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

Ladies and gentlemen, good day, and welcome to the J. Kumar Infraprojects Q4 Results Conference Call hosted by Prabhudas Lilladher Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now had the conference over to Mr. Shivang Joshi from Prabhudas Lilladher Private Limited. And over to you, sir.

Thank you. Good afternoon, everyone. I welcome all the participants to the 4Q FY '21 results conference call of J. Kumar Infraprojects Limited. We have with us Mr. Kamal Jay Gupta, Managing Director; Mr. Nalin Jay Gupta, Managing Director; and Mr. Arvind Gupta, CFO of the company. We would commence the call with the opening remarks from Mr. Kamal Gupta to give an overview on the company's performance. This will be followed by the Q&A session. Before we begin, I would like to mention that some of the statements related to today's conference may be forward-looking in nature. I would now request Kamal, sir, to begin with his opening remarks. Over to you, sir.

Thank you, Shivang. Good afternoon, ladies and gentlemen. A very a warm welcome to all of you to this Q4 and FY '21 earnings conference call. I hope you all are staying safe and healthy during these unusual and challenging times. Along with me, I have Mr. Nalin Gupta, MD; Mr. Arvind Gupta, CFO; and our IR team. I hope everyone had an opportunity to look at our results. The presentation has been uploaded on the stock exchanges and our company's website. I will give you a brief overview of the performance in the first 5 minutes, post which we will have question and answers. Before I begin the overview, a brief disclaimer. The presentation we have uploaded on our website and the discussions we will have on the con call today contain certain forward-looking statements concerning J. Kumar's business prospects and profitability, which are subject to several risks and uncertainties, and the actual results will materially differ from both in such forward-looking statements and discussion. Coming to the key developments during quarter 4 and FY '21, we were awarded projects totaling INR 2,259 crores in FY '21. We were also awarded projects by Gujarat Metro worth INR 942 crores during Q4 of '21 for design, construction and completion of underground stations and tunnel for Surat Metro. The revenue from operations for Q4 FY '21 grew by 13% to INR 992 crores as compared to INR 878 crores in Q4 of the preceding year FY '20. Revenue from the operations for FY '21 stood at INR 2,571 crores. The operating margin for Q4 '21 stood at INR 104 crores as compared to INR 92 crores in Q4 of the preceding year, and the operating margin for FY '21 stood at INR 311 crores. EBIT for Q4 '21 stood at INR 44 crores as compared to INR 40 crores in Q4 of FY '20, and the PBT for the whole year FY '21 stood at INR 89 crores. Profit after tax, PAT, for Q4 of FY '21 stood at INR 33 crores as compared to INR 31 crores in Q4 FY '20, and the PAT for the year FY '21 stood at INR 64 crores. The company continued its focus on working capital management and quality of order book, and we have been able to reduce INR 145 crores in gross debt, despite the pandemic. Our total order book as of March 31, 2021, stood at INR 10,927 crores, almost INR 11,000 crores. The order book includes metro projects, elevated as well as underground, contributing 54%, while flyover, bridges and road projects contribute to 44%. Before taking questions, I would -- let me repeat the vision of the company. J. Kumar's target is to achieve revenue of INR 5,000 crores by FY 2025. Objective is to continuously improve shareholders' return ratio, that is ROE and ROC, by investing in people, technology and processes. With this now, I now leave the floor for questions. Thank you.

[Operator Instructions]

Ma'am, you're not audible properly.

Sir, am I audible now?

Yes.

[Operator Instructions] The first question is from the line of Mohit Kumar from DAM Capital.

Just 2 questions. So firstly, on the -- how do you see the revenue panning out in FY '21 -- FY '22 given the execution challenges in current quarter? And what is the margin you are looking on an overall year basis? That's the first question. And second, sir, on the order opportunity. Do you think the order inflow opportunity will dwindle down given the COVID? And do we have any target in mind for the order inflow for FY '22?

So with regards to top line, as we are expecting for FY '21, we have only done a top line of INR 2,560 crores. And for FY '22, we are expecting a top line of around INR 3,000 crores to INR 3,500 crores, with the margin of -- we should be able to maintain the similar margins of around 14% to 16%. And with regards to order inflow, there are a lot of opportunities that we are seeing coming on the way, like NHAI, DMRC, Bombay Metro, medical hospitals, various opportunities that we are seeing forward. The company has already bidded for projects worth around INR 3,000 crores, out of which we are in one project of INR 1,300 crores already, and we are expecting to [ enter one ] very shortly. And there are -- and we expect that we will be able to maintain a top line -- the order book of close to INR 12,000 crores by the end of FY '22, with an order inflow of nearly INR 4,000 crores to INR 5,000 crores coming in this year.

Understood, sir. And secondly, the last question, sir. Are we facing any difficulty in execution in this particular quarter? What is the kind of efficiency level you are operating right now than the desired?

