Kalpataru Projects International Limited (KPIL) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the Kalpataru Power Transmission Limited and JMC Projects Limited Q3 FY '21 Earnings Conference Call, hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Bhoomika Nair from DAM Capital Advisors Limited. Thank you, and over to you, ma'am.

Thanks, Lizzane. Good morning, everyone. I would like to welcome you to the Q3 FY '21 Earnings Call of Kalpataru Power Transmission and JMC Projects. We have the management team represented by Mr. Manish Mohnot, Managing Director and CEO; Mr. Ram Patodia, President, Finance and CFO; and Mr. S.K. Tripathi, Deputy Managing Director and CEO of JMC Projects. I'll now hand over the floor to Mr. Mohnot for his opening remarks, post which we open up the floor for Q&A. Over to you, sir.

Thank you, Bhoomika. Good morning, everyone. I'm thankful to you for your continued interest in attending this earnings call of KPTL and JMC. I will quickly share highlights of our financial performance for Q3 '21 before I move to share updates on key strategic initiatives. KPTL and JMC business operations have reached complete normalcy with declining COVID cases and gradual easing of restrictions. KPTL and JMC have improved turnover, maintained profitability, successfully secured orders and reduced debt amidst a challenging business environment and pressure of mounting commodity prices. Our numbers, at consol level, we have delivered revenue growth of 11%, PBT growth of 138% and PAT growth of 132% on a Y-o-Y basis. Excluding the one-off gains, consol PBT grew by 17% in Q3 '21. Our consol order book, including L1, is well diversified and is at a record high of INR 31,382 crores at the end of December 2020 with KPTL order book plus L1 of around INR 16,429 crores and JMC of closer to INR 15,000 crores. At KPTL stand-alone level, revenue has marginally improved, with T&D business delivering a Y-o-Y growth of 5%. Our KPTL stand-alone PBT grew by 84% and PAT by 88% on a Y-o-Y basis. Excluding the one-off gains, stand-alone PBT grew by 13% in Q3 '21. We have maintained double-digit EBITDA margin of 10.4% in Q3 '21 and 10.6% for 9 months financial year '21. Our exceptional items for Q3 '21 mainly includes gain on sale of Alipurduar Transmission Limited as the company has recognized the entire gain, representing gain on transfer of 49% stake and fair value gain on the balance 51% stake. Our KPTL consol net debt has reduced from the peak of around INR 3,800 crores in June 2020 to the levels of INR 2,343 crores at the end of December 2020. On same lines, KPTL stand-alone net debt has declined by 39% Y-o-Y to INR 612 crores and JMC net debt reduced by 24% Y-o-Y to INR 661 crores at the end of December 2020. Our order inflow, including L1, we are at around INR 9,360 crores -- sorry, our order inflow is around INR 9,360 crores as on date. KPTL has already declared orders of INR 6,260 crores till date in financial year '21. We are confident of receiving majority of L1 orders before 31st March '21. JMC has recorded best ever quarterly revenue of INR 1,066 crores with Y-o-Y growth of 15% in Q3 '21. JMC's EBITDA margin in Q3 '21 was largely impacted due to additional costs incurred for transportation and accommodation of labor due to COVID. We expect margins to be back on track in Q4 to double-digit range. JMC has witnessed financial year '21 as one of the best years in terms of order inflows. It has received orders of INR 7,484 crores. Additionally, we're L1 in orders of around INR 750 crores, which we expect to receive before 31st March. On the subsidiary front, we have witnessed significant improvement in performance of all our subsidiaries. Shree Shubham recorded revenue growth of 31% Y-o-Y, with EBITDA margin of over 23%. We have around 331 warehouses spread across 8 states in India, having an average utilization of around 82%. For 9 months '21, we continue to remain positive at PAT level, and for full year also we're confident to deliver profitably. Linjemontage, Sweden reported revenue growth of over 100% for both Q3 and 9 months with improvement in margins. Our per day average collection at all 4 SPVs is at INR 61 lakhs in Q3 '21, one of the best