NCC Limited (500294) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the NCC Limited Q2 FY '22 Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions]. Please note that this conference is being the recorded. I would now like to hand the conference over to Mr. Mohit Kumar from DAM Capital. Thank you, and over to you, sir.

Thank you, Janice. On behalf of DAM Capital, I welcome everyone to Q2 FY '20 Earnings Conference Call of NCC Limited. Today, we have from the management, Mr. Y. D. Murthy, Executive Vice President, Finance; Mr. Krishna Rao, Executive Vice President, Finance and Accounts; Mr. P. V. Vijay Kumar, Vice President, Finance; Mr. K. Durga Prasad, Joint General Manager, Finance. Without much ado, I'll hand over the call to the management for the opening -- for the opening remarks, which will be followed by a Q&A session. Over to you, sir.

Yes. Thank you, Mohit. Good afternoon, and welcome to all the participants. I am Y. D. Murthy, Executive Vice President, Finance at NCC. I will briefly make some opening remarks and after that, we can go for a question and answer session. Our Board has met today in the afternoon and declared the first -- second quarter results, you must have seen all the results. Before we take up the second quarter results and also the future prospects of the company, I would like to briefly make some general comments. After that, we will discuss the second quarter results. As you all know, the Indian economy is expected to grow by about 9% to 9.5% in FY '22, having shrunk by about [ 7.5% ] in FY '21. As you all know why FY '21 was a bad year, not only for our country, but all the countries for the global economy as well because of the pandemic everybody suffers but now all the countries are also bouncing back. The Indian economy is likely to redeem the losses of FY '21 in the current financial year by growing at 9% or so. And as far as the construction industry is concerned, it has shrunk drastically in FY '21. The shrinkage in the construction industry at about 12% or so that this when the economy shrunk by about 7.5%, where the construction industry has shrunk by about 12%. That is FY '21. Now we are again looking at a bounce back, the COVID is behind us, things are falling in place. Workers are available at the project sites, raw material is available at the project sites. There is no disruption. Supply chain is intact and things are looking up, and also we have reached a pre-COVID level execution in all of our project sites. And the construction industry is definitely going to do well better than the Indian economy in the current financial year, though a ballpark number is not available. As far as NCC is concerned, in the first quarter of FY '22, we have reported a 57% growth in the top line compared to first quarter of the previous year. And in the second quarter, where the results are declared today, we have grown by about 41% as compared to second quarter last year. So things are definitely good for us. But in the Board meeting, our Board was -- earlier meetings also, our top management and also Board felt they will not be able to provide a guidance mainly because the third wave of the pandemic is expected are still some stages there in certain pockets of their business. So officially, there is no guidance. But based on the first quarter performance, second quarter performance and the order book that we are having with us, which is around INR 39,000 crores, we are confident that the performance of the company for the year as a whole will be in the region of 20% to 25%, which should be expected as a reasonable performance compared to Indian economy growing at 9.5%. As far as the order book is concerned, things are looking good for us. There is a good traction in award of orders. In the first 6 months of the current year, we already backed about INR 5,600 crores of orders. And in October, we have become L1 for some orders where the [indiscernible] for the client are expected in this month, in the month of November. And we are looking at order accretion of about INR 14,000 crores to INR 15,000 crores in FY '22. Out of which, about INR 5,600 crores has already been received in the first half of the current financial year. As far as the working capital cycle is concerned, we have seen a distinct improvement [indiscernible] has improved, particularly the central government agencies like marquee companies like National Highway Authority, All Indian Medical Sciences, defense projects, they are all AAA-rated companies and the payment cycle has improved substantially. Last year also, the finance industry has given a direction to release to government agencies to see that the payments are released faster and quicker to construction contractors. So that the wheels of the economy keeps moving, and that also helped us immensely in terms of payments. And also, as you know, the Reserve Bank has come out with a soft loan called the COVID loan, about 10% of the fund-based limits of the company. In the process, we've got about INR 150 crores of loans from of our consultant banks at a concessional rate, that also helped us immensely in terms of maintaining our liquidity position without much difficulty. And there are some pockets of problems in terms of payments, particularly in the state government agencies mainly because they are focusing more on welfare measures and health care measures and the payments to contractors are happening, but some delay is there. Particularly as far as NCC is concerned, we have seen delays in the state of Andhra Pradesh and Telangana. But we are, again, taking up the matter with agencies there. And hopefully, the payment cycle should improve by March '22. As far as the order book is concerned, we are sitting on an order book of nearly INR 39,000 crores, predominantly 3 verticals that is buildings, roads and water projects put together constitute about 75% to 80% of the order book as well as turnover of the company. We have got a strong execution capabilities in these 3 verticals. And we have a leadership position. And the contribution from these verticals is definitely going to be strong in the third and fourth quarter of current year also. Likewise, we are looking at other opportunities, particularly in the areas like mining, where we've have substantial orders in the recent past and were able to execute also without much difficulty that is likely to continue. And as far as macro environment is concerned, the government of the day is very key on implementing the NIP that is a National Infrastructure Pipeline. So because they realize that there is a deficit of physical infrastructure across the country, and they want to set in the position. And the huge order award is happening in various segments. And we are nicely positioned to capture those orders. And we are confident that about INR 14,000 crores to INR 15,000 crores of fresh order accretion in the current year is possible, though officially, we are not giving any guidance for order accretion for FY '22. Out of these, already INR 5,600 crores is received in the first 6 months of the current year. And we have become L1 for about INR 2,600 crores of orders and balance orders are also likely to come. And we are focusing on the [ LG1 ] mission projects where we had some success in UP, we got orders of about INR 6,500 crores, though there was some delay in execution, mainly because of the preparation of the project documents and approval by the government agencies, but the speed is [ expected ] to pick up and also other states are also planning similar Jal Jeevan Mission projects in the respect to states will definitely participate there also. We are also looking at affordable housing projects. We have done a number of projects in the state of Andhra Pradesh earlier. And the other states also, we are participating in affordable housing. This is also a good area of future growth for the company. And likewise, the Central Vista project in New Delhi, the Parliament House and other buildings, we started participating the bidding process for the various building projects there. We are also participating in [ metro rails ] that represents about INR 3,500 crores to INR 4,000 crores of our order book is coming from the metro rail projects. We are being 2 products in Pune right now. And Mumbai, we are doing one project. Nagpur, we are doing 2 projects, Bangalore we are doing a project. Likewise, as and when opportunities are there, we participate in bidding for the construction projects and we try our luck there. Recently, we started bidding for high-speed rail projects the bullet train projects. We have tied up with like-minded construction companies, though we were not successful in the recent bidding, but we will continue to participate in those projects. All in all, we are confident that the order equation should be pretty strong. We have got a strong execution capabilities. And our third and fourth quarter, we are expecting it to be far better than the first and second quarter. So based on all these things, we are looking at a top line growth of 20% to 25% in FY '22. That is what I thought I should bring to the notice of the participants. And also, the banking system has supported us well. We have got most of the limits for FY '22 [ tied up ]. And soon, we are planning for execution of the documentation. Bank guarantee position also has improved nicely, mainly because of the initiatives taken by the Finance Ministry by reducing the performance guarantee value in proportion to progress of the projects. In the process last 18 months, we were able to get back about INR 1,000 crores of bank guarantee limits available to us. So the availability of bank guarantee limits also improved nicely so that we can take a bigger projects as we go forward. We have got good support from the banking system, a good measure and our accounts are always standard and regular with all the banks in the consortium. They are quite happy with our account and they are supporting us, which is a big positive as far as NCC is concerned. And I'm very confident this kind of support will continue in the near future also. Now I request my colleague, Mr. Krishna Rao to talk about our second quarter results.

