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

Ladies and gentlemen, good day, and welcome to the J. Kumar Infraprojects Q2 FY '22 Earnings Conference Call, hosted by Anand Rathi Share and Stock Brokers. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Prem Khurana from Anand Rathi Share and Stock Brokers. Thank you, and over to you, Mr. Khurana.

Thank you, Lizan. Thank you, participants. On behalf of Anand Rathi Share and Stock Brokers, I welcome you all to J. Kumar Infraprojects Q2 FY '22 and H1 FY '22 post-results conference call. To share with us the perspective on the current quarter as well as, I mean, the way forward, from the management we have with us Mr. Kamal J. Gupta, Managing Director of the company; Mr. Nalin J. Gupta, Managing Director of the Company; and the CFO of the company, Mr. Arvind Gupta, with us. So I'll hand the floor over to the management for their opening remarks, and then we'll open the floor for interactive Q&A session. Over to you, sir.

Yes. Good afternoon, everyone. This is Nalin Gupta, Managing Director, J. Kumar Infraprojects. A very warm welcome to all of you to this Q2 FY '22 earnings conference call. Let me start with wishing everyone a very Happy New Year. Along with me, I have Mr. Kamal Gupta, Managing Director; Mr. Arvind Gupta, CFO; and our IR team. I hope everyone has an opportunity to look at our results. The presentation and press release have 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 or so, post which we can take the Q&A. Key developments during H1 FY '22 is that we have been awarded projects totaling around INR 1,540 crores during H1 FY '22, which is basically Line-2B of Mumbai Metro MMRDA, costing INR 1,308 crores and Mithi River tunnel, work of INR 232 crores, which is actually INR 464 crores job and share of J. Kumar comes to INR 232 crores. Stand-alone performance highlights for Q2 FY '22. Revenue from operations for Q2 FY '22 grew by 62% to INR 772 crores as compared to INR 477 crores in Q2 FY '21. EBITDA for Q2 FY '22 stood at INR 110 crores as compared to INR 63 crores in Q2 FY '21. EBITDA margin for Q2 FY '22 stood at 14.3% as compared to 13.2% in Q2 FY '21. PBT for Q1 FY '22 grew by 448% to INR 54 crore as compared to INR 9.9 crore in Q2 FY '21. PBT margin for Q2 FY '22 stood at 7% as compared to 2.1% in Q2 FY '21. PAT for Q2 FY '22 grew by 478% to INR 41 crore as compared to INR 7.1 crore in Q2 FY '21. The PAT margin for Q2 FY '22 stood at 5.3% as compared to 1.5% in Q2 FY '21. Stand-alone performance highlights for H1 FY '22, revenue from operations from H1 FY '22 grew by 90% to INR 1,447 crore as compared to INR 763 crore in H1 FY '21. EBITDA for H1 FY '22 stood at INR 206.8 crore as compared to INR 91.5 crore in H1 FY '21. EBITDA margin for H1 FY '22 stood at 14.3% as compared to 12% in H1 FY '21. PBT for H1 FY '22 grew by 652% to INR 97 crore as compared to a loss of INR 17.6 crores in H1 FY '21. PBT margin for H1 FY '22 stood at 6.7% as compared to 2.3% loss in H1 FY '21. PAT for H1 FY '22 grew by 634% to INR 73 crore as compared to loss of INR 13.7 crore in H1 FY '21. PAT margin for H1 FY '22 stood at 5.1% as compared to 1.8% in H1 FY '21. The company continues its focus on working capital management and quality of order book. The company has been able to maintain its debt levels within broad parameters despite the challenging environment. Our total order book as on 30th September '21 stood at INR 11,209 crores. Before taking the Q&A, I would like to reiterate the vision of the company. Our target is to achieve revenue of INR 5,000 crore by FY '25. Although we have comfortable debt position, our endure is to reduce gross debt every year. Objective is to continuously improve shareholders' return ratio, ROE and ROCE by investing in people, technology and process. With this, I now leave the floor open for questions. Thank you very much.

