Hi, good evening, everyone. Welcome you all to today's meeting of analysts. Joining us from HCC side are our Vice Chairman and Managing Director, Mr. Arjun Dhawan, our Chief Business Officer and Operations Director, Mr. Santosh Rai, and Mr. Girish Gangal, who is our previous CFO, ex-CFO, and Senior Advisor to the company currently. We will take you through this quarterly presentation. Just a quick refresher. HCC with 100-year-old legacy. This year, we are celebrating our centenary year, and we have completed 4,000 lane km of highways, almost 400 km of tunneling, including in complex geographical region of Himalayas. 60% of India's nuclear capacity has been contributed by HCC, and 26% of India's hydro power capacity is done by us. This is our order backlog. A robust order book of INR 11,188 crore, and dominated by transport sector, followed by hydro, nuclear, and water.
And very well diversified geographically as well, with Maharashtra leading the pie. Coming to key performance highlights. For this quarter, our standalone turnover was INR 8,069 crore, vis-à-vis INR 1,265 crore during the same quarter last year. Our standalone profit stood at INR 38 crore, almost 50% jump from the previous year. Standalone EBITDA is at 14.9%. Again, there is improvement vis-à-vis previous year. We have received INR 250 crore through Vivad se Vishwas settlement of one of our award, which has given good liquidity to the company this quarter. In terms of business development, we are lowest bidder in projects worth INR 6,000 crore HCC share, and we have got a very robust order pipeline, bid pipeline of INR 40,000 crore, which we will be reflecting in our order book going forward. Some of the key operational updates. Anji Khad Cable Stayed Bridge in J&K has been inaugurated by Prime Minister on 6th of June.
In another project, Tehri Pumped Storage Plant, the commercial operation of Unit 5 and 6 has been achieved, in this quarter. Vishnugad Pipalkoti project, which is another large hydro project which we are doing for THDC India Limited. There, the tunnel boring machine, which is a tunnel boring, which is a key aspect of the project. We have completed 6.5 km out of total 12 km of that. In Sohan Bridge, DLP has been completed, so we have received the certificate which reflects de-risking of the complete from that project. The three new projects which we had acquired, their mobilization is moving on quite well. The projects are Agarlandha Cable Stayed Bridge, Devpuri Pump Storage Project, and Indore Metro project. In addition to that, in this quarter, we have received a very strong claim to award conversion of almost INR 450 crore. So these are initial summaries.
Now we will move to operational highlights, and I will request Santosh Rai to take care of this.
Okay. What you see on the screen is inauguration of the Anji Khad Cable Stayed Bridge. This bridge being the country's first cable stayed bridge for Indian Railways and also happens to be the second longest cable stayed bridge in the world for railways. This bridge also houses the tallest pylon in the country at 193 meter. It is one of a kind engineering structure built into the railway for the railway projects. Next. Tehri PSP, what we see here is the powerhouse where the unit number five is also now put into the commercial operation, and all the other works are progressing well. Vishnugad Pipalkoti, this is the main HRT, which we are doing by tunnel boring machine. We are already 50% through into the tunnel, and the works are steadily progressing into these challenging mountain conditions.
Parwan Dam is an irrigation dam, which is almost completion, and by December this project will be again put to use for irrigating large parts of Rajasthan. Mumbai Metro Line 3, almost you can say 95% project is overall done. On the screen is the pictures of all the stations which are there, and these pictures are at the platform level, where all the platform safety doors are already put into place. System checks are in progress now to make the train running smooth in just, we can say, a couple of weeks from now. Coastal Road, fully operational. Very minor works left, like car park, et cetera, which are going to get completed in this month. Rahul will take you through these financials now.
Yeah. Key numbers we have already discussed in the previous slide. Again, just to reflect INR 1,000 crores of turnover and EBITDA margin of 15% with INR 159 crores of number. PAT is at INR 39 crore. Consolidated level with INR 1,100 crores of income. This has reduced from the previous year because last year we had Steiner, so the impact is only that. That is the reduction over there. Then EBITDA, again, very robust EBITDA of almost 16.5% that we have achieved. At PAT level, we are at INR 50 crores. Thank you so much. This ends our presentation. Now we are open for question and answer, so you can raise your questions.
