GPT Infraprojects Limited (533761) Earnings Call Transcript & Summary

Thank you. Good morning, everyone, and a warm welcome to GPT Infraprojects' Earnings Conference Call for the Quarter Ended 30 June 2020. I have with me on call, Stellar IR Advisors, our investor relations adviser. I hope you all have received the updated investor presentation that we have also uploaded on our website for your reference and the website of the stock exchanges. We hope that everyone on the call is safe, and their families are also healthy and safe. These are really trying times, and we hope that we are nearing the end of the seemingly long tunnel of these unprecedented times in the life of each and every one of us. When we had recently assembled on the last conference call to discuss the full year results at the end of June, we have updated you on how the company is coping with the COVID-19-related restrictions across our project sites and manufacturing facilities in India and Africa. Let me take you through how that has impacted the company's operational and financial performance for the quarter ended 30 June 2020 and also give you an update on how things currently stand. On the execution front, the COVID-19-related lockdown, starting from midnight of March 24, 2020 and the attendant restrictions that were in place until the middle of April, followed by the partial reopening in the months of May and June resulted in almost a 41% year-on-year shrinkage in the consolidated revenue of INR 84 crores in Q1 FY '21. In terms of segment breakup, both the Infrastructure segment, which form nearly 77% of our revenues, and Concrete Sleeper segment posted degrowth to the tune of 45% and 34% year-on-year, respectively, in Q1 FY '21. While the overall quarter's performance is muted, there has been a significant pickup in execution when compared on a month-on-month basis over the past 3 to 4 months. The calibrated resumption of project execution began towards the end of April, improved gradually in May 2020 and witnessed a significant uptick in June 2020 at most of our project sites. Presently, the execution rate -- run rate stands at almost 70% of that of the same period last year, underscoring the company's effort to achieve normalcy in operations. On the Concrete Sleeper side as well, all our manufacturing operations in India opened up in the end of April 2020, and we have gradually ramped up the capacity utilization, which currently stands at almost 75%. Our South African facility had also resumed operations in mid-May 2020, while the Namibian facility had also resumed operations last week. On the ordering activity, the COVID-19-related disruption notwithstanding, the company has successfully bagged 2 orders worth INR 218 crores in year-to-date FY '21. In addition to the INR 115 crores orders awarded by NHIDCL for the widening of a section of the National Highway 102B in the state of Manipur on EPC mode in April 2020, we bagged a contiguous stretch of the same project for an additional INR 103 crores in July 2020. Incrementally, we are L1 in orders worth INR 500 crores approximately, which further strengthens our order pipeline for the current fiscal as against an abysmal order inflow in FY '20. With this, our order book stands at -- strong at INR 16.4 billion, forming almost 2.6x FY '20 revenue. Some of our key projects under execution include the Ghazipur order worth INR 378 crores by RVNL, which is going on smoothly other than the COVID-related disruptions, with a quarterly run rate currently of INR 20 crores and its closure expected over the next 20 months. This would enable us to bid for single orders of approximately INR 1,000 crores, underscoring our execution capabilities in the infrastructure segment. In the Concrete Sleeper segment, the GMR order worth INR 246 crores is progressing smoothly, and the cash flows from the same are also expected to ease the working capital requirements. We expect utilization to pick up further at all our Indian facilities in the next few months. With respect to the margins and profitability, in Q1 FY '21, our EBITDA declined to INR 17.8 crores, accounting for almost a 20% year-on-year fall in relation to approximately 41% year-on-year degrowth in revenue for the same period. Consequentially, the EBITDA margin grew by almost 552 basis points year-on-year to 21.2% in Q1 FY '21, from 15.7% in Q1 FY '20 and 13.5% in FY '20. The strong increase in margins is attributable to our ongoing cost optimization drive that has not only benefited us in the quarter gone by, but is also likely to result in earning -- recurring savings in the long term. We expect cost savings of roughly INR 5 crores to INR 6 crores to accrue in the current fiscal on account of the aforementioned. Additionally, our continuing ethos of bidding discipline, wherein we ensure that our hurdle rate of 13% to 14% is maintained while bidding for new projects, continue to be the primary factor of possibility into the profitability. Profit after tax in Q1 FY '21 came in at INR 1.9 crores as against INR 3.7 crores in Q1 FY '20. Our leverage and liquidity position has also improved considerably. As mentioned in the previous call as well, we have been trying to optimize our working capital in addition to paring some of our long-term debt. During the past fiscal, we managed an overall reduction of approximately INR 22.5 crores of long-term plus short-term debt. And in the last quarter, we have been able to reduce by approximately INR 7.5 crores of long-term and short-term debt. This, coupled with improved profitability, has helped us to increase our cash flow generation last year. We also expect to release some of the long outstanding old dues from various clients, which was approximately INR 49 crores in March 2019 and has been reduced to INR 25 crores in March 2020. The same is expected to reduce by a further INR 5 crores to INR 6 crores this year. In addition, some outstanding tax refunds are also being processed by various departments and the same will also ease out the cash flow for the company. Further to strengthen the company's liquidity position during these challenging times, we are actively engaged with our working capital bankers to await the special liquidity scheme announced by the Reserve Bank of India. We have also applied for the release of performance guarantees from various clients in partly completed projects as allowed by the Ministry of Finance, which will result in a significant release of our nonfunded limits, thereby providing liquidity in terms of margin money for these bank guarantees. Already, approximately INR 40 crores bank guarantees have been released by various clients as on date. We do not foresee any challenges in meeting our debt obligations or liquidity for the business. That is all from my side. I would now request the moderator to open the call for any questions and answers. Thank you.

