Welspun Enterprises Limited (WELENT) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '22 Earnings Conference Call of Welspun Enterprises Limited 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. Thank you, and over to you, sir.

Thanks, Steven. On behalf of DAM Capital, I welcome you all to the Q3 FY '22 Earnings Conference Call of Welspun Enterprises. We will start with a brief introduction, followed by Q&A. To start with proceedings, I'm handing over the call to Mr. [ Abhinandan Singh ], Head Investor Relations. Over to you, sir.

And good afternoon, everyone. I hope all of you and your dear ones and team members have been staying safe during the [indiscernible] play of the pandemic. As Mohit said, I'm Abhinandan Singh. I recently joined Welspun Group as a Head for [ Legal Commission ] division -- function. Sitting along with me today on this forum are Mr. Sandeep Garg, Managing Director; Mr. Ajay Hans, CEO; Mr. Akhil Jindal, Group CFO and Head Strategy; and Mr. Sanjay Sultania, CFO, Welspun Enterprise. You'd already have received the results. The results are also available in our filings with the [indiscernible]. We further point out that we now that a copy of disclosures are available on the investor section of the website of the company as well as how filings [indiscernible]. I do know that anything that said on this call would reflect the outlook throughout the future of this to be construed as a forward-looking statement, must be seen in convention with the risks that come in later. Should we have any inquiries that we made unanswered to earnings call, you can reach out to us, [indiscernible] both in our filings have been on our website. With that, I'd like to hand over the evening -- the forum now to our Managing Director, Mr. Sandeep Garg. Over to you, sir.

Thank you. Good afternoon, ladies and gentlemen. On behalf of Welspun Enterprises, I welcome you all on the Q3 and 9 months FY '22 earnings call. I hope everybody is safe and in good health. And you all are taking precautions to deal with the ongoing third wave of COVID. I'll take this opportunity to once again introduce Mr. Ajay Hans, who I had introduced last time as CEO, and I would want to inform you that he is now Managing Director and CEO designate of Welspun Enterprises. I had also introduced last time, Mr. Sanjay Sultania, the CFO of Welspun Enterprises. I would want to request Ajay and Sanjay to take you through the business, operational and financial side of our business, while me and Akhil are available for any questions and answers or any queries that you may have. Over to you, Ajay.

Thank you, Mr. Sandeep, and good afternoon, ladies and gentlemen. The financial results and investor presentation of this quarter has been uploaded on the Exchanges. And I hope everyone has gone through the same. Recent surge in COVID-19 cases on account of rapid spread of Omicron variant have forced countries to reintroduce strict lockdown measures. However, this time, the effect on global economy has been rather scattered and limited. Before sharing with you the project-related developments and operational highlights, I will briefly touch upon government thrust on the infrastructure sector as well as our strategy to