PNC Infratech Limited (PNCINFRA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to PNC Infratech Limited's Q3 FY 2021/'22 Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note, that this conference is being recorded. I now hand the conference over to Mr. Mohit Kumar from DAM Capital Advisors. Thank you, and over to you, Mr. Kumar.

Thank you, Neerav. Good afternoon. On behalf of DAM Capital, I welcome you all to PNC Infra Q3 FY 2022 earnings conference call. From the management side, we have with us, Mr. Yogesh Kumar Jain, Managing Director; Mr. B. Sawhney, Chief Financial Officer and Vice President, Finance; Dr. D.K. -- Mr. D. K. Maheshwari. To begin with, we'll have opening remarks from the management followed by Q&A. Over to you, sir.

Yes. Good afternoon, everyone, and a very warm welcome to all present on the call to discuss quarter 3 financial year '22, our financial results. Along with me, I have Mr. T.R. Rao, Director Infra; Dr. Bhupin Sawhney, CFO; and Mr. D.K. Maheshwari, VP, Finance; and Strategic Growth Advisors, our Investor Relations advisors. I hope everyone is safe and taking all necessary precautions to protect yourself and others. I will first share my views on key sector development and highlights and then share operational and strategic financial highlights for the company. Though overall highway bidding activity by NHAI has been active during financial year '22, the awarding activity by NHAI has been a bit subdued during January and first half of the February. It is expected that awarding activity will be picked up by NHAI during the next 1.5 months of financial year '22 to make financial year '21 figure of 4,818 kilometers. In the recently announced Union budget government continued its focus on infrastructure sector, across the sectors. As for the budget announcement, the national highway network in the country will be expanded by 25,000 kilometers in '22/'23. With emphasis on road development for accelerated socioeconomic growth and employment generation, government increased allocation for development of roads and highways by 69% to INR 1.98 lakh crores in financial year '23 budget, from INR 1.18 lakh crores initially made in financial year '22 budget. In the comparison to budget of financial '22 absolute increase in allocation towards road sector had being INR 81,000 crores, out of which increasing allocation to NHAI is being more than INR 76,600 crores. The increase of national highway network and substantial increase in budgetary allocation for road sectors in a sign of increment and inspiration to the highway development funds in the country. PM Gati Shakti Master Plan will encompass the 7 engines for Multi-modal connectivity in the country with speedier implementation of the project through technology. Digitization and networking to facilitate faster movement of goods and people so that overall logistic costs are reduced. Government also allocated INR 50,000 crores for financial year '22/'23 for Jal Jeevan Mission to provide water to 3.8 crore household in villages. In the budget government also announced that the DPR, DPRs for river linking, 5 river linking project has been finalized which include Damanganga-Pinjal, Tapi-Narmada, Godavari-Krishna, Krishna-Pennar, and Pennar-Cauvery. Fast-tag based toll collections picked up significantly in quarter 3 financial year '22, and the record high monthly collection at INR 3,679 crores in December 21, which roughly translated into an average daily collection of INR 119 crores per day. As per the data released by the National Payment Corporation of India, the toll collection increased INR 502 crore in December '21 on month-on-month basis, which was primarily driven by increased economy activities led by festive season and a spark in manufacturing activity. Now coming to the key updates of the company. During the quarter, the company received from NHAI for collection of user fee at kilometer -- at 135-kilometer long Eastern peripheral express way, B plaza in the state of Haryana and Uttar Pradesh for 1 year for a contract value of INR 369 crores. Also on 25th January '22, the company in joint venture achieved LOA for 3 new EPC projects, namely survey, design preparation of DPR construction, commissioning and operation maintenance for 10 years of rural water supply for total villages of 2,337 in this State of Uttar Pradesh from state water supply and sanitation mission Namami Gange and Rural Water Supply Department, Government of Uttar Pradesh. The approximate aggregate value of our 3 water project in UP is INR 2,337 crores and a specific value will be known at the time of execution of agreement after preparation and approval of the state project reports. We have our projects -- are to be constructed in 12 months upon approval of DPR and signing of agreement and operated for 10 years post commissioning. As I mentioned in the previous earnings calls, the company continued to focus on diversification in the project development business to continue the growth momentum without assuming the concentration. However, given the strong pipeline of upcoming projects from NHAI and MORTH our focus area would continue to be the road sector. The recent trend of contact awarding in the water sector is very encouraging. We look forward in increasing our presence in the water sector through Jal Jeevan Mission. We believe that the pipeline of projects to remain robust from this mission in the long term. However, the company will focus on consolidated the ongoing water sector project first. At present, the company had a total of 19 projects on PPP format comprising, BOT toll, BOT, NOT, OMT and HAM assets. Out of these 19 projects, we have 11 HAM projects with a total bid project cost of INR 16,144 crores from our HAM portfolio of 11 projects, we have achieved COD and PCOD of 5 projects and 6 are under construction. In terms of equity investment, total requirement for these 11 projects would be around INR 1,468 crores out of which we have already invested INR 749 crores till December '21. And the payments will be invested over the next 2 to 3 years, the internal accrual generated from the next 2 to 3 years should be sufficient to fund the total equity investment. Now moving on to our order book. As mentioned earlier, the company has focused on diversification of the order book and the divisions are busy within the current order book. Our unexecuted order book for 31st December '21 was over INR 12,000 crores while including all the projects for which we have already received letter of award. Our order book would be over INR 14,300 crores that gives a strong revenue visibility for company over 2 to 3 years. Of the total order book of INR 12,000 crore the roads, EPC context contributes around 24%, road HAM projects contribute around 45% and water and irrigation contributes around 31%. Update on Ghaziabad-Aligarh project divestment. We have signed the share purchase agreement on 1st April '21 with the Cube Highways and as on date, we have received NOC from all 10 bankers, NOC from NHAI for changing -- also received formal approvals for final COD and extension of commission concession period on account of reduction traffic are awaited from NHAI. We are expecting receipt of consideration from this transaction from Cube Highway upfront on the closing date and our share of agreed earnout after financial year '23. However, the company considered an impairment amounting to INR 39 crores in its investment in the SPV during the quarter ending 31st December '21. Balance of impairment, if needed, would be considered upon the shift of consideration from Cube Highways, which is expected by the end of financial year '22 and assessment of earnout. Now I would present the vision for the quarter ended December 31, '21. Before discussing financial performance, I would like to share that during quarter 3 of financial year '22. The company has considered an impairment of INR 39 crores in the investment made in the Ghaziabad-Aligarh road project and as we have provided the same under other expenses. We have adjusted to have -- to make financial performance comparable with the previous corresponding periods. Financial periods of stand-alone and consolidated without considering the impact of impairment. Revenue of third quarter of financial year '22 is INR 1,522 crores, which is higher by... [Technical Difficulty]