recorded in past several quarters. We've not invested any funds in this year in our road BOOT assets. In totality, all our 4 assets have cash breakeven, for all 4 SPVs is around INR 59 lakhs per day. And we are now above the cash breakeven levels as far as the SPVs are concerned. We have completed sale of around 35% units in the Indore real estate project. In the last 3 to 4 months, we have sold 10 units, which is around 8% of the total units. Our construction works are in the final stage, and we expect OC for another 2 towers by June '21. We've already received OC for 2 towers earlier in 2020. With this, we should all be receiving OCs in the next 6 months, and we are on track to exit this entire project in the next 12 months. We made substantial progress in divestment of T&D assets and restructuring of Road BOOT assets. We've successfully achieved transfer of Alipurduar Transmission assets and received proceeds in Q3 '21. We achieved full commissioning of Kohima-Mariani Transmission asset. Now we are awaiting necessary approvals for transfer from relevant authorities. We believe we should receive all the approvals in the month of February, and the transaction should be completed in March, April '21. Discussion for restructuring of KEPL and WPL road assets are in final stages and is expected to be completed by the end of Q4 '21 or max by April, May of '21. The proceeds from sale of transmission assets will be utilized to reduce debt, incentivize shareholders and invest in future growth. We have recently announced our strategic acquisition of Fasttel in Brazil at an equity value of USD 8.8 million for a controlling stake of 51%. This acquisition will provide us with a much-needed entry into the Brazilian power T&D market, one of the largest markets in the world. It's actually the third largest after China, India and -- after China and India. This acquisition is also in line with the strategy to strengthen our geographical footprint, enhancing our technical capabilities and to be local player in the global environment. Similar to Linjemontage in Sweden, Fasttel brings to us an asset-light business model, backed with strong EPC and project delivery competencies, low debt and highly experienced and talented workforce. Fasttel has delivered a revenue CAGR of 25% for the last 5 years and consistently maintained profitability. We plan to ramp up operations at Fasttel through synergies with KPTL and are confident to deliver a strong performance through our Brazilian operations. KPTL will continue to invest in organic growth opportunities in order to strengthen its capabilities and expand geographical reach. With swift deleveraging, improved focus on core business and consistent profitability, KPTL and JMC will continue to take advantage of rising domestic and international infrastructure spending in key targeted segments. Our order visibility across most of the business verticals looks very promising over the next 12 to 18 months. Our actions over the last few quarters demonstrates clear focus on an effective capital allocation strategy, a strategy that emphasize on 3 key elements, namely profitable growth, ROC improvement and maximizing shareholder return. We are pleased to provide an interim dividend of INR 8.5 per share in addition to recently completed share buyback program of around INR 180 crores. Notwithstanding this shareholders' payouts, we have successfully managed to lower our debt levels at consol and stand-alone level. Our debt levels will reduce further in the next few quarters as we complete sale of balanced long-term assets and noncore business. For the financial year '21, we continue to be on target for the following: positive revenue growth compared to the previous year, both at stand-alone and consol; EBITDA margins in the range of 10.5%; new order inflows of around INR 9,000 crores to INR 10,000 crores in KPTL and around INR 7,000 crores to INR 8,000 for JMC; negligible level of debt on a net cash basis. For next financial year '22, based on a strong and well-diversified order book, we are confident to deliver double-digit revenue growth for both stand-alone and consol levels. Thank you, once again. I'm happy to take your questions now.