encash upon the growing opportunities. Infrastructure development is a key focus area for the government to achieve a GDP target of about USD 5 trillion for [indiscernible]. To achieve this, an estimated overall infrastructure CapEx needs to grow at a CAGR of 11.4% over FY '21 to '26, primarily driven by spending on water supply, transport and urban infrastructure. The government has, over the years, allocated strong budgetary support to the infrastructure sector, which has been continued in the recently presented union budget, 2022 to '23 on February 1, 2022. The major announce was the expansion of national highway network by 25,000 kilometers in the financial year 2022 , '23. According to the IBF highway construction has increased by 17% CAGR between financial year '16 to '21, with around 13,298 kilometers of highway being constructed across India in financial year '21. The government of India has allocated INR 111 crores under the National Infrastructure Pipeline for financial year 2019 till year 2025. The road sector is expected to account for 18% of capital expenditure over financial year 2019 to '25. Now as far as the water sector is concerned, improving water security is attention for India's development. With the expected increase in water demand for over 70% by 2025, the huge demand supply gap is expected in coming years. In 2019, the government of India has introduced Jal Jeevan Mission to provide functional household tap connection, that is FHTC to every rural household by 2025, that is "Har Ghar Nal Se Jal." The estimated project cost for the mission is INR 3.6 trillion, through which around 146 million rural households will be provided with FHTC connections. During the union budget 2022, '23, INR 60,000 crores has been allocated to the team to cover 38 million households in financial year '23. Now moving on to the Welspun Enterprise strategy we have been selected in evaluating and pursuing project opportunities and have been focused into bringing a strong infrastructure player. With a diversified presence across road and water space, our emphasis is also towards building EPC orders from external clients engagement, which is currently about 60% of our total order book. We are focused on growth sectors and simultaneously looking to grow our exposure towards water space. where we anticipate a significant opportunity over the next few years. The order book as on 31st December 2021 is around INR 7,680 crores. Growth sector contributes to INR 5,162 crores and water contributes INR 2,525 crores. I am delighted to share that the company received PCOD of the package number AM 2 under public work Circle, Amravati in the state of Maharashtra from NHAI on November 11, 2021. With this completion of the company's total and road portfolio of 7 projects of around INR 10,000 crores. 5 projects of around INR 6,300 crores have achieved PCOD and COD. We expect to receive PCOD for Mukarba Chowk -- Panipat project in Q4 of FY '22. Post on delayed on account of external factors. We are also evaluating asset monetizing opportunity of our 5 HAM projects and 1 BOT project. With this, now I hand over the call to Mr. Sanjay Sultania for the financial highlights and project status. Over to you, Sanjay.

