Pennar Industries Limited (513228) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q4 FY '21 Earnings Conference Call for Pennar Industries Limited, hosted by PhillipCapital (India) Pvt. Ltd. [Operator Instructions] I now hand the conference over to Mr. Vikram Suryavanshi from PhillipCapital. Thank you, and over to you, Mr. Suryavanshi.

Thank you, Nirav. Good morning, and very warm welcome to everyone. Thank you for being on the call of Pennar Industries. We are happy to have with us management of Pennar Industries for question-and-answer session with the investment community. The management is represented by Mr. Aditya Rao, Vice Chairman and Managing Director; Mr. Shrikant Bhakkad, VP, Finance; Mr. J. Krishna Prasad, CFO; and Mr. K. M. Sunil. Before we get started with the question-and-answer session, we will have some opening comments from the management. Over to you, sir.

Thank you, and a warm welcome to all the stakeholders of Pennar Industries to the fourth quarter and for financial year ending March '21 investor conference call. Since we are all doing this remotely, if my voice is unclear, please let me know, I will repeat what was -- what I've said. So feel free to interrupt at any point of time, my request to the moderator. So once again, good morning and thank you for attending this investor call. I hope all of you are safe and are taking all necessary precautions during this pandemic. We will follow the following structure for the conference call. I will first provide an overview on the performance of the company on the fourth quarter and for the financial year. Our CFOs will then provide details on major financial metrics. And post this initial summary, we will open up the call for questions from our stakeholders. So to give you an idea of the performance of the company, in the fourth quarter, we have achieved improvements we wanted to our revenue line. We were able to record net revenue of INR 556 crores compared to net revenue of INR 451 crores in the fourth quarter of the previous financial year. Our EBITDA hit INR 74.56 crores compared to EBITDA of INR 30.95 crores in the fourth quarter, up by about 140%. And the profit after tax after minority interest is at INR 33.32 crores compared to profit after tax after minority interest at INR 1 crore in the fourth quarter of the previous year. For the financial year in question, we recorded net revenue of INR 1,525 crores compared to INR 2,106 crores in the previous financial year. Our EBITDA was at INR 131.5 crores compared to EBITDA of INR 189 crores in the previous financial year. And our profit after tax was INR 2.27 crores, considering -- compared to the previous year's profit after tax after minority interest of INR 53.3 crores. So in summary, with regards to the performance in the fourth quarter, we achieved and exceeded, in fact, in some cases, the metrics and the targets we had set for ourselves. As I had mentioned to you in our previous calls, going forward, our updates will be broken into 3 aspects: profitability, liquidity and growth. On the profitability front, we had -- in the third quarter, we achieved a moderate level of profitability and liquidity, and our focus was on achieving a pre-pandemic profitability. We have since achieved that in the fourth quarter and also in terms of PBT and cash profit. Now our goal will be to start generating growth quarter-on-quarter, improving our numbers further. And in the first quarter of this financial year, with the second wave having come into being, we had expected moderation in some of these numbers. But we have reached a steady-state level of profitability, which we think will continue. On the liquidity front, we have continued to work hard to bring working capital usage down. Our current working capital utilization is an improvement over the last quarter. As I had mentioned last quarter, our target is to reach 75 days. And we had started the -- in the second quarter, we were at 120 days. We improved that to 100 days. We are right now at 96 days, and we expect these improvements to continue and for us to reach 75 days in working capital number of days in this financial year. Coming to growth. As I had mentioned on my previous calls, we have commissioned the BIW plant in Chennai. We have commissioned the Ascent Metal Buildings plant in Tennessee in the U.S., and our tubes [indiscernible] operations have started gaining fruit -- bearing fruit as well. So all these investments are starting revenue generation very soon. Some of it came in, in the fourth quarter. But the BIW plant will be starting operations from next month, but the Ascent plant will be starting operations from next month. And we believe that the addition of all of these 3, over the next couple of quarters, will allow us to substantially grow PBT and cash PAT. We have funded the vast majority of these investments. We only have around INR 30 crores more of CapEx to be deployed in order to make sure that these assets are up and running, and we will complete that investment and make sure that they become good revenue-generating assets. For the other revenue streams, we also have small moderate CapEx investments and growth investments in our industrial components line and other businesses. And with the exception of Railways and our Water EPC business, all of our businesses have very robust growth plans ahead of them. The Railway vertical continues to be unclear. Because of the second wave, most of our customers in the Railways are not operating right now. ICF is not operating. So in that environment, it is difficult for us to give guidance about what is going to happen, as I had mentioned last quarter as well. So this quarter as well, we will be unable to guide you to what is going to happen in the Railways vertical. But our order books are quite strong in that, and we expect whenever the second wave recedes, for us to benefit from that from a profitability growth. PEBS' order book has come back quite strongly as well and [indiscernible] at a higher level, and we expect to hit our target profitability in PEBS also quite soon. We are, as usual, not going to give guidance. But in spite of the second wave, in spite of a lockdown, we believe we have a strong level of profitability in Q1, which is superior to what we had in Q3. But what we can expect is a good level of profitability, a good level of cash flow generation, further improvements in working capital in the first quarter of this financial year. In conclusion, before I hand over to our finance heads, I would like to conclude that we have achieved what we had committed on our last call. That is what is most important for us that what we say we do we do. And we are quite confident that we are well placed to continue to operate and improve our profitability and our working capital position and also increase our revenue over the medium term. On that note, I will hand it over to our finance controllers, Mr. Shrikant Bhakkad and Mr. Krishna Prasad, for their briefings on our performance on the fourth quarter and the financial year.

