Ircon International Limited (IRCON) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. I am Dorvin, the moderator for this conference call. I thank everyone for joining us today for the Ircon International Limited Q3 and 9-Month FY '24 Analyst Conference Call. [Operator Instructions] Today, we have with us the senior management represented by Smt. Ragini Advani, Director of Finance; Shri B. Mugunthan, Chief Financial Officer and Executive Director Finance; Shri Alin Roy Choudhury, CGM Finance. I would like to remind you that some of the statements that will be made in today's discussion may be forward-looking in nature. It is subject to several risks and uncertainties, and the actual results could materially differ. I would now like to hand the conference over to Smt. Ragini Advani, Director of Finance, for the opening remarks. After which, we will have the forum open for the interactive Q&A session. Thank you, and over to you, Madam.

Thank you. Thank you, Dorvin. Good afternoon, everyone. I'm Ragini Advani, Director of Finance, Ircon. On behalf of my team, I extend a warm welcome to all of you, and thank you for your presence today at the Ircon's earnings call for the third quarter and 9 months period ended 31st December 2023. Let me introduce you to my team today. I have with me Shri B. Mugunthan, CFO and ED Finance; Shri Alin Roy Choudhury, CGM Finance; and Shri Sachin Garg, DGM Finance. As you are aware, in this quarter, DP Government of India has upgraded Ircon to Navratna status on 12th October. With the grant of Navratna status, the company will be able to undertake larger sized PPP projects, and there shall be market credibility enhancement as well. We extend our heartfelt gratitude to all the stakeholders for their continuous and unwavering support. I am pleased to once again convey that we have been reaching greater highs quarter-on-quarter and recorded the highest ever third quarter turnover. We hope to continue this growth story of ours. Financial results as well as the presentation has already been uploaded on the stock exchanges. And I'm sure that all of you have had the opportunity to review the same. Let me take you through our financial performance of Q3 FY '24. The company has reported total revenue of INR 3,012 crores, up by 24% as compared to INR 2,422 crores same period last year. PAT has increased by 29% from INR 190 crores in Q3 FY '23 to INR 245 crores in FY '24 -- Q3 FY '24. Core EBITDA has also increased to INR 296 crores vis-a-vis INR 169 crores. It has increased to 10.3% in Q3 FY '24, an improvement of 304 bps over the last year. Earnings per share has gone up to INR 2.60 per equity share as against INR 2 per equity share for the corresponding period in Q3 FY '24. This is on a face value of INR 2 per share. The order book of the company as at 31st December 2023 stood at INR 29,436 crores, which includes 45% on nomination basis roughly and about 55% on competition basis. The split between domestic and international is 91% to 9%. Ircon has 11 subsidiaries currently mainly into roads, highways project and 1 in renewables, and it has 7 joint venture companies, again, mainly into coal connectivity projects and roads and highways. Without taking much time, I would now like to open the floor for Q&A session. Thank you.

[Operator Instructions] The first question is from the line of Sujit Jain from Bajaj Allianz Life Insurance.

Compliments on a good set of numbers. I wanted to know what is our scope in terms of project winning et cetera and opportunity in the India, Middle East, Europe corridor. And is it taking shape? It has been spoken about in GCC and even including in the recent budget. But is there a traction in terms of laying it out.

Yes. Thank you, Sujit, for the compliments on the results. As far as this corridor is concerned, we are also aware as much as you are based on the announcements that were made in GCC and recently, some activity is happening at a government level or at a ministry level. But not something at which we would be aware at this stage. So we will not be able to comment on it any further till we get more details on it.

But just to understand, in this, which Indian entity would be at the forefront, would it be RVNL, or would it be Ircon, or would it be some other railway entity?

Nothing has been so far discussed in those lines. I think it's still at a preliminary stage. I don't think those discussions have right now been done or deliberated.

And ma'am, just to understand the difference between us and RVNL, is it safe to understand that we engage in material sourcing and management of overall contracts as well, and so therefore, our staff is much higher than, let's say, an RVNL.

Yes. So our model is that we actually work like an EPC company. Therefore, we will do certain work in-house. We will have material procurement, design and many other works that we like to do ourselves. And that is the reason we have that kind of staff, strength of manpower available with us.

Sure. And do we also eventually intend into getting into consulting business, which is more like a DPR viability, et cetera, which is mainly done by RITES.

Okay. So there are 2 things. One, we offer a concept to commissioning to all our clients. Two, we have a subsidiary called IISL, which does PMC as well as some of the initial consultancy work. But typically, where the consultancy work is alone, stand-alone, either we will have our IISL, the subsidiary, to do to some extent, but we may not like to do that directly in our company. If it's pure consultancy because then our consultant versus and EPC, there could be a conflict of interest going forward. So that is where we tend to prefer going into EPC role because that's where our strength is but if it is a part of the overall opportunity, then we are definitely also doing that.