Thank you, sir. Thank you. Welcome to all the participants. I'm Krishna Rao. The order book stands at the beginning of the financial year, INR 3,928 crores. Orders received during 6 months' time, INR 5,611 crores, and value of the work executed during the 6 months, INR 4,428 crores, and the order book stands at the end of September, INR 39,212 crores (sic) [INR 39,112 crores]. As far as the performance for the Q2 is concerned, revenue, including other income, INR 2,223 crores and the corresponding quarter of the previous year, INR 1,578 crores, a growth of 41%. Gross profit for the current year Q2, INR 397 crores corresponding quarter INR 337 crores growth of 18%; EBITDA INR 327 crores, that works out to 10.8% and PBT INR 130 crores. That works out to 5.8% and [ PAT of INR 104 crores ]. There are the specific issues during the quarter, which I will brief. There is one exceptional item of INR 34.6 crores. We have, in one of the projects where additional built-up area of 36,109 square feet has been granted that works out to INR 34.60 crores. This is an exception item. And from these, we have also taken out a [ knock out ] of INR 3.46 crores. The provision for investment, net of these 2 is 31.1, which is only the exceptional item during Q2. The other figures, salaries, there is an increase of INR 23 crores, which is because of the increase of volume, number one. And the increase of the certain salaries of the staff effective from July and the number of employees also head count has gone up. The administrator despite increase in operations, only INR 9 crores is the improvement and interest rate finance charges despite the improvement in the usage of the working capital, there is a reduction in working capital, which I will be able to brief you later. This is primarily because of the rate of interest reduction number one. And as my colleague mentioned, more bases have come back because of the government notification. These are the numbers. And with regard to the consolidation for the Q2 of current year, the consolidated numbers are revenue, including other income, INR 2,601 crores, corresponding quarter INR 1,744 crores growth up 39%. And the gross profit for Q2 is INR 435 crores, corresponding to INR 374 crores growth of 16%. EBITDA for Q2 is [ INR 266 crores ] that works out to 10.3%. PBT 150 walks out to 5.8%. PAT is INR 114 crores, which is attributable to shareholders and before to 4.4%. These are the numbers and the [indiscernible] , et cetera, of rating. As we take up that the division-wise the order building dividend stands at INR 21,157 crores at the beginning of the financial year works out to 56%. And the closing is INR 22,383 crores works out to be 57%. Crores INR 1,950 for that the 5%, the closer is INR 1,337, 3%, other than railways at the beginning of the financial year, INR 7,078 crores that works out to 19%. And at the end of the half year, [ INR 8,469 ] crores, which is 22%, relatives, INR 2,438 crores, 6% represents closure is INR 2,122 crores 5%. Irrigation [indiscernible] Beginning INR 2,442 crore and [indiscernible] Is INR 2,314 crores, mining the INR 2,592 crores at the beginning represents 7% and closing INR 2,244 crores, 6%; others is INR 251 crores and the INR 229 crores, the closing order works out to [ INR 39,112 crores ]. Now that the receivables for the period ended, it's 30th September [indiscernible] outstanding is [ INR 2,601 crores ], comparable to corresponding as well March. That as connections it is 116 days -- And the capital expenditure that the budget for the year is INR 250 crores. The Q1 CapEx is INR 41 crores and Q2 INR 45 crores to newt INR 86 crores in the half year. The debt funds movement is at the beginning of the quarter, that is the first of July 2021, INR 1,936 crores -- And the working capital and the [indiscernible] loan increase is INR 190 crores. Repayment of the term loan is 24. So the debt position at the 30th September is INR 2,102 crores that is INR 166 crores, we have utilized our key capital more. And the consolidated basis, the debt is INR 2,316 crores. For Q2, INR 181 crores is increase compared at July '21. And there is a reduction of interest at 0.43% where we have savings in the bank interest. As far as [indiscernible] Is concerned, we were able to get back INR 52 crores the performance and the retention money basis. There is no improvement with regard to the outstanding status circumstance as it is. And the cash flow for the quarter is cash flow generated from the operations, [ INR 35 ] crores. Cash flow generated from investing activities INR 5 crores. Cash flow generated from financing activities INR 2 crores as a result of net increase in cash, cash equivalents, INR 32 crores. And on a consolidated basis, the cash flow stands at cash flow generated from the operations, INR 42 crores, cash flow generated from investing activities, INR 0.5 crores, cash flow generated from financing activities INR 9 crores. Net increase in cash, cash equivalent is INR 52 crores. With regard to investments, loans and advances to the subsidiary, there is no change except the reduction in loans and advances from NCC infrastructure, we have received the INR 12 crores. And one of the foreign [indiscernible] constructions INR 7 crores we have retooled, and there is no change with regard to the others. With regard to the balance sheet numbers, investment in property has gone up to the tune of INR 36 crores. [indiscernible] Additional area, built-up area. Inventories has gone up to INR 591 crores by INR 64 crores, these are only the changes. The other improvements more or less looks comparable to June. And these are all from my end. I now leave this to my colleagues.