I request you to raise the hand so that I can allow you into the discussions. Saurav. Saurav, you may please-
Can we-
Yeah, you can go ahead.
Okay.
Saurav, you can unmute and start.
Is my voice is clear, sir?
Yes. Now it is clear.
Sir, I just wanted to ask the question. What is your current order book, and is this INR 6,000 crore order included in the INR 11,000 crore?
No, Saurav, it is not included. Our current order book is INR 11,000
800
crore, close to that.
Almost, yeah.
This INR 6,000 crore is in addition to INR 11,200 crore that we have shown as order book.
Okay. It is from which, sir? Hydropower or something, any?
Yeah, there are transportation jobs, two Metro jobs. One is a hydropower plant, another is a bridge project, where we have the lowest positions.
Okay. When will it be signed?
We are expecting over next, we can say one month to 45 days. These all orders should be signed largely.
Okay. Thank you. I will come back again.
Thank you.
Prateek Bohra, you may please unmute and start.
Yeah. Sir, congratulations for the good set of numbers. I just want to know the level of debt that we are having right now, and what is the future plan about debt we are going to achieve that?
Prateek, currently, we are at the debt level of almost INR 3,200 crores. That is mentioned earlier also, we are working towards accelerated deleveraging. Our target is that in next 15- 18 months, they should come below INR 2,000 crore. For that, we had described code BG mechanism through which we are availing BGs from lenders, and withdrawing monies against our awards and repaying them. That is one way. Apart from that, we are also working on the normal route through our own cash flows as well as capital raising that we plan to do. That will give additional boost to our deleveraging exercise, and that is how I am saying that in next 15- 18 months, we should be sub INR 2,000 crore level.
Sir, one more question I have. There was a claim which we have told about in last quarter, about INR 250 crores. What is the status of this?
Prateek, your voice is not very clear. Can you please repeat your question? There is background noise.
Sir, in last quarter, there was a claim that we told that we will be getting of INR 250 crore. So what's the status of that?
The same thing which I mentioned, Vivad se Vishwas II, we have received that cash, INR 250 crore, which we had applied for settlement under the scheme. We have received the money.
Okay, sir. Thank you, sir.
Welcome.
Harish Sayyad. Harish Sayyad, sorry, if you can please start.
Yeah. Hello. Thank you for the opportunity given, and congratulations on the good set of number. What is the order inflow during the quarter?
No. We haven't booked any order. We only have the L1 positions.
Okay. Can you give some update on your BKC railway station of this bullet train?
Yeah, so the Metro station, sorry, the bullet train terminal is going on. The majority of excavation works are over. We have already started the concreting of the base slab. And even at the other shaft location, the concreting has started. So work is progressing.
Yeah.
Just to give you a feel, that station is I mean, the one station is equivalent to 10 metro stations.
Yeah.
It's like almost a kilometer long, so the excavation normally takes long time in this congested area. We have successfully completed that.
There is no hold on that project because of environmental or anything of that?
No such thing.
Have you started booking the revenue of this project in your books?
Yes.
Okay. Thank you and all the best.
Thank you.
Kunal Tokas, you may please start.
Hello, am I audible?
Yeah. Now go ahead.
Okay. My first question is about your debt repayments in March 2026. If you can quantify those interest, principal plus accrued interest.
Total, almost 900 crore is something that we have to pay in March.
The PR repayments for PRPL will also come in, I think from September of next year. Am I right?
Right.
The March 2026 payment, do you expect you can meet it using your existing cash and internal accruals, or will you have to raise some equity?
For PRPL or HCC?
For this March 2026 payment.
March, yeah, March 26 repayment, there are three ways of doing it. One, we are, in any case, executing certain code BG transaction through which it will come down by some amount. Then we have got our cash flow from operations, and then we will have to certainly work towards raising capital also. A combination of these three will be used for making this repayment. This March, as you must be aware, is the largest repayment that HCC has to make. After that, these repayments are coming down. This INR 900 this year will go down to, say, almost INR 700 next year, and it will keep on. It will be at the level of almost INR 600, INR 650 crores thereafter.
