KNR Constructions Limited (532942) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to KNR Constructions Limited Q1 FY '22 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 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 welcome to all of you present on the call to discuss the financial results for Q1 FY '22. Along with me, I have Mr. K. Jalandhar Reddy, Group Director; K. Venkatram Rao, General Manager, Finance and Accounts; and strategic growth advisers, our Investor Relation adviser. I hope all of you and your loved ones are healthy and safe in the wake of the ongoing pandemic and floods across the country. I would like to highlight a few industry updates first, and then we will discuss the company's performance. Infrastructure development in the country continued the robust momentum despite facing multiple challenges due to the ongoing pandemic. In the financial year 2020/'21, the construction of highways reached 35.5 kilometers per day, which is the highest construction speed of national highways in the country as per the Minister of Road Transport and Highways [indiscernible]. In Q1 FY '22, we had total number of 2,284 kilometers were constructed, which is up 45% on a year-on-year basis. The government is planning to add world-class [indiscernible] kilometer national highways at a pace of 40 kilometers per day by 2024. We believe that this ambitious target is achievable driven by various initiatives like support to contractors, direct payments to contractors, relaxation in contract provisions and food and medical facilities to on-site workers. Over the past few years, the government and various institutions have undertaken multiple initiatives to boost the pace of highway development and the financial health of the infrastructure developers. The government is planning to set up a dedicated funding agency for the highway sector, similar to the dedicated funding agencies for the cover of right way sector. According to the recent announcement of Mr. Gadkari, he would discuss with the RBI governor on the development of this scheme for using the country's ForEx reserves, which surged far higher to $720.57 billion for the week ended 30th July 2021 for the infrastructure development. In another positive development by the NHAI, the extension of financial closure timeline and waiver of penalty for delaying submission of bank guarantees, and the road developers impacted, impacted the localized lockdowns. COVID-19 has been shut the industry of road transport and highways. We believe such initiative an opportunity for the company and the infra development sector as a whole. Economic activities have picked up the pace with a sharp downturn, and downturn in active COVID-19 cases is in large amounts and increase in factory activities. As a result, toll collections through FASTag have rose 15.5% to INR 2,960.4 crores in July 2021 as compared to June 2021. These strong collection level are almost reaching the pre-COVID levels with the rising penetration of vaccination program and easing lockdown. Across the country, the business consumer sentiments are expected to improve further. We expect this will in turn support the toll collection momentum. Now coming to the key updates for the company. The project execution has gathered pace post easing of lockdown in Q2 FY 2021, which was impacted to some extent due to the sudden soft spike of COVID-19 cases in the second wave. The company's priority remains the well-being of the employees and the families. As a result, the company's average operational effectiveness in this quarter stood at 95%. As mentioned in the previous con call, the workforce have reached the pre-COVID level, and the company is not witnessing any shortfall in the workforce. The percentage of physical progress as on June 30, 2021, for the HAM projects is as follows: Chittor to Mallavaram is at 92%; Ramsanpalle to Mangloor is 89%; Trichy to Kallagam is at 73%; Magadi to Somwarpeth is at 39%; Oddanchatram to Madathukulam is 29%. During the quarter, the execution has primarily driven by HAM projects. And one of the other HAM projects, that is Chittor [ one ] to Mallavaram, KNR Tirumala has achieved PCOD as on 10th May 2021, which is 142 days ahead of the schedule. The company has entered into a share purchase agreement with Cube Highways and Infrastructure III Private Limited for 3 projects. Deal to divest these 3 HAM projects is on track. Out of the INR 635 crores equity requirements for all the 5 HAM projects, the company has already invested INR 425 crores as on 30th June 2021. The incremental equity requirement stands at INR 135 crores and INR 65 crores for FY 2022 and FY 2023, respectively. You can refer to Slide #24 on the investor presentation for detail on these HAM projects. The tentative equity requirement for the 2 new HAM -- Kerala -- NHAI Kerala HAM projects where concession agreement is signed is around INR 430 crores and INR 100 crores approximately for the AP HAM projects where the company is the one building this Q1 FY 2022, which needs to be invested in the company over the period of 2 to 2.5 years from the appointed date. The toll collection of Bihar projects that is developed for Barauni, the collection in Q1 FY 2022 has been INR 1 crore. The toll collection was impacted due to a second wave of COVID-induced travel restrictions, continuous rain, floods and the major repair being undertaken in 2 of the [indiscernible] bridges, resulting in restrictions in heavy vehicle movement, passenger traffic movement, which resulted in lower business activity and reduced toll collection. The company has now proposed major class as for the concession agreement and are under the discussion with NHAI for eligible compensation. Now coming to the order book position. During the quarter, the company has received 1 HAM project for a value of INR 1,042 crores BPC in the state of AP. As on June 30, 2021, the company has an outstanding order book position of INR 6,596 crores. The EPC project and HAM projects constitute 54% of the total order book, while irrigation project constitute the remaining part of the total. The client-wise, 80 -- 78% of the order book is from third-party clients and the balance, 22%, is from captive HAM projects. Our third-party order book or non-captive order book, which accounts for 78% of the total order book position, is skewed between state government contracts with 65%, whereas 2% from central government and the balance, 11% of the order book, is from other players. They estimate that EPC costs for the new HAM projects will be around INR 4 crores to INR 100 crores and the cost of new EPC contract is INR 983 crores. With this, the order book of the company will be INR 11,679 crores, which is EPC road projects, and HAM projects constitute 74% of the total order book, while irrigation projects constitute the remaining 26%. The current order book position is robust and provides visibility of execution over the next 3 years. Robust project pipeline and ready DPR under the Bharatmala project should accelerate the project awarding activity going further. The process of submitting further bids for road projects is currently in progress. The average ticket size of the tender for each project is about INR 1,000 crores. Based on the shortlisted projects for the bidding pipeline, the company is targeting a further order inflow of INR 2,000 crores to INR 3,000 crores for FY 2022. I'll now request Mr. K. Venkatram Rao, our GM, to discuss the results for the quarter ended June 30, 2021. Over to you.

