Vascon Engineers Limited (VASCONEQ) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Vascon Engineers Limited Q3 and 9 Months FY '26 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Akhilesh Gandhi from Stellar Investor Relations. Thank you, and over to you, Mr. Gandhi.

Thank you, Rudhra. Good morning, everyone. I, Akhilesh Gandhi, on behalf of Stellar Investor Relations, welcome you all to the Vascon Engineers Quarter 3 and 9 Months FY '26 Earnings Conference Call. We shall be sharing the key operating and financial highlights for the third quarter and the 9 months ended on December 31, 2025. We have with us today the senior management team of Vascon Engineers Limited. We have Dr. Santosh Sundararajan, he's a Group CEO; and with him, we also have Mr. Somnath Biswas, he's the Chief Financial Officer. Before we begin, I would like to state that this call may contain some of the forward-looking statements, which are completely based upon the company's beliefs, opinions and expectations as of today. The statements made in today's call are not a guarantee of future performance and also involve unforeseen risks and uncertainties. The company also undertakes no obligation to update any forward-looking statements to reflect development that occur after the statement is made. Documents relating to company's financial performance, including the investor presentation have already been uploaded on the stock exchange. Now I invite Dr. Santosh Sundararajan to state his opening remarks on the company's performance for the third quarter and 9 months ended on December 31, 2025. Post that, we will open the floor for the question-and-answer session. Thank you, and over to you, sir.