Good morning, everyone. Welcome to the investor call. I would like to give you the highlights of the Q4 FY '21 versus the Q4 FY '20. In terms of net sales, we have increased from INR 451 crores to INR 556 crores. That's up by 23% in terms of the net sales. Correspondingly, the raw material cost has also gone up from INR 255 crores to INR 340 crores. Employee benefits, we have -- now that we are back to normal, we have started all the employee-related full payments of the thing, and it has increased from INR 31 crores to INR 33 crores, moderately by INR 2.12 crores. Finance cost from INR 18.28 crores to -- has come down to INR 18.1 crores. So there is a decrease. These are based on the various measure that we have taken in terms -- in order to reduce the working capital in terms of number of days and also getting the interest advantage in terms of the LC discounts. Depreciation has been more or less the same from last year to current -- last quarter to the current quarter of FY '20 versus FY '21, INR 11.53 crores to INR 11.79 crores. Overall, if we see, there is a profit before tax of INR 44.67 crores. The profit before tax consists of an exceptional item of INR 19.96 crores. This was on account of the land sale that we did, which we had the surplus land. And as per the Board approval, this has been sold. So this is an exceptional item and onetime event. The existing profit also includes the onetime profit which we have got from the tooling revenue, which is close to approximately INR 7 crores. So if you take out from INR 44 crores INR 27 crores -- the balance -- INR 45 crores -- from INR 45 crores if we reduce this INR 27 crores, INR 18 crores would be revenue that has been there from the operations, which is not -- which is the normal course of the business. So that is INR 18 crores revenue. And overall, we have a -- we have clocked the cash profit of -- from INR 12.49 crores last quarter to cash profit of INR 45.85 crores in the current year. Just because it's a financial year, I would just like to take you through the balance sheet numbers as well. So in terms of property, plant and equipment, from INR 572 crores, it has decreased to INR 554 crores. This is on a combination of the capitalization that we did, close to INR [123 ]crores in factory building and plant and machinery and the depreciation that we have charged off in the current year. The increase in the working capital from INR 33 crores to INR 61 crores is on account of the new initiatives that we have taken in terms of BIW and Ascent Buildings, which we are setting up in the U.S. Trade receivables. Overall, if you see, the trade receivables has decreased -- has increased by INR 7 crores. Trade receivables in noncurrent has reduced from INR 41 crores to INR 17 crores, while the trade receivable in terms of current has increased from INR 396 crores to INR 427 crores. So overall, even with the increased revenue, we were able to maintain the receivables. This is because of the old collections which had been followed up and collected in the coming quarters. In terms of inventory, it has increased from INR 439 crores to INR 486 crores. This was predominantly on account of the increase in the prices that -- the inventory value has gone up. In terms of the metric tons, the overall metric tons remained more or less similar or reduced levels in various business units. We continue to hold INR 55 crores in terms of cash while compared to the last year INR 59 crores. In terms of investments, some of these investments have reduced from INR 45 crores to INR 17 crores. This is predominantly on account of deploying this money for BIW and Ascent and resultant you can see the increase in capital work-in-progress. Coming to the equity. Equity is more or less similar. The slight reduction is due to the buyback that we have carried out a year ago, which we have completed in late 2020. So -- but if we remove that, there is growth in terms of the total equity. Borrowings is -- from INR 102 crores to INR 112 crores in terms of the long-term borrowing. And in terms of borrowings, working capital, wise, it is from INR 297 crores to INR 419 crores. So overall, if you see the working capital, it has slightly increased in terms of INR 524 crores to INR 580 crores number, while the other numbers in terms of trade payables has come down from INR 478 crores to INR 440 crores. Also, we have reduced the other current liabilities from INR 80 crores to INR 51 crores. So this is the summary. And just take you -- just take 1 more minute to explain in terms of the cash flows from the operations. So building the balance sheet, yes, the cash flow from the operating activities has increased by INR 43 crores, and this has been used to deploy in terms of investment activities by INR 6 crores and financing activities by INR 43 crores. So overall, we have -- we were able to maintain from INR 39 crores to INR 33 crores in terms of the cash and cash equivalents that we have in hand. This is the brief in terms of the finance number. If we have any further questions, we'll be happy to take you...