Ladies and gentlemen, please stay connected. Line for the management call. Participants please stay connected while we rejoin the management back to the call. Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. Sir, you may go ahead.

We can start from financial details, sir?

Sure, sir.

Or 9 months results. Hello?

Mohit, sir? Hello?

We can start from years of 9 months or from starting financial year.

9 month, 9 months, sir. Thank you.

Revenue of 9 months financial year '22 is INR 4,388 crores, which is higher by 34% as compared to INR 3,281 crores in 9 months of financial year '21. The EBITDA for 9 months financial year '22 is INR 602 crores, INR 602 crore, which is higher by 37% as compared to INR 440 crores in 9 months financial year '21. The EBITDA margin for 9 months of financial year '22 is 13.7%. The profit for 9 months of financial year '22 is INR 349 crores as compared to INR 233 crores in 9 months of financial year '21, a growth of 50% on year-to-year basis. Consol financials for the quarter ended 31st December '21. Consol revenue of quarter 3 financial year '22 is INR 1,722 crores as compared to INR 1,582 crores in quarter 3 financial year '21 with a growth of 9%. The consol EBITDA for the third quarter of financial year '22 is INR 365 crores. The EBITDA margin for quarter 3 financial year '22 is 21.2%. The consol PAT for quarter 3 financial year '22 is INR 117 crores. Consol revenue of 9 months financial year '22 is INR 4,982 crores compared to INR 3,923 crores in 9 months financial year '21 with a growth of 27%. The consol EBITDA for 9 months of '22 is INR 1,093 crores, which increased by 10% as compared to INR 998 crores for the corresponding period last year. The EBITDA margin for 9 months financial year '22 is 21.9%. The consol PAT for 9 months '22 is INR 352 crores as compared to INR 347 crores in 9 months financial year '21, a growth of 6%. On the standalone balance sheet side as on 31st December '21, our net working cycle is 96 days. Our network on a stand-alone basis is INR 3,205 crores as on 31st December '21, whereas total standalone debt is INR 339 crores. As on 31st December '21, we do not have any working capital loan. The total cash and bank balance as on 31st December '21 is INR 246 crores. This translates to net debt to equity of 0.11x. On a consol basis, our net worth is INR 3,374 crores, whereas total debt is INR 4,421 crores as on 31st December '21. The total cash and bank balance, including current investment is INR 854 crores, this translates to net debt to equity of 1.31x. With this, we now open the floor for question and answers. Thank you.

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

Congrats on strong execution once again. Sir, my first question was basically on the order flow this year. [Foreign Language] So any specific reason throughout the year [Foreign Language] period is left you will be able to basically capture more orders from NHAI.

[Foreign Language] 5 EPC and 2 TOT projects already, we have submitted that amount is around INR 17,000 crores. So we are expecting 3, 4 bids out of this.

Okay. [Foreign Language] or they can go to next year.

All bids are submitted.

