KNR Constructions Limited (532942) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to KNR Constructions Limited Q3 FY '21 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 to everyone present on the call. We welcome you to our Q3 FY '21 Earnings Conference Call. Today, I have Mr. K. Venkatram Rao, General Manager, Finance and Accounts; and Strategic Growth Advisers; our Investor Relation advisers present on the call. I hope you and your loved ones are safe and healthy. I will first start with an update on the industry, industry update. Along with our company, infrastructure companies across the board have witnessed marked improvement in execution during Q3 FY '21 due to fast bounce back in labor availability to pre-COVID levels and smoothening of raw material, supply chain and passage of monsoon season. We continue to witness sustained awarding momentum across roads, urban infra, water infra and irrigation segments. Timely disbursement of payments from NSA, along with low-interest COVID loans has improved the overall sentiment for the infrastructure sector. The Ministry of Road Transport and Highways has initiated a series of relief message like a shift from milestone-based billing to typically used -- to rate within 45 to 75 days to monthly billing, and there is some retention money in proportion to the work as we execute them. These measures have significantly helped to ease the pressure on working capital inventory supporting their own contractors. The lower construction during the last 9 months stood at around 8,200 kilometers, 8,000 -- 8% higher than the approximate of 7,600 in the same period during FY '17. Adjusted for the first 20 days of April 2020 where no construction activity was allowed, this is a great achievement. The order bid pipeline across road, urban infra, water infra and railways is expected to remain robust and gain further traction as in the Indian budget. The gross budgetary support towards the capital expenditure has been increased significantly, with infrastructure being the key beneficiary. The government relaxed the difficult deficit target to meet the huge funding requirements for productive asset creation with Bharatmala, Pariyojana and the National Infrastructure Pipeline getting a major fillet. Capital outlay for the Ministry of Road Transport and Highways has been increased by [ 35% ] to INR 1.98 lakh crore in 2021/'22 budget, estimates from INR 1.47 lakh crore in 2020/'21. The Central Government has also provided a capital of INR 0.45 lakh crore as a support for the Infrastructure pipeline. To meet the significant increase in investments required as for National Infrastructure Pipeline, the government has made an announcement of setting up a new development finance institution with a capital of INR 30,000 crore to improve the financing availability for the infrastructure. The aim of the institution will be to leverage and provide a debt over INR 5 lakh crore to the infrastructure sector over the next 2, 3 years, thereby to bridge the infrastructure finance industry. NHAI has set an ambitious target of awarding highway projects in the range of 4,800 to 5,200 kilometers, higher than the 4,500 kilometer original target, the accounting asset for itself on FY '21. NHAI has awarded 2,433 kilometer national highway till December 2020. NHAI has awarded 3,211 kilometers in the whole FY '20. Considering the huge capital bid pipeline of INR 72,000 crore and in the second half of Q4 historically witnessing a substantial awarding, we expect a significant order inflows for the road and highway success in the near term as well during FY '22. HAM constitute a major share of 55% in the order pipeline, followed by EPC at 38%. Two projects are planned to be awarded through the revamp, renewal, [ retool ] model. About 60% of projects are located across the states of Andhra Pradesh, Karnataka, Kerala, Punjab. Irrigation on water infra are also expected to get major impetus in the face of Telangana, Andhra Pradesh, Uttar Pradesh. That strong awarding momentum is expected to continue. The order bid pipeline across various verticals, road urban infra, water infra and railways will continue to remain healthy over the long term on back of major capital allocations over the next 5 years under National Infrastructure Pipeline. The government envisages developing of 34,800 kilometers of highway at a cost of INR 5.345 lakh crore under the Bharatmala Pariyojana. So far, the contract has been awarded for a length of 13,531 kilometer road. And the detail project report for 16,500 kilometers is currently in the pipeline. NHAI has also plans to raise about INR 10,000 crores in the current calendar year by monetizing its road across to about 1,200 kilometer with an objective to deleverage itself and enable greater funding for Bharatmala Pariyojana. Toll collection. Q3 FY '21 witnessed a marked improvement in toll collections on the back of increased momentum of both passenger and commercial vehicles. As per ICRA, the toll collections in September to November 2020 on an average grow of -- growth by 13%, implying a growth of 8% to 9% traffic. 