PNC Infratech Limited (PNCINFRA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the PNC Infratech Limited Q1 FY '21 Results Conference Call, hosted by Emkay Global Financial Services. We have with us today Mr. Yogesh Kumar Jain, Managing Director; and Mr. D.K. Maheshwari, Vice President, Finance. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Amar Kedia from Emkay Global Financial Services. Thank you, and over to you, sir.

Thank you, Faizan. Good afternoon, everyone, and on behalf of Emkay Global Financial Services, I welcome you to the Q1 FY '21 Post Results Earnings Conference Call of PNC Infratech. As Faizan mentioned, we have with us the management of PNC Infratech, represented by Mr. Yogesh Kumar Jain, Managing Director; and Mr. D.K. Maheshwari, Vice President, Finance. I request the management to give their opening remarks, after which we can have the Q&A. Over to you, sir.

Good afternoon, friends. A very warm welcome to all of you to participate in our earnings conference call to discuss on our financial and operational performance for the quarter June 30, '20. Along with me, I have Mr. T.R. Rao, our Director; Mr. D.K. Maheshwari, Vice President and Strategic Growth Advisors, and Investor Relations advisers. I will share key points on the impact of COVID-19 pandemic on sector, the future outlook of -- and then will discuss company's performance. Like most of the economic activities, infrastructure sector also impacted by the COVID-19-led disruption, including lockdowns and restrictions imposed by both the state and central government authorities across the country during the first quarter of the year. Both construction and operations significantly affected for 30 to 45 days during the quarter due to suspension of tolling operations, exodus of migrant labor, disruptions in the supply chains and paucity of construction material, like cement, steel, construction chemicals aggregate, et cetera, across the project sites. While most of the fixed cost being unchanged, reduction in production, toll revenue and income had an adverse impact on operating margins. Apart from pandemic-induced pressure on the income and margins, maintaining adequate liquidity had also been another challenge being faced by the industry. According to CRISIL, construction across national highway is picking up steadily from May onwards. However, due to irreversible loss of golden working period for construction from fourth week of March till the end of May. Most of the migrant workforce are slowly returning to work. Labor availability, which rose to 70% to 75% of pre-COVID level in the month of June is now around 80% to 90%. However, with a bit early onset of monsoon and it's being active and heavy at many parts of the country, the execution will continue to remain subdued during most duration of the second quarter also. With the given constraints and challenges, the sector may have to sustain an overall decline of 10% to 15% of the year as compared to last year. However, the complete receding of monsoon by the end of September, return of labor to 100% level post monsoon and early flattering of COVID-19 curve, we expect progress could be accelerated substantially during the second half of the year to make up the shortfalls in the first half to a large extent. Relief measure announced by government, including loan moratorium, up to 6-month extension of concession and contract period up to 6 months, release of retention money and bank guarantees, offering COVID-19 launch at low rate of interest by MORTH and NHAI are expected to provide support to the industry during the challenging times. The positive impact of above relief measures and [ descale ] priorities of the government on the sector will only depend on the timely implementation at the ground level. Order awarding activity is picking up gradually, which is being largely driven by NHAI after the slump we witnessed till May '20. Overall bidding pipeline of NHAI modest at around INR 50,000 crores with bids to be submitted before the end of September '20. Apart from central authorities, some of the state government also started awarding projects incrementally in roads, irrigation, water supply and mining sectors. On traffic front, toll collections were severely impacted as tolling was suspended from March 25, '20, to 20 April, '20. Traffic volumes have started ramping up gradually from the middle of May post relaxation of goods movement by government. Toll collection at national highways from June onwards started rebounding. In the last fortnight of June '20, the average toll collections have almost reached 90% of pre-COVID levels for many stretches of highway. According to Crisil, traffic on national highways is bouncing back with the electronic toll collections reaching nearly 75% of the pre-COVID lockdown level with lifting of most of the curbs. According to reports, the overall ramp-up in the toll collection, particularly with regard of commercial vehicles, has been faster than [indiscernible]. The trend of sustained improvement for more than 2 months indicates that the rebound, it is not just due to pre -- pent-up demand. Now we are moving on to operation of the company. Our revenue for the quarter was impacted due to complete shutdown of operations for the initial 20 days of the quarter 1. Subsequently also, execution has not picked up due to migrants of labor -- migration of labor, disruption in supply chains and early onset of monsoon in the month of June at quite a few project locations. Post relaxation of the lockdown, execution was resumed across all projects with about 60% to 70% operating efficiency. There's around 70% of pre-COVID labor strength. Presently at most of our project sites, labor strength has reached around 90% of pre-lockdown level. We resumed toll collections from 20 April onwards at all NH projects. Current traffic levels are around 90% of pre-lockdown levels across all projects primarily due to rebound in commercial traffic. We expect the traffic to reach normal level from October onwards after the monsoon. We are following directions issued by various authorities to contain the spread of COVID-19 by strictly adhering to the laid down standard operating procedures at all construction sites as well as toll operation sites. Our key competencies like end-to-end execution capabilities, large fleet of modern plant and equipment and multidisciplinary execution team with proven credentials led to strong execution track record. Additionally, our prudent leverage and strong balance sheet enabled seamless project execution without any financial or liquidity challenges. Our robust techno-commercial credentials provide us with flexibility to continue to bid large-sized projects on EPC and HAM. Now we are moving on to our project development business. Over the years, we have been able to create a diversified portfolio of 18 fund-based projects comprising BOT toll, BOT Annuity, OMT and HAM. Out of the 18 projects, 8 project are operational, which also include Dausa-Lalsot HAM projects, which achieved the commercial operation with effect from 14 February '20. Including already operational Dausa HAM project, we have a total of 11 HAM projects, of which 6 are under construction and one is awaiting appointed date. And for remaining 4 projects, we have received the Letter of Award and process of financial closure had begun. For the 7 projects under construction, the total equity requirement is INR 848 crores, out of which we have already infused INR 469 crores as on June 30, '20, and balance will be infused over the next 2 years through internal accruals. For Challakere-Hariyur HAM project, we expect the NHAI will declare the appointed date by the middle of October '20, land acquisition for our 4 new HAM projects distance around 80%, and we expect to receive the appointed date for these projects as [ invested ] in concession agreements within the 5 months from their signing. The company internal accruals should be sufficient for funding the future equity requirement for all the HAM projects. Now on to our order book. COVID-19 crisis has not affected the order book position of the company so far. In June '20, we have received a Letter of Award from NHAI for 53.95 kilometers long 4-laning of Meerut-Nazibabad section of NH 34 HAM project for -- in Uttar Pradesh for bid project cost of INR 1,412 crores. In July '20, we have received letter of acceptance from the NHAI for 2 EPC projects of Delhi-Vadodara 8-lane access-controlled greenfield expressway for an aggregate contract value of INR 1,548 crore. Our unexecuted order book as on June 30, '20 was over INR 7,700 crores, out of which the EPC and HAM projects constitute 66% and 34%, respectively. The order book does not include Challakere-Hariyur HAM projects, and 4 new HAM projects, 2 EPC projects of Delhi-Mumbai Expressway of an aggregate cost of INR 8,000 crores. Including the -- all projects, our order book would be over INR 15,500 crore, which gives us a robust revenue visibility over the next 2, 3 years. Now I would present the results for the quarter ended June 30, '20. During the quarter, the company operation has been impacted due to COVID-19 lockdown and, therefore, it is not really comparable with the corresponding quarter of last year. Revenue of first quarter of financial year '21 is INR 905 crores and EBITDA is INR 120 crores. The EBITDA margin for quarter 1 financial year '21 is 13.2%. Profit of first quarter of financial year '21 is INR 60 crore. Consolidated revenue of the first quarter of financial year '21 is INR 1,093 crores. Consol EBITDA is INR 287 crore. EBITDA margin is 26.3%. Consol PAT for the quarter is INR 95 crores. Our working capital cycle is 84 days. The debtor days as on June 30, '20, is 73 days as compared to 71 days on June 30, '19. Our net worth on a stand-alone basis is INR 2,607 crores as on June 30, '20. Total stand-alone debt is INR 326 crores, which is for equipment finance debt, and there is no working capital loan. The total cash and bank balance as on June 30, '20, is INR 668 crores. We have a net cash balance of INR 342 crores. Net debt-to-equity is 0.13x. On a consol basis, our net worth is INR 2,647 crore. Total debt is INR 3,590 crores as on June 30, '20. The total cash and bank balance, including current investment, is INR 1,116 crores. Net debt-to-equity is 1.36x. With this, now open the floor for question and answers.