Just 1 or 2 points I will tell in addition to what Mr. Rao mentioned about the quarter. The finance cost is at INR 116.34 crores for the second quarter of FY '22, there's a slight reduction in the finance cost compared to the previous -- in the second quarter of the previous year, where it was about INR 1l7.72 crores. As far as the bifurcation of the finance cost is concerned, the INR 116.34 crores comprises of interest on term loans, INR 6.4 crores. Interest on cash credit and WCDL of INR 42.5 crores, interest on mobile headwinds, INR 32.6 crores, interest on other about INR 5.34 crores. That is as far as the interest cost is concerned, total is INR 86.8 crores. BG commission INR 23.2 crores, LC commission INR 4.2 crores, bank to other finance charges, INR 2.01 crores. So the total finance cost for the second quarter INR 116.34 crores. Likewise, the investments -- the exposure to group companies, that is loans and the advances to group companies and investments in the group companies by our equity put together remains more or less safe at INR 1,272.06 crores as compared to INR 1,284 crores in -- at the beginning of the quarter. As far as the mobilization advance is concerned, it is around [ INR 1,643 ] crores and the retention money is about INR 2,108 crores. Cash on the bank values out INR 422 crores, out of which INR 400 crores is on account of fixed deposits given to banks. Inventory is about INR 591 crores. Trade receivable is about INR 2,600 crores, and the trade payable is about INR 3,703 crores. That's all from our side. Now I request the participants to ask your questions. And our request is, please see that each participant will not ask more than 2 questions, and the total number of participant questions that we will take up will be limited to about 20 because of the positive time. Please go ahead.