1/3 of traffic growth was on account of passenger car units and 2/3 on account of commercial vehicles. The better-than-expected recovery in traffic as, I have said, major slippages in the credit profile of various toll road assets. According to ICRA, toll collections are likely to grow 14% to 15% in FY '22 on a low base in FY '21 as the traffic stands may just increase by 5% and toll rates are expected to increase by 3% to 4%. [ We see ] 100% cashless tolling at the toll plazas across the country. Electronic toll collection system, FASTag, will improve mandatory for all vehicles -- it will become mandatory for all vehicles from February 15, 2021. NHAI has also decided to do away with a requirement of maintaining a minimum amount in FASTag with an aim to ensure a seamless movement across electronic toll plaza. With more than [ 2.5 crore ] users, FASTag currently contribute about 80% of the total toll collection. Daily toll collection through FASTag track has crossed the INR 89 crore mark. This is substantially [indiscernible] Company update. Now coming to the key updates for the company. The operational effectiveness across all our projects reached a pre-COVID level as workforce got bolstered by Palamuru. On 5th October 2020, we had received appointment date for our 5th HAM project, Oddanchatram to Madathukulam, Palani HAM project, which is worth INR 920 crore BPC. The percentage physical progress as on date -- as on 31st of December 2020, for our 5 HAM projects is as follows: Chittoor to Mallavaram is at 72.1%, Ramsanpalle to Mangalore is at 64.2%, Trichy to Kallagam, 58.9%. Magadi to Somwarpet at 22.4%. Oddanchatram to Madathukulam is at 14%. During the quarter, the execution was equally driven by all our 5 HAM projects. Our deal to divest 3 HAM projects is on track. Out of INR 624.28 crore, equity requirement for all HAM projects, we already invested INR 345.51 crore as on December 31, 2020. Our incremental equity requirement stands at INR 90 crore, INR 139 crore and INR 50 crores for FY '21, FY '22 and FY '23, respectively. You can refer Slide #26 of our investor presentation for details on each HAM projects. The toll collection for our Bihar project, Muzaffarpur to Barauni, in Q3 FY '21 and 9 months ended FY '21 is INR 11.43 crore and INR 33.68 crore, respectively. We are invoked force majeure clause as per the construction agreement for the reduction in toll collection in this sector, and are under discussion with MSA for eligible compensation. Order book position. Coming to an order book position. During the quarter, we have received an order for upgrading Cheyyur to Vandavasi Polur road, including link over at Cheyyur to Panayur road to 2-laning in the state of Tamil Nadu on EPC mode, aggregating to INR 539 crore, [indiscernible] road in [indiscernible]. As on December 31, 2020, we have an outstanding order book of INR 7,664 crore. EPC road projects and captive HAM project have ensured 55% of our total order book while irrigation projects comes to the remaining 45%. Client wise, 30% of our order book is from third-party clients, and balance 30% is from captive HAM projects. Our third-party order book -- our noncaptive order book, which accounts for 70% of the total order book, is skewed between State Government contracts with 51%, whereas 3% is from Central Government and the balance 15% is from the order book -- I'm sorry, from other private players. Our current order book position is robust and provides visibility of execution over the next 2, 3 years. Robust project award pipeline and ready DPR under Bharatmala project should accelerate awarding activity in the last quarter of this financial year. The process of submitting bids for road projects are currently underway. The average ticket price of the tender is about INR 1,000 crore. Based on our short-listed projects and bidding pipeline for the current financial year, we are targeting a further order inflow of around INR 3,000 crores to INR 4,000 crore in the forthcoming remaining period of this fiscal year. A subset in irrigation projects. Substantial portion of our deals for irrigation projects from the state of Telangana has been cleared by the state government. We have received about INR 540 crore till date and expect to receive remaining outstanding amount in near term. This amount includes built and unbuilt and work in progress. At the same time, we have just started our operation at one of the irrigation project sites. Now I request Mr. K. Venkatram Rao, our GM, to present the results for the quarter and 9 months ended 31st December 2020. Over to Venkatram.

