KNR Constructions Limited (532942) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q2 FY '25 Earnings Conference Call of KNR Constructions Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of the 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. K. Venkata Ram Rao, General Manager, Finance and Accounts from KNR Constructions Limited. Thank you, and over to you, sir.

Good morning. Thank you for joining us today on the call to discuss the financial results for Q2 and H1 FY '25. Along with me, I have Mr. K. Jalandhar Reddy, Executive Director; and Strategic Growth Advisers, our Investor Relations Advisers. We have uploaded the results and investor presentation on the stock exchange as well as on our company website. I hope everyone got an opportunity to go through it. We would like to touch upon a few key company updates and industry events post which we will have a question-and-answer question. I would now like to share our perspective on the significant industry development. In the first half of the year, we observed a slowdown in awarding of the projects primarily due to general elections. However, the more has set target aiming to award projects of INR 5 lakh crore for the current financial year. This commitment gained momentum in September with project good pipeline amounting to INR 1.1 trillion, primarily driven by HAM and EPC projects. Looking ahead, the government is also preparing to approve additional highway projects, which could bring the total cost of [ sensing ] projects to INR 2 lakh crores by the end of December. This robust pipeline are from the government commitment to maintaining an aggressive pace in highway construction. Additionally, the NHAI is undertaking several transformative initiatives including collaborations with banks to implement advanced toll-collection technology on expressway. This state-of-art multi-lane free-flow system will replace [indiscernible] toll collection, removing the need for physical toll booth. Moreover, NHAI is constructing 74 new tunnel across India spanning a total of 27 kilometers. This extensive project aims to significantly enhance the country's highway infrastructure with an estimated cost of around INR 1 trillion. Lastly, the government's decision to double the effect liability period to 10 years for the contractor of EPC marked a crucial step towards enhancing the quality and longevity of the national highway infrastructure. This policy change is expected to lower long-term maintenance cost for the government and improve road safety and user satisfaction by keeping infrastructure in optimal condition. Ultimately, this will support the development of more reliable and sustainable highway network across India. With this initiative, a strong bidding pipeline and a diversified order book, we are confident that positive growth momentum lies ahead. Now coming to the key updates of the company. The percentage of physical progress as of September 30, 2024, for the HAM project is around -- is as follows: Magadi to Somwarpet, around 87%; Oddanchatram to Madathukulam, 100%; Ramanattukara to Valanchery, 82%; Valanchery to Kappirikkad, 84%; Chittoor to Thatchur, 77%; Marripudi to Somavarappadu, 12%. As of September 30, 2024, the company has already invested INR 556 crores out of INR 992 crores revised equity requirement for all 8 HAM projects. The additional [ liquidity ] requirement of INR 436 crores total includes [ INR 200, INR 120, INR 160 ] for H2 FY '25, FY '26 and FY '27, respectively. You can refer to the Slide #27 of the Investor Presentation for detail on each HAM project. Pursuant to the settlement agreement signed between NHAI and KNR Muzaffarpur Barauni Tollway Private Limited, the company has received INR 317.69 crores including INR 142 crores of the interest on unsecured loan from the SPV. Additionally, as per the terms of the settlement agreement, the SPV has repaid entire debt obligation to the lenders and the project will be INR 4 crores. The toll collection of Muzaffarpur-Barauni Tollway Private Limited was taken over the NHAI with effect from 1st of November, 2024. On 29th October 2024, the company has signed fair purchase agreement with JKM Infra Projects Limited and/or Mr. Gaurav Jalan, Investor for INR 45.90 lakhs, for which the company will transfer its entire stake that is 0.65% in SPV. And further, KNRC Holdings and Investments Private Limited, the wholly owned subsidiary of the company will also transfer its entire stake, that is 100%, to the investor. Now coming to the order book position. As of September 30, 2024, the company has total order book position of INR 4,406 crores, which can be divided up as 52% of the EPC growth projects, HAM projects, whereas 23% of the total other routes is for irrigation project and balance 23% is for pipeline projects. Approximately 67% of order book is from third-party clients and balance 33% from the captive HAM projects. The third-party order book percentage is split between the state government contract at 54%, where 11% for the central government and balance, 2%, is from the other private players. And we know that this order book does not include content aggregating to INR 1,200 crores as we have not yet received the [ funding ] for our 2 HAM projects. If you include this, our order book will increase to INR 5,606 crores, this order book will get include over a period of around 1.5 to 2 years. With our recent election behind us, and clear government emphasis on the road and highway development, we anticipate an increase in new order work. We are aiming for order inflow of approximately INR 6,000 crores to INR 8,000 crores for the next year. Lastly, the rating has -- India Ratings has affirmed its outlook on the long-term bank facility as in the AA/stable and also the short-term rating is affirmed in the A1+. Before discussing the financial numbers, I would like to highlight that during the quarter, the company has received an arbitration claim from its Orissa project of INR 28 crores, which includes the total revenue and INR 43 crores towards interest transfer scheme is included in other income. And also expenses related to such claim of INR 0.93 crores is included in other expenses and resultant tax of INR 17.6 crores included in current tax. I would like to further clarify an exceptional item of INR 15 crores for this quarter, which resulted from 2 specific transactions. First one is our Patel KNR Infrastructures Limited, our associate company, bought back its 32,71,161 shares held by the company for a consideration of INR 8.9 crores. And accordingly, the resultant profit of INR 5.6 crores that is included in exceptional items in the statement of stand-alone profit and loss. I think the company has made a provision of INR 21 crores towards the receivables from the [ National Highway ] and infrastructure, which includes in the exceptional item. This was due to the nonfulfillment of some of the conditions of the SPV excluded between the company [ National Highway ] and SPV. Now let me take through the Q2 and H1 FY '24 standalone financial performance first, followed by the consolidated financial highlights. I will start with the quarterly highlights first. The revenue for the quarter stood at INR 884 crores. EBITDA for Q2 FY '25 is largely stabilized, 1% degrowth due to INR 165 crores as compared to INR 166 crores in Q2 FY '24. EBITDA margin in Q2 FY '25 is 18.6%. Net profit for the current quarter was INR 334 crores as vis-a-vis to INR 100 crores in Q2 FY '24, registered a growth of 235% year-on-year. Now coming to H1 FY '25 highlights. The revenue for FY '25 stood at INR 1,760 crores. EBITDA for H1 FY '25 grew by 5% to INR 357 crores as compared to INR 339 crores in H1 FY '24. EBITDA margin in FY '25 stood at 20.2%. Net profit for H1 FY '25 was INR 469 crores as compared to INR 210 crores in H1 FY '24. The adjusted turnover in EBITDA, PBT and PAT for the quarter and half year ended is INR 856 crores, 16.12%, 14.94%, 10.92%, and for the half year ended, it is INR 1,675 crores, 16.33%, 14.44% and 10.4%, respectively. Now coming to the consolidated financial performance. I will start with the quarterly highlights. The company recorded a year-on-year growth of 87% in the total revenue from INR 1,038 crores in Q2 FY '24 to INR 1,945 crores in Q2 FY '25. EBITDA came in at INR 870 crores in Q2 FY '25 from INR 232 crores in Q3, a growth of 226% year-on-year. EBITDA margin in the current quarter stood at 44.7%. Profit after tax stood at INR 580 crores in Q2 FY '25, vis-a-vis INR 143 crores in Q2 FY '24, year-end growth of 3.6%. Moving on H1 FY '25 highlights. The revenue for H1 FY '25 grew by 45% year-on-year to INR 2,930 crores. EBITDA for H1 '25 of INR 1,148 crores as compared to INR 447 crores in FY '24, registering a 157% growth. EBITDA margin for H1 FY '25 stood at 39.2%. Net profit grew by 120% year-on-year to INR 746 crores compared to INR 276 crores in FY '24. Now moving on the standalone balances. The company continuing to maintain a strong balance sheet. The working capital rate stood at 71 days compared to 78 days as of June '25. The consolidated debt as of September 30, 2024 is INR 1,420 crores as compared to INR 1,258 crores as of March 31, 2024. The net debt-to-equity on consolidated basis as of September 30, 2024, stands at 0.33x as compared to 0.3% as of March 31, 2024. The increase in consolidated turnover in PAT is due to pursuant to the settlement agreement of the KNR Muzaffarpur Barauni Private Limited who is entitled to receive a settlement amount of INR 961.38 crores, which is included in revenue from operations, an amount of INR 342 crores accounted as ETC claim, which is included in construction costs and INR 49.67 crores towards the interest, which is included in the finance cost, an amount of INR 221.83 crores of intangible assets, which has been amortized and included in the depreciation and amortization expenses in the consolidated statement of profit and loss. With this, we can open the floor for question-and-answer.

