Larsen & Toubro Limited (LT.NS) Earnings Call Transcript & Summary

Thank you, [ Stanford ], and good day to all of you, ladies and gentlemen. This is P. Ramakrishnan. I have with me my colleague, Harish Barai, also who has joined this call. Firstly, a very warm welcome to all of you for the L&T Q3 9 Months FY '21 Earnings Call. The analyst presentation was uploaded on our website around an hour back. I hope you have had a chance to go through the numbers. This time around instead of going through the entire presentation, I will give you a brief overview, and after which we will proceed into questions and answers. Before I summarize the performance, a disclaimer. Essentially, this presentation and the discussions what we will have in this call would contain certain forward-looking statements concerning our business prospects and profitability, which are and would be subject to a number of risks and uncertainties and actual results could materially differ from those in such forward-looking statements. For the group, Q3 FY '21 was a welcome departure from H1 of the current financial year as most of the financial parameters of the group are evidencing return to pre-COVID levels. At an economic level, the pickup in high-frequency economic indicators for India, especially considering manufacturing index or power generation statistics or GST collections or even supply or cargo movements, it augurs very well and it appears that the country's GDP will grow in H2 of the current financial year as compared to the contraction that we witnessed in the first part of FY '21. In Q3 FY '21, we do see a strong sequential recovery. We registered a strong growth in order inflows in Q3, 76% Y-on-Y and around 1 lakh, 61% Q-on-Q on the back of some very prestigious and high order wins, most notably in the Infrastructure and the Hydrocarbon segment. Consequent to such wins, our order book at 3 lakh 31,000 crore, approximately, is also at a record high. Our revenues for the quarter Q3 of the current financial year have registered a sequential growth of 15%, largely aided by near-normal labor availability and a functioning -- and a functional supply chain. On a year-on-year basis, our Q3 revenues have marginally declined by 2%, primarily due to productivity challenges arising out of stringent safety protocols at sites. Our Q PAT, profit after tax, from continuing operations for Q3 FY '21 has registered more than 100% quarter-on-quarter growth and 4% on a Y-on-Y basis. Our cash flow situation in the current quarter is, again, an extension of very good collections on the back of H1 FY '21. A combination of enhanced borrowing programs at the center and states, along with the pickup in tax collections in Q3, has augured very well for us. As an example, or as a statistic, our gross collections for the group for the quarter Q3 was around INR 32,000 crores, against which the parent collections attributed to around INR 18,000 crores, which is a large part of our core business. For the 9 months, our absolute levels of net working capital has shown a marginal improvement, around INR 31,000 crore net, thanks to the steady current collections -- customer collections. Our entire operations for this 9-month period have been funded from customer collections, and we have not had to draw on the cash reserves on the balance sheet. Our net cash flow from operations for Q3 and 9 months of the current financial year are very robust. You can refer to the cash flow statement, which is there at the end of the presentation. Finally, net working capital to sales ratios appear although high because of the fall in revenues, although it is not a guidance from our end, but we will endeavor to maintain the same levels of net working capital in March '21 as existed the previous financial March 2020. Having mentioned that, let me also state here that the ask rate for collections in Q4 would be higher given the likely ramp-up of operations. Hopefully, a combination of the improvement in tax collections at the government level and the remaining program for Q4 should enable us to maintain our working capital at satisfactory levels. Coming to order inflows, as I said on the back of large domestic order wins in Infrastructure and Hydrocarbon, our order inflows for 9 months stand at INR 1,248 billion, marginally lower 3% compared to the 9 months of the previous year. We see total bottoms and prospects pipeline of around INR 2.65 trillion as at -- for -- as at December for Q4 FY '21, of which around INR 2.2 trillion is domestic and the balance international. Infrastructure prospects, both domestic and international, account for around INR 2.7 trillion, out of this total prospect pipeline of INR 2.65 trillion. It appears that the government has now turned to focus on new awards, which will boost economic recovery and generate further employment. The government is currently focusing on awards in key areas like Metro; RRTS; HSR, high-speed rail; roads and expressways; renewables; water; and as well as power transmission and distribution. Some comments on the order book. As I said earlier, out of a record order book at INR 3,311,000,000, as at December 31, the ratio of domestic to international in this order book is around 80-20. After domestic order book of INR 2,637,000,000, the split of the order book is as follows: central government projects, 12%; state government, 34%; PSUs 41%; and private, 15%. In challenging times like this, a large proportion of the orders from public space mitigates credit risk. Suffice to state here, out of this order book, almost around INR 90 billion is multilateral funded. The overall group performance, financial parameters are covered in the presentation along with summary explanations for the variation. I hope you have had a chance to go through the same. The 2 points which I would like to mention here is that the profit from discontinued operations net of tax in Q3 is an aggregate of: a, additional consideration net of contractual adjustments against sale of the electrical automation business to Schneider, which happened in the month of August; b, gains on divestment of our U.K.-based E&A, Electrical & Automation, segment that is the [ row up ] systems. With this, the L&T has completed the complete exit from the Electrical & Automation business. Some comments on the segment performance before I move on to the final part on outlook. Firstly is infrastructure. Q3 order inflows in this segment surpassed cumulative order flows in H1 FY '21. As you are aware, we secured some large prestigious domestic orders in this segment in Q3. As I mentioned earlier, we have a healthy prospect order pipeline for Q4 in the Infrastructure segment. And we remain optimistic on the ordering outlook in this segment in the near term. Coming to revenues, this segment recorded a smart sequential growth of revenue growth of 22% in current quarter Q3 on the back of workforce availability and supply chain normalization. However, on a Y-on-Y basis, the Q3 growth declined 7%, largely due to strict safety protocols to be followed at sites. However, through various automation initiatives and better workforce scheduling as well as work methods, hopefully, going ahead, we will return from the productivity hump, and at the same time, maintain our safety protocols. As you are aware, margins in the Infrastructure segment is a function of job mix and site productivity. As activity