Thank you, sir. Let me take you through the Q3 and 9 month FY '21 stand-alone financial performance. We recorded a 23% year-on-year growth in our total revenue, some INR 558 crores to -- in Q3 FY '20 to INR 686 crore in Q3 FY '21. EBITDA came in at INR 135 crores in Q3 FY '21, registering a growth of 9% as compared to INR 124 crores in the same period last year. EBITDA margin in the current quarter stood at 19.7%. Profit after tax stood at INR 78 crores in Q3 FY '20, up by 93% as against INR 40 crores, post-exceptional item of INR 7 crores in the same quarter last year. In Q3 FY '21, one of the old projects, we have received the interest receipt of about INR 12.60 crores against delay and receipt of the bill. We have registered the same as other income. Corresponding to the same amount was passed on to the subcontractor, which is reflected in increase in the finance costs in this quarter. Other income also includes some of the write-backs of the old liabilities. Now coming in our stand-alone performance for 9 months FY '21. Revenue from the operation in 9 months FY '21 was up by 13%, INR 1,767 crores from INR 1,569 crores in 9 months FY '20. EBITDA witnessed a growth of 4% from INR 340 crores in 9 months FY '20 to INR 354 crores in 9 months FY '21. Our EBITDA margin in 9 months FY '21 stood at 20%. PAT for 9 months FY '20 stood at INR 167 crores, registering a growth of 6% as against INR 158 crores in the same period last year. Excluding the exceptional item of INR 11 crores on account of sale of 100% stake in Walayar projects though Ministry of Highways. The net profit for 9 months FY '21 stand at INR 178 crores. The debt-to-equity as on 31st December 2020 is 0.01x as compared to 0.12x as on 31 March 2020. Acute summary for the consolidated performance is as follows. The consolidated revenue for the quarter grew by 22% to INR 735 crores in Q3 FY '21 from INR 604 crores in Q3 FY '20. EBITDA in Q3 FY '21 witnessed a growth of 10% to INR 177 crores as compared to INR 161 crores in Q3 FY '20. EBITDA margin in Q3 FY '21 stood at 24%. Net profit for the quarter was INR 92 crores, registering a growth of 93% as compared to INR 48 crores for Q3 FY '20. Now coming to our consolidated performance in 9 months FY '21. Revenue from the operation in 9 months FY '21 stood at INR 1,913 crores, up by 11% as compared to INR 1,722 crore in 9 months FY '20. EBITDA witnessed a growth of 10% from INR 435 crores in 9 months FY '20 to INR 478 crores in 9 month FY '21. Our EBITDA margin for 9 months FY '21 stood at 25%. PAT for 9 months FY '21 witnessed a jump of 64% to INR 288 crores from INR 176 crores in 9 month FY '20. The net debt-to-equity as on 31 December 2020 stood at 0.04x as compared to [ 0.48x ] as on 31 March 2020. With this, we will open the floor for questions and answers.

