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

Ladies and gentlemen, good day, and welcome to the J. Kumar Infraprojects Q1 FY '21 Earnings Conference Call hosted by Prabhudas Lilladher Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Viral Shah from Prabhudas Lilladher. Thank you, and over to you, sir.

Thank you, Nirav. Good afternoon, everyone. I welcome all the participants to the 1Q FY '21 results conference call of J. Kumar Infraprojects Limited. We have with us Mr. Kamal Gupta, Managing Director; Mr. Nalin Gupta, Managing Director; and Mr. Arvind, the CFO of the company. We would commence the call with the opening remarks from Mr. Gupta to give an overview on the company's performance, followed -- and then will be followed by a Q&A. Now I would like Mr. Gupta to begin with his opening remarks. Over to you, sir, and thank you.

Yes. Thank you, Viral. Good afternoon, everyone. This is Kamal Gupta here. A very warm welcome to our Q1 FY '21 earnings conference call. I hope you all are staying safe and healthy through this unusual and challenging times. Along with me, I have Mr. Nalin Gupta, MD; Mr. Arvind Gupta, our CFO; and our IR team. I hope everyone has had an opportunity to look at our results. The presentation and press release have already been uploaded on the stock exchanges and our company's website. Before I take you all through the operation and financial performances, I would like to highlight a few points. The first quarter was a challenging quarter for the entire construction industry. The lockdown, which was imposed in the month of March 2020, led to disruptions in operations, labor availability, supply chain and liquidity. We witnessed partial recovery in May and good recovery from June onwards. We believe substantial normalcy by mid of September 2020. We have taken stringent cost control measures and are working hard to improve working capital management and profitability going forward. As execution fees improve, the company expects substantial increase in revenue and cash flow. I believe that performance of this quarter, thereof, could not be compared with the figures of year-on-year or quarter-on-quarter basis. We have increased the execution for majority of our work orders after easing the lockdown. I'm happy to share that as on date, we have commenced work on more than 90% of our order book. The labor availability has also improved substantially and is currently more than 60%. Marking a milestone for the city, we have completed a tunneling under the Mithi River in Mumbai as part of the construction of Metro Underground Line 3 Colaba to SEEPZ section this week, thereby completing the entire tunneling work for Package 5 of Metro Line 3. Now allow me to give you an overall overview of our operational performance in the quarter. The stand-alone performance highlights for Q1 FY '21 stands at the total income from Q1 FY '21 is INR 285 crores as compared with INR 668 crores for Q1 of preceding year FY '20. The EBITDA operation -- the EBITDA for Q1 FY '20 is INR 28 crores. Our execution was adversely impacted during the quarter due to the national lockdown and migration of labor. Despite the challenging environment, we have earned a cash PAT of INR 14 crores. Our order book as on 30th June 2020 stood at INR 10,975 crores. Metro projects account for 57%, while flyover, bridges and roads account for 41% of our order book. With this, I now leave the floor open for questions. Thank you.

[Operator Instructions] First question is from the line of Mohit Kumar from IDFC Securities.

Sir, I have 2 questions. Primarily, first on the, of course, the -- you did mention that 60% of labor is available right now. When do you expect 100% labor available? And how is the ramp-up in July and August? And how we see Q2 panning out? And can we see substantial jump in revenue from Q3 onward given the large order book?

Yes. So Mohit, firstly, with regards to the labor, in the pre-COVID level, we had labor to the tune of around 11,000 numbers. And out of which, as of now, by the mid of August, we are already at 60% of the pre-COVID level we have already reached. And by, say, mid of October, majorly, the labors would be coming in by the end of this September. And by mid of October, we will be at the pre-COVID level. So we are making all the arrangements by air transportation, by buses, trains. Special buses are arranged to get these labors back with the help of government permissions. So labors are coming in. They are flowing in at a rapid speed. And we see that by end of September itself, we should have a good number of labor back to normalcy. And for the turnover, again, it's still very premature for us to give an exact figure. But as you know that we have already done around INR 250 crores -- approximately INR 280 crores for the Q1. And by the -- for the year basis, we are expecting around INR 2,000 crores to be achieved for the current year. So Q3 and Q4 will be growing at the rate of 12% to 15%. That would be maintained. So Q3 and Q4 will normalize.

And secondly, sir, as far as -- is there a difference in across projects in terms of construction activity? Is it better in underground? Is there any issue with Metro elevated projects because the work is not allowed in the city? Is it -- how is it affecting our execution in various orders? Can you just give some color?

See, with regards to permissions, Metro permissions we had got on April 20 itself because Metro holds under essential services. So all the permissions to execute this work, we had received a long time back. But the only labor -- the issue -- the biggest hurdle that we faced was the labor, which is also getting sorted. So with regards to permissions, there is no issue. And as we said, the work will normalize from October in a proper manner. And when the order effect and everything is absolutely not there, the payments have been given online, we are not facing any challenges with regards to payments from the government. And for the orders also, there is large chunks of orders that we are expecting, like we have already bidded for Ahmedabad Metro. We have bidded for some projects in Mumbai, for MMRDA already for Metro projects. So there are a lot of opportunities that are there for -- in the coming 6 months' time.

Sir, how has been the collection in the last 3, 4 months?

I'm sorry?

How has been the collection in the last 3, 4 months? And what is the receivables amount or receivables amount outstanding right now?

See, our debtors as on 30th June is around INR 527 crores. And out of that, also, a good number of amount has already been received by us in July, July and mid of August.

As you see, Mohit, we have reduced our debtors from INR 645 crores to INR 527 crores this year.

[Operator Instructions] Next question is from Shravan Shah from Dolat Capital Markets.

