J. Kumar Infraprojects Limited (JKIL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the J. Kumar Infraprojects Limited Q4 FY '20 Earnings Conference Call hosted by Anand Rathi Share & Stock Brokers Limited. [Operator Instructions] I now hand the conference over to Mr. Rachit Kamath from Anand Rathi. Thank you, and over to you, sir.

Thank you, [ Hemanth ]. Good afternoon, ladies and gentlemen, and welcome to J. Kumar Infraprojects Q4 and FY '20 Earnings Conference Call. Today, from the management, we have Mr. Kamal Gupta, Managing Director; Mr. Nalin Gupta, Managing Director; and Mr. Arvind Gupta, the Chief Financial Officer. We will start with a brief management commentaries for the quarter, that has gone, and for the year ended FY '20 and then proceed to the Q&A session. Without any further ado, I will now pass on the call to the management. Thank you, and over to you, sir.

Good afternoon, everybody. This is Nalin Gupta, Managing Director of J. Kumar Infra. A very warm welcome to our Q4 and FY '20 earnings conference call. I hope you all are staying safe and healthy through this unusual and challenging times. Along with me, I have Mr. Kamal Gupta, MD, J. Kumar; Mr. Arvind Gupta, CFO; and our Investor Relations teams. I hope everyone has had an opportunity to look at our results. The presentation and press release have been uploaded on the stock exchanges and our company's website. Before I take you all through the operational and financial performance, I would like to highlight a few points. The COVID-19 pandemic and resulting lockdown contained the spread has led to unprecedented slowdown in the economic activities across the globe. Like other sectors of the economy, the infrastructure sector has also faced various operational challenges. We lost more than 20 [ crucial ] days of operations in March 2020, owing to the lockdown. Though work has resumed at most of our site, but we are experiencing shortage of workmen due to large-scale migration of workmen. As such, there was significant revenue loss in Q4 FY '20 as well as Q1 FY '21 for the company vis-à-vis corresponding periods of previous financial years. The company continues to incur expenditure towards fixed and indirect cost through rationalized -- though rationalized to the extent possible, as a result of which, the profitability of the company has impacted in Q4 FY '20 and will have a bearing on Q1 and -- Q1 FY '21 as well. We have devised a plan aiming to accelerate our execution phase in the forthcoming months. The company has sufficient cash flow as well as unutilized working capital facilities to ramp up our execution. With the sector being one of the largest employment providers, government is focusing on pushing infrastructure development projects to kick start the economy. With our expertise and track record, we are helpful -- hopeful of being awarded more such urban infra projects across the country. At JKL, we are geared up to capitalize on opportunity of huge infrastructure development in the country. Now allow me to give you an overview on our operational performances during the quarter. As far as order book is concerned, our total order book as on March 31, 2020, stood at INR 11,644 crores, wherein metro accounts for approximately 54% and followed by flyover and bridges, which accounts to approximately 33% of our order book. Our standalone financial performance for Q4 and FY '20 is as follows: revenue from operations for Q4 FY '20 stood at INR 878 crores as compared to INR 968 crores in Q4 FY '19; revenue from operations for FY '20 grew by 7% to INR 2,971 crores as compared to INR 2,787 crores in FY '19. EBITDA for Q4 FY '20 stood at INR 92 crores as compared to INR 134 crores in Q4 FY '19. EBITDA for FY '20 was INR 429 crores as compared to INR 436 crores in FY '19. PBT for Q4 FY '20 stood at INR 40 crores as compared to INR 88 crores in Q4 FY '19. PBT for FY '20 has fallen slightly by 7%, stood at INR 233 crores as compared to INR 268 crores in FY '19. PAT for Q4 FY '20 stood at INR 31 crores as compared to INR 57 crores in Q4 FY '19. EPS, which is not annualized for Q4 FY '20 stood at INR 4.1 per equity share as compared to INR 7.57 per equity share for Q4 FY '19. PAT for FY '20 grew by 4% to INR 184 crores as compared to INR 177 crores in FY '19. EPS, again, not annualized for FY '20, stood at INR 24.26 per equity share as compared to INR 23.4 per equity share for FY '19. The Board of Directors have recommended a dividend even in these difficult times of INR 1.25, that is 25% per share, subject to approval of shareholders in the ensuing AGM. With this, now I leave the floor open for questions.

[Operator Instructions] We have the first question from the line of Mohit Kumar from IDFC Securities.

Sir, of course, I missed out in the initial part of the -- your opening remarks. But sir, if there's sort of, pardon me, if I'm repeating myself. First, sir, what is the activity level right now in Q1? And how is the panning out in the rest of the 9- month? And what are the challenges you faced? And given the price of your large order book, how do you see the next 18 to 24 months for us?

Mr. Mohit, this is Kamal Gupta here. Well, as Nalin told you, the major problem what we are facing is a workmen now, the labor force. Of course, there were some supply chain issues also, but even the supply chain issues are falling in place and the labors have also started coming. So going forward, we see like this Q1 was, of course, bad quarter and like Q2 also won't be that good. But we are fully optimistic that by Q3, things will wrap up the same way it was pre-COVID. So we are getting the labors by trains, doing their reservations, sending vehicles, whatever best possible we can do our HR team is after that. And the supply chain is also started and like in falling in place. So we foresee like by Q3, things should be normal.

And sir, what was Q1 and Q2 activity for us given the fact that there is of course -- we believe in most of our...