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

Congratulations for a good set of numbers. Sir, first question is on the revenue front. So now are we revising our revenue guidance upwards? So last time we have talked about around INR 3,000 crores to INR 3,500-odd crore. So just to give you a perspective in the first half, what we have done, INR 1,447 crores and the second half of last year, if I add, that comes to around INR 3,255-odd crores. So in that perspective, what the broad guidance that we are looking at? And at the same time, with regards to the margins previously we have talked about 14% to 15%. So that definitely we have maintained. So we will continue to maintain that?

Yes, Shravan. So we are revising our guidance from INR 3,000 crore to INR 3,500 crore. Instead of that, we are now confidently saying INR 3,200 crore to INR 3,500 crore as the revenue. And you're right, like we'll be able to maintain our operating margin in the range of 14% to 16%.

Okay. So secondly, now, sir, coming to the individual projects specifically. So just to get an idea in Surat, we have just done. So definitely, we have started in the last 6 months. So we have done INR 9-odd crores. So when can we see the significant uptick in execution in Surat?

Yes, Shravan. So basically, Surat, we have some land issues, actually it's basically some realignment we are doing there because of a very congested alignment at some partial locations. So the alignment needs to be -- initially, we are losing some time, but it's basically we are trying to make the project feasible so that eventually once we start and the overheads started running to the optimum, we don't lose money. So because of this, we are changing some alignment and realigning these stations, because of which the work is not yet started. Our already -- our D-Wall machine has been imported and reached Indian port. So we should be in a position to start D-Wall from this month end or early next month.

Okay. So now on a quarterly basis, can we see INR 100 crore plus kind of execution this quarter onwards?

INR 100 crores per quarter?

Yes.

No, no, no, how it can happen. It's a INR 1,000 crores project and the time span is around 40 months. So we do not expect INR 100 crore turnover to happen from this quarter. But once the work is started, we shall -- from the Q4, I think we can expect some good revenue to be coming in.

Okay. So the same case in terms of the Mira Bhayandar, Line 9. So there in the first half, we have done INR 100-odd crores. I stay there, so I can see a significant physical progress there. So is it that the revenue booking is late in that, so when can we see the uptick in execution in terms of the revenue booking in Line 9, Mira Bhayandar?

So as you rightly said, INR 100 crore odd booking if the work is completed to the tune of the around 14%. Out of INR 2,000 crores work, INR 1,000 crores is elevated and INR 1,000 crore is underground. So the underground portion, there were some land acquisition issues due to Airport Authority of India. We have already -- MMRDA has already paid the required money and the land has been handed over to us now. So that's how we lost 2 years to get that land and we could not start that work. So now we have got the land, and the work will pick up very fast. And there is some -- there was an addition of 2-kilometer flyover in the metro Line 9 wider to work. So due to that, also some NHAI permissions were taking time. But now the work is in full swing, and we expect a revenue of around INR 150 crores coming in from H2.

Okay. Okay. And in terms of Line 2B, D N Nagar, Mandale when can we start the execution there?

So work has already started there. Now the work will be in full swing, and we expect a revenue of around INR 75 crores flowing in H2.

Okay. And Dwarka Package 1 and 2 where we are seeing an uptick in the execution. So that momentum will continue.

Yes. Dwarka also, both the packages have picked up and work is going very smooth. We are expecting good revenue from there, like in coming H2, will be affecting around INR 350 crores, INR 400 crores from Dwarka.

Okay. And just a clarification, are we L1 in any of the projects sir? And secondly, in terms of the -- where we have already bidded and where we are planning to bid in terms of the opportunity size?

We are opening 2 projects, Shravan. These are CIDCO projects, one is CIDCO Metro station work, which is INR 168 crores. So we are already L1. We are expecting the LoA in another 2 weeks' time. And we are also L1 in one project of -- in fact we got coastal road. We got the LoA this month in October. So like we are not putting in our Q2 results. So that was INR 200 crores. Our part is INR 100 crores in that. We also bidded for some of the projects of like NHAI, Vadodara project, costing INR 1,400 crores. We also bidded for Kanpur Metro, Delhi Metro and Chennai Metro. So these are the projects what we have bidded and we are -- the pipeline projects are, of course, HSR high-speed rail, Agra Metro, GMLR and Nagpur Metro. So these are the projects, and there are many more in line. So these are the projects we are planning to be bid.