Sir, shall we open the floor for questions?

Yes, please do. Please go ahead.

[Operator Instructions] The first question is from the line of [ Digant ] from SVIP Capital LLP.

Sir, I have a few questions about the freehold land that we sold at Bandalguda, which was sold at a profit of INR 20 crores is what I see. So, sir, I wanted to know what is the total sale price of that property? And by when would we receive all the -- have we received all the money? And if not, then by when will we receive all the money from the sale proceeds?

Yes, I will take that up. The total cost of the land that was purchased way ago is approximately INR 4 lakhs. And in terms of the taxable profit, the tax computation on that is approximately around INR 4 crores. The total amount of INR 20 crores -- from the INR 20 crores, only INR 4 lakhs is the cost. So INR 19.96 crores is the profit. And out of this INR 19.96 crores, as we speak, we have received the -- almost 85% of the money and balance 15% is -- will come in -- before the month end as per the time lines.

Okay, sir. Sir, I see the proceeds from sale of current assets in the cash flow statement of INR 28 crores. What is that relating to?

Proceeds from sale of?

Current investments.

That is the amount of the money that we had in terms of investment and which we have deployed in capital work-in progress. So that is mutual fund amount which has been withdrawn and used for CapEx purposes.

Okay. And sir, just the last question. So the changes in inventory is about INR 20 crores. How much of this would comprise of the inventory revaluation?

Inventory, we did not carry out any revaluation. Inventory is at cost of net realizable value, whichever is lower.

[Operator Instructions] The next question is from the line of [Arvind Joshi] from Bateleur Advisors.

Yes. I had a few very broad questions. So looking at the scenario that is developing and also some green shoots developing partly due to the upturn in the economy and partly due to the efforts you guys have been taking since last 2, 3 years, I think both sides, the green shoots will sustain is what we hope. So in that context, I had a few questions. Now looking at the fairly derisked model footprint that you have, except a couple of parts which are becoming a little dormant in the short term, which components excite you the most in terms of scalable profit? And I have a few other questions. Should we ask a question and I get the answer or I ask all the questions?

If you can ask the other question also, sir. I'll try to answer.