[Operator Instructions] The first question is from the line of Mohit Kumar from ICICI Securities.

What is the kind of tender of EPC and HAM?

Sir, your voice is not audible.

My question is what is the pipeline of tender from NHAI for EPC and HAM? And can you also help us with the pipeline of [indiscernible] separately?

So actually, the pipeline in the sense, there is nothing considerable that is leading pipeline kind of thing. But there has been around 80, 85 tenders, which we have studied on NHAI itself. So the 80 tenders which we are right away focusing -- and these are getting postponed. Actually, there are certain tenders are supposed to be happen in this month. But many of them got postponed by 10 days, 1 week and it's kind of a month. So the gap is building up there. We just asked them why the delays that is happening, they said that the acquisition of land is not adequate. So until they achieve the 80% land position, they would like to hold these tenders. That is what NHAI is saying right now. So probably second thing is after the new government has taken over the part. I think considerable rally is not started by then. So maybe the March quarter, fourth quarter of this year could be flooding with all these tenders. That's what I'm thinking because there is almost 4.5 months time that is there, so [indiscernible] -- it happened also earlier in similarly. So even NHAI is expecting them that from January onwards, the tenders will partially start -- keep on pulling up. And the peak will be in February and March. I think we'll have to wait for that sort of window, wherein many tenders that come up. And as we have said already, definitely, we can try to get the 5,000 to 6,000 from here. And some certain state government also we have studied and those tenders [ have been verified ].

Anything you had expecting for the BOT, sir?

BOT, actually BOT we are starting the terms with other players. And those also would like to go. As a EPC player, certainly, we have a discussion with Adani also. They were also under discussion with us for 2 projects. And Cube is also there. So whatever it is, we will give an exclusivity for them, and we want an exclusivity from there. But in these 2 are being now under discussion. Actually, there are terms between the initial discussions are over for the Adani projects. So definitely, we will [ strike ] some projects. And Q1, given the MoU only we have to see the opportunities and participate.

Understood, sir. My second question is on the EBITDA margin. If I subtract the [indiscernible] for INR 27 crores and INR 60 crores, respectively, for 2 [indiscernible], the EBITDA margin jumps at 12.2%. I think you saw the lowest EBITDA margin. Am I right?

No, no, no, no, sir. For the half year, if you adjusted with the adjusted EBITDA is 16.33%, sir. For the half year.

For the half year. My last question is on the employee expenses. It looks to be a slightly higher side compared in the last 3, 4, 5 quarters. [indiscernible] employee? Employee expenses.

Actually, employee expenses is the same, only 43%, but this quarter, actually, as you know, we have paid to -- wherever we paid to our directors amounting to around INR 9.9 crores. So due to that reason, this quarter, it has increased. But otherwise, it is in the range of somewhere between INR 41 crores to INR 42 crores per quarter.

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

Sir, continuing the same thing. So for us, the order inflow is the main concern. So just trying to a bit understand further. So -- when we say 80, 85 tenders that we are looking at, if you can help us in terms of what's the value, and this is only the NHAI one. And in terms of the HAM and EPC, is how much? So that is first one. And second, maybe if you can also elaborate in terms of the MSRDC, what we are looking at there. So first on that.