Q1 and Q2 there was not much in play like April was full lockdown, May, we could start something. And around 20% labor force, 20%, 25% labor force right now is in place. So we were -- we could do some work, but not major things. So like, of course, apart from essential works like the dewatering and taking care of the place is one part. But actual revenue giving was where -- very much low because the skill labors all had migrated to their place. So we could only -- right now having around 20%, 25% of the workforce.

And what about, sir, the -- are you able to work on all these sites, given the fact that we most have urban sites where you're supposed to work? Are you allowed to work?

All our sites are started, no doubt, whether it's like Bombay or Delhi or all the works are started, but at a very slow pace.

And secondly sir, on the, of course, the -- we have a huge order book. So of course we will take it -- so what is your view on this order inflow or order intake for the year? And what are the order intake for the last year, sir?

Last year, we had a order inflow of around INR 4,250 crores. And we hope to maintain an order book of around INR 13,000 crores.

Okay, sir. So yes -- year to year -- okay. So similar number like last year, right?

Yes, yes. You're right, Mr. Mohit.

Okay, sir. And sir, thirdly on sir, on the payment sir, how is the payment, of course, the -- or if your position seems to be comfortable, but are the payments we made for the bills raised in March by the metro especially?

Yes, yes, absolutely. The payments are done. The government is also like whether they have come forward to see that the payments are made without if the people are not there also, they are doing online payments. Like taking the approvals from the engineers and the consultants online and doing the payment. So payments are done. So payments like we could rather receive around INR 400 crores in this quarter.

[Operator Instructions] The next question is from the line of Rakesh Vyas from HDFC Mutual Fund.

A few questions. First, can you just highlight as to what kind of CapEx are we looking at this year in general? And secondly, also..

2021, you're talking, Mr. Vyasi (sic) [ Vyas ].

Yes.

Yes. So we are looking for around INR 50 crores for the coming year like CapEx.

And that will suffice for the execution that we are panning, right?

Yes. Yes, Mr. Vyas. Suffice for the projects what we have taken.

Mr. Vyas, the advantage of J. Kumar having that all these projects that the company has are in the same geography because of which the existing establishments are going to help in taking up the newly taken orders as well.

Sure sir. No, I appreciate. So secondly, we have been hearing that in certain other metro projects, the fixed cost compensation even during the lockdown period and this overall challenging times has been compensated to the contractors. If you can just throw some light as to what is happening in the projects that we have taken? Or are you hearing anything on that, sir?

Yes. As far as metro departments are concerned, government has been quite considerate, and they are looking on to it, but it's not a easy decision to be taken or in a such a short span of time. Though they have compensated us for the wages and some departments have -- some projects have also paid some of the salaries compensation also partly though. But the overall compensation is been discussed, and we are doing all the necessary documentations correspondence with them. And it could take a while for them to take a decision on such a thing, which has a huge financial implication also on the departments. But we have made all the correspondence and claims to them time to time as per the contract conditions.

Also to have Mr. Rakeshji here is like the government has already started giving relaxation in terms of -- they are not taking the BGs for the retention money in some of the projects. So some of the departments have already done this. So this will also help us in -- to some extent in our finance cost.

They have also started giving us refunding the bank guarantees because as per the guidelines given by MHA, Ministry of Home Affairs, a clear guideline has been issued that the performance guarantee, which is to the tune of around 10% of the contract value, which is 5% for performance and 5% for [ DLP ]. So among that, there is an circular we should be -- which is issued. So we should get back some parts of relief of the bank guarantees for the proportionate of value of the work executed by us. So that would again give us some release in terms of financials.

And sir, can you clarify, how much is the total outstanding bank guarantee? How much do you expect to that release?

We cannot give you the exact -- we can give you the number of the value of bank guarantees in place, but to talk about the refund values, we'll -- we'd say to -- calculation which has been happening. So as of now, the utilized fund base is -- non-fund base is around INR 2,788 crores. So some reasonable amount of bank guarantees for -- other than the DLP portion, as I have mentioned, is under consideration, and we should get refund of it.

Okay. Sir, just an extension of the earlier question that I asked, that -- does the contracts, especially wherein JICA or World Bank is involved as a funding agency, does it explicitly talks about compensation to be given to contractors in these kind of events, especially force majeure kind of events?

So this is even the JICA projects or like World Bank or whether it’s a central government project. So here, there's a force majeure clause, but the force majeure does not clearly define these. So there's a gray line Mr. Rakeshji. So I think this will be a common policy call taken by the government. Based on that, all the different agencies or entities will act. So we are just waiting for that. As Nalin also told you, we already submitted our claims based on that. But maybe in some or the other way, they are like this BG retention money refund was not in the contract, correct? So they are going out of the contract and helping in this sense. So maybe like they'll come out in some intermediate way, wherein some relief will be there to the contractor.

Okay. And lastly, sir, around margin, so if you can just highlight as to what kind of profitability that you lost in 4Q because of this COVID? And for FY '21, what we should look at as a reasonable margin on the work that we will probably execute?

It will be difficult to say right now, Rakeshji, because, of course, as we told you, Q1, Q2, is not looking that good. But Q3, we are very much hopeful that things will be normal and the way it was pre-COVID. So same thing will go on. The -- we could manage Q1 very well, and Q2 also, we are hopeful that we will be able to manage very well. And the fixed cost as compared to others are -- is very less to us. And like, we also have leverage in terms of unutilized capital this thing city limits also. So there should not be much problem.

Great point. And if you can just quantify as to in your estimate how much of EBITDA impact happened in 4Q because of the COVID that you did not execute as per plan?

Are you talking about Q4, Rakeshji.

Sorry.

Are you talking about our Q4.

4Q, yes, yes. In March, so second half, 20 days of impact that you see for the...

Yes, 20, 25 days.