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

Congratulations on a good quarter given the challenging situation. I have 3 questions. First is, how is the -- is there any kind of number or guidance you can provide for FY '20, given the labor availability and progress on the project sites?

So we expect around 10% reduction in the turnover this year in comparison with financial year '20 due to pandemic.

Okay. And sir, any comment on the project-wise improvement in the situation?

Project-wise situation more or less is similar. See, initially, because of the COVID, lockdown, followed by the exodus of migrant labor, now the monsoon being active across all project sites, the situation is normal. So we will certainly try to make up the shortfalls in the second half of the year, but as of now, still things are not certain. And given the unpredictability, we are expecting around 10% kind of a decline in comparison to last year's turnover. Otherwise, the situation across the project sites is similar.

Understood, sir. Secondly, sir, what is the absolute number -- absolute amount of debtors and working capital? And are we facing any challenges in getting money from UP in the current quarter, especially from Purvanchal?

Gross debt is INR 326 crores on 30th June and net cash and bank balance is INR 668 crores. So there is net cash available INR 342 crores, sir.

Sir, my question is on debtors and working capital.

Okay. Debtors is 73 days as compared to 60 in March '20. And working capital days is 84 days as compared to 57 days in March '20.

Sir, my question was, has it -- why has it -- the debtor days have increased Q-o-Q? And are -- is there any issue in payment with Purvanchal Expressway execution in the sense that the payments are delayed?

Yes, there is some delay in Purvanchal Expressway. But the delay is not substantial, but there is some delay.

Actually, this is temporary, and we'll be able to reduce in the coming quarters because we have not taken the disbursements also in 2 of our SPVs during this quarter. But this is temporary, but we don't think the working capital days will go more than 70 days in next -- third quarter and fourth quarter.

Okay, sir. Lastly, on Gwalior Bypass Project Limited, can you just throw a light, sir, what is the bid, what is the arrangement and...

See, Gwalior Bypass, we submitted our resolution plan under CIRP process initiated by pursuant to the NCLT order. The committee of creditors have issued the letter of intent to us. We are bound by certain confidentiality in the letter of intent. Otherwise, it's a annuity -- convention annuity, BOT annuity project and has a trial period of 7 years as of now.