[Operator Instructions] The first question is from the line of Renu Baid from IIFL.

I have 3 to 4 questions. The first question is on the execution side, we have seen some bottlenecks continuing even in this quarter for the stand-alone business. So what is our reading in terms of these bottlenecks easing out? And when do we actually expect execution to pick up? Though on a broad basis you have mentioned on the guidance front for revenues, but if you could give some more feelers in terms of segment-wise performance, and how do we expect the growth to improve on this side? And does commodity headwind challenge the margin outlook for the next 2 quarters in the near-term?

So Renu, first on the bottleneck. I think if I divide this entire business into 3 aspects, which is, let's say, the plant operations, the bought-out and the erection or the construction side of it. On the construction side of it, I think majority of the bottlenecks have gone. All our workers, we are back to the same level, if not improved level on having workers at site. Efficiencies are coming back with the restrictions on travel, all of that, which was there, not more than 3 people in a car, all of that not being there now. So efficiency is coming back. So on the construction side, if you ask me, we are closer to 95% to 99%, if not closer to 100% of our budgets. On the plant operations and manufacturing, we are, again, closer to 100%, but there are bottlenecks on delivery, primarily in the neighboring countries. So if you see the neighboring countries, including -- without naming specific countries, there's still bottlenecks on deliveries because of availability of whether containers or whether because of road blockages at the border, all of that. And that's a challenge, which I think should get improved in the next few months, but definitely looks like improving. We're still -- I would say we're at 90% plus, but not as comfortable as we are on the construction side. On the bought-out side, which is the material supplied from majority of our suppliers, I think we're there also. It's similar to our production bottlenecks on -- primarily on the borders, and there also we're at 90% to 95%. So today, if you ask me on an overall business, we are closer to 95%, 96%. And I think it's only a matter of time with reduced cases that we should be there sooner than later. On the segment-wise performance, I think this was your second question, right, in terms of segment-wise performance for Q3. I think our T&D business, as I said earlier, has grown by 5%. Our Railways and Oil & Gas business has not seen significant growth. We're at similar levels. It's a slight degrowth. But in Q4, we expect all the businesses to grow further, and that could be a big advantage from an overall business perspective. Your third question was on the commodities front. Yes, that's a big challenge today, right? Primarily, the steel price hike which happened because a lot of our orders are fixed price in nature. But we still believe that even with those headwinds, we should still be at double-digit margin even in the next few quarters and even for the next year.

Okay. And on a broad basis, strategically, 2 questions. How are we looking to utilize the cash on books apart from deleveraging timelines that you have mentioned? And what is the progress in terms of divestment of the large assets? And lastly, given that JMC also, there is deleveraging. At the same time, the 2 upgrading projects are also nearing financial restructuring. So how should we look at the road map for the potential merger of JMC projects and Kalpataru Power, if you could give any broad perspective on this side?

Sure. So on a cash utilization perspective, I think we have said earlier, and I repeat that, our first focus would be to reduce debt, right, and make sure that our net debt comes to negligible levels. Second focus would continue to be incentivizing shareholders. We had this huge dividend and we had the buyback. And if things continue to be good, we should again see something coming up. And third would be to keep on looking at smaller acquisitions in geographies where we want to be long-term. And when I say smaller acquisitions, look at smaller companies who can then grow using KPTL's strengths. So that continues to be on track. As far as the merger of JMC and KPTL, your second question, I've said earlier, we are building more synergies between the 2 companies, and those synergies are on track in terms of processes, systems, culture and all of that. The timing, if at all, whenever it happens, will be decided by the senior management and the larger Board. As of now, the focus is to make sure that JMC also -- both of us focus on the following 3 things: improved growth and profitability, double digit; reduce debt levels; and improvement in ROC. The third question on divestment of KMTL. We personally believe that this approval should be with us in February. We know a few approvals have already come. And one of the approvals from the LTTC is pending, which it should be a matter of weeks, if not days. Our team is sitting there while we speak. And once we have that approval, it's max 4 to 8 weeks to finish the balance process. So if we get the approvals, maybe in the next 1 week, we might target March end. If not, definitely looks like this happening in April along with CLP itself.

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

Congratulations on good set of numbers and broad-based recovery. Sir, my first question was on the bid pipeline. Sir, if you can highlight both on KPTL and JMC, sir, how -- after the budget, so how do you see the bid pipeline panning out both in the private and the government side? That was my first question.

Sure. Parikshit, on a bid pipeline, if we look at -- divide this into 4 or 5 segments, we can get into each of them specific, right? And if you see our investor presentation also, we have those details. On the transmission line, international still looks promising. And domestic also in the last few months, given the pressure by REC, PFC and all the BOOT assets bidding which have come through, looks very encouraging. Out of our INR 3,000 crores L1, I think 80% is transmission itself and significant is transmission domestic. So visibility going forward looks good, but I still continue to be on that span, which I said earlier, transmission international can still grow at double-digit, but domestic, I still believe, in terms of revenue would be a single-digit growth going forward. On the Railways side, we're seeing a lot of tenders coming on electrification. We have won a few of them -- a few large tenders. We're seeing a lot of tenders coming on electrification, a lot of tenders coming on widening of track. And next 2, 3 years growing there at double digits should not be a challenge. And the same applies for Oil & Gas with a lot of projects coming in by all the PSUs focused on Oil & Gas, whether it's GAIL, IOCL, GSPL, Gujarat Gas, all of them. If I look at it from a JMC perspective, buildings and factories look very, very attractive, right? That's where a lot of projects we've already got and same is the case with infra. And specifically on JMC, we'll get into further details on the specific question.