And first of all, congratulations in terms of posting positive EBITDA versus our expectation of a loss for the quarter. So trying to understand first part that, particularly on the employee cost and other expenses, employee cost from INR 82 crores now reduced to INR 35 crores. So have we reduced the number of employees? Or have we cut their salaries? And how we expect the run rate going forward in terms of the salary costs?

Yes. Our revenue cost here -- sorry, employee cost is around 9.5% to 10% previously also. Now also, like in this quarter, it is 12.5%, Shravan, due to COVID.

Due to COVID.

So employee cost is -- a lot of people left their native because of this, what you say, COVID thing. So of course, since they were not there, maybe the employee cost must have gone down. So right now, it is 12.5%. And we have also rationalized the cost, Mr. Shravan.

So when we say -- I understand you said it as a percentage of revenue, but in terms of absolute, from INR 82 crores to INR 35 crores. So just trying to understand, have you cut the salaries? Or have you cut the employees? And secondly, how we see -- in terms of the absolute number, will it come to the normal level INR 75 crores, INR 80 crores from the second quarter onwards? Or how we see it?

So our -- see, if your average is INR 82 crores, if you take -- compare it with the Q1 of FY '20, it was INR 63 crores, first of all, Shravan. And like since the people have started pouring in, all the employees also, by Q3, I think it's likely it will normalize to the pre-COVID level.

Okay. So from Q3, we can expect the EBITDA margin in the range of 15%?

The margin?

EBITDA margin from Q3, can we expect...

EBITDA, yes, yes, yes. Yes, yes. You're right, Shravan, it should be.

Okay. Okay. And sir, I wanted to understand further in terms of order inflow. So we mentioned in the presentation, I think, INR 175-odd crores kind of order inflow. And last time we said, we were L1 in Worli-Sewri flyover INR 1,000 crore and CIDCO project. So -- and also, we bid it for INR 2,000 crores. We were supposed to bid for INR 2,000 crores order. So just can you update on all these?

Yes. So Shravan, last year, FY '20, we had an order inflow of INR 4,250 crores. And in this Q1, we had an order inflow of INR 175 crores, which is the extension of Line 7 Metro elevated. And we are L1, likely said by you, for 2 projects, one is INR 1,050 crores and other INR 100 crores. So INR 1,150 crores projects, we are L1. Okay? And we expect around INR 3,000 crores to INR 4,000 crores of work inflow -- order inflow in this year, 2021.

So this is over and above the INR 1,150 crores L1?

So it's like -- yes, so like INR 4,000 crores, if you say, including INR 1,100 crores.

Okay. Including INR 1,100 crores, but we expect a INR 4,000 crores. And in terms of the bids, in terms of the opportunity, if you can once again help us because Line 2 and whatever the new tenders that we are paying that are significant or increase in the tendering activity, if you can help us in terms of which are the projects that you are planning to build in the next 3, 6 months?

Yes. So see, from Q3, it will intensify, like the bidding will go up from Q3. And we are bidding for a lot of projects around Mumbai and around Delhi also and in Gujarat, Ahmedabad also, in metro areas and non-metro areas, both. So like the projects we have already bidded for is the Ahmedabad Metro, which is already in pipeline. We are bidding for Surat also. And we are also waiting for some of the projects of National Highway Authority in Delhi in and around where we are working.

We are also bidding for MMRDA. Bombay has come up with Metro Line 2B. So we are bidding for that. Ahmedabad Metro tenders, they have already been submitted. Surat Metro has come up, for which the submissions is likely in the next 2 months' time. It is elevated and underground both, so both works we are going for. And again, we are bidding for National Highway, for HSR, for all the other projects we are getting involved in it. So the coming 6 months, we'll be going in for big-sized projects.

Sir, broader amount would be for Surat, Ahmedabad Line 2 and the NHAI projects that we are seeing a broader amount?

Well, Bombay -- do you want specific ticket size or the value of these projects?

Yes, yes, ticket size and if they are having more packages, a broader -- a total pipeline that we are looking at?

We have 2 projects, so INR 1,500 crores -- in Surat, we have INR 1,500 crores. So around INR 3,000 crores is -- INR 1,500 crores is in Bombay, INR 1,500 crores is in Ahmedabad and Surat is to the tune of around INR 3,000 crores with elevated and underground. In all, we'll be bidding around INR 7,000 crores to INR 10,000 crores of projects with the ticket size of around INR 1,000 crores, and we expect to take around INR 3,000 crores to INR 4,000 crores of projects in that, my guess.

Okay. Sir, lastly, some balance sheet numbers. What is our inventory? Debtors, you have paid INR 527 crores. So inventory, other current assets, gross debt, cash, mobilization advance and retention money?

Inventory is 832 -- INR 838 crores. Debtors is INR 527 crores. Creditors is INR 349 crores, and mobilization advance is INR 410 crores.

Okay. And other current assets?

Other current assets totaling is INR 810 crores. This includes all of the INR 538 crores contract asset.

Okay. Okay. And gross debt is?

Gross debt is INR 563 crores.

INR 563 crores.

INR 563 crores?

INR 563 crores.

Okay. And cash?

Cash.

This is -- bank balance is INR 467 crores, and cash is INR 24 crores.

[Operator Instructions] Next question is from Shivang Joshi from Prabhudas Lilladher.

Congratulations for a good set of numbers. Sir, actually, I wanted to understand, in this scenario, whether we are facing any pressure from the working capital level? I know you have said that you've got good collection. But overall, considering the scenario, considering the number of projects that we'll be taking up, so what kind of working capital pressure you are facing right now and you are expecting in the coming few months?