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

My first question is that earlier in the call, you said that the second half will be far better than the first half of this financial year. So -- but if I see you have not given any guidance, but you have indicated 20% to 25% growth, which is about on a higher side, INR 9,000 crores of turnover for this year and INR 5,000 crores in the second half. The INR 5,000 crore turnover is about 10% growth versus the second half of last year. So is the guidance very conservative because we were expecting much far better number -- not the guidance, but the numbers which have indicated 20%, 25%. So is it very conservative, sir? Because it looks like very low growth for the second half Y-o-Y.

See, the Indian economy is growing at 9.5% and I am projecting will grow at 22%, 25%, which is more than double that of the growth of the Indian economy. It is not conservative. But I agree with you, there could be possible upside to what we have projected. Beyond that, I cannot tell you because the Board has not given any guidance.

Okay. Second thing is, sir, on update on the land monetization. So what's the status on the payments when we expect [indiscernible] is quantify whoever time sale, the entire money will be realized?

Mr. Durga Prasad, will you answer this question?

Yes, sir. As your main -- we are focusing monetization of NCC Vizag. So management has identified potential investor [indiscernible] term sheets have been signed, the focus has commenced in the month of October. So [indiscernible] make arrangements for payment of revenue sharing [indiscernible] land will be registered. And the total amount expected from this transaction INR 375 crores, and we are expecting about INR 314 crores [indiscernible] of March. The balance will be paid by June '22. So this is [indiscernible]. So it is going as per schedule. So we are confident of closing these deals.

Just lastly, on the [indiscernible] of the INR 6,500 crores of orders which we had earlier. So how much of that has been executed or booked in the revenue. So if you can just update on that?

That question will you please repeat?

So we have the [indiscernible] projects of about INR 6,500 crores, right, order book? So just wanted to know how much of those works have been executed. So have the exhibition started? And as then how much of the revenue has been booked total overall and how much in this quarter?

Yes. With regard to the DPR, work party is completed. Now that the initiation has started, the turnover not much is booked from these projects is going to start from December onwards.

Okay. And how much you are expecting in this year, sir? In the fourth quarter, how much you're expecting this order can be executed in this year, out of the INR 6,500 sir?

Third and fourth quarter we'll be able to have some area.

[Operator Instructions] The next question is from the line of Ankur Sharma from [indiscernible] Standard Life.

Two questions on the balance sheet. One, your other current assets at almost [ INR 6,400-odd ] crores. So what is this? Is this on up also when I look at it on a Y-o-Y and over March as well. So is this unbilled revenue sitting here? And therefore, you see this number go up? And when do we start seeing those numbers come down actually [indiscernible] number?

Krishna Rao?

