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

And then FDR. FDR is near about INR 365 crores, and balance is the escrow account in this, INR 45 crores -- INR 44 crores.

Okay. Fair enough, sir. Sir, lastly, sir, we have done significantly well in terms of execution. So what will be the key contribution of the project wise, we could highlight 4, 5 projects, which are the key contribution during the quarter, that would be helpful.

So for Q1, we got INR 160 crores from Line 3, Metro Line 3, underground, Mumbai. Line 2, we got INR 42 crores; Line 6 Metro of Mumbai, almost INR 50 crores; Line 9 of Metro, almost INR 60 crores; Pune Metro, we got around INR 45 crore; NHAI JNPT projects, INR 45 crores; and Dwarka, almost INR 97 crores. And others were like INR 70 crores and all that. These were the major contributors for this quarter.

[Operator Instructions] The next question is from the line of Sreeram Ramdas from Green Portfolio.

Sir, to the previous participant you had mentioned we are the lowest bidder for around INR 600 crores.

Would you mind to be little louder, sorry?

So to the previous participant, you have mentioned that we are the lowest bidder for around INR 600 crores. Is that the right value?

Yes, you're right.

That's right.

Okay, INR 600 crores. And the -- there are around INR 5,000 crores worth of projects that we're currently bidding for?

Yes.

That is already bidded by us, and around INR 15,000 crores were projects we'll be bidding in this year.

INR 15,000 crores. Okay. All right. And lastly, another question is, sir, are we facing any execution delays in any projects?

Not really. Some little bit issues here and there are -- ought to happen when we are working in urban cities, but nothing remarkable that need to be concerned about.

Okay. And any update on the coastal project where we were awaiting forest clearance?

Yes. So Sreeram, we're still awaiting the forest clearance for this coastal project of CIDCO. So the environmental clearances are in process. So they are like they have cleared 2 milestones. So another 2 or 3 balance. So we expect it another 3, 4 months to get started on that project.

[Operator Instructions] The next question is from the line of Parvez Akhtar Qazi from Edelweiss Securities.

I just had 1 question. If you could guide us about the status of some of the major projects that we are doing, like Line 3, Line 7, Line 9 or -- and the Dwarka project, et cetera. I mean, how is work going on? When do we expect to complete them all, that would be helpful.

Yes. So Parvez, these all projects are started going very well. We have completed almost 76%, 77% of Line 3. Dwarka, of course, since the second wave of COVID hit Delhi more, so like this quarter it was slightly less, so total around 16%, 17% of the project is completed. And rest of the major projects of like Line 2, we have completed 89% approximately. Line 4, we have completed around 25%. Line 6, we have completed around 30%, Line 7 is 100% completed. Line 7 extension that we had got, that also have completed to the tune of around 60%. Line 9, we have completed around 12%. And Pune Metro, we have completed around 75%. And Surat, we have just started.

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

Sir, what is the payable number, credit payable?

INR 405 crores, 4-0-5.

4-0-5 crores. Okay. And in terms of the cash that we have, FDR cash, cash deposit and balance in escrow. So the number last year at March was INR 598 crores total. So right now, the total is INR 451 crores because you said INR 365 crores FDR, INR 44 crores in escrow and cash is INR 42 crores, something is also missing?

Yes, yes, you're right. I think that's right. Escrow amount has come down. That's it.

Okay. So cash balance of combining all put together, cash and bank balances, which were around INR 598 crores in March now is INR 451 crores. So around INR 150-odd crores has came down, put together all the...

The escrow amount has come down. You're right.

Okay, okay. And secondly, sir, in terms of the -- this year, this Line 3, how much would be now will be finishing this year? So would be around INR 800 crores, INR 900-odd crores revenue would be coming from this Line 3?

So Line 3, we'll be completing the project by coming December, that is December '22, the project will be completed in all respects from our side. So like up to this year, we'll see a revenue of almost INR 700 crores to INR 800 crores.

Okay, okay. And this Mira Bhayandar Line 9, there we can see a INR 400 crores, INR 500 crores kind of a revenue this year?

This will like give around INR 200 crores to INR 250 crores this year.

Sorry, INR 200 crores to INR 300 crores, you're saying?

Yes, INR 250 crores to INR 300 crores you can say. Yes.

[Operator Instructions] The next question is from the line of Prem Khurana from Anand Rathi.

Sir, most of my questions have already been answered, just one. I think in your opening remarks or the answer to one of the earlier participants, you spoke about kind of planning a bit for Chennai Metro projects? And historically, we wanted to focus only on Delhi, Gujarat. I mean, essentially, the idea was to look at only areas wherein we are already present, and we never want to get into or go to south at least, I mean, till when you're able to find opportunities either in Maharashtra or Gujarat or existing markets. So what has led to the change in the strategy? I mean, we're willing to go and bid for projects in Chennai now.