How much do you reckon you would need to raise in equity?
Debt repayment is one thing. In addition to that, as you know that we are now accelerating our new order intake. We also want to have a decent amount of cash in our books for this quarter. It's almost INR 500 crore is something that we have. But still almost INR 200, INR 300 crore we would certainly like to have in our books as a cushion. Some part will be kept for that and INR 700- INR 800 crore, something we can plan to raise depending upon the situation in the market. Naturally, promoters will have to underwrite that. That also is one factor that we'll consider. But comfortably, we are looking at somewhere around INR 700- INR 900 crore that we can target during next quarter.
Also, this mechanism that you use to raise funds using bank guarantees against awards. There is some cost associated with it, right? Do you show it as part of your finance cost?
Kunal, if I have understood your questions correctly, the cost of raising capital, whether we treat it as a finance cost or not, is that the question?
The cost of using bank guarantees-
Okay
against your-
Yeah. That's a part of our finance cost. BG commission you are talking about.
Yes.
Yeah, that's a part of finance cost.
Would you be able to point how much t arget?
So annually we have almost this BG commission you are talking about, right?
Yes.
Almost INR 45 crore-INR 50 crore is something that goes on annual basis for this.
Okay. In total, how much BG have you raised?
Total BG exposure of the company is to the tune of almost
Yes
INR 5,500 crores.
INR 5,500 crores.
Yeah.
And just hypothetically, this might be too far-fetched, but what happens if the award goes against HCC in case you have to raise the BG against that award?
Sorry, can you please repeat your question?
What happens if an award against which you have raised a BG goes against HCC?
So you are going into methodology. I think this is a little detailed discussion, but I will just answer this particular question. If in the eventuality of, say, one person situation, it goes against HCC that BG will get encashed, and it will become HCC's debt. It is today also HCC's debt, right? The situation does not become worse.
Yes.
It just reverses to the current situation where we are today. But in the meantime, we get the benefit of lower repayment and reduced reduction in rate of interest, all those things that are there.
Okay. But does the BG become payable immediately or do you get some time from the.
Let me just jump in here. Let's be clear. If in court, theoretically speaking, if a matter basically is not upheld in our favor, for whatever reason, and we're not discussing the merits of basically our awards and our receivables, et cetera, which, in that situation, the court would naturally, effectively, give the company the option to pay the amount into the court, or it would basically then in the worst-case situation, have the encashment of BGs. We don't like encashment of BGs. So we would then effectively, the court would give us some time, I imagine, for that amount to be paid and deposited. Please note that there are appeals that everybody has all the way up to Supreme Court.
In all our matters, as I have said multiple times before, our claims and our awards are relatively boring, because all of them are very similar in nature for projects that have been completed many years ago. These are very technically quantified in the amount of the escalation, the idling, the loss of profit, et cetera.
But to answer your question, just be leave there would obviously be a reasonable discussion with the court should basically an award not be upheld and the company would have the opportunity to actually deposit that money. In the eventuality it does not, then you would theoretically have basically a BG encashment if that money has already been withdrawn and a BG has been submitted.
Okay, thank you very much. That was very clear. Just another question, if I can please have it. Of all the subsidiaries you have, I reckon only HCC Infra is a material one, right?
Right. Currently, only HCC Infra is the major subsidiary. We have one more company.
Our operating subsidiary, main operating subsidiary, HCC Infrastructure, which is a natural younger brother or a natural basically part of our overall EPC business. As our business grows and we actually take on, you know-
Active BOT projects, whether they happen to be ourselves or with strategic and financial partners, there is a growing importance for PPP in the country. We will selectively look to take on a certain amount of BOT projects, which will contribute potentially up to maybe 10% of our order backlog at any point in time. This operating subsidiary will continue to be a natural part of our EPC, basically, strategy. The other subsidiary that we have, as a function of our exit from the divestment of the Steiner Group, is H 56 IMO. It is a subsidiary that carries a substantial amount of receivables that we will be winding down over the next few years.