Thank you, Mr. Ajay, and thank you, Mohit and my dear friends, leading me into them. This is the first opportunity I'm interacting with all of you as a Chief Financial Officer of this company. And before I start on the financial highlights, I would like to explain you how the Q3 results have been derived. First of all, I would like to embrace all of you how we are moving in terms of execution from the order book that we have currently. We have started our journey with HAM projects and we build the portfolio of 7 HAM projects and 1 called as BOT project , out of which 5 HAM projects has been achieved PCOD and 1 BOT project PCOD is likely to be achieved in the quarter 4. Now let us understand that the major EPC revenue of the completed project have been accounted for in the previous quarter and previous years. At the moment, EPC order book of water and road is going to be the revenue drivers in the entering quarters as the site in both the projects have been fully mobilized, and we have started accounting minor revenues out of this 2 project. The greatest difficulty will be seen in the entering quarters. And I would say and state upon, this will be the major and primary reasons that Q3 revenue looks stretched in the stand-alone basis. And further, the ongoing farmers' agitation and [ AGD ] band is one of the large BOT projects in Panipat has also got majorly affected due to that. Otherwise, I'm sure you have been in the position to account for the revenue as very slightly better than the previous quarter. As you know that as a company, we are into 2 lines of business. One is the developer business; and second is the EPC business, where the EPC order book are basically growing strong, our developer business. But now the situations are changing. Currently, 60% of our order book is growing from external engagements where we are doing large projects in the National Highway #2, which is Varanasi-Aurangabad road project. And another one is the water, which is also the large size, which we are doing in the UP under "Nal Se Jal" Scheme. So these, as I say, these 2 are going to be our major driver in the entering quarter. But as we touched upon the business for our EPC and the business for developer, now the EPC, as I explained, is going to take the major driver. And so from this quarter, we have also included our consolidated results to the investors, and I would top touch upon the [indiscernible] business also because at this point of time, it becomes relevant because we have completed 5 projects and revenue is flowing in the console out from the EPC business as well as from the regular business. So it will be more relevant to understand our consolidated interest also, along with the stand-alone interest, which we have been discussing with you in previous quarters. Now coming to the financial highlights. I would like to say that we have reported a revenue of INR 225 crores on a stand-alone basis as against INR 288 crores in Q3. EBITDA was at INR 22 crores as compared to INR 34 crores in Q2 FY '22. EBITDA margin in Q3 FY '22 was 9.9% and against 11.7% reported in Q2 FY '22. I'm comparing this from the last quarter to this quarter rather than comparing from this Q2 to the last Q3 because in the last Q3, the pandemic impact was measured. And in this Q3, the impact is major, as I explained to you that our developer business order book has started as was executed mostly. And now the new 2 projects, which is our Varanasi-Aurangabad and UP JJM speaking the driving feed. Now coming to the 9-month stand-alone results, we reported the still -- standalone revenue of INR 867 crores as against INR 933 crores. If you see on the 9-month basis, the Q3 impact is more vigilant here in 9 months as well, and the reasons has been -- has already been explained in my earlier remarks. And if you see the EBITDA, EBITDA is INR 97 crores as compared to INR 127 crores in 9 months FY 2021. If you are tracking the reasons of Welspun Enterprises, you'll be knowing that in full year of financial year '21, and this quarter, our major projects, which were driving the revenue was Mukarba Panipat Chowk was CTHPL was Amravati projects, which is a PWD project in the state of Maharashtra. As I said, these 3 projects are getting -- 2 projects, we achieved the COD and third project where BOT Panipat is we're likely to get COD in this. So the order book is getting depleted. Now this new order book, which is close to about INR 5000 crores is coming on the driver seat, which will drive the ongoing quarters. Now coming to the standalone -- I mean, consolidated revenue. During the Q3, we reported a consolidated revenue of INR 284 crores out of which EPC -- revenue from EPC is INR 240 crores, and from HAM business is INR 37 crores as against INR 343 crores in the previous quarter. In the previous quarter, revenue from EPC, INR 300 crores and revenue HAM business from INR 37 crores. Absolute EBITDA was at INR 57 crores as compared to INR 68 crores in Q2. EBITDA margin in Q3 FY '22 is [ 19.9% ] similar to last quarter which is FY 2022. If you see the absolute EBITDA in this consolidated business is going to be increasing from here onwards and which will bring a business sense of a developer business when we report to the consolidated results, so everybody will have in mind that how absolute EBITDA looks as far as effort to the [indiscernible]. Moving to the 9-month FY '22, we reported a consolidated revenue INR 1,040 crores which is coming from EPC business, INR 917 crores and HAM business INR 109 crores as against INR 1,071 crores revenue from EPC, [ INR 960 crores ] and revenue from HAM is INR 71 crores in compared to 9 months FY '21. And the absolute EBITDA was at INR 197 crores as compared to INR 206 crores in 9-month period of the last financial year. On the balance sheet side, our gross debt is at INR 475 crores on a stand-alone basis. And we have our ongoing HAM projects where the executions are happening, and we are getting to the PCOD. So we will have some equity commitments in my ongoing projects also, which has been estimated at INR 227 crores at this point of time. With this, I open the floor for the questions and answers, and thank you very much for hearing. Thank you.

