KNR Constructions Limited (532942) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to KNR Constructions Limited Q4 FY '20 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. S. Vaikuntanathan, VP Finance, KNR Constructions Limited. Thank you, and over to you, sir.

Good afternoon, friends. I welcome you all on our earnings call for the quarter end and year ended March 31, 2020. Along with me, I have Mr. K. Jalandhar Reddy, Executive Director; and Mr. K. Venkatram Rao, General Manager, Finance & Accounts and Strategic Growth Advisers, our Investor Relations adviser. Let me begin with -- by giving you all you a brief on key industry updates, and then we'll discuss the company's performance. To achieve the aim of making India USD 5 trillion economy by 2025, infrastructure development will play a pivotal role. For this National Infrastructure Pipeline, it's an expected investment of INR 111 trillion during the period financial year 2020-'25 has been staged. The honorable Finance Minister describing infrastructure development as an enabler for growth has stated that most of the investment in NIP will happen in the initial 2, 3 years. Further as per EdisonReport, the transport infrastructure sector in India holds a further investment opportunity of USD 575 billion over the next 5 years. The report further states that roads and railways constitute 80% of the total investment opportunity, driven by investments in flagships, such as Bharatmala Pariyojana, et cetera. Recently, Finance Minister rolled out INR 20 lakh crores, a similar package aimed at the Atmanirbhar Bharat Abhiyan aimed at accelerating the growth and building a self-reliant India. It was announced that for roads and highways companies, an extension up to 6 months without cost to contractor will be provided by all central agencies. It will cover obligations like completion of work, intermediate milestones, et cetera, and the extension of concession period in PPP contracts. It also stated to classify the lockdown event as the force majeure for the projects impacted due to lockdown. Besides the government agencies will be asked to partially [ release ] bank guarantees [indiscernible] to contracts that are partially completed to [ ease ] cash flow problems. Very recently, the Ministry of Road Transport and Highways has decided to release INR 7,500 crore to INR 8,000 crore of retention money to provide liquidity support to EPC concessionaires. This is a very welcome move in the current scenario. And Union Minister of Road Transport and Highways, Macro and Small, Medium Enterprises recently stated that he aims to attain a faster pace of highway construction and boost to develop Bharatmala Pariyojana program. He further stated that -- said that the growth in the road sector will be double than it was in the previous 5 years. He has set a target of constructing road work INR 15 lakh crores the next 2 years alone. NHAI awarding. During this financial year 2020, the pace of awarding by NHAI was glorious and [ as ] stated. NHAI has awarded 3,211 kilometers of roads as against target of 4,500 kilometers. However, the awarding activity was higher in FY '20 as compared to FY '19 when NHAI had awarded 2,222 kilometers. The pace of construction activity was its highest ever of [ 3,979 ] kilometers in FY '20, up from 3,320 kilometers in FY '19. The imposition of lockdown to control the spread of COVID-19 has a certain [indiscernible] delay in awarding the activity by NHAI. However, the target for 2021 consists of awarding 4,000 kilometers of projects and developing 4,500 kilometers of highways. With respect to funding availability, NHAI has been able to raise funds from the market at competitive rates. Its borrowing program for the current financial year amounting to INR 65,000 crores has been assigned a AAA rating by top rating agencies. Further, NHAI has also signed an MoU with NIIF for financing growth projects and is also in talks with new development banks for financing green corridor projects. Bharatmala Pariyojana. The ambitious Bharatmala Pariyojana includes development of national highways of around 65,000 kilometers. Under the first phase, 34,800 kilometers of highway are being constructed [ as an outlier ] of INR 5.4 crores -- INR 5.4 lakh crores by FY '22. NHAI has been mandated to develop about 27,000 kilometers out of this. According to the data available, about 1,315 road projects covering 49,238 kilometers worth INR 5.9 lakh crore are currently under progress. Now coming to the key updates of the company. We have a portfolio of 9 projects. Of it, 5 are HAM, 2 BOT toll and 2 BOT annuity projects. We have received appointed dates for 4 HAM projects, including the appointed date for KSHIP HAM project, which we have received [ on February 12 ], 2020. The execution of projects are in full swing, and we kick-started execution at KSHIP HAM project during Q4 FY 2020. The percentages of physical progress as on March 31, 2020, for these 4 HAM projects are as follows: Chittor to Mallavaram, 54.4%; Ramsanpalle to Mangloor, 43.7%; Trichy to Kallagam, 37.4%; Magadi to Somwar Peth, [ 6.9% ]. For our fifth HAM project was INR 920 crore, BPC, we have signed the concession agreement on December 6, 2019, and submitted the document for financial closure on May 22, 2020. We have already invested [indiscernible] as equity across all of our HAM projects. We have given all the details of all HAM projects on Slide #26 of our investor presentation. As you know, we have already signed share purchase agreements with Cube Highways and Infrastructure III Pte. Ltd for our 3 HAM projects, that is Trichy to Kallagam, Chittor to Mallavaram and Ramsanpalle to Mangloor projects for divestment of our stake. As per the agreement, we will completely sell these 3 projects on COD plus 2 years. The deal structure ensures that the HAM projects now operate like a deferred EPC contract and the company [Audio Gap] free up its balance sheet and take up new projects in the future. Update on BOT projects. We are very pleased to inform you that the company has signed an SPA with Cube Highways for sale of 100% stake in KNR Walayar Tollways Pvt. Ltd. for an enterprise value of INR 529.27 crores. The transaction is subject to certain conditions, including approval from lenders and NHAI. We expect the transaction to be completed within the next 1 to 2 months. The toll revenue during the quarter is INR 17.9 lakhs per day. Our Bihar project, like, that is Muzaffarpur-Barauni Project, the toll revenue during the quarter has come down to INR 15.82 lakhs per day Q4 of FY '20 due to repair work at Rajendra Setu bridge and stoppage of core construction as per directive of NHAI to contain the spread of COVID-19 pandemic from March 20 onwards. Coming to the EPC projects. We have a total order book of INR 5,230 crores, out of which the EPC components of 4 HAM projects on which appointed date has been received is INR 2,452 crores, which is 47%. Out of the remaining order book, central government projects contributed INR 413 crores, which is 8%; and state government project contributed INR 999 crores, which is 19%; and others contributed INR 1,356 crores, which is [ 26% ]. In terms of order book breakup, road constitutes INR 3,666 crores, that is 70%; and irrigation projects constitute INR 1,574 crores, that is 30% of total order book. Our combined order book, including 1 HAM project in Tamil Nadu and 2 irrigation projects in Telangana state that has not been included in the order book, is INR 2,658 crores as on March 31, 2020, which translates the total order book portion to INR 7,888 crores to a reasonable stability of 2.5 to 3 years. We are awaiting forthcoming, the new bid process of NHAI, and we'll chalk out our bidding strategies accordingly. COVID-19 impact are [ conceiving ] the requisite approvals from government authorities. The company has assumed a total toll collections at all toll plazas on national highways and recommenced the operations across our project sites. The company is following all directives, guidelines issued by various authorities, including safe distancing for safeguarding the health of the workforce to contain the spread of COVID-19. We faced some logistical issues and with respect to raw material availability during the initial days, post relaxation of lockdown. However, the same has now normalized. During the period, company bagged orders worth [indiscernible] approximately, thereby further augmenting our order book position. As the COVID-19 pandemic and the subsequent lockdown is classified as a force majeure event by government authorities, we do not expect any significant impact on the business due to nonfulfillment of various obligations as per the existing contracts and concession agreements. Further, the company is in a comfortable liquidity position to meet its future financial commitments and has not opted for moratorium with bank. We are confident to continue to meet all our debt obligations. We will be watching the situation for the next 2 quarters before embarking on future guidance. Now I request Mr. K. Venkatram Rao to present the results for the quarter and full year ended March 31, 2020.