This vehicle will be the vehicle that will be in receipt of our various earn-outs and claims and receivables that we have as a function of our exit from the Steiner Group.
About your various joint operations that you have, whether with L&T or Samsung, Alpine.
I'm sorry, could you repeat that? Your joint operations with?
Joint operations. Joint operating entities with L&T or Alpine Samsung SPC.
We don't have any JVs with L&T at this point.
In the audit report, there is.
Very old one. It's a close one. Paradip?
Purulia.
Purulia. Sorry. Purulia, yes.
Purulia Alpine.
That's a very old 20.
I think, does the team want to basically elaborate on why that's currently in our report?
Because that's not fully closed as it was. There are some assets that would be there, it's like-
Okay. You know-
-elements of that are pending.
But as far as the commercial impact of this potential project at Paradip that you refer to, there is really no minimal, no material commercial impact. We will, if you like, get back to you with regard to the logistical reason as to why it's still basically mentioned in our accounts. But really, there's no material impact.
The only material joint operations will be the one with, what was it? The two you recently signed.
Coastal.
Bhivpuri and Indore Metro.
We've got three active JVs. Coastal Road is closing right now with Hyundai Development. We're the lead partner. Also, in our Indore Metro project, we are in a JV in that along with, in our Bhivpuri Pumped Storage Scheme, where we have two JVs with Tata Projects.
Okay. Got it. Thank you very much.
Thank you.
Saurav, you have any additional questions? Saurav?
Hello.
Yeah, go ahead.
Yes, sir. I have two more questions. Sir, why is the L1 order getting delayed, sir? Can you explain this? In the last annual report, you also mentioned that a INR 40,000 crore order book will be getting, sir. Can you explain when your order book will be getting this over INR 40,000 crore?
So, it is on?
Yeah.
Saurav, you had two questions. Your first part is why this conversion of L1 to LOA is getting delayed.
Yes, sir.
See, these are very largely, these are very bureaucratic procedures, in the sense, once an entity has become the lowest bidder.
Okay.
I think we have some background noise.
Can we just request you to mute your line, please, Saurav, while we are-
Yes, sir. Yes, sir.
I think it will be clear for everybody.
Yes, sir. Go on.
Yeah. These government departments, they have their own internal procedures, and also sometimes it involves taking the approval of the financing agency. For example, our job in Metro where we are lowest, the funding agency is Japan International Cooperation Agency. There are a lot of forth and back communications between the client and the funding agency, which they have to close as a procedure. These are actually procedural delays because we have put a very competitive offer. It's a routine matter, but I think normally our experience has been, once you have become L1, within four, max, let's say three to four months, you should be getting the order. We expect that to happen in that way. Some bids take a long time because of unique situations. Like, one job we are lowest, that is in Jammu and Kashmir, and that's going through its own bureaucratic procedure.
On the INR 40,000 crore, that's what is a bid pipeline. I don't expect to win the entire INR 40,000 crore. We are working with a very good hit ratio, and we believe we should be able to secure around 25%-30% of that. That's our target. But we have identified a lot of jobs which are for real, which are in the sectors where we have core capabilities. That's the bid pipeline on which we are very confident that we'll be able to secure good amount of orders from that. Is that clear, Saurav?
Yes, sir. Yes, sir.
Yeah.
Yes, sir.
Okay. Thank you.
SK Damani, if you can please start. Unmute your phone. SK Damani. SK Damani, please start.
Am I audible, sir?
Yeah. Now it is.
Yes. Sir, congratulations for construction of Anji Khad Cable Stayed Bridge. Such a beautiful construction you have done, sir. So very happy about it. I have few questions, sir. You have received INR 250 crore through settlement of an award under Vivad se Vishwas II. Can I know whether this money has come into Hindustan Construction Company or into a company which was created with liability transferred. Can you please tell me about this?
It has not gone to the company which has created for liability transfer. However, money was received by the concessionaire who had got the award, which is HCC Infrastructure, and then subsequently got transferred to HCC after deducting taxes and all.
Okay.
The money has been received by HCC.
HCC. It will help us in our working capital and all.