Thank you. Good morning, everyone. This year is especially meaningful for us, at Vascon, as we complete 40 years of our journey. Under the theme [Foreign Language], we are proud to celebrate 4 decades of trust, execution excellence and enduring relationships with our clients, partners, lenders and stakeholders. This milestone reflects not just the scale and diversity of projects we have delivered over the years, but also the strong values, discipline and credibility that have guided our growth. I warmly welcome you all to the earnings conference call of Vascon Engineers for the third quarter and 9 months ended December 31, 2025. Thank you for taking the time to join us. I hope you've had the opportunity to review our Q3 and 9-month results along with the investor presentation which is available on the stock exchange as well as the company's website. During Q3 FY '26, EPC revenues were lower primarily due to the impact of election in Bihar state and delays in receiving approvals in a couple of projects, which has temporarily slowed execution. These are largely timing-related issues, and we expect execution to normalize as approvals are received and on-ground activity resumes. On the Real Estate side, revenue during the quarter was impacted by revenue recognition policy under which revenue is recognized only upon completion of projects. As no real estate projects were completed during this quarter, no revenue has been recognized. In contrast, Q3 FY '25 included revenue from the completion of GoodLife project, resulting in a higher base for comparison. On a cumulative basis, our 9-month FY '26 revenue growth has been muted at around 1%, primarily due to the lower execution in the EPC segment during Q3 and the absence of any major project completions in real estate during the quarter. With the second half of the year typically being more conducive for on-ground activity, we expect execution momentum to improve, enabling teams to accelerate progress on ongoing projects and support more consistent revenue recognition in the coming quarters. Building on our operational learnings and current execution trajectory, we have outlined clear strategic priorities for the remainder of the year. EPC continues to remain a core focus area with emphasis on improving execution efficiency and expanding our project pipeline to support sustainable medium-term growth. We continue to actively pursue new order inflows and expect to secure meaningful EPC orders during FY '26, which will further strengthen our order book and enhance long-term business visibility. In the Real Estate segment, we remain focused on optimizing our debt structure in a more cost-efficient manner to improve liquidity and financial flexibility. At the same time, we are prioritizing the timely completion of ongoing projects to enable revenue conversion and profitability while preparing the ground for upcoming project launches. Our growth framework is anchored by a simple principle of sustained growth powered by execution excellence and financial discipline. This is supported by a strong working capital position with total sanction limit of INR 745 crores, including both fund-based and nonfund-based. Of this, approximately INR 370 crores remains unutilized with an additional INR 60 crores currently under appraisal. This liquidity position provides us adequate headroom to execute our projects without disruption. With strengthened banking support and higher sanction limits, we are well positioned for rapid resource mobilization across projects. Our available working capital can support execution of up to approximately INR 3,000 crores of incremental EPC orders, ensuring predictable growth, sustained execution momentum and healthy cash flow visibility. During the current quarter, we also received a revised working capital assessment from SBI with improved commercial terms. This included better collateral leverage with collateral coverage reduced from 35% to 27%. SBI-led collateral optimization has unlocked incremental working capital without the need for additional security, thereby enhancing liquidity and improving cash flow efficiency. Additionally, bank guarantee margins for BGs exceeding 3 years have been reduced to 15% from 25%. BG commission rates have also improved. Further, CRISIL has reaffirmed our long-term credit rating at A- for the current year, reflecting the strength of our balance sheet, our liquidity position and our banking relationships. Coming to our segmental performance. Our EPC business continues to be the cornerstone of our growth journey. Over the years, we have built a strong track record having successfully completed more than 225 projects, covering over 45 million square feet of construction across India. Our execution strength is backed by the team of over 500 skilled professionals across project management and engineering functions. In addition our in-house design and planning capabilities enable us to offer complete turnkey solutions covering architectural design, structural engineering and execution. This integrated approach reduces dependence on external agencies and speeds up our decision making and helps maintain healthy margins. We continue to focus on large, high-value civil construction contracts, especially from the government bodies and reputed private players. Our strong track record of quality execution and timely delivery has helped us build long-term relationships with marquee clients like AIMS, NBCC, CIDCO, MMRDA, et cetera, and other leading institutions in health care, educational, industrial and residential sectors. In Q3 FY '26, our EPC revenue stood at INR 248 crores, reflecting a moderation of around 9% year-on-year basis. On a cumulative basis, EPC revenue for 9 months FY '26 reached INR 676 crores registering approximately 4% growth on a year-on-year basis. During the year so far, we have secured new EPC orders aggregating to INR 646 crores. In April 2025, we received an order from Royal Rides Private Limited valued at about INR 225 crores. During Q2 FY '26, we secured an order of INR 161 crores from MSEB for Saudamini Building at Haji Ali Mumbai. Further, in Q3 FY '26, we received an order of Navi Mumbai Municipal Corporation for a Super Speciality Hospital at Belapur valued at INR 220 crores. As a result of these additions, as of December 31, 2025, our total order book stands at INR 2,825 crores, which is approximately 2.8x our FY '25 EPC revenue, providing strong visibility for the next 2 to 3 years. The composition of the current order book is as follows: external EPC contracts account to about INR 2,470 crores, while internal real estate projects contribute INR 355 crores. Approximately 77% of the total order book is from government-backed projects, which supports timely receivables and provides greater cash flow stability. In addition, the strategic engagement with Adani Infra India Limited, as discussed earlier, is expected to further support future order inflows and strengthen our EPC order book over the medium term. Now let me provide an update on the Real Estate segment. In Q3 and 9 months FY '26, we continued to see steady progress across our ongoing projects. During the 9-month period, we achieved new sales booking of 77,315 square feet with a total booking value of INR 86 crore and collection of approximately INR 105 crores. While these sales will be reflected in the financial statements in line with revenue recognition norms, operational activity across the projects remain steady. We currently have 4 real estate projects under active development, with a total salable area of 0.78 million square feet, of which 0.65 million square feet is attributable to Vascon. These projects include Tulips in Coimbatore, GoodLife in Talegaon, TOA in Kharadi and Orchids in Santacruz, Mumbai. To date, we have sold 0.48 million square feet, booked cumulative sales of INR 303 crore and collected INR 238 crore. Revenue of INR 117 crores has already been recognized from Tulip and GoodLife. Looking ahead, our near-term real estate pipeline remained strong and well defined. It includes the joint venture residential project in Powai, Mumbai; the Prakash Housing Society redevelopment, for which all the approvals have been received and construction is expected to commence in Q1 FY '27. Tower of Future, which is a commercial project in Baner where the approvals are currently under process and the 4-acre high-density housing Ajanta real estate development is also at a planning stage. Collectively, these projects represent a total developmental potential of approximately 1.94 million square feet, with an expected gross sales value of INR 2,360 crore. Of this 0.82 million square feet of salable area and 1,110 crores of revenue would be attributable to Vascon. The steady progress across ongoing projects and a robust pipeline in place, we expect the real estate segment to contribute in a more consistent manner over the coming periods. Coming to the financial performance of the company in Q3 FY '26. The company reported a consolidated total income of INR 254 crore in Q3 FY '26, reflecting a year-on-year decline of approximately 15% compared to INR 298 crore in Q3 FY '28. This is in line with the factors which have been outlined earlier. EBITDA for the quarter stood at INR 17 crore compared to INR 24 crore in the corresponding period last year. EPC EBITDA margins remained stable at around 10%. Overall EBITDA was impacted by the lower revenues during the quarter, along with higher marketing expenses incurred in connection with new real estate launches. Profit after tax stood at INR 9 crore in Q3 FY '26 as compared to INR 76 crores in FY '25, reflecting a decline of 88% on an absolute basis. This higher profit in Q3 FY '25 was primarily on account of an exceptional gain of INR 75 crore arising from the sale of GMP. Excluding this exceptional item, the underlying profitability remains aligned with operational performance. Coming to the 9-month performance. The company reported a consolidated total income of INR 725 crores for 9 months FY '26 as compared to INR 698 crores for the corresponding period last year. EBITDA for the 9-month period, excluding profit from sale of Ascent Hotels stood at INR 53 crores as against INR 58 crores in the corresponding period last year. The EBITDA margin for the 9 months stood at 9% for the EPC segment. Profit after tax for the 9 months stood at INR 43 crores compared to INR 93 crores last year, reflecting a decline of 55%. The higher profit margin in the previous year was primarily due to the sale of GMP Technical Solutions. To conclude, while revenue during the quarter was impacted by the standing related factors, our execution environment is improving with a strong EPC order book, a healthy project pipeline and a strengthened balance sheet. We are well positioned for the next phase of growth, as execution momentum builds across projects, we remain confident in delivering sustained progress and enhancing long-term value for our stakeholders. With that, we now welcome your questions. Thank you.