So the projects that we said that we bidded, Kanpur, Chennai. So what would be the broader size of that and the pipeline that we are planning to bid, so broader size will be how much?

We have bidded for around INR 11,000 crores projects, wherein our share is around INR 5,000 crores -- INR 4,000 crores to INR 5,000 crores. And in bidding pipeline, almost INR 15,000 crores of projects.

Okay. Okay. And in terms of the debt and working capital, a very good management. So there, we will continue to see the same the numbers that we have seen in this quarter in terms of working capital and debt around 500-odd levels will be there?

Yes, Shravan. You will appreciate -- we have already reduced our debt in this quarter by INR 23 crores to INR 508 crore total. And our debt-to-equity stands at 0.26, which is also very comfortable. And we are hopeful we'll be able to maintain that by year-end around -- this thing -- what to say, around INR 550 crores as our debt level.

We'll move to the next question. That is from the line of Mohit Kumar from DAM Capital.

Congratulations on good set of numbers. Sir, first question is on the opportunity size, given the fact that -- of course, we understand that there is a very good order book, but how do you see the -- how are you thinking in terms of order inflow for FY '22 going forward? And is the number correct, INR 1,500 crore -- this INR 1,500 crore order inflow which you, which you mentioned, that's for H1, right?

That is right. So we expect an order inflow of close to INR 4,000 crore to INR 5,000 crores for FY '22, out of which INR 1,500 crores we have already bagged. And as we mentioned, we have already bidded projects close to around INR 4,500 crores, where the bids have been submitted and there are other like INR 15,000 crore to INR 16,000 crore worth of projects, which we will be bidding in due course of time. So I think we should be able to maintain an order book of INR 12,000 crore by the end of FY '22.

Sir, this INR 15,000 crore to INR 16,000 crore order opportunity which I'm mentioning right now, is it mostly metro? Or is it a combination of 2, 3 segment? Can you please throw some light.

In the areas like we are bidding for BKC bullet metro train stations, we are bidding for HSR, Mumbai-Ahmedabad project, which is tunneling cum elevated works. Again, we are bidding for Agra Metro, which will be -- the bid will be submitted today. We are bidding -- going to bid for Nagpur Metro, for MTHL Packages, some Pune Corporation riverfront development projects. So it's a basket of mixed works, costing around INR 15,000 to INR 16,000 crores. GMLR tunnel, connecting Goregaon to Mulund, so that's also in pipeline. We have already submitted the RFQs.

Sir, how large is this Goregaon-Mulund project, roughly?

So each project is around INR 3,000 crores, and there are 2 such packages. And our share is 30% in that as of now.

Understood. Sir, related question, is there any reason why we didn't participate in Chennai Metro at all?

So basically, J. Kumar, we are looking for projects where we get margins to our satisfaction. So we don't want to -- and having metro underground works, these are in any project -- metro projects, underground project would not be more than 25% to 30%. And J. Kumar owns 7 tunnel-boring machines. So to -- and as of now, out of 7, our 4 machines are deployed at 2 at Bombay Metro Line-9 and 2 at Surat. So we have 3 machines which are in surplus. So we are trying to bid for Chennai, Agra, Lucknow, wherever we get good work at our margins. So we are bidded for these works. And Chennai is also not a bad geography. The geology is quite good there. It is sand. So we have opted for Chennai, Agra and Kanpur.

Sir, I understand that our entire -- each of the contract, we have a price variation clause, right? So -- and we are posting -- we are reporting an EBITDA margin, which on the lower side of our guidance. Is this something to do with no input inflation -- input raw material inflation, which has affected our margin in H1? And do you expect this margin to move up to the upper end of our guidance?

If you look at the margin side, I don't think it is on the lower side, my friend, because it's around 14% to 16% margin that we are targeting and we are achieving over past years. And all our contracts being covered under price escalation. Though there is a steep increase in prices, they have been not hitting our bottom line as the contract is fully covered under the price escalation variation clauses. So we don't see any impact on the bottom lines as of now at all, even after being having too much of a steep increase.