Good afternoon, friends. Thank you. I hope that you have all gone through our results and the presentation that we have circulated and uploaded on our website. I would now present the standalone results for the quarter ended March 31, 2020. The total revenue stood at INR 675.6 crores in Q4 FY '20 as against INR 715.7 crores in Q4 FY '19. Our EBITDA for Q4 FY '20 stood at INR 146.8 crores, indicating a growth of 2% year-on-year with EBITDA margin of 21.7%. PBT, before exceptional item, in Q4 FY '20 is INR 85.9 crores versus INR 103.9 crores in Q4 FY '19. Our interest cost was higher during the quarter due to interest on mobilization advance on the HAM project and increased [indiscernible] utilization during the quarter. Coming to standalone results for the full year ended March 31, 2020. The total revenue stood at INR 2,244.2 crores in FY '20, indicating a growth of 5% year-on-year. Our EBITDA for FY '20 stood at INR 487 crores, indicating a growth of 14% year-on-year with EBITDA margin of 21.7%. Adjusting for the exceptional items related to Walayar Tollways and KNR Chidambaram, our adjusted PBT grew by 4% year-on-year to INR 304.4 crores. Our balance sheet side as on March 31, 2020, the debt on a standalone basis is INR 230 crores, including promoter loan of INR 180 crores. And [ debt-to-equity ] stands at 0.14x. Our working capital base increased to INR 53 crores due to delay in collection from data. A quick summary for the consolidated performance is as follows. The Q4 FY '20 revenue stood at INR 730.1 crores. EBITDA grew by 4% year-on-year to INR 187.4 crores. Adjusted PBT was INR 99 crores. In FY '20, revenue grew by 7% year-to-year to INR 2,451.7 crores. EBITDA grew by 16% year-on-year to INR 622.4 crores. Adjusted PBT grew by 14% year-on-year basis to INR 335.2 crores. On the balance sheet side, the debt is INR 845 crores, including promoter loan of INR 180 crores. And debt-to-equity on consolidated basis stands at 0.53x. With this, we now open the floor for question and answers.

[Operator Instructions] Please note, Mr. K. Jalandhar Reddy is available till 4:00 p.m., post which the Q&A session will be attended by Mr. S. Vaikuntanathan and his team. [Operator Instructions] The first question is from the line of Niteen Dharmawat from Aurum Capital.

My first question is, what is the situation of migrant labors and how this is impacting our business? Approximately, what capacity of construction sites of KNR are currently working?

Yes, sir. Actually, the migrant labors are really a problem today, because central government -- due to central government's announcement and all, many have started going to their own native places, and most of the people have left. We have now less than 20%, 30% of the laborers in the sites, which we are trying to hold on to them. And we are, again -- already, I think, certain laborers who have gone in the time of Holi, we were asking them to come down and restore the work. But -- they are responding, but they were not able to say the date when all when they can come down, all that. We are trying to bring them back, because once they come up to the new state, that means they're all coming from Jharkhand, Bihar and Chhattisgarh and all other places, so once they reach to these project sites like in Tamil Nadu, Karnataka, Andhra Pradesh, Telangana and Maharashtra and other places, they become the new workers who are coming from -- to the new state. So kind of that. There are certain barriers there. Other state peoples are quarantined for 15 days. But rules are now -- hello?

Yes, yes, I can hear you.

The prevailing conditions are [ there ]. And Chennai, they have to come to major cities like Chennai, Bangalore and all. Chennai is already in the lockdown situation, so they are unable to release the labor from their places. So such fears are there. So we'll have to wait till this month end. I think after month end, we are hearing that things may get relaxed or it would worsen, we don't know really. But as you have asked, I can answer straightforward that the projects are running at an efficiency between 50% to 60%, 65%, depending on each site. Some site has 50% progress. Some site has 65% progress. But nothing more than 65% progress is happening today.

My second question is related to this only. So what is the revenue guidance now for financial year '21 and operating margin, if you can give some indication on that? And how -- what is the situation of the raw material crisis, especially cement and availability of the raw materials?

The raw material prices have gone up. As you know, cement, steel and all have heavily gone up. Diesel -- the fuel is a little bit under control, but we can't say how long it is there. But once I come back to, again, this what sort of guidance and all, again, see, this COVID situation, we are really suffocated to say something. If I say something, if I go wrong tomorrow, what would be happening. So kind of let's not put these issues into some guidance thing and all. But we will try to do our best, because we are all still monitoring HAM on site, project site and [ the issues ], directly again motivating the people to work on. So things are on [indiscernible]. So more or less, we will -- my assumption is that there will be a little bit less clocking in this first quarter, because this already June is getting completed. So July, August, September is also going to be a rainy season. So we don't expect much in the first, second quarter -- first 2 quarters. But as the order book is more than INR 7,000 crores, we can do rough solid work in the third and fourth. And I don't hope the COVID situation will also go beyond this second quarter.

Got it, sir. Sir, which company we procure the cement from?

We are procuring from Birla, the UltraTech and then Ramco. There's -- we are also -- India Cement, all that we are taking -- it's not -- we are not sticking to one, because wherever we are getting a lesser price, we are procuring it, even Bharathi Cement we are procuring from.

The next question is from the line of Ashish Shah from Centrum Broking.

Sir, my question is on the irrigation projects. So the -- one of the orders has a lift irrigation sort of a project. So just wanted to get a clarity on what kind of margins that one should expect from the new irrigation projects that we've got of INR 2,300 crores?

Yes. Actually, the irrigation projects have little bit higher margins than the road sector. But because of the delay that is happening in receiving the payment, maybe this -- we are, again, coming back to the same old kind of '13, '14, '15 level. That's the real feel what I'm getting right now. But the project price is very good, because it's all -- the major work is being with the major machinery-oriented thing. And the entire machinery [ REIT ] we are owning, so we hope some good margins out of here. But the old projects, we are unable to get the payments in time. But however, the new project which you are talking about, the lift irrigation one and all, they have the bank tie-up. So we hope to get the bank timely payments and the margins are 2%, 3% higher than the regular margin.

