KNR Constructions Limited (532942) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to KNR Constructions Limited Q4 FY '21 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the 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, everyone, and a warm -- very warm welcome to all of you present on the call to discuss our financial results for the quarter and year ended 31st March 2021. Along with me, I have Mr. K. Jalandhar Reddy, Executive Director; Mr. K. Venkatram Rao, General Manager, Finance and Accounts; and Strategic Growth Advisors, our Investor Relation adviser. In the wake of second wave of COVID-19, I hope all of you and your loved ones are healthy and safe. I hope everyone is following all the regulations and safety protocols laid out by the various authorities. I would like to highlight a few industry updates first, and then we will discuss the company's performance. As we all know, the road construction sector faced multiple headwinds, mostly in terms of availability of manpower due to COVID-19-induced disruption during the first year of this fiscal year. However, the road sector is finally witnessing a significant recovery with workforce strength nearing to pre-COVID levels. Despite the initial period being impacted by COVID-19-led lockdowns, FY 2021 saw a record 37 kilometers per day of highway construction. While highway construction was lower in April to October 2020, it grew from November 2020. Overall, 13,327 kilometers of highways were constructed in financial year 2021 as compared to 10,237 kilometers in FY 2020. Minister for road transport and highways hopes that the construction would touch 40 kilometers per day in 2021 and '22. The central government is giving utmost priority to the development of infrastructure and they have set a target of road construction worth INR 15 lakh crore in the next 2 years.

Sorry to interrupt, sir. Sir, this is the operator. We are not able to hear you clearly. Yes, sir, your voice is breaking up.

Yes, yes. Yes, sir. Yes, sir. The central government is giving utmost priority to the development of infrastructure. Is it clear now?

Sir, this is a little better.

Yes. The central government is giving utmost priority to the development of infrastructure and has set a target of road construction worth INR 15 lakh crore in the next 2 years. As per the Union Road Transport and Highways Minister, under the National Infrastructure Pipeline, there are 7,300 projects to be implemented at a total outlay of INR 111 lakh crore by 2025. And that the project aims at improving project preparation and attract investments into infrastructure like highways, railways, ports, airports, mobility, energy and agriculture and rural industry. Highway is awarding activity by MoRTH and NHAI was also higher in FY 2021 with about 10,965 kilometers of highways awarded as compared to 8,948 kilometers in FY 2020. The NHAI awarded 141 projects in 2020-'21 aggregating to 4,788 kilometers. The length awarded in 2020-'21 was the highest in the last 3 years compared to 3,211 kilometers in 2019-'20 and 2,222 kilometers in 2018-'19. Of the total projects awarded in 2020-'21, 2 projects were on BOT model for a length of 132 kilometers, 69 projects for a length of 2,609 kilometers around HAM model and the balance 70 projects of length of 2,047 kilometers are on EPC model. The share of engineering procurement and construction, that is EPC, in the award, last fiscal was 46% followed by hybrid annuity model at 54%. The capital cost of the projects [Technical Difficulty] 2021 more than doubled to [Technical Difficulty] as compared to INR 81,324 crore in 2019-'20 and more than 2.6x as compared to INR 64,009 crore in 2018-'19. For the current fiscal, NHAI is planning and awarding activity of INR 2.25 lakh [Technical Difficulty] which is a growth of more than 32% compared to FY '21. The income tax department has granted tax exemption to 4 pension funds for their earnings from infrastructure investment as a part of efforts to bolster the sentiments of -- for investment in infrastructure. The tax break is applicable for investments made till March 2024. The idea is to help finance some of the nearly 7,000 projects that are part of the National Infrastructure Pipeline. Road traffic has witnessed a marked improvement in H2, financial year 2021, after subdued traffic witnessed in the initial month post resumption of tolling from April 2020. This has been driven by increased movement of both passenger and commercial vehicles. The total collection likely to witness a robust double-digit growth in FY '22 on a low base following an estimated degrowth of 5% to 7% in financial year '21. FASTag based toll collection on national highways rose more than 20% in March to INR 3,100 crore compared to INR 2,560 crore in February, helping India's Highways Development Agency to improve its financials and increase the pace of asset monetization. However, toll collection through FASTag on national highways in India fell to INR 2,780 crores in -- as a result of cuts on mobility to contain the spread of coronavirus. Toll collections are expected to witness a rise from July as COVID-19 impact settles in the country and mobility improves. The government has made use of FASTag mandatory across at least 75% of the lane of toll plazas and has limited use of cash payment to maximum 25% lanes of toll plaza. This has helped to reduce revenue leakages substantially and daily toll income has increased from INR 70 crores per day to more than INR 104 crores per day. Currently, revenue from FASTag constitutes about 95% of total toll collection. The jump in toll collection is expected to attract more bidders for NHAI BOT toll tenders, which will further ease the funding pressure on NHAI. Now coming to the key updates to the company. The project execution gathered pace post easing of lockdown in Q2 FY 2021. Our average operational effectiveness in this quarter stood at 95%. Our workforce strength has reached the pre-COVID level and we are not witnessing any shortfall in the workforce during FY 2021. However, due to the impact of COVID second wave in Q1 FY '21-'22, the workforce efficiency has come down to 60% to 65%. The percentage physical progress as on March 31, 2021, for our 4 HAM project is as follows: Chittor to Mallavaram is at 82%, Ramsanpalle to Mangloor is at 80%, Trichy to Kallagam is at 66%, Magadi to Somwarpet is at 29%, Oddanchatram to Madathukulam is at 27%. During the quarter, the execution is primarily driven by HAM projects. The company has entered into share purchase agreement with Cube Highways and Infrastructure III Private Limited for 3 projects. Our deal to divest these 3 HAM projects is on track. Out of the [Technical Difficulty] for all the 5 HAM projects, we have already invested INR 365 crores as on March 31, 2021. Our incremental equity requirement stands at INR 200 crores, INR 60 crores for FY 2022 and FY 2023, respectively. You can refer Slide #26 of our investor representation for detail on each HAM projects. The tentative equity requirement for the 2 new HAM projects is INR 430 crores, which needs to be invested by the company over a period of 2.5 years from the appointed day. The toll collection of our Bihar project, that is Muzaffarpur-Barauni, the collection in Q4 FY 2021 has been INR 9 crores. We have invoked a fourth major clause as per concession agreement and are under discussion with NHAI for eligible compensation. Now coming to our order book position. During the quarter, the company has received 2 NHAI HAM projects in the state of Kerala for a value of INR 4,507 crore, BPC, and 1 EPC project worth INR 983 crore, excluding GST, in the state of Karnataka. As on March 31, 2021, we have an order book position of INR 7,118 crore. EPC road projects and HAM projects constitute 56% of our total order book, while irrigation project constitute remaining 44%. Client-wise, 74% of our order book is from third-party clients and balance 26% is from HAM projects. Our third-party order book or non-captive order book, which accounts for 74% of the total order book position is skewed between state government contracts with 62%, whereas 3% is from central government and balance 9% order book is from other private players. Our current order book position is robust and provides visibility of execution over next 3 years. Robust project pipeline is already -- and ready DPR under the Bharatmala project should accelerate the projects awarding activity going forward. The process of submitting 4 to 5 bids for the road project is currently underway. The average ticket size -- size of the tender for each project is about INR 1,000 crores. Based on our shortlisted projects, the bidding pipeline for FY 2022, we are targeting a further order inflow of INR 3,000 crores to INR 4,000 crores for financial year 2022. The estimated EPC cost for the new HAM projects will be around INR 3,340 crores, and the cost of the new EPC project is INR 983 crores. With this, the order book of the company will be totally INR 11,400 crores. Now coming to irrigation projects. As communicated in the earnings call -- earlier earnings call, there have been a delay in collection of dues from the irrigation projects from Telangana government, as the government has diverted its funding towards other essentials sectors and services to prioritize COVID-19 relief measures. Now the outstanding receivable is around INR 500 crore, of which included billed and unbilled revenue. Now I will request Mr. K. Venkatram Rao, our GM to present the results for the quarter and financial year ended 31st March 2021. Over to Venkatram.