[Operator Instructions] The first question is from the line of Nirav Shah from GeeCee Holding.

I have 3 questions. Firstly, if you can just separately give the total project cost and what is our equity in the 5 HAM projects where the PCB has been achieved and even Mukarba Chowk? Because these fixed projects will be up for monetization, right? So if you could just give the breakup of this, the total number, the total project cost as well as the equity component.

See the equity component, if we are able to monetize this 5 HAM projects and 1 BOT project, we are expecting the unlocking of equity to the extent of INR 1,400 crores. Potential upside, we cannot know today. As we progress in Sim, we will come to know and we will share with you. And estimated project cost would be close to INR 10,000 crores.

How much?

INR 10,000 crores.

INR 10,000 crores is the estimated project cost and you expect the unlocking of INR 1,400 crores?

INR 1,400 crores.

Okay. And the second is, I mean there has been some news reports about we are leading at the advanced stage of negotiations. Can you just give some views at what stage are we, whether you've started or I mean -- any color on that?

My dear friend, as I explained in my opening remarks that HAM project and 1 BOT project where we are in a position to monetize and that is available for sale. Yes, a lot of investors are coming and talking to us, but then it get [indiscernible] or crystallize maybe we will be the first question to come back and say it with you.

Perfect. Sir, second question is our total sending equity commitment as of September was INR 180 crores. It seems that we have infused another INR 59 crores in this particular quarter. So since you've not added any orders, our pending equity commitment should have been INR 120 crores, but instead of that, we are seeing a [ INR 220 crore ] number from the presentation. So if you can just share some light on which projects is seeing a higher equity commitment from us, what changed in this quarter?

No. See, what is happening as we are progressing in the project and I just say it our large equity investment in the BOT project. And we have currently 3 ongoing large projects in HAM and BOT which is Aunta-Simaria, SNRP and MCP. And if you know us all these projects are slightly -- I mean these 2 projects are slightly delayed in terms of completion. And the prices are soaring up in the market for steel and everything. So there could be some escalations on this account. And for the escalations, as you know, that the 40%, maybe will come from NHAI, but 60%, we have to account for from the equity for the time being, which makes it slide as we get the annuity or [indiscernible] for what. To put that as a consecutively, we have estimated that INR 227 crores that we may plan to infuse in the equity. And another is the Oil & Gas business for the next 1 to 2 years horizon. As the project goes on, we have just budgeted for that account for also.

Okay. So broadly, we are budgeting for INR 100 crore increase in equity commitment and because last quarter it does go through the road projects itself. So you are saying that the project cost escalation on the -- this thing is close to INR 800-odd crores?

No, it is not INR 800 crores. See -- as I said that when we are having the escalation, then 40% in the HAM projects will come from NHAI and 60% we need to invest. So it's not a debt equity ratio that account for because this is an escalation, which will come in the project, let's say, INR 100 crores so INR 100 crores we need to fund, maybe 40% upfront may come from NHAI as we progress in the project and 60% will come along with the annuity and tool. It is not -- because I said that maybe cost of around something like that at this point of time. But when we do the revised [ CPC ] on a monthly basis -- on the basis of CPC when the price -- escalations on price are in the right trend WPI index percent rises trend, we keep on budgeting.

Just to making very clear that INR 100 crore increase, part of it will be funded from NHAI system. Not everything will come to us?

No, no. So I think we have read with [indiscernible]. This is not about the funding, basically any cost increased [indiscernible] equity of that. Now at this concern, you are not accounted for any debt increase. We only accounted for what we may receive from NHAI. And other than NHAI, we have presumed that everything will be funded out of our own contribution unless we tie up the debt or get a lender's approval, for a higher debt equity ratio.

Conservative number?

That's right. So this is in debt match. So [indiscernible] you're right. Traditionally, our equity component is 12% and you have done that math. I understood the logic. But you best is that today, we are not doing any cost escalation from our additional debt.

Got it. And Akhil sir, just last question. Brent is close to $90. Just any update, I mean, are we trying to accelerate our monetization of Oil & Gas asset or still the thesis remains as saying that upon production only when we look at -- look for new buyers, if you can just share some thoughts because $90, there should be a lot of interest for our fees for our Oil & Gas assets. So if you can just share your thoughts on this particular thing?

I would let Sandeep answer this because...

Yes. Sure. So Oil & Gas? You are right it's a commodity cycle is at its peak and now unfortunately, or fortunately, we are [indiscernible] of gas bearing and that is something which is a sustainable pricing thing because of the LNG, et cetera, et cetera. So in terms of monetization, the initial exercise was to try and get the reserves certified. We are likely to get the certification from the Internationally acclaimed DAM authority within this quarter. Post which we will be in a position to decide how to monetize this [indiscernible].

[Operator Instructions] The next question is from the line of Rohit from Antique.