We have not taken any new additional working capital or term loans, anything. And with the existing internal cash accruals, the payments are being received timely on a monthly basis by all the government departments. So we don't see any new requirement of funds as such.

Okay. And have you taken moratorium on the loan, sir?

Some amount we had taken, and that also we have started paying it off now. So like till June, more or less, all the moratorium has been paid off.

Okay. Okay. And sir, when I was looking at the presentation, the order book position, sir, one project pertaining to NBCC headquarter, some INR 560 crores project. So it was not read as a part of the order book position as on Q1, as I've assumed. So whether it is -- so if you can give some update on this, sir, because it was there as a part of the order book last time?

So this INR 560 crore project was given to us around 2 years back, and the contract period was 2 years. So like in due course, there was some land issue. It was a project by NBCC, which was, like, I think headquarters for South Delhi Municipal Corporation, and they could not give us the land. So we foreclosed it in the last quarter, Q1. And like we've removed it from our order book position.

So our order book as of now does not include that.

Does not include this, yes.

The next question is from Chirag Singhal from First Water Fund.

Sir, first of all, what is the current execution level across all our sites?

The current execution level is -- percentage in terms of revenue, you're taking? Because as we told you, until now, we have received, until this last week, around 60% of the labor, all right, the current position. So revenue-wise, like, it will be around 30%, 40% as of now and will pick up in Q3.

Okay. All right. And so I'm just trying to match the number with the last con call's commentary. So you mentioned that we had some 15%, 20% execution level or labor availability when we had the last con call. And when we're looking at the revenues, it is down 57%. So can you share the last quarter's, that is Q1's, execution revenue?

So Q1, we did like around 40% of -- or like 60% of revenue is down -- 57%. So around 40%, we executed, Chirag.

Okay. And for the current, you are saying, it's around 30%, 40% in terms of revenue?

Yes. So labor -- since the labors are increasing, will come to because it's mid of August, another 1.5 months to go, correct? So we're expecting around these levels, like 40%, 50%. Now of course, we should -- we'll do better than Q1, Chirag. We'll do, of course, better than Q1. Even though it is heavy monsoon, still, with the increased number of labors, we'll be able to perform better than Q1. That's the whole point. And from the Q3, as we have been mentioning again and again that Q3 onwards, the work will pick up in the normal pace.

Okay. All right. And any revenue guidance, sir, for this fiscal?

INR 2,000 crores.

INR 2,000 crores. And EBITDA margin, if you can share?

We should generally...

EBITDA, we cannot say now, like...

But generally, as -- I think that we have been maintaining that, we should be able to maintain. For this year, of course, it will have an impact. This year, obviously, it is going to have an impact because of the COVID. But otherwise, as such, the order books already taken up with the similar margin of what we have been doing until now. So there won't be any major impact as such on the margins.

Next question is from Mukul Agarwal from Param Capital.

My question is regarding...

Sir, sorry to interrupt you. May I request you to speak a little louder, please?

Yes. Is this better now?

Yes, it's much better, Mukul.

Much better.

Yes, yes. So my question is regarding recently, BMC Commissioner on CNBC was mentioning about releasing EMD and other performance guarantees for EPC companies, and Maharashtra Government might take this call in the cabinet, and it has already been discussed. So in case this is done, I'm not aware whether they have already announced it or not, and if it is not announced and it will be announced, how does it help us? And how much working capital gets released?

It is like, Mukul, of course, this is -- these steps is taken for infra and it is good for all of us. We -- these guys have decided to release part of the performance guarantee to the extent of the work completed by you. So if this will be released, of course, our margin and this thing...

Financial cost will come down.

Financial cost will go down. Correct, sir? So we have already received, Mukul, around INR 60 crores to INR 70 crores of bank guarantees. And we are in process to get a little bit more.

So they have taken this call or they are yet to announce this?

No, they have taken this call, sir. They've taken this call, but it's like departmental-defined payment. Different departments are slightly modifying as per their thing, their contracts, but this call is in general for all central as well as state governments.

It is not a confusion anymore because there were 2 orders. One was by the Ministry of Home Affairs. So MHA issued an order through the Central Cabinet level. Thereafter, there was an order release at the State Cabinet level. And all the different government departments, they have already given the approval. And each of the departments, they have released some or the other bank guarantees. So it's a process now to get the bank guarantees done, 60s, 70s, we have already received. And a good amount of money, we will receive in the next couple of months.

So how does it work? It was earlier, I believe, 5% EMD and 5% performance guarantee?

Yes. So in Metro, like we have 10% performance guarantees. Out of that 10%, they have concluded that 5% will be treated as the performance guarantee and 5% will be treated as defect liability period performance. So out of the 5%, they have kept the DLP 5% as it is until the defect liability period is completed. And for the 5%, to the tune of -- like if you have completed 80%, that -- 80% of 5%, 4% they are releasing. And if the defect liability period of the project is, say, 5 years, and if you have completed 3 years, so out of that pie also, they are releasing percentage. Like in our Ahmedabad Metro, they are releasing the 100% bank guarantee now.

So this might substantially help us in terms of working capital?

Yes, surely. Surely.

Our margin will also be saved, Mr. Mukul.

So now my second question is, so most of the companies, irrespective of infrastructure or [ listing ], post COVID, there is some savings, some learning. Like all of us have realized, you don't need this much expenses for maintaining your day to day. And do you think this works for J. Kumar Infra also? And if yes, like we have seen in first quarter also a lot of saving has been done. So out of this, how much will remain with us over a period of time might -- we might not incur that much expense?