So there has been a drop of around 30%, 35% in terms of labor capacity, but the good thing is that from this month itself, we are seeing labor coming back. And we are expecting by the end of June end, we should be back to pre-COVID level. And secondly, people are being very -- and we have also understood that the facilities available in urban cities are much more better than the village situation. And with companies like J. Kumar, we are trying to provide them with all vaccinations, medical health and food facilities, accommodation, everything, sanitization. So labor's understanding the experience of Phase 1 of COVID. People have more positivity, and the [ infection ] rate has reduced. And now people have started coming back. So I think labor is a big challenge, for which we are seeing positive improvement. So I'm very hopeful that this situation should be solved by June end.

The next question is from the line of Prem Khurana from Anand Rathi.

And congratulations on attaining net cash status in this quarter. Sir, two questions. So one was eventually, and if you could help us understand EBITDA margins better. I think sequentially, the number seems to have come down quite significantly and from 14 odd percent to 10.5%. So I think in our media line, you spoke about, I mean, the venue would understood in your own expectations. But fair to assume, I mean, besides this revenue mix, and it was also because of the fact that the commodity price has gone up substantially in the recent past. So if you could break down this margin pressure in terms of -- I mean, how much of -- I think was eventually because of the lower revenues, how much is attributable to the commodity price pressure?

Prem, our margins has gone down, no doubt. So this thing is like as -- has already put before, which is basically like if you are in an urban city, in Mumbai, particularly, COVID has picked up and from mid of March, the situation has started coming back. So we had disruption in terms of labor going out from mid of March. So like we are expected around INR 100 crores of our expected revenue would not be achieved. So there, in the fixed cost more additive. So that's why that major reason was margin going down for that. The second point, what you're asking is the commodity prices have gone up. Of course, there was an unusual rise in terms of fees, so that is still there. And so we do have our price escalation clauses in all the contracts. All the contracts that have already price execution clause, so that covers this portion. But like because of the unusual rise, of course, there was slight impact because of that also on this. So we are to evaluate the exact impact because of this price rise on this, but there is, of course, a small impact of that, not a substantial one. And -- but if you see on the project, exactly, the whole project, I think there's no impact. Going forward, like the project section, there won't be much impact. So -- and going forward, we are very sure to maintain this margin of 14% to 16%, what we have been achieving since last many years.

Sure. And sir, I think this advanced status that you have, it's been pending for a while now. I think, I mean, eventually, because, I mean, there was slightly -- or rather higher than the base cost estimate. So the negotiation, is being done now or are we still negotiating with authority? And I mean, I think the scope was around INR 1,390 odd crore. I mean, where do you expect this to kind of settle down? I mean, INR 1,390 crores is the number. Or do you go down under? And if you recall, the authority would want you to bring this number down.

So this thing is already finalized, Prem. The number is finalized, and it's been approved by the Executive Committee of MMRDA. So we should expect the order in coming week or 2 week max. It's already been approved. So basically, because of this COVID situation, the Executive Committee was very delayed. Due to the prices high, it got delayed. It wasn't anything else. So it's been already finalized, approved and like we'll get the orders in coming week or a couple of weeks.

Sure. How much is the size now, revised size?

INR 1,300 crores.

INR 1,300 crores. Okay. And just one last from my end. I mean, so this quarter, we've been able to manage net cash and net cash status. And given that you are targeting pretty significant jump in this year in terms of revenues, and we are targeting anywhere between INR 3,000 crores to INR 3,500 crores, where do you see debt to, I mean, go because of the significant rise in the scale of operations in this year?

No. So that will be -- well, as you can see, we are -- we have reduced our debt from INR 670 crores to INR 530 crores this year, so that will be on similar lines going forward. We have mobilization advanced provision and -- which are interesting. Most of -- all the metro projects in this industry. So we are entitled for more mobilization advances also to the tune of around INR 330 crores. So because of that, we don't see any debt level to increase.

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

Sir, you explained the previous participant in terms of the lower EBITDA margin, as you were saying that you expected INR 100 crores more revenue, but the labor did not -- it started -- a reduction in the labor started happening in the month of March mid. But still, sir, I'm not able to understand, in the February when we did a call, we said we were expecting 14% EBITDA margin and guided for a INR 2,400 crores, INR 2,500 crore revenue, and we have already beaten that revenue. So it is -- I am not still able to understand why such a significant 400, 500 bps dip versus from third quarter to this quarter. Primarily, it seems that on the calculation that it is an increase in the construction cost and not because of the INR 100 crore lower revenue that you are saying because your other expenses, fixed cost seems to be in line, up 15%. What was that in the third quarter? So not able to understand costing. Second, why we are now reducing our revenue guidance from INR 3,000 crores to INR 3,500 crores? And if that is so, what revenue are we looking at in the first quarter? Will it be in the INR 700 crores range or INR 800 crores plus?