levels pick up, the margins will automatically improve as under-recoveries would get eliminated or reduced. Having said, there could be some quarter-on-quarter volatility in margins depending on job mix. The second segment, Power. Power has been a little muted in the 9 months of this financial year. There has been a lot of award deferments largely on account of the pandemic. However, this segment is largely impacted from a revenue perspective because of the large opening order book, and a couple of quarters of our deferments will not impact this segment from a revenue perspective. The revenue growth in Q3 and 9 months of the current financial year is largely due to the opening order book. However, margins is subdued as major part of the execution is yet to cross the margin recognition threshold. Heavy Engineering segment. This segment registered a reasonably robust order win in a challenging environment. And it is good to state here that around 60% of the order wins in Q3 of the current financial year is from exports. Better capacity utilization at workshops and the factories resulted in sequential revenue growth of 32% in the current Q3 and 1% growth on Y-on-Y basis. The Q3 margin, again, is reflective of job mix. If you recall, during Q2, the margins for this segment were depressed largely on account of a prudent share provision made towards a onetime settlement with an overseas client. Defense Engineering, multiple small orders replenished the order book. The recent policy governance of the government concerning this sector are very encouraging for the domestic industry. In fact, as we speak, around INR 28,000 crores of domestic projects have been cleared by the Defense Council. We are fairly excited about the future outlook, however, implementation may happen over the course of time. The final stages of execution of a large order drives revenue in the current quarter Q3 FY '21, revenues in Q3 having registered a sharp growth of 34% on quarter-on-quarter basis and 2% Y-on-Y. Margins, again, are reflective of job mix and stage of execution. Hydrocarbons, Hydrocarbon segment: Big domestic order wins in Q3 replenishes our order book. The improved activity levels at yards -- at our fabrication yards drive revenues in this current quarter. The Q3 margin contributed by a very efficient job mix and execution. Coming to Development Projects segment, this segment includes the Power Development business, which comprises of a 1,400-megawatt power plant, thermal coal-based power plant in Punjab and a 99-megawatt hydropower project. The hydropower project has been fully commissioned in the current quarter Q3 FY '21. And besides this, the power development business, it also includes -- the segment also includes the Hyderabad Metro operations. And it is important to note that the roads and the transmission line transitions are housed in IDPL, L&T IDPL, and it is consolidated at PAT level under the equity method as because it is a joint venture. The revenues in this segment for Q3 is largely contributed by Nabha Power, which is the thermal power plant in Punjab, which I stated earlier. The decline in Q3 revenue is attributed to lower front-load factor in Nabha, arising mainly because of lack of coal supply due to the Rail Roko agitation in Punjab, which affected the operations of the power gen of the plant for almost a month. The Metro margins are impacted by operating expenditure because of under-recovery due to low traffic in COVID times. The current traffic averaging around is 100,000 or at an absolute statistic level. But during weekdays, it has been almost -- operating days or weekdays, it is around 1 lakh 25,000 to 1 lakh 30,000 registered per day. Coming to IT and Technology Services segment, this segment comprises of 3 listed entities, namely LTI, Mindtree and LTTS. This segment has YTD -- on a YTD basis, this segment has largely been unimpacted because of COVID, as they have quickly migrated to work-from-anywhere kind of model and with increasing outsourcing of services, especially in the digital engineering space. Consequently, sequential as well as Y-on-Y revenues for this segment continues to grow. Margin improvements is aided by improved utilization, better favorable onshore/offshore mix, and improved operational efficiency. The other segment comprises realty, construction mining equipment, rubber processing machinery, industrial valves and smart world and communications. The strong revenue growth in Q3 is led by realty, smart world and communications and valves. The higher Q3 of the current year margin is primarily due to the sale of a commercial space by the Realty segment. Coming to the last one, Financial Services segment, the Q3 of the current financial year revolved around significant disbursements in rural and infra, robust collections, improved net interest margin, and maintenance of adequate liquidity on the balance sheet. The Q3 PAT degrowth is largely due to enhanced credit cost provisions. The business continues to pursue the strategy on retailization of its portfolio, a very prudent ALM and improving asset quality and increasing diversity of funding sources with the overarching aim of remaining in the top quartile of ROE. Coming to the environment and outlook, this financial year can be best described as a tale of 2 halves. The first half witnessed lockdowns due to the spread of the COVID-19 virus, falling tax collections due to economic contraction, partly offset by government fiscal and RBI monetary easing. And the second half is about growth coming back as evidenced by various high-frequency economic indicators, improved tax collections, start of the COVID-19 vaccination program and continued liquidity and fiscal support from the government and Reserve Bank of India. Reflecting on the 9-month performance of the current year, our E&C performance has been fairly robust on order inflows and cash flows, primarily due to government and RBI proactiveness, to create ordering opportunities and adequate available liquidity, whereas on the revenue and margins, we were impacted due to lack of labor availability and supply chain bottlenecks in Q1, and in Q3 due to lower productivity arising out of strict safety protocols at the site level. Although this year we have refrained from giving any sort of guidance on the E&C business, we will try and retrieve as much growth as possible in Q4 FY '21 on the various financial parameters. Our services business has largely been unimpacted by a means of our IT&TS segment. They have been largely unimpacted due to COVID, and they will continue to pursue profitable growth opportunities. Once normalcy returns, we will pursue our divestments of the concessions portfolio and address the refinancing part of the Hyderabad Metro. And hopefully, I think that should get resolved with the passage of time. With the pandemic yet lingering and the aftereffects of that still continuing, the business pursuits need to factor additional risks warranted to ensure responsible contact towards the new emerging opportunities and growth prospects. Against such a backdrop, the group will continue to focus with cautious optimism on pursuing large project wins, smart execution of its reasonably large order book and continue to preserve liquidity and optimum use of capital and other resources. Thank you, ladies and gentlemen, for efficient hearing. We will now proceed to take question and answers.