[Operator Instructions] The first question is from the line of Rohit Natarajan from Antique Stockbroking.

Sir, my first question is more to do with the macroeconomic picture. I understand that, sir, most of the projects that you are looking at is, currently, you are expecting that caught a little bit, if you are bidding for the Ghazipur or even for that matter, the DFC projects. But my question is more towards how the railway ordering is scheduled to happen in this year because we have been reading news that there is a lot of fund crunch at the railway level and that may impede the capital expenditure plans. Is there something of such similar thoughts that you have come across?

So with respect to the fund crunch and the ordering pipeline for the railways, the L1 that we are currently is for railway contracts of approximately INR 500 crores. So -- and we are also bidding for railway contracts every week, every month. So we don't see the ordering pipeline drying up for the railways as such. As regards the fund flows from railways, the fund flow has been quite smooth until now and we have been given to understand that this financial year, it should be smooth as well. The -- there have been a lot of news with respect to what you rightly said with respect to fund crunch at the railways. But I think that they are in the process of organizing more funds, whether through some bond offerings and also they are looking at diluting some stake in the public sector undertakings, and that should also ease out some of the cash flows for them.

Just to continue with that question itself, there are some nodal agencies, and I wouldn't say that it's nodal agencies, there are some CVCs like RITES, IRCON, RVNL. They haven't got a strong order since the December revision of that modification of new policy. So do you think there is some other bottleneck in that overall scheme of things? Do we see something of that sort that the investors are missing?

I think that a lot of our ordering activity is happening with RITES and RVNL, even IRCON, for that matter, other than the zonal railways and the DFC. The contracts that we are L1 also are some with RVNL and others as well. So we don't anticipate any ordering activity dry up for them as of now.

Okay. I appreciate that part. Sir, my second question has more to do with this bank guarantee part. Earlier in the last call, you said that there were some a INR 30 crores that was stuck up in quote and banks went to quote and this matter was supposed to be opened up in August. And you also said in your opening remarks that you got some INR 40-odd crores kind of amount. And in the overall scheme of things, you were looking at close to INR 55 crores to INR 60 crores of release of funds. So what is that position over there, if you could give us some granular picture?