Yes. And just to understand more about the 11 subsidiaries that you spoke about, are there any asset ownership businesses residing in those subsidiaries? And what is our position there in terms of capital allocation? Will we undertake? Will we not?

All our subsidiaries, other than IISL, which is a project management consultancy company essentially rest all are asset owned companies, they all have assets. But these are long-term PPP assets that you have.

And in the field of railways or it is in the field of other infrastructure?

Yes. So our joint ventures are in railway connectivity projects. Our subsidiaries are mainly into roads and highways. There is one which is in renewable and the rest are roads and highways.

Sure. And in terms of more capital allocation to asset owned projects, what is our thought process?

Yes. So we'll continue to do that as well. And if you see that we started with some 2 or 3 projects then moved on to 5, then we took another 5. Currently, we have something like total of about 9 road and highway projects, another 4 to 5 coal connectivity projects. And we continue doing that. As a part of our business, we will be doing both PPP as well as EPC.

Okay. And ma'am, one last question based on the -- so as I understand, international is 9%, 10%, not large. Right now, the IMEC corridor that is at a very conceptual stage. So the main growth driver would be railway CapEx, and you have a small portion in infrastructure. So how do we view this company in terms of on a medium term, let's say, 3- to 4-year horizon from today, and then what kind of growth one can expect? Would this be a 13% to 15% kind of a growth company? Would it be lesser? How do you view this?

Yes. So I think we mentioned it earlier also that in the next 4 to 5 years, we see our -- doubling our turnover.

Okay. And that is mainly riding on the CapEx in -- budgeted CapEx in the railway sector.

So it would be a mix of railway, roads and highways and some related infrastructure activities that we may foray into. But yes, it would be driven mainly by railways, roads and highways.

Because when you say doubling in 4 years, it's 18% CAGR.

Yes.

So I'm sure you would have worked it backwards?

So 4 to 5 years, if I may use that word. I mean, we can be that...

Yes. 5 Years then that would be about 14%, 15%.

Yes, yes, yes. That is what we would like to target, yes.

And one last question is 45% nominated and remaining competitive bidding, if you can give us a flavor which contracts with some examples where those were nominated contracts and which contracts were competitively bidded? Just to understand that in terms of future pipeline, what would be coming directly to us on nomination basis and what would be bidded out.

Going forward, nothing will come to us a nomination that practice has been stopped, okay? So whatever existing nomination business we have, it should get completed in the next 2 to 3 years, one of them being, let's say, Sivok project USBRL, we are in the process of completing, so it should get completed in this year. And similarly, we will have some other railway projects, which were on a nomination basis. Actually we have one nomination project internationally, which is the Myanmar project, which has been given to us by MEA. But that is again an exception which has come to us. But typically, the way ahead as a rule would be a competitive business. Any new orders would be on competitive basis.

The next question is from the line of Rohit Natarajan from Antique.

Congratulations on a good set of numbers. Ma'am, my first question has more to do with what is Ircon doing as compared to competitors? For instance, I was on another call with RVNL. They were saying, they are looking at orders. In fact, they have bid for a $10 billion Trans-Kalahari project in South Africa, $4 billion in Kyrgyzstan. Even a company like RITES, they're in discussion with a country like Chile to export Vande Bharat. Whereas Ircon by design, was supposed to be an international railway execution agency as well. We have had a rich history of doing projects in the past in international countries like Sri Lanka. We were talking about Malaysia, Singapore, 1MDB, that particular high-speed rail contract. Somewhere this international picture is nowhere to be seen in the discussion stage. Where exactly is that disconnect?

So while I may not like to comment on what RVNL, RITES are doing. But from Ircon perspective, yes, you are right. we were internationally very strong till about a couple of years back, so much so that we had most of our turnover coming from international projects. And we continue to enjoy that credibility or that respect that we have in those countries. In the past, jobs that we got internationally were of 2 types. One, which were mainly funded through some kind of government grant for MEA funding. Two, the products which we negotiated on a one-to-one basis and managed to get good returns thereon. There have been changing scenarios all over the world. It is not that Ircon is not making efforts. We are making efforts. Right now, we are doing it in our neighboring countries as well as in Middle East. But having said that, the window, which is right now currently drying up is where Government of India or MEA used to fund projects, that kind of projects are not coming as of now. They may be coming in the future, and we are very much in touch with MEA. As far as one-to-one projects are concerned, typically, most of these countries when they talk of such large size projects are also looking for project financing. It is not that they're sitting with this kind of finance, and they just want you to come and execute. The project financing by itself is a difficult task if Government of India is not a part of it. And therefore, when we are looking at international projects, we are essentially trying to look at the projects where either they have already tied up the financing from somewhere, and we are doing the EPC, or where we are confident we'll be able to manage some kind of a structuring in which those kind of financing would be possible. Having said that, yes, we still need to work a lot on our international business. Our business development and marketing teams are looking into it, so is our CMD, but what is very important is to really understand that which are the projects which are tangible and which are actually on paper, and which are the projects where we are looking at some kind of an MOU and not knowing when they're actually going to come ahead. So I think I'll leave at that point. And we will -- I think it would be best if we speak with our results as and when they happen.