Yes. Yes. Unbilled revenue, because of the number of projects execution has increased. As a result, the unbilled revenue is also increasing. This is one part. And for some projects, you are aware, it depends upon the milestones set. The unbilled is going to convert it into the billing. So this is that the continuous process and which we are also equally pursuing with clients for completion. So based on the completion of the milestones and the completion of that works, we are going to raise the bills. This -- the more the projects we take up, this unbilled revenue is going to go up on a continuous basis. This cycle is happening on a continuous basis.

Okay. Okay. So we can only expect this number to go up, right, on an absolute amount, okay?

And the more the turnover more unbilled revenue and unbilled to billing continuous process.

Okay. Okay. And secondly, on the debt on the books at about INR 2,100-odd crores as of the quarter end, where do you kind of see this number stabilizing by the end of the fiscal?

The debt is likely to come down to about INR 1,800 crores by end of the current financial year. Definitely about INR 300 crores, INR 350 crores, a reduction we are expecting, and we are keen on maintaining the debt-equity of 0.3:1 by the end of the year.

The next question is from the line of Shanti Patel from Shanti Patel Investment.

My simple question is, as compared to the first 6 months, next 6 months might be better. And if it is so, approximately in terms of percentage can you quantify?

Yes. We have told you, we are looking at a top line of around INR 9,000 crores as far as the standalone balance sheet is concerned. And now we have done a top line of about INR 4,135 crores for the first 6 months. In the remaining 6 months, that is in the second half, we have to do about INR 5,000 crores, which means about INR 2,500 crores in the third and fourth quarter each. So we are very confident that should not be a problem.

Sure. But then on PAT margin, we remain be constant or it will be going up?

PAT level further increase will be difficult because we already reported PAT margin of around 3.7% for FY '22. The EBITDA margin, some improvement is expected. EBITDA we have reported in the first quarter -- the first half around 10.7%. Whereas we are confident that for the year as a whole, FY '22, the EBITDA margin can go up to about 11% or so, which means in the second half, the EBITDA margin will be in the region of 11.25%.

[Operator Instructions] The next question is from the line of Ashish Shah from Centrum Broking.

My question is again is on the execution, which you can expect in the second half. So historically, we've had the capability to do INR 3,000 crores in a good -- seasonally good quarter and probably we have a very strong order book. So why do you think we can probably be restricted to INR 2,500 crores? Is it because the payments coming from the clients are not supporting that level of execution? Or there's something else which you think is stopping us from [ reaching ] INR 3,000 crores every quarters?

No, they are talking of the third wave of pandemic that also we have to keep in mind. We do not know how it will pan out. Already in Europe, in U.S. and China, some new cases, new variants are found. When they will reach India, to what extent they will infect the people, so we wanted to be somewhat conservative, and we wanted to see that we deliver on what we have promised. That's why the figure of INR 9,000 crore is given for the year as a whole. But anyway, as I told you once again, it is not the official number, but based on the growth in first and second quarter. And based on the general pickup in the economy, we are confident that we deliver about 22%, 25% top line growth for the year as a whole. And definitely, that is achievable.

Okay. Sir, secondly, in terms of -- can you highlight what is the AP exposure, both in terms of the gross exposure in terms of receivables on build, et cetera, and the net level of exposure?

Yes. My colleague, Mr. Durga Prasad will do that. Before that, I will give the macro picture. The payments are not coming in the current financial year, AP government agencies have not paid monies to us. In some cases we have requested them and we have adjusted the receivables [indiscernible] mobilization advance paid to us. Thereby about INR 200 crores to INR 250 crores have come down in the receivables. The balance receivables and also balanced payment, we are talking with government agencies at the highest level possible. They have got government approval for borrowing with bank with government guarantee as security, but they are in the process of signing up of the debt. But the debt is primarily meant for payment of outstanding dues of contractors like us. And also, we're completing the project, balance works of the project has to be completed [indiscernible] brought approval for borrowings up to INR 6,000 crores with government guarantee, it was AMR [indiscernible] development agency, they are [indiscernible] Now actual numbers as on today, I request my colleague Mr. Durga Prasad to give it to you.

So coming to AP projects, the capital city and other projects, we normally [indiscernible] capital city because it's [indiscernible] and other projects are running projects. So I'll just tell you receivables running projects is INR 281.95 crores. And tough project is capital to be less INR 103.20 crores. So total receivable is INR 383.15 crores. [indiscernible] revenue is INR 246.72 crores from [indiscernible] and INR 120.38 crores [indiscernible].