[Foreign Language] These bids are expected to be opened. The financial bid is before end of the March. See, as you know, the competition has been very, very steep and very aggressive because of the relaxation of widespread relaxation of the qualification criteria as well as the dispensing with the bid security. Now recently, the Ministry has taken a decision to restore the bid security in the both EPC as well as HAM. Certainly, this will have an effect on the -- this being -- I have some work as a threshold and work as a barrier. So that we also see going forward, the competition will be subsided. But nevertheless, whatever bids we have submitted, we have submitted total 19 bids of a aggregate value of INR 17,000 crores which are under evaluation and which will be opened before end of this financial year. And we expect, as our MD said nearly around 4 to 5 bids, 5 projects out of these bids.

Okay, sir, got it. [Foreign Language] Do you think [Foreign Language]?

[Foreign Language].

Got it, sir. Got it. Sir, secondly, sir, [Foreign Language]?

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

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

Congratulations on a decent quarter. So my first question is on BGM projects. So if you can tell us out of the INR 3,200 crores order book, which was there. So what is the pending order book? And how much was the revenue in 9 months and the third quarter of this financial year?

Okay. Yes, for all the listeners, to all the analysts because this -- whatever statements we'll be making will be the forward-looking statements will not assume any warranty or presentation or any been implied or said. And these are subject to all kinds of risks and uncertainties -- and also then the final actual results would be materially different from what the statements we are making today. So this will be whatever we are talking and whatever we are sharing of information will be subject to the standard disclaimer and safe harbor. Okay. Second thing, when it comes to Jal Jeevan Mission. Jal Jeevan Mission under Phase 2, we got around 2,476 villages. That is the PNC share out of 3,500 villages we got -- 3,400 villages we got. So out of 2,476 villages, we already submitted DPR for 2,003 villages, which roughly translates into 82% of DPRs have been submitted. And we also signed the tripartite agreements DPR approved by the state level committee for about 1,077 villages, we already got it. So this out of 177 villages, we commenced work at more than 400 villages. So 200 bores already drilled and the remaining bores are underway. And during the first 9 months, only we raised bills for the DPR preparation and some boring kind of thing. So this fourth quarter, we will be doing bidding -- we will be doing billing, maybe, say, around INR 100 crores to INR 150 crores before end of this financial year. And also, we received more than INR 130 crores mobilization advance from the, interest-free mobilization from the Jal Jeevan mission.

What is the total order book, sir, as of now, 9 months order book on these projects?

See, 9 months outlook, we got a project of 2,337 new villages we got. Earlier, we have a 2,476. Total, we have 4,813 villages. Yes. Though we are considering INR 1 crore per village when we prepare the DPR and when we get the DPRs approved, this is coming on an average of INR 1.4 crores. So INR 4,800 crores will roughly translate into more than, I think, around INR 7,000 crores. But we'll come to know only once these all DPRs are approved, and then we signed the cover agreements.

Okay. So my second question is on Aligarh-Ghaziabad project. So if you can highlight some numbers, if I remember correctly, we had about including loans and advances, equity and receivables to be realized from the SPV about INR 300 crores plus. So if you can highlight how is that number increase now? And the INR 39 crore write-off is the funding part, which we did for this quarter. That's why you've taken the write-off, can you just highlight on that?

Actually, as MD has confirmed that we have received the NOC from all the 10 lenders. We have received a change in ownership NOC from NHAI and as regards the TOT extension of time, which has already approved and business deal awaited from NHAI, which is expected in a big time. So after discussing with the auditors, conservatively we are -- management that the amount we have improved on account of the unsecured loan and debtor, we have provided 10% as a impairment in this quarter.

So total amount is you are saying INR 390 crores is the total exposure there?

INR 390 crores on account of or is equal in the debtors and equity.

And how much we're expecting to realize from Q1 to 3, sir. Last thing about INR 350 crores, we will get after deducting INR 40 crores. So we should get about INR 350-odd crores from this?

Certain things are still awaited for an extent that unowed package from Cube Highways and certain from partners. So as soon as we have received the minutes of the NHAI, then settlement and distribution will be cleared. So that is why Yogeshji has confirmed that we will consider in the FY '22 impairment in case if needed or in the FY '23 after receiving the earnout.

The next question is from the line of Mayur from Profitmart Securities.

I just want to ask that what is the outlook for the next quarter? What is your thoughts on that?

As already informed in the earlier call that this year, we are expecting the top line with the growth around 20% and certainly we will achieve 20% as compared to FY '21.

Mayur, do you have any follow-up questions?

No, sir. That's it.

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

So my first question will be on the order backlog breakup project wise. So I would require the order backlog for Delhi Vadodara package 31, Delhi Vadodara package 29, and there are more orders I will repeat, so if you can tell me one by one, then I can just note it down, sir, please.

Package 31 outstanding is INR 637 crores and package 29 for Vadodara is INR 590 crores.

INR 590 crores. Then, sir, this Purvanchal Package 5, 6 and Mumbai-Nagpur express way?

Sir, 5 almost completed, it is negligible and Purvanchal 6 is also around INR 80 crores, INR 90 crores.

Mumbai-Nagpur?

And Nagpur-Mumbai, INR 110 crores.

Okay. And on the packages of the -- old packages of Bhojpur, Koilwar, Nagina, Varanasi, what is the status?