So my question was that, sir, we are achieving 14.3%. Is there any chance that will improve -- we can improve our margin by 100, 150 basis points and we can reach to our upper end of 10 or target, which is 16%?

We are striving for it. And our whole team is working to have its best pricing while bidding for new tenders and even for the current increase. I wouldn't say that there is no possibility, because it totally depends upon the market pricing also, like how are the raw material prices moving and the nature of work. So to increase it by slightly on a better side, should not be a very big challenge, and we will try our best to achieve it.

[Operator Instructions] The next question is from the line of Shikha Mehta from Equitree Capital.

I just have a couple of questions. We had an sorry accident...

Shikha, you're like not properly audible. Can you please speak a bit louder?

Am I audible, sir?

Yes, better.

So we had an unfortunate accident with collapse of bridge a couple of months, so if you could just...

Your voice is breaking, ma'am. Like we are not still able to hear you.

Ms. Mehta, can you use the handset mode while speaking and not the speaker phone. We're not able to hear you clearly.

Can you hear me now?

A little better. Please go ahead.

Yes. I was saying we had an accident a couple of months earlier with one of our bridges. So have we found out the cause for that, have there been any course correction or anything of that?

Yes. Like what I understand, Shikha, is like you are still not audible, but what I understand you're talking about that unfortunate accident what happened. Am I right?

Right. Right. Right, sir.

Yes. Yes. So this was really unfortunate. There was this incident, but we are fortunate enough that there was no casualty at that time. And like if you see our history of last 4 decades, there was no major incidents till now. All right? So we've taken very serious note of that, and we have deployed an in-house team to ensure that no such things are happening in future. What is -- for the first instance, it's looking like there was a mechanical failure because of which it happened. So we are just ensuring that no such incidents ever occur hereafter. Hello? Yes, Shikha, anything else? Hello?

Shikha, we are not able to hear you. Hello, Shika? As there's no response from the current participant, we'll move on to the next, that's from the line of Meet Parikh from Anand Rathi.

I just wanted to know the timeline for the CIDCO project, which we got in October for the -- so can you give some details on that?

This is part of the coastal road project. So it's a 2-year timeline project, but there's some environmental issues, Meet. So I think like the initial 4 to 6 months will go in taking the environmental permissions, which CIDCO is after that. So they are at the advanced stage of it now. So we are expecting it to come -- so the project should start like physically after another 4 months or so. And like there's one more project, which is the L1 168 crores, so that timeline is only 12 months. So we are planning to complete it in a year's time.

Okay. Secondly, sir, on this Dharavi project. So what -- when do you expect to start the project and about it also?

Dharavi, you're talking about the MCGM tunnel project, right?

Yes, sir. Yes, sir.

Okay. So that work is basically a microtunneling job, which is of 2.3 meter dia, and -- so the shaft location is being freezed. Yesterday only we had a meeting with the MCGM authorities. And the shaft location will finalize this work. So immediately, the work will start. The machine is available with our JV partner, and we don't need to infuse any CapEx for it, and the work should start in this month itself full fledged.

Okay. Yes, sir, can you give me the number for the CapEx incurred during the quarter?

During the quarter, for the year, like we have...

Or even if it's a 6-monthly number you can give, that is also fine with me.

Six-month is INR 45 crores.

INR 45 crores. And your target for the whole year?

So see, we have like maintenance CapEx of 5%. So overall, we are expecting INR 80 crores to INR 100 crores for the year-end, out of which INR 45 crores has already been done.

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

Congratulations on good numbers. Just a couple of questions, sir. Just wanted to understand in the order book, which you have right now, are there any slow moving orders or -- and how much of this order book is currently under execution, if you could just throw some light on that?