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

First of all, congratulations on better-than-expected results. Sir, continuing to the working capital question. So in terms of the days you have mentioned, but if I just look at overall, 27 days has increased. So in terms of absolute if I just calculate, close to INR 330 crores kind of an additional increase in the working capital has happened. So is it possible to give the absolute amount of inventories, debtors, payables and where -- from where the paying, whether it is from the SPVs -- HAM SPVs the debtor has increased or any other EPC project it has increased?

Actually, in case if we will compare with March '20 because during the lockdown in the COVID-19, last 10 days, we have received all the money from payment, advance payment, and that is why, certainly, to some extent, it is down in March '20. It was 54 days only. So -- but coming quarters, we don't think that working capital days will go more than 70 days. As regards the complete details, we will discuss, and we will give you the -- off-line, complete details.

Okay. Okay. Okay. And secondly, as we are saying that we are now expecting 10% decline, that is definitely we are always conservative in terms of the revenue for FY '21. So just trying to -- so related to this, that remaining 4 HAM projects, when we are expecting appointed date? And for this both Vadodara-Delhi, when we are expecting? And have we factored any revenue from these remaining projects which are not part of order book in FY '21 guidance that we are giving?

Out of 4 HAM projects, 3 HAM projects we have signed the concession agreement of 5th of August. So that appointed date has come -- falls in January. So in the guidelines which we have given by our Director, Yogeshji, we have not come with the revenue of these projects. We are expecting that appointed date will be in the month of January and/or February in the -- all the 4 HAM projects. Around 80% land is clear presently.

Yes, sir. Because even the last time in June when we had a call, at that time also we were expecting appointed date for all the 4 projects by October, November and for the Challakere-Hariyur, by mid of July. And now for that, we are saying from July mid to October mid and here from October, November to January so -- despite the 80% land is available. So just trying to understand why there is a 3 to 4 months delay.

Actually, we have a time of 5 months for achieving the financial closure on timing of the concession agreement. We have signed -- 3 projects we have signed on 5th of August. That appointed date and financial closure comes to January first week. So we are expecting that appointed date will come in the end of January.

Okay. Okay. So sir, continuing to that, in terms of the equity investment, so the ongoing under construction projects, INR 380 crores would be required. Out of that, how much we would be putting in FY '21 and in FY '22? And these 4 HAM projects and, actually, the fifth one also, Challakere-Hariyur, so how much equity required for these 5 projects? And when we would be putting in -- '21 how much, '22 and '23, how much?

Total equity requirement is around INR 1,000 crores, which includes the under construction project and the new HAM projects. And we are expecting that in FY '21, we have to include INR 257 crores in 9 months and INR 430 crores in FY '22, and FY '23, INR 155 crores. But this amount may vary because it depends on the taking the disbursement because we usually -- we include the money at the time of taking of development just to maintain the debt/equity. These are the tentative amounts. The total amount required is INR 1,000 crores.

So sir, this number varies sizably significantly. So INR 848 crore is for the 7 HAM projects, including the Challakere-Hariyur and for remaining 4 projects, you're saying only INR 150 crores would be needed?

No, no, total requirement, INR 1,000 crores; INR 380 crores out of 7 projects, including Challakere. Remaining 4 projects, around INR 620 crores.

Sorry, sir, sorry, sir. Come again, sir?

Actually, equity commitment for 7 project was INR 848 crores, and we have infused INR 470 crores till June. The remaining is INR 380 crores, which includes Challakere, and all the new 4 HAM projects we require around INR 620 crores. So total equity requirement will be INR 1,000 crores.

Okay. And at this INR 1,000 crores, we would be putting in FY '21...

'22 and '23 and partly in '24.

Okay. Sir, broadly, once again, can you tell in '21, '22, '23 how much?

INR 257 crores, INR 430 crores and INR 150 crores. INR 257 crores, INR 430 crores and INR 150 crores.

[Operator Instructions] We'll take the next question from the line of Ashish Shah from Centrum Broking.

Sir, first question is on the Ghaziabad-Aligarh asset sale. So last time, we had indicated that we are in talks with some other investors. So can you update on the status of that discussion?

Actually, as per the terms of the share purchase agreement, which was signed with Cube Highways on 4th May, '19, expired before closure of the deal and the party have decided not to extend the term further. But we are in the discussion with another prospective investor who has evinced interest in the project asset. Accordingly, process of due diligence gets underway and almost it has completed, and we expect to enter into a deal with the investor in 1 or 2 months if valuation permit to us.

Okay. Right. So are we expecting a valuation similar to...

[Foreign Language] technical, legally, financially and technical studies. Yes.

Sir, valuation, same [Foreign Language] change [Foreign Language] valuation [Foreign Language].

[Foreign Language]. Let us see.

Right. Sir, secondly, Lucknow Ring Road [Foreign Language], so there, we have the appointed date, [Foreign Language] execution [Foreign Language]? So [Foreign Language] issue [Foreign Language] on the ground?

[Foreign Language] appointed date -- Lucknow Ring Road [Foreign Language] lockdown [Foreign Language] start [Foreign Language]. [Foreign Language] rainy season [Foreign Language]. [Foreign Language] Earthwork [Foreign Language]. [Foreign Language]. Second quarter [Foreign Language] October [Foreign Language].