Sir, I asked this, because one of them is going to be subcontracted back to back. We are not going to execute that -- one of the projects and chase one.

That decision is not yet done. When I spoke to you last time, I was mentioning that I may give it, but recently, what happened, the Yedula reservoir, which is running, it's running at a very slow pace, because the payments are not assured when government of Telangana is not resizing us to work there. So those teams, we really want to focus, then we get the payments and try in put the work. So definitely, I'm not right now thinking to give any subcontracts. If I engaged also, I engage some [indiscernible] so that not much of difference is there on the margins and our equipment is -- entire equipment is engaged.

Right. So as of now, the view is that it will generate slightly higher margin than what the previously executed margin generated for us. So it could be in [indiscernible].

Yes [indiscernible].

Sure. Sir, second, just -- and the last question, on the payments. I mean we know that the payment was delayed in the March quarter. But any view that we have today in terms of what is the total outstanding on the account of the irrigation projects? And by when do we expect that we will get them?

Yes, sir. INR 500 crores nearby as the bills are now ready to be put with Telangana government. I think INR 2,000 crores -- INR 200 crores -- sorry, INR 500 crores is the total figure what is outstanding right now. And during the March also, we put our bill of about, let's say, INR 200 crores, which was not -- which was supposed to be paid by the March end. But because of these lockdowns and all that the state government totally had taken a deviated turn. So we were not getting that payment. And I'm quite sure in another 1, 2 months, we should get this payment -- this thing. However, we are even continuing to work, because we do not want to suffer the -- if I keep the equipment idle and all the whole salaries and the installments will eat away our -- this thing. As the margins are reasonably okay, we are trying to work and see that the situation is going good.

The next question is from the line of Faisal Hawa from H.G Hawa Company.

Sir, how are you taking this whole situation on this prime lending rate of banks going down and the HAM projects, the banks are really not passing on the interest rate. So how are we placed on this? And do you feel that the ordering from the government of India, the central government itself would also suffer due to their revenues going down overall from GST, et cetera?

Yes, sir. Actually, this phase is [ anyhow there ]. We are just trying to analyze the situation, because straightforward, the losses are there on these accounts for the HAM projects. However, during the [ execution ] period, the FX is -- it is straightforward can be calculated. So we'll have to take that much impact over these projects. And really, the situation we are trying to -- anyhow NHAI is accepting to take this even [indiscernible]. So we'll have to put the future claims and wait for the thing to happen. Now straightforward thing is that they say we'll pull projects and all they said they will...

Sorry. Sir, so your voice is breaking up in between. So we couldn't hear you in between.

Yes, sir. Actually, I mean to say that toll projects, they have committed to give some EOT, that is extension of times and all. So that could not solve the purpose right now, but it may increase the visibility for future.

You mean to say they will give us more time? Is it maybe 21 years or something?

Yes, yes. Certain period has been increased, they are committing to do it. We'll have to check it case-to-case.

And sir, on the Telangana government payments, do you feel that [ maybe ] they would be able to find some other resources, like they have been promised extra funding from RBI to the tune of at least 3% to 4% of their state GDP. So do you think that could help us in getting our payments out?

That is what I hope, sir. That is only the hope left. Again, that Telangana government is also generating [indiscernible] income, because as it is the state is rich and having good resources. So there should not be any big problem. But however, the [indiscernible] is going to be more hopeful and it's going [ towards the light ].

The next question is from the line of Mohit Kumar from IDFC Securities.

Congratulations on a decent set of numbers. Sir, my first question is on Telangana. I believe that they were roughly on INR 25,000 crore worth of orders, which got finalized in April and May. Is the number right? And is there something else which is remaining? And secondly, on the Kaleshwaram, I think the deadline is only 1.5 years, right, left for the COD. And are there any the orders left for Kaleshwaram?

Yes, sir. I think most of the Kaleshwaram has been called for. There have been certain linked or distributory projects, which have been pending now. So most of the Kaleshwaram is done with it. Recently, what you are talking about the INR 20,000 crore, INR 25,000 crore or so has come out from the Kaleshwaram only. So it is now done mostly.

Is there anything remaining on the other lift irrigation schemes, which will come in this particular financial year?

Some other schemes are also there, as Andhra Pradesh is coming out with some Rayalaseema development projects and the -- even Telangana state is looking to divert some other -- Godavari again to these other parts where it is not covered some Rangareddy District and all other places. There is a lot of [ problems ]. So that's also there. I'm hearing that schemes are there to attend all that.

My second question pertains to the Indian government, NHAI has provided a number of concessions for road and EPC road -- for an EPC. Have you availed any of them? Have you seen any movement in the terms of retention money releasing EPC guarantee or something just -- and is there any shortfall -- COVID shortfall loan you were trying somewhere?

Sir, actually, here, the thing is each project has been asked to apply on to the scheme. So we have started applying on each project even twice. Only the cases where the contractor is not under default, those are only going to be extended to come up. So luckily, we don't have a situation where we are lagging and things are out of order. So definitely, our strength that we can put all these claims, like getting the bank guarantees released and, like, getting the retention money released also can be done. The other EOTs are also, accordingly, they gave minimum 3 months and maximum was 4 months or 6 months. That's also being worked out. But as the damage of COVID is still continuing, so things have really not come to a conclusion. That is another thing. The -- as per this order is concerned, the BOT orders and all, NHAI, again, they are ready to put forward all the new orders, because there has been enormous delay due to COVID as well. Earlier also the land acquisition problems are still continuing. So it's a big challenge. I don't say that they will be able to completely deliver as they are paying, but they would deliver a 50%, 60% efficiency, that's what I mean.

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

Congrats on continuously surprising positively for the EBITDA margin front and hope you will continue to surprise.

Thank you.

Sir, I just wanted to understand -- last time, we said that we may look for newer geographies, MP, UP, Bihar, Jharkhand, all this. So in that context and plus also whatever you are having understanding with the -- or the interaction with the NHAI, what kind of inflows are you looking at from the NHAI, particularly HAM and EPC? And from KNR perspective, now how we are looking at in terms of broader -- I understand it is difficult to guide. But how much are we looking at in terms of the new HAM plus the EPC?