You are right, Mukul, like bad times also teach you good things. So similarly, like if you've seen, we also rationalized our cost. And going forward also, we are looking that this cost will be optimized and rationalized. So of course, this bad times have given us some good lessons, and we are working towards that. This will help us going forward also to reduce our cost, Mukul.

So is it fair to assume in normal circumstances, when we are back to normal, we might see 1.5%, 2% improvement in the EBITDA margin?

We cannot put them in numbers as such. But surely, I would say the efficiency level and cost because it is not such a big cost saving that we can really put in numbers. But yes, it will be something on the savings side and not an extra side because whether it is like utilization on machineries, utilization of your resources of staff, manpower, everywhere, there has been a rationalization that is happening, even like for the -- there is awareness from the employee side where they say [Foreign Language] we have 10 vehicles, we'll manage with 6 vehicles. So whether it is a INR 50,000 cost per vehicle, that does not really have an impact in terms of that numbers. In terms of percentage, we cannot see. But that is the mentality which has been developed. Even all the meetings are happening through video conferences. So the saving in terms of wastage of time of people for traveling from one point to another is improving, documentation is happening online. So all this, there is a better working culture, I would say, that's been developed, which will increase the efficiency of people.

Yes, that's what we are seeing with most of the companies and in our own establishment also. So that was the whole point whether something will be retained and we might see something...

Yes, yes, yes, right.

There will be some retention, but you can't put it in terms of percentage.

I was just trying to -- maybe a year after, we'll come to know, Mukul, exactly.

[Operator Instructions] Next question is from Prem Khurana from Anand Rathi Shares & Stock Brokers.

Sir, I joined a little late, so sorry, I mean, if it is a repeat question. So could you please help us understand what is the status on the 2 Dwarka Expressway project? I think Dwarka Package 2 was already appointed, so which is -- where, I mean we would have already started moving. How about Dwarka 1 because we were waiting for some approvals for tree cutting and all, where are we in terms of approvals now?

Yes. So Dwarka 1 has already taken off. And like we have started receiving revenues also from that. And Dwarka Package 1, which was like hold because of the tree permissions, which is also received 15 days back from the state government, so it is entirely cleared now. They are in the process of issuing us appointed date anytime in the coming 2 weeks. So in this quarter, we will get appointed date for Dwarka Package 1 also. But at the same time, we've already started the work on Package 1 of utility shifting, and we have started receiving the payments also for Package 1 for utility shifting, for your information.

Okay. And sir, how about mobilization advances. I mean I'm sure, I mean, you would have some mobilization advances due from both these packages now. So when are we like going to have...

Yes, we have received INR 160 crores of mobilization...

INR 66 crores.

Sorry, INR 66 crores in this quarter from Dwarka Expressway.

Okay. Okay. And the other question was, I mean given the fact that you're guiding somewhat lower top line, I mean, versus last year because of the COVID issues of almost from INR 3,000-odd crores to INR 2,000-odd crores, would it be fair to assume, I mean when we close this year, our debt would be substantially lower than last year and it will be also because of the fact that, I mean as you rightly said, I mean you have had realizing -- release of performance guarantees, which is that you will also get to have some of your margin money get released? So what kind of debt do you think is possible by this year-end because of these 2, as in lower top line and lower working capital needs?

Debt, as of now, it stands at like INR 565 crores. And like by year-end, we are looking around INR 600 crores to INR 650 crores.

Okay. So you are expecting a rise in the debt?

Yes, because some working capital will also go up, like the new projects which are -- we have taken, so like there is Dwarka or Line 9 and all. So we have to...

But it wouldn't be substantial. It wouldn't be a substantial increase, but because of the new projects that we have taken up, as we mentioned.

Some equipment finance will be done, right? So...

Working capital requirement for...

Overall, we are looking for around INR 600 crores to INR 650 crores.

No, because I was looking at our FY '20 end number around INR 670-odd crores. And assuming, I mean you're going to do lower top line during the year, so INR 650 crores is only INR 20-odd crores. Whereas when I look at my top line, we're guiding for almost around 30% kind of drop. So 30% drop would lead to only INR 20-odd crores of reduction in gross debt? Is that the right way to look at it?

Gross debt has already gone down, if you see, Mr. Prem, correct? It is reduced from INR 674 crores to INR 565 crores. And what we are saying, we are looking for around INR 600 crores to INR 650 crores estimated by the year-end. This will be basically from -- like we are also getting some equipment purchased for the new projects, shuttering, centering and all that. So that will take up the same debt to slightly more than what is there now.

Got it. And how much would be the CapEx, I mean since you spoke about, I mean you're planning to buy some equipment? How much would be the CapEx for the year?

Around INR 50 crores.

Next question is from Parikshit Kandpal.

Congratulations on decent performance in this quarter. My first question is on the inventory. The inventory has gone up sharply from INR 300 crores to INR 838 crores. So what's the reason? Why such a sharp jump in inventory when the execution was not there -- very low execution was there?

Inventory has not gone up, my dear. Inventory like is -- total inventory is INR 838 crores, which was INR 862 crores previously.

Last balance sheet, inventory was INR 312 crores.

This is raw material -- raw material stock is INR 313 crores as of March 31. Now it is INR 298 crores. And this contract asset, this is working for unbilled revenue. It's INR 539 crores as compared to INR 549 crores on 31st March. So even the debtors have gone down.

Yes, debtors have gone down. But you said, sir, -- Arvind sir, you said other current assets is INR 810 crores and it includes the contract asset of INR 538 crores. So that inventory which you are telling, is that 538 -- INR 838 crores includes that INR 538 crores also?

Absolutely, yes.

I'm confused because the actual inventory is how much right now?