Okay. Great. Great. Okay. Okay. Fine. So other than this, we believe and have been looking around and I think there's a fair amount of consensus that water and clean tech are emerging as huge opportunities. How is our footprint currently? And how are we planning to enhance that and any new initiatives taken? And especially on our Chemical Treatments and Resins business, what is the status and any expansions or any more value-added qualitative improvements in that, which we could expect? And also on the defense front, if you recall a couple of years ago, I think, or a year -- yes, I think it was a couple of years ago, when we had met and visited your facilities, you were very excited about the defense vertical shaping up very nicely. We are one of the key vendors to a major ballistic component manufacturer in the PSU arena. So you're very excited about that. How is that business shaping up? And in general, what is the outlook for the defense sector in this thing? And also, we were very excited about being suppliers of almost entire coach for the Train 18 project. Has it been sidelined due to some internal problems with our government authorities with the Railways end? Or this project eventually will start and we should see the good times coming back?

Thank you. I'll take your questions up one by one. So as to which things excite us the most, I feel in the next -- within the next 2 to 3 years, we will see our automotive business, which is dominated by -- which will be -- which is our BIW line, our existing auto component revenue lines will do quite well. So that I find very interesting because I believe there's massive growth potential in that. Our Engineering Services verticals also are growing quite quickly. They may only comprise 10%, 15% of our profitability right now, but I believe that going forward they will expand their profit share for us and also, I think, are very scalable verticals. So that is another business that excites me a lot. Even our capabilities right now in Railways, though they are being used right now because the businesses are shut, I believe that rolling stock movement, Railways is a massive opportunity in India. So what -- where we are now won't be where we are 2, 3 years from now. So I'm quite optimistic that once the situation does turn around all of these business verticals become very, very attractive to us. And a lot of them have already become attractive to us. From a clean tech space, in clean tech, we are in water and in water purification, affluent recycling industrial water and wastewater recycling. We are also in solar where we make modules and we also provide module monitoring systems. And we have a lineup, as you had mentioned, chemical treatment products, which includes combustion efficiency improvement, water treatment again in terms of chemical water additives and also line of paper chemicals. All of these businesses have massive potential, and our order books are slowly growing up for all of them, and all of them are also profitable. So I believe that we are quite eager to see where these sectors go. And I'm quite confident that they will do well. For defense, we currently have about INR 110 crore order book. I cannot reveal the names of the customers, but they are at approximately the same margin that the company makes, I can definitely say that. And we believe these are good orders, and we'll continue to execute them. So they are -- we are looking to make sure that the revenue is out. As far as Train 18 is concerned, it was a very good initiative in my view. It's obviously a personal view from ICF. They had done the development, and you know there is Vande Bharat Express, for example. So that may come back. Right now, we don't have a lot of clarity, but I believe that they are trying to -- railway board is evaluating giving large orders in that. So we may have some good news. But right now there isn't anything for me to cover because while we have some order book, not a lot of it is Train 18 right now. So the data right now we have available, the facts of the matter are that we don't know what will happen to Train 18. But if it does scale up, I think we are definitely going to be -- play a role in that as a vendor -- as a key vendor.

Okay. And sorry, and I have just one last question, finally. It seems you guys are on track now. And looking at the emerging opportunity that are showing some nascent signs, do you feel as a head of this organization, are you adequately tooled up on the management front, on the asset front to really encash big time on this opportunity if it's emerging? That's it.

Thank you for the question. I think I should not be the only person. I think in the organization we have several business unit heads who are quite strong. Some of them are very young, some of them have been with us for over 30 years. So we have a good mix of that, of managerial talent capability wise. I'm quite confident in their ability to steer the company. And it's -- I think the idea we have is that we all learn from each other. I learn from them and they learn from the outside market as well. So I'm quite confident that we have the bandwidth to execute our vision, and we will ensure that managerial bandwidth, managerial focus and our internal human resource -- human capital assets don't become a bottleneck for our growth. But thank you. So you're right, it's important to monitor that as well.

[Operator Instructions] The next question is from the line of [ Rishabh Shah ] from RS Capital Services.

Yes. I just want to understand, sir, this land proceeds, sir, is in INR 20 crores, how would you plan to use that? Will it be for debt reduction or working capital or something else?