Sure. Just my second question has more to do with the domestic opportunities. There was a time when all this network debottlenecking, electrification, doubling all those orders came to your nomination? But if you look at the National Rail Plan as such, the scope of conventional works is very limited, going ahead the CapEx is largely confined to high-speed rail, rolling stocks and dedicated freight corridor, where technically speaking, Ircon hasn't proved its credential, probably a dedicated freight work could be an exception.

Both high-speed and dedicated freight corridor, Ircon has the advantage. It's the only CPSC, which has that credential.

But ma'am, we haven't seen within -- I mean, yes, there is one particular tender that you may be doing in Gujarat part. But when you look at the overall scheme of things, you will have to fight with the remaining players as such, private players, you'll have to -- the market share has dramatically reduced over there even within the overall scope of things.

So okay, yes, there are two things. As you rightly pointed out, when we talk about National Rail Plan or any of the railway CapEx, it is split between what I may call as rolling stock and the areas which Ircon may not be into and the areas where Ircon is into, which would include doubling, tripling whatever of the lines, having new lines, modernization, S&T works, electrical work and then having semi high-speed, high-speed kind of networks as well as dedicated freight corridors. So on the latter part, I would say, as of now, whatever has been there, the budget is easy between 30% to 50% of the total. It's not a low number. So I mean, it is not that the cost the rolling stock has come, these numbers are low. In fact, these are quite significant. As far as competition is concerned, yes, there is a competition amongst serious players, good players, and that is what Government of India wants, and we are happy to participate in the competition and get the jobs. The advantage with Ircon has been that, one, we have the credentials. Two, we do a lot of work in-house, and we have that kind of requisite experience on the quality. So per se, the market share is depleting as of now for Ircon in certain areas. But that's a very temporary phenomenon because a lot of players are coming and small ticket size jobs wherein some of them have been quoting numbers which are not even covering the costs if one was to look at those project estimates. But we are fairly confident of our skills as well as the fact that we should be able to get some of these complex and reasonably sized jobs.

Got it. And then finally, when you come to the order inflow part, the -- last time you said you have placed bids for INR 50,000 crore projects as such, and you were confident to win some INR 5,000 crore kind of number. But when you look at the execution, we require...

I don't think I've ever said that we have bid for INR 50,000 crores.

I didn't get you, hello ma'am?

Yes. Anyway, please carry on with the question.

Yes, ma'am. My point here is the order inflow for this year, this fiscal, that is FY '24. What is the realistic number one should be looking at? And second part of the question is, are we really going into the road projects with BOT toll model? Is that in our cards?

So there are two things, again. One I did give a message in the last con call as well as that we have been going low on our order secured or input. And that is something which has further come down from the estimate that we had thought in Q2 till date. I think we've had order size that we've secured in this year of currently about in the range of INR 500 crores. And since we're already sitting in mid-February and some of the big ticket jobs, which we were anticipating should come this year are not likely to come because of various reasons. There could be political scenario, there could be delay in decision making at some of the client end. So I don't see this number going very high in this financial year. But some of our efforts for this year should give us good results in next year in terms of orders. In terms of the BOT projects -- see, we will continue to focus on road and highway projects. We will also be doing EPC as well as PPP projects. BOT specifically is something that we will be examining on a case-to-case basis. We have taken up 2 or 3 BOT projects in the past. So based on how we see them, we may be looking at them, whether on a stand-alone or on a JV basis.

The next question is from the line of CA Akash Dhanuka, an individual investor.

Ma'am, in the last conference call, you had updated your guidance with respect to the revenue part to 15% over the last year, which means that we'll have to achieve around INR 11,900 crores. And that should mean that in Q4, we'll have to achieve over INR 3,300 crores. So are we on track to achieve that? Will we achieve that number?

Yes. It could be a 200, 300 here or there, but we are there pretty much.

So I mean INR 11,600 crores we'll touch for sure?

Yes, INR 11,500 crores is something that we should be touching, yes.

Okay. The other income part, ma'am. You also said that we'll be touching INR 550 crores. And until now, we have INR 388 crores, which means in the Q4, we'll be touching -- we'll be needing INR 162 crores. And in this quarter, we had only INR 127 crores. So will we achieve that INR 550 crore number?

So in the other income part, what is happening is, at a consolidated level, as we mentioned, we have started getting income from our interest element in annuity of HAM projects which if you see, it has been a significant contributor in these 9 months also. So if we are at about INR 500 crores, INR 550 crores level, yes, we should be in the level of about INR 800 crores in March.

Sorry, INR 800 crores?

INR 500 crores.

We're already in the number of...

INR 388 crores.

INR 388 crores. So we should be in the range of INR 500 crores.

INR 500 crores, INR 520 crores.