INR 298 crores, which was INR 313 crores before.

So just to repeat the number, the inventory is INR 298 crores, debtors is INR 527 crores?

Correct.

Creditors INR 349 crores, mobilization advance INR 410 crores and other current assets is INR 810 crores.

Other?

Current assets.

Other current assets is INR 810 crores. Correct.

And that includes the INR 538 crores of contract asset?

Correct. Correct, of contract asset.

But you had said, Arvind sir, earlier INR 838 crores of inventory, so that was also including the same contract asset of INR 538 crores, right?

Correct.

I have to remove it from that inventory then?

Correct. You're right.

Okay. My second question is on -- so you said that maybe third quarter onwards, we'll start normalization in terms of execution and run rate on revenue. So third quarter...

Sorry, can you come back?

We don't get your question.

Please?

Sorry. Okay. So you said that from third quarter onwards, we can expect the normalization to happen. So labor will be back in place. So by which month, I mean September, October, or like towards the end of third quarter, you're looking at normalization?

No, no. By the end of second quarter, like September end, majority of the labors will be in place because there is a rapid inflow of labors happening every week. So we were trying to say that by mid of October, that is the start of the Q3, you will be having 100% normalcy of the labors that were pre-COVID. So that is what we were trying to say. So you can see the revenue coming up to normalcy from Q3 totally.

So that run rate is like roughly INR 700-odd crores per quarter, so that kind of run we can...

Yes, yes, yes.

[indiscernible] run rate, we can start hitting on that.

That is right. That is right.

Sir, the Coastal Road, has that LoA has happened or like still L1 -- or is it still L1?

So Coastal Road, there were 2 projects. So one LoA work order has been given, but like there were some environmental clearances wherein, they were specified in contract only, that 6 to 8 months CIDCO will take to clear it. So that work is of -- Package 1, it was not started. And Package 2, LoA, we have not yet received.

No. Worli one I am saying. Worli-Sewri connector.

You told about CIDCO. Okay, Worli-Sewri connector, so this thing, it has been approved by the Executive Committee. So we are expecting the LoA in this quarter only, Q2 only.

What are the revised time lines of like the Metro projects now, so Line 7, Line 2 and Line 3? So how is the time lines now? How much delay is now there in those projects? And...

So average delay in all the projects will be around 6 months, my guess. And subsequently, some projects are like 2 years, some are 3 years, some are 4 years. So average gestation period will be around 3 years for any project which is not started. And with projects which have started, like some projects are completing next year, some will be completing -- like Line 3, we'll be expecting to complete by '22 June. Yes.

Okay. And Line 7 and Line 2?

Line 7 and Line 2, we are expecting to finish it by June, operational to public.

June of '22?

Yes. June of '21. '21, yes. So it is like already our internal planning by the department and ourselves were to put it to operation by January. But there is a shift by almost 6 months. So by June, all these trains should be operational, from Line 2 and Line 7, yes, from Link Road and Highway Road.

So sir, if any cost overrun happens because of time overruns, how do you get compensated for that?

See, there are 2 types of costs. One is about the fixed cost for which there is a discussion happening at all the government levels. But we are -- we cannot really -- it's premature to say that we'll get it or not. But the other factor is about the time overrun for the escalation part. So that is already all our projects are fully covered with price escalation and variation clauses. So that money automatically comes to us.

Any issues with regards to funding from the government? Has been there any delays in funding payments coming on time from the government? Are you facing any issues?

See, basically, all the works taken up by J. Kumar are all EPC contracts, wherein before -- while the work order has been given to the contractors, the money is already passed. So the money is either of the state government themself or from world banks or JICA and such international organizations. So unless there is a sanction, these works are not taken out. So there is absolutely 0 issue in terms of fund availability for the works already awarded.

Okay. Okay. And just lastly, sir, on the bid scenario, if you can give us some highlights, like how is the bid pipeline looking for you? And what is your stance on that? Are you bidding for the projects or you want to wait and watch and consolidation?

We've already mentioned that there are various projects that we are -- that are into pipeline in Maharashtra, Gujarat and in the North. So -- and there is, in fact, a good amount of positivity in terms of new orders coming into because the state and central government, infra is the second largest supporting arrangement for the growth of the economy. So government is trying to pump in more and more works through which the employment and the supply chain starts getting affected. So we are very, very positively hopeful about a good number of projects coming up, much more than the appetite of J. Kumar.

So what is your guidance for taking order inflows? How much order you're targeting this year?

We already mentioned that around INR 4,000 crores is approximately that -- new orders that we are expecting in this current fiscal year.

As of now, nothing has come in, right, in the first quarter?

We have already received around INR 175 crores in this Q1, and there are orders to the tune of around INR 1,100 crores where we are L1. So that would itself take the order book for the current year to INR 1,500 crores. So all put together, we are targeting another like INR 2,500 crores to INR 3,000 crores more.

Lastly, on the working capital, sir, I mean we have done a lot of cost rationalization during this quarter. And -- so what is our view on working capital now? What kind of stuff you are taking there? So any view on how we're looking to improve it from here on?

So the working capital, we are -- on a yearly basis -- right now, calculating it wouldn't make much point. So on a yearly basis, 125 days is what we are expecting.

Next question is from Shravan Shah from Dolat Capital Markets.

Sir, you mentioned that you received INR 60 crores to INR 70 crores of bank guarantee release because of the new changes. And how much more you are expecting it will be released? And right now, what is our current fund-based limit and how much is utilized? And the non-fund-based limit and how much is utilized?

So we are expecting nearly around INR 300 crores of bank guarantees further to be released.

Okay.