Thank you, sir. Let me know you through the Q4 and FY '21 stand-alone financial performance. For the Q4 FY '21, we have recorded a 39% year-on-year growth in our total revenue from INR 676 crores in Q4 FY '20 to INR 936 crores in Q4 FY '21. EBITDA came in at INR 182 crores in Q4 FY '21 as compared to INR 147 crores in the same period last year. EBITDA margin in the current quarter stood at 19.5%. Profit after tax post exceptional items stood at INR 77 crores in Q4 FY '21 as against INR 67 crores in the same quarter last year. Now coming to our stand-alone performance for the year ended FY '21 -- is it audible? Okay. Revenue from operation in FY '21 was up by 20% to INR 2,703 crores from INR 2,244 crores in FY '20. EBITDA witnessed a growth of 10% from INR 487 crores in FY '20 to INR 536 crores in FY '21. Our EBITDA margin in FY '21 stood at 19.8%. PAT for FY '21 was recorded at INR 244 crores as compared to INR 225 crores in FY '20. A quick summary for the consolidated performance for Q4 FY '21 is as follows: The consolidated revenue for the quarter grew by 36% to INR 991 crores in Q4 as against INR 736 crores in Q4 FY '20. EBITDA for Q4 FY '21 witnessed a growth of 18% to INR 222 crores as compared to INR 187 crores in Q4 FY '20. EBITDA margin in Q4 FY '20 stood at 22.4%. Net profit for the quarter post exceptional item was INR 95 crores as compared to INR 80 crores in Q4 FY '20. Now coming to our consolidated performance for the year ended FY '20. Revenue from the operation in FY '20 stood at INR 2,904 crores, up by 18% as compared to INR 2,452 crores in FY '20. EBITDA witnessed a growth of 12% from INR 622 crores in FY '20 to INR 699 crores in FY '21. Our EBITDA margin stood at 24.1%. PAT for FY '21, post exceptional items witnessed a jump of 50% to INR 383 crores from INR 256 crores in FY '20. Please note that consolidated figures includes a profit on sale of Walayar SPV amounting to INR 85 crores, which is accounted as an exceptional item in Q2 FY '21. Now moving on the stand-alone balance sheet. We continued to maintain a strong balance sheet. The company became debt-free in FY '20 on a stand-alone basis. And our working capital days stood at 82 days as against 54 days in FY '20. Working capital cycle stretched due to increase in receivables from the ongoing HAM project, for which the debt is yet to be drawn. The consolidated balance sheet has undergone a change due to deconsolidation of Walayar project on account of sale to Cube Highways. The consolidated debt as on March 31, 2021, is INR 729 crores as compared to INR 845 crores as of March 31, 2020. The net debt-to-equity as on March 31, 2021, stood at 0.3x as compared to 0.48x as on March 31, 2020. With this, we open the floor for question-and-answer.

[Operator Instructions] The first question is from the line of Nitin Arora from Axis Mutual Fund.

Sir, thanks for taking my...

Sorry to interrupt Mr. Arora, we are not able to hear you. Can you speak a bit louder?

Am I audible now?

Yes. It is better.

Great. Sir, just first question. If you can directionally tell us, I understand you've been talking about the Cube deal to happen soon. When I say deal, I'm saying the fructification of money. But can you help us understand what kind of a timeline now we are expecting given PCOD also should be near -- in the near-term should be there for your assets. So I don't want to more dwell on the valuation. But just to understand when the cash will start coming in the company? What's the timeline we should look at it? That's my first question.