Yes.

So that's around 3% in the operating margin, sir.

The next question is from the line of Chirag Singhal from First Water Funds.

Sir, just a question on the operating level. You mentioned that the labor force is around 20% to 25%. So shall we consider that as the current operating level across all our sites, 20% to 25%.

You can because labor are increasing. So around 15% to 20% operational things are there. Day by day, the labors are coming -- increasing Mr. Chirag. So because the labor have come now, so the effect will be up another 2 weeks out there.

Okay. So currently, it is around 15% to 20%?

Yes. Yes, sir.

So sir, for Q2, can you give any guidance that what kind of levels you are expecting it to be? Can we expect around 40% or 50% in Q2?

See, you should appreciate that usually, Q2 is the worst quarter of the year, any which ways. And every year, you find that Q4 is the -- Q2 is the weakest quarter.

Right.

Right now, with the COVID situation being there all across the country, there are -- there is a hesitance which is there among the labors to resume back to work. But as Mr. Kamal has already mentioned that, people have started coming. And by the end of July, we should see a reasonable amount of labors coming into the city. Because we are totally dependent on the migrant labors from the North areas for the specialized nature of work. So Q2 -- July is what we see people coming back. But giving the numbers in terms of Q2, exactly, it won't be possible for us, or won't be realistic too.

Okay. Okay. And sir, lastly, on the debt side. So...

See, better than Q1.

Yes. Yes. No, sir, I understand your point. So lastly, sir, on the debt side, like will we -- is there any incremental debt you will be taking amidst the COVID and lockdown and all, like for the full fiscal '21, I was asking? Will you be maintaining the same level of debt equity? Or will it be higher than the current levels?

Chirag, we plan to maintain the same level of debt and debt equity as well for coming year. So we don't intend to take any additional debt in this because of the COVID.

The next question is from the line of Shravan Kumar Shah from Dolat Capital.

Yes. Sir, if you can help me to clarify, actually, we are expecting close to INR 1,200 crores revenue in fourth quarter, but the [ shortfall ] rate is lower by INR 300-odd crores and also to clarify that you are saying that 20, 25 days got affected in March, it should be 8, 10 days. So first clarification needed on that part.

Firstly, Shravan, as you have replied already, your question was very clear that we were expecting a top-line close to INR 1,200 crores firstly, our top line anticipated figure was around INR 3,000 crores in total in FY '20. And as we have made a revenue of close to INR 2,970 crores. So firstly, there is no -- shortfall of only INR 100 crores, not INR 300 crores. And secondly, we have lost almost 1 month that is 33% of the Q4 because there was a restriction...

Sir, sorry sir, I was just -- sorry sir, I'm disturbing in between but I think last time, we have said that we were expecting a revenue of INR 3,200 crores and not the INR 3,000 crores. Yes, sir, you continue.

Okay. So INR 3,000 crores -- if I'm not wrong, it was INR 3,100 crores to INR 3,200 crores. So say -- let's say that it is a shortfall of around INR 200 crores or INR 250 crores, whatever you say. In this situation, you would appreciate that for March month physical lockdown officially was been declared from 21st of March. But the effect of COVID had started around 10 to 15 days before that. And in all the offices all across the country, you would appreciate that the attendance of people were reduced to almost 25%. So the effect was around 20, 25 days, which is around -- you can say, close to 30% of the Q4. So in that that situation, it has to have a impact in the top-line. That is the slip that we can see in the top-line.

Okay. And then when we are saying that right now, 15%, 20% of our labors are there, so in the first quarter, can we see a revenue deep up 70%, 80% versus the last year Y-o-Y? Is it what we are trying to say?

We cannot give you the exact numbers because we are not...

Broader range. Broader range. So April was lockdown, and now we are seeing now also 15%, 20% labor are there. So broadly, I'm saying a 70%, 80% kind of a drop in the first quarter of revenue for the Y-o-Y basis, is this what we are trying to...

I would say it should be surely less than 50%, but actual numbers, we'll come to know when we are having the Q1 result.

Yes, yes. I understand. But just was trying to understand, in terms of the labor versus the actual revenue, trying to -- so as you rightly said, though the labors are 15%, 20%, but the loss would not be 70%, 80%, it would be a 50%. That's what I'm trying to understand. And broadly, sir.

I'm not saying 50% my friend, but yes, it will be less -- the effect -- the top-line expected for Q1 will be lesser than 50%. May not be 15%, 20% I -- this number cannot be really -- I don't want to commit to any unrealistic number. But yes, I -- we are surely feeling the fact that it -- the effect would be less than, means at least 50% cut would be there.

Okay. Got it. Got it. And for the full year, sir, simple answer, can we see a degrowth for the full year, broader -- broad -- I'm not asking any number. Can we see a degrowth for the full year?

You are -- you have said it very light. There has to be a degrowth in the overall top-line of FY '21. How much? We really can't say. But as Mr. Kamal has already mentioned that from Q3, we should be able to resume back to pre-COVID level. So but there would be surely a drop in the top-line as compared to FY '20.

Yes. And sir, on the balance sheet front, 2, 3 things. It is -- I just wanted to understand sir, our inventories, trade receivable has declined significantly. So inventories versus December was, I think, INR 820-odd crores has declined to INR 312 crores receivable from INR 780 crores to INR 644 crores and even the payables has also -- actually, the payables has increased. From December, it was INR 300 crores, now it is INR 460 crores. So first, wanted to understand why. And at the same time, other current assets has increased significantly, so INR 847 crores. So is it the unbilled revenue, which has -- from trade receivable line item has changed to the other current assets? So -- is it so?