Bhojpur outstanding is INR 90 crores and Koilwar, 85 INR crores, and Nagina-Kashipur, INR 120 crores.

And Varanasi complete?

Yes.

Sorry, sir, INR 120 crores, you said, Nagina? and Varanasi complete?

In this quarter it will be completed, in the current quarter. This and Nagina.

Varanasi also we completed there is no significant order backlog there. We completed, we received the completion certificate for this.

Completion certificate. And sir, this Jhansi package 1 and Jakeri-Allahabad.

Jhansi package 1 also, we received completion certificate on 28th January this quarter, and there is no order backlog as on that. There's no significant order backlog in Jhansi package 1.

And Jakeri-Allahabad is INR 460 crores outstanding.

Which package sir?

Jakeri-Allahabad.

INR 460 crores, okay. And sir, continuing on that, what is the under position because you said that till December, we cannot do the execution because the exchange of monsoon and the status. So whether have you done any execution in December or the order backlog is still INR 975 crores in execution has started from January?

No, no. In the December quarter, we have done some execution where there is the water is not released. And again, we'll resume the canal works and other things from the first week of March.

Okay. So what is the outstanding order backlog then in that project?

It's around INR 960 crores.

INR 960 crores. Okay. Okay. Okay. And sir, this UP water supply project of INR 275 crores, which we had received. What is their order backlog, sir?

INR 2,700 crores, sir.

INR 2,700 crores it was opening -- so last quarter, it was INR 255 crores as on September.

We made it INR 246 crores.

And sir, you have not booked any revenue from this -- the other 2 UP project of INR 32 billion. You will start -- you'll be booking revenue from Q4 of INR 100 crores to INR 150 crores, right sir?

Booking the revenues.

Yes, so what -- and the next question is on the balance sheet numbers. So if you can give me the debtors, creditors, inventory, unbilled revenue retention and mobilization advances?

Mobilization advance by INR 536 crores in December '21, debtors is INR 1,500 crores which the debtor days were 96 days.

Creditors, inventory retention unbilled?

Retention was INR 203 crores.

Inventory and creditors, sir? Hello?

Yes, yes. Inventory is...

How much sir?

INR 494 crores for inventory.

INR 494 crore. And creditors would be?

Creditors is INR 1,140 crores.

And any unbilled, sir, or just small only, as usual?

Unbilled is...

And sir, why is the debtor days were high like 96 days, it's very high, I guess, compared to a usual run rate. So any reason why we have done some late bookings, which resulted in high debtors.

Actually debtor days is -- as you are aware that the PNC Infratech is not having the -- utilized limit, that's why we are not taking the disbursement from the HAM project from the lender. Irrespective as some amount we are discounting on the rate of 4%, instead of taking the development from lenders, we have taken -- discounting the bill at the rate of 4%. That is why debtors days slightly higher because of the outstanding in the HAM project.

So what is that number outstanding?

That is around again INR 1,500 crores.

So INR 940 crores is outstanding from HAM projects as on December?

It is 61% of the total debtors outstanding.

So this strategy will continue this quarter also that we'll be not taking in any additional debt from the...

We have started to take the disbursement. We have started to take disbursements.

Okay. Okay. And this as -- what is the toll collection numbers for the projects?

Toll collection in NP highway was INR 12.8 crores.

Okay. This is in crores, right?

Yes. And OMT project Kanpur-Ayodhya is INR 121.5 crores, Kanpur highway is INR 36.5 crores.

INR 36.5 crores, okay?

INR 33.5 crores.

INR 33.5 crores, okay.

Narela is INR 10.7 crores.

Okay.

And Bareli-Almora is INR 14.30 crores. And Ghaziabad is INR 64.5 crores.

Okay. Okay. And sir, CapEx -- 9-month CapEx in Q4 target and next year CapEx target sir, and revenue growth guidance next year and margin guidance?

The CapEx, we have only informed around INR 125 crores, but in 9 months, we have taken only INR 20 crores, and we are expecting around INR 40 crores to INR 50 crores in FY '22.

And next year?

Next year it should be around INR 125 crores.

And what is the revenue guidance for next year?

Next year's revenue guidance again subject to disclaimer -- 10% to 15%.

And are you bidding for any projects Ganga Expressway subcontracting or are we looking to bid for such project because you are bidding for TOT model, which is again the asset heavy model. So if we are not participating in the BOT project in Ganga Expressway what is the logic of bidding for this TOT project? And are you interested in taking a subcontracting of -- that's it from my side.

See, actually, the TOT projects are brownfield projects, all the TOT projects are Brownfield projects, we have a tangible toll revenue history. In terms of the Ganga Expressway, being a very greenfield project and completing a greenfield alignment -- so there we perceived some risk in that because the traffic -- how the traffic will be diverted from the existing network to this whole and how much time it will take to ramp up the traffic. So other key consideration with the traffic revenue rate. So we have not done...

Are you signing any subcontracting work from Adani and IRV for this Ganga Expressway if they award any because we are the expert in UP.