Yes. So I'm not too sure if I missed the opening remarks, but have you -- sir, what could be the outlook on this Panipat BOT project? Earlier this farmers agitation was impacting the execution. What is the situation now? Now that I think that should come back to the execution mode. So how much of execution can we expect in 4Q? And how much do we anticipate that number to translate in FY '23?

So to answer your question, you're right. The farmers agitation has been called off, and it has given a big respite, both in terms of execution and the PCOD for the project. It is also true that the project is now in a situation that it can be pushed for completion. . However, as you are aware, NGT has a ban in the -- for the execution between the December, January, which is becoming a panel after right now in our NCR. It is impacting the -- our ability to progress the project. However, it is in the end of January, we have a clear access to the site as well as the clear -- clearance from NGT. So next 2 months, we expect the progress to take place and the PCOD to be achieved within this quarter.

Sure. Sir, my second question may be more to do with the other projects. Earlier, we had some sand impacting issues, the [indiscernible] project. And then rains impacting, we have Aunta-Simaria. What happens to those projects? Or are they like back to normalization? Or what exactly was it taking you that?

I think you are referring to our Aunta-Simaria project and SNRP project.

Correct, correct.

Yes. So these 2 projects have been streamlined, and we are mobilized in full swing. Both have started. So you will see the turnover coming right from next month onwards on these projects. As far as SNRP project is there. It's a running project, and we have achieved a milestone of 30% progress in that. And considerably going forward, we are targeting to continue a good progress on these projects. These are fully mobilized and work is going on in full swing.

So if I have to say that earlier we were talking about an order backlog that you already have of $75 billion plus or it can be $76 billion that kind of amount, we could be in a position to do 30 billion execution by FY '23. What is the situation right now?

Yes, this is Sanjay Sultania here. When you talk about the order book that we had at $76 billion of [indiscernible], INR 7,600 crores, you must understand when this order was bad. You see out of INR 7,600 crores, roughly about INR 5,000 crores is getting mobilized in this quarter. This you can say this would be the first quarter. And the second quarter, when it comes, then we can see the visibility of execution because you can see this is the first financial year that we have started mobilizing on this order book. And the balance order book is coming from our developer business, which is ongoing, where we have already discussed that SNRP, it slightly has been a challenging project, which just now Mr. Ajay Hans said now, this project is also coming on the track. When we talk about INR 5,000 crores, then in FY '22, '23. maybe from the next quarter onwards, till we have a goal visibility because the project is just mobilizing. And next financial year, as I said in my opening remarks also is going to be the revenue driver. For the financial for these 2 projects, which is UP JJM, which our water project and this road project, which is [indiscernible]. These 2 projects go into the revenue driver for the current financial year or I would say, current quarter also.

Sure, sure. Sir, if I fairly understand earlier you were talking about an L1 of [ INR 35 billion ], NCD project. What are municipal water body project? What exactly is the situation over there, sir?

I would request Mr. Sandeep brought to some highlights on this. Please.

So the situation is that a couple of days back, the projects that we -- the tendering process has been channeled and the process of the rebid has started. So we -- we have opened L1, but that process will no more be carried forward. We will have to a bit [indiscernible].

Okay. Okay. So sir, in terms of order inflow, in that case, what exactly is the strategy ahead? Like will we be focusing only on EPC projects? Or will it be mix of HAM plus EPC, how is that strategy going -- looking like?

So we -- we would -- I would request Ajay to take it forward because he's been managing [indiscernible], and we will take it from there on.

I would say it will be a mix of the projects, both HAM as well as EPC, like we are trying to unlock some equity. So the moment we have some unlocking on this, we will continue to win new HAM projects as well as EPC will be the focus [indiscernible]

Okay. Sir, if I had to look in terms of the order backlog, how you want to strategically position us? I think do you want to have 50% EPC, 40% HAM, 10% water projects. How do you initially look at this strategy from a strategic point of view, how do you see that number?

Going forward, it's very difficult to say right now. But on a very approximate basis, it might be 50-50.