Right, correct. This is inventory that's classified into 2 categories -- inventories first is a raw material INR 312 crores. And then [ WI ] is soon under the other current assets near about INR 550 crores. But regarding for the Ind AS implementation of [ 0115 ], that's where the inventory is classified into 2 categories.

Okay. Okay. So -- and apart from, sir, is there any other that we should be aware in terms of this 515. Apart on that, is there anything that we should be aware about?

No. No.

Okay. And sir, what is the gross rate of stand-alone?

Gross rate is INR 674 crores.

INR 674 crores.

Yes.

Okay. And sir, lastly, Kamal sir or Nalin sir, I think we were L1 in Worli-Sewri and some of the ongoing opportunities. I understand everything must have been postponed in the Mumbai Metro line 10, 11, 12, or whatever, even the leftover package of INR 275 crores for the Line 7. So if you can update on all this.

Yes. As you told, like, we are L1 in the Worli-Sewri, plus one more work of coastal road of CIDCO. So we expect this LOIs in a couple of months or by end of Q2. So the work will resume only after monsoon.

Sir, this is a broadly around INR 1,000 crores that we are L1?

Yes, that is it, INR 1,057 crores.

Okay. Okay. And what about of a...

The next question is from Nitin Gandhi from KIFS Trade Capital.

I have -- see, you stated that there are unutilized working capital limits. So can you give breakup of fund and non fund?

So non fund base, I think we are around 20% of unutilized. And fund base also, we have 30% utilized.

Can you -- what's the limit right now?

Fund base is INR 700 crores. So 30% around is -- 20% is unutilized.

Non fund is how much?

Fund based -- non fund based is INR 3,400 crores.

Okay. And what your fixed cost at present per month you are incurring?

Fixed cost per month will be around INR 40 crores.

Any plan to manage this, reduce to some level? Or this is the best what we can achieve in the current environment.

So this was pre-COVID level, fixed cost. And now, of course, we've rationalized the cost. Going forward, and like now it is -- per month is around INR 27 crores. Yes.

Okay. And you shared this in opening comments where you are expecting certain more orders. So besides this Worli and leftover package, can you share something, some other things which you have in mind?

So what we have bided is for this Worli-Sewri and like is a coastal project of around INR 200 crores of CIDCO. And like this was the project where it is there. And we of course bidding for some more projects. That is Ahmedabad Metro and plus this Line 2BA, which is led by Simplex. It's again costing around INR 1,000 crores.

Okay. So which we must be hopeful being more or less same vicinity and its better coast advantage for that.

Hope for the best Mr. Nitin.

The next question is from the line of Parikshit Kandpal from HDFC.

Sir, my question is on this P&L hedge. So I just wanted to know, there are 3 things. There is material expenses, implied expenses, and other operating expenses. So where do you record your labor expenses in this?

In the other expenses.

Sorry, labor is coming in the other expenses, right?

Yes, Parikshit. This is in the other expenses.

And sir [Foreign Language] fixed cost was reduced. So if I'm assuming that fixed cost you are considering with the employee expenses, right? That is what you're expecting -- that is basically what you're considering as fixed cost of almost like INR 27 crores, INR 28 crores, which you're saying is now currently the run rate.

So sorry.

So you said earlier that fixed cost for a month is INR 40 crores, pre-COVID, which is now reduced to INR 27 crores, right. That pertains to the employee costs only, right?

That is?

Employee cost.

The employee cost...

Employee cost for -- lot of other costs also included in there, it’s not only employee costs. We have reduced some rents, we have reduced some vehicles, some equipment, like whatever that's possible for [Technical Difficulty] employee.

No, sir. Sir, I was combining that too, so I'm assuming material expenses will be variable. So that is depending on how much execution you do, you will get the materials corresponding to that. So your gross margins have been around 30%, so which will continue to maintain even if that work levels reduced? [Foreign Language] material consume [Foreign Language] that only you will consume for that kind of work, right? So I would assume that you have at least your gross margins, which is sales minus material cost, that should not change materially, right? That should be at around 40%. So I was just trying to arrive at that, rest is your employee costs, which is roughly around last year's number if I go by, so it is around to 30 -- sorry, INR 30 crores, close to INR 30 crores. And your other expenses, which is including a labor cost is around close to INR 60 crores per month, 60 x 12, so 360. So INR 100 crores is your total cost. I was wondering that how much can you reduce because your labor is not there. So how much of this will reduce per month the another operating expenses?

So see, this -- what you are talking is fixed plus variable both, right.

Yes. So if I'm talking about your other operating expenses and employee expenses. I'm not talking about the material expenses. So [Foreign Language] INR 100 crores [Foreign Language] run rate [Foreign Language] INR 30 crores we have reduced from INR 40 crores. So I assume that INR 40 crores was your employee cost, which has been reduced. So [Foreign Language] INR 30 crores [Foreign Language].

[Technical Difficulty] employee. It’s [Technical Difficulty] we have reduced some car and equipments, vehicles and equipments what we had that we have reduced. It was -- which was in general required is been reduced. So this is -- it's not only the employee cost Parikshit.

[Foreign Language] other expenses and employee costs put together is currently what would be the run rate per month? Is it INR 27 crores?

Sorry, you are not audible.

I'm saying your other operating expenses plus your employee expenses put together per month would -- how much would be the run rate now?

Other operating per month. It’s INR 60 crores around.

Okay sir. INR 60 crores. Now post-COVID it is around INR 60 crores.

Yes sir.