Yes. Sir, yes. First is regarding Cube deals, what happened is -- I would first when are likely CODs could happen on 3 projects which are HAM. As you all know, the project in Tirupati, that is in Andhra Pradesh, the Chittor to Mallavaram, we are expecting by first week of next month. And the second one, most likely we are expecting in third week of next month. It's an approximate estimation because we have done all the work, only that some safety caution boards are need to be installed. Because of that oxygen shortage to the suppliers, they are unable to get back the supplies to us. That is the major problem we are facing. Otherwise, we have already 1 month ago we are ready for COD. Actually, the -- even the RO level visits are over. They said, once you have installed the thing, you can move your obligation. That's the situation. So it could be around that, sir. And the Ramsanpalle-Mangloor, which is in the state of Telangana, that's going to happen maybe in a couple of months. And yes, Cube deals concern, sir. As you all know that we are now suffering on the account of RBI plus 3 clause. Because of that valuations, first, we need to look at it. And then we should take a call. But however, sir, the discussions are going to start after COD. Once COD is in, we should be able to make the conclusion in coming 3 to 4 months after COD. Is that right sir?

Sir, Jalandhar, I mean, the deal is subject to the RBI approvals of this interest rate thing or the deal is done -- I mean, we're -- I'm just trying to understand, does the deal comes in risk if RBI doesn't approve? They say, okay, look, you need to -- okay.

No, no. That is -- sir, actually, it's not about approval from RBI or something. It is completely about the clause what we have is escalation for our rate of interest is on RBI plus 3%, right? So the bank rate is now that RBI. In a recent contract, they made 5 banks' average and all that [indiscernible] that is okay now. We are now not talking about -- these are the old contracts. There is no -- conceptually, there is no change to that because these contracts are signed and which have been under execution and all. So now -- they are now literally not looking at changing it. And sir, these -- the thing is, sir, see, RBI cannot be -- the current situation is RBI is lower side and banks are charging very high. So there is a difference in -- to the banks and our escalation being paid, the differential is almost 2% to 2.5%. But going forward, so because of this pandemic situation and all, it's worse, things are. Going forward, even RBI can go up and things could come up. So there's sort -- there should be a sort of negotiation, which is also acceptable to us and which could be also accepted by the Cube. So there's a mutual exchange or solid discussions should take place and we should also be under lesser -- if you are valued very less with this clause, then the deal may not happen, right? Because we should have a proper price, I mean to say. Okay, I'm ready to forgo something, but it's not that, okay, they estimate that, oh, all 10 years, it's going to be like this. Or -- see some assumptions they make and they want to cut down on the valuations, we may not accept it. In that case, we are ready to take risk. And like today -- looking at this point concerned, today, we have become debt-free by God's grace and we are comfortable to invest into our own projects also. So this kind of situation is that, okay, we want to have in -- cash inflow, so that business growth can happen and it could go -- and also we want to mitigate our risk into long-term contracts even though the input prices are [Technical Difficulty]

And Nitin, we just want to like add that because now this NHAI has liberalized their policy that within 6 months from the COD, it can be transferred. So definitely, valuation aspect that we are discussing with them, the deal is on. And maximum timeline is suppose project is completed in Q1, so within 6 months from the Q1, we will able to get the receipt of the fund, subject to discussion on the valuations.

Got it. Got it. No, sir, I got your point. That's very helpful. I was just trying to assess that this interest rate thing, has it really caught into you valuation -- the valuation of the project down even below book value because that's where you want to take a risk or you are fine, okay, let me...

Yes. We have not come up to that stage. We have not come up to that stage. No...

The discussions are to be taken place. I think if they are reasonable, we would like to sell it. It's not that I want to hold it. For that purpose, see the positive angle, which we have taken is, we want to sell, that is the thing. But I'm not desperate that I should sell at loss. That's the main concept, which we are keeping in our mind.

Got it. My second question is of the current order backlog. If you can throw some light on this, I would not say slow moving, but the irrigation orders, I think, were INR 2,000 crore-plus. What's the status there? When the ramp-up will start happening faster on those...

Sir, actually -- yes, I got it, sir. Actually, the irrigation concern, the power project, that Mallanna Sagar Pump House Project is now just starting. I think the land acquisition issues are cleared. And a month ago, we have started work. Slowly it is picking up. But the canal project concerned, the inflow canal for this pump house, which is still pending with the land acquisition. And moreover -- anyhow the bigger project is started, so meanwhile, even the small project, around INR 640 crores or INR 670 crores that project is, that will also pick up, sir. I think it will take another 4, 5 months. I'm not very sure before that they will be able to give.

And sir, lastly, on this irrigation receivables, if you can -- you recovered that what you said, and you've been guiding to all of us, you recovered quite a decent amount. But now if you can throw some light, how much is pending on the irrigation receivables? And how do you see a scenario at the ground level now given what has happened in the second wave. Do you see a risk? Or you think these things are manageable, states are getting loans, they are getting money from the center, so eventually, the money will come to us. That's my last question.

Sir, actually, the payment concern, we have -- no doubt we have a huge due with the state government, around INR 500 crores is still pending. And when do we get? Again, the thing was that we would have got something in coming 1, 2 months, but because of this pandemic situation, last time also same thing happened and the amounts were piled up, but they cleared also. And moreover, the problem is these projects are being tied up with funding from NABARD and other -- few other brands. So only that if they pay the margin money, we would all get back our payments. It's only that state government's call that when they will pay the margin money and see that these loans are under process. So I think, hopefully, if this corona situation is going to get down in coming 1, 1.5 months, probably, we should get another 2, 2.5 months, we should get it, get all the payments.

The next question is from the line of Mohit Kumar from DAM Capital.