Thank you, sir. Let me move to the Q1 FY '22 stand-alone financial performance. The revenue for the quarter grew by 54% year-on-year to INR 740 crores as compared to INR 479 crores in FY '21. EBITDA for Q1 FY '22 witnessed a growth of 52% to INR 143 crores as compared to INR 94 crores in Q1 FY '21. EBITDA margin for FY '22 remains largely stable at 19.4%. Net profit for the quarter was INR 23 crores as compared to INR 40 crores in Q1 FY '21. Let me quickly take you through the consolidated performance. The company records a 54% year-on-year growth in the total revenue from INR 523 crores in Q1 FY '21 to INR 807 crores in Q1 FY '22. The EBITDA came in at INR 203 crores in Q1 FY '22 as compared to INR 130 crores in the same period last year. EBITDA margin in the current quarter stood at 25.1%. Profit after tax stood at INR 108 crores in Q1 FY '22 as compared -- as against INR 42 crores in the same quarter last year. Now moving on to the stand-alone balance sheet. The company continues to maintain a strong balance sheet. As you are already aware that the company has become debt-free in FY '21 on a stand-alone basis, the working capital days is further reduced to 66 crores as compared to -- 66 days as compared to 82 days in Q4 FY '21, which is primarily due to considerable reduction in the receivables. The consolidated debt as of June 30, 2021, is INR 982 crores as compared to INR 734 crores as of March 31, 2021. The net debt-to-equity as on June 30, 2021, on consolidated basis stood at 0.4x as compared to 0.3x as of March 31, 2021. With this, we can open the floor for question and answer.

[Operator Instructions] The first question is from the line of Parikshit Kandpal from HDFC Securities.

Congratulations on a good performance. And my first question is on the irrigation projects. We have about INR 2,000 crores of irrigation projects. If you can just update us on the status of execution, whether the execution has started on all the projects, all [indiscernible] are in place? Are these projects financially closed? That was the first one on the execution. And then the second part is what is the total ending balance sheet exposure on this one and...

Excuse me, sir. May I request you to please use the handset mode, sir. Your audio is not clear from your line.

Your voice is cracking, yes.

Yes. So second question is on the balance sheet exposure on the irrigation segment. So what is the total outstanding debt, unbilled revenue and payment flows from the government? So started giving payment given the second wave is now largely behind. Is there any improvement there?