[Operator Instructions] The first question is from the line of Renjith Sivaram from ICICI Securities.

Yes. And congrats on good margins and order intake as well the overall environment. Sir, if you can just show some more clarity on that real estate transaction because that has been a good amount. If you can provide some more granularity on that, it would be helpful.

So Renjith, as part of the Realty business is a function of either leasing or outright sale of properties. And in every quarter, whenever there is a sale of space, be it residential or commercial, you will see a bump-up in revenue and margins in that quarter, but it's part of the business itself.

Okay. So there is no one-off in that margins of Realty that what -- we should understand?

As I said, that when the real estate business, whenever there is a transfer of property in terms of be it residential or commercial, in that quarter, you will find a jump in revenues and consequently, profitability. But in the specific response to your question, the impact of this would be around the range of INR 340-odd crores on our PAT level.

Okay. Okay, sir. And sir, if you can throw some more light on the infrastructure margin. This quarter was better than the last 2 quarters. But on a sustainable basis, what kind of trend do you see in infrastructure because that was one segment where margins have been under pressure continuously for the last year also. So how do you see that overall margins as your infrastructure panning out given the mix of jobs that we have?

So Renjith, I think we have maintained in this particular year that we will not -- we will refrain from giving out revenue and a margin guidance. Having said this, if you see on quarter-on-quarter basis, the infrastructure margins have stabilized, I would say. This quarter, we have done around 6.2% as compared to the previous -- corresponding quarter of the previous year, which was roughly around 6.1%. We do have, I would say, a more better order mix in terms of having secured some large orders in this segment. A combination of smart cost-saving and better execution will hopefully improve the margins. But it is a complete, I would say, a resultant of how the overall job mix across the quarter pans out. And we do believe that quarter-on-quarter with almost near normalcy coming in, infrastructure revenues should hopefully go up. And to that extent, the under-recovery of overheads will happen, and hopefully, margins should go up. But as I said, margins in all the entire core business is a function of execution and job mix and proportion of jobs going into their respective valuation thresholds.

Okay, sir. And so if I can ask one more like leading to working capital, which is that element where you are seeing major improvement, because we see that the order intake has been a huge pickup. So advances would have increased a lot. So we would have ideally expected a much more better improvement in the working capital. So is it that better? Or is it the payables that is still hurting us on the working capital front?

Okay. So let me tell you that our actually net working capital, which is maintained at December -- as of even March 20 levels, is largely because of a drop in the gross working capital, which is mainly due to improved collections from customers. Having said that, it is also important as a company as we get collections from our customers, which has been quite robust in this COVID year, we always ensure that our supply chain doesn't get affected. So to that extent, we have also been quite supportive of all our supply chain vendors and ensuring that they get paid so that they are in a position to ensure supplies are unaffected to our sites.

Okay. And regarding the advances from these orders which we have received, wouldn't that have a support for the working capital? Or is that for year 2?

In Q3, one important advance which we secured was the advance of almost around INR 450 crores against the HSR, high-speed rail, order.

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

So much questions on a very excellent quarter. Sir, my first question is order inflow. You have announced order inflow of near INR 630 billion versus the order inflow announced that the exchange is still that of INR 760 billion. This is a marked departure from the earlier quarters where the announced order inflow was higher. Is it something that we [ will ] clear for Q4? And secondly, is it possible to tell us how much is -- what is the L1 order inflow? How much worth of the projects were the L1?

I would not like to comment on the second question, Mohit, because -- just because in the domain, we may have been announced as L1. But as a company, we do take into order inflows only after the due process of getting a proper LOA or an EPRA award is done. So I would not like to comment on that part. And as far as the first question is concerned, kindly note that when you are asking me about a number of December '19 vis-a-vis December '20, it is quite possible that some announcements which have happened in the subsequent quarter would relate to orders for which the letter of awards was given in the previous quarter itself.

Okay. Understood. And given the fact that the order inflow from the Middle East or international order inflow for the infrastructure and the other segment has been very pretty slow, how do you see the panning out over the next 12 to 18 months? Are we seeing more order inquiry, more tenders, do we expect more tenders to get finalized? I'm talking about a larger horizon of 12 to 18 months, not for the Q4.

Mohit, as we speak, our order prospects, even, as I just now told, is largely from the domestic space, okay? As far as opportunities outside of India is concerned, we do see opportunities in the range of almost, I would say, INR 40,000 crore worth of prospects, but they are largely coming from areas like water, renewables, power transmission and distribution. We don't see any major prospects per se in the other segments where we cater to in the Middle East area.

So asking about the prospect from the next -- from the time line of around 12 to 18 months, are you seeing any traction in Middle East, in Hydrocarbon, especially?

Considering the fact that the crude prices still continue to have -- as per the forecast, the crude prices are expected to be, I would say, very moderate in the current calendar, CY '21. So it would not be proper of us to really forecast as to what kind of increased opportunities may happen. So we do see, if you really ask me from Hydrocarbon's perspective, the areas where we see more traction happen is more on the mid- and downstream and largely, in the area of petrochemicals. Maybe we would be in a better position to give a perspective on this segment from Middle East maybe when we close the current financial year.

And sir, last question, sir, how much cash were infused in L&T Hydrocarbon in Q -- I'm sorry, L&T and Metro Hyderabad Metro in Q3?

In Hyderabad Metro, we have infused around INR 500 crores during the quarter.

And is there any plan to increase this infusion in Q4?

So if you recall, in the September call, when we had the earnings call while we disclosed our H1 results, we clearly communicated that we have set aside a sum of around INR 2,000 crores towards funding into Hyderabad Metro. And I guess out of that, we have advanced INR 500 crores in Q3. So based on the requirements, we will continue to fund the Metro operations till we reach this threshold. And hopefully, by then, we should be in a better position to have refinanced or restructured a major part of the balance sheet of this particular operation.

The next question is from the line of Puneet Gulati from HSBC.

Congratulations on great numbers. My question relates to the work that was done in Q1 and Q2. And obviously, there were difficulties in [ our LT agent work ]. Is there any discussion with your customers about how that loss can be -- or that's been set aside?

You are referring to the Q1 and Q2 claims regarding the COVID interruptions?

Yes.

Okay. So it is -- as you are aware that most of our customers are all repeat customers, okay? And we are not into pursuing through protracted negotiations. We would rather adopt a conciliation approach and ensure that we are able to manage a sort of a win-win situation. And we do expect, and as you know that most of these cases where our customers are government parties, and immediate settlements may not be possible. Hopefully, in the next 3 to 4 quarters, we should expect some of these claims towards COVID, which we have already expensed out in the P&L, should materialize, but it is too early for us to comment a number on that.

Yes. But there is a positive movement in that direction.

100%, yes. But as I said, we are -- as we are pursuing all -- because we are also executing the project, not only one project, but multiple projects with the same client. So we have to ensure that we are able to create, as I said, some sort of a win-win situation. But clients accept the fact that we have incurred expenses. They are completely aware of it. But as you know that the government process on such clearances does take some time. Hopefully, I think in the next 3 to 4 quarters, we should achieve or witness progress.

Okay. That's great. My second question relates to your current investments, cash and equivalents. That number seems to be sitting quite high in last quarter as well and continue to remain high at INR 450 billion. Any thoughts on why you're keeping so much of cash?

We did talk about, again, in H1, we see the total around INR 45,000 crores, which we talk as surplus investments, okay? Out of that, our financial services has around INR 7,000 crores, okay? And then our IT&TS subsidiaries, they have another around INR 7,000-odd crores, okay? And the rest is lying in the core business, which is largely in the parent. And I did talk about -- I mean we have also discussed after how we plan to utilize when we closed H1 results, having set some amounts for Hyderabad Metro for infusion as part of our share into L&T Finance and also use some of the cash proceeds to retire the debt. As we speak, in month of Q3 itself, we have reduced debt around almost INR 5,000-odd crores. So a combination of subscription to defined commitments like Hyderabad Metro, L&T Finance rights issue and also reduction of debt, hopefully should bring down our overall investable surplus as we close the financial year.