So Prem, basically, company, as we mentioned during the discussion as well, our primary focus is to concentrate on the northwest belt of the country. But we are open to opportunities. If we get the jobs at our margin. And as the company is growing, we need to open different areas as well. Because J. Kumar, we don't believe in doing into a bad competition and taking orders that unwanted rates. So we keep bidding for jobs and wherever we feel that we get to work at our rates, we are open to it. And Metro sector, we already -- this job that you're talking about, whether it is Kanpur, Nagpur, Agra or Chennai, these are all mainly underground jobs. They are not elevated. So J. Kumar, we own 7 tunnel boring machines in the company's fleet. So to keep them utilized and make optimum use of it, we are trying to bid for these areas as well. But our main focus is northwest belt.

Sure. And then these new orders, would you get to have a similar kind of conditions? I mean, what we had with Line 3 wherein you were required to buy new TBMs or the old TBNs -- refurbished TBNs would be allowed?

It depends on the number of TBNs required on the project. So like as of now, out of the 7, 4 tunnel boring machines has been already booked for Line 9 and Surat Metro. So we already have 3 machines free as of now. And depending on the number of projects we bag, maybe 1 or 2 machines maybe we may have to buy. Otherwise, we should be able to accommodate with the available machine.

[Operator Instructions] The next question is from the line of Alok Deora from Motilal Oswal Financial Services.

Sir, just 1 question I had. So what's the execution run rate now? So how -- so we understand that it was impacted in April and May. So have we now moved back to the Q4 run rate, or if you could just elaborate on that?

So the labor strength has already improved to the pre-COVID level, and there was a dip of around 50% to 60% due to the COVID. But, however, we have reached the pre-COVID levels, and now we have a labor strength of 11,000 to 12,000 people. And so I think the execution should ramp up, and we should be operating in the normal conditions, unless there is some new surprise of third wave or something coming up. Otherwise, we are in normal range, and we are working comfortably now.

Sure, sir. So July, we have not seen any impact. So it could be like a normalized quarter for us of whatever we have seen till now, July and August?

As you would appreciate that Q2 is the weakest quarter of the year, and there has been monsoon also, but yes, it would be a normal quarter. And we look forward for Q3 and Q4 as we mean ramping up area for company in terms of revenues.

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

Sir, my question was related to our water segment. So I just want to understand what kind of projects we are looking for? And are we able to do it independently? Or we would be doing such projects in joint venture?

So we are like -- we already have some experience. We have done like around INR 200 crores, INR 300 crores of projects in water in our existing [ NH ] project. So we do carry some experience. But of course, if we go for bigger sized price projects, we may go for JV for that. And like the water pipeline work, water tunnel work, these are coming up, so we'll be bidding for such projects, maybe in JV for initially because of the credentials. But with regards to Metros and flyovers, J. Kumar, we qualify on a stand-alone basis now. Other than water, we can go mostly on a standalone basis.

But sir, in the water segment, you are looking mostly for the pipeline and the tunneling work, tunnel pipeline, right, sir?

[indiscernible] water treatment plant..

Sir, we are -- are you looking for any Jal Jeevan Mission project wherein we are seeing big uptick from the -- so are we looking for bid? No?

No, not yet.

Sir, and these projects are -- we will be able to maintain above 15% margin, or we would expect these margins to come down like...

Of course, all projects, we like -- we will maintain the 14% to 16% margin. Without this, we don't want to take any projects, Mr. Jiten.

And sir on the raw material price increase, I understand there is escalation clause, but are we able to get 100% escalation? And can you just give me the breakup of the order backlog, which is covered by escalation, and which are fixed price contracts?

All our projects are covered with price escalation contracts apart from Lucknow, a small project of -- [ which is balance ] around INR 80 crores, where the escalation clause is not there. Rest all of our order book of INR 16,000 crores -- INR 11,600 crores are covered with price escalation clause.

So in -- okay, so Metro 3 where we are seeing multiple delays, so we are able to recover our escalated cost there, right? Because the prices are going up, like steel and cement, and this project requires maximum steel and cement. So if we are getting reimbursed from the Metro Authority what I understand, right, sir?

So all the projects like they have different escalation clauses, Jiten. Some clause is with RBI index based, some with star rate. So there are different formulae for this -- in different projects, but out of covered with price escalation, so maybe some projects give you immediate, what you say, reimbursement of that compensation, but some projects like they don't give it now, but on the whole of project's life cycle you're covered. So it should not be a problem.

[Operator Instructions] The next question is from the line of Mr. Alok Deora from Motilal Oswal Financial Services.

Sir, sorry, a follow-up question. So just on the previous question, if you could just elaborate on the escalation part. So if the input costs are increasing quite significantly, then where do we see the margins going? I mean, do we -- we don't see any significant pressure on that? If you could just elaborate on that part?