Please repeat your question. First question, repeat it. [indiscernible]

First question is, sir, on the total order book of INR 2,000 crores on irrigation, so what is the status update on the execution? Has all the work started? Still, we are awaiting and there were some issues on land acquisitions. Has that been sorted out? So out of the INR 2,000 crores, if you can update us on the execution status. And second thing was on the balance sheet exposure on the irrigation segment and whether we are receiving the payments on time now. That is my question.

Sir, as far as irrigation project is concerned, I accept that KNR received -- this is around INR 700 crores of the project where land issues are there. And also, this project has not taken off. But other than this, actually, all other projects like we have big INR 1,600 crores that project and any Mallanna project almost 95% completed. And Vattem is also we have completed around 58%. So except this KNR, actually, there is -- other than our project in a good pace. And as far as balance sheet exposure is concerned, as of now, we have around -- at around INR 650 crores of the receivables we have to get from the government of Telangana in the set up irrigation. And we expect that next 2 to 3 months, actually, we expect that largely this amount should come back to us.

In the next 2 to 3 months. So what is the total pending due as of now that the bills have been committed and payment has not come? So how much of that amount is over now, so which would have come in actually?

That is around INR 270 crores is billed, what we have submitted and payment we have not received. And billed and unbilled put together is INR 650 crores.

So about INR 270 crores is what you have submitted, but it is already -- you are expecting this to come in, in the next 2 months?

Yes, yes. 200 to 300 -- INR 220 crores is what we are expecting to receive.

Just last thing, sir, we have not been asked to stop any work, right? Because there was this issue with the Ministry of Water that the work has to be stopped. There are some arbitration issues going on between the AP and the Telangana government. So that does not impact the execution and there's no direction for you to stop your work.

Yes. The state government has not instructed to stop as the works are floated by state government and we are expecting state government to issue any further stop instructions. Otherwise, we are not authorized to stop also.

Okay. Sir, every time the issues coming on the payments and irrigation, so in terms of bidding strategy, we have seen the segment grow up each time for us. So in the future, are you looking to add more irrigation projects on the state? And if not, then how will you look at diversifying the order book beyond the irrigation segment?

Actually, irrigation concern, it has become quite seasonal because of the first pandemic, there was a regularized stream of payments were done. But again, that second pandemic in the month of April, May, June. So these times, we had -- again, that funds were diverted to this COVID management issues and all that. Again, now the election has come up, so there is some -- one of the buy election is happening. So there also some funds are being diverted. The state government is behaving in a different fashion, sir. But otherwise, they're -- because of these special events kind of things, they are unable to process that bills in time. But otherwise, we might have seen the -- after first pandemic, they were regularly paying the bills, and we have received the -- at least 5, 6 months, we have received continuation monthly bills also. It's not that we can [ equate ] every time and just pick out the section because it is also -- it is improving the EBITDA levels, the margins also quite good in this. So definitely, we are not okay. It's a kind of -- if you have any other alternate, definitely, we can think of alternate, but otherwise, this is the things to continue. If we get the proper tenders, definitely, we would like to participate. And if there are a bank to support the bids, then definitely we are bidding.

The next question is from the line of Niteen S. Dharmawat from Arum Capital.

So see, as we are growing rapidly and we are getting new projects and expanding, so just wanted to understand what is the management bandwidth available to go to the next level from here?

So management bandwidth concerned, we have that sort of improvements in the management level. As you know that we have introduced the senior vice presidents, vice presidents. Even we have higher-up positions in the company, improved with professional back in the project levels as well in the headquarter monitoring level and even in our sales.

Bandwidth-wise concerned, I think we have get up for complete upcoming 2 to 3 years. I can't right away say for 3 years, but I'm okay with 2 years concern. And we would like to improve time to time. It is not a game that we have improved this time and we are just starting. Every time there is an innovation which is coming up, we find ourselves adapt, both for digital construction, scope of nice metrologies and administration. All that we want to act. So we are regularizing and we are trying to keep the things in order and improving, I mean to say.

Got it. One more question connected to this. So as we are growing, also what are the limitations that you see in ourselves that could come in our way while we are growing? Because we have reached to a level now and we are going in a different league in terms of top line and the performance. So what are the limitations that you see over here?