Yes, Shravan. As you've told, like we have told you that this basically major reason was like it was -- we were expecting a revenue up. I think it was more, which was reasonably attended. And like Jan call or so, we have told INR 2,500 crores, wherein you are aware that these were very conservative figures, right? So expected revenue was down by INR 100 crores. That was one major reason. The second also, as told by you, of course, the raw material prices has slightly gone up, no doubt, like because of this immediate rise in commodity prices, okay? So even that there also, there was slight impact of that as well. So as I told you, going forward on the project cycle, there is no implication because of that. And the second point was -- what was the second point, Mr. Shravan?

Sir, I was saying the reduction in the revenue guidance for FY '22. Previously, we said INR 3,500. Now we are saying INR 3,000 crores to INR 3,500 crores. And then if you expect sort of in the first quarter, how much revenue now are we expecting?

So we have given the revenue guidance of INR 3,000 crores to INR 3,500 crores, again considering conservative because, right now, see, nobody was expecting the second wave, and we are hearing about the third wave as well. So nobody knows how it will be. If there is nothing this, like we are very sure to attain this INR 3,500 crores, absolutely no problem, okay? And coming to our first quarter result, like, you know what? At this stage to comment on Q1 won't be appropriate. And as the work has been going on, we need to really come to the numbers, and we'll get back to you later on this.

Okay. So previous, when you say that labor workforce has reduced by 30% to 35%, so let me put it very simple. In April and May on an average versus the fourth quarter average, how much percentage labor has reduced? It would have reduced for 10 days and increase whatever. So net-net, now we have already completed 2 months. So how much labor on an average for these 2 months would have reduced versus the fourth quarter of average?

Around 35%.

Okay. From March level, you're saying it is already there. So in the same extent, can we expect the revenue to decline are slightly lower?

It is not exactly related to that. And it is -- we have mentioned that there is a reduction, which started from March. And because March '20, there was a -- we could see the steep increase in cases. But actually, it was happening from before. So that's what your earlier question when you were saying that it is INR 100 crore. INR 100 crores was the COVID didn't happen. Maybe, basically, that clear and this -- the atmosphere of COVID, I think, started showing from Feb itself. So Fed end around, you could see that there are cases increasing and people are getting infected, and people are on leave, and all this problem started coming up. But this situation cannot directly relate to the top line, that is the labor force proportionately or less or more. We need to ascertain this number. And at this stage, we cannot really comment on Q1. So basically, with regards to labor, we have mentioned 30%, 35% reduction is there. But we are seeing already positive inflow of labor. People have started every week. Last week also, we had more than 100 labors, which had come back. So we are very hopeful that by June end, this labor situation should improve.

Yes. So if that is the case, difficult to -- as you are saying, difficult to say in terms of the revenue. But previously, as you said, the steel prices, commodity prices has also gone up. So it may possible that this quarter also, we can see the same kind of a 10%, 11% revenue. And if that is the case, then also, we are confident, therefore, full year, we will be able to achieve 14% to 16% EBITDA margin or there is an issue downside.

We're very hopeful, Shravan, that we should be able to because pre-COVID, if you've seen our consistent results, people have been witnessing. But right now, the COVID situation is such, which is totally uncertain. So we can't -- we do expect figures only, but if you look at the pre-COVID situation for last so many years, the company has been making 14% to 16% margin. And all the contracts backed by us are a similar margin. So on an average, at a company level, we expect the similar margins to be made. However, in the situation of this COVID, like, if there is [indiscernible] business situation burden because, right now, everything seems to be under control from -- with the number of death tolls and the number of positive cases declining very steeply. We are hopeful that we should be able to maintain this. But if this third wave becomes what the COVID period stretches, these numbers can vary. So right now, we can always give it. It's not a cycle that we're supposed to give. We are dependent on certainties.

Got it, got it. Sir, last couple of data points only. How much CapEx now we are expecting for FY '22? And in terms of if you can give the mobilization advance retention and unbilled revenue as on March.

So we have in mobilization advance, which to the tune of around INR 450 crores as on March 31, FY '21. And we are expecting advanced to the tune of around INR 334 crores for the new works of Dwarka, Surat Metro and Worli-Sewri.

Okay. Retention money and unbilled revenue, sir.

Retention money is INR 239 crore as on March 31, and unbilled revenue is INR 509 crore.

INR 509 crore. And CapEx, how much now we are factoring for this FY '22?

The net flow as on March 31, INR 800 crores. And for guidance for FY '22 for the CapEx is near about INR 8,200 crore. That is 5% to 6% of our net flow.

Sorry, INR 84 crores you said, sir?

So our net [indiscernible]. So it's around 5 to 6 months and goes in maintenance of the CapEx. So that's the additional routine CapEx will be around INR 46 crore. So around INR 80 crores to INR 100 crores is the guidance for the coming year. Surat also, so it's a different city, so we have some additional CapEx there also.