Sir, actually, right now, I'll go to the straightforward answer. Thing is that order what we require, NHAI is anyhow ready to land. They are saying they want to come up with a big, huge project on this. But we would require about, say, INR 3,000 crore orders this year, that is FY '20-'21. And we are -- because as you know that many of our HAM projects have been more than 50% cycled. And almost all the projects like 4 projects which we have taken up, they have reached near about 35%, 40%. And a few others have gone beyond 50%. So definitely, I would need to attend to get new jobs for these teams at least. And we have completed one Trivandrum project recently, and that team also requires some jobs. So around 3 to 4 [ big ] projects I will be requiring. If the projects are bigger, I can plug them, but I'm trying to -- we've done INR 1,000 -- INR 3,000 crores, we are really targeting from NHAI. That is one thing, sir. Second thing, we have got enough orders from irrigation. So we may not be further focusing on irrigation, because we are supposed to execute these and put our equipment in same. So as you straightforward asked that what would be the guided -- this thing, however, I have given the guidance about the INR 2,700 crores we wanted to touch. But looking at this first, second quarters only, we will be able to really guide what's going to happen, sir. The efficiencies are really not up to the mark. And today also, I'm on site and roaming, almost 1 week, I'm roaming on the sites, trying to motivate people, trying to put them on the works and all the things we're doing. Around 50%, 55% is maximum we are [indiscernible]. And many projects are also blocking at 45% 50%. 45% is very less, probably small areas. But through 55%, it is between [indiscernible].

True, true, true. And particularly, now we have taken this 2 irrigation JV projects. Just wanted to understand in terms of the CapEx, last time, you said that if we get the irrigation, it would be at INR 200 crore kind of. So just wanted to get that. And also at the same time, if -- what would be the CapEx? And secondly, in terms of the quarterly depreciation, because the irrigation normally have a higher depreciation. So a current run rate of INR 53 crores, INR 54 crores, can it increase to INR 60 crores per quarter or for next couple of quarters, except maybe monsoon quarter?

Actually, the CapEx concerned, yes, really, we don't really do -- not required to do much in this financial year, only around the maintenance CapEx, that's around INR 15 crores we are expecting to happen, we think. So -- but next year, that is maybe after 2021, we would have to invest good -- quite good on the lift irrigation [ team ] and the pump house mobilization and all. So that will be coming in the second phase of this project. So maybe the next year, we'll have to do a good amount of projects.

Okay. Sir, these 2, the latest irrigation projects, the NCC and the HES JV, how much of a broader kind of execution are we expecting in this -- maybe in the last 2 quarters or maybe full FY '21?

Sir, actually, it may start from this quarter, but the rainy quarter, [ already rains have started ]. So not much of a focus. We'll try to do whatever the best we can do in this. But the strong results can be expected from third and fourth quarter itself, sir.

Okay. And we don't need any CapEx for these -- both the new irrigation?

Not actually.

Not much, sir. INR 50 crores we have already estimated, plus there's some maintenance CapEx in the roads that are happening. Every year, we are replacing around INR 30 crores, INR 40 crores of [indiscernible], because age-old equipment in time rate -- time-bound projects, it is becoming very unviable equation to keep them. So those we are just starting, and we are trying to replace.

Okay. So Venkat Rao, sir, so quarterly depreciation, INR 55 crore, INR 60 crore run rate will continue?

Because what happened, whatever our existing net block of irrigation, that is going to anyway -- we have to execute in these 2 quarters. Overall, you can say, around INR 50 crores per quarter will be there.

The next question is from the line of Ravi Naredi from Naredi Investment.

Sir, this year, employee cost and other expenses are too much high. What is the reason, sir?

Because this year, what happened, we have taken a lot of projects. A lot of the HAM projects are there. They have contributed execution in this year actually, and that's definitely there. We have taken a lot of employees. So this year, that's why execution was more and all execution in these HAM projects are almost in full fledge. So that is the reason being our employee cost is more.

What about other expenses?

Compared to last quarter, it is from INR 60 crores to INR 89 crores. So basically, in this HAM project, we have to give such design and consultancy fees to the consultant. So that has contributed more actually. So that is the reason why this other expense has gone up.

And sir, this note #5, why the company has impaired its investment amount INR 671 crore?

That is actually -- as you know, this -- we have [ held ] our debt. We have signed a share purchase agreement with the Cube, sale of our Walayar project. So in that Walayar project, how much money we have put there and how much the deal we have done, so around INR 6.7 crores, that is the loss was there in this project. So that's why we have booked that impairment.

Okay. Okay. And sir, lastly, if you can allow me, this arbitration claim anything more possible in near future?

So definitely, around INR 540 crores of our shares, registered claims are pending. So we have to see really how it will work on this situation, because now mostly our arbitration in the High Court, because we have got award for all our arbitration claims, and now that party has gone to the court actually. Now you know that court is also not working, and they are taking only important matters. So really we have to see actually how it will move in near future.

The next question is from the line of [indiscernible] from Spark Capital.

Sir, first one is on execution loss that we are facing in Q1 and Q2. Can you throw some color on when exactly we can see this ramp-up in execution which we can recover over, say, Q3, Q4 or FY '21? How long it will take to recover that loss in execution?

Definitely, this -- because as our [indiscernible], definitely, Q1 is almost over and Q2 is due to rainy season. So whatever the ramp is there, that will -- can be visible in the -- from Q3 onwards only. So definitely, Q3 and Q4 is going to be strong, what we are thinking right of now. But we have really seen that this COVID impacted, how long it is going to be there in the future, but as of now, we are thinking that from Q3 onwards, we can show some recovery.

Okay. I understand. Sir, the next one is on what is the -- how different is irrigation project execution, sir? Any -- productivity is better than the road projects or it is more or less same?

No execution way, it is the same only, because both [indiscernible] what are the machinery that's required in the irrigation project and both are almost the same type of machinery we require. But what are the recent irrigation projects what we got, actually, it is a little different. [Foreign Language] [ we are -- other than we have to -- ] that pump -- this pump house work is also there. But that work is not going to start now. It will take almost 1 year from now onward. But what are the new irrigation projects we have got, that is different from our old irrigation projects.

I understand. Sir, last thing is on any other state tenders that were already in hand that we are working or very close to awarding, which we are waiting, say, for next 1 or 2 months?

Actually in one of the state -- in Tamil Nadu, actually, we are working for an annuity project actually. So we have already tendered this. We are just waiting for the results.

Okay. Any other irrigation opportunities?

No, nothing, sir. We are not looking further.

The next question is from the line of Keshav Lahoti from Angel Broking.

Sir, how do you see the ordering pipeline for NHAI is going to be for this year? Do you think it will be strong or you will see they will be short of funding with the government and we might see a muted kind of pipeline?

Still, sir, [Foreign Language] we have already interaction with NHAI. Hello?

You're audible.

Yes, yes. [Foreign Language], we have also interaction with NHAI officials. So what we are -- what the guidance we have got this year, we are targeting from between 4,000 kilometer to 4,500 kilometers. So -- but a lot of tenders actually, they're supposed to open, but it is getting postponed actually. Last -- even 2 months also, we are trying -- we have around 5 to 10 tenders that we are focusing, but it is getting postponed. So definitely, if once this environment will improve, so we are hopeful that definitely NHAI will achieve this target of 4,000 kilometers actually in this year.