[Operator Instructions]. Our first question comes from the line of Himanshu Upadhyay from [indiscernible].

So my first question was on the real estate side, okay? If we look at our Orchids, the presentation of the Q1, we had sold around 10%, okay? And currently, even after 2 quarters, we have sold only 13%. And why the velocity is so slow in that project and what can we do about it? Because the markets seems to be good. So where are we stuck up there? Also, where did we lack or is it in the project design feature, lack of focus or something else? What can we learn from it? Because I don't think we would have expected or wished to do slow sales in the project. So some thoughts on that will be helpful.

Yes, primarily your observation is correct because this is our past redevelopment project in Bombay. And you know the market size of the Bombay redevelopment project, unless project comes to the ground level or ground level, the sales velocity is very unlikely to increase, there is a standard phenomena is the most of the redevelopment project. Except that the players who are playing the game for a long time, I'm talking -- I'm not referring them, but for any segment, any new start, it is a [indiscernible]. So now we are at G+1 level, the visibility is much better, the inquiry is much better. And technically, as per the registration and booking is concerned, it is showing 10% to 13%. But there are another 10-odd booking has happened, which has been token money and everything has been received, but the documentation process is on; unless it is being done, we cannot reflect it. Once this will be reflected, then 10 will be converted 20, 25 kind of thing.

More than 25, actually.

More than 25, but yes, apparently as of now, since selling velocity was low due to this visibility and the ground level movement and all these things, but now since the movement is G+1, G+2, good amount of inquiry is happening. The velocity of inquiry has increased substantially, and we are expected a good conversion on or before Gudi Padwa.

And to answer your question on the design, no, I think all customers that have visited sites have, in fact, expressed a lot of happiness on the features of the design facilities that are being provided even with the limited space that we have. So we are very confident of our design and quality of the product, that is not under the question. Also we have strategized that as Somnath said, we have about 10, 12 bookings, which are not reflected as we haven't done the registrations. These cash flows are available to keep the project going. So once we are about 25% sold, we do not even want to be slashing prices. So -- since it's a small project and our inventory is small, we are not unduly worried about the slower velocity. If we had more inventory and slightly bigger projects, yes, I agree with you, we would have to take certain measures, including reducing the price a little bit if need be to ensure velocity is on. At this point of time, we accept it's slow, but it's known to us, and it doesn't worry us too much at this point of time.

Okay. And one more thing. I was going through our credit rating rationale which has got renewed in the month of Jan '26, okay? It states that the debt under real estate had risen to INR 147 crore as of FY '25 and from INR 88 crores at the end of FY '24. Currently, what would be the debt on the real estate side of the business? And also it says the rating rationale or it says that liquidation of long stock inventory in the real estate segment is a key monitorable, okay? And it says that the value of unsold inventory is INR 320 crores as of March 2025. Can you give some thoughts on that? And also, yes, what is the debt level on the real estate side of the business as of now?

See the real estate side business, the debt level is once again in the range of INR 150 crores to INR 160 crores kind of things, and which is very inevitable. It is likely to happen if you compare the debt level of '24 was INR 80-odd crores. So at that point of time, everybody is aware that we are supposed to raise almost INR 100 crores through QIP, INR 125 crores from QIP, out of which INR 100 crores earmarked for the real estate. But due to certain market conditions, all this thing, we don't want to dilute our equity drastically, we dropped the QIP program. But obviously, the project cannot be stopped. The fund mitigation has to be done through other sources. So that's why the debt has been increased.