It will have to go towards debt reduction, but I request our CFOs to comment also.

Yes. Against this land, there has been a loan that has been taken. So this will straightaway go and reduce the term loan.

Okay. Okay. And I just want to understand, on the order book mix, how much is it from government and how much is it from private? And what is the trend for the company going forward? If you could give some sense in this.

Could you repeat it? How much of the order book is from...

Is from government entities, government and related and how much is from private companies?

For Railways, the majority of the order book is -- well, when you say government, it is PSU, right? Integral Coach...

Yes, yes, yes. Government to government [indiscernible]

The majority of the -- yes, yes. So the majority is from them. In none of our other businesses do we have a very high government component. I think our defense orders, we have about 30% to 40%. So it's about INR 30 crores, INR 40 crores because we have around INR 100 crores. There is government PSUs again. But overall, our goal is to move away from a high concentration from -- direct government orders, we don't take. Everything is either PSUs and -- or private sector. And PSUs comprise all these. For the railway sector they're high. But overall in the rest of the company, the majority or in most of our businesses, they're not even a very significant proportion. Another way of -- for me to give that -- to describe that is less than -- if you discount Railways, less than 5% of our company's revenue is from government or PSUs.

Okay, sir. And the last thing, I just want to understand, how do you -- how is the company planning to optimally utilize its capacities going forward? You're saying that we have -- a lot of things exciting across a lot of segments. Well, how do you intend to keep the focus and then optimize all the divisions efficiently going forward?

I think the idea we have is that we have to think of ourselves as an engineering company. And a lot of engineering companies have revenue streams. So we have more than most, I would agree. I think we have -- from a discrete revenue stream's point of view, we have anywhere between 6 and 10 at any point in time. So what -- I think the best way we have done that is that we have a very robust view structure. We have professionals at each revenue stream, and we make sure that they are directly accountable for profitability, for growth and for capital efficiency. So that will allow us to take care of the financial parameters. From a strategy point of view, we only invest in businesses which we think are going to exist in the long term, which is they should exist 5 years from now, 10 years from now. We don't chase short-term opportunities. We will only chase opportunities which allow us to build beachheads asset, capabilities, which will last for at least 5 years, 10 years, 12 years, with some maybe improvement, some adjustment, some additions in capacity. So where -- that combination, I feel, will give us the operating structure and the org structure to be able to continue to manage this growth. So if you have the 6 business units, discrete business unit, and each of them has the potential to be INR 1,000 crores, then we can more than double our size from where we are right now and not worry about either from a bandwidth point of view or from a management point of view or from a capital and assets point of view. So I think that is our plan right now, and we are confident that we will be able to achieve this.

Okay. Sir, last 2 questions. If you could say anything on a debt reduction plan for the next 1 or 2 years. And also, is there any thinking of increasing the promoter stake via open market purchase or anything? Any idea if you have?

Sure. Okay. From a debt reduction plan, I think we look at it as capital efficiency. I'll also request after my comments for the finance controllers to comment. But effectively, the way we look at debt is in 2 ways. One, what is the interest cost as a percentage of our revenue. That's the metric that has...

[indiscernible]

Sorry?

Hello? Yes, sorry, yes.

Yes. So what I was saying was that we monitor it in terms of interest cost as a percentage of sales. That is something that we monitor. And the second thing that we do is we make sure that our ROCE is maintained at a high enough level. So if our ROCE, our target is above 20%, we intend to achieve that. Obviously, for the last financial year, it doesn't look good. But if you are to analyze the fourth quarter, the third quarter, we are achieving that. And we are going to break it down to a BU level to make sure every business unit we have is profitable and capital efficient. So that takes care of whatever capital we are using. On the interest cost percentage, our overall effort is to make sure that we are at 2.5% to 3% for most of our businesses. Some business it's less. But I think if we use that metric, that allows us to make sure that we don't binge on debt. Our debt equity also is at 0.7. We don't want it to increase. We want it to decrease. So over the long term, I think a safe level of debt equity is about 0.5. So as the revenue grows, our profitability grows, I think that is what we intend to achieve. I would also request our finance heads to comment on those -- on our debt reduction plans, post which I will speak about the promoter [indiscernible]

K.P. sir, if you can speak.