The next question is from the line of Sumit Kishore from Axis Capital.

You had mentioned that the order prospect base for H2 at the end of September quarter is about INR 6 trillion. And that figure has now come down to about INR 2.6 trillion. And we understood that the high-speed rail contracts are not part of the prospect base. So would you say that there has been certain slippage of order prospects that we had seen for the next financial year?

So it is like this, that when we gave the prospects as of September, that was for the balance 6 months of the current financial year. And when I gave a number of INR 2.65 trillion for -- it is largely what we think is the animus we have in terms of what orders would likely come up for tendering or bid or getting awarded. A combination, as you see, the number of INR 6 trillion in September, some of that would have been deferred to the subsequent financial year, the next financial year, and there is a good possibility that some of those got put out, tendered, and maybe there are others who would have bought those projects. So it's a number which is dynamic. And as I said in the early start of my call, that this is a completely bottoms-up approach, starting from each and every BU under each every segment. And that is how it is done. So INR 2.65 trillion is a number which we are working on, which should see some awards happening or tenders happening and crystallizing, hopefully in our favor, and that is only for Q4 of the current financial year.

Sure. Could you also talk about the impact of commodity prices on margins, especially as the commodity prices have gone up, and qualitatively, how you're looking at the impact on business in 3Q and going forward?

See the impact of, I would say, the steel price is in the range of around 9% and 6% on cement, which are the 2 important commodities we have in terms of procurements. So that has happened whatever -- those prices have happened, that has been factored, while we have reported the margins. Having said this, we do believe that these prices are unsustainable, and as you know, the government itself has made out some public pronouncements that this is completely out of whack. And we do expect that the prices to stabilize in the near term. And as you are aware, 50% of our contracts are on a cost-plus basis. So wherever, because of this inflation buffers, we'll ensure that some part of this gets compensated in the future.

Sure. And finally, on productivity levels, where do you see them now and are we back to -- when do we get back to normal? What is the last vestige of impact of productivity on business -- core business?

Okay. So the productivity challenges, especially at site level, is most visible in the infrastructure segment. And as I stated, that continued to have some impact in Q3. But as you see from the numbers, there has been a vast improvement in terms of the overall progress of execution, what we have achieved, and that is reflected in the numbers for Q3. We do expect that -- I mean in the period that there's pandemic, there is no relapse or no resurgence again, the productivity levels only to improve. And hopefully, with the vaccination efforts which should hopefully cover a large part of the population in the next 2 quarters, we do expect that the productivity should come back to normalized. But it would be difficult for us to say whether it will happen in Q4 or Q1 of the next financial year.

The next question is from the line of Ankur Sharma from HDFC Life Insurance.

A couple of questions. One, when you look at the competition across Infra segment, Hydrocarbons, both where you've won sizable orders in Q3, would you want to believe that competition has also gone down in terms of the number of players participating? Or is that a little more aggressive in terms of winning orders?

Okay. So first thing, let me tell you that when we bid for any tender or any project, the company has and continues to review each project on a stand-alone basis. A complete reassessment of that project happens in terms of pricing and other technical conditions. So I don't think we have compromised in any form to get projects where margins are significantly or severely compromised. Having said this, it is also important to note that from an India perspective, I do believe that we are reasonably well-placed in terms of our ability to contract large orders, which has a lot of complexity, be it on engineering, on execution. To that extent, I do believe that we have an edge over the competition. But as you are aware that there are really various projects which have been tendered out in Q3 where we have not been placed in L1. So it's a combination of, I would say, our ability or technical complexity being more, or the size being more. We do have the competency in both in financial and engineering part to bid successfully for these projects. So that's the way I will probably answer to your question.

But in your view, you don't believe that the number of players participating would have also gone down meaningfully, and therefore, our win rates are so much better?

If I have to give a statistic now for any job which is between, say, INR 500 to INR 2,000, we do witness a big competition of almost 8 to 10 parties. But the moment it comes to very large jobs, well, as I say, a large job, maybe around INR 2,000 crores to INR 2,500 crores above, then depending on the sector which we compete, the list comes down, maybe around 4 or 5. And there, the technical evaluation is one of the very important criteria because the client actually goes into the price bid process.

Okay. That's good to know. Sir, secondly, on the Hydrocarbon margins during this quarter, you had that 12% odd number. Are there any claims or any provision write-backs sitting over there? Or is it just a function of execution of better margin projects?

In this quarter Q3, it is primarily on account of efficient execution.

Okay. Understood. Okay. Thirdly, sir, on the defense pipeline, also in your comments, you did talk about this INR 28,000-odd crore orders -- not orders, but the approvals by the Defense Council. So I'm just wondering, how much are we left with the Vadodara order? And any update on the follow-on on that? Because I think there were some talks on getting some more of the Vadodara orders when the first one gets over.

Okay. What I mentioned during the early part of the call was the government coming out through their Council saying that almost INR 28,000 crores of opportunities will be put on to the domestic bid. And that is a very, very positive development. But as you are aware, the ordering in defense usually is a very patchy and sketchy. But when it comes, it usually comes with a large order value. As we speak now, roughly around, I would say, INR 3,500-odd crores are the prospects which we are pursuing, and we do believe that we are quite well-placed to take care of these opportunities. And this number, what I said is for the current quarter.

Fair. And on the Vadodara [ chances ], are they over? Or is there something left on this?

Roughly 100 supplies, we have almost delivered still now, 91. And it was up to -- in Q3, we did 13. And prior to that was around -- in total around 87 has been delivered.

Fair. Okay. And just one last one from my side, sir. On the debt levels on the balance sheet, so when I look at the numbers you've given, right, I believe that INR 33,000, which relates to the others on your balance sheet in the presentation would be for largely be stand-alone debt, which I believe, historically, used to be in the INR 10,000 crores, INR 12,000, INR 15,000 crore number. So given the fact that we've done a brilliant job on the working capital side, we obviously have lifted infusions into our subsidiaries, if any. So when do we see these debt levels come back to normalized levels?