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

Congratulations on a good set of numbers, sir. Sir, 3 questions, sir. First, are you looking to revise your guidance of -- for FY '21? I believe the guidance you had given for FY '21 was INR 2,400 crore. And sir, any kind of revenue guidance for FY '22? That's the first question.

We have given earlier the guidance for this year INR 2,500 crores. So I think we want to maintain that because things are now -- though it is taking an improved -- we want to just wait till the March, and we want to stay at our own guidance of INR 2,500 crores.

And anything on FY '22, sir? Or no?

FY '22, normally, we adjust that 15% to 20%. We will go for increase in the revenue, which we will be maintaining. But see, time will be there still for FY '22. So maybe in the second quarter, we will be in a position to ascertain the exact -- how the trend is going.

And secondly, sir, has the work started at Kaleshwaram project awarded in Q1 FY '21? I think we had 2 projects, right, which you won in Q1?

Sir, this project is yet to be -- 1 project, actually, we have just started not in full scale. But we think that in Q1 FY '21, actually, we will start the full project.

Okay. And thirdly, sir, on the receivable side, I think we had INR 740-odd crore from Telangana, right. And? I think you mentioned INR 540 crore is balanced. Am I right in saying that?

No, what we have mentioned is INR 540 crore, we have received as recent money from last November. In last con call, we told that actually around INR 680 crores is outstanding. Against that, around INR 540 crores, that money we received as of now, from November till as of now.

From that amount, they've only INR 140 crore left, right?

Yes. Yes. Out of whole liability, around INR 140 crores is left only.

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

Sir, congratulations on good set of numbers and also for recovering your funding lease from the Telangana government. So now whatever is outstanding, so that is standard, right? So leaving aside that -- leaving aside that INR 140 crores of the old receivable?

Holding INR 140 crores in current business. As of date, around INR 290 crore is the outstanding, which included unbilled also. So definitely, INR 140 crores, which already has been satisfied. And that amount, we are expecting that by -- definitely by March, we will receive. So what are the whole liability, as I've said, that's definitely going to close by March.

Okay. Great, sir. And second question was on your total order inflow. So what is the financial year-to-date? How much is the total order inflow?

Around INR 4,000 crores we have received in this year.

And the INR 4,000 crores, you -- are targeting, INR 3,000 crores to INR 4,000 crores, you're targeting in the fourth quarter?

Actually, what is happening, as you know, because NHAI is awarding a lot of projects, so that's why this is the opportunity to get that. But if you see INR 4,000 crores, that is sufficient. But now NHAI is going very -- awarding these differently. They are giving a lot of the project so far. We have almost bidded around 15 projects, HAM projects as of now, including 1 EPC project. So we are expecting definitely at least 2 to 3 projects to come. So that's why now we have -- when opportunity is there, we are seeing that. And we are, therefore, we are targeting at least INR 3,000 crores, INR 4,000 crores we should get by March.

And moreover, we'll be completing 3 more projects by this June, our existing projects.

Okay. So we may end up this financial year, somewhere close to about INR 10,000 crore of order backlog if we receive this INR 3,000 crores to INR 4,000 crores of new orders?

Yes, that's what we are targeting. Let's hope so, we could get.

Sir, one question again. I think that Venkatram sir had given a very strong commentary on overall budget and government focus on infrastructure. So we are largely 70 roads and state government irrigation projects. So how do we capture this because what I understand is that a lot of increase in the competitive intensity on the ground because of the dilution of qualification norms. So on one side, we have seen more players coming in. We are seeing that increased competitive intensity in the HAM projects. So how do we -- beyond roads and irrigation, which is probably a safe subject, so another segment where we have started building capacity, building fees or looking to bid, if you can throw some light on the diversification side.

Yes, yes. We are also now bidding in urban infra, which we got a major flyover in Tamil Nadu, a very big player over there. We are also on the lookout for urban infra players. And water infra also, we have now -- our focus is there, already we have worked and we are also looking at it. As and when now we -- now as on the -- on the other hand, we have got visibility of 2 or 3 years visibility, will be done by end of March. So by that time, things will also stabilized some of these urban infra, water infra, road or HAM projects will really materialize.

[Operator Instructions] The next question is from the line of Kalpit Narvekar from Allianz Global Investors.

Sir, congratulation on a good set of results. So this INR 30 billion INR 40 billion worth of order inflow that you are targeting in [ 4 quarters, 6 quarters ], could you share some color on -- is this all coming from NHAI? All this coming from the irrigation? Or is all of it from HAM or EPC? Or what's the breakup?

It is going to blend between HAM and EPC and mostly whatever we bidded. Because we are most -- I told around 15 bids actually. So that's around INR 20,000 crores that we have bidded. Out of that, actually, we are expecting. So is definitely is going to be mixed up both EPC and HAM because EPC also we have quoted. So that's why we have revised our target because I think NHAI is awarding this project. So based on that, we have just revised our guidelines for order take for this year.

Okay, sir. Okay. And could you provide some guidance on order inflow for FY '22?

It's too far, too far. Let us all hope that the trend may continuously grow like that. Maybe before the year-end, we may be in a position to say.

Like INR 70 billion, INR 80 billion of FY '20 can be sustained for FY '21, can be sustained for FY '22 do you see?