Actually, in MSRDC we are under discussion -- under discussion with Navayuga [indiscernible] [ Construction ] is there. They have 3 packages in Pune, which they were offering 1 project to us, which is under discussion, we need to examine the case and come back to you. Then, one, we have already given MoU with that pre-tender meeting we have done to Patel. So if they get the job, definitely, we will be facing that. So each is having around INR 2,000 crores plus values only. So that is one aspect. Second, as you asked that 80, 85 tenders, which we have studied, sir, I think [ the content I ] have not totally [ summed it ], but the projects are ranging from INR 800 crore to INR 1,600 crores. So, the max is INR 800 -- the minimum is INR 800 and INR 1,600 is the max. So those are the ticket sizes, which we have started. Very few are there [ in INR 1,600 to INR 1,650 level ], but most of them are [ below ] that.

Okay. And roughly, in terms of the EPC and HAM would be how much? About 50-50 would be out of this 80, 85 will be your HAM and EPC?

[indiscernible] I'm not hoping anything out of it. I'm really focusing on some Tamil Nadu bids in flyovers and all, flyovers and somewhere in even higher projects are actually selected to come, which we have examined from the department. So we are waiting those tenders to happen. Once they happen, definitely, we'll try to grab some of that. And apart from that, we are also thinking that some projects, whatever EPC mode projects, which Adani bags for this [indiscernible] which you have already spoken now. So those are also started and they're online.

Okay. So this MSRDC, Navayuga, just to clarify that 1 project that we are looking at, so that itself is close to INR 2,000-odd crores, and even for Patel Infra that we have a MoU, that value is also close to INR 2,000-odd crores?

Yes, yes. Already, they've got the job and from there we are discussing. So the price between us and them should be finalized. So we were waiting until election go because we don't know which government is going to come in Maharashtra. So what would you say, who's going to come?

Yes, yes.

If we like to continue that, then it is good. Otherwise, if there is [ any doubt ] they will grab the project because just before the election there [indiscernible]. So a little bit dilemma, but still lagging. I'm a bit comfortable. Things will happen like what happened in AP. Only AP is an exceptional state where developmental projects have been hampered because of political movements and all. But I don't think such things will happen in Maharashtra.

So sir, just to come back. So let's say, if we get this INR 7,000 to -- INR 6,000 crores to INR 8,000 crores order inflow that we are looking at -- and I think the revenue most likely to start in the next FY '26, next year. So this year, so 2 things to understand. First, this year, already in 1H, we have close to core revenue in INR 675 crores, around 10% down. So for full year at a core revenue, how much we are looking for FY '25? And assuming that we get the INR 600 crores to INR 1,000 crores order inflow in this by March. So in FY '26, how one can look at in terms of the revenue?

Actually, FY '25, I am expecting that even we grab the job in the last quarter of this year. So there is a 6-month gap that will come on. So by the time, we'll have to see that all the 2 quarters, we have to completely finish all the order books, whatever we have. So -- and after that, how many jobs which are coming [indiscernible] actually, if you take this Maharashtra [indiscernible] can have an impact in 2, 3 months. So first quarter, we leak. Second quarter will expand. Maybe there could be some raise and all, but we will start in the second quarter, those projects. But HAM projects and all, it can be taken up in the 6 years -- 6 months later because now they are coming up with the 80% lag, I don't have that dilemma as I have in the [ Maharashtra ]. So certain dilemmas are not [ based ] in that. So we can set it aside and think about it. We'll keep it in a very strong way so that we try to keep working. That said, these are [indiscernible], these are very, very assumable things. So I [ wait ] a little less only in the coming year or so. So maybe that we may have to bear with that. And after that, I think this could be good.

Sir, still not able to understand -- still trying to understand. So this year, can we do close to INR 3,400 crores, INR 3,500 crores kind of a revenue? And assuming... Okay. Okay. Got it. And for next year, let's say, as you said, even if we ...

[indiscernible] no doubt, we are targeting for INR 4,500, provided this [ order book will get released in 2024 ].

And the margin to...

[ Let me add for clarity ], but the second last 2 quarters, we will [indiscernible].

And then at margin level, 16% can be maintained?

It is difficult to say because all the new orders which are coming. So EBITDA, the reason [indiscernible]. It's the market, then only I'll be able to answer this question. But we may [ try ]. The thing is we tried our best in the industry as of now. So we will focus to have that.

Okay. And lastly, sir, when these pipeline projects are INR 1,100 crores to start execution and to appointed date, when that appointed that to come? And lastly, on the CapEx front?

2 months to go, sir. Actually, when the [ order come in ], I think in another 1 month, it could come. So there will be formality to close. 1 month, we are paying, but after that, we [ are thinking ] within 2 months, we should [ start to close ].

For pipeline or for the 2 HAM projects that we will be expecting [indiscernible]?

We can't understand you, sir.

For HAM projects in 2 months [ appointed them ] for pipeline projects, when the execution will start?

I think we've already started on it. Because I think there have been certain [ stage-wise ] constructions are there. Unless we achieve that stage, the payments are not eligible in that.

Then lastly, if you can...

[indiscernible] [ in a 7% job ], I think upon reaching the 15% of the project value, we have a milestone to get paid like that.

Okay. And lastly, sir, irrigation payment when we now expect because last payment we have received is of February. So I think the outstanding is more than INR 1,000-odd crores. S when we are expecting...

[ Around INR 900 crores ] I think -- no, what happened actually, whatever it is built is around INR 700 to INR 740 crores is built. INR 740 crores is built actually. And this build -- it is not recorded. I mean, they were insisting them to record, and we've been giving continuation letters to record the risk. But since the payment is not accessible to them by the loan component, so they are just looking at. Certain issues are there. I think if they resolve that loan issue, then the things will be resolved. I'm hoping, sir, very uncertain it is. I can say within 2 months, it can be solved, I think. They are saying [ under their ] department [indiscernible], [ they will try ] to solve it in like 2 months.