I think you're mixing up 2 subjects. So one is with respect to the INR 30 crores that you're talking about, is the Jogbani Highway, wherein the NHI deposited INR 50 -- INR 30 crores with the Delhi High Court, and the same is to be released to us against bank guarantee. That hearing was supposed to be in August. Unfortunately, the Delhi High Court has postponed the hearing to October, all their hearings of August to October, because of the pandemic. So that is one part, I think, that -- so -- and the other part is with respect to the release of proportionate bank guarantees, performance guarantees especially, as part of the circular of the Ministry of Finance, which, in total, we expect to get a release of almost INR 55 crores, out of which INR 40 crores to INR 45 crores has already been released. The balance, INR 10 crores, is expected to be released over the next -- in August itself.

I appreciate that part. Just one more question, sir, from my side, that has more to do with the working capital limits that we have. I understand it should be somewhere between INR 2.1 billion kind of a number, with a utilization rate of 90% to 92%. What is that situation right now looking like?

So we are -- the working capital limit sanction to us is almost INR 2.1 billion and another INR 11 crores to INR 12 crores is getting sanction under the special liquidity window by -- that was announced by RBI. So it would be almost INR 221 crores, INR 222 crores approximately. Out of which, I think the utilization would be about, now about 90-odd percent. So INR 200 crores would be currently utilized approximately.

Okay, sir. That's it from my side. Should there be another question, sir, I'll get back in the queue.

[Operator Instructions] The next question is from the line of [ Shruthi Sharma ], an individual investor.

Sir, actually, I wanted to understand like the current order book we have of around INR 1,600 crores. What is the execution period for the same?

It's over the next 2 to 3 years.

And sir, what kind of deferment have we seen because of -- due to this pandemic in the execution -- on the execution front?

So deferment would be approximately 1, 1.5 months. There is not much of a deferment there. I mean the government has allowed the various PSUs of those departments to grant an extension up to 6 months. But like I said in my opening remarks, in April, it was almost fully locked down and we started in May gradually, and now we had almost 70% of our execution rate already.

Okay, sir. Secondly, sir, I wanted to understand on the margin improvement. So what are the reasons for the -- this improvement? And is it sustainable?

Like we had said in our annual earnings call in June, we are undertaking some cost optimization measures, especially with respect to employee costs and other overhead and administrative costs. That has led to an improvement in the margin in the current quarter. We expect that, for the full year, we will be able to improve the margin by almost 100 basis points, which is INR 5 crores to INR 6 crores, and that would -- that is a long-term thing and it is strategic in nature.

Okay. Sir, also, if you could tell me, like in our Africa business, what kind of headwinds are we facing? And I mean, is there any, I mean, institutional business strategy in that particular area?

So there's no headwind as such. It was there last year because of the elections in South Africa as well as Namibia and the sovereign rating downgrade of South Africa, which led to a mark-to-market loss as on March 31. The currency is still quite devalued compared to what it has been historically. However, the operations are going on quite smoothly. We are getting -- we have the requisite orders and we are getting the necessary payments. And all our purchases as well as payments are in local currency. So we are, as such, not affected by the currency fluctuation per se.

Okay, sir. Sir, one more question, if I may ask. I mean is there any update on the arbitration award of around INR 60 crores?

So like I said in my earlier remarks, the hearing that was expected in August of -- this August has been deferred to October by the Delhi High Court due to the pandemic. There's no update on that.

Okay, sir. I mean, sir, any time line do we have in our mind, like, I mean, any expectation on that one?

We can't decide it because it sub judice. So it depends on the judicial process.

Okay, sir. And sir, what is the average cost of debt?

12%.

[Operator Instructions] The next question is from the line of Deepak Poddar from Sapphire Capital.

Sir, I just wanted to understand like we are currently running at about 70%, 75% utilization level. So by when we are expecting it to normalize?