Okay, okay. And now with respect to the guidance for FY '25, ma'am, and will we be touching INR 11,500 crores this year. If you can help us with the guidance for the next year, FY '25?

Sorry, FY '25?

Yes, ma'am.

Yes. So next year, I think we should be -- see, given the current order book that I have, I would say we would be at similar levels. I will be revising my judgment as and when I get more orders inflow, if any.

Okay. With respect to the EBITDA part, ma'am, just give me a patient hearing on this, ma'am. In public interest, when there is a lot of confusion because of that HAM annuity part. And why I'm saying this so is because a section of media for the past few quarters is quoting a figure of 7.4%, whereas we have in our presentation quoted 12.6% and that is because of two different and which is because we are taking, the media issue and the revenue from EBITDA from operational part only, whereas we are taking into account the other income and also the profit from the joint venture part. So this creates an anomaly, ma'am, and it at the end, affects the share prices of the investors interest. So my request is if you can give the PAT percentage instead of EBITDA percentage, so that it brings the clarity, ma'am. I hope I have conveyed it correctly.

Yes. We've got your point. I think we would be conveying PAT percentage as well. If we are not, we shall do that, okay. So we'll do PAT percentage as well.

So if you can help me with that, ma'am, for this year and the next year, and then FY '24.

As far as in my con calls, I've always been stating that the PAT percentage will be in the range of 7% to 7.5%.

Okay. And for the next year, ma'am, it remains the same?

PAT percentage. I've been saying that we'll be maintaining at that level.

The next question is from the line of Shreyans Mehta from Equirus.

Ma'am, just wanted to understand, since we have a lot of JVs into rail connectivity. And I believe we were probably expecting them to be up and operational by '24, end the '25. So is that on cards, and how much of that income will we see in the JV share of profit coming through?

So in the coal connectivity project, 2 of my JVs part 1, I mean, if I would call phasing of those projects are already commercial. So in Chhattisgarh, I have Phase 1, which is already operational. And MCRL, though, of course, we have now mentioned that it may be taken over by railways. Again, the Phase 1 was operational or I can say it's still operational. Now in the Chhattisgarh project, where the Phase 1 is operational, there have been certain losses because the CapEx has been a little lesser than the overall expenses. Again, which -- this has been the first quarter where we've had some good marginal profits, but otherwise, ever since operations, there were certain losses. The rest of the projects, which are right now under construction, they should be getting completed by, some partly by the end of this year and some by the end of next year. So the actual benefit of coal connectivity projects should come 2 years from now.

Got it. Okay. And then...

Yes. And it will take some time for them to stabilize because once you have these coal connectivity projects, the coal companies have to have that kind of -- the fact that some of the capital is already going by truck, and they also need to have certain accessories and certain yards and linings and all in place. So there could be some mismatches. That's why I'm saying it should take 2 years for it all to stabilize.

Got it. Ma'am, in terms of the order inflows, as you mentioned that probably there were certain projects, which we were targeting and are yet to be ordered. So in terms of the projects which have been already been awarded. So is it fair to assume that it is primarily because of competition or something else which we need to introspect into?

So a couple of factors again. The first thing is, the big ticket complex orders that we were looking at, some of them are delayed and that is where our forte lies. Some of the projects where we bid, again, there were two categories, one where we were quite close to being L1, but did not get it. Some were where you had something like 20 to 30 parties quoting. And again, it's gone at a very indecently low price. So that is what I'm talking about the domestic segment per se. And internationally, again, certain projects that we're trying to get that is something which we are trying to -- I mean it takes time because, as I told you, this is not coming through in an MEA or a government grant too. So it's taking us some time to get those moving even on the international front. Certain projects that we updated, the results are still awaited. Now given the kind of scenario right now in India in terms of political, the elections coming up, et cetera. There could be further delays in certain tenders or bids that we were targeting or total results, which we were targeting that they will come in this year. So it's a mix of everything. It's not just competition, but yes, it's a mix of everything.

Got it. Sure. And then in terms of clarification, I mean, when you mentioned that probably we expect to grow, say at some 15%, 20% CAGR for next -- and we need to double our revenue. So if I just do a rough ballpark calculation, probably we need order inflow to the tune of say around INR 15,000 crores, INR 20,000-odd crores on a yearly run rate basis. So how confident are we in achieving that?

So there's been a year when we moved from INR 26,000 crores to INR 41,000 crores in terms of order book. So the confidence is there, but it is such a dynamic market where we are working in. And as I also mentioned earlier, that there are a lot of these fly-by-the-night players, which at times trouble us or, in fact, some of the serious players. So given all these factors, the confidence is there, the growth overall in Infrastructure segment shall be there, both internationally as well as domestic. But on the other hand, we want to be doing projects which are serious projects and where, ultimately, we are making profit. We do want to increase our top line or the order book by knowing at stage zero itself that it will be into a loss. So given all these factors, as I mentioned, that is what, we target. So there could be some ups and downs. But overall from a 5-year scenario should be doable.