Sure, Alok. Of our entire order book of INR 11,200 crores, 2 projects are slow moving. That is the coastal road project, okay? So which is total -- like INR 400 crores, and the one which we will be getting now, the order in -- LoA we got in October, INR 100 crores, so which is not part of the order book as of now. So this -- apart from these 2 projects, that is around INR 400 crores to INR 500 crores, that's all projects are like at its best peak level, all are moving very well. So there's no issue. Of course, as like Nalin told you sometime back, the Surat Metro, initially, one quarter will -- a couple of months will go in finalizing the alignment. So you can consider like 2, 3 months for the Surat. That's it. All other projects are going very well in full swing.

Sure, sir. And also, sir, you mentioned about we winning around INR 1,500 crore worth of projects, and we are looking at around INR 3,500 crore or more project wins in the next 4 months. So sir, how confident we are on that because we have currently bid for around INR 3,000 crore, INR 4,000 crores worth of projects. And then -- so even if we win some bit of that and then we bid again for like December, January, we bid for some more projects. So is it like a tall ask to get around INR 3,000 crore, INR 4,000 crore worth of projects in the next 4 months? Just your confidence level on that, sir?

Yes, Alok, like slight correction. We have already -- we had order inflow of around INR 1,500 crores plus in H1, and we are targeting for INR 2,000 crores to INR 2,500 crores in the coming H2 of this year. So totaling will be like around INR 4,000 crores. And of course, we cannot see 100%, but we are very much confident that we'll be able to achieve this number, okay? Because we are already bidding a lot of projects, and we are sure like -- we will surely get this small chunk out of it. So that should not -- it doesn't look any issuance to get INR 2,000 crores, INR 2,500 crores in the coming 6 months.

Sure, sir. And just last question, sir, so our execution run rate is now nearly around 700, 800 -- 750, 800 sort of run rate we are doing. So what are we looking at in the third and fourth quarter because we are -- as you said, only around INR 500 crore worth of projects are kind of slow moving and now -- so what's -- if you could just throw some more...

It's like we have already completed INR 1,450 crores of project, and we are targeting INR 3,200 crores, INR 3,500 crores. So we should look for around INR 2,000 crores, INR 2,100 crores in the coming 2 quarters, okay? So -- hello?

Yes. Yes, I can hear you.

Yes. So in the coming 2 quarters. And like accordingly, the third quarter and fourth quarter -- fourth quarter will be the best, of course, so that it's around INR 1,000 crores, you can consider INR 900 crores or INR 1000 crores in the fourth -- INR 1,100 crores in the fourth one.

Sure, sir. Just last question, sir. In the -- and what could be the margin like? I mean, we are nearly 13% to 14% levels. So do we see that moving towards 15%? Or it would be more towards these numbers only?

So right now, we're maintaining this, but we are hoping like this number is slightly improved to putting 14%, 15%, of course, as we already spoken before, so about it. So we want to improve this operating margin going forward.

The next question is from the line of Deepesh Agarwal from UTI Mutual Fund.

So my question is, is there any implication of the recent accidents in terms of your eligibility for bidding for future projects? And how far are we from the final accident report by the respective agencies, how they are dealing with the situation?

So the thing, as I told you before also it was unfortunate and like the government department, they have also deployed an expert committee on that to find out what is the reason and like what are the preventive measures both way, all right? So they have not come out with the report yet. So after report is out, we will be -- like what's there. And like, of course, there is no issue of any bidding on this, like your second question. So we don't foresee any issues of not bidding or restricting our bidding for going forward. I think if you look at other infra contractors also, so this is an accident. And these things happens once in a while like -- and whether it is L&T, Afcons, HCC, ITD, anywhere, these type of accidents, if you look at Dwarka, L&T, same issue had happened. So these things are -- they does not have an impact on the bidding process because it's not a mala-fide intention or malpractice that has happened. It is an accident. So accident has nothing to do with your bidding eligibility of these factors because J. Kumar, we have a robust and very proven track record of having executed works with good quality and timely completion. So it will have 0 impact on bidding any tenders. And that's how you can see we have recently backed orders of INR 1,500 crores. Thank you very much.

Okay. So my second question is, so typically, you have a higher working capital versus the industry average because we understand you do a lot of investments on the structure for the metro work. So with you expanding the scope of the -- into different segments and geographies, do you see there is a scope for a reduction in the working capital in the next 2, 3 years?