Yes. And we've utilized around 80% of the fund limit, non-funding limit, and 50% of fund-based.

So non-fund total limit is how much?

The total non-fund limit is 300...

INR 3,276 crores, and we've utilized INR 2,725 crores. So 80%, 82% we have utilized. And fund-based is INR 619 crores, we've utilized INR 375 crores, so around 54% we've utilized.

So 83% of non-fund-based and around 54% of fund-based.

Okay. Okay. And sir, just once again coming back to the revenue front. So I'm still not able to understand. So when we are saying the INR 2,000 crores revenue and the second quarter would be better than the first quarter, so let's say, first quarter is closer to INR 300 crores. Second quarter would be INR 400-plus crores to INR 700-plus crores is that -- and INR 700 crores, INR 800 crores. So INR 1,600 crores, INR 1,700 crores would be there in the second half. So INR 2,200 crores, INR 2,300 crores should be the bare minimum. So...

Yes. So this is what we are telling you, Shravan. Like this is an approximated figure, which is conservative size. Correct? Of course, we are trying to take it up, like let's see until Q3, we'll come to know.

See, you need to appreciate one thing that INR 285 crores is approximately done in Q1. And Q2, which is the worst-hit quarter, there also we are saying it will be better. So we are talking about, say, INR 285 crores and INR 285 crores, so that's INR 600 crores. So there is -- if you are still talking of INR 700 crores, INR 700 crores also if you consider, then you are talking of INR 2,000 crores. So this is an approximate number. And labors are still not in hand, but we are very, very optimistic and positive about it because labors are coming in a regular basis. So we are hopeful to get a target of close to INR 2,000 crores.

Okay, got it. Got it. And sir, just now we said a Line 5 tunneling we have done, and the Package 6 -- Line 3, Package 6, when the tunneling will be done? And overall, sir, in these both the packages, how much we are expecting in terms of the revenue for the full year, particularly?

See, as I told you, Line 3 Package 5, we've completed the tunneling. And Package 6, the tunneling will be over by this year-end. It should be over by the year-end. And for the whole year '21, we are looking for a top line from Line 3 will be around INR 600 crores.

Okay. Okay, okay. So then the -- whatever the remaining, because right now, would be -- we will be -- in terms of the extension of time should be higher, normally where you said 6 months. So in this case, it should be, I think, more than 1 year to be the -- how much already has been -- time line extension has been given for both the packages in Line 3?

So Line 6, they were giving this extension until December '21 before only. But because of the COVID, okay, so December-January was before only -- before the COVID, like June '22 is what I'm saying. 6 months because the COVID is also there.

So Line 3, both the packages, we are expecting June '22, we should be completing the entire...

Substantial completion of our part.

Next question is from Mohit Kumar from IDFC Securities Limited.

Sir my -- I have a couple of clarifications. You've taken the NBCC order out in this quarter, I'm right, sir?

Pardon?

Yes. We have taken it...

You've taken the NBCC order...

NBCC order is not part of our work order now. INR 10,900 crores does not include NBCC order of INR 560 crores, yes.

Understood, sir. Second is the Mumbai Metro Line 9. Have you started the work? Is it in full swing? Or do you think it will have some time for you to start the work here?

So Mumbai Metro Line 9, already 9 hydraulic rigs have been deployed, and we have achieved piling of more than 200 piles already has been completed. So the foundation work has been taken up. Tree cutting, which was one of the biggest issue of more than 1,200 trees, we have received the permissions. The cutting and transplantation is cleared. All the foundation work has started. So right now, because of labor issues, we are going at the foundation work that's piling. And as we mentioned, within -- so -- and we have already started doing revenue also in that. And we have received close to -- we have received some payments also for the work done to the tune of around INR 10 crores. So the work is started and in full gear. And because this -- we have a lot of establishments available from Line 2 and 7, we should be able to take up this work much faster.

And sir, how's the Mumbai bid for the Metro? Has it been closed? Has it been bid out? Or where are we in the process?

Can you come back?

Sir, on the Mumbai Metro, there are a couple of packages which are left, right? Which has -- has it been happened?

There were 3 packages. One was of Line 7 of Simplex. That has been retendered and J. Kumar got the order for viaduct, which was -- which itself you were discussing about INR 175 crores. And there were other 2 packages that will be -- 3 packages, in fact, 2 of elevated viaducts, which were of Line 2B, and one of depot of Line 2B. So these tenders were retendered, and we are going -- about to submit this tender in a month's time. So we are very hopeful of bagging order from there as well.

And what is the time line for Surat and Ahmedabad Metro, sir?

On an average it is all 30 to 36 months, that is 2.5 to 3 years is the time.

Bidding time.

No sir, my question is bidding time.

Bidding time line is next 2 months. Within next 2 to 3 months, it should be there. Like the elevated metro, the tenders have been uploaded, and we have already started working on it. And for the underground, they have to approve the documents.

Next question is from the line of Parvez Akhtar from Edelweiss Securities.

Congratulations for a decent performance this quarter.

Parvez, can you be a bit more loud? You're not audible.

Am I audible now?

Yes, better.

Just wanted to get a couple of figures. Was mobilizing advance INR 410 crores? Did I get the number right?

Yes, that is right.

Did we incur any CapEx in Q1?

Pardon?

No. No, there was no CapEx.

Next question is from Mukul Agarwal from Param Capital.

I just had a small suggestion...

Yes, Mr. Mukul. Hello, you are not audible.

One second. One second. Hello?

Yes. Perfect.

Yes. I just had a small suggestion. From next quarter onwards, can we mention our net debt figure as well in the presentation? And also, if possible, breakup of the inventory and other thing? Why I'm saying this because all these things will help us getting better valuation in market. Market doesn't understand these things. And...