I think that it depends on the pandemic. We are hoping that it gets normalized quite soon and the utilization levels at the factories as well as the projects are going up. Currently, also, there are some effects of the monsoon as well. Hopefully, by September, October, once the pandemic subsides, it should get normalized.

Okay. Okay. So once the situation normalizes, so what sort of basically growth we would be wanting to grow at?

This year, due to the pandemic, I think we would be a flattish or a slight uptick, not too much of growth. But it depends on how the pandemic honestly pans out. It is too premature right now also to predict what would happen this year. But as we stand, I think, this year, we would be flattish or slightly uptick.

A slight uptick. Right. Fair enough. And regarding EBITDA margin, you mentioned about a 100 basis point improvement. So vis-à-vis, overall for the last year, right? That's the comparison metric?

Correct. Correct.

[Operator Instructions] The next question is from the line of Ravi Kumar from IDFC.

That is Mohit Kumar. So my first, one question on the order book. Just, sir, have you seen any order inflow in the sense there is less tender from the Indian railways are core or RVNL or IRCON? Are you seeing a decent order pipeline for you for the next -- for the tender? And have you submitted any tenders for the past 3, 4 years which are awaiting the results? I understand that, of course, from the PPT, that you have L1 in INR 5.2 billion worth of orders. And what kind of order book you -- accretion, you believe, will be -- you would be able to do in this financial year?

So first all, I think that we have got orders from RVNL and IRCON in the last 1 year, I don't know. So the last 3 to 4 years, obviously, we've got a lot of orders from them. We are L1. Just to correct you, we are L1 in INR 500 crores, not INR 5.2 billion. So it's not INR 520 crores, it's INR 500 crores. In terms of ordering activity, I think that it has almost been the same with respect to what it was previously in RVNL, RITES, IRCON and even the railways for that matter. We are bidding, like I said earlier, also every week, every month with RVNL and railways and RITES and even IRCON for that matter. So we don't foresee any downtick in that order pipeline. For the full year, we are -- we have already got INR 230 crores of orders already in this -- in the year-to-date right now in the L1 in INR 500 crores. So I think that, for the full year, we should have order inflow of minimum INR 1,000 crores.

Sir, actually, which are the other sectors you're looking at apart from railways for the order for the next 6 months?

Our primary focus has always been railways and whether it is the Concrete Sleeper segment or the Infrastructure segment. And I think that it will continue to be that. We have done some -- we have got some contracts for roads in the northeastern part of the country, in Manipur. But primarily, it would be railways.

And sir, one last, like what you said about the arbitration award, the arbitration award is for the Jogbani Highway, am I right?

Correct.

The next question is from the line of Viral Shah from Prabhudas Lilladher.

Sorry, I joined in late for the call, so my questions might be repeated. First of all, I hope, in GPT's family, all, everyone is safe and fine. To start with, sir, to start with, in terms of order and so, of course, L1 offset of around INR 500-odd crores, so could you quantify what are the segments? Mainly could be railways, or is it because of them or so EPC or referring on the audited...

All EPC contracts right now.

And all from railways or there are plans from RVNL, IRCON to start...

The railways include RVNL, IRCON, RITES. So railways include all those sort of things.

Okay. So what I was clarifying is, is it from Indian railways directly or it is through the PSUs, RVNL, IRCON or RITES...

The current L1 is from PSUs, not really directly. Although we submitted some tenders even for the -- for railways directly, currently, they are not yet open, so we don't understand -- we don't know whether they are L1 or not.

Okay. Fair enough. Sir, secondly, sir, how have you seen the conversion that has to be happening from tendering or bid pipeline, to actually getting into orders? And what is the duration of time does it take to start the work on ground, so to be...

Conversion, generally, our strike rate is almost 15% to 20% and that we are having that kind of strike rate also currently in terms of getting new orders for the tenders that we bid for. And to start the project, post the award, I think it takes a minimum 3 to 4 months after the drawings and everything are clear, so 3 to 4 months is generally when the work can get started on the ground.