As of now, we are not -- this thing. So even between 2 corporates, so I don't want to discuss much on that.

[Operator Instructions] The next question is from the line of Faisal Hawa from H.G. Hawa & Company.

Do we see any kind of risks emerging from the high debt levels that NHAI is having at this point of time. And could it be a reason for their releasing these orders, not on time in this financial year also?

See, what does happen. See yes, yes, because of the code of conduct is still in force in Uttar Pradesh and also, they have some 5 states, where these projects are located. And also then they are taking valuation some time because they also want to appoint the independent engineers before awarding these contracts to be the concessionaires and the contractors. So it is getting delayed. But we expect the opening up the financial bids as well as the awarding activity will be picked up maybe next 1.5 months before end of this financial year so that the NHAI like to meet their targets.

So feel about the high debt levels at NHAI is carrying. Would it be a risk to the entire industry?

Yes. This is a very larger issue on thing, who don't want to comment on that. But to being a government authority and also NHAI got boost assets and also then they also want to go for a monetization and they also have other frameworks like InVit and all. So it would be very difficult to comment on that. But as such, we also foresee any major risk in that aspect.

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

Most of the questions have been answered. Just trying to again understand in terms of the guidance when we are saying 20% for this year. So that means we are looking at a decline in the fourth quarter on the top line front, is it?

See, can you come back again.

Sir, I am saying that when we are saying that looking at our 20% top line growth for this year, does that mean we are looking at a decline in the fourth quarter on the top line front?

See, fourth quarter would be definitely better than the fourth quarter of last financial year. Corresponding financial year -- financial corresponding quarter of the last year. And the top line, what we had -- what my colleague has mentioned is that 20% minimum. So it will be maybe between 22%, 23% and 24% kind of setting.

Okay. And next year, when we are saying a 15%, so that is based on the assumption that what -- even if you can repeat in terms of the order inflow, we are expecting 4, 5 projects out of 19 bids. So how much is the value of each of these projects or average size -- and in general, how much are we targeting to get the order inflow in this 1.5 months?

Yes. See, we have already secured orders worth of INR 2,700 crores. And as we had earlier mentioned, our total expected order inflow for the current financial year would be INR 8,000 crores. Since we already got INR 2,700 crores, we are looking forward to have an order of around INR 4,000 crores to INR 5,000 crores before end of this current financial year.

Okay. And then as it is slightly on the lower side -- so next year, we can look at INR 10,000-plus crores because for -- to sustain the growth of 15%, we need a sizable order inflow or rather we need to keep on increasing the order inflow from FY '23 onwards. So just trying to understand if that is the case, are we only looking at the road as a case because previously, we are looking at airport and other also. So now as we said, in water, we will be first now consolidating. So -- are we looking further order inflow in the water also or only the road that would be the driving 70%, 80% of order inflow. And there also, how much are we now comfortable to look at the HAM projects as a inflow for this -- out of this INR 4,000 crores to INR 5,000 crores. And for next year, also how much we can take HAM projects.

Sure. Our road sector portfolio, even in the order flow, also, we are expecting around 70% to 75% from the road sector because that will continue to be our focus area and focus sector and whatever orders we'll be expecting from the roads and highways would be on a 50-50 basis kind of thing. So we always look forward to have a 50% HAM projects and 50% EPC projects. So that there is a balance between the fund based and nonfund based project. And Jal Jeevan Mission since because government has already allocated INR 60,000 crores in the FY '23 for the Jal Jeevan Mission, so many other state governments will also come. And also, it is expected the fourth phase also will come from the Uttar Pradesh. So there also we look forward to have a bid for the in case good opportunities are there in the Jal Jeevan Mission. But as our Managing Director has mentioned, before embarking on the new projects, whatever projects we got 4,800 villages, we want to consolidate them. We want to submit the DPR and start the work over those projects before venturing into the further. But definitely, in FY '23, we have another 13 months from now. So we look forward to having projects in that. But in case of the airport sector, we also have a -- because of there's a lot of synergy between the roads and airports, particularly air side payments and all. So we also see good opportunities are there. EPC opportunities are there in the airport sector, we did.

Okay. And sir, just if you can help me in terms of the asset monetization. So previously, we said that we were looking at 5 HAM, and 1 NOT project, so where INR 680 crores kind of equity has invested -- so where are we -- will it be a direct sales or InVit form? How much time it will take? When can we see the announcement. And at the same time, in terms of this water continuing to on that part. So the previous 3 water projects is INR 3,500-odd crores. And for you, I think, correct me if I'm wrong, you mentioned that in terms of the DPR post, does that value can increase sizably in terms of after finalizing the DPR, and broadly, how much revenue are we looking at in FY '23 from this INR 3,500-odd crores?

See the -- definitely, once the DPR gets finalized, there will be increase in the estimate now we are assuming that INR 1 crore per village it can go up to INR 1.3 crore to INR 1.4 crores on an average to village. So there will be around 30% to 40% increase in the value of these water projects. And whatever this first phase, we have 2,476 villages, is roughly transfixed to INR 3,000 crores. So 50% of that we are expecting in FY '22. So it roughly comes to around INR 1,500 crores. It may further increase, but it would be around INR 1,500 crores execution in FY '22.