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

Sir, how many more claims are pending with NHAI or other authorities?

How many claims pending? Sir, all our claims are done. One claim will come in this quarter [indiscernible], which is there in HAM project -- sorry, not HAM, a [indiscernible] project. 2 claim has already come in this quarter. So this quarter, we'll be having that also. After that, I think we have very...

How much claim it will come in this quarter?

Around INR 130 crores will come.

INR 130 crores. And it will go over in income only, right?

Some part in income, some part in other income that we are working on.

Understood. Sir, you are so knowledgeable person about road construction. Sir, can commentary on road projects from NHAI, how many kilometers they have sanctioned and how many more kilometers will come in this financial year '26? Can you give some commentary? It will be helpful.

Actually, this year, they have targeted around INR 5 lakh crore actually in the current financial year. That is [ road ] target. And out of that, there were sections of INR 2 lakh crores by end of December. A lot of projects are there, actually, which is to comment because almost last 1, 1.5 years, not much project was awarded. So we are expecting that definitely in Q4, actually, some definitely a big rally will come, so we want to capitalize that rally.

Okay. Okay. So you mean to say maybe [ INR 3 lakh ] road project maybe come in the quarter 4?

We are expecting, we are expecting.

But we will be only where our margin is reasonable, right?

Yes, that's why we are working on that, actually. Definitely, we will look into that.

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

My question is on the [indiscernible]. So first thing is that I can see you have approximately INR 500 crores, INR 520 crores of cash in the consolidated. So that is the right number, right, including investments, current investments?

Yes, yes. This year, at September, our stand-alone cash is around INR 347 crores and consol cash is -- sorry [ INR 246 crores, INR 247 crores ] [indiscernible].

INR 450 including investments, about INR 520 crores.

Yes, investment is separate. Yes.

So my question is if we were getting the receivables on time and once we realize all this INR 900-odd crores of receivables, which you pointed out. So in terms of billing work, the pending work which -- in terms of progress and the receivables which is due. So how much of this would have been the cash if these receivables are coming on time? So how much of the receivables are overdue against the time lines?

I think we don't have anything -- everything is on time. [indiscernible].

We have INR 435 crores receivables from the pending from the HAM project that we are not [indiscernible] because we have the surplus cash flow in the parent company, which is INR 435 any day we can track, only around INR 600 crores [ started ] is visible as of September. That is only due actually, that is [indiscernible] status for.

From mitigation, I'm asking INR 900 crores, how much of receivables are overdue. I mean, which had come on time would have resulted in cash sitting on our books. So how much is that number?

Almost INR 600 crores, just about.

INR 600 crores from there, it should get realized and INR 400 crores from HAMs, it's about INR 1,000 crores, and you have another INR 500 crore. So INR 1,500 crores of cash would have been in place if you were going through a normal course of business, right?

Yes, yes. Correct. Correct.

So how much can you do with so much of cash? Once 6 months' time...

Because we have a good [indiscernible] projects are coming as well as the annuities are coming. We have to run our business and nowadays, you may forget our [indiscernible] business, it is very, very difficult to predict. So we have to focus more on the HAM projects as well on this [indiscernible] . And second thing, [indiscernible] due, all that comes we will be comfortably running the company without any help. without taking additional debt or anything. That's what the plan for going forward. And we will have a [ growth ] also. We have a little bit sitting on a cash pile. We can focus more on, with whatever the appetite we have, we will go up to that limit, and we will try to do the business.

The only thing is you are making the platforms with Cube or with Adani on one way where you will need not invest in BOT so much, you will convert it into EPC?

Adani is asking us for participating in a partnership also. That's what we are examining. [indiscernible] Rather than that, we are talking another method that anything below INR 2,000 crore tender and that to which has good [ protection ], we would like to also participate in those tenders alone and try to do alone. And as we think in the earlier that [indiscernible], all that we want to do in the similar style.

Okay. So what is the stand-alone debt right now. So sorry, I missed that number, standalone debt?

Nothing is there. INR 2.95 crores as of September.

Cash out should be [ starting ] because we are not able to grow now and may we have structured our business and we are only in 2 roads, and we are not making any serious efforts to diversify beyond roads. For many quarters we've been talking about. So I think better we should distribute some of this cash [ as the land ] gets realized, as stepping up dividend or maybe buybacks because...

We're actually hoping what it is. See even today, if I focus on 1 BOT project, whose value is around, say, INR 2,000 crores, a little bit below that only, I want to look at it. It is 2, 3, if I take, 30% is the equity, which we have to get. [Foreign Language]. In any event, that will be under rotation. And I think it will give good depreciation also.

But then sir, diversification could be [Foreign Language]...

Diversification [Foreign Language] [ Every day we want to hide the ] [indiscernible]. It's not a [indiscernible] situation [ to happen ]. And even while the [indiscernible], are diverse. [indiscernible] are higher because we know about everything. So now I want to stabilize my business to these BOT's roads and annuity, then look at something else. Because under [ participation rates ], especially looking at now, I feel I'll be going wrong with that thinking also. I mean, not that I'm not examining the cases. I am examining the cases. I think I have rejected -- I have already -- last time I told you that one [ EPC ] project was there. And quite a big project it was. Actually, INR 5,000 crores worth of contract [ was there ], [indiscernible] but he was asking for a wrong price. So we couldn't go because our return on equity was very less. So we have offered one price and we left it, because he is not coming to our price. But I don't want to take something with a lesser [indiscernible]. But the EPC project, what happened is, he was showing wrong cost in the maintenance, which we caught. And that is not agreeing to anything. And we have [indiscernible]. So there, he wants to [ trick us ]. So then we said, no, we started keeping [indiscernible] [ something to be rounded ]. We are [ going after ] every good [ filter ], whichever is available.