The next question is from the line of Karthi Keyan from Suyash Advisors.

Just wanted to understand whether your counterparty for these 2 irrigation projects, Megha and Navayuga, is that Telangana government? Or is it this Megha and Navayuga? So how exactly will you achieve your collections? Some thoughts, please?

What are the 2 projects, what we got from Megha, for the background of that, because on the government's insistence, we got this project. So definitely, money has to come from the government to that counterparty. And from that party, money will come to us. So there is no issue as per se as for -- the understanding is there. Only there is issues from collection from the government itself. So what are the outstanding receivables there as of March, we are not able to collect from the department. But there is no issue as far as collection from the respective party, what we can say.

Yes. And these new projects, sir, with the pump house construction, will that be outsourced? Or do you have in-house competencies?

So that we will work out, sir. That we will work -- that we will do, sir. We will do.

The next question is from the line of Rita Tahilramani from Invesco.

Congratulation on a good set of numbers. So sir, in terms of EBITDA margin, sir, could you help us understand for FY '20, how much is the arbitration change?

This year actually, we -- in our note, we have mentioned that out of -- we have received arbitration of around INR 61 crores in this year. Out of that, INR 22 crores is pertaining to the interest and balance is the money towards the work done. Out of that, around INR 12 crores is already we have accounted in the previous year. So you can say around the differential only around INR 20 crores, INR 23 crores, that has been booked actually.

Okay. And in terms of -- sir, I didn't understand what would be the margin trajectory, say, in Q1, also in FY '21? Because see, there are challenges in terms of execution. As sir rightly pointed out, there are labor challenges. And there will also be crossovers. So could you help us understand what could be as per you -- or as you envisage the margin directly incremented?

Definitely, in this quarter, Q1, Q2, there will be a dip in the margin because we are also -- because lot of fixed expenses that we have to incur with corresponding revenue we could not be able to generate it. And we have to incur little bit expenditure to retain our workforce also what sir has told. So definitely, what we can say is that this quarter, we may not achieve. Actually, there may be around 200 and 300 bps actually don't fall in the EBITDA compared to last year.

Okay. Sir this would also be accounted -- similar numbers would be there for FY '21, correct?

I'm talking about quarter actually. Q1 and Q2 will be there. And definitely, we are thinking that from Q3 onwards, we will rampage our turnover. So from Q3 onward, we should achieve actually what we are achieving as of now.

Secondly, could you help us understand what is the -- sorry, I missed the number in terms of equity invested. And could you, therefore, give the breakup of how would this pan out for '21-'22?

How it was in '21-'22 or '20-'21?

How much has been invested till date in FY '20? How much has been invested till date?

So we have invested as of now around 1 -- out of INR 578 crores of our equities, we have invested around INR 200 crores.

Okay. Okay. And how much would be...

Around INR 378 crores that we have to put actually in this year. Out of that, around -- you can say, around INR 150 crores we have to put in this year.

Okay. Okay. And sir, in terms of working capital, you rightly explained for the debtor days, but could you also help us understand why has there been an increase in terms of creditor days? In fact, in the presentation itself, there is an increase from 20 days to 45 days. What could be the reason for that?

Madam, generally, what is happened, suppose if we're not able to receive the collection from the department, corresponding what are the payments we have to make, we will also negotiate that. So definitely, we have to make some link to the creditors also because a lot of payment when we have to make to subcontractors, we have to just negotiate that and we have to work out that. So that is the only mechanism we have to reconcile our net working capital [ cycle ]. So correspondingly, the debtors we are not able to realize. Accordingly, we have also -- hold some payment for the creditors actually. And once there's realization, accordingly, we will release this payment to them.

And what is the 3H land acquisition status on your KSHIP project and the Oddanchatram project where we yet to receive SP?

This KSHIP project is having around 72% of this land because there is no 3H concept because land has to be acquired by the government. But they have to purchase the government -- land has to be purchased by the government. So 22% land is there in -- as far as this KSHIP project. And as far as Palani, around 50% land is there as of now. So we are expecting that in the next 2 months, we should be able to get the appointed date for this project.

Okay. Sir, SP when, sorry?

Pardon?

You were saying appointment date will be received in the next 2 months, right?

Next 2 months I said.

The next question is from the line of from Vibhor Singhal from PhillipCapital.

Am I audible?

Yes. Yes.

Sir, basically, just 2 questions from my side. One is -- sorry, if I've missed this, but what is the timeline for the sales proceeds to be received for the Walayar project from Cube?

Sir, we have got -- because we have to get the approval from the NHAI as well as lenders, so lenders approval we got it. And NHAI approvals also we -- in principle approval we have received. So we have to submit some undertakings. After that, we will get the final approval. After that, it may take around 45 days to receive the credit.

Okay. So do we expect this to basically happen in the first half or maybe second half of this year?

We are expecting in the first half actually we should complete.

First half itself?

Yes.

Sure, sir. And secondly, sir, in terms of the HAM projects, the 3 HAM projects that we have sold to Cube, if I look at the equity that we have invested, so we have already invested 50% -- almost 50% or, in fact, more than 50% of equity in these projects. So how does this take place now? Does Cube invest more equity now -- their share of equity now? Or what is the timeline of Cube's investment in this portfolio?

Sir, as per our contract agreement, actually once 90% land is there and we have to put our portion of the equity, Cube will start putting the money. So as of now, what is happening, because -- we are also working out that -- because Cube cost of money is a little bit higher because now due to this COVID impact, so we are just seeing that whether if we are able to generate the funds actually with low cost. So we should get that money rather than taking the Cube money. So we are also really working out on that. And we will take definitely a call in this quarter itself.

So until then we will keep putting in our equity?

Yes, yes, then we will keep putting it in our equity. Our equity means actually if we get the low-cost equity actually. So we should put that money, no, rather than putting the high-cost money up there. So we are just discussing that -- management is internally discussing that, and we will take call in this quarter.

So basically, it could also be a situation in which we invest 100% of equity in all the 3 projects and then Cube gives us the money later on after COD?

Yes. Yes.

Yes, that situation may also come.

That may come. That is also possible, right?

That is also possible, sir, yes.

Sure, sir. Sir, lastly, my question is basically [indiscernible] on this one. So on the KSHIP project, the 3 projects you said that you will take a call. But in terms of the remaining 2 projects, you expect -- how much is the equity investment that you expect on all these HAM projects this year and next year to be put in?

Sir, actually, the KSHIP project equity requirement is around INR 120 crores, but anyway we have to put actually. So around INR 100 crores we have to put in this year, sir. And Palani project is around -- equity requirement is INR 80 crores. So around 50% we have to put this year. So INR 140 crores for this project we have to put. And for other our 3 HAM projects where the equity requirement is, balance is around INR 170 crores, sir. So out of that, around -- if suppose we are not going with the Cube, we are putting the money. So around INR 100 crores we have to put.