Okay. And then my second question was on the restructuring of assets. So this year, we have not infused any equity till now, that could be partly because of the Atmanirbhar scheme and the relief which the government has given and the moratorium. But if it was not there, so what would have been the loss funding despite the recovery? So if you can highlight on that? And also, if the restructuring does happen, so do we need to increase any further equity for the restructuring to happen?

SKT?

Yes. So Parikshit, SKT here. Yes. So as far as the restructuring is concerned, if you recollect, last year, we infused almost INR 70 crore in the SPVs. Until -- for this year, we have not infused anything, right, because of the conversion into the short-term loan. So your question that, had it not been there, the numbers would have been in the range of, say, about INR 50 crores to INR 60 crores, right? But the restructuring is very well advanced in both KEPL as well as WEPL, and we are making full effort to complete it by 31st March. It may spill over to the April or 15th May. This is the final line we see as far as the restructuring is concerned.

And adding to that point, Parikshit, of SKT, if we continue achieving this kind of INR 60 lakhs to INR 65 lakhs per day of revenue, right, on a consol basis, if I put all the 4 assets, then going forward, our infusion could come down to single-digit crores or maybe INR 10 crores, INR 15 crores, not more than that.

So if you look at the last -- this quarter, the revenue growth compared to the last quarter is almost to the tune of about 20%. And we have to see that how much of this is able to sustain. Precise number is about 18%. And if this sustains, then the cash infusion will reduce drastically. So 2 of the SPVs, anyway, cash infusion is not there. And if they are restructured, and that is what we are targeting, then cash infusion in all the SPVs will -- should be negligible or it should be 0 from the next year onwards.

So another question was on the pledge reduction. So you had intended to reduce the pledge -- loan on the pledge of the promoter by INR 150 crores by March end. So are we largely on track to achieve that?

Parikshit, on that, 2 specific data points. Our loan against shares from INR 720 crores have come down to INR 684 crores while we speak. INR 720 crores was at the end of Q2. That's when we had promoters committing a plan. Our understanding for promoters are that they are on plan, given the increased sales in the real estate business, and we should be able to achieve whatever is targeted.

Okay. Great, sir. And just lastly, if I can squeeze on the Indore real estate, so what will the total pending sale as of now, unsold inventory? And what will be the total construction outgo and timelines of completion of this project?

This is Indore, right?

Yes, yes, Indore real estate.

So Indore real estate, I think we have sold closer to 35% units. When I say units, it includes residential and commercial. We had approximately -- our total units are around 130. We have sold closer to 40 units as of now. The balance are pending. So the number -- yes, 129 units. We have sold till date 46 units. The balance is expected, and we see a huge traction last -- last 4 months, we have sold 10 units at attractive price. The balance cost to finish the construction should be in the range of INR 20 crores to INR 25 crores because 4 out of the 5 towers are fully completed. 2 OCs we have received, 2 OCs could come any time and the fifth one is like 80% done. So balance cost to incur is not significant. So we expect the entire cash flow to come in the next 12 to 15 months out of Indore sales.

What is the value of that? I mean, balanced unit value would be how much?

So our investment in the property is around INR 380 crores, and we believe we should be able to get back our investment.

The next question is from the line of Swarnim Maheshwari from Edelweiss Securities. As there's no response from the current participant, we'll move on to the next, that is from the line of Deepak Narnolia from Birla Sun Life Insurance.

I had a housekeeping question around your order book actually...

Sorry to interrupt, Mr. Narnolia. There is a lot of disturbance from your line.

Yes, I have this question about your order book. I read in your presentation somewhere that it's INR 13,000 crores -- around INR 13,000 crores. At one place, it is mentioned as INR 16,000 crores. So what exactly is the order book right now, sir?