So as you are aware that prior to the -- in the first quarter of this financial year, as a preemptive measure, the parent actually took into a market borrowing of almost INR 12,000 crores. And that's one of the main reasons where the debt level shot up. And after the E&C divestments, once we have got the proceeds, we have already started pruning the debt levels. And hopefully in the times to come, in the next 2 to 3 quarters, we do expect that the stand-alone debt levels to come down from where it is today. Setting aside, wherever there is no possibility of retirement prior to its maturity, otherwise, we don't expect any sort of additional incremental debt is absolutely ruled out to be at the parent level. We will pursue opportunities as and when debt can be redeemed as early as possible and bring down. Today, our net debt-to-equity ratio at the parent level is around 0.1. So the expectation is we will probably, post-March, it should become almost negligible.

The next question is from the line of Renu Baid from IIFL.

A few questions from my side. First, on the execution side, I remember that when we spoke last in November, December, the broad expectations were that you're still running lower than last year's utilization levels. And probably somewhere by Jan also, we were expecting to come back to previous year's level. And your comments, which mentioned that I'm sure whether during 4Q or by the end of 4Q, you would be back to previous year's level. So does that mean that the overall ramp-up that you were anticipating a couple of months back, the -- or the level of productivity improvement has been relatively softer than what we anticipated, and larger projects will take time to scale up in terms of revenues for the core Infra portfolio?

Okay. So Renu, it is like this, that as you observed, in all the segments, on a quarter-on-quarter basis, our revenues have actually gone up. And that's why at an overall level, we are talking 15%. But if you go segment-wise as well, that the improvement in revenue is largely because of, I would say, more larger execution given the fact that our mobilization at site levels have improved. Q4, as I said, given the ramp rate…

Sequentially, usually, 2Q is a softer quarter from an execution perspective, and it was also impacted by COVID. So anyway, 3Q always is higher than 2Q in terms of execution. So essentially, we're trying to assess that to come back to normalized levels, even if you look at Feb, March, I mean, are we seeing inherent bottlenecks to continue at sites which might delay this?

See, as I said earlier, as far as supply chain is concerned, any supplies which are relating movements within the country, the bottleneck seems to have largely been taken out. There are still some restrictions as far as imports or cross-border transactions are concerned. We do think -- but that also has significantly improved. We do expect that Q4 as far as Infrastructure segment and other E&C segments are concerned, that there are no further restrictions from a supply perspective. But as I said earlier, that the effects of the COVID situation is still -- although it has vastly improved as we speak for the Q3 as compared to what it was in the situation in Q2, but it would be conservative and prudent of us not to specifically target a number, and that's the reason that we are not in a -- we are not -- refrain from giving any sort of revenue guidance as far as this year is concerned. But one comforting factor is that as we speak, the workforce is almost at 100% of the requirements of almost 2 lakh 65,000 people across the 900-odd sites we have in this country. And we do expect that this will enable us to demonstrate better growth prospects in Q4. And the target is to ensure that whether we will be able to manage the Q4 of previous levels, in fact, we need to do far more -- far more than that.

Yes. The base is lower for last year, I mean.

Yes. So we will try our level best, but I would request that I would not be in a position to provide you a guidance as to how Q4 will actually plan to be. The only thing is we do see that -- the return to normalcy, as we speak, into Q4 as well.

Sure. The second question is if you look at the stand-alone financials, and that is also partially reflected in the consol financials, there is a sharp jump in other income. So any particular drivers for the sharp rise on a sequential basis as well? Are there any one-offs, either dividend or otherwise? If you can highlight that.

So Renu, the other income in the stand-alone financials is mainly on account of higher investable surplus, as you are aware, the EIC divestment proceeds. And I would attribute a far more better treasury management, which has happened, that has enabled us to have a reasonably large other income in the group results for this quarter.

Sure. Sir, can you also share the headline on PBT/PAT numbers for Hyderabad Metro as well, specifically in terms of -- for the quarter or 9 months?

Okay. So I will put across like the revenues for Hyderabad Metro for Q3 was in the order of around INR 50 crores, of which INR 30-odd crores arises out of passenger ridership. The operating expense of the Hyderabad Metro, as it stands now, is roughly around order of around INR 50 crores to INR 60 crores. And the depreciation charge is in the range of INR 75-odd crores, and interest for each quarterly is around -- in the nature of INR 365-odd crores. So I've given you a rough estimate of the entire operations of HMR.

And lastly, would it be possible for you -- you did mention that your inflation in both steel, cement have had 9% and 6% impact, and part of this was also seen in 3Q financials. Would it be possible for you to broadly quantify in terms of basis point the impact on the margins because of these super normal rising commodities that you have seen on a sequential basis?

So Renu -- okay. It's a very good question you have. But my first answer is that I don't have the ready answer to answer to your question. The only thing I can articulate is to the extent of jobs where we don't have a cost pass-through, to that extent, whatever procurements have happened at this inflated crisis have been obviously reflected into the margins that has got reported.

The next question is from the line of Venugopal Garre from Bernstein.

Just a few small questions. Firstly, on the real estate side of things, there seems to be some optimism brewing in the market. I just wanted to understand 2 things. One is, is this reflecting in any way in positivity for you in terms of sales in your existing projects? And is that creating any potential new advances that you could share? And secondly, at this juncture in the order backlog, what is probably the exposure you have to real estate construction for others, more in terms of, let's say, the residential side? And is there any faster movement happening out there? Could this be another area of positive strength?

So Venugopal, I guess you have asked me 2 questions. One is on our realty business. And the other one is in our contracting business, if I understood you right. Correct?

That's correct, yes. Two distinct questions, yes.

Yes. So coming to -- if I say about realty business, the total number of units, what we have as an overall plan as far as whatever developments we are doing across the country, the number of residential units, I sum it up at around 5,600. Against that, around 2,600 have already been sold, which means we have already booked the revenue, okay, sold and transferred. Then balance, 3,000. Again, order of magnitude, around 1,900 has been contracted to be sold. So that means as and when you hand -- we hand over, we will accrue the revenue. And we have an unsold inventory of around 1,100-odd residential units. But our response to the second phase in our Navi Mumbai property and also Phase 2 or 3 in our Bangalore property has been quite favorable. And we do expect -- there has been -- I would say in the Q3, the residential real estate in terms of especially the mid-ticket, not the elite or the high-end stuff, but more on the midsize, that is the classic 2 BHK, 3 BHK segment, has seen an uptick. And we do believe that it will continue to be favorable in the next 2 or 3 quarters. Coming to the other part of the business as far as contracting opportunities in real estate are concerned, we do see mass housing opportunities in a more pronounced form and other public space projects like hospitals, data centers and so on. As far as hospitals are concerned, we have seen some orders coming from state-owned operations, setting up hospitals. So we do expect a large uptick onto this area, especially on the health sector, on the data centers or data -- concerning the IT&TS space, and the low-cost residential housing. I hope I answered…

Sorry, in terms of the projects that you have, what is the broad exposure today in the order book for the real estate in terms of quantum?

