IRB InvIT Fund (540526) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. Welcome to the IRB InvIT call hosted by the company for discussing the audited financial results for the quarter and year ended March 2023. We have with us on the call today Mr. Vinod K Menon; Mr. Anil Yadav; Mr. Rushabh Gandhi; and Ms. Swapna Vengurlekar from IRB InvIT. [Operator Instructions] Please note that the duration of the call would be 45 minutes and any queries left unanswered after the call can be subsequently mailed to the management for adequate response and resolution. Please that this conference is being accorded. I now request Mr. Menon to give you an overview of the significant development during the quarter. Over to you, sir.

Yes, thank you. Good afternoon to all. I would like to welcome all the investors and the analysts on the call. Hope you have reviewed our detailed numbers as well as the presentation. So we are distributing INR 2 per unit for the quarter, taking the overall distribution for the year ending 31st March 2023 to INR 8.05 per unit. During the quarter ended March '23, we have observed robust traffic growth across all our projects. As compared to the corresponding quarter of the previous year, we have observed 16% growth in the toll revenue on a like-to-like basis, that is excluding Bharuch Surat, Surat Dahisar and Pathankot Amritsar project. On an annual basis, the toll collection has increased 26% reflecting the robust traffic growth across the portfolio. During the year, the trust has added one HAM asset that is the Vadodara Kim HAM asset to the portfolio. The Vadodara Kim HAM asset has recently received the second annuity payment from NHAI along with the O&M payment. The net debt to value of assets of the trust is at 0.3:1, providing sufficient debt capacity for acquiring new assets. And the trust continues to have AAA credit rating from two of the rating agencies that is: Care and the India Ratings. I would now request Mr. Rushabh Gandhi to take you through the financial performance for the quarter and the year. Over to you, Rushabh.

Thank you, sir. The total consolidated income for the year ended March '23, stood at INR 1,039 crores from INR 1,400 crores for the year ended March '22. This is primary due to ending over of two of the projects to NHAI on completion of their respective concession. And excluding the revenue from arbitration award, which has been appropriated to the EPC contractor. The consolidated toll revenue for the year ended March '23, stood at INR 903 crores from INR 1,290 crores for the year ended March '22. EBITDA for the year ended March '23, stood at INR 828 crores from INR 1,159 crores for the year ended March '22. Interest costs, including the interest on premium department and interest on the recently acquired Vadodara Kim HAM Asset, for the year ended March '23, stood at INR 193 crores from INR 142 crores for the year ended March '22. Depreciation for the current year reduced to INR 261 crores from INR 681 crores for the previous year. The profit after tax for the year ended March '23 increased to INR 370 crores from INR 303 crores for the previous year. I would now request an moderator to open the session for Q&A.

[Operator Instructions] The first question is from the line of Mohit Kumar from ICICI Securities.

Sir, first question is what is the guidance for dividend distribution for FY'24? And can you broadly take us through the workings.

For FY'24, our endeavor will be to pay at least INR 8 per unit for an entire full financial year.

Understood, sir. And how has been the traffic growth in the month of April? And what are the tariff hikes for all the roads we have taken?

Tariff hike was close to 5% and traffic growth, we will be sharing the numbers shortly within a day or two. And post that, we can expect the same.

Understood. Lastly, sir, can you please let us know the major maintenance expenses, if you are likely to incur in FY'24 and FY'25 for the entire portfolio?

I think for FY'24, there is no significant major maintenance and in FY'25 as well, but we'll share the details, whatever the major maintenance for FY'24 and '25 shortly.

The next question is from the line of Satinder Singh from Eon Infotech Limited.

Yes. Congratulations for a stable set of numbers. So Mr. Menon, first question is regarding these two projects one is Talegaon Amravati. It seems that in the last 2 months, that is February '23 and March '23, our traffic is below 90% compared to the same months of the previous year. So any compensation claim that we are filing, we believe that is due to the metro works going on in Nagpur any compensation claim that we are filing? And how long more is the challenge is expected to continue?

Sir, with respect to Talegaon Amravati, as you rightly mentioned, still the revenue is 90% of this last year. And if the revenue falls below 90%, then only we can file the compensation. And we will explore that if we can file some claim on the same. But this is the -- this is a concession agreement, which talks about that if revenue falls below 90% for a continuous period of 7 days, then we can file the claim.

Sir, I was understanding is based on the data already provided our March '23 revenue was about 4% lower than previous year. So accounting for the 10.15% increase that we had in tariff, so the traffic should actually be down 15% already in March '23.

Sir, it's -- they take annual average. And as I have mentioned that, we are exploring all the possibility if the claim can be filed as. And when it will trigger, we will definitely file the claim for the same.

Right, sir, okay. And second is, how long is it expected to be work [ square ] in Nagpur?

I think, sir, it will take another 6 to 9 months kind of period of time.