We will surely mention, Mukulji.

Huh?

We will surely mention, and the net block is INR 74 crores -- net debt is INR 74 crores.

So that -- in fact, J. Kumar, these financials are the best in the industry. And I think only because we are not able to present it properly to the market, we are not getting valuation. So we need to -- and get some good professional to guide us on how to present our numbers. And even the inventory breakup and all should be very clearly mentioned in the presentation.

Okay. We will ensure and get it done, my dear.

Yes, please do this. That was a small suggestion from my end. And you said that net debt is INR 74 crores, right, as of date?

Yes, yes. Right, Mukul.

[Operator Instructions] Next question is from Jiten Rushi from Axis Capital.

Sir, just one thing. On the labor, you said, currently, the strength of labor is around 60%, right? That's right?

Correct.

And the execution efficiency is almost 40% to 45% -- 40% to 50%, you said, right, sir?

Efficiency -- yes, efficiency will keep going up like -- which is right now, it's around 40%. It will keep going up because some of the sites like efficiency is very less, some of the sites, it's more. Yes, so for Q3 it will pick up.

Sir, on the backdrop of this, obviously, your order backlog seems very strong. So what's the current executable order backlog? Because as you said, currently, there are a few orders where some environmental clearance is pending and all. So out of the INR 10,900 crore orders, what is currently under execution?

So almost everything, like as I told you, only Dwarka, which was INR 1,400 crores, is yet to start. And like one CIDCO Coastal, that is around INR 400 crores. So these are the 2 projects which have not picked up, okay? And Dwarka, we will be starting from next month, like 1.5 months from Q3. We can see the revenue from Q1 Dwarka also. And on the Coastal CIDCO, maybe like it will take a couple of months more to get the clearances. Rest all the projects, they have started the work and are in full swing for now. So literally, INR 9,000 crores worth order is into execution.

Okay. And sir, the L1 project of INR 1,000 crores, can you just give us the name of the project?

This is an extension of MTHL, Mass Trans Harbour Link (sic) [ Mumbai Trans Harbour Link ] from Worli to Sewri. So Sewri-Nhava Sheva is already under construction. So this extension of MTHL from Sewri-Bandra–Worli Sea Link-Worli.

So when is this expected to convert into...

This quarter only, Q2 only. Q2 only.

Yes. Okay. And CapEx, you said INR 50 crores for this year, right, sir?

Absolutely.

And sir, just one thing, like we have been strong in the flyover and the metro segment. But in the longer run, are we looking to expand in the buildings, hospitals? I know you have got 2-3 orders in the building segment, but aggressively entering the -- taking up [indiscernible] projects or something like institutional projects, commercial projects. So that will give us diversification and no dependency on the metro because gradually metro projects can come down, how skywalk had come down in the past. So metro can also come down in the next 2 to 3 years. So are we looking...

Metro sector is a sector where all the infra companies who are not into it are interested to come into the sector because this area has such a huge potential, J. Kumar entered into the metro sector in 2010. And still after a lapse of 10 years, it's also -- around 70% of our revenue is coming in from metro sector. So metro is a very huge amount of business opportunity all across the country. It is not that we have to look for metro jobs at one city. There are ample amounts of cities which have not even started metro. Like if you talk about Uttarakhand, you talk about Bhopal, you talk about Surat, there are so many cities who are still to come with the metro projects. And all the cities who are already having metros or under execution have the next phases of metros to be constructed. So the metro business unit, I would say, has lot of opportunities. And this is one of the very specialized industry, engineering work for elevated and underground metros, which all companies cannot really do. So here, it's a niche competence -- a very competency area where J. Kumar specializes into. So looking at other works are already like, as you mentioned, that we have taken up building works. But metros, flyovers, which are speciality of J. Kumar and many have, given an opportunity, would like to stick to it.

Makes sense, sir. Makes sense. And sir, any mobilization advance now which you will expect in the remaining part of 9 months? Can you just quantify the amount?

So the Metro Line 9 is what we are going to expect in Q2 also, we'll be having advanced figure booked on it. So Metro Line 2, Metro Line 4 is where we should be getting more advances.

Dwarka 1.

And also Dwarka, also, there is a -- if we want, we can take in Dwarka 1 as well.

Next question is from the line of Rachit Kamath from Anand Rathi.

I just had one question and it is somewhat relating to the question asked by the earlier participants in a way because we were targeting around INR 7,000 crores to INR 10,000 crores kind of bidding for prospects. And [ on that ], you are saying that we will be able to bag around INR 2,500-odd crores, INR 3,000-odd crores. So are we assuming that we'll have -- that the competitive intensity is very low? Or like how does it pan out? Because it kind of implies almost -- like almost 50% -- 30%, 40% kind of a strike rate.

That is the strike rate of J. Kumar.

So Rachit, if you were to assume exactly, that's what Nalin is saying, we have a very focused bidding. So our strike rate is always good, like 50%, 60% is the strike rate of J. Kumar. So what we are looking is not much. So INR 3,000 crores out of INR 10,000 crores is not much.

[indiscernible].

Okay. And so -- okay. And if I break down our INR 10,000 crores pipeline as around INR 6,000 crores on the metro and INR 4,000 crores of NHAI and CIDCO projects, will that be the correct way to look at?

Can be.

Can be? Sure, sir. Yes. And sir, one more question I have is on your debt that you said was -- we expect the debt to go up, like on the net working capital days, our total is around 133 days at FY '20 end, and we're targeting to go down to 125 days. And so that one we're kind of expecting on the working capital into in a way. And our CapEx plan is again around INR 50 crores. So despite the lower CapEx end results and expectation of a better improved working capital, we -- our debt to kind of be even around INR 600 crores, INR 650 crores kind of level. Like, can you comment on that, sir?