So in the real estate space, our overall exposure is in the range of, I would say, around INR 45,000 crores. And most of them are -- a large part of them are under execution. We don't have any major -- I would say, major, I would say, nonmoving order barring for maybe the Navi Mumbai Airport. That is nonmoving. But otherwise, a major part of this entire real estate part is a moving order book, I would say, executionable order book as we speak.

Okay. Got it. My second very quick question is I just want to understand is that there seems to be a fairly good acceleration in the market in terms of order inflows. I also wanted to know that, at the same time, is there any quicker pace of, let's say, site access that has been given to you for the orders that have been awarded? Or is it like the usual time line? So just wanted to see how quick is the government trying to push things. Is it just about announcing orders and selecting the vendor? Or is it more also about on the ground where things are moving faster?

Okay. So most of the orders that we have secured in the current year, for 9 months, are all orders where a large part of the financing has been secured, number one. And number two is, especially the large projects, whatever we have secured, I would say, high-speed rail and all, our understanding is there are no significant write-off restrictions in terms of land or site availability.

The next question is from the line of Apoorva Bahadur from Jefferies.

Sir, just wanted to understand, you gave a pipeline of INR 2.65 trillion for 4Q, of which INR 2.2 trillion was domestic. So if you could share the same number for last year, if that is possible. And also, how much is the Infra pipeline, if you released that number?

So last year, which means you are referring to December '19 quarter, right?

Yes, sir.

So that was in the range of around 2 lakhs 90,000-odd crores, total, okay, order prospects for Q4 of FY '20.

Got it. Got it.

And I don't have a -- sorry, I don't have a breakup of that in Infrastructure right now.

Okay. Sir, for this year, what's the infrastructure fee? I think 2.73?

Infrastructure is around 80%, 2 lakhs 20,000-odd crores.

Okay. Got it. Sir, secondly, I think you mentioned on the Hyderabad Metro refinancing, so that is being pursued but closure is probably some time away once the normalcy resumes? And so how far do you see it?

See, discussions are progressing with all the other stakeholders, especially the government and also our lenders. As I stated -- as we stated in the September call, given the size of the project and the complexity, it would be -- it would take some time. Our talks have been -- with all the stakeholders as we have progressed during Q3 has been positive. But I do think that it could take some time before we can come to a clear solution to this. But I do believe, hopefully, by March '21 or maybe first quarter of the next financial year, we should see substantive progress in terms of how we have progressed on the entire refinancing of this particular project.

Okay. Sir, if I may just ask one more question and that is, could you share the slow-moving orders in the order book, the overall number?

I will tell you that as far as the order book of 3 lakh 31,000 is concerned, the amount of orders which are what we call as slow-moving is minuscule and negligible.

The next question is from the line of Sumit Jain from ASK Investment Managers.

Our compliments on good set of numbers, PR and team. A few details, if you can just note them down. The net working capital for the core business that is standalone plus Hydrocarbons. The ROE ex of the E&A sales, we have spoken about Uttaranchal Hydropower PPP being signed. Any progress there? Progress on exit from Nabha? If you can give me Hyderabad Metro's absolute debt and equity numbers. And from the numbers of the P&L that you just explained, Hyderabad Metro, which means that -- and correct me if we are wrong on this, it's INR 375 crores of quarterly cash [ refund ]? Yes, that's about it.

Okay. So you asked me almost 4, 5 questions. So let me put it. As far as cash operating expense of Hyderabad Metro is concerned, I talked about interest at 365. And maybe -- I mean, shortfall in revenue vis-a-vis OpEx, maybe around 10. So number of 375 is what you can consider the current levels of ridership, okay? Now coming to Uttaranchal, the hydropower project has been fully commissioned. We are discussing with the state government to [hire for] a long-term PPA. We have not done it as of December. But since the plant is commissioned, we are -- started selling power through the merchant power, the short-term PPAs, and that's how the operations of the company has tracked. As far as sale of Nabha Power is concerned, we are pursuing, but we have not yet sort of concluded in any definitive form in terms of identifying a buyer and coming out with a proper sale agreement, so that I guess it should take some more time because today, currently, thermal coal generation is not in the best of times in terms of valuation perspective. But we are following up very, very closely to achieve the desired result of exiting Nabha Power, and hopefully after some time, even Uttaranchal as well, as a clear strategy in terms of moving out of the -- divesting the assets in the power development business. The core business working capital is roughly in the range of, I would say, out of INR 35,000 crores, around INR 22,000-odd crores. And if I have to take out the EIC gain from the PAT of the current year, then the return on equity would be around 10.3%.

Hyderabad Metro debt equity absolute numbers?

That could be in the range of INR 14,000-odd crores, and equity would be around INR 2,500 crores.

The margins, EBITDA margins that you report in the slides, segment-wise, these are core operating margins without apportioned other income, right?

Yes. Where our other income is reflected, it's reflected in the corporate segment.

Okay. And one last question is on the sense of at the PAT level because you give corporate separately, IT business will be contributing to how much in L&T today at the PAT level?

I think that is mentioned at the last part of our analyst presentation. One second.

Which is what I was referring to. But there is a large corporate item. So it is difficult to figure out post EBIT -- post EBITDA.

So let me summarize that for you. If you see that -- one second. Yes, Slide #29, right?

Yes.

Okay. So we have -- IT&TS is the PAT that flows directly from those companies, okay? Similarly, our financial services also flows largely from -- there are no adjustments at the L&T consolidation, largely coming from the L&T consolidation of L&T Finance Holdings group, okay? And development projects is, again, a combination of Hyderabad Metro and Nabha, that is our power development business. So the rest of what we call is a core business, that you see that's in the first column as excluding services, and -- whereas the interest and the [ past part ] is residing in corporate.

Okay. I will take this offline, maybe.

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

So you did say that about 50% of the contracts have some sort of price variation clause. Were you referring to the domestic order book or the overall order book?

Overall.

Okay. Of the overall order book, about 50%. So that would include some international orders also which has the price variation? Because the general understanding was that international orders are fixed-price contracts. That's why I'm asking this.