Sir, congratulations on good set of numbers. Sir, my first question is, sir, what is your guidance for revenues and EBITDA margin for FY '22? And how do you expect the revenues booking across irrigation and roads? And can we expect more irrigation contribution in FY '21 and FY '22? Yes.

Yes, sir. FY '22, we were -- before March, we have targeted about, say, INR 3,000-plus crores we should make as a top line. But unfortunately, what happened first week onwards of the April, the laborer started having the COVID cases in our project sites. And today, each site is having almost 60, 70 cases. And we have been announced as red zones. And that's where the problems which we are now facing. Hopefully -- but nobody is -- I think few cases are also getting cleared in 1 or 2 days. And we are able to run. It's not that completely projects have stopped, but we are able to run with various projects in various percentage of efficiencies. Like irrigation, we are trying to work at 60%, 70% efficiency. We are -- it is happening. But because of the land problems, again, there is a break on other new projects to be -- they are not getting started. Second, we are now -- on the road projects, at least 50% to 60% efficiency is going on. But in Tamil Nadu projects, we are at least down by 40% only we are able to make. I mean to say efficiency. If I do in a regular time, about 100% efficiency, now I'm talking at 40%, 45% efficiency in Tamil Nadu. Except in Tamil Nadu, all other places, we are able to run at 60%, 65%.

So sir, what is your guidance for...

And -- yes, I'm going on to the guidance, sir. The guidance for the next year -- see, there are a lot of ifs and buts, sir. We have received new orders in 3 big projects, which are almost INR 1,100 crore from that Periya Shanti to Bantwal, which is in the state of Karnataka and another 2 projects put together around INR 4,500 crores in Kerala. Those projects are -- when are they going to start? That is going to be a big question. They were asking us to come on to the agreements. We are not able to conclude the agreements -- sign the agreements right now. I think another 1 month, we'll be signing the agreements. And from there, 5 to 6 months, if they are able to provide the land. Definitely, last quarter or in this FY '20, at least 4 months if we are able to work in those projects, definitely, we're going to do a better job, one aspect of it. Second, this first quarter, we've lost because of this COVID issues. So altogether, sir, there are ifs and buts, but we are -- internally, we have a target to -- tough targets, I mean to say, INR 3,000-plus crores, we kept as a target. So guiding purpose, if I achieve this year figure that would be a great job for me, I'm thinking right now.

Understood, sir. Understood. Sir, my second question is, sir, what is the receivable position at this point of time? And do you think this -- the increase in receivables that happen in -- from FY '20 to FY '21 from 54 to 82 days, what is your target? Or how do you think this will proceed going ahead? And do you think that the -- once the NABARD bank -- the NABARD gets the -- if Telangana ties up this irrigation funding with NABARD, will this entire thing gets paid up? Or is it -- do you think this is the level at which this will sustain now going forward?

Sir, out of INR 863 crores of the receivables as of March '21, out of that, INR 525 crores receivable is pertaining to our home [Foreign Language] our HAM project, that is the captive project. So as you know that, and balance INR 300 crores is pertaining to the irrigations as of 31 March. So if you see around -- more than 50%, around INR 525 crores is pertaining to HAM project. And for that, actually, we have not gone for the disbursement from the bank. The reason is being that because as -- in a parent company, we are not using any working capital, and we have almost INR 100 crores of the cash balance as of March. So that's why we don't -- we have not gone for the disbursement from the SPV. We can receive -- reduce this receivable by taking disbursement in the SPV and paying to the KNR. But that's why you can say the outside receivable is only around INR 350 crores, actually. The balance is only the captive receivable.

But why didn't we take the disbursement, sir? Is there any particular reason?

Because what if -- if I have to take the disbursement in the SVP, then I have to pay interest cost there. And I -- and here, actually, in parent company, actually the cash requirement is not there because cash is there in the parent company. So really, when the parent company needs the money, then only [Foreign Language] we should give the money to save the interest cost in the SPV, actually. If we save the interest cost in the SPV, when we are selling this project to some prospective investor, so what are the cost savings that is also passed through. So we can increase the valuation in that SPV.

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

Congratulations on the great set of numbers this quarter. My first question is if you just highlight in these 3 projects...

Sorry to interrupt you, Mr. Kandpal. Sir, we're not able to hear you clearly.

Hello? Is it better now?

No, sir, your voice is breaking up.

Just 1 second. Hello? Is it better now? Hello? Can you hear me?

A little bit. Yes, sir. Please go ahead.

Okay. So on these 3 projects, sir, so when -- at what physical progress will you take the disbursement from the bank?

Pardon?

Sir, on these 3 HAM projects, which were in advanced stages of completion. Sir, at what physical progress will you take the disbursal, if you start taking disbursals from the bank?

Yes. [Foreign Language] definitely, before COD, actually, we have to take the entire draw, actually. We have to draw the entire amount. So definitely, in this quarter, actually, in one of the projects, actually, we have gone for the disbursement in this quarter. So definitely, by end of the June, actually, we'll try to take disbursement from the bank, actually, for these 3 projects.

So you have completed 60% to 70% of the project, and you've still not taken disbursals from the bank. This is what...

Yes, yes, correct.

Okay. So just from the NHAI advance and then your own internal cash flow, we've been able to manage 60% to 70% completions in these projects?

Yes, correct.

Okay. My second question was on, so we have been targeting to diversify outside roads. Sir, in the last year, did we did any of these projects like in metro or in any other segment besides roads, so did we target a little bit anything?

Pardon, sir? Pardon, sir?

Sir, in nonroad segment, did we bid anything in the last year, tenders in metro or some other projects, so besides water and railway -- water and road, did we bid for any other projects in the last financial year?