Here limitation is concerned, Bharatmala Pariyojana is still to continue for another 2 years. So definitely, we are okay with it. Again, irrigation projects are also in line to projects ourselves for the 3 -- 2 to 3 years, the line is clear to get on to that and thus get the revenues. And a lot of improvements that are happening with the city levels, town levels and all, like [indiscernible], like recently, we bagged a size of INR 1,200 crore flyover, which is almost 11-kilometer length, 6-lane -- 4-lane flyover. So every city is set to improve in such a way, and there is lots of schemes that are coming out. Maybe a little bit slowdown we are observing is at government levels because of this COVID or the revenue losses due to COVID and all. Otherwise, I don't see any issues we can face in future, sir. And every time we used to think what happens after 10 years, but every time there's a new concepts are coming up now. NHAI has already announced about their expressway concept and greenfield highway concepts due to which I think NHAI highways are being converted. Like you might have seen a lot of job-based brownouts from Delhi, Mumbai expressway as well now the Chennai to Bangalore Expressway is already -- there are call for tenders and the work is likely to start up. And now they are thinking of Hyderabad, Bangalore. And there's -- a lot more things are coming up like that, sir. So they have identified 22 express highways, which are now part and parcel of -- which are not part and parcel of Bharatmala Pariyojana. Things are going to come up, sir. So every now and then, we are going to get a new concept, a new job, I mean to say.

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

Sir, my question is regarding any kind of early completion bonus that we are expecting in this year? And if yes, then what would be the quantum? And any identification you feel that could be scheduled out of quarter and we get the money early? And secondly, sir, how do you feel this whole flyover opportunity could open up? Do you feel that we could even get like 3 or 4 flyovers? And if you could just tell us whether we are ever going to have any kind of different kind of hiring on middle management or upper management level to now take care of the new level of growth.

Yes, sir. The first thing which I would like to answer about is that the flyover projects are -- no doubt there have been slowdown now because of the revenue is not much enough where the data have said the highways, state governments to develop all this. [indiscernible] most parties are to develop this. But in the near future, after 1, 2 years, I think they'll be getting up and definitely, they come up with -- they have a huge big scheme in each city, everywhere where the traffic has grown to so many multiples and there, everywhere the traffic jams are happening. So there is no depth. The business is very huge and very big opportunities are available. Only that maybe there's a little bit slowdown we are observing because of the pandemics or COVID. So that is easing also. Sir, the management bandwidth concern, definitely, as I earlier told, we are considering every new concepts to be adopted and second-level management or the higher ups are also being hired, and they have been under payrolls for the company. And we are looking at every opportunity that -- wherever we can improve and make the things progressing.

So allow me, sir, further. You had almost like a 40-year-old experience in roads and this thing. So would you agree with my statement that this is probably the best period you could have for infrastructure and road development? And you have almost reached like a very -- what is your momentum in the history of road construction. And you are very lucky that at this point, you sort of balance sheet is absolutely in order. So you could be well positioned to take advantage of future, and you have great efforts during the last 40 years.

Yes, of course, we have passed all the levels. But I really didn't get the question what you need to -- need an answer.

This is like an absolute hike or the pinnacle of what could happen for road construction. It's like all the forces are coming together to give you a very good payment.

Yes. Actually, sir, this is -- recently, we have rephased the ticket size like INR 2,000 crores, INR 2,500 crores ticket size projects we have in crores. And so a number of the turnover rates will lead into very few jobs. So definitely, the growth can happen. And the engineering concerns, every year, there is an improvement. Every now and then, there have been new concept, new equipment, new designs, which are in place for the higher structures or heavy duty structures. Even NHAI is also adapting very huge and big structures into their projects. So definitely, we are adapting new technologies, and we are trying to keep up our credibility.

And my question about the early completion bonus remains unanswered.

Sir, actually, early completion bonus concerns are [indiscernible]. We had not early completions in that project. Definitely, we may get around -- without hassle, we should get around INR 9 crore and all like bonus. And the claims concerned, I think our Orissa project, the award was ready. I think quotes are already awarded and anytime was asked to deposit the money. It is in the state of that. So we may recognize that payment in coming say, 1, 2 quarters.

And that will be substantial, the arbitrage?

Pardon?

The Orissa will be substantial.