[Operator Instructions]

Sir, just last question from my side. Also, apart from AP, are there any significant delays in some of the other states as you can mention, in what kind of projects? And what is the quantum of outstanding from some of the states, which historically have been a problem, like maybe UP or Jharkhand or some of the states.

In Telangana also, we are facing difficulty in terms of payments, some delays are there. Other than these 2 Telugu states, in UP, our electricity bill payments are delayed, but now payments have started coming, so that will even out without much difficulty. So right now, the problem we are facing is from these 2 states. And as far as Andhra Pradesh is concerned, I have already mentioned, they are the cost of tying up of debt and the debt proceeds will go to various contractors like L&T, Shapoorji, NCC and other contractors are to pay the outstanding bills and also for completion of the balance works in the interstate. That is the position now.

The next question is from the line of Vibhor Singhal from Phillip Capital.

Yes. Sir, just 2 questions from my side. One is on the margins front. The margins in this quarter were a bit softer than expected. So we know it was a monsoon impacted quarter. But generally, our margins have been range up 11.5% and so. So was it the impact of the commodity prices or any other things which led to these kind of lower margins? So in that respect of what exactly is the nature of our order book, how much of our order book has passed through contracts and how much are we able to get to this? And with all that, what is the kind of margins that we are expecting for the full year as of this?

Sir, for years, EBITDA margin already, Mr. Murthy has suggested that we are going to end up at around [ 11 to 11.25 ]. And with regard to the price increase of the imports, you are aware this is going to affect the margins to the tune of 0.5%, one. And out of the total order book, around the 72% of the order book, we have the price escalation that is the coverage from the contract agreements. Hence, we are chilled protected. So there may be the effect around 0.4% or 0.5% on the margin. However, we are going to achieve that around 11% EBITDA for FY '22.

Okay. And sir, given that this commodity price hike raw material price hike was basically mainly this year, can we expect that margins next year, keeping everything constant next year margins should revert back to the normalcy? Given that you mentioned that now the bids that we are submitting, we are taking those higher prices into account.

Since the price volatility is not expected, we don't know how the trend is going to be. It all depends on [indiscernible] Price momentum.

Okay. Sure, sir. So sir, my second question was on some of the projects. So I think at this point of time, I have ask -- also Murthy highlighted, the Central Vista project, the bullet train project, these are some of the large projects that are there in the market right now. But I think from the initial rounds of bidding in both bullet train and the Central Vista proceeds at PFC, refer to in any of the projects in both these. Any of the contract would be so many cases we've been able to, and in some cases, we've been already below that as well. So is it that -- so what is your perspective on that? Is it that our profits are more conservative than the players, and we have been converted because we have a very good strong order book? Or do you think there will be plenty of orders in these projects going forward that we should be able to win them when they come?

Yes. See, as you know, we, as a company, we never bid aggressively for projects. We don't want order book to increase just for the sake of order book but we need to keep the margins also in mind. And we don't want to sacrifice the margins and get the fresh orders. As far as the bullet train is concerned, it's the new area we have entered and we have got partner of [indiscernible] Projects. So together, we have these the costing and all that. And accordingly, you have bid it. But going forward, we will see things should definitely improve. And likewise, Central Vista project also -- it is a INR 20,000 crore project. And as far as I understand, about INR 4,000 crores, INR 5,000 crores has been bidded out and awarded. We were not successful, though we are participating. But definitely, we have got a strong presence in the building segment. Now all these buildings are coming up. We'll definitely participate in the rest of the buildings. So you see this is in the process now, it's difficult to predict what will be [ affected ]. Other players are also there. But we are confident we will get our share of the [ projects ].

The next question is from the line of [ Vijay Kumar ] from Spark Capital.

Can you give the percentage of the order book coming from central government and central government-related entities?

Yes. Krishna, can you do that?

Yes. Yes. One moment, please. Central government is around 30% and [ Sales ] government is, 40%. PSU is 20%, ADB [ IIB ] is a balance 15% up.