And sorry, what project was this? [ EPC ], you said?

[ EPC ], sir. Actually, it was [ pharmaceutical ] base we made to make [ that engagement, to do ], we have examined actually. [ Mother Air ], there's a company called [ Mother Air ] that is a 50% stake [indiscernible]. We have examined that case and [Foreign Language]. Valuation was not kicking into ours.

So just on the efforts which you are looking to recover the relation receivables of [ INR 900 ]. So last time, I think on the call, you said you'll take it immediately, and now you're saying again, the loan is -- so now this project is only -- the funding of this project is only dependent on the loans? Or can it also be met through the budget, but it will support from the government? So how will the payment come? I mean, what...

I can't hear you properly. Can you speak a little louder?

I was saying that you -- on the last call, you had said that you will maybe pursue legal options to recover the receivables, irrigation receivables. So beyond the -- so what are the progress on that? And you also mentioned that the Minister is saying that in 2 months, some resolution will happen. So will the funding of this project only be dependent on loans? Or is there any possibility of any budgetary support or supplementing support being provided? So what will give us confidence that the project recovery or the collection is on track now?

Actually, the litigation -- it is completely political. What is happening here is completely political. For this, we met Chief Minister also and we told him our issues. He instructed the Ministry -- the Irrigation Ministry to consider to pursue the lower component also. So I think [Foreign Language]. Within 2 months we will resolve, that's what it is told. Generally, it is out of hand -- our hands, but we are completely vigorously [ pursuing ] it. It's not only me, that [ my guy ] is there, and [indiscernible] is also pursuing there for their payments. So we all together fighting for that actually.

And have you slowed down the execution on the balanced order book, like how much of the revenue this quarter and for this year, how much is the projection we have with current collections?

Overall, we are definitely last year, we did INR 4,000 crores. So this year, we are targeting because there may be some shortfall. So we made somewhere around INR 3,500 crores to INR 3,600 crores turnover in this year because what are our existing asset projects are there, like Kerala project and almost 80% were completed on the group. All the projects by March '25, we should be able to complete and we'll achieve somewhere around INR 3,500 crores of turnover.

[Foreign Language]. Irrigation, how are we looking at it now?

[Foreign Language] Actually, this quarter also, we did actually in irrigation, around 17% -- we did actually around INR 150 crores, [ et cetera ]. At the same time now, definitely, we'll do on the balance. Other book is there almost, Irrigation is INR 900 crores from these 2 projects actually, Package 3, Package 4. And the one is that any -- our pipeline project, that is anyway it will start working, beginning from Q4, but out of this INR 900 crores, definitely, actually INR 150, around, you can see why we will do around INR 150 crores of turnover from this project in every quarter. [ Everything else ] about these two we have to exclude, because what is happening if we stop our machinery and because it ultimately it will become cash flow, and we have already going through legally and put our claim through court also. So we are making all our efforts actually we are talking to the concern the Ministry and as well as putting all the legal efforts, both the way actually we are doing. But we cannot completely stop the work. We will slowly execute.

What happened actually to stop the work, I would like to add a few words here. See, the situation here is that almost we have given order for that all pumps and [ motor ]. Everything, and I think the 3 pumps, 3 more are to come. [indiscernible] and 1 more are to come. The last hour, if we do such things, definitely we'll become the [indiscernible] in progress. So we have only -- only the way we have left with it is that you do the work and [ hold on to it ] so we can fight for that, once we create the work. So that is where a little bit we have to think on it and do it, sir. So -- and everything is mobilized, equipment is there. If you don't do the work there is, that revenue doesn't happen. So completion is there. Once we do the completion, definitely at the fact and for committing and all, we can stop, later you get paid and [ we can do the commitment ]. We can even get stay from the court. Courts will give us very fair [ decision ].

Okay. The last question, sir, how much is the total order inflow in this year till date? And when is this pipeline and you also can you elaborate a little bit on the pipeline project?

This year, no [ order booked ]. There is a considerable pipeline [ projects here ].

[Foreign Language]

Actually, this year, we have not received any orders in this year. This pipeline project to that INR 1,100 crores [indiscernible] That is actually...

That's the pipeline coming. [indiscernible] 12% as a [indiscernible] project. I think 15% say we will be getting eligibility to get paid for that. I think the funds are available. I think we have been getting from central government to [indiscernible].

These are Jal Jeevan Mission projects?

Yes, AMRUT. Under 25% funding by the central government, and with [indiscernible] has awarded.

And 75% is coming from the state?

No, by the state government, yes.

[indiscernible] funds are available for this project?

Yes. Further, they are already budgeted actually because central government is there. That's why they have budgeted these projects. So there won't be any payment issue for this project.

Hopefully, they don't divert.

[Operator Instructions] The next question is from the line of Vaibhav Shah from JM Financial Limited.

Sir, out of INR 1,000 crores irrigation order book, what is the unbuilt portion?

Unbuilt will be around INR 400 crores, sorry -- around INR 400 crores is unbuilding.

So incremental revenue potential should be actually around INR 700 crores, which is less -- around INR 600 crores?

Yes, yes, yes, correct. Incremental revenue will be around INR 600.

Okay. Sir, secondly, what is the outstanding [ relation ] in receivables?

Receivables, around INR 600 crores is there.

And the total number?

Everything, it will be around INR 1,000 crores.

And sir, last time, you indicated that you're looking to recover around INR 300-odd crores in third quarter. So what's the status on that?

Regarding irrigation, that's why we recently -- actually our management had discussed with the concerned Ministry. So we are expecting in the next 2 months, actually, we get paid off actually.

So how much we are expecting in the next 2 months?

Entirety. Whatever entirety, about INR 600 crores together.