Yes. It is substantial, yes.

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

Congrats on great execution once again in a very challenging environment. Sir, just wanted to pick your brain on we have already done around INR 740 crores, INR 750 crores of execution in this quarter. And we are already 45 days into the second quarter. So what -- I mean, in your opinion, what is the kind of top line that you can do for this year? Any kind of guidance that you would want to give as you had earlier given the 2020 guidance? So any chance that we could exceed it? What is it looking right now in terms of overall top line?

Yes. Overall top line concerns, it's -- we are all geared up to do around INR 3,400 crores plus. But in concern, the -- again, the pandemic issues are -- even the third wave we choose -- we have not taken anything into that consideration. And we had a little bit disappointment due to the new projects being -- all projects being completed and new projects have not been taken off because the Kerala project, which we have bagged recently, that there is some land problem and they would start only after 5, 6 months, even [ every ] time is also there. There may be a delay in starting those projects for 2, 3 months. And the Bangalore project, which has taken around INR 1,100 crores project, that is likely to start -- actually, it could have started 1 month ago, but we are expecting another 2 months delay there. So new projects are not taken off and all projects have been completed. And there is a little bit slowdown in the irrigation section also because, as you know, as our [ people ] well said that all the payments are a little bit stuck up in the state governments. Sir, a little bit slowing -- slowdown is there. So a little bit -- it's [indiscernible], but we would like to deliver the best and we are traveling towards it.

So sir, the INR 3,400 crores top line that you're talking about, it does not take into account, let's say, the COVID pandemic or second wave. But it does take into account the...

No, no, not taken. Not taken partially. Whatever is happened, we have taken into account. But whatever is going to come up, we have not taken it into account.

Of course, sir. Yes. But it does take into account that a large part of our order book right now is L1 because the entire order book is L1. The irrigation of INR 700 crores is not under execution. So you're expecting those projects to start execution in maybe next 2 quarters. And taking that into account, we expect INR 3,400 crores of top line this year.

Of course, sir. Of course, sir.

Sure, sir. Great to hear that, sir. Also, sir, just I think I missed out on the numbers, if you could -- just a couple of bookkeeping questions. What was the stand-alone debt at the end of the quarter? And what is the equity requirement for this year and next year in the HAM projects?

Venkat, go on with this.

Yes. Sir, the stand-alone debt for this quarter is -- it is a net cash only. It is around INR 47 crores. We have the cash balance are there. And as far as equity requirement is concerned for this year, we may require actually INR 135 crores for these 5 HAM projects. And next year is around INR 65 crores, actually, for this 5 HAM projects, except this Kerala new HAM project where equity requirement is at INR 430 crores. So if this project will start somewhere in Q4, then we have throughput around INR 200 crores equity for this Kerala project in Q4.

Right. And sir, the latest HAM project, another INR 100 crores of equity, right?

I think this may not require during this year. That will come in the next year only.

In the next year only, right. So just one last question, if I could squeeze in. So now we have a HAM portfolio of 8 HAM projects. What is our strategy going forward? Will we continue to bid for more HAM projects? Because if I remember correctly, last quarter, we spoke about that the deal with Cube also is right now, while it is on track, but they -- as you had mentioned that they are also trying to negotiate based on the current interest rates and all. And if it becomes too much of a value loss or provision products, we would let go of that deal. So in that sense, at this point of time with 8 HAM projects, how many more HAM projects, even in terms of number or in terms of rupees, crores, capital? What is the number that we are comfortable with in terms of holding a HAM portfolio?

Venkat, go on with this.

Yes. So as far as this HAM project is there, definitely, the deal execution is on track actually. Our due diligence has already started, and we expect that because one project now, we got the PCOD. And we have already applied approval for the straight sale with the lenders as well as the [ NEK ]. So definitely, the deal is on track actually as of now. So definitely, our strategy will be asset-light only. So definitely, we will try to take further at least 2 to 3 HAM projects in this year. Already, we have got 1. We may take further at least 2 to 3 HAM projects in this year. And our strategy is the same only. We will do the execution. And once this completion is completed, we will definitely offload to the first 50 investors. So we will work on that strategy only.

The next question is from the line of Priyankar Biswas from Nomura.