Actually, it is something in relation to turnover. So debt reduction in relation to turnover, whatever the ratio, that ratio as of now it is slightly higher, but we want to maintain that one. And the reduction -- once the turnover is increasing, automatically debt to that extent, working capital requirement also will increase. So what Mr. Aditya is telling the ratio of them, what we want to have the control and that control is going to be extended further. So if there is a turnover increase, then only our debt will get increased. To that extent, we are controlling everything.

And I do want to add at this point, sir, that the vast majority of our debt, 80% plus perhaps, is short-term debt. So...

It is working capital debt.

Yes. So the next -- the question you asked in terms of the promoter shareholding, we -- as promoters over the last 5 years, as you would see, even though there have been multiple rounds of dilution due to mergers, we have always maintained or even increased our shareholding. We will continue to do that. I think we had a buyback which closed about a year -- or less than -- about 7, 8 months ago, I think we closed a buyback. So we are prohibited from buying for a certain period of time. But I will [indiscernible] tell you that the promoters are very interested in increasing their stake on behalf of the promoter group. But any rigorous plans that we have this thing, I will communicate the next time we speak. But definitely, we are very excited about this business. Our goal is to get from where we are right now, which is 35%, 36%, 37% to a higher level, and we will communicate those in due course.

The next question is from the line of [Amar Mourya] from Alfaccurate Advisors.

Yes. First thing is this, in terms of the commodity inflation, I mean, how much percentage of our overall order book is the fixed price order book?

So on paper, our order book for Railways does not have large commodity price increase. But the recent commodity price increases we have seen are very largely in the mild steel or the lower-grade steel prices. Some of the [indiscernible] alloys like high-resistant alloys, stainless steel alloys, so in that -- in those alloys, they have not been -- there has not been, as you say, 100% increases. So there are no margin pressures -- to anticipate your query, there are no margin pressure in that order book. For our pre-engineered building lines and other lines, we have now put in place price escalation clauses in all of our contracts as standard. So we will not accept orders which don't incorporate a price escalation clause because they have been forced to do, but the pace of raw material price increases. So we are including them and all. And if there are customers who don't want to give us that, then we estimate the price as best as we can for when we are going to execute the order, which is typically 2, 3 months down the line, and we give them that price. Either way, we make sure that we are -- our margins don't get hit because of raw material price. And quite frankly, sir, if we do get stuck at the wrong end of the stick, our goal is to go ahead and speak with our customers and renegotiate -- I mean renegotiate the contract so that we can make sure that we make our target level of contribution. We will not execute orders at low margins if the low margin is a consequence of raw material price increase.

Okay. Okay. And secondly, sir, if you can update more about the U.S. plant which we had talked about in the press release. I mean when it will be commissioned? What is the kind of visibility we have in terms of the business over there?

Thank you. So the U.S. plant is Ascent Building Systems. That's the brand it works under in the U.S. It is in Tennessee, and it has -- will be commencing operations from next month. It already has a very strong order book of about USD 13 million. The operating profit for that are very healthy, much higher than what we get in India. And we are quite confident that -- the reason for the investment is for us to ground that [indiscernible] and it will be profitable in this financial year itself. In fact, the next couple of quarters, we will be hitting our targeted profitability, not just profitable, but hitting our target profitability for that plant. So to summarize, the plant is starting commercial operations next month. The order book is very strong. The margins are very strong. And we expect to hit target profitability levels by -- in the month of November, December, we will hit our target PBT.

Okay. And in terms of the -- like you said, currently, the order book is around $13 million. So what is the kind of visibility we have over there in terms of the next 2 years? What kind of scale we can bring over there?

So as of right now, the capacity we have set up is for a single beam line, which gives about 30,000 metric tons. So at capacity, we will execute about $25 million in revenue from that plant.

Okay. And profitability wise, is it going to be similar to the average company-level profit or it's going to be higher?