Yes. So like Dinesh (sic) [Deepesh] you must have seen, we are right now sailing at 120 days of working capital cycle, okay? And our endeavor is there to like going forward to decrease the working capital cycle between 100 and 120. And one more thing is that J. Kumar, we are more of an urban contractor and also into specialized infrastructure work like structures. So structures has bigger -- the working capital requirement and the CapEx requirement is slightly higher, but still we make good margins. So I think -- but yes, we'll surely try to reduce the working capital cycle.

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

Sir, mobilization advance and retention money, what's the number as on today? And how much more mobilization advances can come in the second half?

Mobilization right now is at INR 436 crores. Outstanding mobilization to be repaid. And what was the second question, Shravan?

Retention money.

INR 217 crores. Retention is INR 217 crores.

INR 278 crores, okay. And how much more mobilization advance is expected in the second half?

Around INR 387 crores.

INR 387 crores. Okay. And sir, the underground Line 3 that last time you said would be over by next December '22. So that remains intact.

So we have already completed 79% of Line 3 project, Shravan. And December '22, of course, was our target, but I foresee by filling by another 1 quarter or so because second wave of COVID and also what to say -- this thing -- yard issue is not for -- the depot issue. Of course, we can complete our and finish. But of course, the handing over portion will be remaining because of yard, but we'll be completing over 97%, 98% of the group project. And like because of the yard, we may have to stay for another 6 months or 8 months there.

Okay. Okay. So by March '23, it would be over.

By March '23, we are hopeful of getting to, yes.

Okay. Okay. And sir, this Worli-Sewri, so there, how do we now see the pickup in the execution?

So Sewri-Worli, we have just started, but we have done 3% of the total project cost of 1,050 till now. And when the project has picked up, like the -- since it is a missing link from Worli and towards the Sewri. But the government is doing a great job by removing all the encroachment and PAPs and wherein they are doing it much before the timeline what they had told us. So the project from both ends, Worli end and Sewri end has picked up and we'll see revenue flowing in from the fourth quarter for Sewri-Worli also.

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

Sir, there was a recent -- the Ministry of Finance recently that issued a reform on public procurement for the -- in this sector. So have a looked at it? And what is your view on this? Where they are saying that public procurement works been declared as quality-oriented procurement. There shall be 30% weightage for nonfinancial parameters. And also on the payment terms, which mandates to release 75% of running...

Jiten, you're talking about the arbitration cases, am I right?

Not arbitration. This is just a normal Minister of Finance Department of expenditure has provided -- has come out with a procurement policy...

Yes. Yes. We do appreciate that. So they will be giving not the L1. 30% weightage will be given to technical right mark also, right?

And then also payments. So -- and also, sir, is it eligible for projects, there is a INR 10 crore criteria here also. So is it eligible for larger projects? Or it is eligible for small-sized projects? What is your view on this?

Exact details are not yet out, but we have also learned that when we -- we welcome this move of government, of course. So that's like when we get an elaborate detailing of this, we will be able to guide more towards that. So we don't have exact details of that right now.

Okay. Okay. Okay. Still the clarity is awaited. So we are in consultation with the government or we will wait for the any note from the government for this.

Of course, of course, we are in touch with them. So like we'll get the details, more clarity towards that and then what to say -- we'll be able to get more proper approach towards that.

Okay. Got it. Sir, one more thing. Can you give us the revenue breakup segment-wise, like metro, flyover, roads and other civil for the half year and Q2?

You're saying H1, right, half yearly.

Yes, half year and Q2 if possible.

Yes. So for half yearly, we have like 62% for metro and rest from flyover bridges and other work. And for...

And sir -- yes, sorry. Please continue.

So for Q2, we have around like 55% from metro and rest 45% from other works.

And sir, any key projects contributing to the revenue in Q2 and H2 -- H1, like Line 3, the elevated projects...

So Line 3 has contributed almost 24% in H1. And Line 2 has contributed 6%, 7% is from Line 6, 9% from Line 9. Pune Metro has contributed around 7%. This was among the metro. JNPT projects of NHAI has contributed 7%. 14% is from Dwarka Expressway. And other flyover bridges is 11%.