No. Sir, actually, the road projects are only ample, they are coming up and even irrigation also we have hand in full orders. Then, we have not given a thought in bidding in a new segment -- new kind of metros are into railways or anything. Maybe going forward, we would look at it, sir.

Okay. Sir, my another question was on mobilization advance payments. So you can tell us that what was the total eligible amount of mobilization advance we could have taken? And how much of that we have availed?

As of now, mobilized advance outstanding is around INR 150 crores. That is basically pertaining to our Avinashi project in new -- in Chennai we got the project. So this is only due what we have availed, actually.

And what was -- what could we possibly would have availed if we wanted to take the entire like mobilization advance payment...

See, that is there. Because whatever the existing HAM project is there, all mobilized advance we availed and recovered also.

Okay, so we've already availed. And -- so there's nothing pending, only from the new project, we would draw mobilization advance...

Yes, yes. Yes, correct. Correct. Only from the new project.

Okay. Just lastly, on the Walayar project under recovery, sir. So if you can highlight that from the deals which we have signed with the Cube? So what is the status of the toll collection there? And do you see further write-downs happening on account of under recoveries, which may come to us. So if you can give some sense on that?

In Walayar project, actually, we have to receive some part of money in different tranches. So as of 31st of March, actually, we have received the entire money. And now next milestone is in March 2023. So what are the milestone mentioned that we have got, almost -- there is only just INR 1 crores, INR 1.5 crores what we have got -- we have not received, balance every money we received from them.

Okay. Okay. Okay. Sir, just one last thing. So you said [ INR 155 crores ] is interest-bearing advance mobilization. Okay, so what do you really think would be the bid pipeline? Because you said that 2.25 -- I think earlier, VPF sir said that INR 2.25 lakh crore is NHAI pipeline. And last year -- so if you can first highlight last year our total order inflows was how much? And if the NHAI pipeline is growing up by 30%, 40%, so while we are underguiding the market on the order inflows for the next year?

Sir, it's not in underguiding or something. See, today, you might have seen -- I would have participated in most of the bids last year, but we were successful only in 5 to 6 bids. So it's a ratio what we hit. Sometimes you -- even you bid on 50, 60 projects, you may win 1 or sometimes you may win 4, 5. So it's a -- the concept is to add at least INR 2,000 crore to INR 3,000 crore -- INR 3,000 crore minimum we need to add every year. That's what we are thinking and going forward. Because even the HAM projects or any other sort of -- except EPCs, any other projects would start only after we bid and it is taking almost 8 months, according to contract, it is 8 months after only that we can take out some revenues. So in that case, we have to be a bit advance. At least 1 year in advance we should be there to pick up the new orders and all. Once you wait for these order to get down, again, you will come into pressure. And then you will have to underquote. You need big order and the market is not geared up to give you that much order, definitely, there will be pressure on the margins. So -- which is really not a good sign.

Okay. And the order inflows, sir, for FY '21, what was the total order inflow?

Order inflow FY 2021, sir?

Yes, sir.

It is around INR 8,400 crores, sir.

INR 8,400 crores. And just lastly, on the HAM deal, sir, so you said that you are looking at giving little bit of space for negotiation, so which -- it should be fair for both the parties. But is it right to understand that the deal will happen at a premium to the book value, right? That should be the right assumption, right?

Yes, yes, definitely.

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

Congrats on a great set of numbers yet again. Sir, just 2 questions from my side. On the receivables part, you mentioned that out of, say, INR 60 crores of receivable, around INR 525 crores is from HAM projects and around INR 300 crores from irrigation projects. Am I right, sir?

Yes. Correct. Correct.

And sir, you also mentioned that the receivables outstanding from the Telangana government of the irrigation project is around INR 500 crores.

That is as of date, [Foreign Language] INR 500 crores includes unbilled also.

Sir, as on date, as in...

As on today, according to the DPR.

Okay. Okay. Fair enough, sir. So at 31st March, it was around INR 300 crores?

Yes, yes. Correct.

And sir, this INR 525 crores of HAM receivables that we have. So as you mentioned as long as we are comfortable with the cash position in the company, you will not be drawing more debt on the HAM projects. And so this INR 525 crores number might actually remain there on our balance sheet for maybe some more time also unless we want to draw debt at the SPA level, is that right, sir?

Yes. Definitely. But before COD, we have to draw the money. [Foreign Language] that is there because we have to draw the money. So we will draw money before COD, definitely.

Right, right. Sure, sir. Also sir, in terms of bidding for the next year, as we mentioned that, yes, you are looking at around INR 3,000 crores to INR 4,000 crores of inflows and mainly from the road segment only. Sir, we have recently seen very high level of aggressive bidding in the projects. I mean in EPC projects, we had 35, 38 bidders. In HAM also, we had 15, 20 bidders coming in. So do you believe in this kind of a competitive environment, we will be able to get projects at our threshold margin level, either in HAM or EPC? Or do you think that because to avoid that we might have to look for more maybe state highway projects or irrigation projects or something else that you might want to look at?

Yes, sir. Actually, yes, you're right. Actually, we are even looking at state highway projects. And most of our state highway projects are running in Tamil Nadu and, again, in Telangana. So both the states are -- we felt as of now, there is a delay in payment in -- we are facing in Telangana, but Tamil Nadu is promptly they are paying as of now. We haven't seen any crunches there. Second, if you're talking about the order book concerns, sir, I would always -- this time, we are not desperate that I should pick up INR 3,000 crores. So we will be floating our bid. If we are successful, fine. Otherwise, we are also fine because I don't have to take any order on pressure now, so I don't have to compress my margins kind of that. As of now, we are confident that, okay, whatever the orders even which we have picked up, they had -- they have enough margins. But however, one of the most bothering factor here is that cement and steel and fuel prices, I mean to say, diesel prices, these all are rolling very, very bad this time. So going forward, we'll have to strike a balance on these also.

