NBCC (India) Limited (534309) Earnings Call Transcript & Summary

Good afternoon, everyone. We welcome you all to the Q1 FY '21 earnings con call of NBCC (India) Limited. We have with us Mr. P. K. Gupta, Chairman and Managing Director; Mr. Rajendra Chaudhari, Director, Commercial; Mr. Neelesh Kumar Shah, Director, Projects; Mrs. B.K. Sokhey, Director, Finance; and Mr. Pradeep Sharma, GM, Engineering. We will start the call with the opening remarks from the management followed by the Q&A session. Thank you, and over to you, sir.

Good afternoon, everybody. Our total income during quarter 1 has been much lower than the earlier years because practically, there was a lockdown. The total income has been INR 477 crores. But still, we have been able to maintain marginal profits and pay all our salaries and all other dues. But April and May were practically washed out, very little progress. And June, we had started the work. But after June, the works have picked up, labor has started coming back to the sites. And we hope that next quarter will be much better than the first quarter. Total order book as of now stands to -- close to INR 70,000 crores, about half is PMC projects and half is redevelopment projects. We have started Amrapali project in a big way during this period. We have awarded 19 tenders, and work on 2 projects have already been finished during the last year and work on 17 projects is going on. And this covers total 30,000 houses. The balance tenders of Amrapali are -- is out for -- under tendering, except 2 projects of Heartbeat 1 and Heartbeat 2 for which orders from Supreme Court receiver are yet to be obtained. So that will constitute this -- pending tenders will constitute about 16,000 houses. So the Amrapali has been a big achievement during the last quarter. This is all about opening remarks.

[Operator Instructions] The first question is from the line of Rohit Natarajan from Antique Stockbroking.

Sir, if I understand, currently, the PMC project, can you talk something on the labor availability? How much quantum of work is going on? How much we are planning to award in this particular year to contractors?

Currently, we have around 34,000 number of laborers on all our sites. This is about 60% of the total requirement that we have. But labor is increasing day by day, and it's coming back. So by, I think, mid of October, we should have full forum of labor or at least 82% to 80%. As far as tenders are concerned, we plan to award another INR 5,000 crores to INR 6,000 crores worth of tenders during the current financial year. Around INR 4,600 crores worth of tenders we have already awarded during the financial year. So the total figure will be close to INR 10,000 crores at the end of financial year. Majority of this is Amrapali project and certain other projects like IIM Visakhapatnam; CCL, Ranchi; and Election Commission building, these were some -- also to be awarded.

Sir, out of this INR 70,000 crores order backlog that we have, what is the proportion in which the work is currently going on? What is the quantum of orders that we are currently working on?

Total value of work which is underway is INR 16,500 crores. That is work of awarded tender minus executed work of INR 6,500 crores.

And by the end of this fiscal, what is that number expected to be?

It will increase by INR 7,000 crores, INR 8,000 crores hopefully. So it should be close to INR 25,000 crores.

Okay. Sir, what about the guidance that you gave in the initial part of the year that -- you were talking about 20% kind of guidance. But would that be possible at this current situation?

Look, that seems difficult with the pandemic coming, that 20% increase since [indiscernible]. We expected that corona will go away, but it doesn't seem to be going. So works are affected. So that type of increase is not possible.

Okay. Sir, on Amrapali project, if I may have to ask you something on the finances part, I understand the current tie up that we have with SBI and other such things. I mean that number really doesn't gel up to all the way to some INR 82 billion kind of number that you want to execute the complete project. So how are the -- stage-wise, can you explain how much will be awarded in this year? How much would be awarded next year? And what will be the sources of finance?

We plan to award all the tenders during the current financial year. And source of funding is that around INR 4,000 crores are from -- come from the homebuyers. And as Supreme Court has issued the details of the installments by which homebuyers are supposed to deposit the money to the court receiver. And another big step taken by Supreme Court is that all the accounts of homebuyers which were NPA loan accounts with various banks. So Supreme Court has ordered that NPA tax would be removed and banks should give the loans to homebuyers. So that process has already started. We hope that this full amount of money will come in the installment. And around INR 2,000 crores is to come from the unsold inventory. Once the construction picks up, then we'll be able to sell the unsold inventory and that money will also come. Temporarily, some loan is being tied up with SBI bank and other banks to bridge over this time gap. So I hope money will not be a problem. To start with, we have got the funds from Supreme Court, and our projects are going through whatever work we have awarded.