Sir, last question. Challakere [Foreign Language] is there any chance [Foreign Language] cancel [Foreign Language]? Because [Foreign Language] delay, [Foreign Language] any probability of cancellation? [Foreign Language] 100% [Foreign Language] couple of points here and there?

[Foreign Language] cancellation [Foreign Language] we are mobilized there. [Foreign Language] October 15 [Foreign Language] last discussion [Foreign Language] October 15 [Foreign Language].

The next question is from the line of Vibhor Singhal from PhillipCapital.

Sir, my question is more on the bidding activity going forward. So given that [Foreign Language] HAM projects [Foreign Language] appointed dates [Foreign Language] January, February [Foreign Language] EPC projects, as you said, construction [Foreign Language]. So going ahead [Foreign Language] order book [Foreign Language]. So [Foreign Language] HAM projects [Foreign Language] pipeline [Foreign Language] EPC [Foreign Language] strategy [Foreign Language].

[Foreign Language] EPC [Foreign Language] HAM [Foreign Language]. [Foreign Language] 50:50 -- HAM [Foreign Language] EPC [Foreign Language] 50%-50% maintain [Foreign Language]. We will maintain that.

Okay. Sir, NHAI [Foreign Language] expectation [Foreign Language] and they should come out in the next couple of months. [Foreign Language] NHAI [Foreign Language] activity [Foreign Language] Feb, March [Foreign Language] activity [Foreign Language]?

[Foreign Language] but moderate [Foreign Language]. Operating [Foreign Language]. NHAI [Foreign Language] bid [Foreign Language] last year [Foreign Language] 25 bids [Foreign Language] NHAI [Foreign Language] ...

EPC.

[Foreign Language] EPC [Foreign Language] 18 bids HAM [Foreign Language]. Total [Foreign Language] INR 42,000 crore [Foreign Language] bid almost -- bid [Foreign Language]...

Float [Foreign Language].

Float [Foreign Language] September [Foreign Language] bid on [Foreign Language].

Maheshwari sir, just one question. If you can just give the project-wise [Foreign Language] Bhojpur-Buxar, Koliwar-Bhojpur and all these projects and also Jhansi-Khajuraho, [Foreign Language] basically order book [Foreign Language]?

Bhojpur-Buxar INR 278 crores; and Koliwar-Bhojpur, INR 248 crores; Varanasi-Gorakhpur, INR 174 crores; and Lakhimpur-Kheri is INR 82 crores; then Jhansi-Khajuraho, Package I is INR 416 crores; and Jhansi-Khajuraho, Package II, INR 313 crores.

Okay. And sir, Chitradurga and Aligarh-Kanpur?

Chitradurga at INR 420 crores, and Aligarh-Kanpur, INR 448 crores.

The next question is from the line of [ Ramesh Mariappa ], individual investor.

My question is, first thing is, great results for the quarter. I appreciate the team has been doing well. The question is more on minority shareholders in terms of dividend payouts. For an EPS of INR 20, we get a dividend of INR 1, how can you justify that? Is it not very low?

Can you repeat, please?

So my question is on dividend payout, basically. Last year, for an EPS of INR 20, the dividend payout is INR 1. Is it not low?

[ Mr. Mariappan ], though EPS is there around INR 20, because we more focus on the reinvestment of the profit again into the company, both for equity as well as CapEx, to some extent, purchase of capital equipment, so that in the long term, the valuation of the thing and the -- would be beneficial to all stakeholders. So we are reinvesting the money...

Sorry, sir. But see, for the last 4, 5 years, it has been the same, though the profits, revenues, everything almost doubled.

Actually, if you will see my result [Foreign Language] because most of the money we are infusing either in the CapEx or in the equity in the HAM projects. Even then we have maintained the dividend 25% as we were giving last 2, 3 years. So we require the money for CapEx as well as in the equity in the HAM project. Yet after monetization of project, when cash will come, at that point of time, after 1 year, we can rethink for that. We can recommend your case to our Board also.

We'll take the next question from the line of Jiten Rushi from Axis Capital.

Congratulations on a decent set of numbers. Sir, my question is related to the balance sheet numbers. If you can share the balance sheet numbers, like, debtors, creditors, inventories, mobilization advances, retention money and unbilled revenues.

See mobilization advance with the client as on June 30 is INR 345 crores. The remaining debtors -- detail of creditors, debtors, we will give you off-line.

And sir, how much mobilization advances you are expecting to get in the next quarter, in Q2 or Q3? I mean fresh advance is expected or...

In Q2, Q3, we are not expecting any mobilization advance. But certainly, in the fourth quarter, when we will get the appointed date, we will get advance from the client.

So Purvanchal and Mumbai-Nagpur is all -- there is no pending advances, right, sir?

In Bombay, we have already taken. Purvanchal, we have not taken -- we have taken only 5% because we are already having a cash and bank balance. And yes, in the third quarter, we can take advance from Delhi-Vadodara Expressway because we are expecting the appointed date in the month of October and November. Yes.

And sir, toll collection numbers, can you give me project-wise toll collection, Kanpur-Kabrai, Gwalior-Bhind, Bareilly-Almora, Kanpur-Ayodhya, Ghaziabad-Aligarh and Narela?