So order book as of 31st December, to answer your question, is around INR 13,400 crores. We have declared INR 800 crores further yesterday at KPTL and we are L1 in orders of around INR 2,500 crores. So we have just explained these 2 differently, one is order on 31st December, one is including L1. So including L1, we are in excess of INR 16,000 crores and order book as on 31st December is around INR 13,500 crores.

And sir, about your road assets, what have you mentioned, by first quarter of next year, it will be restructured or what?

Yes, yes. So we -- I mean, this restructuring process is going on and we should complete it by the quarter of -- first quarter of the next year.

For 2 of the assets, KEPL and WPL, and that's where restructuring is focused because balance 2 are anyway cash positive and some...

So only those -- these 2 are problematic assets. But how confident you are at this time, sir, because you have been trying this for a long?

Yes, you are right. We have been trying for a lot -- for a long, but the process is in advanced stage. ICAs are signed, and the rest of the process also is in advanced stage. So we are confident this time that it should be over by Q1 of next year.

And sir, about your debt reduction, I see that quarter-on-quarter, your debt reduction is INR 1,100 crores. So how much is that you have repaid and how much is on account of transfer of this BOOT assets?

So you're talking of consol debt, right?

Yes, consol debt, sir.

Yes. So transfer of BOOT assets, the debt reduction would be closer to INR 700 crores. INR 300 crores is reduction at KPTL stand-alone and INR 100 crores is reduction at JMC stand-alone. And that's what the breakup of INR 1,100 crores is.

INR 700 crores plus INR 100 crores is own debt.

INR 700 crores out of transfer of assets, INR 300 crores KPTL stand-alone and INR 100 crores JMC stand-alone, and that's a reduction of INR 1,100 crores.

Okay. Okay, sir. And about Indore, SKT have just said by the year FY '22 end, you would be able to sell all the inventory.

Yes, next 12 to 15 months, I think we should be able to exit majority of our Indore investment, if not all.

The next question is from the line of Bharat Sheth from Quest Investments.

Manishji, if you have to take, say, from 1 to 3 years' perspective, really, so which -- where -- which company you see in KPTL and JMC are kind of a growth opportunity, I mean, in new ordering and all? So if you can give that perspective? And how do really we see -- of course, we always say we don't give from 3 years' perspective, but if you can give your, I mean, broader understanding.

So Bharat bhai, with the push of the government on infrastructure, along with the budget which came out, I think visibility has changed significantly for the positive in the last 1 month, right? I think the push by the government and not only domestic, even internationally, we're seeing this push coming from a lot of geographies. So today, if you ask me, compared to December, when we spoke about our December -- about our quarter 2 results versus now, I think we're a lot more bullish on majority of our sectors, whether it is Transmission International, Oil & Gas, Buildings & Factories, Water, Infra. And for us, again, a big focus comes also on the International business. So today, if you look at our KPTL JMC, it's only Transmission, which is international in a big way. But the other segments have just started. Road, we just have got 2 projects. Water, we've got just a few projects. Railways, we have just 1 project international. Oil & Gas, we still do not have anything while we have qualified everywhere. So that is, again, a huge growth potential for us. So keeping that in mind, our personal view is, next 3 years, on a consol basis, doubling ourselves should not be a challenge for us at KPTL and JMC.

Okay. That's great. And last question on this Shubham asset, I mean, divestment, are we really working on it or -- so what -- where we are, I mean, sorry?

So on the Shubham divestment, we've appointed advisers. We have got some expression of interest from 4 specific players, couple of them private equity, couple of them strategic in nature. The due diligence process is on. My own assessment is Q1, we should be having some insights on that process.

And how much total investment as on today is from KPTL in Shubham?

KPTL's total investment in Shubham, including loans, could be -- would be in the range of INR 350 crores to INR 400 crores. I don't have the exact numbers in front of me, but -- yes, it's closer to -- sorry, it is INR 300 crores. Yes, it's INR 300 crores.

[Operator Instructions] The next question is from the line of Deepak Poddar from Sapphire Capital.

Sir, first at the JMC level, I just wanted to understand in terms of net debt, so any kind of target we have by next year, how we want to reduce that?

So yes, there will be definitely -- even this year, so far, we have done the reduction, and this we expect to continue next year also. So it could be in the range of about INR 750 crores or so.

INR 750 crores in the sense?