Okay. So if we don't take Cube, then INR 100 crores this year and INR 70 crores next year?

Yes, yes, yes. Correct.

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

Congratulations on good set of numbers. You -- I think Reddy sir said in the call that currently the irrigation debtors outstanding is INR 500 crores, and at the end of March quarter, it was INR 200 crores. Is it right?

In March, it is INR 127 crores, all irrigation put together. Our irrigation project of this Mallanna Sagar and this Navayuga also, all put together is around INR 200 crores irrigation was there as of March. And as of now, it is around INR 500 crores.

So you would have done a billing of around INR 300 crores worth irrigation project in this April, May and June as of now?

Because there's 2 things: we have done the bill, and we have submitted to the department, sir.

That's fine. So I'm saying your run rate -- you have already reached -- I mean your quarterly run rate is INR 600 crores to INR 700 crores of revenue. You have already done half from the irrigation project. So I assume that road projects may add around INR 150 crores to INR 200 crores. So it should take around the first quarter revenues close to around INR 500 crores.

Close to around INR 450 crores. Yes.

This is a very good number, sir. I mean I don't know why you're sounding too low that the first half will be washout, I mean, compared to other companies, it's almost like 70%, 80% of your quarterly turnover, which you'll be doing. And I assume that second quarter would be at least INR 500 crores, which is usually your typical quarter -- months and quarter, so maybe around -- so this first half itself is adding INR 1,000 crores and second half should be ideally INR 1,500 crores.

Actually, sir, what you're saying is correct, but we don't know this COVID how it is going to impact us. Right now it is okay. It is there -- what you are telling is correct...

Worst of COVID is already behind in terms of execution, where the sites were shut down. Now the sites have resumed and most of the people are positive on the labor returning this month end, and you're already a 50-50 side. So until and unless the second wave comes in, I don't think that you should be able to degrow this year, is what my analysis says.

That's why, sir, we don't want to commit actually anything. That's way, we have taken all success measures. We are telling that we know that around INR 450 crores we can do in this quarter, but still it is lower than what we thought. So that's why...

Next quarter would be close to INR 500 crores?

Pardon?

Second quarter should be close to INR 500 crores?

That we have to really see -- assess actually. We have to really assess actually.

Okay. Okay, sir. My second question was, sir, just the financial closure of the Oddanchatram project has already happened, right?

We have submitted actually document to NHAI dated [ 22nd of May ].

So what is the rate at which the project's financial closure happens?

It is sub-9 actually, close to...

Very good rate. Okay. sir, on -- lastly on this arbitration part, so you said close to INR 500 crores of awards are in our favor. So since we were in high court, so the conciliation process is not being followed here, right?

Because -- it will take time because award is there in different courts actually. So we have to really see. Now there is not much activities in the court. So we are not expecting that anything coming this quarter. We have to really see actually. This quarter we are not -- this year we are not expecting any arbitration.

Okay. Okay. And just lastly on the tax rate, sir, what is the tax rate for this year and next year, if you can just tell them? And when are we migrating -- likely to migrate to the new ETR?

Actually, definitely, right now, in our books, we have around INR 34 crores of MAT credit that we are going to utilize in this year. So definitely, from next year onwards, we will go in normalized rate of new tax regime. But this year, we will continue to take that old tax regime only.

So 20% to 25%. So 20 -- around 25% ETR for this year?

Yes, yes, next year from 25%. Yes.

You're saying FY '21. What is the tax rate in the FY '21?

This year will be around same, around 25% will be there.

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

Just one question from my side. What is the equity that's been included in our projects in FY '20, I mean, the year gone by?

This year how much we have put?

Yes.

Around INR 100 crores, sir.

INR 100 crores?

Yes.

The next question is from the line of Ashish Shah from Centrum Booking.

Sir, I just want to come back to the new irrigation project. So we know that in the Navayuga project, there were certain write-off [ pay ] issues, and I think those continue till date. So first, if you can start with that and make us understand where we are in terms of securing the write-off pay in that project? And then as far as the 2 new projects is concerned, what is the status of the write-off pay? So realistically, when do you think that we can start seeing material execution in those projects?

Sir, in Navayuga project, actually, the project length is around 4 kilometers in there. Out of that, we have around 1 kilometer of the land is available. One kilometer is there and balance land, actually, we are expecting -- in another 3 or 4 months, we can expect the balance land. So definitely, from this year, that project is going to start contributing the revenue, but that is also depend upon how -- because Navayuga project is coming under Palamuru lift irrigation, and it is a government-budgeted project. So based on the government funding also, we will execute the work. And for that, we already raised the first bill on the government actually. So we are expecting the collection once -- that's why all irrigation project is based on how government funding is there. So based on that, actually, the project will move. But what we are expecting that what are the ROW issue in that project is going to be completed in next 3 months, you can say -- 3 to 4 months.

Sure. And sir, the ROW on the newer projects, the 2 new projects, the Kaleshwaram ones?

New ones?

Yes, the new ones.

We are estimating that. Sir, what is the ROW...

Because recently, we have only signed the agreement. Now we have -- next 1 to 2 months, we will get the clear visibility on that.

Right. Coming to the Walayar project sales, so there we did say that we expect the cash to come in first half. But I just want to check if there is any indication by the Cube to renegotiate on the valuation, given what has happened to the traffic or the valuation committed is sacrosanct and that will not change?

Sir, actually, basically what happened, sir, Cube -- they have asked -- because whatever collection has reduced, but initially there is no clarity from the government, but later government has come with the notification that whatever the loss in toll actually, they will compensate through EOP. So initially, Cube has come with that mind, but after getting this circular actually. So definitely, we have to sit with them and we have to do the final negotiation and close that deal. So -- but both the parties, Cube and KNR, want to close that deal, and we are expecting that in the second -- this first half, the deal will be closed.

Okay. And lastly, on the Oddanchatram project, there -- I mean we have been expecting the appointed date for some time now, but it just kind of is getting delayed. So now given where we are in terms of the state machinery not fully functional, do you think it -- the appointed date can come in 2 months or it can probably get stretched to 4 or 6 months?

Now NHAI is functional. We are expecting appointed date in 2 months actually.

The ramification is clearly because of COVID. Maybe in the next 2 months [indiscernible] also will come.

Okay. Okay. Fair enough. So after monsoon, we can positively look at revenue to come from this one?

Yes, yes. Correct.

The next question is from the line of Amber Singhania from AMSEC.

Just one clarification. You mentioned this Kaleshwaram project, the irrigation project, both the projects, which has now been added in the order book. It will start from which month or which quarter?

Sir, definitely from Q2 -- because -- next quarter only because anyways the agreement we have signed recently, and we have to get approval, all the designs, everything. So definitely, it will be going to start from next quarter on.

So both the projects will start from next quarter, sir?

We are expecting that, sir.