And also a good chunk of this is not towards the 2, 3 projects that are giving us sales and revenue at this point of time. We have Powai, we have Baner and we have Prakash, all of which needed purchase of certain FSIs and approval costs to launch these projects. So that is why the borrowing is also looking a bit high at this stage.

And the second part, yes, the rating agency, there is a very standard phenomena for rating agency for all real estate projects that sales velocity and inventory dilution has to be monetized, that is fine. See, whatever the complicated project, there is no such inventory is left out. But ongoing project, there is a 2 way to look at it because in books, certain of inventory is always been getting piled up due to the revenue recognition policy. The books will have to continue some good amount of inventory, which it is -- one side it is inventory, other side is advance from customer and all these things are happening. So we are not too much worried because sales are happening. Yes, for what you have pointed for the home final project, it was relatively -- it was relatively slow, but now it is picking up. And also, we are tying up some channel partners in that area who are predominantly operating in that particular segment. So we are quite hopeful that sales velocity will improve very significantly in coming days.

Okay. Because in our strategic goals and objectives also, which is, I think, Slide 4, okay, is the goal is to optimize the real estate debt, okay...

Yes. I mean see, when we say optimized, it doesn't mean we will not borrow. I mean let me be very clear on the real estate side. There are various options available for us -- real estate, even though we're doing it on a joint venture basis, and I keep saying it glorified EPC, the way we look at it. But even then today, given the FSI available in most land parcels, premium FSIs and TDRs would have to be purchased. So even if we get the one FSI land coming from a landowner or a redevelopment from the society, the balance exploitability on the land has to be purchased by us. So there is an investment always needed in possible cases where we are able to get private equity in or underwrite certain inventory in advance at a subsidized rate and get equity in, we always explore that option. But in some cases, when we know that it's a matter of 4, 5, 6 months by the time the approvals come and we are able to launch and if private equity is coming at an extremely high cost, then we don't mind borrowing. Our current borrowings are well below 15%, 13%, and all of these borrowings are, in our assessment, not more than 6 to 8 months, there will be a rollover. These borrowings will remain as we continue to grow our real estate book because if one project gets launched and starts giving us cash flows and revenues another project would want to be launched, and we would need to. But we will keep a constant eye on the amount of borrowing, the serviceability of this borrowing, and we will ensure that it is not going to create trouble for us internally.

And if you look at that Slide 4 of that our presentation, we are talking about the optimization of debt in the most cost-effective manner. So the meaning is that there are a couple of debt initial level, which has been taken at higher cost, and we are gradually converting into the lower cost. So cost optimization is the first step to happen. And then obviously, the debt optimization -- as long as we want to grow the real estate, debt will keep coming, keep going. That will keep on happening. But cost optimization is a priority to get it done. So it has to be cost effective in terms of the interest rate is concerned.

Okay. And one last question here on debt side. Is Vascon GoodLife, is nearly now 8 years old, okay, and we are at Phase 1. Any views on when can we complete that project and the sales? And do we plan to launch Phase 2? Or I think it will take more time for us to launch...

As of now, we don't have any plan to launch Phase 2 as because that segment is typically affordable segment, has its own challenge. At a point in time, 2015-'16, all this in, there is some PMAY scheme, there is some kind of movement happened, but that movement is not a very conclusive or very high energy movement is there. So for -- to making a sale of this small segment and all this thing, the effort, time, energy is equal as compared to the mid segment and higher mid segment. So Phase 2 is very unlikely to get launched. But obviously, the land available in the Phase 2, it has to be monetized in most effective manner that we are working, but not through it, may not be through the affordable segment.

So we are looking at other options possible, hotels or commercial, I mean whatever option is possible on the balance land, we are open to it rather than sticking to our plan of doing affordable housing on the entire project.

And whatever sales is it is almost -- it is handed over. Majorly has been sold. Some inventory strategically we kept on hold because there is a -- we need -- there is some strategic issue also. One, there is a lot of industries coming over there, so there is a good amount of rental demand. So big amount of inventory has been rented out. And at the same time, the same inventory has been -- is acting as a collateral for our EPC segment bank guarantee limit. So any working capital limit needs some collateral. So that has been used as a collateral.

Our next question comes from the line of [ Siddhesh from PL Capital ].

So mainly on a few projects like Kaushambi, Medical and Vedanta, Barmer appeared to be largely completed, yet a revenue of around INR 35 crores and INR 39 crores remains unrecognized. Could you clarify whether the spending amounts are due to any [indiscernible] or mainly because of delays in certification or payment from clients on [indiscernible].