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

Congratulations on the excellent performance. My first question was in this quarter, any accelerated provisioning done for COVID, anticipating some of this impact?

You are inaudible. Can you please be more audible?

So there's a lot of disturbance coming from your line, sir.

Is it better now? Hello?

Yes, we can hear you, please. Yes.

Yes. So I was saying, what in this quarter any accelerated provisioning done for the COVID impact given that we will have this continuation of this impact in the first quarter? So can you conservatively provide any provisioning during the fourth quarter to account for this impact, which should happen in first quarter as well?

No, no. We haven't done anything like that.

Okay. The second question is on the last year's COVID impact, the provision which you had -- would have done because the first half was really impacted. If you can quantify that amount and whether anything, any payments you received from the authorities or the clients on those provisioning, which you have made for COVID in the last financial year.

Which item are you talking about, Mr. Parikshit?

Sir, we have -- as you said, right, this quarter, you had some impact on labor movement, could be moving out. So there was some impact because of that cost associated to that. So any COVID claims have you filed with the clients? And what could be the amount which you have already received?

So like we had put some claims to the government, out of which Chennai Metro and Bombay Metro DMRC, they have paid us some amounts related to compensating our labor and salary payments. So we have received some couple of crores for it. But as such, there has not been any substantial figure received for it. But yes, we have received some amount from Chennai Metro and Bombay Metro and DMRC.

But what, according to you, this amount which has gone -- foregone because of the COVID last year?

This is around INR 8 crore to INR 10 crore of this account purchase. We can get back to you for the exact number of amount that we have received for it. Our CFO can reply on that later.

We are -- coming most from the cost, how much is the cost you would have incurred on account of COVID, additional cost because of COVID in the P&L?

So of course, that the first quarter, we had to book losses now because the cost was more. So it will be around like INR 25 crores approximately.

So this quarter, is it like first quarter of this year also that it could be severe or it will be much lower?

No, no. This quarter, it doesn't look. We don't know anything much like this, unless the situation goes in again. But right now, it seems to be a good picture because the cases have come down and labors are coming back. So we don't expect anything like this.

So the last time, sir, we had for some period about sites were shut down. But are you seeing the similar kind of trend even in this quarter? Or is it like the work is continuing [indiscernible]?

Even in the earlier time also, these sites were not shut down. We had been coming into intention of these services. The government had permitted us to work, but the issue was labor at that time and even this time. So even now, our work have not stopped. They are going on, but do it at [indiscernible] as rightly said by you. But right now, as labors are increasing, we should see upward trend in the execution scale as well. And prices is better. In fact, it is much, much better.

Yes, yes, because the last time, you had come down to almost sub INR 300 crores kind of revenue in first quarter, so I was just trying to compare that this time, the situation is not the right where in assuming we have to...

Absolutely not, absolutely not. We are not looking to the year full like impact. I should not give the figure, but like full to minimum of INR 500 crores for this quarter. So yes, that is not that high as before.

You have to understood that after going to the villages, they were in a bad situation as compared to what we were seeing here in Mumbai or any other metro cities because the facilities, medications and everything are available. So labors are understanding this fact, and it is easier for them to convince their families as well as their mentality to join back here.

Okay. My next question was on the ordering side. So given the pandemic is there, and now it's getting a little bit better, really, we have seen improvement, do you think the government now come back towards refocuses from COVID again towards ordering? So if you can highlight how is the big pipeline looking for you and some of the projects -- bigger projects. I mean, where are the pockets where you are seeing, like hospitals redevelopment or metal opportunities or roads or flyovers. So if you can just give some sense on the other pipeline, how it is looking for you. And what is the order inflow guidance for this?

So if you look at Phase 4, as I was mentioning, even DMRC has come up with their Phase 4 project, and there are 4 tenders which are online, which are ranging from INR 1,500 crores to INR 2,000 and on our underground metros. So we are itself, if you look at one single opportunity, you have INR 6,000 crores worth of projects that we would estimate in coming couple of months. As well as there are a lot of projects coming in from NHAI, from MCGM, from MMRDA. So all sectors works are going on. Specifically, the slowdown is from multiple corporation where they are more focused into COVID side rather than infrastructure development. But other departments, we are focusing on development. And there are -- these number of projects coming in are regular, and that's how we have this credit for HSR also. And other HSR projects are going to come up. All metros are coming up with tending process. So I don't see any shortfall for infra companies to be worried about COVID [ interest ] as I would have like to think.

There is a huge traction in orders. If you feel like [indiscernible] to bigger economic to [indiscernible] and like being -- in terms of being the second largest generation of employment, so there's great question in order interest. The order interest should not be an issue. We expect around INR 4,000 crores, INR 4,500 crores of order inflow this year.

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

A couple of questions from my side. First, if you could update about some of the major orders that you have like postal loans into the Dwarka Express Way and the various metro lines [indiscernible].