Sure, sir. So just one last bookkeeping question from my side. What is the kind of CapEx that we are looking for this year, given that we will have more irrigation projects to execute on? Or what could be the range of CapEx for FY '22?

Sir, it's not that I have -- I do not have a particular concept, but we would be striking our bids and which are all successful, they'll form the priorities. I don't have a priority that I need an order from here only and from road only. I don't have a priority. I would be bidding whatever the opportunities that are coming forward. In which I'm successful, I would be the successful bidder and then that becomes my priority.

Sir, my question was on the CapEx, the machine -- and equipment CapEx that we are looking to do this year?

So -- of course, sir, actually, the -- this is one concern. We have already placed order on pumps and all for the pump house project. And yes, definitely, we're going to have quite a good amount of CapEx because the Kerala projects, which are INR 4,500 crores, there are 2 huge big projects, and there's a lot of earth work that is involved and even that Mysore project -- Mangloor project also. Mangloor [Foreign Language] I mean to say, Periya Shanti to Bantwal, that project also involving a lot of earth works. So definitely, we will have to increase our CapEx. I'm estimating not less than INR 200 crores to INR 250 crores this year, sir.

Okay, sir. And this year we did INR 100 crores?

But most of the CapEx will come in the end of the year because what happened this project is going to be started by -- maximum by Q3 of this year. So definitely [Foreign Language] what I've told that INR 200 crores we have to -- can be spill over to next year also. But most of the CapEx will come in the end of the year.

Right, sir. And this year, it would be INR 100 crores of CapEx, right, approximately?

This year might be around INR 100 crores to INR 130 crores.

The next question is from the line of Chintan Sheth from Sameeksha Capital.

Am I audible?

Yes, sir. Yes, sir.

Little loud, please. Little loud.

Yes. Okay. So sir, on the HAM projects, I can see the key HAM projects...

Sorry to interrupt, Mr. Sheth. Sir, your voice is sounding very muffled. Can you use the handset mode while speaking...

Now is it okay?

Much better.

Yes. So basically, I was asking that given the 3 HAM projects, which we are concluding with Cube, we have shown out of the estimated debt, we have drawn lesser amount, almost INR 930 crore is due as of March as per the presentation. So that is the amount we will draw by this quarter. As you mentioned that COD will be in next month for the 2 projects and a couple of months for the third project. So in the first half, we will draw around INR 930-odd-crores?

INR 930 crores.

Yes. So Trichy, estimated debt was INR 380 crores, we've drawn only INR 106 crores. Similarly, Chittor, we estimated debt of, say, INR 570 crores, we drawn almost INR 200 crores. And around Ramsanpalle INR 417 crores, out of which we only draw INR 140 crores. So the residual debt amount is -- works out to be INR 930 crores, which we need to draw before the COD, that is in the first half itself?

Yes, yes. [Foreign Language] definitely, for Tirumala and Shankarampet, definitely, we have to draw the debt, but for Trichy, there may be some [ COS ] may be come, actually. Because the land is not available. So to the extent of that, we will not draw the debt, actually. But as far as Tirumala and Shankarampet is concerned, most of the debt is going to be drawn, actually, before COD.

Sure. And sir, second question I have is on the bookkeeping side. If you can provide the unbilled part, customer advance and other aspects of the balance sheet in the working capital side?

Mobilization advance is around INR 150 crores. And this retention deposit with the government is INR 180 crores. And what you asked, advance?

Due from customers and advances in subcontractor?

Yes. Advance to subcontractor is around INR 102 crores, and due from customer is INR 215 crores.

INR 215 crores. And on the liability side, I would like to have this due to customers and retention deposits withheld amount?

Retention deposit withheld is INR 111 crores. You asked due to customer? This is INR 387 crores.

INR 387 crores. That has jumped up a quite bit from INR 277 crore last year. Okay.

Yes, yes. Correct. INR 277 crores to INR 387 crores, yes.

INR 387 crores. Okay. Okay. And sir, on the progress, if you can provide a couple of projects, where are we as on date, like I'll just ask the project name? Yes, so Chittor-Mallavaram how much is pending now?

Pending order book is...

92% it's completed, sir. And...

92% is complete.

Yes. And INR 150 crores...

Pending order book is INR 207 crores, that is Chittor.

That is up to March?

Yes, March, sir, March.

I'm talking about now.

Currently. So...

Around INR 150 crore is pending, sir, as of now.

Okay. So that will get completed in the first half itself?

Yes, yes. Correct.

And we're expecting COD. Actually, the inspections are over, we are only waiting for the signboards to come because there is oxygen shortage. So for cutting the signboards and making it, they would need that oxygen. So because of that, signboards are not coming up. And the supplier who was trying with illegal oxygen he was caught in and put into the jail also. I think he went to the police station. So part of that we are facing. Otherwise, we are quite ready in the Trichy-Kallagam also there is a land problem, though you've not asked I'm going to tell you that there is a land problem in almost 6.5 kilometers, balance we are completing and delivering. There also another 2 to 3 weeks or max if not fourth week we should get the COD. And there also the signboards problem is there.

Okay. And in the Mangloor project...

Sorry to interrupt, Mr. Sheth. Sir, may I request that you return to the question queue. [Operator Instructions] The next question is from the line of Parvez Akhtar Qazi from Edelweiss Securities.

Congratulations for a great set of numbers. A couple of questions from my side. First is, tax rate was pretty high this quarter. So any particular reason behind that? And what is the tax rate that we expect going ahead? And the second question is with regards to the pending equity for our HAM project, if you could give us a year-wise schedule?