See, Vedanta, there is still some work has to be done, almost INR 30-odd crores work has to be completed. So there is certain x, y, z reason, which we are discussing with the Vedanta top management also. So certain thing has been slow down and certain thing -- decision is yet to be taken by them. But a couple of meeting has happened. So we are hopeful that by Q2 of this particular financial year, the project will get completed, it is most likely. That hospital project is almost complete, is the ending work process and final bill certification is there. Nothing is -- nothing as such is major left out is there. Only the snag list completion and certification of the final bill, which takes its own sweet time to get it done.

Understood. And with around INR 370 crores of unutilized funds enabling execution capacity for like orders around INR 3,000 crores. What factors are contributing to the current slowdown in orders inflows? This it due to lower bidding activity?

So this is based upon all the recent tie-up has happened with HDFC, then IDBI and realignment of this SBI working capital limit. So that's why INR 370 crore limit has now made available with us, which can be utilized and that will give a good boost to back the order. Rest, Mr. Santosh will...

Yes. I mean, the things -- I agree with you, they're not linked. I mean, we did have -- currently, we have INR 370 crore untied. It's not that 6 months ago, we did not have any untied limits. So bank guarantee was a constraint for booking orders, I would say, a year or 2 ago, this entire year not booking orders is not attributable to lack of banking relations or bank guarantee, to be honest. We have been trying. We have been filling a lot of tenders. We have even, as I said in the quarter call last year that brought down our margin expectations by a basis point. Also, we are ready to bid in the range of 13 rather than 15 even at this point of time. But we haven't -- I mean most of -- it's certainly become a very competitive market in the space that we have been operating in UP, Bihar and Maharashtra, a lot of tenders were put on hold because of the municipal elections over here. Bihar also, a lot of things were put on hold because of the state elections, which have only about now stabilized in terms of the government body there. In UP, most of the tenders, I mean, we bid for a lot of tenders in UP and all of them have been going at minus 30%, minus 25%, where we have not been able to bid more than minus 10%. So it looks like a crazy horizon over there in terms of bidding. Now we are trying in Tamil Nadu, we are trying the private sector. We're trying in Karnataka as well. We are currently now L1 for a couple of orders totaling to about INR 1,300 crores to INR 1,500 crores. We are hopeful that we will receive some good news in the short term. We are also talking to a couple -- I mean, we are also in talks with a couple of projects where we feel we will be able to back or be competitive on a design and build basis. So the last year's order target was INR 1,500 crores, which should have happened by March 2026. We are just a month away. We have done only INR 650 crores -- so I'll make it amply clear that on that count, it does look like we have failed in a big way. But we are not unduly perturbed. It has become very competitive. We are ready to compete. We are ready to reduce our margins. And we are confident that, okay, whatever doesn't happen by March end will probably happen in the first quarter of next year, including -- and so we're not going to reduce our target cumulatively to next year, if it was INR 1,500 crores for this year and INR 1,500 crores for next year. INR 3,000-plus crores by April 2027, we shall take it head on. As Somnath pointed out, the BG limits are in place. So now it is a matter of continuously bidding and with some luck by our side, we are very confident we will get those orders in place and keep the growth story alive. But yes, it is not linear. It hasn't happened quarter-on-quarter in a linear way like we would all love for it to happen.

Our next question comes from the line of Mihir Vyas from 9 Rays EquiResearch.

Just a clarification question. So we book revenue in real estate on the project completion basis, is it a percentage completion basis or it's complete project completion basis?

Complete project completion.

Okay. And any update or something on Adani tie-up?

Lot of discussions happening, the modality -- see, the Adani tie-up is not a typical contract award that we would get from any client. They want a partnership for us to work on the medium- to long-term together. And so they are also coming up with a totally new kind of a contracting methodology itself, which they are working out. So we've had a lot of technical discussions on that front with them that has sort of been frozen in terms of responsibilities on their side, responsibilities on the project management consultant side and responsibilities on our side as we are contracting partners. They want us to be involved at a very early stage from design and planning itself. So at each stage, the responsibility metrics has been carved out. We have negotiated, discussed and accepted all of that at this stage. Parallelly, about 4 projects at site, we have visited, we have started engaging with them on drawings, decisions or in terms of planning on these projects. But it does -- I mean having said that, it does look to me that finally, in terms of receiving a concrete order for a particular project and starting revenue, it still looks at least 6 months away. So I don't see any revenue translating out of this in the next 2 quarters for us. But once it starts -- I mean, we're very positive on this because there's a huge amount of work that they are talking about. And once the ball starts rolling and 1 or 2 projects get their approval and we start construction from there on, it will be quarter-on-quarter just incremental effect going to the next 2, 3 years.