This is for the half yearly, you're talking about, right?

Half yearly figures, yes.

So JNPT is now over, sir, because we don't see anything remaining in the order backlog?

Yes. There was some COS, some additional work of around INR 70 crores, INR 80 crores. So that is balanced. And like, we expect it to complete by March.

And sir, one more thing, I would like -- on the margin front, yes, I mean, you have given the guidance -- a broader guidance of 14% to 16%, and we understand the material price going up, resulting in lower margin in the first half. But sir, how do we see -- like, is our order backlog fully protected against the price escalation or we have some fixed price contracts also in order backlog. Can you give us a breakup for that? And your view on the margin? How do we see the margin in the coming half, sir?

Jiten, all of our projects are covered with price escalation clause. So there is no issue of any contract with fixed price clause. So like all the projects like are not affected because of this rise in commodity prices. As I told you like, since these projects are covered with price escalation, the increase of pricing of commodities as well as labor are being taken care by these clause. And on the whole project cycle, life cycle, this is not affected.

Sir, one last question. Do you -- sir, through automation and mechanization, sir, do we see the labor cost coming -- or replacement of labor through automation going forward, which can bring in operating leverage because of the COVID, we have learned that labor -- we are dependent on -- highly depend on labor. Obviously, for few work, you need to get labor on board. But otherwise, we are focusing on automation CapEx, which will bring down the labor cost and improve the efficiency and operating leverage. Any thought process on that, sir?

Yes, of course, Jiten, J. Kumar's endeavor is always to go for more and more mechanized and automized way. So we try to do a work -- particular work in like more methodically wherein like you can use latest equipments, machines, wherein labor requirement is at minimum. So of course, we are deploying latest methods to do it, wherein the labor requirement goes down. But of course, we cannot eliminate labor, but we are trying to improve it so that it improves our efficiency, time cycle, everything.

Like what we have done is, we have gone for more and more of precasting methods, where in the labor requirement at site goes down. So such type of procedure like J. Kumar, we are the first company in India to do entire station precast. And that's how we could complete 22 stations in the given time frame where other companies could not even compete 4 to 5. So these methods J. Kumar, we always believe in going for the latest technology, and that's how we have been able to succeed in our target given.

So going forward, we can see the labor count coming down because of the new technology we are adopting at various sites, just understanding on that.

Labor would not be a substantial decrease. But looking at the quantum of work and the type of technologies used is by precasting methods that we adopt in most of the works now reduces the amount of increase in labors and the period required for such mega projects is also not going ahead. Like earlier for doing a INR 50 crore project, we used to have a time line of 2 years -- 2, 3 years. But now for doing a INR 2,000 crore project, also the time line is around 3 years. So it is the same. But still the huge quantum of work is done in the same time period because of the technological changes.

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

So 2 questions from my side. First, what do we expect our debt levels to be by the end of this fiscal? And second, I mean if you could also give us the status of some the other metro lines that we are doing like Line 4, Line 6, Line 7 extension and also Surat -- sorry, Pune metro?

So we expect our debt levels to be anywhere between INR 500 crores to INR 550 crores. And with regards to -- the other one was, you need to know the progress of the other line?

Yes. I mean what is the work status there? How much work has been completed and any...

Yes. All the works are in full swing. And like Line 4, there is -- we have already achieved a progress 26%. At Line 9, we have completed 14%. As I mentioned that the INR 1,000 crore underground section was not been handed over to us due to land acquisition issue from AI. But now the money has been deposited and the permission has already come and we are at the job site. So Line 9, you will see a good increase in revenue generation. And Pune Metro, we have already completed 81% for the elevated portion -- elevated project. And for underground, we have completed to the tune of around 40%. So like within 6 to 9 months, we should be able to complete our elevated project and underground project would take nearly around 2 years from now as they have increased some scope of working line. And Surat, we have already mentioned that the work is to start. We have generated just INR 4 crores revenue from it, and the machine has right at the job site and the alignment issue needs to be finalized because rather than struggling during the course of work, it is better to delay by 6 months and start in the right alignment. So that's the reason why we are taking some time.