During discussion, we have asked full payment to be done because now the project is under completion also, about 85% is over, only 15% is to be executed. So with that holding [indiscernible] in the situation that I cannot go back or I cannot [indiscernible] things are like this. So definitely, we have spoken to the Minister, and I think they are resolving what they're saying. The loan components are any movement, it can be resolved, actually. That's not a big deal also. Only some marginally they have to pay, so I think they are that doing. So I think if they do that, I think it will be as we go [indiscernible].

Okay. And sir, on the inflow side, we guided for INR 600 crores to INR 800 crores of inflows. That is for FY '25, right?

Yes, yes. Correct.

And sir, in terms of execution, we are saying there will be a decline of around, say, 6, 7-odd percent for FY '25. So can '26 be a good amount of growth given the lower turnover in FY '25?

That is reason what we told if we are receiving project of like MSRDC in Q4, so definitely, we could be able to do better in the '26. What is -- if it we are getting mostly HAM projects then, again, it will take further 6 months to financial crores and then that will get [ appointed in ]. So that's why '26, we need to really see in Q4, how much project is come in, and in which sector, whether EPC or HAM are [ built here ]. So based on that, '26 revenue we will be able to highlight, how much we will achieve in '26.

Sir, lastly, for the pipeline order. We said that 15% is -- at 15%, we can start doing the revenue of the milestone. So can we reach a milestone by Q4? Or it will be in next year?

We can start in Q4. We will achieve milestone in Q4.

The next question is from the line of Vasudev from Nuvama.

Just one question from my side. What is the CapEx that we did in Q2? And how much are we planning for the second half now?

So far, we did -- in our Q2, we did around INR 4 crores only. So 5, 6 months, we did around INR 13 crores only. So definitely, next -- this year, we are not really seeing any CapEx we are going to incur. But what are the project in Q4 is we are getting the same project [indiscernible]. Based on that, we will really see. But based on current quarter, the order book is there for that not much CapEx is required.

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

So sir, when we are now looking at taking Andhra Pradesh orders and even Telangana more orders. So are we now changing our stance that we will now be a little more flexible in late payments and difficulties associated with state government? That's one. Second is, does our now increased cash balance increase our chances a lot in winning the large-ticket BOT orders? And third is sir, when do you plan to sell our projects to Cube Highways and Infrastructure for Kerala and other ones which are going to complete? And what is the kind of return on equity that you are expecting on these projects?

So first one is regarding the [indiscernible]?

So we are going to now with a lot of the Andhra Pradesh development projects, and [indiscernible] projects and even Telangana now this new [ year]. And [indiscernible] the state government payments are usually not on track, and there's a lot of follow-up to be done. So is the management now taken a [ interest and ] stance that kind of headache and still try to get the orders?

AP, we are expecting projects [indiscernible] after a couple of months onwards they start coming up. Because I think they are budgeting some amounts and government is also sanctioning them some amount. So with all that, they will start something and tenders will happen in a couple of months. So maybe that is also expected by March end only. So I think I heard about, say, INR 20,000 crores worth of contracts. They come off from that in this year. So we had -- actually the main purpose of aiding these state governments is they're very eager in developing the state, Andhra Pradesh. And if they don't pay, then development will stop and they will not be able to do. And we are also -- we will also go over [ budget ]. We are doing it -- we only invest 10%, if they don't pay by that time, we stop doing it. So that's why things are like that. We will have an alternate [indiscernible] to the same state, we'll have -- even we have the running projects are there because -- in Andhra Pradesh are there and other projects are there. There we can double the resources and speed up the central government projects. So that can happen. So state government is focusing -- is focused because of their EPC model. EPC may give us more cash flow and working capital will be less in that.

And sir, when do we propose to sell our HAM projects? And what is the kind of return on equity that we can make? Because I feel that, that will add another, I think INR 150 crores to [ INR 200 crores ] extra cash flow to us whenever that comes?

Yes. Sir, we are discussing with the prospective investor regarding the sale of our 4 HAM project. Out of that, 1 project, that KNR [indiscernible] is our project is already we got the PCOD for. Definitely, by March, actually, we should be able to close that project. Another 3 projects also because we are expecting that we will receive PCOD in the March, so it will take further 6 months from there. So you can say by March '26, actually, we could be able to sell of our 4 BOT assets and return is, definitely, it is better than the last -- what we did in the last -- quarter-over-quarter returns is quite good actually.

What is the total we have invested in these 4 HAM projects? And what do we expect to get out of them in FY '26 in total?

We have invested somewhere around INR 500 crores actually, INR 550 crores in these projects. And we will definitely achieve better than our previous deal [indiscernible].

So at least INR 800 crores would come out of that total?

We are just discussing with them actually, but better than the last deal is what I can say.

And sir, I missed about the Adani JV. So are we saying that we will bid together with Adani for most of the BOT projects and they will also put up money and so will we put up the money also?

That -- they were asking for that, and I'm not little bit thinking on it because they are big people. So doing easily, take away your money and then, I think that's better. Having 30 years, 20 years in relating BOT projects is going to be picked up. I think, [indiscernible]. They're very big people now. So tomorrow, we won't even get an appointment to discuss anything further with them. So that said, [ EPC ], okay, do the work, they pay you, and that's okay, we [ can not work with our JV ]. That's what I'm thinking.

You would prefer that you would just do the EPC from them and not [indiscernible]?

EPC is from them, wherever there are INR 3,000 crores, INR 2,000 crores, INR 4,000 crores projects are coming, size BOTs are now going to be in a big size. So that the competition intensity is also going to be less when serious players are only going to participate because [indiscernible] will guarantee [indiscernible].

So now our competition would be only IRB and very, very big companies.

Very, very big companies. [indiscernible] Those many people will not come. So we also -- we want to be part of it ourselves. Second, we even want to think of doing EPC for very, very good pay. We will give a free tender EPC bid to them and they would exclusively -- they're timing exclusively this time. That's what we are saying.