A hearty congratulations for really a very excellent set of numbers in a very challenging quarter. So sir, last time, if I remember clearly, you had highlighted about commodity challenges that maybe the indexation that NHAI or the other state may not be able to compensate. But here, what I see in your results is that the margins still remain above 19%. So if you can highlight that what measures maybe KNR has taken that we do not see any commodity impact at all, I mean, in the results. So what has the company done to actually mitigate this impact? And can we expect these margins to -- may be sustained into probably the rest of FY '22?

Sir, definitely, as far as this commodity is concerned, definitely, there is an increase in the commodity and prices of basically steel and cement. But there's still companies able to maintain that. The reason is being that, actually, if you know what are our HAM projects are there, they are the fixed price EPC contracts. And on that, definitely, some escalation part was already built up while billing the EPC costs. And other than this, in this EPC HAM project, because, as you know, last time, we told this because due to bankers' requirement, we have put the additional equity. And what are the inflation part, what we are getting from the NHAI, that is completely passed on to the EPC contractor. So definitely, when we have seen that we are getting almost at least 4% or 4.5% escalation in our grant actually, and that is completely passed on to the EPC contractor. So if otherwise, sir, what are the equity -- what are the additional equities are paid more than that, it will be got in the form of inflation. That's why that has not been very much affected in the HAM project. But definitely, other EPC projects there was increase in the input price and which has been compensated through around 50% to 60% to the extent of what is the buildup in the contract agreement. So basically, these are the 2 reasons that's why that the margin has had been reduced. But we expect that actually the margin may continue between 17% to 18% definitely in the future.

We are also on the look out for now. This -- only the third quarter end, we'll be in a position to explain how the prices are going. So that call will be taken at that time.

But sir, if let's say, if a complete pass-through would have been possible, let's say, in the steel and cement, even for the EPC. So could we have possibly reached a margin level of maybe 20%, 21%? I mean if such high level of inflation was not there, would that be a right opportunity?

Definitely at that time we may touch around 20%, 20.5%, definitely we may touch. But as of now, also, we are having around 19.4%. So definitely, around 0.5% benefit will be there in that case.

Okay. And sir, another question from my side. So I think during a question on management bandwidth, Jalandhar sir mentioned something on digital construction, probably fund digitalization. So can you please shed some light? So what are the plans here? And what are the maybe longer-term expected benefit that is going to accrue? So as far as addition of new technology, so what is the road map?

So actually, the digital construction, we are likely to consider to improve our risk monitoring system as well as construction metrologies to be properly digitalized, and they are available for information availability made to the employees, and the methodologies, what we do during the construction and everything is properly digitalized and have a record on it. As well, the performance of employees are being properly monitored. And everything -- the digitalized contracts are now being developed and many company wants to adapt. So we are also in a study stage. We have not completely gone into it, but we were considering in upcoming 1 year or 2 years' time, we would likely completely go in a digitalized to adapt a proper -- to add some strength to the company, I would say.

And so, sir, related to this, so what is the sort of CapEx maybe we would be looking at? I mean, not only in this year, maybe...

Actually -- this actually -- really is premature thing for me to tell you anything, sir, because we are in touch with some agencies and all who are doing all these customization for us. So definitely, I didn't get real quotes from them. Once I have the full information, I would follow up with you.

And sir, just last -- 1 last question. So I understand that the Chittor project has got the PCOD. So if the Cube deal goes on as planned, then you were supposed to pay like half of the amount on COD. So I mean, how far are we from that milestone at least for this particular project? I mean you have got PCOD.

Yes.

Is there -- when can we expect some cash flow from Cube at least in this project?

Venkat, go with this?

Yes, by this -- definitely, if -- because the deal is very much on track, and we expect for at least Tirumala project, we should be able to complete the entire money mix by March actually. By this year, definitely, we should get the entire actually.

For that we already applied for the NOC, which they -- and that NOC also comes under [indiscernible]. So the process is taking place now.

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

First of all, congratulations on a good set of numbers. A couple of points. Sir, first, how many projects we have bidded where bid has not opened and in terms of value and which segment and EPC?