Sir, lastly, if I may squeeze in one more question. That is more on Jaypee acquisition. What is the progress there?

The case is in Supreme Court. There were a number of appeals against the resolution plan and the decision filed by NCLT. So appeals were filed in NCLAT and now Supreme Court has taken all these appeals to themselves. And that decision is likely to come shortly. 2, 3 hearings have already taken place.

Okay. So you expect in this particular quarter, maybe before September or in the next quarter, you expect?

Maybe October, all depends on the Supreme Court. But since all the appeals have been taken together by Supreme Court, at least 1 step of NCLT is now over. So we expect that the results will come out soon.

[Operator Instructions] The next question is from the line of [ Himanshu Shah ] from [ Potentialities Ultimate ].

I had a question. Last quarter, you said that if the redevelopment projects are awarded, our tendering will go all the way up to INR 46,000 crores. What is the scene on that sir? Hello?

You see -- we told that, yes, tendering will go up to INR 46,000 crores once all the statutory approvals are given. So we are in the process of getting the approvals. Only a few approvals are pending. I mean they are in process, not pending rather. And maybe another 2 months or 3 months, we may get all these approvals. And we are ready with the tender documents, and it will be immediately tendered during this financial year, subject to as early as we get approval.

So money is not a problem in that case. Is it?

This development is self-sustainable. We will be selling some of the built-up spaces, and from there, we will be generating money. And with that money, we'll construct the rest of the project.

But sir, are you able to sell because you have been postponing auctions for a few times now?

You can very well understand during this COVID...

Yes, I understand.

Yes. Yes. So we are aggressively trying because this is the main crux of the redevelopment project. The more we are successful in selling our built-up space, the project will...

Sir, my question only comes because you said this fiscal, we are only going to do INR 25,000 crores-or-some order, so -- tendering. So the question is in relation to that. Sir, just one more question on the labor front. Last time, your report shows that we have 1,900 people on the payroll for the company. And we have the employee benefit of INR 330 crores. This is about the last entire year. So the average salary comes to about say INR 19 lakh, that comes from everybody from top to bottom. And sir, I fail to understand the quantum of salary because then INR 5,000 crores, INR 6,000 crores of turnover will only go to salaries. So can you enlighten on that?

Your question is not clear. Myself, Baldev Sokhey, Director, Finance here. Could you repeat your question?

Yes. Ma'am, my question is, we have, last year, given out INR 330 crores towards employee benefits, okay? And every quarter, the salary is roughly in the region of INR 60 crores.

Yes.

So basically, the difference is that INR 90 crores, maybe with something that I'm missing out on that front? And even if I take that amount, INR 330 crores, if I divide it by the 1,900 people that we have on our payroll, according to last annual report?

Actually, I just would like to clear here. You are talking about the consolidated salary part, right?

Yes, consolidated salary part.

No, no. As regards with NBCC, it is more or less constant, rather, it is now on the reducing side as the people are now superannuating, and we are not enrolling [Foreign Language] currently the further manpower. So I -- on NBCC side, you have seen that it is approximately INR 60 crores per quarter, right?

Per quarter. Yes.

[Foreign Language] It will remain constant during this period, rather slowly will go down.

But madam, even that figure comes to like INR 240 crores for the entire year?

Yes, yes, yes.

Yes, which is like -- almost like if you do a INR 5,000 crore turnover, and if you have a 7% OPM margin, which you said in the last quarter, you just have those INR 5,000 crores going towards the employees, isn't it?

Yes. You have very correctly noticed this. [Foreign Language] yes, that is a breakeven for us to achieve that to meet out our salary pack.

But madam, if you take the number of employees on the payroll, which is like 1,900 or something. Am I right?

No. It is not 1,900. It is now like 1,600 on NBCC's roll.

Yes. So if you even divide 1,600 by, say, INR 240 crores, your average salary exceeds like INR 17 lakhs, INR 18 lakhs per person, which I fail to understand from -- right from the peon to all the way to the top, which is what I understand is because -- what I understand is that even the CMD of SBI, Mr. Rajnish Kumar, has a salary of INR 30 lakh.

The salary structure in the PSU is decided by the Department of Public Enterprises, and it is made applicable on the CPLCs on the same pattern, and there is no deviation from that. So maybe you are taking out the average salary?