So more on the intangible basis, these are the first times that in the last 8 or 9 quarters that I have seen you very relaxed and quite optimistic about getting orders. So can we read more into it than it looks at this time you are very confident of getting most of the orders through?

Sure, absolutely. It is all assumptions only. And that I can say that I'm very confident in getting 1 project at least, and I'm struggling to get 2 projects, but at least 1 is -- have [ moved ] in from Maharashtra say, about INR 2,000 crores kind of thing. That will be subcontracting only. Second, around 80, 85 projects which we have studied in this thing, HAM projects, and we are quite confident of getting at least INR 4,000 crores to INR 5,000 crores of that. And even BOT tolls, we are targeting. So around INR 2,000, INR 3,000 crores easily we can make from BOT tolls also, maybe. That [ fine ] may increase, but that is possible. Second, we are also hoping certain projects from Tamil Nadu section. There are some EPCs and flyover projects are coming, and we are now completing our Coimbatore flyover. So right -- because there are tenders coming up. So we are already late, so we will be definitely participating in those tenders, and we will try to get the job. And that is the one jobs we get who price is about INR 1,000 to INR 1,500 crores. That will be the thing. And AP, I am getting at least INR 2,000 crores in AP, I am aiming. And Karnataka also may come up with the certain tenders, which are bank-funded or something that we are also looking at. In the department, we made in inquiries [indiscernible] and that is going on very serious on few projects, which we will be trying to pass. And Telangana also, there is some irrigating projects. There is one road project. [indiscernible], but the time may vary.

And there is some talk of one very big [indiscernible] project also coming in Telangana [indiscernible]?

Yes, yes, that is also likely to come. I'm getting up myself to participating some of the ECP projects also from there.

We are qualified for that?

We have to take [ a very hard look at that ].

We can qualify for that [ riverside ] project?

We have to go with [indiscernible].

The next question is from the line of Subrata Sarkar from Mount Intra Finance Private Limited.

Actually my question I think you have partly addressed. My point was like since we are not finding this HAM -- this entire road sector as of now that attractive, why we are not trying to diverse into other areas, given that I believe we should have capability to address other areas also? I suppose you have addressed partly, but still, if you want to add something?

Yes, that's what I said, in between. First of all, we would like to see, the scope is there. If you go for irrigation sector, it is very seasonal. If you go to [ risers and all], there is some contract, but overcrowded is there and lesser margins are observed. But if you focus on highways and NHAI, first thing is that [ the HAMs ] are a little more sensible, bidding may happen, that's what we are thinking, better than the EPC model contract. Second, we are thinking that those projects could be having good margins than the HAMs. So there is right scope that we can get some stabilization on this thing. Right now, every year around this time, I do agree, 1 year visibility is not there as of now. So we were seeking to stabilize from the own adaptive field, what we have. And then later, we will also think of diversifying into [ different ] sector. That we have examined quite a few other diversification sector also. Like I said, [ CBT ], EPC we have examined all that. So we [indiscernible]. So definitely, we are successful and the returns -- our company returns are safe, definitely, we are going to put in the money and we are going to [indiscernible].

The next question is from the line of Abhishree Bang from JHP Securities Private Limited.

So sir, actually, I just have one request. If you were to please come up with a comprehensive slide on one-offs, which would give you -- give us a like-to-like comparison on financial performance, that would be very helpful for us.

Actually, we have given the detail, actually, in our listing [indiscernible] -- but okay, you want because this is all of one-offs is there in 1 quarter only, may not be there in the next quarter. But if you want any clarification, you can reach us to our investor adviser, we can clarify you.

The next question is from the line of Uttam Kumar Srimal from Axis Securities Limited.

Sir, last time, you had mentioned that you have bidded for an irrigation project in JV with NCC. So what is the current status of that?

That is the NCC -- that is -- we have bidded [indiscernible] actually, that is macro project in Bhubaneswar, which we have not got actually. We are not on that project.

Okay. And sir, what is the current status of [ ordering ] Andhra Pradesh governing since the new government has come? Are you seeing any meaningful order coming from new government

The Amaravati Development Authority is now being formed, earlier it was scrapped. So now they're starting from scratch. So it is taking some time, that's what they're saying. So I think in -- from now, I think 2 months -- within 2 months, I think they'll be able to call the bids. And because they are getting allotments from the central government as they are helping the central government to be empowered, so they will likely to get more funds also.

So what kind of bidding prices will be there, if you can quantify that, if you have some information on that?

I heard about INR 20,000 crores, around INR 3,500 crores, they are budgeting themselves and INR 15,000 crores were committed by the central government through some bank loan or something. So those are all proposals have been prepared. Around INR 20,000 crores is in [ their scope ].

They are all applying with the World Bank and [ anybody else ].

[indiscernible]

[indiscernible]

The next question is from the line of Abhishek Pipariya from ICICI Bank Limited.

My query is regarding the NHAI dependency on the overall order book. So what is our -- currently, we have around INR 4,406 crores of order book. So what is our NHAI funded for dependency projects?

Out of that, almost NHAI-related project is -- it is around 42%, actually.

The next question is from the line of Saket Kapoor from Kapoor & Company.

Sir, firstly, you alluded to this INR 1,100 crore pipeline project. If you could just dwell of what has been the scope of [ this core ] and which segment it is this pipeline related to, oil and gas or water?

No, no. It is all drinking water supplies and sewage management.

And which state, sir, it is?

Telangana.

In Telangana?

Yes. [ Communication ] kind of project. We need to construct the water tank and the [ SPV ] and pipelines, and we have give the taps to the public.

So this fall tender Jal Jeevan Mission [indiscernible]?

Come again, sir?

It is like Jal Jeevan, but it is under [indiscernible] central government. It is a [indiscernible] same like you told Jal Jeevan only. We have to provide the drinking water to each house. This is basically scope.