The next question is from the line of Meet Parikh from Anand Rathi.

Sir, my first question was, you had mentioned previously, you were looking for opportunities in the health care hospital building projects also and the water pipeline projects also. So any -- or your view on any bids you will be participating in, in the future?

Yes, of course. We are already doing this hospital project in Lucknow, which is on the verge of completion, okay? So there are some more projects which are coming in NCR region. So we are targeting that, and we'll be bidding for that, of course.

Okay. Secondly, sir, on the high-speed rail project, if you can throw some light on when any new bids which will be coming up and you will be participating for it?

So there is a Bombay-Ahmedabad HSR project, which is connecting from Bhiwandi to BKC, which is an underground section of INR 8,000 crore, and we have already started the preparation of that work. So -- and we had already participated in 3 earlier packages. So this project, we should submit within 6 -- 3 to 6 months' time as per the submission date.

Okay. Sir, one granular detail I needed. It was regarding the Dwarka Expressway. Can you just provide the physical progress of the projects, Package 1 and Package 2?

So Dwarka Package, both put together, like we have completed around 23% of the whole cost. And as I told you, we have -- in this H1 had a revenue of INR 275 crores from Dwarka and we are expecting a revenue of around INR 400 crores from Dwarka in H2.

Okay. And sir, on the Line 7 metro elevated, what is the physical progress in there?

So there are 2 projects. One is the earlier project of Line 7, which we have completed 100% or we can say 99% and only 1 entry exit is pending, which the department gave us in the month of July. So that also will be completed in the next 2 months. And for the Line 7 extension, which is -- which was the work, which was canceled of Simplex and we bagged it. That work also has been completed to the tune of around 80%, and some ancillary works are going on. So within the next 3 months or so, we should be able to complete that as well.

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

Sir, so one question. I think earlier in -- somewhere in your remarks, you spoke about having bid for some project in Chennai underground metro, if I remember correctly. So if you could help us with the size and also, I mean, in the same breath if you could help us understand how do we decide on the markets that we would like to explore, because I think if my memory serves me, we did not participate for underground metro projects in Bangalore, but we're participating in Chennai. So besides the terrain or geology, I mean which all factors are taken into account when you look at some of these new geographies, especially on metro side?

Yes. So if you look at this, what is important, Prem, is what is the geology of that city. Like Bombay, it has hard rock, but it is not granite. But if you look at Bangalore, it is a very, very tough rock. It's granite. And the abrasion of the rock is very, very bad. So in that condition, the wear and tear of the machine and the productivity is very less. So that's the reason why we didn't participate in Bangalore. But if you look at Chennai, it is mainly sandy salt. So it is very much similar to Ahmedabad, Surat, Delhi that we are already operating. So it is geology, which makes us select, which is the type of area we need to operate. And as we had a lot of underground works happening in Mumbai and Delhi, Ahmedabad, Surat, so we did go for Chennai till now. But as those works are nearing to completion to backward -- to utilize our machineries, we have selected areas like Kanpur, Lucknow -- Kanpur, Agra and Chennai, which has, again, sandy soil. So the available machines of J. Kumar's fleet will be utilized on those work. So that is how we select these works.

Sure. And any new markets that we are targeting besides the name that you spoke about, I mean, Kanpur, Lucknow, Agra and Chennai, any other markets that we are targeting to kind of enter into?

So basically, J. Kumar, we are open to any good opportunity, but we try to stay in the same geography as far as our appetite is taken care of. So these areas also been again close to NCR towards the north area or Chennai is the only different sector which we are connected. Otherwise, if you see, we usually try to stay in the same geographies where we are operating. So as of now, we don't have any immediate plans to open some new state. But if we have a good opportunity, we'll be surely open to it.

Lizan, do we have any more questions in the queue?

No more questions.

Sure. Sir, I hand the floor over to you for your closing remarks, please.

Thank you, everyone, for joining the call. We hope we are able to answer you queries. Stay safe and all the best to all. Thank you.

Thank you. Thanks a lot.

Thank you. Ladies and gentlemen, on behalf of Anand Rathi Share and Stock Brokers, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.