Okay. Right, sir. And regarding Jaipur Deoli, we only -- again, Jaipur Deoli is a great full year. It does seem that in the month of February and March, there has been softness, especially on the MAV side. So as a result of which, net of the tariff increase annual, there seems to be a fall in the normalized disinflated tariff collection, so primarily because of MAV traffic reduction. Any views on that, sir?

I think, sir, I will observe that LCV count has increased from 37,000 to 74,000 accounts and that -- and we have seen a reduction in the MAV count. So probably, the goods, which were moving on the MAV has shifted to LCV. This is what it appears from the data. And LCV charges are lower as compared to MAV. That is the one of the prominent reason for the lower number.

Okay. Sir. And the latest update on the TC settlements Timkur Chitradurga settlement and Pathankot Amritsar arbitration for both the farmers protest , what is the latest?

Timkur Chitradurga, actually, the interim award is out, as you know, that the escrow account is operating as per the waterfall mechanism and all the expenses are being taken out from the escrow account and being paid in the -- as per the waterfall mechanism. So there is no hassle in the core mechanism as far as Timkur Chitradurga is concerned. The arbitration is continuing. And the witness examination will be on -- in a couple of weeks from now. And in Amritsar Pathankot, INR 30 crores out of INR 100-odd crores has been paid by NHAI. And the balance is being sort out in arbitration, along with the 1 month of further farmers protest in the month of December to January. So both of these have been stuck together, and the arbitration tribunal is formed and our statement of claim has been submitted. So the [indiscernible] is on. We are expecting NHAI to submit their response within another, say, 1 month.

Just to update on the earlier question regarding the maintenance cost. So the O&M cost for FY'24, would it be close to INR 100 crores. And for FY'25, it will be close to INR 180 crores.

This is including the major maintenance. For FY'24, there is hardly any major maintenance. And for FY'25 it is close to INR 80 crore.

The next question is from the line of Rajan Kapadia, an individual investor.

What is our current interest rate effectively? And what was last year?

The current average cost of debt is 8.5%. And in case of the HAM asset, we are receiving the interest from NHAI at 9.75%, which is bank rate plus 3%.

And as far as my understanding is clear, in some years where we have major maintenance, we are actually providing some buffer in another year. So we don't have that issue later on. Am I correct?

From accounting perspective, we have created a provision for major maintenance for the actual major maintenance has to be incurred in subsequent years.

Mr. Kapadia does that answer your question?

Yes.

We will take the next question from the line of [ Saurabh Chatri ], an individual Investor.

One question and then two small questions. Basically, for Pathankot Amritsar, as well, we see flat growth year-on-year in terms of month of March.

We are not able to hear you. Please repeat your question. There was an audio loss from your line.

Okay. Sure. Sorry. I'm saying -- okay, I was asking for Pathankot Amritsar, also we are seeing flat growth. If we consider the month of March, even after toll collection revision, right? I mean even the toll prices got revised, it is flat. So that means that the traffic has lowered definitely by 10%. So any view on it or like similar to Talegaon Amravati?

On Amritsar Pathankot, even we have discussed the last quarter also because of the mining traffic is a bit lower because of some security securities increased in those particular area by the BSF and that has led a closure of some of the mines which were close to the border. And that has led some lower traffic. So there is no specific, but this is having impact on mining traffic.

And the rates have been revised only in April.

Right. Okay. Got it. My second question, and I think I missed it because the first person might have asked this, what is the guidance for next year? Or now this financial year?

Our endeavor is to pay minimum INR 8 per unit for next financial year.

Okay, including -- even though we will have additional HAM asset DPU coming in, it will be INR 8 per unit?

As of now, we are only guiding for INR 8 per unit. As the sole collection will progress, we will -- if the collection is higher, then definitely we can increase. But as of now, we are guiding on a conservative side.

Okay. Got it. And any -- like any sort of visibility on additional assets being added? Because I understand like in last call, you had -- there was discussions around a couple of additional HAM projects have been added. So anything on that?

I think we are continuously evaluating HAM assets or even BOT assets where the asset is quite matured, which can provide a kind of at least breakeven from the date of acquisition. For HAM assets, we have given some nonbinding offers in a few assets. But because we are competing with the funds and funds are having cost of capital is lower as compared to us. And that has led kind of -- we have not been able to get any project. And going forward, our endeavor is we will be continuously bidding for the projects wherever the third-party assets are available. And I think we will have an opportunity to buy a few projects in the coming years.

Next question is from the line of [ Padmavathi Dhondale ], an Individual Investor.

Am I audible?

Yes.

Yes, I think my question was very similar to the previous one. like my family has invested quite some amount and I'd like to congratulate you on the cash flow that you've been giving out. I think I speak for the retail investors, and we think that, okay, the cash costs that we are getting when we invest in such a project, like a quarterly payout. But can we get an idea as to when we can see like something like what you paid out in the first, second and third years maybe? Is there any time line you have kept to acquire these assets and increase the cash flows?