There's only one project in the total order book that is coastal road of the [indiscernible], which has not started because of environmental clearances, okay? So we're still awaiting for that. And all the other projects are of course in full swing with Dwarka Express Way, all the projects are in full swing. So like we have already completed 30%, 40% until March last, and the project is going well. So even, of course, in Dwarka, also Delhi, as you are aware, there was COVID impact. For a couple of months, there was [indiscernible]. Again, the leader has started going in, and the workers has taken up pace again. Other metro projects also doing very well. Our underground metro, we have completed the tunneling portion entirely. So it's like all the projects are really shaping up. As you must have heard this elevated line also, they have been doing the trial run from the month end or first week of next month. So -- and all the projects, which are in our hands have started and in full swing.

The second question is, Nalin, on the margin side. Now obviously, there is a fair bit of uncertainty about FY '22 due to COVID and labor situation and so on. But how confident are we about the 14%, 15% guidance that you have given?

Sorry, sorry. Can you repeat?

Yes. Sir, I was saying how confident we are about the margin guidance for FY '22, considering that there is still a fair bit of uncertainty about COVID and the other associated factors for the next...

So like we are very confident to gain momentum. And the lost time in H2, obviously are at risk. So it should be really good. And we are fairly confident to maintain this margin of 14% to 16% for the year-end.

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

Sir, in terms of the working capital, I think we have -- how we are looking at -- is there any expectation that our database can further increase or broadly likely to remain at this level? Or is there any possibility of further improvement in terms of our overall working capital?

So we are at -- currently also, if you see, Shravan, we are -- we have been -- even in this pandemic situation and tough times, still, the company has been able to bring down the debts. And so if you see, we have reduced almost like INR 150 crores in term loan and working capital -- in terms of fund-based [indiscernible] limits. So we don't see any issues in the working capital going up going forward. But right now, we should be able to maintain 120 days of working capital cycles that we are doing right now.

Okay. And sir, the days have gone up -- gone down. That is a good thing that we have done this year so become a [indiscernible] cash company. But in terms of the finance cost, if I look at our still -- on the third quarter, it has actually gone back INR 4.7 crore. So if you can help me overall, how one can look at in terms of the overall finance cost and if possible if you can break it down in terms of what is the interest cost and what are the bank guarantee charges and all other charges.

So basically, if you look at the interest on borrowings in the -- on a year-over-year basis, INR 64 crores was on interest on borrowings as against INR 69 crores in FY '20. And the main increase in finance cost that you are seeing is due to the interest cost on -- of INR 12 crores of mobilization advance of Dwarka Expressway. So there, it is on interest rates. So that's the only thing why we could see a little increase in the finance cost. Otherwise, the costs are well under control, and we are bringing down the -- the repayment of term loans and CC demands are also happening. So we don't see any major upward trend, and we should be able to maintain the rate cycle.

Okay. And sir, what is the FDR now off of our total cash? What's the FDR?

So we have an FDR of close to around INR 390 crores, and the cash guidance of nearly INR 46 crore. So -- and cash deposits to the tune of around INR 240 crores. As well as we have balanced in S2 account to the tune of around INR 165 crores.

Sorry, sir. I missed the number on the FDR, if you can repeat it.

FDR is INR 387 crores as on March '21.

Okay, okay, okay. Got it, got it. And is there any change in terms of last time, whatever we said in terms of the final fund base limit? Anything changed? Or are we looking at anything to be changed?

No. So if you look at this point, the utilization with regards to fund base, yes, we have been close to be 68%. That is the [indiscernible] figure is INR 407 crores against INR 602 crores. And for term loan, it is INR 124 crores that we have. And non fund-based is utilized to the tune of around 81%. That is INR 2,200 crores against INR 2,700 crores.

Okay, okay, okay. Got it, got it, got it. Okay. Anything you want to highlight in terms of the projects that definitely is the smaller one, as you said, the trial run is going on? So what other projects are likely to be completed this year in terms of the bigger one that if you can -- if you want to highlight?

So well, I would say most of the projects that are going on right now are related to metros, and the major projects that we are doing in Dwarka. So these projects are -- nothing is likely to be completed in this year, except out Kalwa project, Kalwa, we are making bridge, which is going to be completed. We have launched the [indiscernible] span of 100 meter or Kalwa Creek. And Metro line 2 and Metro line 10 are -- these are been already handed over from our side to the flat division. And the trial runs are expected to happen by this month end within 4 to 5 days. And this all -- the entire Metro line 2 and 7, there only entry-exits that are the connections to the stations are pending, which should be completed by somewhere around October, November. And the trains will be put into operations likely by December.

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

Yes. Sir, my question is on the exhibition guidance, which you have given around INR 3,500 crores for next year. Sir, can you shed some light in terms of which major projects you're expecting to contribute to the revenue for FY '22 in Dwarka or Surat Metro? So just we can get some insights.