50% HAM and 50% will be the EPC?

Yes, that's correct.

Sir, earlier, I was also given to understand that you are looking at some railway projects too, for case in point that Lucknow Railway Station as a [ DBA 14 ] project. But what happened over there?

Look, we have submitted our requalification rates for these projects, but there are uncertainties and planning at the government side. So we are waiting for it. The moment the things are clear, we will go ahead with it. But our we are exploring the real feasibility on these projects.

So help me understand, sir, the strategic part. Like once you said HAM and EPC and now you also want to take up the DBA 14 model of a railway project too. So that's like an asset-heavy business model. It will be very different from what you are doing, right?

That's correct. Like the main focus is on HAM and EPC where we have the clear visibility. These are the new areas which we are exploring. And we might be exploring some other areas, which will be bringing it to you in the next quarter onwards.

Okay. So strategically, earlier that we wanted a -- only road or maybe mix of road and water is now going to for into railway and other sectors, too?

So let me address this. That the strategy is clearly derived out of one simple thing, what is the competitive intensity and what is the ability to have profitable business. As you are aware, growth is right now highly competitive environment. There is -- and as management has been decided to do -- be cautious in that area in the time the pricing gets stabilized and the commodity prices also stabilize. As a proven business now, we will want to continue to derisk the business. So we look at the efficiencies. Efficiencies to the road are also related. So we are looking at railway and the risk and reward is something that we are willing to take a position on we will go ahead with those options otherwise taking an exercise of exploration.

[Operator Instructions] The next question is from the line of [ Giriraj Daga ] from [indiscernible].

So my first question, like you mentioned that the mobilization has come in this quarter. But if you have to give some number like ballpark number for FY '23 execution. So what kind of EPC revenue we are building for FY '23? .

Okay. Like as we have told, our EPC order book is around INR 5,500 approximately as of now. And generally, these projects, both in the range of 2 years to 3 years, depending upon when you get notice to proceed and clearance to go ahead on that. So looking into these figures, we are looking at -- I feel it should be improving. The turn overs must be improving. You can see the numbers started improving from first -- for the next financial year.

That looks possible because this quarter -- it's totally -- the do number is very low. But the ballpark number will be between INR 400, INR 500 crores quarter is ended now going forward? Or this is still a call task?

This is Sanjay Sultania here as the CFO of the company. See, it is very difficult to quantify at this point of time. But as I said earlier also, maybe I'm sure you got some on the call that this EPC project, which is water project and the [indiscernible] project, which is [indiscernible] is taking the driving field as far as revenue growth is concerned. And I also said that in Q3, we have the site has been completely modernized. In Q4, it will be -- we will start recording the revenue out of this 2 projects. And so FY '22, FY '23 from that perspective, looks very wide. But at this point of time, quantification is difficult, but any end business or any other kind of sort of challenges, we are not pursuing at this point of time.

Okay. My second question to order is inflow guidance. Would you be able to have some thoughts there? Like what is the kind of order inflow we are targeting in let's say FY '23? And in the fourth quarter also.

Like I have -- and we have told that you will be bidding very cautiously on the road side, but for the time being, looking into the hard competition. And simultaneously, we will be exploring contracts from other new areas, which we are exploring. So -- and water is going to be another main focus sector so we are looking forward for high-value contracts in all of these 3 areas. So there should be a decent order book, which should increase time value.

[Operator Instructions] The next question is from the line of Riddhesh Gandhi from Discovery Capital.

We're tracking this company in sort of foreign investors in a long time. Just had a couple of questions with regards to the initial, I think, aspirations that we were expanding into infrastructure was to effectively focus on HAM, given that comparative intensity was low and looking at 18% [ HD ] plus equity IRR. From what is appearing give us some commentary from the asset which [indiscernible]. Obviously, those equity IRRs are a bit of a stretch. So as we're starting for inches I wanted to understand what actually the trend wrong with what we initially thought in terms of the people? And if you could also explain to us the plans with regards to -- the reason why this is time around, we see single shipment?