Fair enough, sir. Sir, my question to conversion was more from the point of view that, currently, there would be a huge amount of bid or tendering pipeline, right? And to get into -- converted into actual orders for, say, LOI or LOA, so what is that time line, whether it has been 3 months, 6 months because there would be a huge amount of pipeline?

Normally, nowadays, it doesn't take that long, normally 1 to 2 months.

1 to 2 months. Fair enough, sir. So that was really helpful. Sir, on our execution capabilities that we look at, what has been the run rate in the month of July as compared to the month of June? And what was that in the month of April? So how gradually the ramp-up has happened? So that clarity would be...

April was practically maybe quite abysmal, almost INR 2 crores to INR 3 crores, or maybe even April was quite less in terms of execution because it only started in the end of April, that 5, 6 days that was there, and that took some time. And so basically, the -- in May and June, we have done almost -- June, we were doing almost INR 40 crores, and July, I would say, we are doing almost INR 50-odd crores of run rate right now.

So that's -- and that would be how much as compared to pre-COVID levels in terms of percentage, broadly?

So I think pre-COVID, last year, July, we would be also doing a similar amount.

Okay. Fair enough. That's fair enough. And sir, in terms of employee availability, what is the trend currently? And when do you expect the peak to happen?

So in terms of employee availability, 90% of our employees are at project sites and factories. So they are fully available because in rural India, it was not affected that much until now, thankfully. In terms of our corporate office, we have started it in 5 May 2020 as allowed by the government of West Bengal. That too with a limited, very limited manpower as again allowed by the local district authorities. But now also, it is working on a roster basis. So 90 -- I would say, 95%, 95%, 98% of the employees are on -- are working from home. Maybe 2% to 3% are not able to come. I think about 15 to 20 people out of 800 people or so are unable to come, so 2% to 3%.

Fair enough. Sir, last 2 questions from me. One on the moratorium, have we availed any moratorium relief, which was given by the government during the quarter? And what will be the CapEx plan B for the FY '21? And how much have we incurred in 1Q?

So we have not availed the moratorium from -- as announced by the government of India, only that we have applied for the special liquidity window. In terms of CapEx, it again depends on the order inflow, but generally, CapEx will be -- replacement CapEx will be about INR 10 crores to INR 12 crores.

[Operator Instructions] The next question is from the line of [ Mihir Desai ] from Desai Investments.

Sir, my first question is here on the...

Mr. Desai, can you speak louder...

I can't hear, can you please speak -- yes...

Yes. Can you hear me now?

Yes.

Yes. So sir, my first question would be on order inflows, sir. So basically, you said the order inflow would be around INR 1,000 crores this year. And so it would be even higher than FY '18 and FY '19, sir. Is that correct?

Yes.

Okay. So sir, we are not seeing any restructuring or any lag in order activities on account of the pandemic.

No. Like I said, we already have received INR 230 crores of new orders and the L1, INR 500 crores. So first half, hopefully, we should announce INR 700-odd crores of new order inflow. And that would be much higher than even FY '20, that we had gotten in FY '20.

Okay. Sure. And sir, on the industry, sir, how do you see that now post-unlock, the supply chain and everything which has been disrupted earlier, sir, now is it back to normalcy, sir?

Supply chain is quite back to normal. There is no issue in supply chain.

Okay, sir. And also, with the improvement which we have seen in the past, increase, sir, for EBITDA going forward, sir?

So like I said, we expect EBITDA margin improvement of almost 100 basis points on account of cost optimization. Obviously, it will not be the EBITDA -- EBITDA will not be 20%, 21%, which we have done for this quarter. Overall, for the year, I think we would do an EBITDA of almost 14% to 15% rather than 13% to 14% that we would have done historically.

Okay. Understood, sir. And lastly, I just wanted your outlook on the Sleeper business also, sir, and how you saw...