Mr. Rushi, so we are expecting around like 60% from the metro and 40% from other projects. So major projects are, of course, the metro underground line will give a good portion of it. The line 6, the line 9 will contribute well. Pune Metro will also contribute well. And the Bombay Metro project, the Dwarka project will give the contribution. And these projects, CLR and GPT. So these are the projects which will contribute to the coming year top line.

These major projects will contribute almost 80% to 20% to the top line. If I can some [indiscernible].

You're right.

So in terms of [indiscernible], which you said that INR 3,000 crores, you had made [indiscernible] of around INR 1,300 crores. So what are the other 2 projects, balance INR 2,000 crores -- INR 1,500 crores, INR 2,000 crore [indiscernible]

So we have bidded for this high-speed railway, which is connecting Bombay and Ahmedabad, which is costing the packages C7, costing INR 6,000 crores. So we have taken 26% share, which is of J. Kumar. And we have mentioned that we should be -- we are bidded for INR 3,000 crores, out of which INR 1,300 crores we have already advanced.

So maybe that INR 1,300 crores other than that is one [indiscernible].

INR 2,000 crore approximately is from HSR, high speed railway connecting Bombay and Ahmedabad.

Yes, yes. Okay. And sir, any other bids, which you're planning to be at in the near-term in next 1 month in terms of value and size?

We have also -- there is microtunneling work for MCGM costing around INR 450 crores for Bombay. And also we have -- we are about to bid for Delhi Metro [indiscernible] packages of underground, which we mentioned, costing around INR 5,000 crores to INR 6,000 crores. So that will be bidding in the near future as well as there are some other projects in Mumbai. Like MMRD has also come up with one more package of Line 2B costing around INR 600 crores.

And sir, any diversification you are looking for in terms of any other segment other than INR 9,000 crores? What are the pipeline projects or something like that?

We are open to any opportunities, whichever comes our way because J. Kumar, we have qualification and expertise in all areas mostly. But we focus into this area being specialized job, where it's a niche area and experienced area of J. Kumar. But that doesn't mean we wouldn't go for like -- right now, we have bidded for a INR 450 crores job for microtunneling. So this is related to us and not usually, that's what we used to do before. But whenever there is an opportunity and we find a lucrative project, J. Kumar is open for such opportunities.

So this is what type of project?

It is also what we mentioned. We have already completed one of the largest projects of INR 1,000 crores at Alwar in Rajasthan, which was a hospital building. So -- and in multi-utility building, it was. So we are already having such certificates, which will entitle us for such opportunities coming on the way.

So the microtunneling is what type of project? This [indiscernible].

It is storm water drain and civil connections for which it's a connection of 2.8 meter [indiscernible] line connecting from Andheri to Kurla. So it's a tunneling job.

And sir, now just on the payment terms. So with most of the projects, how is the payment cycle now? Because I think, with this low manpower working at the government offices, so are the payments release on time or there is some delays we are facing right now?

Payments are made on a very timely basis. And of course, there are some small delays here and there due to limitations in staff that are [indiscernible] department. But online approvals and the offices systems has been started. So we don't see any major delays on payments for that matter. We are getting timely payments.

The next question is from the line of Jaspreet Singh Arora from Equentis.

My question first was around how much of the current order book would we have, which is where the clients would have been -- would be giving us the key raw material, let's say, how much lagging the, let's say, the steel and...

No, no. The projects are supply and materials.

So in this situation where...

Speak louder, please.

Okay. Sorry. So I'm saying in a period, which is -- which was where the last 5 months, which happens once in 15 years, where the steel prices go up 50%. Over what period of time do you think you would be able to raise the escalated bill and then get the difference approved between the price at which it was quoted and the current prevailing price? And talking about the current prevailing price, so March, the quarter may impact was more have been limited, I understand that the current steel prices would be very, very high compared to, let's say, December. And this happens once in 15 years. So what's your sense there?

So this price escalation as is commodity price or the wholesale price by arguing the sales does not go in proportionate on immediately sales. But going forward, they do take care and they match. The index is nice with the current ruling prices. So this does take care going forward for a couple of months. Initially, the gap is there. So going forward, the prices are matched. So this price execution clause usually fairly going forward will take care of it. We have also put our papers to all the government agencies also about this price rise to curtail this price rise by stopping the export and to maintain the import duty. So that will help the prices to go down. But I think basically, this is because of great demand in international market because China basically is importing a lot of steel, which was usually exporting. So that is a gap year. There should not be much impact, Mr. Arora, because of it.

Okay. So during the course of the current year, you're confident that whatever the difference is, you would be able to realize it from the concerned agencies.

Yes. It should be.

And therefore, the confidence, that 14% to 16% EBITDA margin is doable.

Yes, yes. We are looking forward for that.