That's a great. And now on the asset monetization front of 5 HAM and 1 NOT.

So we have received a pre-proposal for monetization, which are still under evaluation. We should be able to take it this year on this before the end of FY '22, followed by the -- by the retrospective.

So are we only looking at direct sale and not the InVit format or that auction is also available?

Yes. Yes, that option is also available, but we see kind of valuation we are getting finally we'll be getting from this proposals what we receive, so then the final call -- will take a call before end of this financial year, accordingly.

So no time line in terms of getting our equity back, is it fair to say that FY '23 may not, we see some -- any kind of inflow coming back in terms of the equity coming that it takes most likely would be in the FY '24. Is that the right understanding?

Yes. Largely it is a right understanding.

[Operator Instructions] The next question is from the line of Alok Deora from Motilal Oswal.

Congratulations on decent quarter. Just -- so a lot of questions were already answered. Just 1 question on the TOT bidding. So I just wanted to understand the strategy there because how much of these kind of asset heavy projects we are willing to take because a few quarters back, we have mentioned that we are not looking at any sort of toll projects. So now that we are looking to bid for TOT projects, which has a very long-term kind of toll collection. So how much of this would we are looking to keep as a part of our overall order book going forward?

Yes. This personally what out of TOT bundles, Bundle 6, Bundle 7 and Bundle 8, we bid for 2 bundles. As you know, the Bundle 6 is virtually in our backyard, it is Agra Bypass. So there, we know that -- we know about the project. In fact, we executed EPC of that project. So with the certain concentrations, we bid for that. And in case of the TOT Bundle 7 where we got a 1-year toll user fee collection contract, for 1 year. So there, we are the highest bidder and we got the project and we started to toll collection from 1st of January. There also, we've got some conductors first hand information. So that -- but in a long-term strategy, we are not looking at a TOT as the kind of area where we'll be pursuing. But these 2, we are bidding with some specific regions and also which are very close to our area of business, and the center of our operations.

And the water project, which we won very recently, when is that expected to start?

Water projects what we got it in the month of January, 2,337 projects. Now we are expecting the list of villages provided by just given this state water mission by March, then we'll have a 3 months' time to prepare the DPRs and getting the DPRs approved. So you can say by till the end of June. Once the DPRs get approved, then we will commence these projects, we can say something Q2 of FY '23.

So large part would come in the second half of FY '23 in terms of revenue.

Initially, when we start the project, then there will be some enabling works and other things and all boring. So the substantial execution will start from the H2 of FY '23.

The next question is from the line of Bharani Vijayakumar from Spark Capital Advisors.

Am I audible?

Yes. Yes.

Yes. So my question is on this Jal Jeevan Mission projects. If the final project cost or value is not finalized. Based on what is this order awarded, the 2,337 L1. So that is just an initial estimate and it will change after your DPR preparation? Is that the understanding?

Yes, yes, yes. It is an initial estimate of 2,337. -- initial estimate sales INR 1 crore per village subject to preparation and approval of the DPRs.

Right. And still, the L1 mechanism is what is used to award these projects, right?

Yes, yes. See these projects are awarded bases on there is a set of BOQs there. And then on those rates, 1 has to be the plus or minus kind of a thing. So who were force or the lowest, the bids are awarded. And based on the quantities of the DPRs this already pre-agreed BOQ rates are applied and then accordingly, project cost is decided for each village.

Understood. So how will the cost pass-through mechanism in this Jal Jeevan Mission projects? Would we have any problems due to the material cost increases?

See, in the Phase 2, we have an escalation provision for the regime if in case of any increase in the HDPE material, there is the escalation program there in the Phase 2. But in the Phase 3, that provision, they have removed it. Otherwise, there is no provision for the escalation in the Jal Jeevan Mission. But the rates, whatever rates -- BOQ rates or whatever. So it has considered some kind of escalation factor in that. So any increase in the -- any steep increase or any unexpected increase in the basic input material, it will have some pressure on the margin. But there is some -- already something is already bidding in these rates.

What will be the typical mix of components in a project like how much percentage of cost would be, say, pipes, pumps, electrical works and civil works?

I don't have readily the breakup. So we can share you separately.

And what are the kind of margins you are expecting in these projects, sir, including our -- including some margin pressure, say, in the next 1 year?

Something around -- it will be something around 14% EBITDA margin. I will probably get in touch with you on this water project some time.

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

Sir, two questions. One bookkeeping question. What is the outstanding order value of Lucknow ring road in the order book?

Lucknow ring road.

Lucknow ring road. It is INR 700 crores .

INR 700 crores. Right, sir. Sir, just 1 last question from my side. [Foreign Language] in the last -- in the next 45 days, [Foreign Language] in bidding for projects only in the north and central part of India because [Foreign Language] we are trying to restrict ourselves and bid for only in the North, South and central parts of India? Or is it just coincidence?