If this Bharatmala project will continue for another 4 to 5 years. So there is no debt orders to be received. In the case of urban infra or HAM project, water infra. As of yet, we are having a sufficient amount of visibility is there. So we will definitely plan accordingly as per the days to come.

Sir, one last question from my side. So this urban infra and water infra you're talking about, is the -- are any of the budget announcements relevant to the projects you're targeting? And what is the qualification? Are we qualified to do projects in this these 2 categories? Could you get some color on that?

The urban infra, we are qualified. We have 5 major flyovers genuinely are completed successfully. And we have also completed 1 flyover in [indiscernible] was the flyover which we are doing. And the urban infra is 11.5-kilometers flyover, the big -- largest one in Tamil Nadu. This will give additional qualifications value to bid for bigger projects like the metro projects and other projects. And similarly, the water infra, we have done reservoir dams. And also now, the pump project also we are doing now. This has enhanced our eligibility criteria in the bigger projects.

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

Yes. Sir, congrats on a great set of numbers yet again. Sir, what would be our debt level or the stand-alone debt number at the stand-alone level at the end of the quarter?

It is around -- gross debt is INR 16 crores. But we are actually cash of -- the bank balance of INR 43 crores. So that is actually net is negative only.

Negative only. Right. I think you mentioned that basically, in the -- in this quarter, we had INR 12 crore of basically interest from the earlier project, which is there in the exception of other income, and which we passed on to the subcontractor, which led to the higher interest expense. So basically, if I see the INR 18 crore of interest expense in this quarter, and as I removed that INR 12 crores, so our recurring interest expense was around INR 67 crores. Is that understanding correct?

Yes, yes, correct. This is not only interest expenditure. It includes what are the bank charges like DC commission, LT commission. It includes all the finance costs actually. It is not only interest income. It is a finance cost, yes. So because now you know that because we have repaid the loans of our promoter also, so that's why there is no interest for this quarter. And what are the outstanding mobilized or advanced now around only INR 57 crores is the outstanding noise around on that interest what we have to pay to [ NSA ]. That is also really going to be reduced. So that's -- now you can see that around 6 -- INR 5 crores to INR 6 crores is the finance cost.

And sir, going forward, I think this INR 5 crores to INR 6 crores should remain stable.

That is subject to utilization because now this quarter, still our debt to utilize because we have received a lot of funds from our irrigation projects. And we have received proceeds from sale of Walayar in the end of the last quarter. So that's why this quarter, there has not been much utilization of the working capital. That's why interest is reduced. Definitely, based on the requirements and utilization of working capital, it may vary actually, not much, but definitely, it may vary.

Right. Sure, sir. Sir, so my second question was on the margins front. I think we have reported very strong margins again at around 20%. Do you believe these margins will be sustainable going forward in terms of the mix of the order book changing towards irrigation? Or in fact, because of the irrigation projects, the margins could actually be higher also?

Eventually, what we have given guidance is our -- it will between 17% to 18% is a sustainable EBITDA as of now. But definitely, when these irrigation projects started contributing in the top line, the margin has been improved. So we, right now, we are at around 45% is order of irrigation. That's why we expect that we should continue this margin, if this is -- our irrigation projects are exhausted.

Right. Okay, sir. Sir, the last question is on the HAM portfolio. So -- but we -- as we see, I think, the bigger picture -- I mean, I think a couple of quarters back, there was a change in the amount of equity for 2 of the HAM projects while the deal value would actually remain same. I see the presentation, the numbers have remained the same. So will you -- so we can basically assume that these numbers will remain the same in terms of the equity and the debt component of the project and these have been finalized and closed, right?

No, it is almost now because these 3 projects are almost over. We expect that by Q1 actually, we should get at least [ BC or EC ]. We are trying to get by the end of the Q1, Q2. So definitely, what are the composition for debt equity was mentioned for these 3 projects, it will be the -- remain the same actually.

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

Congratulations on a good set of numbers. A couple of questions from my side. First, I'm sorry I missed the consol debt and the consol cash, just if you could provide that? And also, you mentioned about INR 12 crore interest income from some projects. So would it possible to repeat it?