Yes. MP highway is INR 8.3 crores. And Kanpur-Ayodhya is INR 72.3 crores. Kanpur highway, INR 19.6 crores. Narela is INR 10.4 crores. Bareilly-Almora is INR 7.8 crores. And Ghaziabad-Aligarh, INR 27.6 crores.

So as you said, sir, the labor availability is around 80% to 90% and efficiency -- execution efficiency is around 70% level right now, am I right, sir?

See, execution efficiency has slightly declined due to the monsoons. Though labor efficiency -- labor availability is up to 90%, because of the monsoon, the progress is hampered.

So we can assume safely that the execution is almost at 50% now compared to the pre-COVID levels?

Yes, yes, around 50% to 60%.

And sir, one last question on tax rate. So what is the tax rate this year you're expecting? Because there were some balance MAT Credit remaining. So our tax rate for this quarter was almost 30% plus. So what is the run rate you're expecting going forward for this year and next year?

In the first quarter, tax rate was 30.5%, and we are expecting between 31% to 34% in entire FY '21.

And '22, sir?

'22 will remain -- it will be around 34%, 35%.

34%. Okay. So sir, MAT Credit is still remaining? How much is left, sir?

MAT Credit is around INR 94 crores.

The next question is from the line of Mohit Kumar from IDFC Securities.

Sir, which of our HAM projects you expect to be achieved PCOD in this financial year? And do you expect any bonus accretion to us?

In the current financial year -- see, as you know, in the last financial year, we received COD for one of the HAM projects, namely Dausa-Lalsot in February. This financial year, we are expecting COD for 4 of the HAM projects.

And what was, sir -- are we ahead of time? Are we on time? So can we expect any bonus?

See, all these projects -- because of the COVID pandemic and other reasons, these projects are slightly lagging. So we don't expect any bonus from these 4 projects. But -- however, we'll see how -- whether we can take up the bonus issue with the NHAI, considering the justifiable extension.

Anything on the EPC side where we are ahead of?

EPC is not known, but we are endeavoring both expressway project and 3 -- Purvanchal as well as Nagpur, we are endeavoring to complete substantially before end of the current financial year.

And secondly, on HAM project, all the HAM projects are reaching closure. Are we looking for -- are we in talks with the investors for exit? So what kind of time line we are looking at?

Please come again?

Sir, all these 3, 4 HAM projects, which are getting -- which most likely will get completed in this financial year and one Dausa-Lalsot got achieved PCOD last year, are we in talks to -- with investors for an exit in this project? And is there any time line you're looking at for complete exit?

See, there is no time line we decided, but definitely we are looking into getting an exit from these projects and if we get a right valuation.

The next question is from the line of Prem Khurana from Anand Rathi.

Sir, so [Foreign Language] questions [Foreign Language]. So one was, did we extend any stopgaps into any of our operational assets this quarter? Because, I mean, the numbers that you gave in terms of toll collection seem on a lower side, I mean, when compared to last quarter. So I think last quarter [Foreign Language] collection [Foreign Language] BOT toll [Foreign Language], INR 130 cores, INR 140 crores [Foreign Language]. So I'm shocked [Foreign Language] repayment [Foreign Language]. So are we required to support any of these entities in this quarter, especially Bareilly-Almora? Because Bareilly-Almora [Foreign Language], it seems we've made some repayments during the quarter.

In the first quarter, certainly, there is a lower collection, but in July and August, it has ramped up. And per day, collection, it has come to INR 11 lakhs per day as against the INR 9 lakhs or INR 8.5 lakhs in April and May in the Bareilly.

Sir, [Foreign Language] either Bareilly [Foreign Language], Ghaziabad-Aligarh [Foreign Language]?

We don't -- we have not given any money neither in the Ghaziabad nor to Bareilly in this quarter. And we don't require to pay any more money to infuse in the Bareilly-Almora because we are going in the restructuring. Now [ RBI ] has permitted. So thereafter, we don't require to infuse any money in the Bareilly-Almora from PNC.

Sir, [Foreign Language] INR 97 crore [Foreign Language] reduction [Foreign Language] debt, I mean, the [indiscernible] was sitting on some cash, which is how they've been able to meet this obligation? Or how have we been able to manage this INR 90-odd crores of reduction in Bareilly-Almora this quarter?

Actually, in this quarter, earlier, we had given the unsecured loan to Bareilly-Almora because now this year, in one of our subsidiaries, which is debt-free and there was circular, we have given INR 100 crores from that company to Bareilly-Almora, and we have still [Foreign Language] reduced the size of the debt. That is why now we don't require for any debt service.

Sure. And I think, sir, last quarter [Foreign Language] Ghaziabad-Aligarh [Foreign Language] requirement [Foreign Language] on the higher side. So that number stays or that number would go on to change because of this COVID scenario now?

Till -- in case if required, total requirement till March will be around INR 20 crores, INR 25 crores, if required.

[Operator Instructions] The next question is from the line of Vibhor Singhal from PhillipCapital.

So sir, my question was on Purvanchal Expressway. We are reading this in the newspaper that the state government wants to complete this project basically next year by December and basically in time for the elections that are upcoming. So do you believe we should be able to complete that project? And do we expect any early completion bonus also in this?

Yes. In Purvanchal, we expect early completion bonus. The government wants at least the operationalization of the main carriageway in the first quarter of next year, I would say, from -- before March, and subsequently, finishing works and all will be completed. So we expect early completion bonus from both of the packages.