Got it. And ma'am, in terms of investments, what have we done till date, if you could break up in road SPVs and the other segments. And at the same time, our cash on the books, our own cash?

Our own cash on the book is about INR 700 crores to INR 750 crores. And in terms of the amount that we've already put in JVs and subsidiaries is about INR 2,300 crores. We have another INR 1,000 crores that we have to invest. And I think in this year, we have done about INR 200 crores -- INR 150 crores to INR 200 crores.

So this INR 2,300 crores also include the roads, right?

Yes, yes. This is roads and rail connectivity and renewable projects that we have.

Right. So just to clarify INR 2,300-odd crores is what we've invested and INR 1,000-odd is what we need to do over the next 2 to 3 years?

Next 2 years, yes. In fact it is lesser than 2 years, yes.

Okay. And then last question from my side. In terms of the solar power project, which we are doing, what's the status of the health, the construction started and when will it be operational?

So I will ask my CFO to address this question since he's directly looking into this.

Currently, we have acquired or done the lease date for about 70 percentage of the total land requirement. We have already started constructing 4 blocks and our other assets like pooling substation and transmission lines are under construction. We were targeting to partially commission the project by 31st of March, but there are some impediments which are there, which needs to be sorted before it. And in any case, we are planning to complete the project by September, October of '24. So that is the current status.

Got it. And in terms of raw material, is the entire thing procured, or we are yet to procure it?

Yes. So we have placed the orders for all the transmission equipment, transformers and all the modules also, entire order is placed, and we have already received modules for about 50 megawatts also at the site. And over the current month and the next month, we do hope to install partially some of these modules also. And our target is to kind of partially commission the project. But we -- there are certain issues, which are involving other agencies of government of Karnataka. We are trying to get those permissions so that we can partially commission. So that is the current status.

And just to follow up on the thing. So sir, just trying to understand there's no raw material risk because largely this project generally fail because of raw material. And second, these are back-to-back sign contracts, right, as in the PPAs are backed by the state governments. We -- 100% procurement will be there, right?

So raw material, I assume that you are referring to modules.

Right, right. Majorly modules, yes.

Yes, yes. So we have already placed the orders. The supplies have already started. So we don't see -- foresee any disruption on that account. As far as the power evacuation and PPAs, we have already signed the PPA with Indian Railways. So they will buy whatever power is being generated. So that has already been tied up.

The next question is from the line of Abhishek Maheshwari from SkyRidge Wealth Management.

My first question is regarding the budget that was announced INR 2.55 lakh crores for this year. Can you give the dissection of this amount, how much of it is going to infrastructure work that we do and/or the bulk of it is being used for conversion of old trains to Vande Bharat. So how much of it will be helpful for us, the kind of work we do.

The budget split is still not known of INR 2.55 lakh crores. But mainly, they mentioned two things. One, of course, for the Vande Bharat coaches and the trains. And the second thing they mentioned was more connectivity projects to port and many other infrastructure. So the second part, since it's been mentioned, especially as a part of the budget, I think it should have a significant share. And that is where we are already there. We are already doing some of the coal connectivity projects also. So once we also get to know, we'll be looking at all those aspects.

Ma'am, second question, so whenever, just for understanding sake, whenever a budget is announced, do you have some clarity on hand before the announcement that, okay, these projects are in pipeline, these are going to happen in the coming year, or is it completely secretive process?

So we work like any other company does. So it is not that because we are a government company. We get to know anything before or just immediately after the budget. All of us will know it in the due course as and when Ministry of Railways works it out.

Okay. Ma'am, lastly, now you're working on one high-speed rail project for Ahmedabad-Mumbai. So are there any more such projects in discussion or even in discussion? Or is it, first, you will finish this project and then government will see if it is feasible to proceed with others?

Okay. So parallelly, the discussions have started on some more high-speed projects. I think at a DPR stage, two projects are already being discussed. Overall, the government wants more of these projects, both semi-high speed as well as high-speed. And in semi high-speed, like we have recently also done NCRTC electrification work. This is the Delhi-Meerut corridor. So I think a mix of semi high-speed and high-speed from a long-term perspective is what government would want our country to have. So it is here to stay and grow in a big way. The details will be known to us as and when they are announced. But yes, it is a promising area going forward.

Good to hear that, ma'am. One last thing. When you -- if such projects are discussed, generally, it's the conversion of existing lines into high-speed lines, or you have to completely look for a new line and new...

No, no, no. This is a completely new project, and it is based on Japanese technology.

No, no. I mean, when you want to lay down the railway lines for such high-speed rails, are the existing lines, old lines converted to new lines or you have to look...

Oh, no, no. That's what I'm saying, it's a completely new -- it's a greenfield setup of line.

So land acquisition must be a big challenge here.

Yes. So that's why you have a company National High Speed Rail Corporation Limited, which is doing these projects on a dedicated basis. So we are doing the part of the EPC work, but there is a company -- there is a setup within Government of India, which does all this. It's something similar to when you have metro setups.