[ Foreign Language ] Do we just breakeven at the EBITDA level? So I'm just arriving from the gross margins and these 2 costs of INR 60 crores. So at least you should be through. So I'm just saying, what, at the EBITDA level, what kind of breakeven revenues you will have to do? So is it like INR 150 crores will be the right number because [Foreign Language] almost the gross margin has 40% [Foreign Language] 40% of that will be INR 60 crores, which will just be able to cover up your fixed costs. So plus variable costs post-COVID. So is it right to assume that? So because [Foreign Language] as per actuals [Foreign Language] right?

[ Foreign Language ] Parikshit, [Foreign Language] we need a revenue of INR 400.

[ Foreign Language ] per quarter [Foreign Language] EBITDA level [Foreign Language] I'm saying?

EBITDA level [ Foreign Language ] EBITDA level [Foreign Language] INR 400 crores [Foreign Language] breakeven [Foreign Language].

[Foreign Language] INR 400 crores. Okay. So second question is on the total urban order book, out of the total order book, what should be the area -- what should be the urban share in that pure urban share? And if you also can give me in how much of that would be in the containment zone? Where you cannot...

[Technical Difficulty] of the order book.

So how much of that will be total urban contract [Foreign Language] projects JNPT [Foreign Language] Dwarka Express Way will be slightly outside. So I'm just saying pure, pure urban centric projects, which are like highly impacted, like projects in Delhi or say in Mumbai. So [Foreign Language] total order book [Foreign Language]?

[Foreign Language] Dwarka Express Way also is our urban. It’s just next to the airport. So [Foreign Language] major 91% of our projects are urban.

[ Foreign Language ] because Haryana and that side, it should be little bit [Foreign Language] border [Foreign Language] like [Foreign Language] it must be bread and butter than you are facing issues in the Mumbai project, right? [Foreign Language] your availability should also be better?

So Dwarka Package 2 is already started, work is already started, and things are improving day by day, no doubt. And it's slightly better than Mumbai, but not much because the panic situation for Mumbai and Delhi is more. Bombay and Delhi [ Foreign Language ] So I think things are now getting better day by day. So labors are pouring in. So things should be much better in coming months.

Okay. Okay, sir. Sure. [ Foreign Language ] peak any sites, where -- can you give example of any large site where you see your -- the highest lever availability, sir, if you can quantify that lever availability? [Foreign Language]

There in Dwarka, we have around [ 400 ] plus labor.

So which will be like what percentage of the normal?

Pardon.

So that should be what percentage of the normal requirement, like is it 30%, 40% or like 50%, so luckily their requirement of actual number of labors there?

For the current rate, what is required?

Yes. Yes. I'm saying, sir, so that 400 means in one -- in terms of what is the percentage of labor availability there? So if you can quantify in terms of percentage so that would have help us.

It is around 40%.

The next question is from the line of Jiten Rushi from Axis Capital.

Yes. Sir, I just wanted to know that you said unbilled revenue is INR 550 crores. So what is the outstanding mobilization advance and retention money as on March?

1 second.

Give us 1 minute. Mobilization advances as on date is INR 360 crores.

INR 360 crore. Okay. And retention?

Retention money is INR 269 crores.

Okay. So this -- and this retention, which government is also planning to give for the percentage of work complete. So out of this INR 269 crores, do we expect anything coming in the next 2 to 3 months.

Yes, Mr. Jiten, see, this is -- it will vary from department to department. It's National Highway Authority is different, MMRDA is different, MMRC. So it's like they -- the center government has given a general directive. So now some people will consider this as part of the performance, some people will consider this as part of the retention. So it will be different for different organizations. So we are just hoping like when we come to know the clarity or -- of the picture in another 1 month, 1.5 month.

Sure, sir. And sir, the extension of time out, we are getting for most of the projects, right, 3 to 6 months?

Based on their specifics, from 3 to 6 months. So We are getting for most of the projects.

It will be for all projects, in fact, you can see it. Because it's a clear directive that 6 months extension has to be given for COVID case.

Right. And sir, any -- about the cost overruns like, because our raw material costs are going up, the cement prices going up, it has gone up by 30% in last 2, 3 months. Diesel costs also are fluctuating and also steel prices moving. So, sir, my question is that whether your contracts are covered by escalation? And if it is not, then how are we going to cope up with the rising cost?

Our 100% of the contracts are covered on the price escalation or the price variation, Mr. Jiten. So any rise in terms of labor cost or fuel cost or material cost has been passed on to us by this escalation block.

It's a clear pass-through system. So we won't be getting any major impact as such on -- due to it.

Okay. So just I wanted to conclude on things like you said 15% to 20% is labor force is available as on date and around 20%, 25%, execution is going on ground if I'm correct.

I said the other way. We are having around 20% to 25% of the labor right now. But in execution terms, if you say, it will be slightly lesser because since the labor today it is 25% a week before it was, say, 5% less. So it's ramping up. It is going to pick up.

So sir what was the labor strength pre-COVID, sir, total labor strength across sites?

Now 10,000 people.

10,000 people. And sir, just -- sorry...

[Operator Instructions] We take the next question from the line of Sunil Shah from Turtle Star Portfolio Managers.