It would be higher. It will be higher than our current EBITDA, it would be higher than our current PBT as a percentage margin payment.

The next question is from the line of [ Dilip Sahu ], an individual investor.

Yes. A couple of questions regarding the EBITDA. We have kind of reached a double-digit EBITDA in this quarter. Can you kind of tell me the drivers for this EBITDA? Is it sustainable in the current financial year?

I would -- our EBITDA right now is at 13%. I think double-digit EBITDA can definitely be achieved and sustained. I think our goal is to achieve that. But you have to take into account that this does include a one significant onetime event of, obviously, the land sale. But over the course of this financial year, we will definitely have sustainable double-digit EBITDA, which is above 10% EBITDA. That is our goal.

[indiscernible]

Hello, sir, sorry, we are unable to hear you.

Can you hear me?

Sir, yes, we can hear you, but then your voice is breaking.

Yes. So I call back. I'll come back on the queue. Sorry...

Sir now when you're talking it's audible. You can go ahead with your question.

Yes, yes. So I was just clarifying that this EBITDA has been possible without Railways which happens to be our highest contributing EBITDA profitable segment. So is it expected that this EBITDA will go up as Railway business comes back?

Regarding the Railways business coming back, the timing and the quantity of it coming back is not something that I can project for the next -- right now for the next few quarters, sir. But the business is hard at work building. For example, we're investing a lot in our -- for other customers. So GE, for example, loco, we have invested a fair amount of capital. That revenue stream is starting. We also are working with Bombardier and others as well. So I can definitely assure you that once ICF, MCF open up, once these other investments come, then Railways obviously will contribute in a very big way and the margins will jump up. But as of -- which is what I mean that over the next 2, 3 years, definitely, we will have that happen. Next 1, 2 quarters until ICF opens up, articulates a plan of what they intend to achieve, it would be difficult for me to comment on the impact of Railways margins on our current margins. But I definitely know that double-digit EBITDA is our target this financial year.

Sure, sure. One more question regarding the cash flow, [indiscernible]. Now in the consolidated cash flow, you have shown INR 27.8 crores as write-off and INR 25.3 crores as provisions in the year '19-'20. Can you just -- this looks likely -- on the higher side, just wanted to know what exactly was these 2 items.

I'll just take you to that. It is more of a doubtful trade and receivables which were there in the last years which have been provided and this was done based on the expected credit loss method which was introduced last year. So under the expected credit loss method we are supposed to have the policy of planning and arriving at the number based on our past data. So based on that past data, the last year provision was higher and -- which is moderated as we have collected more in the current year. So we have a consistent policy of making the certain percentage of provision for each of our business units while -- on the revenue itself. So this is -- the current year in line with that and last year being an exceptional due to the expected credit loss method.

Sure. Sure. So the write-offs will be in the same [ Q ] as this year considering the size of the business, right? Let's say at around INR 2,000 crores, INR 14-odd crores, INR 15 crores will be going [indiscernible].

That 0.5% is what we have to take on an average.

The next question is from the line of [ Pranay Jhaveri ] from JNJ Holdings.

I have a couple of questions. First is, basically, the working capital days have increased from about 69 days to about 117 days year-on-year. If you can just like highlight what is your target level going forward?

As I had mentioned, our target is 75 days. We are right now at 96 days. Shrikant, do you want to take this question?

Yes, I'll take this question. So basically, in terms of accounts receivable base, this has increased in terms of consolidated numbers, if you have to say. And correspondingly, if you take accounts payable also, it has substantially increased. So the increase in accounts receivable and accounts payable is more or less, let's say, increased. And the working capital number of days comes to around 96 working days. I can -- maybe off-line, I can share you the numbers how we arrived at that.

So I was just speaking of the data of the inventory, the receivable 2 items and payable. I can take it off-line.

But you have to add the other current assets and other current liabilities as well.

Okay. I'll take that off-line. Sir, my next question is the debt is around about INR 545 crores, INR 550 crores, all inclusive, right, short term, long term as well as current maturities?

INR 584 crores in case you add the current maturities as well.

INR 584 crores?

Yes.