Right now, actually, 1 -- 2 projects are there, where we have bidded, where we are expecting the results to be opened. That is 2 HAM projects. And further, we are already shortlisted around 6 to 7 projects that we are also bidding because the bid is getting postponed, and that size is around INR 1,200 crores -- INR 1,000 crores to INR 1,200 crores each project. And we expect that this year at least 2 to 3 projects we should get actually in HAM.

Okay. The projects that we have bidded that is also in the same INR 1,000 crore, INR 1,200 crore side?

Yes. Yes. Yes, correct. Correct.

So maybe a possibility is that, that we got 1 dam project, we are saying INR 2,000 crores to INR 3,000 crores into the moat. So maybe possibly we can go to INR 4,000 crores, INR 5,000 crores also. That is also a possibility. Second thing is in terms of 2 clarifications. One is on depreciation and the tax rate. So we were talking around 25%, 26% tax rate. But this quarter, we have a 35.5% tax rate. So for the full year, in the last 3 quarters, we can see a lower tax rate, so for full year, we can have 25%, 26% tax rate. And depreciation this quarter, we have INR 27 crore odd. So how do we -- once the irrigation is picking up, can we see the same run rate INR 30-odd crores? Or it can go to INR 40 crore quarterly run rate?

Yes. Sir, as far as the tax rate is concerned, definitely, now this year onwards actually we have gone the new tax regime. If you really see effective tax rate without considering deferred tax, then it is coming to around 27%. So -- but what has happened because now this tax rate has been changed from 35% to 25% due to that there is -- deferred tax realization has come. So that's why deferred tax assets have come. Previously, there was -- deferred tax liability was there. So due to this reason, actually, you are seeing the net effective -- if you see only for the current tax, it is coming to 28%. With deferred tax, it has gone to 35%. So we expect that actually because whatever the difference of 10% that is going to be hit this year. So this year, our current tax will be around 27% -- around 25% to 26%. But with deferred tax, it may go up to same, around 30% to 35%. As far as depreciation is concerned, definitely this year because as you know that last year actually we added just INR 100 crores in our CapEx actually. And before that year, we have added around INR 200 crores. So now because last year addition was less that's why this year depreciation will be less, and we expect that we may end somewhere around INR 120 crores to INR 130 crores of depreciation in this year.

Okay. And the CapEx, last time, we talked about around INR 100 crores or INR 130-odd cores. So this quarter, how much we have done? And for this year and next year, the same INR 100 crores, INR 130 crore of CapEx remains -- the guidance remains the same?

This first quarter, we did around INR 42 crores of the CapEx, we did. And this year, we expect that we would have somewhere around INR 140 crores to INR 150 crores CapEx in this year.

Okay. Okay. And 1 question on the HAM front. So you already said that the cost front when we received the PCOD. So these 3 -- so the deals that we have signed with the Cube on the 3 projects, so by this March or by next year, can we see the entire equity of INR 323 crores will be out of our books, and we will be getting the cash?

It will definitely. Yes, we are expecting. Because 1 project, we have already got PCOD, and we already applied to NHA as well as the lenders. So we expect that at least like Tirupati, we should be able to close the existing 10. And other 2 projects is definitely actually by first quarter or maximum by second quarter, we should be able to close it.

[Operator Instructions] The next question is from the line of Seetharaman R from Spark Capital.

So I mean I have a bookkeeping question. Basically, can you give the working capital numbers, like net retention deposit with government the due from -- due to customers, due from customers?

Yes. Yes. Actually, this retention number we pull in effect we are around INR 184 crores, sir.

Come again, sir. Sorry.

Retention deposits, actually, and that is in asset side, it is INR 184 crores. And against that retention payable to the contractors and other is around INR 108 crores, that is liability side. And what other questions have you asked me?

Basically, the advances to customers, the dues from customers.

Yes. Yes. This mobilized advance what we received from the client is around INR 134 crores, sir.

Okay. And the due to customers? Hello?

One moment, sir. Just a moment. Just a moment.

Yes. Yes, sure.

Sir, this due to customer is INR 305 crores actually.

Okay. And due from customers?

It's INR 220 crores, sir.

Okay. And advances to customers?

This mobilization advance received from client is INR 134 crores, sir.

Okay, perfect. There is mobilization advance, okay. And just 1 more question. You told on the equity investment for the current year is going to be -- for FY '22, INR 135 crores, right, from the 5 existing projects?