Sir, I have one question. Sir, as a company, you have grown significantly in the last 10 years, and you have just got the numbers one after the other. Sir, in this COVID time, you would have got some time to do lot of introspection. Its -- go back just recent history, there were some unfortunate incidents which happened for us. And we have come out of all of those, like the SEBI, the BMC, et cetera. But we have just come out clean. Sir, I want to know what is the learning that you could get in these 2 months? Because you have been just change growth, but you could get some time to do introspection. So where you think some loss which you will implement. I'm not looking from 1 quarter, 2 quarter, but learning starts as you have tremendous time that you could get -- if you could share some [Technical Difficulty] focus on ROE or cash flow because basically, sir, at company's market has unfortunately derated us by almost 65% meaning, it's not being a [Technical Difficulty] just about [Technical Difficulty] sure will be less than that. My point is, if we have to -- we are doing things, but how do we rerate ourselves? So what are your thoughts on how as a company, you will evolve in the times to come, meaning, if you could share some of your insights that you would have spend time thinking on all of these six good letters [Technical Difficulty]

Sunil, you have raised a very good point. And we at our company also, we are just trying to see how we can bring down our fixed cost by other methods of operation that we have been doing and the compulsive limitations of working due to the COVID, where staff availability and working limits are been there. So we are trying to put in more of online systems, reducing paperworks, which means let it be stationary costs, let it be handling manpower for all that things, so more and more online operations of documentations, billings is what we have -- one thing that we have acknowledged. And the second thing is also regarding the reduction of the team as far as possible for the fixed cost. So we can have more controlled and better data-based operation method. And also in this -- by our past bad experiences, it's a learning process for all the companies. So we've also learned that giving joint ventures or limiting it to as far as possible is what we have learned. And if you know, most of the contracts that has been backed by J. Kumar, though it was not a previous mistake also, I would say, because the company was -- company is growing and was earlier into much dependent situation. But now if you see the Dwarka Expressway packages that the company has backed, Package 1, it's in the individual name of J. Kumar, Line 9 Dwarka is around INR 1,500 crores, this Metro Line 9, which is approximately INR 2,000 crores. They are all in individual names of J. Kumar. So working in our own name, which always gives the best comfort. So the company is always on to that process and improvisation is a process, which is a continuous thing. We cannot say now we are done and not. But yes, so we are trying to maintain working by our own name without subcontracting or subletting, which is our strength. So I think these are a couple of things, and also cost control is one thing that we have learned that is processed by default, it is teaching us, and we are adopting it.

Fine, sir. Great to do that. But one more point, can it be that the metro business as per se, for us as a company, is more enumerative plus you have invested in those Tunnel Boring Machines and all of it. So the operating leverage on that will be good for us, is it that Metro projects will be our big focus area going forward? As it like that you have learned that this is better than those traditional flyovers et cetera, meaning, just if you could give me some sense on that as well?

See, if you see metros and flyovers, they are almost similar segments. And flyovers, we can never forget because that's the area from where we have started, and that's again one of the need of the time. But at the same time metro being I mean in terms of order book or in terms of revenue contributes to nearly around 70% of our entire order book area. So in this metro, which is now being acknowledged by all the states and the central level as self. So metro segment is going to be going in a big pace. Earlier, we could see metros, 10 years down the line, you could see hardly in 3 to 4 cities. But now it is been going on in more than 26 cities and amount of growth rate required in the given cities itself is so huge that Bombay -- [ J. Kumar ] we are not able to even -- our entire order book right now has been, again, turned towards Maharashtra. So that itself, you can imagine what is the potential available in this sector. And metro is the need of the time and the only way to help mass rapid transport system. So we are surely going to be focused into it because it's a specialized sector and J. Kumar has a USP over it.

The next question is from the line of from Parvez Akhtar from Edelweiss.

Sir, just a couple of questions. So have you received the appointed date for the Dwarka Expressway Package 2?

So Package 2 work is already started. Package 1 appointed date we haven't received Parvez. So we have full like there are some tree cutting permissions which was required to be done. So 85% is done, so 15% trees permission is still is spending. So we are hoping it by another 1.5 months, the L1 should come in for Package 1 of Dwarka.

Okay. Sure. And for the INR 560 crores order that we had from NBCC, what is the status of that?

So that we have already declared that we have withdrawn from that INR 560 crores of NBCC project. long back. Because that order was like almost 2 years back. So -- and like we were thinking that they will clear, they will clear the land, there were some land issue, change of land issue. So that's not there. So like we are -- yes.

And lastly, sir, bookkeeping issue. What was our CapEx in FY '20? And what was our gross block at FY '20 end?

CapEx addition is INR 177 crores in FY '20. And the gross -- the CapEx as on 21st March is INR 854 crores.

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

Hello, can you hear me?

Yes Ankit, go ahead.

Sir, my question is regarding the order inflow, you see there is a project called Delhi-Meerut Rapid Rail Transit System. So which was to the tune of around INR 30,000 crores. So I just need to know why J. Kumar is not going for such a megaprojects because you see maybe after 12 to 15 months, our Metro Line 3 is going to end. So maybe there, we -- I think we are capable to go for such mega projects.

Firstly, Ankit, the RRTS that you are mentioning about the Meerut Line, which was from NCRTC, that tender, we had already purchased and we had done the working, but we didn't bid it because of some reasons, which I cannot discuss on a conference call. So it is not that we are not bidding. And as far as Metro Line 3 is concerned, it is one of our projects. We have backed several other projects. Let it be Dwarka Expressway, let it be Line 9, Line 4, and the Line 7 and we are also in the process of bidding for Ahmedabad Metro, which was due today, but we'll be bidding it after 2, 3 days now. It’s so unforced, due to some technical reason. Again, we are bidding for Metro Line 2b. So the company's strategy is very clear that we will try to back-orders in the areas where we are already existing. So we are interested in order book. Now as I mentioned, earlier we were replying to Mr. Joshi, Mr. Suni Shah, where we already mentioned that there are so much -- so huge potential available in the industry for Metro segment also that we can't reach out to all the projects. So for us, bagging orders in the areas where we are already established, which gives us lesser CapEx cost, working capital ease, and also in terms of becoming L1 being already established in certain areas like, Ahmedabad, Mumbai, we are already there. So for one project getting -- trying to wish was not so -- we had done the working, but we didn't find it feasible. So we didn't bid for it. But we had already -- we did the whole working for it.