[Foreign Language].

Okay. Any specific reasons for [Foreign Language].

[Foreign Language].

The next question is from the line of Uttam Kumar from Axis Securities.

Congratulation on good set of numbers. Sir, can you give the breakup of equity investment in HAM? What has been -- how much we have invested in this year and the balance that will be in this year and in better future for the next 2 years in the HAM projects?

Actually, we require INR 1,470 crores total equity in 11 HAM projects. Out of that INR 750 crores, we have already infused till December. The remaining is INR 720 crores we have to infuse in this quarter and next 2 years.

Okay. And sir, how much will be invested in the fourth quarter?

Fourth quarter around INR 200 crores. FY '23 INR 320 crores and FY '24 INR 200 crores. But total is...

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

So overall, I just wanted to get your views on the impact of commodity prices on our margins for the HAM project execution that we are doing. At a blended level, what is the kind of margins that we will see at FY '23?

I'm talking about the EPC work that we do on HAM project.

It will be between 13% to 14%.

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

Congratulations on a decent set of numbers this quarter. Sir, just a small clarification on this water supply orders in Uttar Pradesh. You said, I mean, the cost estimate could change from INR 1 crore to INR 1.2 crore, INR 1.3 crore or INR 1.4-odd crores per village. I am assuming, I mean, this variation would essentially be because of change in the BOQ and not the price that you would have given for each of these items that you need to use. Am I right in my understanding?

Yes, basically BOQ rates are whatever peaks -- increase in the quantities will result in the increase in the overall cost of the projects. So the dates will remain same.

Sure. And could there be a situation wherein let's say, I mean, you submitted EPR with certain -- I mean in a number in terms of BOQ that you would be required to use. And authority was not to agree with that quantity and make you go back your estimate because essentially, so let's say, I mean assuming there's a loophole, right? I mean at the time of bidding, I could quote a number in terms of BOK, which is lower and then suddenly go and revise that number. So you could.

At the time of quoting the thing we are only quoting for the rates. Now we are quoting for the items because in fact, these items and rates also fixed, we are only quoting plus or minus percentages. So subsequently, the quantity is what we are based on this site surveys and site studies, we are arranging the quantities for each village. And then we are preparing the DPR, only after approval of the DPR only, we'll start the execution. So there won't be any kind of differences later because they will approve the DPR, they will approve the quantity for each item and the rate what was predecided that will be applied and then execution will be undertaken accordingly. So there won't be any different because we'll -- whatever DPR we're submitting, that are duly approved.

Sure. No, no, I understand that. So I was wondering, I mean, could there be a situation. So we've not had the situation until this time, but could there be a situation where you give a certain number in terms of BOQ. And the authority says, no, I mean, this is not the right time, I mean it is possible to be able to do it for a lesser quantity? Could there be a situation? I understand you've not had that issue until this time.

They have issued guideline for DPR.

Each item under DPR and their set guidelines are there. We are preparing DPRs based on those guidelines.

Sure, sir. Sure. I understand this. And on cash side, our cash balance has come down this quarter. Is it possible to explain in this INR 250-odd crores of cash reduction on a sequential basis. What would explain this because when I look at our net working capital cycle, it essentially seems that it is lower than last quarter, which essentially means I mean working capital maybe would not have infused any significant money. So INR 95 crores, I understand, is the equity infusion, what could explain the balance around INR 160-odd of reduction in the cash balance?

I told you that we have not taken the disbursement from October HAM projects because of the nonutilization of the working capital limit, that is why slightly it is reduce. Accordingly, debtors amount has also increased to that extent -- it can be taken the certainly the cash and bank balance should increase.

Sure, sure. And sir, just on this, you gave creditors, would you be able to kind of repeat that number again, please?

It is INR 629 crores with a 80 days debtor days, INR 629 crores, yes. Debtor days payable. INR 629 crores.

The next question is from the line of Amrutha from Wealth Managers.

My question is regarding what you mentioned about the change in the qualification criteria for the NHAI awarding. So then when is this applicable of these changing the criteria from. Is it going to impact -- or is it for a benefit in the Q4 or will it be from the Q1 of FY '23 onwards?

This will be -- see the real effect of this reintroduction of EMD bid security and also the rationalization of qualification, we'll have this positive impact from the Q1 of next financial year.

Okay. And what is -- how we awarding activity in the Q4 right now as in the -- in Jan and Feb?

See till in Jan and February, the awarding activity been subdued because the elections are going in the 5 states and some other regions, what I had mentioned earlier. But what we see is that awarding activity definitely will be picked up during the March before end of the current financial year.

The next question is from the line of Kalpit Narvekar from Allianz Global Investors.

Congratulation for a decent quarter. My first question was in terms of the INR 15 crores, INR 20 crores of top line that you did in this quarter, do you think there was some loss in terms of execution because of monsoons or because of UP elections, say, some sites had some rallies or something for you. Is there any -- do you think the execution could have been higher in this quarter because of that? And also, do you think that fourth quarter will have some impact on execution due to the elections, particularly in the UP, the projects in UP?

