointed date could not be declared. And when appointed date start declaring, right, then land was 100% land was not there. So authority came up with a new concept provisional appointed date where not 80% land was also there, but even 60% land because [Foreign Language] we are into industry, we have already having mobilized that machinery, plant over there, assuming that the land would be acquired on time. And then we are also somehow convinced by the authority that, okay, let's start on execution. So that [Foreign Language] machinery no point. So that was kind of arrangement. And actually, it resulted into delay execution, right? [Foreign Language] in terms of execution rate. Now second question you asked about that price to book value. [Foreign Language] You asked for the specific SPV which we have transferred [Foreign Language]. And the construction cost, what you are saying is increasing, rather, I can say it is revenue which is decreasing because competition, right, where you can say -- I mean, this is also visible to everybody that NHAI estimates [Foreign Language] bid price. Now it is coming -- going up to 30%, 40% down from NHAI estimate. So it is because of competition. [Foreign Language] it is not going to reduce. I mean this is my theory. I mean there may be players. There may be people who would be reducing accordingly their input also, right? But logically, in last 5 year of period, you will see that because of increased competition, prices have come down, which actually is creating pressure on revenue rather than cost. So [Foreign Language] effectively, if we have to compare that blended cost of the material, what we were actually having at 5 years back, right? So [Foreign Language] that 5 year back it was higher, right? There was good -- I mean various kind of methods were available to us [Foreign Language] which is available to us right now was not available at that point of time, right? [Foreign Language] whatever you say. So it is actually impacting the cost. So maybe in 2020, my cost of material on absolute number was higher than what right now I'm making payment today, right? But if we are comparing it with my revenue, revenue has drastically come down. [Foreign Language] I can't -- I mean 40% revenue [Foreign Language] I can't reduce my cost of material -- cost of construction to 40%. [Foreign Language] at least it is actually the other way around. It is not that construction cost is increasing. It is basically revenue which is decreasing. And where it is perceived that construction cost is increasing, right?

Correct. Sir, if I may ask the last question pertaining to the first question about the execution rate. So as you mentioned, several factors are impacting execution rate, right? So can someone assume that 80%, 85% of execution risk factor is factored in your current execution rate or someone can assume the same or little marginally increasing order of execution rate going forward?

Execution rate, we have to assume at the same level. I don't think it is going to increase. Yes.

It is not going to increase.

We will take the next question from the line of Sudeep Bora from AMBIT Capital Private Limited.

Sir, my question is regarding the oil and gas projects that we do. So what is the tentative kind of margins that we make out in these projects? And how do we see it going ahead?

See, our target is to have at least 10%, 8% to 10% kind of margin. But what has happened is because we are the new entrant into the sector. So we have to learn through this process. And not only that new entrant, but yes, of course, of this geopolitical situation, which is impacting the fuel prices, large-scale basis. So margin has yet to be seen. I mean, let us compete 1 or 2 cycles on this particular sector and then only we'll be able to give you some guidance on what kind of margin which we are expecting on the sector.

Okay. And sir, my second question would be like in terms of the geopolitics or like the crude prices. So what part of our cost or how -- what percentage of our cost is directly kind of impacted by the increase in crude prices?

So if you talk about highway sector, road sector or transport sector, it is almost 40% of the cost.

30% to 40%.15% fuel and 20% to 25%.

Bitumen. And again, because raw material also somewhere is getting -- yes, it is to be transported. It is to be prepared by your -- it is to be -- I mean, diesel is somewhere, somehow it is getting consumed over there, right? So 40%, I would say, a reasonable number, which is actually impacting our cost. 40% of the cost is getting impacted because of this fuel and all that.

Okay. And do we have a -- like we would have a pass-through mechanism as well, right?

Pass-through mechanism is there in normal situation. This is abnormal situation. I mean we are also struggling right now. We have been discussing with the authorities how to get out of this situation, right? They are supportive in this time of crisis. So I wouldn't say that they are supporting. But we have to develop some mechanism for to basically have some insulation from this kind of impact, right? And probably we'll come out with some more good formula also. But until then, probably we have been impacted.

Okay. And my last question was just a clarification. So you said that 2 MSRDC projects are going for a rebid. So those are included in our INR 26,471 crores order book or...

No, no, no. No, no, no. So those projects are annulled. Those process is annulled. So it is already out from our bid -- out from order book.

So we never include L1 in our order book.

We will take the next question from the line of Vishal Periwal from PL Capital.

[Foreign Language] geopolitics has an impact on execution. So just to understand since our order book is from NHAI [Foreign Language] Maharashtra state government, so any authorities are they saying like to slow down execution or probably there's delay in the payment [Foreign Language] can you share something if they have to make a relation with the geopolitics.

[Foreign Language]

Okay. Or any delay in payment [Foreign Language].

[Foreign Language]

Okay. Or second sir, related to this, [Foreign Language]. Just to understand since NHAI [Foreign Language].

[Foreign Language]

We will take the next question from the line of Mudit Bhandari from IIFL Capital.

[Foreign Language] projects were canceled. So it was 2 Pune ring road projects or 1 was also Nagpur- Chandrapur.

[Foreign Language]

Which one is which we are executing.

Western Pune ring road.

Got it. For that is received.

That is already in progress.

Got it. And lastly, any update on sir, income tax search, which happened in, I think, October '25?

So income tax search, I think beyond that, we haven't received any -- I mean, communication is there. They have shown some material. We have also replied to them, right? Now it is up to them, they will be doing some because this is a process which we have to follow. They will be coming up with their show cause notices going forward, and we have to file our return back. And so far, nothing material probably, which I would say we have to -- we have find out, right?

Understood, sir. It is regarding which period?

See, search is generally for last 6 plus current year period. So it is for 7 years, right? So it is as per law, I mean they have to cover -- they can go up to 6 years back, right?

Ladies and gentlemen, we will take that as the last question. And that concludes the question-and-answer session. I now hand the conference back to the management for closing comments. Over to you, sir.

[Foreign Language] Thank you.

Thank you members of the management. On behalf of HDFC Securities, that concludes this conference. Thank you all for joining with us today, and you may now disconnect your lines. Thank you.