Okay. Sir, and my another question is, like, the NHAI Dwarka Package 1, the approval process has been going on for the last one year. So is there any remote chance of the order getting canceled?

Ankit, like there's absolutely 0% chance of it getting canceled because this is part of the 4 packages, which is Dwarka Expressway is 4 packages, 2 are with J. Kumar and 2 are with the L&T. The whole line for the operational -- all the packages has to be done. Okay. So there is absolutely -- in fact, we have already started some of the work on Package 1 also, like the utility divergence and all. So there's absolutely no chance of any remote chance of canceling of that project. So already tree cutting and this thing is done, there were 8,000 trees. So some tree removal already started by us in that package.

Okay. Sir, and one more question. Now we have a lot of value in the company. So is the company looking for maybe a share buyback or either a promoter buying in open market?

Not for the moment, Mr. Ankit. Yes. So we keep, of course, promoter buying keeps going like as we get the opportunity to keep doing that. We have already bought around 6 lakh shares in the around 1% in this financial year.

[Operator Instructions] The next question is from the line of Shravan Kumar Shah from Dolat Capital.

Yes, sir. Sir, you said that the CapEx for FY '20 was INR 177 crores, am I right?

Yes.

Yes.

Sir, I need a clarification, I think, in the February when we did a call, in 9 months, our CapEx was INR 80 crores, INR 82 crores, and we were expecting another INR 20 crores in the fourth quarter. So now we have done INR 177 crores to INR 90-odd crores, we have done INR 90 crores in the fourth quarter. So for what -- which project and are we aware -- not aware at -- in the February, and we did everything in the February 10 to March 15, all the INR 90 crores.

Yes. So this was like some of the products like the Dwarka Package 2 is started. So we have capitalized the casting yard cost in that -- in CapEx. And like, we have taken some equipment for the Dwarka and this thing newly started Metro Line 6 project and Line 9. Yes.

So sir, are we were not aware that this -- we were -- we doing in the February and March when we did the third quarter call. Because at that time, we said another INR 20-odd crores would be we doing in the fourth quarter and we did INR 90 crores. So just trying to understand, in the next -- in the 1 month, we were not aware that we were doing the CapEx out significant, which we did for the 9 months, and we will be doing in the 1 month?

Yes. Yes, Mr. Shravan, like, some of the things we were to do in Q1. So we -- for ramping up the projects, we got the shuttering, centering and the equipments before that.

[Foreign Language] digest. No issues. Secondly, sir, as you previously said that you would need INR 400-odd crores revenue to breakeven at EBITDA level. And if I just look at your last year number of the first quarter revenue was INR 670-odd crores. So is it fair to assume that the first quarter, we can see a INR 30 crores, INR 40-odd crores of EBITDA loss first quarter?

We won't be able to quantify, but of course, there will be a loss in the first quarter, sir.

Okay. Okay.

But also we have used our -- we are trying to control our fixed cost by rationalizing it. So that would also compensate it to certain extent.

The next question is from the line of Parikshit Kandpal from HDFC.

Sir, in Some of our Metro projects, we have tie-ups, we have international tie-ups. So it not seems to be a flavor at the moment. So will -- our project will get anyway is impacted because of these tie-ups?

Absolutely not, Parikshit. These are all pre-tied up working programs. So any new projects like now you know what I -- if you tie-up with [Technical Difficulty] so any new projects coming up. So maybe there are chances that we may not consider, but it's like the previous ongoing project, there's absolutely no issue

So nothing, I mean no financing has been tied-up. I mean, so now they cannot be removed, right? I mean, you cannot -- departments can only remove from the existing projects. Its only in the new projects, right, there could be some issue.

No. Any work order, which has been huge and where the work is started, there is no remote chances that it can be done. New orders that JPMorgan is bidding it's mostly on a stand-alone basis because of our past experiences, we qualify on big projects individually and are in our range. So it's not a problem at all.

The next question is from the line of Manish Bohra from Param Capital.

Sir, in your previous con call, you had mentioned that around 50% of Line 3 underground metro work was completed. And like more 18-month was expected to complete it and around 75% of Line 2 and 90% of Line 7 was completed. So currently, what is the status like we were expecting entire Line 7 to be operational from December '20. So currently, what is the status? And any delay you are looking at how much percentage we have completed?

So Line 3, like, we have completed around 50% of the project. And of course, there will be some time extension of this. So like we plan to -- we expect it to be done by June '22, okay, 2 years from now. So let's see how it goes at for the coming quarter. And which other project you had asked?

Line 7 that you were asking about?

Line 2 and 7.

[Technical Difficulty] Line 2 and 7, Line 2 we have completed the project to the tune of around 80% on an average. Some project it is 78%, some project it is 85%. So approximately 80% to 85% work is already completed in Line 2. As far as Line 7 is concerned, we have already completed more than 90%, 95% of the work. And in that, only entry exit works are pending for which the decisions because of the architectural things and everything it was pending. So as far as Line 7, more than 95% is completed and in Line 2, around 80%, 85% is completed.

So both Line 2 and Line 7 would be completed by January '21.

This is what is our target, but with this COVID it may shift by 2, 3 months here and there.

Okay. Okay. And sir, what is the status on the GMLR tunnel project?