Okay. And secondly, sir, on the broader side, when we are saying our pipeline from NHAI is good and 4,000 kilometer of road is expected by NHAI this year, if you can give some idea about the tenders which have already been submitted, what kind of quantity is there and by when we are expecting it to get opened in the near future? What size of tenders are expected to be opened?

Actually, sir, what are the tenders -- because they have identified around 20 tenders actually, around INR 20,000 crores worth. But every -- but it is getting postponed actually. Out of that, we have also identified 4 to 5 -- 5 to 6 projects, sir. So we want to visit actually. But this project is -- continues, actually, postponing from the last month itself. So definitely, there is a good pipeline we are expecting from the NHAI. So once this postponement will be stopped, definitely, they will start actually.

Have we submitted any bids on the -- at present, sir? What is our bidding pipeline, sir, what have we bidded?

No, we are -- actually, it is getting postponed. We are not able to bid actually, what I meant to say. We have identified, actually, 6 -- 5 to 6 projects, but we are not able to bid it because it is getting postponed actually.

Okay. And how is the similar situation from the state side, sir?

State side, really, we are not looking for actually. What are the irrigation we got now we are -- states only -- we are looking for irrigation only and what are the sufficient order book we got for this year. So this year, we are not looking for any irrigation projects. Now we are only looking for the NHAI, EPC and HAM projects only.

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

Congratulations on the good set of numbers. Sir, just asking on one thing, sir, this INR 500 crore, which you shared that they were as on date. So as on March, the receivables were high. So the receivables included INR 120 crores of irrigation -- INR 127 crores of irrigation and balance. I'm assuming it is from the road, right, sir?

Yes, yes. Actually, around INR 200 crores receivables from irrigation put together. Mallanna Sagar is INR 127 crores and other irrigation project is there. Out of that -- around INR 212 crores of Tirumala project receivables are there out of [ INR 476 crores ]. And that actually for -- that is the SPV company, and we have to go for the debt drawdown. In that project, we have completed around 60% of work, but we have not gone from the debt drawdown. Now this quarter, actually, we are planning to go, and we will do actually debt drawdown. So once this INR 200 crores we will receive, then debtors will be drastically reducing.

And then -- and so far in Q1, we have done almost INR 300 crores worth of irrigation. So total INR 500 crore is outstanding as on date in irrigation. Am I right?

Yes, yes. Correct.

Okay. And sir, one more thing I would like to know. What is the monthly fixed cost run rate and also the raw material cost, as sir said in his opening remark, has gone up. So what -- are we covered by escalation in most of the projects? Or how the things are going to shape up going forward, sir?

Actually, basically, if we -- in our order book, 50% is HAM project, and HAM project has fixed EPC. So there is no escalation. The escalation charge is covered only in EPC project -- NHAI EPC project.

NHAI, not HAM?

So whatever the HAM project is there, there is a fixed price EPC because SPV is giving EPC contract to KNR. So you can say 50% project, this is not covered under escalation.

And in irrigation also we have got escalation cover?

Pardon, sir?

Hello. Sir, in irrigation project also we have got escalation cover?

Irrigation is -- as per our contract, actually, it is there, but it cannot be 100% pass-through actually because they are all-star price contract and around 50% to 60% will be generally pass-through. It is not completely passed through.

Then we can see some impact on the margins because of this raw material cost going up in Q1...

Yes. Q1 definitely some impact will be there. We are working out.

Okay. And sir, last thing, what is the fixed cost per month, monthly fixed cost, sir?

Around INR 15 crores will be -- because INR 10 crores is the salary and other ARPU. Together, around INR 15 crores per month is there, actually, fixed cost.

So INR 15 crores is the monthly run rate of fixed cost.

Yes, yes.

And sir, any cost-control measures you have taken now during COVID like employee cost reduction or other cost-control measures, which we see help [ in reducing ] the fixed cost, at least as of now, sir?

It's being worked out because, see, we have to follow the government guidelines also. And so in June, with those guidelines it's being worked out. Maybe this quarter end, we will finalize how to do the cost-cutting.

And this arbitration you're talking about INR 500 core is standalone or last time also you had given a big number of acquisition, which was in JV and expansion. So what is the arbitration -- this INR 500 crore is only for standalone or there is a JV...

That is KNR shares. Yes. In JV, it is around INR 800 crores, but KNR shares of that it comes to INR 540 crore.

It contains a number of projects.

Okay. Got it. So it is the same. Last time also it was [ INR 540 crore ].

The next question is from the line of Rachit Kamath from Anand Rathi Shares and Securities.

Hello. Can you hear me? Hello?

Yes, sir. Yes, sir.

Congratulations on the good set of numbers. Sir, I needed a few data points relating to unbilled revenues at the end of FY '20 and, if possible, a split of that in terms of road and irrigation.

Sir, the specific data, can I provide you later, separate, sir?

Sure, sir. I can obviously give you a call. Yes. Sir, I have one more question. Like you said that you are looking -- you were looking at 5, 6 projects in NHAI which were getting postponed on a regular basis. Can you just give me a split as to what was the EPC in that, what was HAM and what is the value involved?

No, all are HAM only. Out of that, it is actually 3 in Tamil Nadu and 1 in Andhra Pradesh...

Telangana 1...

And 1 in Telangana.

Okay. And any value to this, sir?

Value, I'll put together around INR 6,000 crores to 7,000 crores,

INR 6,000 to 7,0000 crores. Sure, sir. And sir, regarding mobilization advances, what was the value that was there, like, we had outstanding at FY '20 end. And given the fact that we have almost INR 2,600 crores kind of pending orders that is going to get added, what will be the [ mobilization advances ] we can take up on these projects?

Sir, mobilization advance, actually, all SPV HAM projects we have taken, except for the -- our company projects because we have the -- we have done the financial closure already. In Somwarpet, we have drawn only 50%. And as of now, only around INR 60 crores mobilization advance is pending in Somwarpet and Palani anyway it is yet to start.

Yes. So how much will be there in Palani, sir?

Palani will give around INR 60 crores, sir, more or less.

INR 60 crores. And anything on this irrigation project, sir?

There is no mobilization advance in irrigation project, sir.

Okay. Sure, sir. Sir, actually, I think this is a question we need for all. Can you give outstanding order backlog for some of the irrigation projects, sir, like Navayuga and the other Megha Engineering order, Polachi and all this, sir?

Yes, yes. Backlog, sir, just a minute. Sir, for Megha, it is INR 518 crores, sir. For Navayuga, it is INR 847 crores, sir. These are the basic...

Sir, Polachi was there, then few of the other ones.

Polachi is around INR 43 crores, sir.

Polachi is INR 43 crores. Okay. And sir, some of the older road projects also, I suppose, were -- that were pending with us. I think Hubli was -- this Ramanathapuram...

Hubli is anyway there in the presentation, sir...

Yes. There is no Ramanathapuram, sir.

The Madurai-Ramanathapuram, it is [ almost ] completed, sir.