So I think there 2 questions. Number one, the way we see this go along in terms of our revenue, our return from [indiscernible]. Anyway I think the total returns that we've seen in light of the EPC project margin as well as [indiscernible]. So the EPC margins have come through. However, because of the substantive changes in the policy of the government, which is because of COVID the bank rate were artificially lower. And as you recall, the bank rate as we resume unless we did it for HAM projects with bank rate is 50%. Overall returns have gone down. Also the implication of GST and the position that NHAI has taken to the GST, 40% of the GST is paid and the balance 50% of [ NIDC ] has [indiscernible] on the equity investors. In terms of the returns on the query, we expected -- in the ranges of anything between [indiscernible] that were invested of there around. The challenge, I don't think -- will be happy to turn around because many buyers, the other things that have changed in the or become more of a buyers' market, the amount was up, the GOT, the completed projects have further returned, other developers are also in the market and as a pret company partner [indiscernible]. Overall, [indiscernible] market inquiries is on the basis we denoted for the function, is my take. In terms of the future business, what we're actually talking about is the relaxation in the government has driven bottom parameters that there is no [indiscernible]. And then we are trying to evolve our business strategy to make sure that we do not get into the craft of winning companies cost.

So got it. So look, there were obviously this is stuff which we had not expected, which is why the initial [indiscernible] went 1.0 has not unfortunately delivered with the kind of returns in the project. But if you point to exactly as you're saying, given effectively seeking the kind of increase in comparative intensity and especially earlier you highlighted how EPC, specialty is highly de-commoditized, if you will, then obviously everything is on L1. So what is the strategy of being able to sort of earn attractive returns? I mean, how do we differentiate us [indiscernible].

So there are 2 [indiscernible]. One, fortunately [indiscernible] have already [indiscernible] kind of turnovers that we have, and I don't think this is sustainable to come back [indiscernible] right now are going anything between minus 25 to minus 35. And the HAM projects that we are at minus 5 to minus 15 [indiscernible] kind of at expensive but we cannot sustain for more than few quarters. Investing would get established. So we have the ability to rate it down. We're not starting for order book right now. We have enough on our plate to be able to the -- project and coming. The current focus a lot is more to concentrate on delivery of the projects that we have, we have enough on the plate by the time [indiscernible] business realities will down upon everybody into we're slightly to come into a reasonable shape for us to start earning profits.

[indiscernible] where if the projects are going and in the end there is no problem with the government and the payment, then the current comparative intensity continues to be high where it's hard to actually make a high degree of return. And in the event the problems arise and people are stretching cause of balance sheets or order books or whatever, maybe that's when it becomes attractive. So then it's sort of either the industry is growing well in which case compared with high and profitably low, all there are other issues in the industry in which case anything sorts out.

As I told you earlier, as we have added the water [indiscernible]. We had a comparative with LTC 2.0. As we've said there's [indiscernible] where there's still clear low key bidding that is happening and we are mindful of the [indiscernible]? The comparative intensity [indiscernible]. Even structure our risk-reward model around that and see if there's a project.

[Operator Instructions]

As there are no further questions. I now hand the conference over to Mr. Ajay Hans, CEO at Welspun Enterprises Limited for closing comments. Over to you, sir.

Thank you, Mohit. I would like to once again thank all of you for joining us today. Your questions were insightful, and I appreciate your interest in our business. As I mentioned earlier, you have a robust -- we have a robust portfolio and a strong order book with a couple of large projects having been mobilized now and starting to generate incremental revenue. We remain committed to uphold our operational excellence and deliver progressive performance. I look forward to speak to you all once again next quarter. Meanwhile, feel free to reach out to me Sanjay or Abhinandan for any clarification or feedback. Thank you.

Thank you. Ladies and gentlemen, on behalf of DAM Capital Advisors Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.