Yes. Sir, this in respect of tax rate, I would want to say is that because this -- this year, actually, we have touched the 35% tax regime, entire tax. If you see P&L for the entire year, we are at 35%. And why we have taken this, sir, because initially, we have the MAT credit of around INR 35 crores so that we have used in this year. So that's why this year -- in this year, whatever the project, which project where we supposed to get 80-IA, so that project is not there. Almost all project was completed. So due to this reason, this was -- this year, tax rate was high. But next year onwards, definitely, we are going to adopt the new tax regime, and we will -- we are going to adopt the 25% tax regime in the next year. So as far as equity requirement is concerned, so out of the INR 625 crores of equity requirement, we have already invested INR 365 crores as of March. And we expect that around INR 200 crores we are going to invest in 2022 and balance around INR 60 crores will be in 2023. But we are also expecting that recently, we have got this 2 Kerala HAM project where equity requirement may come by around INR 430 crores. So out of that, we expect that 50%, around INR 215 crores, we have to infuse [Foreign Language] because generally, bank will put condition that 50% equity should be upfront. So total this year, equity requirement may come around INR 400 crores, actually.

Sure. And just one last thing, what would be a stand-alone debt at the end of FY '21?

Stand-loan debt is -- there is no debt, around -- only just INR 71 lakhs debt is there, actually, in the company. That is also working capital. And against that, we have INR 100 crores of the cash balance is there. So as of 31st March, company is debt-free, actually.

Yes, debt free.

The next question is from the line of [ Sita Raman R ] from Spark Capital.

Hello? Hello?

Yes. sir. Yes.

Yes. I want to ask about -- I mean, there are few other projects if I'm able to...

Sorry to interrupt. Sorry, sir, sorry to interrupt. Can you use the handset mode while speaking and not the speaker phone?

Okay. Hello? So in some of the other projects that I'm able to see in the order book, can you indicate what is the status of the other projects, which is close to some INR 1,100 crores. Hello?

The other projects is -- so you are talking Slide number...

Yes, the Slide #31, basically.

This project contained other than the -- what are the 5 top projects, other than 5 top projects, so these are other road projects, actually. So that includes Hubli - Hospet like that project.

Possible to give a split?

Okay. Yes. Yes, other road projects, that is INR 1,113 crores. So...

This includes Hubli.

This includes Hubli. Hubli is around INR 145 crores, is Hubli. And other -- list is there, actually, that we can share you, actually. And we have GHMC projects. All put together, actually. So we can share you that list, actually.

The next question is from the line of Subhadip Mitra from JM Financial.

So I -- my question was with regards to your guidance. You did mention that you're looking to cross the INR 3,000 crore mark for FY '22. Any sense of the mix between roads and irrigation that you're looking at in the coming year on the revenue side?

Sir, you're asking about the...

FY '22 revenue guidance, you said 3,000 -- we will cross INR 3,000 crores. The mix between revenue...

Yes. I said now it is a bit questionable, but we had a target of that kind. We will try max what to be done on that. And because of this COVID, we are suffering. This time we are suffering a lot, actually. When compared with the first wave, it's ruining our situation. So [Technical Difficulty] but I was trying to achieve at least last figure -- last year figure is the best which has come out. If I would achieve that, that will be a great job for me. That's what I was thinking. But however, sir, the mix of it concerned, it is all depending on the land acquisition, sir. Right now, the new projects which we bought from NHAI, those are all -- also have land problem, they would take another 5 to 6 months to clear. So it's very clear that in coming 2 quarters, we're not going to get anything out of those projects. So mostly last 4 months of this year, FY '22, we would be able to do something out of that. Even irrigation concerned, only pump house, we are able to do that -- inside the canal, input canal, we're not able to do because the land problem is there. Another 5, 6 months there also expected. So there are some predictions, a little bit missing out of this. However, if we get clarity in 1 more month, then definitely, we can give you the clear bifurcation, what sort of revenues are going to come, which sector kind of, I mean to say, either road or irrigation kind of thing.

Understood. And on the margin front, sir, how would you be looking at this?

Sir, margins, yes, actually, really 14, 15 could be ideally okay for this. But again, but diesel prices, bitumen prices, and again, it is rolling on nowadays cement, steel prices also a lot of volatility is there. There also we have -- that's why actually this year I've achieved around 19-plus. But this time, I'm not sure. That's why I'm again cutting down to 14, 15 levels only.

Understood. So is it that the commodity price rise that is coming in, is there no pass-through available in the contracts?

Sir, there is a pass-through. No doubt there is a pass-through, but in HAM, it'll hardly reflect anything there because we're -- our SPV and EPC contracts are without that component. That means around 5% to 6%, we are padding in the pricing itself. So if it is beyond that, then there is an impact on the margins. And if you come to EPC projects, it is depending on the WPI. Steel, cement, somehow, they don't represent a proper value in the WPI. That's where we are having a lot of losses out of this cement, steel.

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

Congratulations on good set of numbers. Sir, in terms of the Tamil Nadu projects, obviously, sir, the elections are over now. So what is the payment cycle you are expecting? And what are the new opportunities, particularly from that state versus the change in government? Any highlights on that, sir?

Sir, I'm not very clear with the question. Can you -- could you...

Sir, I'm asking about the Tamil Nadu state. Sir, because there is a change in government. So now we are doing some one of the large projects there, almost INR 1,000 crores plus in Tamil Nadu. So payments terms would be the same or there could be some issue initially? And again, in terms of the opportunity size from that particular state, are we looking for any new project -- large projects particularly from Tamil Nadu state projects?

Sir, Tamil Nadu concern, sir, earlier, I have not encountered any sort of discrepancies. I've been working in Tamil Nadu from past 20 years, I believe. So many governments changed, but none of the public works got affected. But we do not know new set of people are coming, even that new generation people have come on the power. We do not know really, but according to department, we have -- today also we have spoken to the department, and they say there should not be any problem. So we are okay with it. Anything goes wrong, we are the first one to inform you, sir. We're going to be the first one to inform you.