Next question is from the line of Vishal Periwal from IDBI Capital.

Yes, ma'am. In awards, ma'am, can you clarify like in railway sectors, is there any data available that what was the total award for the sector as a whole in this year, last year, anything that you can provide, the color?

So, I think you're talking about Ministry of Railways awarding?

Yes. Yes, ma'am.

No, I will not have that data with me because that data is -- I mean every zonal railway will have their own set of data, then there will be certain centralized projects also different departments, civil, mechanical electrical will have their own set of -- at company level, I may not have that data.

Okay. No, but the CapEx number, which generally is shared in the public and everywhere. So that is combined of all the zonal railways and everything, right?

Yes.

Okay. And second, you mentioned there were like 30 parties in one of the order that was bidded. So can you give some color like where exactly this competition is? Is it in the station development side or a traditional railway work of laying lines, if you can just give some color?

Okay. So it's this particular one that you're talking about, it is a railway project. It's not any station development, I think. Let me just look into this one. Can we move ahead till I get back to you because this is a very specific question. We can take it off the conference call also because this is something I need to check out the data, yes.

Right, right. And ma'am, in terms of -- to get more orders for us, so is there any sector that we are building up a team for us -- for ourselves and then like we can get orders anything that you can provide a color?

So yes, internally -- see, as much as you all are anxious about it. As company management, we would be even more anxious about it, and would be making all efforts towards this side because we understand that is something which is important for us. So while we are doing well on many of the stratas or the pillars that company has. This is an area where we have fallen short in this year, and we need to gear up. So a lot of internal deliberations, activities, some deliberations on how we are doing it and how should we be going ahead and what should be the identified team all that is happening. So -- but I mean, again, that's something which -- I mean I would rather have the results speak for it rather than we get into that deliberation. As regards to your previous question, this was a construction of road bridge, major and minor bridges, ROBs, RUBs, et cetera, et cetera, in the state of Maharashtra for Central Railways. So those kind of projects you are getting bigger in the range of about 15 to about 28, 30-odd percent.

Right. So is it like the norms are being relaxed or any changes which has happened or it's...

So as we mentioned, these are typically projects which have been taken by zonal railways. The project size is of a smaller scale, and it also has a lot of routine work for normal bridges, the normal ROBs, et cetera. So the credentials and the EQC requirements are also not as stringent as they should be. And typically, the size could be anywhere between INR 300 crores to about INR 600 crores, INR 700 crores. So more people do get to participate, including some of the local parties.

Okay. And then in terms of awards only, sorry, I think I'm asking a repetitive kind of question. So can you give some color of what could be the total bidded project that we have right now, what it could be like maybe 6 months before how it was and any bid pipeline, is it becoming more promising to you or still it's confusing?

What I can tell you is that as of now, there are INR 5,000 crores worth of projects for which we have bid but the results are awaited. And we are bidding for another INR 3,000 crores. So about -- and in the past, we've already bid for about INR 15,000 crores to INR 18,000 crores in the cumulative 9-month period.

Right. So incrementally, this 9-month period that awards in terms of actual results are out, incrementally, what we have is INR 3,000 crores plus INR 5,000 crores that you mentioned.

So INR 3,000 crores will be bidding and INR 15,000 crores, the results are awaited.

Awaited, okay. Sorry. Yes. Sure. And last thing from my side, if it is covered, pardon me, in terms of revenue, we did mention like INR 11,500 crores that we are targeting for FY '24, is it?

Yes.

Right. So that is on a stand-alone EPC work, typically that the number that is being shared.

No, no, no. We talk everything on a consol basis.

Okay. Okay. But then if -- I mean like fourth quarter number, if you just imply then, is it like you're seeing things to be a little kind of subdued or because the implied number looks to be a little...

Yes. So what has happened is -- I mean, the reason I'm giving this is again because I'm fairly confident that this is something I'll do, but if there is an upside, I will also be as happy as you are because we're sitting in mid of Feb, and I've had some of my projects which have been affected geopolitically, like Myanmar project, there have been some political disturbances and uncertainties because of my work has temporarily been stopped almost. And similarly, in Sivok, we were all aware that there were certain issues in the month of October, November, after which a lot of our resources were pulled in and given to NHAI to get the roads, et cetera, back, our own workforce told to be stopped because the national priority was to get the road back in place. And even those roads right now are working on a very temporary basis, only for the army, trucks, et cetera. So even our own staff cannot go up and down from those roads. So these are things because we are working in some tougher terrains. So these projects, especially Sivok is an important project for me in this year for my revenue. So this may -- it did take a toll in my October to December quarter, and I see that happening till March because we're already in Feb. And these activities are not picking up in this year.

Okay. But if I look at your quarter 3 numbers, I think double-digit growth that we have shown. So maybe there are certain projects which are compensating for that. So can we expect the same continuing in quarter 4 also, or...