Okay, sir. And any update on the Thane land parcel?

No, nothing. The strategy remains the same. We are working on accumulating 25 acres road touch so that we can try and monetize it. And the corridor from the government will take away another 40 acres. I mean we've said this over the last 2 calls as well. I think it remains -- the status remains there.

So sir, what you were suggesting before in the earlier calls is that you're trying to procure more land from the other individuals involved in the area. Is it improving? I mean are you able to procure it?

It takes his own sweet time. And I say the first target is to make 25 acres contiguous, which is road touch, so out of which almost 17, 18 acres are with us another 6, 7 acres tie-up is going on. So it is happening at a different level of negotiation. And to crack the deal and to get everything converted, to verify all the document it takes it's own sweet time, but our team is very much on to make it contiguous to 25 acres. But no, as such, remarkable [Foreign Language] mean to say, there is no as such moment has happened, which can -- which is in a position to be announced. The movement is going on significantly, but still it is to be converted, something to get to make some announcements.

Our next question comes from the line of Rushabh Dugad from Finnovate Financial.

First of all, congratulations on completing 40 years for the company.

Thank you.

Since a large majority of your business usually comes from EPC and government clients, could you just explain to me how do you select the projects to bid for? And what are the factors you evaluate before taking up the project?

Yes. So firstly, I think we want to be a bit more exposed to good quality private clients as well. So we have set up a business development team to be aggressively working on the private sector as well. At this point of time, we are only about 20% on the private sector. We would like it to be about 60%-40% at least, 40% private, 60% government. We do not want to be 80% exposed to government. Although having said that, at this point of time, government projects seem to be the most preferred projects when we evaluate where we want to put our resources, our bank guarantees, our staff and our bandwidth. We've had a good run with the government. To tell you how do we select these projects, it depends on state where the -- for example, firstly, we -- our sweet spot currently is in the range of INR 300 crores to INR 700 crores, INR 800 crores. So the project, which land up in this kind of a ticket size, most of them seem to be hospitals, that's why you would see us skew towards hospitals in our order book. It is not because we just like hospitals, but it is because projects where we seem to be competitive on a design-and-build basis, ranging from INR 300 crores to INR 600 crores, INR 700 crores, mostly are hospitals, other institutional smaller buildings, schools, et cetera, seem to be of smaller size and then a lot of bigger airports and bigger infrastructure projects are up over INR 1,000 crores. So one is that sweet spot 300 to 800 where we qualify and where the competition is in line for us to be able to back these orders. Second is we evaluate which department from the government is going to be funding this because we stay away from politically sensitive -- potentially politically sensitive buildings which could land up in trouble if there is a change in government in the state during the tenure of the project. So we like to look for projects which are well funded, which will not be in the scanner of politicians once elections are closed by or elections are over. So these are mostly in second tier, third tier cities, villages where there is not much eyeballs. Yes, so I mean these are criteria we look at. But having said that, as I said, at the end, we also have to win this year. We haven't won enough orders -- so we cannot be extremely choosy on more than many criteria that we want to put from our side.

Got it. Got it. So my next question is in line of the EPS and government projects only. I just wanted to understand how the payment terms work for these projects? And are there any delayed receivables in these following projects and the trajectory of those receivables?

So receivables, generally contractually, the payment terms are monthly. So we bill every month. The mode of billing could be different depending on the mode of the contract, it could be an EPC contract or it could be -- sorry, an item rate contract or a design and build EPC contract. But the billing will happen every month, and the payment is supposed to happen every month. Now out of the 10, 15 big projects currently, we are working on -- so far, last 3 years, we have not had any major issues of delay, except now in the last 2, 3 months, a big project in Bihar, Supaul where we've been doing more than INR 30 crores per month kind of work that due to Bihar elections from -- before Bihar elections till now, our payments have been stuck, and we only received a small portion of what we should have received. And therefore, a couple of months ago, we had to take the hard call of stopping or slowing down work at site. The labor has reduced, and we were not in a position to keep pumping money or we are not -- as a strategy beyond the point, we have always maintained that we will not pump money into someone else's project. So between the devil and the deep sea, we had no choice but to choose the devil and stop or slow down site. And that has significantly affected our revenue for last quarter as well and our targeted revenue for the year also is going to be affected because of this. Even now as we speak, we haven't received the receivables from the project, but we are in constant touch with the department and the government. Things have stabilized. Funds have been allocated. We expect the money to come in this week or maximum by next week. And once the money is in, we will remobilize and speed up the project. And so as we said in our -- there is no loss of overall revenue. There is no reduction in contract value or any such thing or even in the profitability in the long run, I mean, a very small hit because of the overheads over the last 2, 3 months. But it's a delayed recognition that is going to affect our targets for this year.