Right. Correct.
One more thing is written here, has achieved claims to award conversion amounting to INR 453 crore in presentation. Can you explain? I could not understand, sir. Sorry about it.
No problem. Whenever there is dispute with client, it has to follow a dispute resolution mechanism, and the claim goes through the arbitration tribunal process.
Okay.
The arbitration tribunal, after assessing the claim, tells that this is the money that HCC company should be getting. This is the award that we have received from the tribunal of this value.
Okay. Got it, sir. In fact, I forgot that a lot of our projects have seen completion certificate and all that. I am very happy about all these things. A lot of projects have been inaugurated also. Now my question is about the three months, that is July, August, and September, would we be able to make some progress in some of the pending work, or this is going to be a lean period because of rains and all that? In north where our projects may be there, I do not remember, but can we make some progress in any of the projects that we have during these three months?
So, I think some of our hydro projects where we are working inside the mountains, we actually are not affected that much by these rains. But of course, on surface-level projects, wherever the rains are heavy and all that disrupts and it brings down the turnover to almost 50% for the period. But we do not see a very large effect of this. We will be continuing to work on our existing projects by every method, and also the new projects are in good stage of mobilization. In fact, sometime from now, they should also start contributing to turnover very efficiently.
So sir, my last question is that how much work of projects that are ongoing now as on 30th of June, how much is already awarded to us and we are progressing on them? Can you give amount?
That number will be our order backlog position as on 30th June. That is INR 11,988 crores. That is the existing position, which is balanced for us to execute. Whatever conversions happen during this quarter, they will get added to this order backlog position.
When you say Bhivpuri PSP and Indore Metro project are progressing well, will they start in next one month, sir, full-fledged?
Both the jobs are under mobilization stage. Sufficient mobilization has been done. In fact, from next month we should be able to see some good revenue booking coming from these projects.
Okay. Can I know the total amount of the project estimated for these two projects, Indore Metro and Bhivpuri PSP?
Indore Metro will do nearly INR 300 crore in this two. No, at a JV level.
Yes.
What is that? You are asking, Indore project is a INR 2,500 crore contract.
Okay.
The total contract is INR 2,500 crore at a JV level.
Okay.
Our share is 55% of that.
Okay.
Similarly, Bhivpuri is an INR 2,500 crore contract, and our share is 50% in that.
Okay. Sir, like coastal road that we have created, some more work is to start for making some roads and bridges in the sea. Have we bidded for them or what is the stage of those, whether tenders have been issued or not? Can I know from you?
The tenders are not yet issued. We are tracking those projects. The tenders are not yet issued.
Okay. Thank you very much, sir, for answering me and all the best for-
Thank you. Thank you for all your compliments, too. Thank you.
Rushmik, can you please start? Rushmik?
Yeah. Am I audible?
Yes.
Yeah. Thanks for the opportunity, sir. Sir, based on the INR 11,000 crore order and the INR 6,000 L1 bidder, what could be the revenue run rate we would end up in FY 2026 as compared to last year we did around INR 5,600 crore. Secondly, what kind of any margin guidance you would give for the full year FY 2026, sir?
Rushmik, as we had mentioned earlier also, this year, we are not expecting increase in our turnover. We are just trying to come closer to there because as you know our order we have executed very quickly in the last three, four years, and now we have reached to the levels that these projects only can give us this much turnover. We will be somewhere closer to what we did last year. In terms of margin also, maybe whatever 13%- 14% EBITDA margin we have been maintaining, we will be on that range only because most of our turnover is still coming from old projects. The new ones which are picking up will start contributing subsequently, maybe then we will see some change in them.
What we have told basically investors is to have your patience with regard to this particular year. I think that that is the takeaway. The margins in our business will not change. The kind of projects we do and the selective nature of the works that we execute, we will always be basically in the low to mid-teens margins, where competitive intensity is lower, where our technical capabilities are very high. What we would like effectively you to do is to observe the order booking that we will now start to ramp up in a very dramatic fashion in the coming months, which will start to effectively deliver cash flows and turnover by the end of the fiscal. It will perhaps not as much impact FY 2026 as much as it is you will see the dramatic impact of that as we grow fairly exponentially in FY 2027- 2028 onwards.