GMLR Thermal project is till now -- means, it has been canceled and it was been recalled. So right now, the prebid is to be held on in some mid of July. So right now, it's under pipeline.

The next question is from the line of Deepika Bhandari from Phillip Capital.

I just wanted to know what is the status on Line 9?

Well, for Line 9, we have already been issued the -- we have got the work order in the month of September. And there is a -- there is all the -- there is some addition in the work due to interruption of some flyover changes in the length of it and all. So it took some while for us to finalize the general arrangement drawing. So everything has been finalized. Even the tree cutting permission for around 800 trees has been received. And in this lockdown also we have transplanted more than 400, 500 trees already. So the site is clear and the piling work has already begun. Like, we have done more than around 50, 65 piles also in this month.

Okay. Going forward, what do the -- what bit opportunity do we see in Metro, I mean for the coming 2 years?

There are lot of opportunities. Even right now, there are 3 projects which has been come up in Line 2B. One is the INR 1,000 crores worth of Simplex which was been canceled, one INR 500 crores, another elevated line at Kurla, and INR 500 crores depo line. So we are in the process of bidding it. We are bidding Ahmedabad Metro. There is Surat Metro which has come up. So there are ample opportunities, I would say, in terms of Metro sector, where the company has to be choosing as to which one we have to go for. There are 2 tenders in Ahmedabad, 1 in Surat, 3 tenders in Bombay. So these are currently immediately -- they are in the bidding process.

Okay. And Line 2B, I think the tendering you were expecting tendering to be submitted by June end and is it done?

No. It -- as I mentioned, it is to be submitted this week.

Okay. Okay. Very well. Sir, if I see in your order book, I've -- even shown in PPT currently a portion of order book for NHAI is 25%, how do you see it going forward?

What proportion do you want, geographical proportion, or what exactly you want though?

I don't need a proportion. I just see like, do you -- are you going to bid further for NHAI?

Yes. So in NHAI, we're working, there are some contracts there join into that. So there will be for that, like, so as we -- as previously also said, we believe in working cluster. So any project coming in the nearby area, we will be quoting for that.

Okay. Only in the -- only in a comfortable zone?

Yes. Yes, Deepika.

The next question is from the line of Parikshit Kandpal from HDFC.

Yes, sir. So sorry, on that last follow-up. So just on the this margins which have cracked during the fourth quarter, so is it right to assume that some of the COVID hit you would have already taken in the fourth quarter?

COVID hit in the fourth quarter?

We have minor portion of that. In terms of top-line, you can see that there has been a hit in the top-line of Q4 FY '20. So...

That I understand. But so on the margin because top-line is fine, but you have been making similar better margins in terms of some of the similar top-line historically. I was talking more from the cost angle because your margins are cramped? So almost likely in the 400 basis point.

Parikshit, in this Q1 and Q2, that would be there.

Yes. But some portion of that is also being taken in Q4, right, sir?

Yes. Q1 is not considered in Q4. Q4 portion will be, of course, part of it.

Okay. Second question was just on the CapEx...

[Technical Difficulty] which is also reflected and Q1 could have some effect because of [Technical Difficulty].

Okay. So just on the CapEx, hello?

Yes, yes Parikshit, go ahead.

Just on the Capex, this fells you have done some CapEx which is supposed to be done in Q1. So this year, what would be the CapEx now? Or is it significantly lower this year?

Yes. We are expecting CapEx of around INR 50 crores.

The next question is from the line of Rachit Kamath.

Yes. Hello, can you hear me, sir?

Yes, Rachit.

So sir, basically my question was like what kind of [indiscernible] losses you would have raised during the quarter? I can understand like -- so my question raises because the gross set is down almost INR 20 crores on an absolute basis. So [ IDRCV ] said we did almost INR 90 crores kind of CapEx during the quarter. So I understand we received almost INR 400 crores from debtors, but then I just want to understand [indiscernible] losses.

Yes. So one was for Dwarka Expressway. INR 200 crores is the revenue of the project. So we received a mobilization for the Dwarka Expressway INR 65 crores, INR 66 crores. One more project is -- that's it, that's for the Dwarka project only.

Okay. So with these around have you received INR 400 crores debtors previously you had INR 65 crores [indiscernible] from Dwarka Package 3 -- Package 2.

Yes, Package 2.

We -- in the CapEx from that, okay. So yes. Okay, sure. And sir, what you -- we mentioned so many projects on the Metro Rail segment. I just want to understand what was the gross quantum of this order pipeline. If you could give me. Like you said INR 1,000 crores, Simplex, so its INR 500 crores of 2 Metro projects, then I think another project since you have Metro in Ahmedabad.

What we can -- right -- see, this like very frankly, project inflow is huge. There's a robust inflow for Metro as well as other urban infra where we are strong. Thus, we are becoming choosy and taking the project. So it is not a problem at all.

Yes. I understand that. I just wanted to understand what kind of opportunities are present in the market, for say, for any interest [indiscernible]? So just wanted to understand what kind of Metro opportunities are there?

Like, this week, we'll be bidding for Metro projects worth around INR 2,000 crores.

That was the last question. Thank you. I would now like to hand the conference back to Mr. Rachit Kamath for closing comments.

Yes, hello again. Thanks a lot -- I thank the management, again, a lot for giving us this opportunity to ask -- to host Q4 and FY '20 earnings conference call. I'll pass it on to you, sir, for any closing remarks.

Yes. Thank you, everyone, for joining on the call. We hope we have been able to answer all the queries. And I'd like to say, stay safe. All the best.

Thank you, everyone.

Thank you very much. On behalf of Anand Rathi Share & Stock Brokers, that completes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.