Okay. So the reason why I'm asking it is central plus PSU, which is 30% plus 20%, around 50% of our order book. In light of the recent document from Ministry of Finance through Department of expenditure where they have given general instructions from procurement and project management. So there, they have given some new instructions, specifically on how payments have to be done within 10 days of bills being submitted all these things. So how do you think this general instructions will have an impact on us positively?

Yes. That will be very good for us if they implement it. It is definitely a step in the right direction. And in fact, in the COVID times, the Finance Ministry has given directions to various central government agencies like National Highway Authority and other agencies. And in last year, between June and August 2020, National Highway Authority has released a payment of nearly INR 30,000 crores to various contractors based on the directions given by the Finance Ministry. And also, there is a realization of the government agencies and also from the government departments, when a contactor has done the fair work and the bill is certified, you should not withhold the payment unnecessarily because when you pay the contractor, he is in turn paying to the suppliers, to subcontractors, to the labor, which means the wheels of the economy keeps moving, which is very important for the economic cycle to improve. So that realization on the part of government agencies is also helping us to see that the payment cycle improves.

Sure, sir. So related question, in the same document, they've given procurement through the quality cost based selection criteria. So do you think this will be implemented in some of the projects that we are bidding for in the future?

I do not know because I have not seen the document. I will check with our procurement department and try to understand that.

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

Sir, the first question from my side is, can you give us the revenue breakup segment-wise for Q2 and Q1 and last year same period? And what is outstanding unbilled revenues on September?

Krishna Rao can you, please. This unbilled revenue, the [indiscernible] Is not ready.

No, but revenue can be 6 months or 3 months.

Yes, yes, yes. The 6 months revenue of INR 4,135 crores. Do you want to have the division-wide?

Yes, yes, that is what he is asking.

Shall I give it?

Yes. Yes, please, sir.

Buildings, I'm giving the revenue for 6 months. Buildings division INR 1,597 crores that is 36%, rose INR 712 crores, 16%, water and the railways, railways is almost 0, but there clumped together, INR 881 crores that is about 20%; electrical, INR 510 crores, that is 12%. Irrigation, INR 128 crores, 3%, mining INR 542 crores, 12%, others INR 55 crores, 1%, international, just INR 3 crores. The total billing that is, the total consolidated construction business, both domestic and international put together is INR 4,428 crores.

And the comparison for last year same period, is it possible to give sir?

We told you, we have reported a top line growth of 57% in the first quarter compared to first quarter of last year, and 41% in the second quarter compared to second quarter of last year.

So Q2 is possible? Or I can take it off-line that's fine.

Q2 also division-wise, we don't have, but 41% growth is there in the top line.

Fine. On the gross margin, we have seen around 18% in the first half. So how do we see our gross margin going up because we have seen operating lease been really good in terms of the [indiscernible] a bit high. But how about the gross margin sir, any thought on the gross margin?

Gross margin in the second half may go up by about 0.5% or so.

Okay. So it is 18.5%?

18.5%. That's right.

And sir, last question is on the Sembcorp [indiscernible] issue and the bank guarantee. So what is the outstanding bank guarantee fund and nonfund and utilization and [indiscernible] Sembcorp [indiscernible] Issue status?

See, already the fund-based, the debt portion my colleague has given. As far as bank guarantees are concerned, I will give you the numbers. The outstanding bank guarantees at the end of second quarter is INR 6,707 crores. The limits available is about INR 9,499 crores. That is about 71% utilization as far as second quarter -- end of second quarter position is concerned.

And [indiscernible] total number, you said INR 2,000 crores is for debt number [indiscernible]. So that is fully utilized [indiscernible]?

Debt figure we have already given you. [indiscernible]

No, I have the number, [ INR 2,100 crores ] but I'm asking the utilization level and [indiscernible] what is the utilization level?

Working capital limits utilization is INR 1,815 crores at the end of the second quarter. Out of INR 2,100 crores or also available to us, actual utilization at the end of second quarter is INR 1,815 crores.

Got it. And sir, Sembcorp [indiscernible] Issue status?

Sembcorp, the obligation, they got the High Court approval to conclude by April 2022. Also, the award is likely to be received only at the time because of the volume is documentation because of delay on account of COVID-19, et cetera, et cetera, it got delayed. As far as TAQA is concerned, we are looking for out of court settlement, we are discussing with them directly and parallelly because of the claims of both TAQA and NCC was rejected by the High Court in Singapore. And so we are going for an out of court settlement.