Yes, of course.

Otherwise, there are scales according to which the salaries of each and every employee and candidate wise is set out.

Madam, what do you think -- how much is...

Sir, sorry to interrupt, but for any follow-up, request you to rejoin the queue, please. [Operator Instructions] The next question is from the line of Ankur Deore from Bank of America.

I have 2 questions. One is on the Nauroji Nagar project. During the last call, you had said that in July, you had sold property of around INR 500 crores, and till then the total property sales for that project was around INR 2,500 crores. So if you could give some update as what has been sold after that? And on ground execution, if that has picked up anything on that particular project? And my second question is on Netaji and Sarojini Nagar. Last time you had updated that all approvals for the revised design were also in place. The only one remaining was forest clearance from the Delhi Government. So if you could tell us what is the status on that? Those were my 2 questions.

Yes, we have sold till date INR 2,500 crores in Nauroji Nagar. And we are continuously making attempts, and there are a few government agency as well as others who are interested in buying the properties. So we are in the process of continuous auction so as to get to the sale. Now as far as the Sarojini Nagar and Netaji Nagar, yes, forest is still pending. The reason being they were making some separate changes in their Forest Act or something like that. So we are every day, pursuing the matter with Delhi Government, and we hope to get it soon.

Sir, just a follow-up question. Sir, INR 2,500 crores have been sold out of INR 12,000 crores, right, as a total potential there?

Yes. Nauroji Nagar is INR 12,000 crores, and out of that, we have so far sold INR 2,500 crores.

And sir, in terms of on ground execution, you had said that it had started when we -- on the last call, it had just started at around 180 in workforce, is it ongoing right now? Or...

It is full-fledgedly going on. And right now, we have around 1,500 laborers, 1,200 working in day and 300 working during night.

The next question is from the line of Binod Modi from Reliance Securities.

Sorry, I joined a little bit late, if my question is repeated. I just wanted to understand our -- the mobilization of labor. Last time you said you could mobilize around 18,000 laborers till first quarter out of your almost more than 40,000 pre-COVID. So what is the status as of now, sir, if you can broadly guide me?

We have around 34,000 laborers on our site as on date.

34,000?

Yes.

Okay. So essentially, we can say we are almost at 80%, 85% of our pre-COVID levels?

No, 60%, 65% of the requirement. We are comparing with the total requirement. So we are around 60%, 65% of labor.

Okay. So by October end, we may be at 85% plus or maybe 90%?

I guess.

And about the order book profile, sir, I -- we understand that around INR 70,000-odd crore at stand-alone level, you had said in the previous quarter, considering low execution, and I think order inflow during the quarter would have been -- I mean, it's not that much. So can you essentially say the order book more or less remained same as of now? Or if there is any sort of change?

Look, specifically, it remains the same. We have got some more orders, but more or less in that range only.

So it's more or less at a similar range, right? Hello?

Yes.

And sir, just wanted to understand, last time, you said only INR 13,000 crores of order out of the INR 70,000 crores were under execution. What is the status as of now? How much of order is under execution? And how much do you expect is still to award in coming months, if you can?

Ongoing works are INR 16,500 crores. And we are going to award another...

INR 6,000 crores, INR 7,000 crores.

INR 6,000 crores, INR 7,000 crores.

Okay. INR 6,000, INR 7,000 crores for the entire fiscal -- for this entire fiscal, INR 6,000, INR 7,000 crores for entire fiscal, sir? Or for the quarter?

Yes. Yes. Entire fiscal. It can be even more depending -- it's too early to say, but minimum around this value will be awarded.

Okay. And sir, would there be any sort of change in your guidance now. You had last time guided around INR 6,000 crores kind of top line, almost 25% growth? So is there any sort of change after this sort of [indiscernible].

I think that kind of growth will be difficult to maintain because the pandemic is still on. So difficult to guess, but that kind of growth will be difficult.

So would you be able to give any sort of guidance today as per current standard -- status?

We should be able to do more than the last year. In spite of pandemic, we should be able to do more than last year.

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

Sir, 2 questions from my side. What would be our current cash and bank balance at the consolidated level? And from that, how much would be our own money and how much would be customer advances?

Total cash and bank balance on consolidated basis is around INR 5,000 crores. And...

Ma'am sorry to interrupt, but request you to speak a little closer to the device, please. Your voice is not audible.