There has lot been spoken about the river linking project also. What do you see things on ground, sir, in terms of this pace picking up and the scope companies like us would be garnering?

Definitely, this is -- we are expecting under the Modi 3.0, this river-linking project, they will take up this project because these term, they are more concentrating on railway and other sectors other than road what we have seen there. So definitely, river-linking project is there in Madhya Pradesh and Uttar Pradesh and now in even our area also like in Krishna and Kaveri also they are bringing, so their projects will come definitely. So we are expecting that once this project will come, we would be able to build that project.

Right, sir. And sir, you mentioned about your lackluster performance from the solar EPC and the railway part of the story. So can you delve further where are you finding the issues cropping up in terms of solar EPC and also work from railways? [indiscernible] you mentioned in your earlier remarks?

Yes. Because -- basically, the content for solar EPC is very, very thin margin [indiscernible] projects. So when we have seen that project to what it is because we want to diversify in the other sectors. But now we are seeing lot of visibility is there in even roads and other sectors such other estate projects like [indiscernible] in Tamil Nadu, Andhra Pradesh, Telangana and even in Karnataka. So that's why now we are not much focused on that sector because they are the same margin. And these are the project is there where we are very expert, so definitely we thought that lets concentrate on this project, NHAI and the state project and bagging actually most of the projects from these entities.

And sir, for H2, you are pointing towards lower turnover than what we did for H1. This is what you alluded to?

It's H2, it's lower than normal.

Okay. Sir, what should be tentatively closing in terms of our execution on a consol level? We did around INR 2,900 for the first half. And last year, it was INR 4,430.

But consol, there is a one-off of there actually in this quarter regarding our [indiscernible] project. That's why it is more. But it will be done -- you can say it will be in the same range of the last year only, except if you exclude the exceptional item.

Right, sir. And sir, of late, sir, there are also some tendering which happened for the Bharatmala project. Also, we are not an expertise there, but many -- we have seen road-developing companies also like DBL and all participated in that, too. What's the thought process on here? And we did not opt for it?

We have not seen that project, actually, as of now. So we cannot be able to comment on it. We have not seen that type of project.

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

Regarding on these claims, so all the money has been realized, cash has come?

All money is realized, yes.

So only INR 130 crores, which you said in this quarter will come like additional?

That is from our another project, actually. [indiscernible] So that will come in this Q2.

And just 1 last question on this Muzaffarpur Barauni project. So how much is the investment and loss funding and total outlook from our side and how much we have received overall?

Actually around INR 175 crores investment from other side actually, our side that we received intent. And additionally INR 140 crores we have received. So total around INR 317 crores we received from [indiscernible].

So this is in line with the termination payments, which generally happens in case of any change?

It is definitely -- it is against that because it is against the settlement of entire handing over the project and based on the settlement agreement, so this figure has arrived.

The next question is from the line of Saket Kapoor from Kapoor & Company.

Sir, for the AMRUT 2 scheme, can you give us some color how the pipeline looks like and the bid pipeline, specifically?

AMRUT 2 project, because this project was our pipeline project, that was there in AMRUT 2 scheme of the central government, so we have not seen the entire scheme of that, actually, but this project was coming from Telangana and it is our -- we are there from Telangana. So we thought that we will take this project, but we have not seen that pipeline from AMRUT 2 project actually. The pipeline will be there because it is there for pan India. But we are very focused in our part of the territory there. So you're not seeing that.

So for the state of Telangana and Karnataka and Tamil Nadu, do we see other bids being floated for these type of projections of -- which falls under the AMRUT scheme or the Jal Jeevan scheme? Do you find other projects also where we will participate?

We have seen only in the Telangana, where we have participated. Other state, we have not looked actually into.

And sir, out of the total revenue for the first half of INR 2,900, what should we exclude as the exceptional part? Because in other income, we have mentioned at INR 168 crores. So in the revenue also, we have booked some extraordinary income? Or is it only the other income part?

Only the revenue from operation also there for the 6 months, around INR 88 crores has been booked actually, revenue from the operation.

Okay. So we need to exclude [indiscernible]. That is what you were saying.

[ You have to attach the INR 950 also in consol level ]. If you are talking about the consol, then you have to exclude that [ INR 950 ] also.

Okay. So from INR 29 crores, INR 30 crores, we have to include INR 960 crores.

Yes. And plus [ INR 88 crores ].

Plus INR 88 crores. Okay. So that works up to around INR 1,800 crores, INR 1,800, INR 82 crores is the revenue profile?

You can work that out...

I can work that out. And we are looking to close the year again, closer to INR 4,000 crores on the basis of the core work that is left to be executed?

Right -- but on a stand-alone basis, definitely INR 4,000 crores, it's difficult. We may grow somewhere between INR 3,500 crores to INR 3,600 crores only.

INR 3,500 crores to INR 3,600 crores. And the margins will be maintained, sir, the way we have done H1?

We are trying -- because our guidance is always between 13% to 14%. We will try to -- definitely, we will achieve more than our guidance on it.

Okay. And sir, what are the ways to reward your investors since now you are in comfortable position, the cash balances are there and the project completion are there. And you are looking to diversify, but in a very proactive manner. So what should the investor community look forward from KNR management?

Definitely, whatever the cash is available because we have our future plan to invest in the HAM projects and BOT project. So we have to generally use our cash for the growth of the company. So that's why we have to give that good return to the investors by growing the company to the next level. So we are working towards that only. So that is the reward actually investor is going to get.

Okay. So we have to look forward in the way how the order pipeline worked out for the HAM and the BOT segment and how we participate. That is what we should be looking forward?

Yes, yes, yes, definitely.

Thank you very much. I will now hand the conference over to the management for closing comments.

Thank you all for joining us on this call. Please reach out to our Investor Relations Consultant, Strategic Growth Advisors or ask directly, should you have any further queries. We can now close the call. Thank you.

Thank you so much, sir. On behalf of KNR Constructions Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.