Understood. Understood. So I think your goal is to increase your private client segment from probably 20 to 40, right? So like I just wanted to understand, is there any difference between the project selection like -- based on EPC and government projects. And if you have any private client segment, are there any repeat customers for any new projects for these private clients?

Yes. So we have done repeat work for people like Godrej. We are now in talks with Mahindra. We are doing for Vedanta. We're doing for Capgemini. We are in talks with a couple of other IT clients who are coming up with their campuses. There are differences between government and private, also the kind of private clients that we want to engage with, our terms of negotiation would also differ. We, of course, have Adani going on in a different direction altogether. So yes, I mean private is a big universe out there. With each private client, we set our own terms of guarantee that we would want to put up or payment terms or advances or capital investment on their projects, all of these will be discussed case-to-case basis.

Understood. So I just have one last question with regarding the outsourcing, if you do any? And is there any way you do any outsourcing so that your efficiency has increased?

See, we do not -- as -- I mean, what we bring to the table is the civil side of construction is only governed by us. Of course, in our contracts, the labor is generally outsourced to labor contractors. Every now and then, we do rent out certain assets, if we feel purchase of an asset for a short term is not the viable option, then we go with the short-term rental of maybe shutterings or some equipment at site. But for the civil works other than this, we control the entire process. We will not outsource it as a sub-contract to someone. But when it comes to finishing and when it comes to MEP, some of those things come in to our scope, and we are not experts, we will be -- we do partner and engage other experts to whom we outsource work.

[Operator Instructions]. Our next question comes from the line of [ Kanishk Shah from SK ] Capital. As there is no response, we move to the next question. Our next question comes from the line of Himanshu Upadhyay from [indiscernible].

I had 1 or 2 more questions. The first one is related to Royal Rides, Goa. We have not seen much progress. Means, if we look at the Q1 released the size of the order, what was there and what is currently pending also at the end of Q3. So what is the progress on that? And are we going full fledged or it will take some more time to go full fledged on that project?

Yes, it has not started at all at site and we do not see it starting for the next quarter as well, in fact, almost 6 months because we are dependent -- our part of the contract is dependent on certain approvals that our client has to obtain from the government. It's a ropeway project. We only have a small proportion of the overall project which the client is handling and he hasn't yet managed to get certain approvals to start the construction at site. So I do not know at this point of time when it will start, but it doesn't look like this quarter -- in the next 3 months, we will be getting revenues from that project as well.

And secondly, related to this Adani project or not project, but when the initial press release came, it was a strategic tie-up or 5-year strategic alliance for 3 land parcels or 3 projects nearing 13 million square feet in Mumbai. So the discussions and the things which are happening are now happening beyond those also or for this 13 million square feet, which was initially thought of that has been finalized. So can you give some thoughts on that? Means, what is the progress on that initial 13 million square feet, which was identified in Mumbai and where are we?

So see, initially, they did -- you're right, they did speak to us about 3 big parcels in Mumbai that they have, which -- I mean, the parcels that they have and the CapEx plan and the execution, including something like Dharavi, so the -- I mean, they are looking at lakhs of crores of investment into construction on these parcels in Mumbai itself. And that is why they have been talking with partners like us because they do see that they would need partners to execute that volume going forward. Now initially, at the MOU stage, they had to put in some number, and they did talk about what you did mention about 3 projects and so many million square feet or this. But before those -- these are massive projects. These would have -- we have seen all these parcels, they have taken us -- they have shown the intent or the master plan in these projects. Each of them is at a different stage of approval, some of them very nascent. Actually, there are a lot of trees in some of these parcels. Dharavi is a complicated parcel by itself. So while Adani works on getting these approvals and launching these massive projects, in the meantime, they have started engaging with us on other reasonably smaller, I mean, smaller by their scale, quite big by our scale projects in Mumbai, in Ghatkopar and also in some other cities, they are talking to us. They have a lot of airport site developments happening in other cities by the airports that they have got awarded to manage. So yes, every time we do meet them, they do have various other projects they talk about. We are engaging on 4, 5 at a very design stage at this point of time. And these 4 are not the bigger ones that are to come, which were originally discussed. So these are beyond that.