Yes. That is the reason I'm saying the overall number would be in the range of about INR 11,500 plus. But yes, that is the reason -- that is how it's been doing, and hopefully, it will continue, but we should be there.

The next question is from the line of [ Ayush Agarwal ], an individual investor.

Can you hear me?

Yes, please.

Right. So I was looking at the numbers reported this year, this quarter. And when we look at the consolidated versus stand-alone for December 2023, I noticed that the stand-alone number for December 2023 has dropped compared to December 2022 while our consolidated number has increased. Can you share some more information on, how it has changed?

I just mentioned that on a stand-alone basis, some of my projects were at a drop, like I just gave an example of Sivok and Myanmar, both domestic as well as international. So on stand-alone, all those have taken a toll on my results, if you were to see it vis-a-vis the previous quarter. But on a consolidated basis, I have 2 of my HAM projects, which are fully operational and I've started getting annuity incomes from them. Also, there have been some dividend inflows because of my joint ventures and subsidiaries. So given all this, consolidated, I'm making it up, but on a stand-alone, I've taken that hit.

Right. And when we talk about these auctions that you are being outbid by other players and you've mentioned a couple of times that these other players are getting ridiculous numbers which don't even cover the cost of the bid, like the project, can you give us some more information on why it couldn't be a case of less operational efficiency on your part?

Sorry?

I'm saying that if other companies are outbidding you in an auction, and you're saying that the offers that they are making, the numbers are very bad. Like it's not possible to even cover the cost of the project. Then could you give us reason why -- or rather like some information on why this could be down to a more efficient operations from your compensation?

No. So all the serious players, the ones who have been in the industry and who are of our kind of size and credibility. They are also not getting those jobs. I also mentioned that these are players who you would not have heard of and are now taking the bids.

So please correct me if I'm wrong on this, but I have read that many times, the government put some certain criteria on who can be qualified bidders for these projects. So on that basis, I would assume that these players whom no one has even heard of, they wouldn't actually qualify for such bid.

Again, as I mentioned, there are a couple of reasons. So in certain projects, where the project size is low or the EQC criteria is such that some of these are very relaxed criteria where you have such kind of players who are coming and quoting ridiculously low and probably they would not be the players you would have heard of earlier as your serious long-time competitors. So that is one part, which I mentioned. And I said that is where if they're a 15, 16 player, we would not even be L1, L2, L3. So that there is that class of orders which are happening right now, in which we don't see ourselves standing a chance because of the kind of players who are coming probably, either they don't understand the business or they are trying to enter into the market by quoting low. So that's something which I'll not be able to comment upon. But long-term serious players are not the one who are winning this bid. But on the other hand, there is a category of projects where the competition is good. The EQC is well laid out, where we may not have won the jobs, but we may have been an L2 or L3. So that's another class of history that we've had recently. And third, are certain projects where the tenders were expected to come out. Those are fairly complex or large-sized projects, but either they have not come out, or if they came out, then they have been rescheduled or retendered, and that is where we see ourselves picking up a decent good fight. So it's all the 3 categories, but the category that you've been asking the question on, the fact is that yes, see, there are many players, especially local players. And if the zonal railways was taking it out, you will have some many, many players in that city or in that zone to do civil work. And you may see them doing the civil construction work and similar activities for railways as well when such tenders come out so they bid, the idea is to see if they'll be able to perform at that price.

Right. So when you say that because of these projects getting delayed because of elections and environmental reasons and stuff, does that mean there will be a spurt in a particular year? Or does that mean it will be a long-term increase year-over-year for these new projects, which were delayed?

So what I'm trying to say is that as of now, going forward for the next few months, we expect there to be a lull. And whatever projects we are already looking at we should be looking them coming after few months. And then from there on onwards, it should become a regular feature. So this should be a short to midterm issue right now?

Okay. My last question is regarding your EPC and modernization projects like the Japanese rail project that you're working on. I wanted to know as a business, how much of R&D is a part of your business strategy? Or do you generally rely on other parties to create technology and then you implement it in your projects?

So the high-speed project has been taken by Government of India based on JICA loan on Japanese technology only. So there is no R&D or technology improvement that India is doing from their side. It's a well-established technology in Japan and which is being imported into India. And that is how the high-speed is being set up. So we are doing it on a project technology as well as guidance from Japanese companies and whosoever are associated in Japan for this project.

Right. What I actually meant was, how does this affect your -- the technologies that you can offer in your bids for other projects even in the conventional...

Technology, in our kind of job, it is owner-driven. What we do is an EPC. EPC may R&D and technology is [Foreign Language] significant part. Wherever it is done, it is taken with the help of this thing. But per se, it is not a critical factor for our kind of business.

The Next question is from the line of CA Akash Dhanuka, an individual investor.

With respect to the PAT, again ma'am, we were 8.12% in this current quarter and 8% in the previous quarter. So are we a little conservative on guiding on 7%, 7.5%?