What I want to -- because actually, in Karnataka state, actually, we have executed one project in the -- almost 10 years back. So on that project, actually, that project is basically given back to that -- it was back to that project, given to subcontractor. So we have received around INR 12.5 crores from the interest income from delayed receipt of the billed from the authority. And as this is the best project we have passed actually this amount to the subcontractor. That's why other income is increased by INR 12.5 crores. Finance costs also increased by INR 12.5 crores. And in the consolidated debt, actually, the consolidated debt is INR 750 crores actually as of December, and consol cash will be around INR 75 crores.

Okay. Sure. And with regards to our depreciation trajectory, I mean, for last couple of quarters have been kind of lower if we compare, let's say, with Q3 and Q4 of last year. So what do we expect the depreciation trajectory to be, let's say, in Q4 and in FY '22?

In Q4, it will be the same range only actually. And definitely, FY '22 actually, we are expecting that 1 irrigation project, we are going to start in -- by Q1 actually. So definitely, next year, based on when we are going to -- because we have to buy some of the machinery for that. And we are expecting some of the projects in this year also. So next year, definitely, actually, we have to really assess actually how much we'll work. Maybe, it may a little bit increase definitely from this year. Next year, so we're going to -- there is some increase in there actually.

And sir, lastly, what is the CapEx that we have done in 9 months? And what is the plan for the future?

Nine months, actually, we did around INR 60 crores of the CapEx, sir. So this year, we may end by INR 100 crores, yes.

The next question is from the line of Sachin Wankhede from Aditya Birla Sunlife Asset Management.

Yes. This is Sachin from Birla, a mutual fund. Sir, my question is with respect to the working capital. So just wanted to understand, since there is a lot of order book which is in the pipeline and plus you're sitting on something about INR 7,000 crores of order book. So with respect to the funded line from the banking system, is it adequate to take care of your working capital? Or you are going to approach the banks for enhancement of working capital?

Yes. No, the sanction limit even we are not fully utilizing. As I was saying, there's a cash balance of INR 43 crores. So for us, this -- whatever the sanction limit is quite sufficient for us. And with the -- our cycling of bill coming at a faster rate, we feel that we could manage this actual limit. We'll not go for the increase in limit.

Okay. So what will be approximately your working capital cycle, maybe in terms of amount or number of days if you are approaching or estimating some INR 2,500 crores of sales?

We have cycle -- full cycle as -- which has not come down. But we have to check it at somewhat around 43...

55 days.

55 days.

Actually, this increase -- it has a little bit increase from the last quarter. But the reason being that actually because around INR 333 crore of the HAM receivables actually, what is laying in our books actually. And we are not drawing the debt from our HAM activity. So what is our understanding is that when there's a money requirement for the parent company, then only we should go for the reserve from the bank. So that's why this quarter, there is a little bit enhancement in the working capital. But per se, if you see outside -- receivables from the outside is on very lower side.

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

Yes. Congrats for good set of numbers, particularly on profitability trend. Most of the questions have been answered. Sir, on the CapEx front, do you said that next year, once the education starts, do we require further CapEx? And broadly, how much CapEx are we planning for next year?

Next year, we are not -- maybe -- it may be somewhere around INR 100 crores to INR 120 crores of CapEx next year.

Two specific projects, I think last time, we have talked about the events of completing the Hubli - Hospet by March. But at this quarter, since the execution is lower. So when do we expect the Hubli - Hospet to be completed?

By June. June. Actually, we expect by June, we should be able to complete that project.

Okay. And these 2 new irrigation projects that we are expecting to start in a full swing from the next quarter onward...

This 1 project will start sooner, maybe by end of March. The next project will take some time.

The bigger one you are seeing, INR 1,600 crores, when will be started? From March?

The bigger one, we already started actually. In fact, execution on 1 particular component will be targeted in the month of March. There are some more projects going on. So after getting -- after those projects, we will start.

Sorry, sir, I didn't get. You said that the INR 1,600 crores one, you have already started and the INR 700 crores of...

I said execution on a particular component on a [indiscernible] and concreting also will be started in the month of March.

Okay. So in this quarter, broadly, roughly, how much execution can be expected from these growth projects totaling around how much?