No, no, no. See, the elections in Uttar Pradesh will not have any significant impact on our execution because I would say no impact on that. And in Q3, there was a slightly, you can say, compared to Q2, Q3, there was this reduction of a few crores. Because in Q2, what has happened, some major projects, we achieved the final COD including Purvanchal Expressway and all this thing. So before achieving the final COD, some of them were parting the activities and to achieve the final CODs, the execution has been expedited. And that's why you would able to achieve higher income in Q2 and when compared to Q3. Otherwise, for a few crores kind of a difference, there is no specific reason for this thing. And we don't foresee any problem with the elections even in Q4 also.

Yes, sir. And my second question is again related to the same thing. In terms of your exposure to UP state, so if -- so -- the -- do you have any -- so what would be your percent -- what would be the order book exposure to say UPEIDA, on the road side? And also on the water side, 50% is funded by the state, right? So do you see any sort of receivables impact on these projects yes. Do you see any impact on getting payments from these agencies given that elections are happening? So firstly, how much exposure? And secondly, is there any risk in terms of getting payments on these projects, right, from UP state?

First thing, the Jal Jeevan Mission, we have 50% from the government of India and 50% for the State Government. What we understood from them that the allocations have been made by the State Government also, even during the election time also, we are getting our payments released, our mobilization and negotiations. Funding is not a problem. We don't foresee any funding problem would be there for the Jal Jeevan Mission project. And also, we don't foresee any funding problem for the UPEIDA, whatever the small amounts are left out. And as of now, the exposure benefiting UPEIDA, I don't think that UPEIDA is launching any new project as of now, as on date. So we'll see once in case any new opportunities comes up. Otherwise, we don't see any funding program in UP.

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

So my question is on the big you said you have received 3 offers for your HAM asset. So last time, I remember, you had said there were 5 HAM assets and 1 BOT assets with total equity investments of about $6.7 billion, which you were expecting bids. So is the amount same now the INR 670 crores?

Yes. Yes. Amount is 5 HAM projects, which we achieved the COD.

And this Aligarh-Ghaziabad is not included in this right.

Yes, that is not included.

So if we go from monetization, I mean these things go through. So we are expecting at least somewhere around INR 1,000 crores of inflows to come in over the next year, FY '23?

Yes.

Okay. Great, sir. My second question is on mobilization advance receipts from JJ model. So what interest rate have we gone through these mobilization advance there.

Mobilization advance -- Jal Jeevan Mission Phase 2, there is no interest on the mobilization advance.

It's interesting in mobilization advance?

Yes. It's a 10% of the approved DPR cost interest rate.

Okay. So another question also, you said that the total villages, 2,476 is what we have got in the earlier the audit which you've got earlier. So in the order book, we have only included INR 2,476 crores (sic) 2,476 or you have revised it to that INR 1.3 crores or INR 1.4 crores faster, in the INR 12,000 crores?

As of now we are still maintaining that INR 2,476 crores only in the order book. And also the new order also...

You corrected in the March, end of March.

Yes, yes. Once this all DPRs approved, so then we'll revise this order book number in the -- before end of the March -- in the Q4 quarter.

So total INR 4,800 crores is what like including the Jan orders. We have -- we are reporting it, which has an upside of INR 2,200 crores on the orders that approved. So INR 7,000 crore number comes from there.

Yes. Around INR 7,000 crores maybe slightly, maybe 5% plus or minus.

And lastly, sir, you said that INR 1,500 crores revenue will come from the old orders of 2,476 villages. And you said the new type of orders will start contributing from second half of next financial year. So that still should add another INR 700 crores or INR 800 crores. So isn't it right to expect that next year, we should have about INR 2,000 crores to INR 2,300 crores of contribution from JJ model?

See, as of now, we are estimating around INR 1,500, crores including the new orders, what we received -- some -- once this DPRs are prepared for the new orders and then the CPRs get approved and all so how time lines and on. So we're able to tell you what would be the figure maybe going forward during the first or second quarter next year. But as of now, we are maintaining it at a INR 1,500 crores the total order book.

Just a last question on the political risk, now there's next election going on. So do you perceive any risk from that to our execution? Is there any change of government or change in guard. So do you think these programs will continue? Or do you think because now water is almost INR 7,000 crores of the order book, which is almost half of the order book. So do you think any risk there? Because it I understand will continue, but more on the water side -- the State Government has been the change can it impact the execution?

No, it will not impact this thing -- given by the central government in this Jal Mission.

Thank you very much. I now hand the conference over to Mr. Mohit Kumar for closing comments.

Thank you, everyone, for joining in. We would like to thank the management for giving us the opportunity. I will hand over the call to management for closing remarks. Over to you, sir.

Thank you, everyone, for your participation in our earnings call. We have uploaded the presentation of our company's website, in case of further queries, you may get in touch with the Strategic Growth Advisors, our investor relation advisors or feel free to get in touch with us. Thank you very much.

Thank you very much. On behalf of the DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.