No, we are not. It really depends on the kind of where we are in the project cycle because when I'm talking of a PAT number, we have a 7.61% for the 9 months, and we had 7.49% for the previous year 9 months. And we had, for FY '23, 7.12%. So I am talking the same range. I don't know where you're putting 8.

Okay. So that...

That's on a quarter-to-quarter. So quarter-to-quarter really kind of project that we have. It could really vary.

So, just correct me if I'm wrong on the conclusion part that we'll it touch INR 11,500 crores on the operational revenue, INR 500 crores on the other income part, which brings us to INR 12,000 crores and on that, we'll be earning 7.5%, right, which amounts to a PAT of INR 900 crores.

7% to 7.5%. And it could be -- the overall revenue could be in the range of INR 11,000 crore to INR 11,900 crore.

Correct. So I mean, as of now, we have achieved a PAT of INR 682 crores, so can we assume another, let's say, about INR 275 crores...

Mathematic, I'm sure you can do, please. I'm confirming again and again the same piece.

The next question is from the line of Niket Jadhav from Purnartha Investment Advisors.

So if I'm not wrong out of the 8 road projects that we have, 2 are completed. So could you provide a breakdown of how much income goes from the HAM model goes to operating and how much goes to other income?

So out of the 4 projects that are operational right now, there are 2 HAM projects. So out of the 2 HAM projects that I have, my interest income that I earned from them, is roughly INR 130-odd crores?

Yes, INR 140 crores.

INR 140 crores.

The next question is from the line of Rupali, an Individual Investor.

Hello. Am I audible?

Yes, please.

Can you please give us a flavor of contribution of roadways -- sorry, roads, highways and railway projects in your total order book for FY '25?

I guess 15%.

Yes. So I think roads and highways are about 15% to 20%.

15%.

Yes. So about INR 6,000 crores is highway out of INR 30,000 crores. And about INR 2,000 crores is others than balance about INR 21,000 is railways.

Order book.

Of the order book.

Yes. Okay. One more thing. Does this order book include the overseas projects as well?

Yes, domestic as well as international.

Okay. International means which countries you are...

So we have Myanmar project. We are doing some works in Sri Lanka, Nepal, Bangladesh, though some of them are under -- I mean, they're at the fag-end of almost getting close and in Algeria.

The next question is from the line of Shreyans Mehta from Equirus.

Ma'am, my question pertains to our stand-alone core EBITDA margins, excluding of other income, so it seems to have been settling at say, closer to 6%, 6.5-odd percent since last 3, 4 quarters. So assuming that we are expecting a 15% growth year-over-year. So can we expect that margins have stabilized here and once we scale up, then economies of scale can play out and these margins can actually go upwards of, say, 7%, 7.5%?

No, no. It's not about economies of scale. It is about the competition and the fact that the jobs are going at very, very thin and competitive margins. So the very fact that we'll be able to protect them by itself and also continue to get good size of order book is the balancing that we'll be doing. And we hope to continue doing that from a small to midterm perspective. It is not expected to go up, the margins, if at all just a few percentage decline, yes, few basis points.

Yes. So at least, it is stabilize here, I'd say, 6%, 6.5%, the core EBITDA margins, or there is a scope of further going down?

So given that order book that we have right now and the margins there in, we hope to be there. But having said that, now we have to start securing more orders and the market is getting intense day by day. So from a next 1- to 2-year perspective, it should be there. But going forward, I mean, I'll only be able to tell as and when we pick up those orders.

The next question is from the line of Niket Jadhav from Purnartha Investment Advisors.

So I had a question about our profit from associates and joint ventures. So if we compare the 9 months of FY '23 to the current 9 months of FY '24, there's a jump from INR 18 crores to about INR 60 crores. So could you tell me what is driving this increase in the profit?

Yes. So there are two things. One, as I told you that my 2 HAM projects are now fully operational. And therefore, they're giving me a significant contribution to my PBT. Second, in one of my coal projects, CERL Phase 1. I had losses till about last quarter and the losses were significant. While this quarter, it has given me a profit. So these are the 2 main reasons for this increase.

[Operator Instructions] Ladies and gentlemen, we have no further questions. I would now like to hand the conference over to the management for their closing comments. Over to you, ma'am.

Thank you. Thank you so much for moderating the call. Mr. Dorvin. I would also like to thank all our shareholders, business partners, analysts and investor friends and the overall stakeholder community, who have shown continuous faith on us and supported us throughout the journey. We assure you that we will continue to strive towards greater heights and are doing all our efforts as management, to carry on with this growth journey of ours. We would be happy to connect with you on a one-to-one basis for any other further queries that you would have and take it forward. I conclude today's con call, and thank you once again for your participation. Thank you, everyone, and good evening.

Thank you. Thank you all for being a part of the conference call. If you need any further information or clarification, please e-mail at [email protected]. That is [email protected]. Thank you, everyone, for joining this call. You may now disconnect your lines.