Execution in this quarter, the execution definitely [indiscernible] in the next quarter only. But we will commence the operations.

Okay. And Venkatram sir has talked about that, 3 projects to be completing...

HAM projects. 3 are HAM projects.

This will be completing by June?

Beyond this month and next year...

Maybe by this March.

So, is there any -- so the entire order book left right now as on of December. So in these 3 projects around significant thousand-odd plus is left. So how much to be completed in this quarter? And is there any descoping that can happen if there is any land issue. Previously, we had talked about, I think, in some instances, there is some land issue.

We have -- basically, we don't want to have any descoping in the project. In case there is any [indiscernible]. Otherwise, we don't [indiscernible].

Sorry to interrupt, Mr. Vaikuntanathan, if you could speak a little louder please. You're sounding too distant.

There will not be any intended descoping.

Okay. Okay. So broadly, the entire order book, which is left as in December, mostly, it should be over by March and June?

Yes, yes, mostly by June, yes.

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

Sir, 2 questions. One was, I mean, given the fact that 3 of our hybrid are due for completion shortly. You said by June you will be able to finish to even half COD in place. So have you been able to engage with Cube, understand whether they would be willing to put in money now? Or would you want to wait for clarity to come through on the bank rate issue and then only go ahead with the transaction?

So definitely, if inclusion of money is, as I already told in the last con call also, we are not invested in any investment from them. So now we -- definitely, the sale of these 3 projects with the Cube, the deal is on track. Actually, we are on discussing. And what are the bank rate issue is there, that is an industry issue. It is not specific to KNR. We are also working out how do we mitigate that. So we are on -- it is on discussion actually. And definitely, actually, we will update you at the appropriate time actually.

Sure. And sir, there was a recent change, wherein now you're allowed to exit by COD plus 6 months versus earlier requirement of staying with the 2 years after COD. And if we all agree on the time, would you be willing to kind of exit in another 6 months, I mean, after the COD comes through?

Yes, definitely. We will -- because initially, we thought COD plus 2 years now NHAI has relaxed the guideline. So definitely, actually, we are looking for that. It is very positive news from the NHAI. And definitely, we will do effectively. COD plus 6 months, we will definitely want to do.

Okay. Sure. And sir, was there any descoping during the quarter in terms of order backlog? Because when I compare last quarter versus this quarter and adjust for the revenues that have booked, there appears to be a gap of almost around INR 200-odd crores. Because last quarter, our order backlog was almost around INR 8,500 crores. Now we are at around -- I mean INR 8,500 crores minus, if I will adjust for this INR 700-odd crores, this kind of number that improved -- it works out at INR 7,800-odd crores. But in the order backlog, it is INR 7,650 crores or INR 7,700 crores. So there's a gap of almost around INR 200-odd crore. So what -- I mean what could explain this gap?

Basically, as you told, because our accounting is based on percentage of completion based on expenditure. And order book is based on certification. So as you know, this quarter, actually, we have received lot of certification from our Mallanna project. So that's why there is some overbilling on this project. That's why order book is comparative to revenue.

And just one last one, you can help us understand the status on your capital related to Mallanna. I mean in terms of -- there was some land which was pending to come and how much has already been declared? And what is the status now in terms of -- by when do we expect to kind of complete this project? So Mallanna has been going good. And it's all in...

It's 90% complete, yes.

Yes. But [ going forward ] this is now to complete formal this Q. But a couple of -- this last one week, there have been 2 meetings conducted consecutively. And then in [ infrastructure ] irrigation, so they are very secular and they insisted the government features to see that land is clear within next 30 days. So but we have almost sort of around 980 meters. So that 980 meters, we are expecting by another month. Based on the [indiscernible] given by this [indiscernible].

Sure. And once we are going to have this and how long will it take us to be able to finish the entire project?

In fact, they are insisting us to complete by June, June, July. But it may not be possible. Because if they give land by say, example, March, April. We may take till next March to complete.

The next question is from the line of B. Vijayakumar from Spark Capital.

Sir, [indiscernible].

Mr. Vijayakumar, we request you to speak a little louder, please.

I would like to...

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