So when is it likely to complete?

By March 2022.

The next question is from the line of Deepak Poddar from Sapphire Capital. [Operator Instructions]

Sir, I just wanted to understand on FY '23, any sort of outlook that you have shared or do willing to share for FY '23 in terms of top line or margins would be quite helpful. And my second query is on your absolute interest level, which is currently at INR 115 crores. So how do you see that interest cost panning out over the next maybe 2 to 4 quarters?

Yes. As far as FY '23 is concerned, normally, what we do is in the fourth quarter of FY '22, that is on the eve of annual closing we prepare the business plan for FY '23 for the next year, present it to the Board, discuss it division-wise and accordingly, will freeze the business plan for FY '23. So that exercise has not started. So I cannot give any numbers for FY '23. Other than saying that based on the order book and the expected further order accretion, FY '23 also, there is a good possibility of top line growth of say around 15% to 20%. What is the second question, sir? Bank rate, interest rates, right? See, the blended interest cost, already my colleague has mentioned, it has come down to about 8.7%, which is a good number. The banks are quite happy with us. They are passing on the policy rate reduction of the reserve bank to companies like us, that's why the blended cost of borrowing, which was as high as 9.5% to 10% 1 year back, now has come down to about 8.7%. And one more thing we are doing is based on the reserve bank guidance to various banks in the country regarding operational CC accounts because if the bank is not having more than 10% share in the consortia, the CC account will become a collection account. So we are asking those banks to convert the CC also into WCDL, whereby there is some interest reduction that is happening. So these measures have helped us nicely as far as the interest rate from bank guarantees -- on bank loans are concerned. But we are talking about the finance cost. Finance costs, not only in comprised of interest rates on the banks, but also interest on the mobilization advanced, and bank guarantee commission and also LC commission. All put together in the first quarter -- sorry, in the second quarter is about INR 116 crores, which is around 5% of the turnover of the company. We are trying to maintain the finance cost between 4.5% to 5%. And as the turnover improves, we will be able to bring it down below 5% of the total finance cost, maybe it will happen in the next year.

So 4.5% to 5% of top line in finance cost is what we are looking at, right? With [indiscernible] the bank guarantees, the mobilization advances as well as your interest cost, right?

Yes, yes. Now we'll take up the last 2 questions.

[Operator Instructions] We take the next question from the line of Parvez Akhtar Qazi from Edelweiss Securities.

Congratulations for a great set of numbers. So 2 questions from my side. First, just wanted to confirm, you said that we are L1 in some INR 2,600 crores of orders. Is that correct?

Yes, that's right.

Okay. Great. And with respect to, I mean, future order intake, I mean, clearly, we have done very good in the first 6, 7 months of this year. For the year, you are saying INR 14,000 crores, INR 15,000-odd crores. So which are the segments where we are witnessing this good traction? I mean, are these largely state government orders? Or are we focusing on central government agencies?

Yes, of late, we are focusing more on central government projects. And definitely, preference will be given for such kind of projects. But in the next stage, we are looking at the central government assisted projects like Jal Jeevan Mission is there, where 50% of the project cost is coming for the central government as a grant, and the balance, 50% has to be provided by the state government. Such products also we are looking at because there is a comfort there. Likewise, affordable housing. There are also central government subsidies available under the Prime Minister Awas Yojana, by about 1/3 of the projects selling unit cost is coming from the central government by [indiscernible] subsidiary. So such projects also, we are taking a keen interest on that.

Sure. And lastly, what is the CapEx that we have done in H1? And what is the target for the full year?

Full year target is INR 250 crores. Krishna Rao, can you tell me?

Yes, first half year, INR 86 crores has been done.

So this will be the last question, please.

Ladies and gentlemen, this was the last question. I would now like to hand the conference back to the management for their closing comments. Over to you all, sir. Members of the management, you can go ahead and give your closing remarks, if you have any.

Yes. We thank all the participants for their active participation. If any questions are not answered, please contact us through e-mail, we will definitely replay them within 24 hours. We also thank the DAM Capital and Mr. Mohit Kumar, for hosting this conference. And I thank all of you once again. Thank you.

Thank you so much.

Thank you very much. On behalf of DAM Capital Advisors we conclude today's conference. Thank you all for joining. You may now disconnect your lines.

Thank you.