Yes, yes. So there -- when I talk about 50% fixed-price contract, it's comprising the international order book as well. But in the international orders, the large part of orders is almost fixed-price contracts. But there are certain international orders where we have especially commodity price variations, but that proportion is less as we compare it to domestic order book.

Sure. So it would be a small proportion there, right. Sir, I just want to ask, I mean, it's not about this one particular bid as such, but there is one bid for this tunneling contract where we were below the authority costs. I understand you did say that you have certain competency, a certain edge against the competitors in complex projects. But what would be the sort of thought process or rationale in a bid which is below the authority cost to see? I mean what is that goes into that bid? What kind of savings we think we can manage in some of these? And I'm not asking specifics about this one contract, but in general, whenever that situation happens. If you can just talk a bit about it.

See, you are taking up a one-off situation where possibly maybe what we quoted is below the -- what the client's overall cost parameters is. But as I said earlier during the call, that each and every project is evaluated on a stand-alone basis from a pricing and engineering perspective. And when we build up the cost estimate, that is based on whatever cost and likely procurement prices we will have for either the materials or the various machinery that we need to procure for executing as part of the overall supply order. So -- but there have been a lot of cases, and most of the cases, some of these estimates could be dated. And what we have quoted is actually many times more than what you see customers' own estimate. So it will not be proper of us to conclude that way, that if we have bid at a lower than what the client is estimating, is there something going wrong or -- in terms of our pricing. As I said, each and every bid is taken into account. The pricing is done based on its own merits in terms of both technical and commercial basis.

Sure. Sir, just coming back on the margin part, you did say that the Q3 margins are reflective of the increase that we have seen in steel and cement. So is there -- I mean from a perspective of cost to completion estimate, would we expect -- I mean do you think you can anticipate any negative surprise in Q4 from a cost to completion point of view, where we assess that probably because of the input prices going up, our margins need to be marked down? Or do you think that, that has been corrected then as we see the Q3 results and there is no cost to completion assessment revision need to be done in Q4?

Ashish, see, in terms of -- when we do projects business every quarter, when we report revenues and margins, it is just not the progress of the job as far as that quarter is concerned. We also have to reevaluate the overall cost to complete the job. And based on that, the site progress or the project progress and the margin is determined, okay? So while we have closed the books for December, it does factor into account the overall cost to complete the job. And that will actually factor any changes into the price parameters for the remaining portion of the job. So having said this, that in terms of whether we do see any sort of one-offs coming in Q4, it would not be proper of me to comment at this juncture because one-off elements do come as a surprise based on the progress of job in a particular quarter when we are proceeding on a particular project. And then in this next quarter, we do see when we go into the next phase of the project, we could have some, I would say, geological or site-level surprises either way, positive or negative. So based on that, we need to reassess and recompute the margins and the revenue as the project progresses.

Sure, sir. I appreciate that. The only thing that I wanted to check is that the increase which we have seen up to 31st of December in the steel, cement prices or, let's say, diesel prices, whether that has been accounted in the numbers as far as the December quarter is concerned from a cost to completion of the projects point of view. That's all what I -- of course, many surprises can come.

I did refer that when we take the cost for the quarter, that also is blended into cost for the portion which is to be completed. But that has all been taken at contracted rates. And if orders have not been placed for those materials where we see a price increase, that also gets built into the cost to complete.

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

Congratulations on good set of numbers. My question was you did mention about the Hyderabad Metro refinancing maybe in a couple of quarters' time, first half of next year. We are incurring almost INR 500 crores of cash burn. So you did mention that. So how -- and at the debt of 14,000, about INR 1,450 crores is interest cost of about 10%. So what is your sense on -- if you can give some sense on what could be -- after the refinancing, what could be interest cost, how much can it come down and whether we'll be able to achieve breakeven levels, and there won't be an equity requirement to be fund -- any shortfall to be funded from the L&T balance?

So Parikshit, there are 2 parts to your question. One is the Metro traffic, which is averaging out to roughly around 100,000 ridership on a monthly average basis. And during the week there, it touches around 125 to 130 per day. I think the passenger threshold of what we call as a satisfactory operation in terms of metro ridership, that would be a number what we have already seen in last year of around 300,000 to 400,000 ridership. I guess from a business perspective, that's the first threshold, which we need to witness. And hopefully, with all the vaccination being successful and most of the companies in Hyderabad telling their employees to resume work from office because a major part of the metro network also covers the IT-intensive zones -- I mean most of the IT companies still that work from home continues. To that extent, the traffic is affected. But the target to what we believe is something which is -- which we believe is coming to a number which is -- enables us to show a profit on -- as far as operating cost is concerned, that should be in the range of 300,000 to 400,000 per day. So I guess, maybe it will take some more time. The second part, since the project has, I would say, a large outlay in terms of the overall project value and there is a significant amount of equity and debt, we do expect that it requires, I would say, combined efforts of the concessionaire that is the Telangana government, the lenders and L&T. So such kind of discussions, we don't expect to get closed out in 1 or 2 quarters. So -- but as I said earlier, that we have achieved some, I would say, positive progress but not yet conclusive. We do expect, hopefully, by March or next quarter, we should witness some progress on the refinancing part. But it is still too early days for us to commit to any sort of -- any sort of a clear path ahead. Having said this, one of the reasons we have set aside INR 2,000-odd crores for Hyderabad Metro is precisely to ensure that pending the restructuring of the overall balance sheet, at least it is very important for L&T as a responsible investor, as a responsible developer to demonstrate to the stakeholders that despite the company's operations being affected, we still have reserved some money to that. Hopefully, I guess with the money having set aside, we do expect some amount of resolution soon. But I guess time is of essence. And hopefully, in the next 1 or 2 quarters, I should be in a position to communicate, let's say, constructive progress. That's the way I put it.

Okay. So you said that about INR 14,000 crores is debt and INR 2,500 crores is equity. So that is about INR 16,500 crores. So what is the total capitalized cost of this project?

I think the metro operations is around 16,000. Okay. 16,000, yes. Metro operations is 16,000. We have not done much on the tariff to Transit Oriented Development. I guess we have around 18.5 million square feet of development that we can do. But against that, what we have done is only around 1.2.

So I was referring that if you do cost overruns part, so which you have funded for, so the 16,500 includes the cost overrun?

Yes, yes, yes. Include -- we don't expect any increase in the metro cost, okay? Whatever costs will come in the project will be only towards Transit Oriented Development.

Okay. The other question was on the mobilization advance. You did touch upon that INR 450 crores you would have received for the high-speed rail. So are these advances interest-bearing? Or these are interest-free operation advance?