The debt will be in the range of about INR 750 crores currently, which we will try to reduce or it will remain in the same range because we are expecting a big growth also next year, right? It's about to -- yes, so that growth momentum will continue and it will be maintained at the same level or there could be some reduction.

Same level. And next year, we are kind of targeting double-digit revenue growth with a double-digit margin, right, at JMC level?

That's right. That's right. Definitely. Seeing the order book, we are -- that is going to happen.

And you did mention that we are at a cash breakeven level at the BOT level? So how do we see that going forward into next year? And what's the monetization plan for this BOT project? I think the restructure is likely to get completed by first quarter. So post that, we might look at monetization of those assets, right?

Okay. So let me answer you this in 2 -- 3 parts, rather. As far as the revenue jump is concerned, there is an element of pent-up demand which is getting surged out now, and let us see how much of that is going to sustain in the coming quarters, as far as the traffic revenue is concerned. This 18% to 20% growth, which has come, I personally feel that some of them -- some -- certain percentage of this will taper out, maybe 3%, 4%, and it will stabilize at that level. This is the one. The second is the restructuring part. It is in advanced stage, that's what I said. And as far as the monetization is concerned, with the improved numbers, there is a good sentiment in the market now these assets. And those discussions are also progressing well. And like restructuring, we have also targets to monetize these 2 assets which are currently under discussion.

And what is the timeline for that?

Timeline maybe quarter 2 of next year.

The next question is from the line of Swarnim Maheshwari from Edelweiss Securities.

Congratulations for the successful debt reduction that we are witnessing.

Thanks, Swarnim.

Sir, couple of questions. Sir, first, just on the revenue part for this quarter, now just dissecting this growth, so you mentioned in your opening remarks that we were not able to kind of deliver in the nearby geographies. But I guess the decline was in the Railways business, which I think is predominantly domestic only. So any specific reason for the decline in the Railways business?

Yes. So I think Railways business, specifically, so Railways also has a big project in Bangladesh just so that you should be clear and that's a neighboring country. So there's some impact coming, and that's a huge value project, but that's not only the key reason. I think primarily Railways reason was, by the time things really picked up and all sites got activated, it was -- the first month was not fully active. And besides that, previous year, if you look at Q3, we had grown 100%, right? So if you're comparing Q2 to 2Q, it's that order book has not grown 100%, but last year, Q3, we had grown significantly. So from a budget -- internal budget perspective, they are very close to budget because we've budgeted similar numbers also because the opening order book was at a particular level. But getting into Q4, they should be growing again.

Right. So it's meeting your internal checks, basically?

Exactly.

Got it. Got it. Understood. Now, sir, just on the revenue guidance, so I think it was not a formal guidance, but you had expected about 5% to 10% growth in FY '21. How do you see that -- how do you see Q4 shaping up?

So I think we still continue to be confident of a growth, both on a stand-alone and consol compared to previous year, right, both for KPTL and JMC. Yes, it might not be 5% to 10% because this is what we had given at the end of Q1 because we thought that things would improve significantly in Q2, which did not happen truly. So on a consol basis, we definitely still expect that our revenue would be higher than the previous year. On a stand-alone, KPTL and JMC both we should be targeting slight growth compared to the previous year, if not similar to what we had done in the previous year. But given the visibility of the current year, growing next year at a good double digit, right, not only a double-digit, a good double-digit on a consol basis, should not be a challenge at all.

Absolutely, sir. Right. Right. Right. Sir, the next one is actually on the balance sheet. So what is the debt associated with Kohima on our books right now?

So Kohima debts actually does not come on our books, right, because Kohima debt, given that it's -- no, Kohima comes on our books. Kohima is a joint venture, so that does not come on our books. So Kohima debt would not reduce, but the equity infusion and the cash flow which comes from Kohima, which we're expecting closer to INR 600-plus crores for KPTL, it should be higher than INR 600 crores only for KPTL and that would reduce our debt on a stand-alone business. But Kohima debt today because the JV does not come in a consol debt. That's a debt around INR 800 crores, but that does not come in the consol debt numbers.