So last year -- Sleeper, last year, we had done revenue of almost INR 130-odd crores -- sorry, last year, we had done revenue of almost INR 97-odd crores. And that, this year, we expect revenue of almost INR 125 crores, INR 130 crores minimum.

Okay. Okay. So there also, activity will be moving on...

Sure.

[Operator Instructions] The next question is from the line of [ Sandanand Cheti ] from [ True Equity Advisors ].

While your Namibia is shut temporarily, are you incurring any cost on that currently?

Namibia, we already started last week, like I said in my opening remarks. We are -- in the first quarter, we have incurred some fixed costs that are part -- so that has been already accounted for in the results that has been declared.

And my second question is when will you complete the Ghazipur contract? And a follow-up on that is how quickly thereafter can you bid for INR 1,000 crores' opportunity?

So we are expecting to complete Ghazipur in the next 20 months. And in terms of bidding, as soon as we complete the circular that will be available from the client, and then depending on the orders inflow, we can always bid for it immediately.

What are those scale and size of INR 1,000 crores' opportunities, which perhaps you have not done until now?

So we have done larger-scale contracts. How we are doing larger-scale contracts, like Ghazipur, is a INR 400 crore contract, so the scale would be similar to like, I would say, some of the larger levers of the country or also, for that matter, the larger contracts for high-speed rail and the likes of that.

Yes. I'll just add one more question. And then after that, I'll join the queue. While you talked about expanding EBITDA by 100 basis points, is that here to stay? Is that secular?

Yes, that is here to stay. It is long-term and strategic in nature. So we expect it to stay.

Okay. What is strategic in that you mentioned?

No. So we have cut down a lot of the costs, and it has been optimized, and some of the departments, which were redundant, have been merged. And so it is strategic in that respect.

[Operator Instructions] The next question is from the line of [ Sandanand Cheti ] from [ True Equity Advisors ].

Within the larger railway CapEx, what is your sizable opportunity? Now we hear this INR 1.6 trillion kind of a spend and all, but I'm sure that you must be operating in specific verticals. So according to you, what is your size of opportunity?

So I think our addressable opportunity out of the INR 1 lakh crore, so-called infrastructure pipeline that the government has announced, would be about INR 10,000-odd crores. So we would be addressing a segment of that.

Okay. If you see your execution cycle, you mentioned earlier, is 3 years for INR 1,600 crores. So this looks like a long cycle. Is there any plan to fill in the short cycle and bolster the overall turnover of the company?

So in order to bolster the turnover of the company, the -- you have to have larger new orders. So the larger contracts require 2 to 3 years. So it is very difficult to shorten the cycle because there are challenges in terms of the execution -- the Gantt chart that you need to follow in terms of the execution cycle. However, having said that, to bolster the turnover of the company, the order inflows have to be in tandem with the growth. So we typically like to have an order pipeline of 2 to -- 2.5x the trailing 12 months revenue. So that is in line with why we're saying that, this year, minimum INR 1,000 crores order inflow is expected.

Okay. My question pertaining to the Sleeper business. In a typical DFC project, when does the sleeper requirement come exactly in the project like DFC? When do they start ordering?

So they have to start ordering it as the sleepers as soon as the project ordering happens because sleepers, a, you need to set up the factory at the location and the approval of the factory, that itself takes almost 8 to 10 months, and then you need to produce the sleepers and keep it ready because once they start laying the sleepers, the daily requirement can sometimes be higher than your daily production. So they are laying about, say, about a kilometer a day, which is about 1,600 sleepers, and you're producing 1,000 a day or 1,200 a day, you would be depleting from the stock. So ordering has to happen in tandem with the ordering of the main contract for the DFC as well.

Okay. In the eastern DFC, which looks like a long runway for you, what is the incremental size of opportunity that would be available?

So until now, I think the -- they have tenured up to somewhere in the Bihar zone level. And they need to tender it from there to the Calcutta port. That is another 300-odd kilometers. So 300-odd kilometers would be about -- in terms of sleepers, it would be an order of almost INR 300-odd crores.