Okay, okay. And second, coming to this fourth quarter INR 1,000 crore ballpark revenue that we had done, was this an optimal number? Or were the -- I'm sorry, the initial comment. Were there any challenges, including in the fourth quarter, maybe in the month of March? Or was this something that you had budgeted and you ended budgeting?

No. So we told, we were like confident to achieve it. And as you know, after October last year, situation has become much better. And like we had to require workman force. There was possibility in and around. So like there was [indiscernible]. So we achieved what we targeted.

Okay, sir. So it means it was an optimal environment for us to mobilize and do the work on the ground. So in that sense, my follow-up question was that assuming, obviously, we take another quarter more for things on the ground to stabilize there, workers are back and we are over with the monsoon period, so do you think the second half of this financial year, INR 1,000 crore per quarter or more is very much a doable number? I'm saying for 3Q and 4Q.

Yes. Got it. So Q3 and Q4 should be really good. What you will say, so we should be able to hit the similar number in this quarter.

Yes. I would like to add one point here that Q2 is the worst quarter of the year always in view of the monsoon. So after -- if I'm not misunderstood, you said Q2 onwards, we'll have a similar Q numbers.

Q3, Q4.

This Q4, yes. Undoubtedly, yes.

Yes. So basically, sir, [indiscernible] growth like that, so like last year, Q3, Q4, you did INR 1,800 crores, INR 800 crores and INR 1,000 crores, INR 18,00 crores. So my sense is your big growth has to come in Q2 this year, second half versus last year second half.

It is [indiscernible].

That is just -- obviously, 1Q will obviously be better than 1Q because last year it was a washout [indiscernible].

Yes. You're absolutely right, Mr. Arora.

Yes. But I'm just trying to understand more from a leverage perspective. So I guess, yes, that is where I was just trying to...

Last year, even after using entire H1, in H2 alone, we have achieved this good number and we could cover up a top line of INR 2,600 crores almost. So this year also, even if H1 and H2 will be competitively weaker, but sure, we'll take care of the entire top line. And we should be able to achieve the numbers, that guidance, the results that we are giving.

Got it. And I guess, by the time we talk next -- after 1Q -- or 1Q numbers, I think we'll have more clarity and confidence about your guidance, right?

Yes, there is. Absolutely.

The next question is from the line of Tarang Agrawal from Old Bridge Capital.

And congratulations for the highest quarterly execution. Some questions from my side. So over the last 6 years, you've invested significantly in CapEx, north of INR 800-odd crores, and you get about INR 1,000 crores of execution this quarter. So given that asset base, what is the kind of yearly execution that you think you can achieve, assuming like there is not a huge geographical and discussion in terms of where we are executing?

Do you want to ask in terms of the top line? Can you just...

Yes, sir. In terms of top line, on the current asset base, without having to invest significantly on your capital expenditures and your instruments and machines, so how much of the top line do you think you can achieve?

We are confident of achieving [indiscernible].

Okay, okay.

Right something like INR 3,300, yes. So around INR 5,000 crores, you can go [indiscernible] CapEx apart from this routine maintenance CapEx.

Got it. Sir, so the INR 4,500 crores of orders that you're anticipating in FY '22, what -- if you could give some sense of the geographical split, where you're anticipating these orders?

So basically, Maharashtra, Gujrat, Delhi, Rajasthan is in Northwest well wherever we are present, we are trying -- we will be focusing mainly into those areas itself.

Got it, got it. The INR 100 crore revenue loss that you alluded to at the start, was it more of a difference on recognition, [indiscernible], your work was already done in its setting in unbilled revenue or that was actually costs incurred and no significant work was being able to be done?

Yes. So it was -- in fact, the work was not done and the fixed cost incurred and the variable cost is not incurred.

Got it, got it. And sir, in terms of your interactions with your customers, right, MMRD, MMRC, DMRC, so on and so forth, how are they responding to the escalations that you've been raising to them? Because as the earlier participants alluded to, it's quite a significant escalation. So that would obviously move their budget structures as well. So how are they responding to it? And do you think you're going to witness any sort of impediments in getting that money out of your customers?

So some of the clients are ready to pay you [indiscernible]. Like we are in top budgets going forward. We expect that we can utilize. So there won't be much impact on this. And of course, there are also like [indiscernible] authorities to contain the prices, which is not good for the industry and overall economy.

So basically, escalations are not a matter of discussion. It is paid towards the standard clause, evitable in the tender. But what we are trying to request them is for additional escalation due to the steep increase. So of course, that's not such an easy thing to talk and convince because it has to be seen at an overall year-over-year basis. But regular escalation, there is no issue with the clients to pay because it is part of the contract.

So but in the last 6 months, the escalation has been far from regular, right? So which is, sir, I was coming from that as a service provider, in some sense, that could significantly dent our profitability.