And the originally discussed one, do you expect we can have some progress in FY '27 means first half of FY '27 now at least? Or it may take more time in those initial things...

Actually, see, I find it very difficult to answer those to be honest, because one -- I mean what is the priority at Adani and when are they wanting to get the approvals and launch these projects? Because the horizon that they have and what we have seen is massive. So which ones do they want to launch first? How do they want to move about? What is their internal strategy quarter-on-quarter is something which we are not privy to. And it will be second-guessing ourselves to say when these projects will start. As I said, there are trees on these parcels, which means from a real estate angle from our experience, we know that if the trees are still there and then you have to get tree cutting approval and then environmental approval and then plan approval and start. Even if you're an Adani, I mean 6 to 8 months is a minimum time line to start any of these. But whether they are actively working on it to start in 6 to 8 months or whether it will go to 12, 14 months, I would not be able to second-guess. But having said that, there are other projects. That's why I said, the good part is that they are talking to us on so many other projects that I do foresee revenue definitely starting on this or that in the next financial year, for sure.

Okay. And I appreciate your frankness and clear communication, which you do with us as shareholders. I really appreciate that.

Thank you.

[Operator Instructions]. Our next question comes from the line of [ Kanishk Shah from SK Capital ].

In the previous call, the management said that an FY '26 EPC revenue target around INR 1,200 crores, along with an EBITDA margin of aspiration of 10% to 12%, right? And also they guided for FY '27, EPC revenues of around INR 1,400 crores-plus. So as of Q3, the company has executed about INR 720 crore of EPC revenue compared to roughly INR 1,080 crore approx achieved in the previous year. So that indicates around INR 300 crore is required to reach the last year's revenue level and an additional INR 150 crores, INR 200 crores to meet the FY '26 growth target. So in this context, can you please share the management's current perspective, the achievability of the revenue and margin targets considering the execution process so far and prevailing competitive bidding environment?

Yes, you're right. It does look like we will not achieve what we projected up to last quarter in terms of INR 1,200-plus crores. It was a target. We were on track till Q2, although Q1 and Q2 revenues are normally less, we -- when we assessed our projects, we were very confident in Q3 and Q4, we will be able to achieve those executions to reach INR 1,200 crores. However, as I said, one of our top projects, which was giving us INR 30 crore revenue per month, which by itself in a quarter could have given us INR 100 crores has slowed down since September. And in the last 2 to 3 months, we have done no work over there, which is a direct loss of about INR 100 crores of revenue. Also, Capgemini project, they have had some internal processes within their company, certain decisions they wanted to relook at in terms of their CapEx and so they slowed down the project for a bit in Chennai. So what -- again, about INR 30 crores, 40 crores to INR 50 crores of revenue for the year is easily not going to be achieved in Capgemini, which we should have achieved, thanks to our clients delayed decision-making. And the last one, third project, which again, is not giving us the throughput that we thought we will get is at Sindhudurg, the hospitals that we're doing at Sindhudurg, that also due to certain decisions from the government side, client side, our bill approval process that also got stuck. So these 3 projects which were supposed to give us -- so we do see a lag, we will not be able to catch up in 1 quarter now from INR 750 crores to INR 1,200 crores, so that's amply clear. So we will probably end up hopefully, at same levels as last year or slightly better is what our current target is. But as I said, none of this is a reduction in our scope or reduction in contract value or loss of revenue in the overall picture, it's a delayed revenue. So we then hope to be more aggressive in catching up on all of this in the next year and achieve that INR 1,400 crores that we had set. So while INR 1,200 crores might drop -- will drop, let me be amply clear, INR 1,200 crores doesn't look achievable. I would be not right to project those numbers standing where we are standing now. But next year, we hope to then catch that back and put the growth trajectory back to the INR 1,350 crores, INR 1,400 crore target that we would take.

Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Dr. Santosh Sundararajan for closing comments.

Yes, I thank all the participants for the continued interest. I do realize that while we take a lot of pride in projecting and achieving our projections -- this is -- this quarter, we have fallen short of what we would have wanted to achieve. And our revenue is also going to reduce. Our order booking is also not up to what we have projected. I'm aware, the company is aware and -- but we are very actively working on it. There's nothing fundamentally or structurally wrong. And all of this is a temporary blip, which will be overcome in the next few quarters. So I appreciate your trust in the company and looking forward to see you all again next quarter. Thank you.

Thank you. On behalf of Vascon Engineers Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.