So Ramanathapuram is almost completed?

Completed, yes, sir.

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

Sir, just a clarification. Initially, we said that in one HAM project in Tamil Nadu, we bidded. Is it NHAI project or state? And then we said that we have just identified 5, 6 HAM projects that you have recently just now you said.

It is a state annuity project, sir. It is not included in that 5 -- the 6 projects what we identified with the NHAI.

Okay. Okay. So this is -- in terms of the value broadly would be?

Around INR 500 crores, sir.

Okay. And the structure would be the same, 40-60 like NHAI? Or it will be different like a KSHIP?

It is a pure annuity-type project, sir.

Okay, pure annuity, not a HAM. Okay, okay, okay.

The next question is from the line of from [ Chenna Avinash ] from Spark Capital.

Sir, other road projects, I just wanted to know if there is any movement in the GHMC road maintenance program order backlog.

Sir, actually, as of March, there's no execution, but in this quarter, actually, we are expecting around INR 60 crores turnover in both the projects put together, actually, in Q1 of this year, sir, yes.

And other road projects of [indiscernible] [ Arunachal Pradesh, any movement, sir, in Thiruvananthapuram... ]

Arunachal Pradesh is same only, INR 93 crores, sir. If you ask project-wise, I can give, sir. This project...

Thiruvananthapuram, [indiscernible]?

What is it?

Thiruvananthapuram, Kazhakkoottam-Mukkola?

Trivandrum is INR 26 crores, sir.

Okay. Okay. And GHMC -- Ramanathapuram and...

Ramanathapuram -- this Madurai-Ramanathapuram is over, sir, basically.

Okay, okay. [indiscernible] And -- yes, sir. That's it. And on the irrigation side, KP Sagar, Yedula, is it completed?

Sir, KP Sagar will be around INR 84 crores, and Yedula is around INR 12 crores.

INR 12 crores. Sir, if you could clarify, our share in the new irrigation projects, one -- numbers that mentioned in the presentation, is it the total value or the value towards....

In the presentation, where we have [ shown ] this order book, it is our share only, sir.

The next question is from the line of Vibhor Singhal from PhillipCapital.

Just a quick question from my side on an overview of the activity right now. Sir, you mentioned that right now our sites are at around 50% to 65% capacity -- running at 50% to 65% capacity right now. So one question is, what was the capacity? If you put the -- what was the execution which happened in April and in May? April, I would assume it will be close to 0? So what was it probably in April and May? And when do you expect this 50% to 65% in your assessment to reach 100%?

Actually, just our ED sir also told that definitely from April, what are the -- this execution has happened only in this -- you can say, in this week only actually. So whatever the migrant labor issues are there. Still, we are not able to get much labor. But still we are trying to retain the employees, and we are trying to retain the workforce and get new labor. But we are expecting that from Q3 and Q4, there should be rampage in the turnover. So really we have to see actually how this COVID is going to impact further. By seeing today's situation, we are expecting that from Q3 and Q4 onwards -- Q3 onwards, we should be able to get actually our full capacity.

And sir, April and May was largely 0 execution. Is that what you're trying to say?

It is very less actually. We were able to do only 20% to 30% on the execution.

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

Sir, just wanted to know what would be your retention money which is lying with NHAI right now?

All put together, around INR 150 crores, sir.

So -- because there is a talk that NHAI may return some of the retention money during -- as a relief measure in the COVID. So what -- how much do we expect to get back? Any sense -- initial sense on that?

I'm not -- because INR 150 crores is all put together, NHAI as well as states. I am talking from the balance sheet perspective. So out of that, what are the NHAI we are eligible to get from the NHAI, definitely we will apply to NHAI and get it. There is no issue on this.

Sir, but large part of...

Because the circular has come very recently. So we are applying to the NHAI and getting this...

But any sense on how much can we get? Or is it like too early to say as of now?

What are the due, actually, entire we can get because what our ED sir also told, if there is no contract default obligation, so definitely, we'll get from the NHAI. And as far as -- as of now, we are not seeing that because not -- any single contract we are defaulting. So definitely, what are the due as of date, we are going to get it.

Okay. I'll take that number separately from you.

Yes, yes, you can take that number separately.

Secondly, on the -- now we have been getting milestone payments, even the grants and those other things from NHAI, milestone based. So now we have made it monthly. So what kind of improvement in the working capital you're expecting for the HAM projects?

Sir, definitely, but they have only used that circular, but so far it is -- implementation has not happened. So we are just discussing with the NHAI how it is going to be implemented because it is a very good effort from the NHAI to put that in the circular. But we are still actually working out with the NHAI, how it is going to be implemented and whatever the due amount is there, we will definitely get that.

So you will get even whatever, like, if you have achieved the milestone and it is still not due, so you will get lump sum kind of amount also based on the monthly kind of run rate?

Monthly because they will give some percentage. Right now because we are giving them 10%, 20%, 30% -- 10%, 30%, 50%, 75%. Now this milestone, they will break into the monthly and then -- and accordingly, they will pay to us.

Okay. And this will be for what period, sir? It will be like for the whole period of the project or only like 6 months? Or like what is the timeframe? Any sense on that, please?

[indiscernible] till the COVID situation prevails.

Only it is temporary.

Only till February?

Temporary.

Temporary.

[indiscernible]

The next question is from the line of Faisal Hawa well as from HG Hawa & Company.

Sir, you just said that Hyderabad municipal corporation project, you have been able to also achieve some INR 50 crores, INR 60 crores of revenue. So I find it very hard to believe that we have been able to achieve only INR 250 crores, INR 300 crores from other road projects of HAM and all. So as Parikshit rightly pointed out, our revenue may even touch INR 600 crores because you said that municipal project is also INR 50 crores, INR 60 crores is processed, INR 300 crores is from irrigation. So INR 250 crores could be easily done from other road projects. And what is the -- since you are saying that most of our migrant workers have left, what is the employee cost reduction that we are expecting in this quarter?

There will not be any reduction in employee cost. It's only wages, right.

Yes, yes, wages.

Employees -- we are retaining all the employees. How can we reduce the employee cost?

No, no, sorry, sir, I meant wages for the contract workers.

So 50% of the labor are not there at this point of time. Obviously, to that extent, progress also will be affected. We expect the labor to return also after the monsoon.

And about the revenue, if it's INR 300 crores is...

Lockdown was there till April 20. Only after April 20, the work started. Maybe there will be some small piece of work started in irrigation and all. So the billing and other things subsequently is yet to be made for May and other thing. Maybe by the end of June, we may be in a position to assess how much bill has been certified...

Thank you. That was the last question of the conference. Now I hand the conference over to the management for closing comments.

Thank you, everyone, for your participation in our earnings call. In case there are any further questions, you may get in touch with Strategic Growth Advisors, our Investor Relations adviser, or feel free to get in touch with us.