I appreciate your transparency, sir. Sir, and on the HAM project, as you were just talking about the cost escalation in the previous question. But sir, when you are asking for the grant from NHAI, you also get the price escalation from NHAI, then that escalation is a pass-through to EPC, right, sir?

No. So actually, the -- the contract between SPV and EPC being signed without that. And the escalation, whatever it is coming up, that could be in the SPV limit only. Yes, we have an option, actually. Either you can give a pass-through or you can do a lump-sum including escalation contracts. But banks who are lending, they are preferring a fixed cost to the EPC contractor. So for the bankers, we are doing this, actually.

That again impacts our margin. So there has to be some flexibility in this, right?

Yes, sir. But we could do nothing out of it because it's the lender's demand.

I understand. I understand, sir. Sir, on the unbilled revenue, you said INR 215 crores. So irrigation project would be how much, sir, in the unbilled portion, sir?

The unbilled irrigation projects around -- unbilled means up to March it is billed, sir, but April and May need to be billed up. INR 150 crore -- INR 170 crores is there, sir, unbilled.

Yes, but -- okay. So as on March, there was some INR 215 crores, so in that, there is no irrigation component, it's all road component, what I understand?

That is different, sir. That -- which we are not withdrawing because of our own rate of interest. We want to control the rate of interest component. Yes, sir?

No, no. My question was the unbilled portion, which Venkatram sir said INR 215 crore as on March '21. So what is the breakup because debtors you gave the breakup like irrigation and HAM. So can you give the breakup for the unbilled portion of INR 215 crore, if possible?

Yes, yes, I will give you.

Yes, yes. You take up this one.

I will give you separately.

No problem. No problem, sir. And sir, any thought on the revenues you are expecting from the newer project this year in Q4? Because the revenue you're looking for some INR 3,000 crore revenue and we understand land is going to be a big issue. But any thought, like if you can get some revenue from the newer project, what could be our FY '22 and this year, if things smoothen out from June onwards -- June or Q2 onwards?

Sir, I'm not very clear with this question, sir. Please.

No, sir, if at all your execution picks up from Q2 and then you are able to get land on time for the newer HAM and EPC projects, so what could be the revenue contribution from the newer projects? And whether this INR 3,000 crore, if at all, you're targeting, includes the revenue from new projects or it is excluding the revenue from the project?

Sir, I'm expecting kind of 10% to 15% of this 5,000 -- INR 600 crores.

Sorry, sorry. Sir, I didn't get you. What you said?

10%, I mean to say, around...

10% revenue. Okay. Okay.

Near about.

Okay. So that would be adding to your INR 3,000 crore if at all we reach [indiscernible] revenue can be anything about...

Yes. If at all it happens in time. If at all it happens in contract timing. If it is delayed, again that would be differed to the next year, right?

And sir, last question, on the outstanding bid pipeline. So we have seen a significantly strong bid pipeline from the state of Kerala and other -- Karnataka and others. So sir, what is our current outstanding bid pipeline, the outstanding bids, which is...

I think it's very less, almost INR 2,000 crores to INR 3,000 crores this thing. But we can't say it is in pipeline because right now, things are not under -- we can't even imagine what is going to happen to a bid which we've given. Sometimes I'm the highest, sometimes I'm kind of...

Ladies and gentlemen, due to time constraint, we'll be taking the last question that is from the line of Mr. Ashish Shah from Centrum Broking.

Sir, if you could give the breakup in revenues for the irrigation and highway segment for the Q4 as well as for FY '21?

Venkat, take up.

Yes, yes. Yes, sir. Giving, sir. For this Q4, revenue breakup of -- for irrigation is around INR 180 crores, that comes to around 19%, 19.5%. And for HAM it -- for quarter -- Q4, it is INR 478 crores. And other EPC is around INR 180 crores. For the year-end, irrigation is INR 620 crores, that comes to around 23.5%. And the road HAM is INR 1,350 crores, so that comes to around 51%. And other EPC projects comes to around INR 500 crores, that is around 18.5%. And back-to-back is around INR 118 crores.

Sir, if you could give the breakup of the 4 irrigation contracts also in terms of outstanding value? So is Mallanna Sagar by and large complete now?

So Mallanna Sagar is completed almost, sir -- 93% it has completed, sir.

Right. And how about Palamuru?

Palamuru is around 35% completed.

Right. And the 2 Kaleshwaram projects would -- probably we have not done much...

No, no, no. Not build, sir, anything. Nothing billing has happened, pending only.

Right. So just one last question to Jalandhar, sir. Sir, last year, around this time, when the receivables were building up, we had a fair amount of confidence that we would be able to recover the amounts, probably also because Mallanna Sagar was much better funded than maybe the other projects. So what is our confidence level? I mean are we going to go ahead and execute as much as we physically can given the constraints? Or we are going to consciously go slow and wait for the payments to catch up?

Sir, actually, this pump house project concerned the loan tie up is there. I'm hopeful that things will be coming up in -- if not on time, at least another 2, 3 months, we shall be able to get. So we are going ahead, sir, because there, we are at least 70% efficiency we are achieving in irrigation, rather roads only 55%, 50%, and even somewhere in 40% also. So kind of that -- so I'm happy to continue this. Payments could come. I'm very -- quite sure last time we have believed and things were on line. So definitely, I want to go ahead, sir.

Ladies and gentlemen that is the last question. I now hand the conference over to the management for the closing comments.

Thank you all for joining us on this call. Reach out to our IR, Strategic Growth Advisors, or us directly should you have any further queries. Stay safe. Thank you.

Thank you very much.

Thank you very much.

Thank you. Ladies and gentlemen, on behalf of KNR Constructions Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.