Yes. So see, as I told you before also, Alok, 99% of our all order book are covered with price escalation clause. But like some contract there's a different clause and the others have a different clause. There are 3, 4 formulae, some are based on wholesale price index and some are based on star rate basis. So there is -- as I told you, like star rate, you get it -- the compensation is immediately received in that month, the managed project you get escalation 3 months prior indices. There are different clauses. So as a mix, looking through the whole project cycle, you get that compensation. So your margins are not [ impacted ] on the project cycle business. So -- and a mix -- for us, on a yearly basis also, it won't have an impact to us. So we'll be able to maintain our margins because of that.

The next question is from the line of [ Abhijit Periwal, ] an investor.

Sir, this -- we had some clause...

Mr. Abhijit, can you be -- you're not audible. Can you be a bit more loud, please?

Can you hear me now, sir?

Yes, better. Thank you so much.

Yes. So this is regarding the Dwarka Expressway. I believe if we complete the project on time, we get some extra amount from NHAI. So are we on time to complete the project? And what are the amounts that we can receive from them?

Yes. So there's -- of course, there's a bonus clause in NHAI. So I think it's like around INR 70 crores bonus we can get if we complete before time of 3 months. So right now, because this 2 COVID scenarios, of course, the time lines have gone up. So like they are giving us the extensions because of the COVID. So I just checked whether even this thing, bonus is applicable on that account or not.

Okay. And INR 70 crores would be for one of the packages or both the packages combined is INR 70 crores?

Yes. So 1 package is INR 70 crores, the other package is some INR 40 crores, INR 50 crores.

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

Sir, my first question is on the NHAI sites. So are we bidding for more NHAI projects besides the Dwarka Expressway. So if you can just highlight the outstanding bid which are yet to be opened if you have committed bids.

Yes. So we have bidded for some NHAI projects, couple of. We were not L1 there now. And like we are bidding more of NHAI projects now going forward also.

Okay. And sir, my second question is on the entire building segment opportunity. And in Mumbai alone, the stocks of big modernization of BMC Hospitals and PWD Hospitals. So are we going to participate in that opportunity because we have done government buildings earlier. So if you can give some sense on this?

Yes. Of course, like hospitals, medical colleges, universities will be our focus point, like -- since we have a good team and good set of different sources for that. So we are looking for the right opportunity in that also, but as we get, we will, of course, bid for that.

Okay. Sir, my last question would be on the high-speed rail. Sir, any package where we have submitted the bid and it's still to be opened even on further package ordering. sir, if we can get some sense on that..

So we have bided for C7 package for HSR and the bid is still under evaluation. And there are some further new tenders, which are expected to come like C3 and some more packages. So we are surely going to keep an eye on it and we'll be bidding for it.

This -- I think you spoke about C7 [indiscernible] bid has to be open, yet to be opened.

Yes, C7.

So how big is that and [indiscernible]

INR 6,000 crores.

And what will be our space, like -- because I think we have bid in a partnership with some other players, right? So what will be our stake there?

Our stake is 26% as of now, but that would be a matter of discussion how it goes, and we may increase our stake also in the [indiscernible] if we get the bag -- get the order.

[Operator Instructions] The next question is a follow-up from the line of [ Abhijit Periwal, ] an investor.

Yes. Sir, this is regarding the high-speed rail. You had just mentioned that the Maharashtra side of orders would also come. By -- what is the time line that you expect these orders to come?

See, we cannot really comment on that because the HSR team is about to meet the CM of Maharashtra very soon. This is what we have heard. But it's a matter of a political decision, so we really cannot comment on it much, but it has to come. There is no other choice because it's a full connectivity. So today or tomorrow it has to. So whenever it comes, we are contractors. Once the bid is out, we will bid for it.

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

Yes. Sir, just coming back to the same HSR, where we are saying INR 6,000 crores, a 26% stake, and we are saying we can increase it if we get the project. So can we increase it to 49%, 51% or only 5%, 10%?

It's an open thing, we can go up to 50%, so that there is a discussion which will conclude at the later stage because as of now, officially, we are 26%. So I wouldn't like to really add much to it. But once we get the order, we'll explore that possibility.

And if we get, do we have to do a separate CapEx for this, or...

Of course, yes, we'll be requiring separate CapEx because it's a different nature of work, and there are [ launchers and RMC plans ] and many -- some specific arrangements, molds for the super structure that's required. So yes, we'll require new CapEx for it.

And any ballpark numbers? So for 26% stake, how much CapEx we need to do? And if we go for a 50% then?

[indiscernible] numbers as of now, and later on, once we get the job, we can surely put to you through all the numbers.

[Operator Instructions] As there are no further questions, I now hand the conference over to the management for their closing comments. Over to you, sir.

Thank you, everyone, for joining on the call. We hope we have been able to answer all of queries. And please stay safe. For any further information, we request you to get in touch with our CFO or the IR team. Thank you so much.

Ladies and gentlemen, on behalf of Motilal Oswal Financial Services, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.