Okay. And -- but not a similar thing, I would say, in Mumbai-Nagpur, right? Or would it be possible there also?

Yes.

Yes, yes, there also. There also we would be completing ahead of schedule.

Great, sir. Sure. Sir, just one last question. Sir, in this quarter, the interest expense basically came down from the last quarter, which was quite high. So [Foreign Language] quarter [Foreign Language] INR 32 crores [Foreign Language] came down to INR 25 crores. So what is the -- so any reason for this coming down? And what can we expect as, let's say, the overall interest expense for the full year?

Actually, mainly reduction only on account of the repayment of the mobilization advance of Nagpur-Bombay in this quarter because that advance got 12% interest. We have taken in the month of October...

Okay. So [Foreign Language] run rate [Foreign Language] for the remaining part of the year?

It should be around INR 120 crores in the entire year.

The next question is from the line of Alok Deora from Yes Securities.

Just a couple of questions. Sir, with the current order book which we have, so what is the order inflow we are looking at for this year? Because the execution is also sort of very tepid. So what's the order inflow target for this year and possibly next year?

Sir, this year, we are expecting total order inflow of around INR 7,000 crores, meaning, thereby, INR 3,000 crores orders we had already secured, so another INR 4,000 crores order this year. And next year also, we are looking at the same -- similar size, maybe INR 1,000 crores, plus or minus.

And sir, one more thing, the HAM projects which have been completed and which we might be looking to exit, so in that -- the recent decline in the bank rate, so that would be impacting the valuation, right? If you can just elaborate on that?

So we are talking with the 2 restructured manner. We're discussing on that way. So these interest rate, bank rate are for temporary, maybe 6 months or 1 year, like that.

Okay. But could that lead to some delay in the -- getting a deal sort of executed had this not happened?

No, as of now, see -- still, we have 6 months' time to get the COD for these 4 projects. So we are watching it carefully and at the right time for the right valuation, we will take it.

The next question is from the line of Manish Goyal from Enam Holdings.

Just taking forward from the previous question, like in current circumstances, like even for new HAM projects, what we have earned, do you believe that banks would be willing to come and provide funding for the same because the challenge is, like, in terms of the negative carry which is happening due to lower interest rates?

We don't have any problem in the recent awarded 4 HAM projects. We've already tied up with the banks. Pardon?

So at what rate do you think that -- we should be able to get the loans at what rate, sir?

Discussions are going on. It has not been finalized. In principle, we have got the sanction.

So because -- like what we'll hear is that still banks are not willing to offer loans below 9%. And on other side, the current bank rate is 4.25%, 4.5% and plus 3%, 7.5%. So I'm just wondering that would it be feasible for us to take it forward?

We will let you know the rate of interest as soon as we receive the final sanction from the banker, but it is not like that.

We don't foresee any major challenges in this regard.

The next question is from the line of Pankaj Kumar from Kotak Securities.

Sir, this year, we are expecting around 10% kind of decline in the revenue. So any guidance for next year FY '22, based on low base of FY '21?

See, just -- see, as of now, we're waiting, and we are closely watching how this socioeconomic conditions would unfold given the pandemic and how the curve will get flattened. So at this point of time, it would be quite speculative to say anything on the guidance of the next year. But definitely, we should be able to tell at the end of third quarter what would be the possible scenario.

Okay. Okay. And sir, any update on this Ganga Expressway, by when we can expect the bids and all?

Ganga Expressway?

Yes.

There is no update because we don't know with the current pandemic situation how the state government financiers and all will support that. So as of now, there is no major development in that particular project. So we don't think that there will be any kind of significant development in the next 3 to 4 months in that project.

And lastly, sir, from any other sector we are expecting projects or we are looking at -- say, earlier, we were looking at metro project or on the railway side or any other sector we are looking at in terms of project addition?

In water sector, we had submitted bids. This is a rural water -- drinking water supply under central government's Jal Jeevan Mission, where government of India is providing 50% grant. So we submitted bids, 3 bids amounting to around INR 575 crores aggregate value. That is a sector we are currently looking at to enter into a limited way in the water supply sector, rural water supply sector.

What would be the scope of that?

It's water supply. It's a combination of surface water as well as underground water. We have to take it from the source and this functional tap connections to be given to rural population -- rural households. It's a typical rural water supply. So we submitted our bids in the month of July. We are expecting the financial bids to be opened in the first week of September.

Okay. Related to this project, water?

Exactly. Correct.

The next question is from the line of Priyankar Biswas from Nomura.

So sir, my question has been -- so like you are saying that in case of this Purvanchal Expressway, there has been some slowdown in payments in the first quarter. But has these things normalized? Now -- that is, are the payments coming on time now? Or are we still facing issues?

Yes. Actually, what has happened in the first quarter, payments across the projects and across the project proponents because of these disruptions in the -- due to COVID and most of the offices were not functioning in the month of April and the month of May also, so this payment and also then funding and all getting delayed. So we don't see -- we don't foresee any major delays in the payments in the coming months. But the clear picture will emerge only after 1 or 2 months.

Okay. So by the -- let's say, by end of September, you would be in a better position to comment on this, like, whether things have normalized on the payment front. So is that right?

Yes, yes, you're right. You're right.

One more question is, sir, like you submitted this bid for the Gwalior bypass. So are there any other potential NCLT assets that you are targeting or have submitted the bids?