Yes. So Rachit, if you see like right now we are at INR 565 crores. I think INR 600 crores is -- I think it's a nominal increase, if at all. It's not much because going forward, all of our new projects are going to be starting. So we require some, like say, 50% of CapEx will be increased, of course, right? And some shuttering, centering. So initially, the working capital goes up for starting the projects.

I would like to mention here that the total -- the debt equity -- the debt was INR 674 crores as of March '20, where we are -- as of June, we are at INR 564 crores. And what we are projecting by the end of March is around INR 600 crores to INR 650 crores. So at the year -- year-on-year level, if you see, we are reducing, we are not increasing. We were just trying to say that INR 564 crores, Q1, which has come down, will be a little more by the end of the year, but still at the year-on-year basis comparison, if you see, will be lesser.

Sure. [Foreign Language] I got your point. No, sir. [Foreign Language] I got your point. And sir, I have one more question here. The biggest elephant in terms of metro projects would be your Delhi Phase 4 in terms of we are not participating in the elevated structures, but the underground structures are expected to come out over there. So any time lines for that, that you've seen because you had already mobilized also in Delhi and NCR region and given your background in terms of this thing?

See, Delhi Metro, what has happened is that the level of competition in Delhi in the north [indiscernible] is much, much higher. And there are -- we are already established with our metro team in metro establishment in Mumbai, Ahmedabad and New Bombay areas. So we are trying to focus more into these areas where we can have optimum utilization of resources.

So basically, we are looking at Maharashtra and Gujarat only for in terms of metro for the time being?

It is not that we are not going to focus in Delhi, but...

In Delhi, we already have a base, okay? If we get the right opportunity, we will strike.

Yes. Sure. Sir, is there any time line as to when these underground packages will come up, sir?

Not very sure.

In this 6 months' time, Delhi Metro will come up with underground packages or Surat has already come up with, Bombay will come up with some more underground packages. So we are surely going to hit those ones.

Okay. And this Mumbai project that we're seeing, about INR 1,500 crores, these are basically the pending works of the 2 bidders whose works were canceled earlier. Is that right?

That is right. And also, there are some new projects which are lined up for new lines.

That will be above the INR 1,500 crores?

Yes.

What will be the value for that? Even though it's 6 months away...

That's around more than INR 5,000 crores.

Over INR 5,000 crores. Is this by any chance the Goregaon-Mulund Link Road kind of a thing or some other project going, sir?

Goregaon-Mulund Link Road is not a metro project. It's...

[indiscernible].

Goregaon to Mulund which is by MCGM, and we are also trying to hit on to that project as well.

Okay. So that is INR 5,000 crores and this INR 4,000 crores, you have sufficient scope within Mumbai itself?

Correct. In Bombay itself, in this next 6 months, you'll have more than INR 15,000 crores, INR 20,000 crores worth of opportunities.

Next question is from Sunil Shah from Turtle Star Portfolio Managers.

Sir, unfortunately, I joined a bit late, so pardon if I'm repeating anything. Sir, just to get a sense, FY '22 Q4 was when everybody got right. FY '21 is still in an unpredictable zone. But when -- is it safe that we can say FY '22, we will be in a position to deliver our best numbers, assuming that all the labor comes in, in the second half and there are no external challenges and that internally, we are capable enough? So when FY '22 will be at our best possible thing, is this a fair assumption from my side?

Correct. You're right. From Q3 of this year, the operations will be in full fledge and pre-COVID levels. So you will see the revenue ramp up from Q3. And as we told before also, we are looking for a INR 2,000 crore top line in '22 -- okay, '21, sorry, and around INR 3,500 crores in '22.

'22. Again, that would percolate into our bottom line as well. So reflecting that higher numbers on the top line, correct?

Correct.

Yes. So meaning FY '19 was a good number. So we'll clearly outbid FY '19 in FY '22 by a huge margin?

Correct. Correct, absolutely.

Right. Okay. Sir, again, Mukulji was just mentioning earlier that we did a good investor relationship and better reflection on inventory and debt numbers also. Likewise, sir, we've got all the regulatory clearances and all challenges which were placed in the last few years, they're all behind us, whether it is SEBI, whether it is BMC, everything. So there is no external challenges which are coming because my point is that even if FY '22 is going to be the best year, if I'm looking from a market recognition point of view, we are sitting at one of the lowest in terms of the market cap. So it's a big disconnect. But I just want to get a comfort that on the business trend, there is nothing, no negative surprises that we can anticipate and FY '22 is going to be a good year going forward for us, right?

Absolutely no. Absolutely no. FY '19 has been really great for J. Kumar. And all the misunderstandings or some issues which were within, all are resolved. And I think we should be having a wonderful '20 and '21 going ahead.

'21 and '22.

Yes. So '22 would be one of the -- FY '22 would be one of the best years for us.

Yes, sir. Yes, sir.

Ladies and gentlemen, that was the last question for today. I will now hand the conference to Mr. Viral Shah for closing comments.

Yes. Thank you, everyone, for participating in the call. I especially thank the management for giving us an opportunity to host this call. Kamalji, any closing comments on your end?

Yes. So I would like to thank everyone for joining on the call. We hope we have been able to answer your queries. Stay safe. And for any further information, we request you to get in touch with our Investor Relations team and our CFO. Thank you very much, once again, and god bless. Good day.

Thank you very much. On behalf of Prabhudas Lilladher Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.