Okay. Okay. Okay. And sir, finally, so in the last, about, say, 1.5 years or so, we have acquired a second company, first one, Linjemontage, and then Fasttel. So I mean, sir, just wanted to understand your thought process over here that these markets are, of course, very high-growing markets, but is it really necessary to have a domestic presence in order to gain some sort of PQ? So what is your thought process over there? And just on the Brazilian market or the South American market, how is that market looking for? What is the kind of opportunities that we are looking at?

So Swarnim, specific, we're very clear that few geographies, if you want to be there in the long run, it's important to be domestic, right? So the entire Nordic, if you look at it, you can't win anything unless you are local. And Sweden and now from Sweden, we're getting into Denmark, Finland, all of them. Similarly, Brazil, we've been studying this market for closer to 10 years now, right? And every time we try to be getting in there sitting in this part of the world on EPC contracting, it was impossible if -- it was difficult if not impossible. So there are a few geographies which has huge potential and we want to be local there. And Latin America is one of them, Nordic is one of them and there could be a few more geographies like that over the next 3 to 5 years which we'll look at. Our philosophy is to look at companies which are small in size, which have a big reputation, which have been in existence for long. So if you look at both the acquisitions we have done, not only both, if you go back to JMC long time ago, which was around 13, 14 years ago, the basis we bought was a strong set of promoters, great team, low debt, focused delivery, execution skills and that's what we look at. So -- and the investment is too small for us. From a larger balance sheet, we're trying to invest from our free cash flows. But we seriously believe that in some of the geographies, if you really want to be long term, you need to be local. So if you look at the entire Swedish entity, out of our 160 employees there, only a couple of them are Indian, everyone else is local, and they are doing exceptionally well and I'm sure they'll continue to do exceptionally well. So that's the philosophy we're driving. And hopefully, it will succeed because some of these geographies you can't work out of India.

Got it, sir, got it. And sir, the overall opportunity size in Brazilian market?

So the Brazilian market, the last 2 years have been difficult, right, given by COVID, volatility in commodity, all of that. But that's what the history of Brazil is. You'll see that they've had these volatilities come in for 2 years, and they'll have opportunities for 2, 3 years, that's how the market is. The last round of auctions happened in December. They went through successfully, and a lot of projects were awarded. And the next round of auctions are again planned for -- in the current year in '21, 2 auctions are planned. With that, I see opportunity wise at Fasttel growing at a double-digit should not be a challenge at all because they have a good $100 million order book visible as of now. Our expectation is only 8% to 10% growth. We're not expecting them to grow at 20%, 30%. But from a long-term, I see that market to be very attractive.

The next question is from the line of Rakesh Roy from Indsec Securities.

My first question is regarding your European subsidiary, Linjemontage. Sir, can you highlight the performance during the quarter for Linjemontage?

Sure. So on a revenue basis, I think Linjemontage did a number of closer to INR 320 crores in Q3, which was 100% growth compared to previous year Q3, and with EBITDA margins in the range of 5% to 6%.

Okay, sir. How much of order book, sir, the country now have?

Around $150 million of visible order book at Linjemontage, excluding the L1s.

Okay, sir. Sir, my next question, sir, your thought on acquisition. Just now you said, you are looking for the acquisition. Can you just highlight on which geography you are looking for or which sector you are looking for, the same T&D business or any other business like Railways or Oil & Gas?

So okay, let me -- the first one is, obviously, is a strategic answer. I would not be able to exactly answer this on a larger call because we are -- there are a few geographies we're looking at and you'll hear about it the moment we look at acquisitions. These are geographies where being -- working from India is becoming more and more difficult, and that's why we look at those acquisitions. Answering your second question, are we looking at only T&D or other sectors? Today, our focus is to start with T&D, but make sure that the company has a potential buy which we can get in to do the other projects also, whether it is Railways, Oil & Gas, Water, Buildings & Factories all of time. But to enter in using T&D because that's our core strength from an international perspective. But clearly, we're looking at companies which in the next 3 to 5 years, help us get into our other segments also where we are equally competent.

The next question is from the line of Amber Singhania from AM Securities.

Just couple of things. What is our total investment in Kohima project from KPTL side?

From an equity perspective, total project cost is around INR 1,300 crores and our investment is around -- our investment, KPTL investment is around INR 225-odd crores.

INR 225 crores, and we will be receiving around INR 600-plus crores...

Yes, yes.