As of now, we have not zeroed in on any particular assets. But this Gwalior only we submitted because we find that of synergy, it's a highway -- it's Gwalior bypass highway project and it's a HAM -- this conventional annuity. So as of now, we have not identified any other project.

Okay. And sir, last question from me. So you had highlighted that mobilization advances for Mumbai-Nagpur, which were very high interest-bearing, were repaid in the first quarter. So can you quantify that how much would this -- repayment would have been? Because maybe that also explains a part of the working capital increase. So if you can just highlight. I mean how much the repayment has been of mobilization?

Around INR 94 crores.

The next question is from the line of Rachit Kamath from Anand Rathi Shares and Stock Brokers.

Congratulations on a good set of performance -- good performance during Q1. Sir, my first question is in regards to toll segmental revenues that you have reported in your consolidated entity. So last quarter, you had booked around INR 187 crores. And this quarter, again, you have booked INR 187 crores. But the thing is that in April, we had this 20 days lockdown and then you also had this -- collections also down. So will you kindly throw some light on that?

It is confidence. Actually, because only of coincidence can amounts segmentally be same, INR 187 crores, INR 187 crores. Because these accounts have been prepared based on the Ind AS with the impact of the HAM projects which are under construction. [ This is how we consider it ]. This is a coincidence.

Okay. Sure, sir. Sir, can you -- Maheshwari sir has just cited that we have this INR 94 crores of MAT credit, which will most likely be used up in FY '21 itself. But we still said that we'll have a tax rate of around 34% for FY '22. So can you just throw some light on that also?

Partly, it will adjust in the FY '21 and remaining will be adjusted in FY '22.

So how much kind of adjustments do we envisage would be done in FY '21, sir, of this INR 94 crores?

Around INR 60 crores, INR 65 crores, INR 70 crores, we will utilize in this FY' 21 out of INR 95 crores.

Okay, INR 60 crores, INR 65 crores, INR 70 crores. Sure. [Foreign Language]. And sir, one last question on bookkeeping with Dausa-Lalsot. [Foreign Language] income book [Foreign Language] consolidated entities [Foreign Language]?

[Foreign Language]

Dausa-Lalsot.

I will let you know off-line.

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

Sir, Aligarh-Moradabad, we are supposed to receive some bonus. So what is the status of that, sir, that INR 14 crores-odd you are supposed to receive?

We are expecting it will take 2 months, I think. Around 2 months -- it will take 2 months more.

In Q3, we can receive, sir?

Yes.

Yes.

So we are going to receive with interest or without interest? Because this is pending for quite some time.

No, NHAI doesn't normally pay interest. So...

Okay. Okay. Okay. And sir, any arbitration -- ongoing arbitration, can you highlight on the same and the CapEx guidance for full year?

CapEx guidance, in this year, we are expecting around INR 120 crores to INR 125 crores because after awarding this Gujarat EPC [ group ] project, we have changed our guidance from INR 75 crores to INR 125 crores in FY '21. Around INR 120 crores, INR 125 crores.

Nice, sire. And arbitration -- ongoing arbitration updates?

See, as of now, it is uncertain. So we don't expect any arbitration awards realized in the current financial year because of the...

What are the ongoing arbitrations? Just can you highlight that? Like, obviously, no award expected, but...

So we'll share you off-line. These are arbitration cases. Ideally, these are not readily available. We'll share you off-line.

Fair enough, sir. And sir, unutilized fund limit and nonfund limit, can you give us the percentage? Obviously, the presentation mentions the limits in terms of value, but what's the unutilized portion of that?

We are having the sanction of INR 1,000 crores in fund-based, and utilization is nil as on date. So utilization 100% is unutilized in fund-based.

And nonfund based, sir?

Nonfund-based, around -- utilized around 55%.

[Operator Instructions] The next question is from the line of Mayank Goel from SBICAP Securities.

It's from SBI Capital Market. Sir, I had just 2 questions. First one, sir, we are to privy to the remedies and extension that NHAI has been providing to deal COVID. But since you are also working with 2 major states, what kind of support these state authorities are giving? Are they also mirroring the relief which NHAI is providing some blanket extensions? Or is it something different?

Sir, they are not exactly mirroring, but in case of Schedule A, like payment, weightages and all, in Purvanchal, they substantially relaxed. So we are getting payments there for the work done irrespective of the minimum length and all. With regard to extension and all, so they have not given any extension as of now because these projects are going as per the schedule till now, and they expect these projects would be completed before the scheduled date. So it is not exact reflection. It's not exact mirroring by the state governments. But they're also considering some of the relief what government of India is giving.

Okay. So if we have to apply for some extension in these projects, will it be project and package-wise or they might come up with a blanket extension for all the packages in Purvanchal or all the packages of Mumbai-Nagpur?

No, no, it may be on a case-to-case basis, on a project-to-project basis, not any -- they're not taking any policy decision in this regard.

Okay. Okay. Okay. And sir, secondly, so the ordering in the first half has been slightly better compared to previous year. But again, we have seen competition increasing in not just in EPC, but also in HAM. I think in this year, all the HAMs which were awarded saw the highest competition ever. So though we are open to both EPC and HAM, will we wait for some time till these small one-timer companies get their share? Or will we continue bidding? And does this also mean that maybe we might resort to 1 or 2 BOT projects also, which NHAI may award in coming time. So -- if they do so?