So we are already talking to the government department. Like Pune Metro, we have already submitted some documents claiming that we should be paid additional escalation based on the steep increase in prices because this is the highest peak areas that we have seen. So in -- due to that, government departments are into discussion, but it's not such a simple matter to be concluded. Like even in 2008, Metro Phase 2 of DMRC, DMRC had paid all the contractors some variation due to the steep increase in prices. But of course, it is -- this peak has seen [indiscernible] compared to 2008 as well. But on the similar line, we are already submitted various letters to DMRC, Pune Metro, Bombay Metro and MMRD, everybody. So this is a lengthy process for which we are already working on it because they -- also they have the similar lines for discussion that, over the period, it will get compensated for it. So we are just trying to submit that today. We are getting written cash flow. And if it is negative, you will take benefit of that. So that's a matter of discussion, which is going on, but we are not left. Even this auction, I mean, are not taken care of. So we have submitted letters to various departments.

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

So my question is L1 is that [indiscernible].

Parikshit, you're not audible. Can you repeat, my dear, again?

This L1, if you say INR 1,300 crore, this is just a L2B project or Line 2B project [indiscernible].

Yes. That is the same one, which is from Chhedanagar to [indiscernible].

Okay. Sir, my question on -- again, on what is the total -- you said the total mobilization advance you have is about INR 400-odd crores, INR 450 crores, I think you said. So what is the interest bearing mobilization advance on the go?

Only Dwarka Expressway interest bearing in that. And all other projects, so that includes [indiscernible] breakup of INR 100 crores.

INR 100 crores.

Out of INR 450 crores, only INR 100 crores in there.

Okay. Just on this escalation, which you said, which you are putting up the claims at the time, so how do you account these escalations because the project execution happens every quarter, every month, every day? And you these costs are getting incurred every day. And then to the ones that you will put it up as and when it comes, you will realize the thing as well. Are you providing -- making a provision for these costs, which has gone up in the P&L? Does the EBITDA margin, the gross margin capture this impact already or they are still sitting in the inventory and as and when earnings come, you will adjust these adjustments?

Yes. So we do -- as and when it comes, we do an actual basis budget. So monthly, whatever the expenses are monthly, whatever escalation we get, so we account for that. There's no provision made for it. So it depends.

It is directly related to the value of work executed value. So there are 2 things that we do. One is the work that we release on a monthly basis. And second is the material advance that we give when we buy something important, which should a material purchased for the value of work done. As per indices, you get paid off on that basis as per the formula on a monthly basis.

Okay. That correction happens to material. Basically the material pricing impact gets -- every month, it gets corrected. So it gets paid out also and it gets build also [indiscernible].

Yes. As per the escalation formula. But like there are different clauses for different contracts. Somewhere, it's played like monthly. Somewhere, it is done quarterly basis. So where the indices are taking -- taken on the preceding months, some of the investments have taken 3 months prior. So it slightly depends on different contracts. That's for your information.

And sir, just lastly, on the income. The cash forward is the unencumbered free cash line and excluding MDR. So what's the total amount?

Okay. Tax billing is INR 45 crores.

How is that?

INR 45 crores in cash and bank finance [indiscernible].

That account holds to fund R&D, right?

No, no. So for Metro Line 2 -- Metro Line 3 and Metro Line 9, we have [indiscernible] including also Metro Line 2A. We have escrow accounts, which is project-based banking facilities that we take from banks. So whatever is the surplus money on that particular project, it's being kept in bank, and you cannot utilize it anywhere else. So that's how the bank balance is looking.

Okay. So only INR 45 crores, you can use it outside. I mean, your current bank balance of INR 45 crores [indiscernible] bank balance is all like at escrow and it's attached to the bank guarantee margin funding.

No. Even you can use INR 165 crores. So INR 16 crores, you can use for these particular projects where there's your monthly debt. On project-specific projects, whether it's Metro Line 2, Metro Line 9, Metro Line 3, the Dwarka project, so [indiscernible] all are these project-specific [indiscernible] for all of them. The money is there even for us to use, and the money is in our banks so that money can be used from that specific project. That's the only reason why we are calling it escrow account. But it is [indiscernible] today.

So when the project is over, then it will come out from there and you can use it anywhere else.

You're right, you're right.

And just lastly, the [indiscernible] one of the big opening [indiscernible].

We don't have clarity on that yet. We have given all clarifications from our side for to [indiscernible]. But we haven't received any 0we haven't heard this out from them. [indiscernible].

Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Shivang Joshi from Prabhudas Lilladher for closing comments.

So thank you, everyone, for participating in the call. I especially thank the management of J. Kumar Infraprojects, Mr. Kamal Gupta, for giving us the opportunity to host the call. Thank you, everyone, for joining the call. Mr. Kamal, any closing comments from your side?

Thank you, everyone, for joining the call. We hope we have been able to answer your queries. Stay safe. For any further information, [indiscernible]. Thank you. Thanks a lot.

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