There are interest-free advances, and I think there is another installment of a similar amount coming this quarter.

Okay. And one more question was on the AP receivables. If you remember, I think mid-2019, these orders were canceled on the -- mid-2020, sorry, all these orders were canceled by the government. So have you received any money from them, pending receivables? So if you can update on this detail, how much is the due still pending and how much you recovered?

So there has been some progress there. It is not that we have not been able to collect, but collection is coming in at trickle, okay? So I don't see any major improvement in the collections. But having said this, we are actively discussing with the government to resolve this matter. And adequately, we have done with the ECL provisions and we do believe that we should be in a position to resolve this entire -- all the orders under the -- under that particular state is concerned, which we had, I think, last year, removed it from our order book. But we are talking to the government to tell us as much as possible. The government does recognize for whatever work we have done, that should get paid. But as you -- as I told earlier, any government-related job in terms of whenever it comes to claims or settlements, it will take time. So we have been realizing, but it's not of the very satisfactory amount. And hopefully, I guess, in the next 1 or 2 quarters, we should see some progress.

How much is the amount which is pending still?

The amount would be in the range of, I would say, net to be -- net of receivables will be around, say, INR 1,800 crores to INR 1,900 crores.

So after the ECL provisioning, you are saying. So this is the gross amount or after the ECL provision?

This should be the net -- gross amount, please.

Okay. And how much of ECL -- if you recollect, how much of the ECL provision would have already done?

That would be in the range of maybe INR 100-odd crores.

Okay. Okay. So this asset remains standard. And as of now, we believe that it will come over the due course of time?

Yes. We do evaluate this whole thing as we do evaluate it, and we will adequately provide in case we see any lack of progress on this. But it has been continuously evaluated and pursued with the government authorities.

The next question is from the line of Atul Tiwari from Citi.

Sir, just one clarification. For the net working capital for core business, you said INR 22,000 crores out of INR 35,000 crores, right?

30 -- 31,000 is the net working capital we have at the group level.

Okay. At the group level, 31. And for the core business, the parent and Hydropower and other E&C?

22, yes, yes.

That number is 22, right?

Yes.

Okay. Okay. And you expect to maintain this at the same absolute level by the fourth quarter, I think…

That is our intention. That is our intention. So Atul, I don't know whether you heard me. The intention is to maintain the L&T group's working capital position as of March '21 at the same or almost the same level as at March '20 and hopefully with good collections and yet have vastly improved Q4. So we are monitoring it. And we also like to mention here with response to this part that we are also prospectively ensuring that wherever there is a visibility of collection happening from the client in all those projects, we are ramping up our operations. Wherever we are seeing visibility of collections not happening in all such sites, we are ensuring that the execution is in line with the collections momentum. That focus on working capital and our absolute number is a combination of these 2 factors, that you progress on execution at a higher pace in places where you see visibility of collections. And in places we don't see visibility of collections, the work is only to the extent of the money is collected.

Okay. Sir, that's very clear. And so my last question is on that 50% order book, which is on the fixed cost. So is there some kind of partial hedging that you do at like the group level on commodity exchanges or in ForEx market to at least partially hit some of the commodity price risk in that part of the order book which is on the fixed cost?

So it is like this. At the time of bid itself, as I said, the risk management protocol that we follow in L&T is we do give -- our corporate treasury team provides us -- provides the bid teams the kind of expected rates, which need to be factored for procurements that may happen over the period of the project execution. So hopefully, till now, I mean, at least in the near-term past, I don't remember having witnessed any sort of a cost overrun because of adverse movement in commodity prices and where we are not able to have a pass-through.

Okay. But sir, over the past 2, 3 months, the kind of movement that we have seen, that kind of movement had not been seen for the past several years, I guess, so…

But there is also a possibility that, okay, we are only talking of this current volatility in the commodity prices in this quarter. But there have been quarters where commodity prices have been also benign, right? To that extent, it's a combination. And at the end of the day, we have to ensure that the job margins do not get affected as and when they were built because of any sort of commodity price variations. And as I said, we have not had any substantial impact in the near-term -- I mean, in the near past in terms of having margins impacted because of adverse movement.

Ladies and gentlemen, we take the last question from the line of Priyankar Biswas from Nomura Financial Services.

So first quickly, can you give me the split, like, firstly, of how much of the order book is right now multilateral funded? And secondly, in the prospects pipeline that you said, like the domestic prospects is INR 2.2 trillion. So can you just split that up? Like how much do you see in, let's say, metro and expressways? And what are the splits there?

Okay. So as far as multilateral, see, we have a INR 3 lakh 31,000-odd crores order book. So the amount of orders or the projects which are under multilateral funding is in the range of around INR 91,000 crores, okay? So that's the -- my first response to your question. And as far as our order book composition, sector-wise is concerned, so we talked about core business around -- domestic around INR 2 lakh 20,000-odd crores, okay? So a major part of that is coming from Infrastructure itself and more uniformily spaced across all the 4 or 5 segments we have in Infrastructure. And we have, I would say, around, I would say, INR 15,000-odd crores on the Hydrocarbon side. And other business is roughly around, I would say, INR 8,000 crores, INR 9,000 crores. And the rest is all under Infrastructure. And they are, I would say, broadly at the same level across the segments of B&F or Heavy Civil or Transportation Infra or Water.

And sir, just one more, if I may. So what I was observing is that in the Infrastructure segment that you have reported, it seems that the international execution is lagging far more compared to the domestic execution. I mean that's what I observed. So has this anything to do with logistics constraints like lack of container ability or the sharp rise in shipping rates? And if so, what is the hedging strategy here? Like what are the steps being taken?

So it is not with respect to any sort of cargo movement prices. But as I said in the early part of the call, that especially with regards to supply-like constraints, it is more manifest in -- when it refers to cross-border shipments. To that extent, there has been, I would say. But the amount of impact what we had witnessed in Q2, to a large extent, that has also got normalized. And hopefully, into Q4, the progress of execution in the international projects also should become near normal, like the way we have seen in domestic.

Sir, I just missed one figure. So in Hyderabad Metro, can you repeat, what was the amount for the depreciation?

INR 75 crores per quarter.

Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. P. Ramakrishnan for closing comments.

So thank you, everyone, for participating in the call. I hope we have been able to answer all of your queries and questions. But given the expanse of our business, I'm sure you will have some follow-on questions. So please feel free to call me or Harish in case you would like to have any clarifications. Thanks for taking your time off this evening, and looking forward to meeting all of you in person soon. Thank you.