Okay. Okay. If there is no other question, I will continue.

Sure.

This contribution on mega bridges, how much is part of your current order book? And how much was that percentage of your last fiscal revenue?

So mega bridges. So we do a lot of bridge contracts. Bridges is almost 60% to 70% of our order book, the larger bridges. We also do smaller bridges. So 60% to 70% is from mega bridges. So that is both in terms of order book as well as revenues.

Considering there is a limited competition, as you mentioned in your PPT, 3 to 4, it's fair to assume you have a higher margin in that segment?

Yes. It's quite fair to assume. So 13% to 14% is -- or the 100 basis point increase will be 14% to 15% EBITDA as a blended margin. So some contracts might be having 16%, some might be having 12 -- 13%. So the blended margin is about -- would be about 14% to 15% for this year.

Yes. You earlier talked about, in the presentation, opportunity in Africa, in Mozambique, Bangladesh, Myanmar. Nothing seems to be fructified. You want to share some details on that?

We have done opportunities. We have done in Mozambique in the past. We are doing currently in South Africa, in Namibia. In Bangladesh, we have also supplied as earliest as last quarter. I mean the March quarter, we have supplied from our factory in India to Bangladesh. So we are sort of -- and Sri Lanka, we have supplied last year as well. So it is fructifying in that sense.

Are you looking at any opportunity in Mozambique that seems to be quite active on the railway CapEx?

No, not currently. Mozambique is going through a tough time. We have had -- the Mozambique railway CapEx is already, I think, fully happened, and they had some contracts with Vale of Brazil, and that contract is again due some totals.

[Operator Instructions] The next question is from the line of [ Sandanand Cheti ] from [ True Equity Advisors ].

You see while you stayed true to your Railways segment, but railway itself is actually opening up to the private sector, whether it's a railway development, cooperation, station development or passenger privatization or goods trading privatization. You don't smell any opportunity on those segments?

So we are a core infrastructure player, and we don't like to -- we like to be asset-light in that sense. We don't like to be a PUD or an asset-heavy company. We are an EPC company, and we like to stay true to our core components.

But have you evaluated them, which can fit into your core competency?

So they are not evaluated in terms of private train operations or station redevelopment, although as part of some contracts for a metro, we might be bidding for a station works. But the station redevelopment of the traditional Indian railways, we are not evaluating honestly.

And the reason I'm asking is one of the calls, I got to know that in a privatization of a passenger train, a lot of these operators might outsource the services part of it. I don't know whether, for you, it's -- fits into your strategy.

No, it doesn't. We actually typically like to have a direct contract from the railway or railway PSUs. Typically, that is our model, and we kind of like to stick to that.

The next question is from the line of Shubham Jain from Samena Capital.

I had a question regarding the Sleeper segment of the company. So given that 13% to 14% revenue is from this segment, I just wanted your outlook from this business for the next -- from medium to long term, what is the amount of inflow you're expecting, what is the amount of expenditure you're expecting in this sector, just the outlook for the sector from your view.

So I think to correct, this quarter, I think the revenue from this segment is about 20%, not 13% to 14%. And in terms of outlook for the segment, like I said earlier, we expect it to be almost INR 125 crores for this year -- revenue for this year and similar for next year.

Thank you. As there are no further questions, I now hand the conference over to Mr. Atul Tantia for closing comments.

So thank you, everyone, for participating in the Q1 FY '21 earnings conference call. I think that, going forward, with our strong execution capabilities, a healthy financial base and enviable growth prospects across our areas of operation, we believe that GPT Infraprojects is well positioned to continue the growth trajectory and give positive return to all our shareholders. In case you have any other further queries, you may get in touch with our IR teams, Stellar Investor Advisors or feel free to get in touch with us directly. I wish that all of you take care and stay safe. Thank you and have a good day.

Thank you.