[Foreign Language] our focus will continue to be on EPC slightly more than HAM because we had 4 major HAM projects recently. Yes, there is a very fierce competition in the EPC segment, but we would be focusing on a larger projects side, so where competition would be less. And also, we'll wait [Foreign Language]. We always look for a right project at a right time at a right price. So we -- for the expansion of order book, we wait for the right opportunity to bid.

So we are not in a hurry.

Yes, yes, we are not in a hurry.

We have sufficient order book for 2, 3 years.

Okay. And sir, in regards to BOT because -- I'm asking this because, if I'm not wrong, I think we had participated in the 2 Bengal BOTs. So are you planning to get 1 or 2 BOT on board which NHAI nodded?

Those BOTs NHAI has not canceled -- both the BOT projects in West Bengal, NHAI has canceled those bids, and NHAI hasn't come back on those bids. So we'll see. As of now...

And is planning to come on HAM also.

Yes, yes, they may convert them into HAM also, we don't know. So our preference would be on a BOT toll, but still we'll wait and watch what kind of projects are coming on BOT toll model.

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

Sir, a couple of clarifications. Sir, in terms of the tax rate, last time we have talked about -- we will be moving to a new tax rate in FY '22, but now we are seeing some portion, INR 60 crores to INR 70 crores MAT of INR 95 crores we'll be utilizing and remaining in '22. And that's what we are expecting a 34% tax rate in FY '22. Just a further clarification, is it -- this is what we are expecting? Or it can be lower than 34% tax rate in FY '22?

See, earlier, we were expecting that turnover will -- there will be growth in the FY '20. Because of a lower turnover, we cannot utilize the entire MAT Credit in the book. So that is why, partly, we have to utilize in the FY '22. That was the only reason. In case if my turnover will increase, certainly, we will utilize this MAT Credit in this FY '21.

Okay. Okay. And secondly, sir, on the -- we are expecting a bonus -- early completion bonus on Purvanchal and Mumbai-Nagpur. This would be in the range of 3% or 5%?

It will depend upon the number of days ahead of the schedule we will complete because the percentage is 0.4% per each day. So let us see. It can go up to 5% and 6% also. But we have to see then when we'll be able to achieve the COD and also provisional as well as final COD.

Okay. Okay. And sir, Jhansi-Khajuraho, outstanding order book, you said INR 216 crores or -- I just wanted the number again because it seems the execution is sizable compared to last time. The outstanding order book was INR 470 crores. So just trying to get the number once again.

Jhansi-Khajuraho Package I is INR 416 crores remaining, 4-1-6; and Package II, INR 312 crores is remaining as on June 30.

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

Congratulations for a very good set of numbers even under the distracting circumstances. My question is that do we see any kind of competitive intensity decreasing in the coming years due to a lot of companies not being able to tie up finance, et cetera, in the HAM regime? And my second question is, even though government announced almost, like, a INR 20 lakh crore package for various industries and concession, there was absolutely no mention of any kind of road projects being given extra or road ministry being given some kind of a headway, even despite the fact that the Road Minister, Mr. Nitin Gadkari, is one of the best-performing ministers of this government. So do you feel that roads will continue to get impetus during the balance tenure of this government?

Yes. Certainly, the road sector will get preference over other sectors, even in the national infrastructure pipeline also, what we're talking about INR 110 lakh crores, INR 111 lakh crores. So 20%, they identified for the road sector projects in the next 5 years. Definitely, road sector will be the focus sector for the government because it creates large-scale employment and also it will have an trickle-down effect on the economy as well as the socioeconomic development. But with regard to the, see, reliefs given under the Atmanirbhar Abhiyan, some reliefs are given, like, release of retention money and extension of time and other kind of things. There is no kind of a direct kind of a thing. But definitely, we expect the government will support the infrastructure and particularly in the highway sector going forward.

Sir, about my question on the competitive intensity decreasing. Do you see any competitive intensity decreasing due to a few players having balance sheet problems?

Maybe competitiveness maybe decreased in case of a fund-based project like HAM because there is -- funding needs to be tied up, and they should have a good financial credibility. And we don't foresee a sharp decrease in the competitive environment of the EPC projects, particularly of [ on site ]. Definitely, in a fund-based process, the competitiveness could get depleted maybe after -- down the line.

And sir, cement as well as steel prices are rising. Do you see problems on that account in the future?

No. Again, it's a -- see, it's a supply/demand kind of a scenario. [indiscernible] lockdown and all, most of these units have been closed. So there is a pent-up demand, and there is slight supply/demand mismatch, demand being higher. So we don't see in the long term the prices rise would be there. We expect the prices will get stabilized maybe after 2, 3 months once we complete normalization [ of the effect ].

We will get escalation in -- price escalation in our EPC, HAM, both projects.

Yes, in HAM, we'll get the price indentation, and in EPC, we'll get the price variation in case there is any soft increase in prices of these commodities.

Ladies and gentlemen, due to time constraint, we'll take that as the last question. I now hand the conference over to Mr. Yogesh Kumar Jain for closing comments.

Thank you, everyone, for your participation in our earnings call. We have uploaded the presentation on our company website. In case of further queries, you may get in touch with the Strategic Growth Advisors, our Investor Relations advisers, or feel free to get in touch with us. Thank you very much for participation. I urge you all to stay safe and make others safe. Thank you.

Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you.

Thank you.