There has the lag, and certainly this is where we have fallen short. The lag that we have actually had in the conversion of our L1 positions to awards and the buildup of our order backlog that is not happened basically in the last three to six months. We will be looking to very aggressively make that up in the next basically six to 12 months.
Thanks. Sir, a subsequent follow-up. Since we have around INR 40,000 crore of order bidding also and the INR 6,000 crore to 11 orders will also come in, can we look at a substantial ramp-up in execution in FY 2027? Can we see a 15%-20% revenue growth?
Yeah, that's a very fair comment.
Okay. Sir, can you just give us a little breakup of what kind of segment orders will be this INR 40,000 crore of orders bidding which is there. How much could be hydel, how much could be roads, dams? Some color on that, sir.
You can expect kind of, let's say 40% of this would be from hydro and another 35%-40% from urban infra, which is like metros, elevated structures. Remaining 15% or 20% could be from other sectors where we operate in, that is water and nuclear sector.
One thing I'll add is that, given the fact that this is the leanest we've been in our order backlog, and certainly this is the lowest we will be, is our expectation in the many years to come, you might see some lumpiness in terms of how the sectoral allocations shift. Some of the hydro jobs that are coming up and some of the mega projects that are coming up, when and if they come into our kitty, fortunately, you will see the mix change temporarily. I think in the long run, you'll probably see the mix be reflecting effectively where we currently are.
Okay. Sir, one more question on CapEx, because I think we haven't seen any jump in the gross block till now, but looking forward for FY 2027, if we have a substantial execution, does the existing CapEx allow you to execute those orders, or you need some substantial CapEx in the next two, three years?
I think we will have to ramp up this CapEx and all will be project by project.
It will be a gradual increase. When we get a project, we also get mobilization advance, equipment advance. So that we will be using as and when needed to build up our CapEx gradually to meet the requirement of that project, and that will keep on getting added.
Okay. And the last question, sir, what could be our cost of interest as of now? And would it remain the same going forward, or do you see it going down?
On average, we have almost 11%, and it will remain same for some time till we really grow our business and deleverage.
Okay. Thank you so much, sir. Very excited to see the future growth part now unfolding. Thank you so much, sir.
Thanks very much.
Ankita Shah, you may please unmute and start.
Yeah. Hi. Steiner AG, which was there in revenues last time, on a like-to-like basis, how much would have the execution revenues would have grown this quarter?
Steiner AG, you are talking about revenue growth this quarter?
Yeah. For the quarter on a like-to-like basis.
Yeah. That you can see in the standalone.
Okay.
So-
No, sir, standalone also is a decline on a year-over-year basis then.
That is correct. Revenue has declined year-over-year basis. Profit has increased, that has increased.
And this would be due to?
Business optimization and the income from.
No
No,the answer there, it is not because of the underperformance of our current operations. It is actually simply because our accelerated execution and frankly speaking, the lack of effectively new orders flowing through our books. So our new orders now as the projects ramp up and as we continue to build our order backlog, you are going to see that impact of that growth about 12 months from today. So what we are asking you to do is actually just for the next two, three quarters, I think what you will see is we continue to execute our current order backlog well, and you will see the real growth in our business effectively start from the start of the next fiscal year.
Got it. What would be the quantum of awards which are already in our favor?
Almost INR 2,000 crore.
Arbitration awards.
Yeah, INR 2,000 crores are in our favor in HCC, which are not utilized yet, available for utilization.
Okay. Apart from the three sources of income that you had highlighted, which will be utilized for debt repayment, are there any other asset monetization or previous monetization proceeds which are pending, which can also help this debt reduction?
Yeah. As I said, we have earn-outs and claims and receivables coming from our Swiss subsidiary. That's one. We have non-core assets that we own, which are effectively some of our land assets. But again, we'll look at that in a very opportune fashion. You could probably, maybe expect something to probably happen in the coming months on that. It's largely effectively substantial amount of receivable settlement claims with our clients. As many of our projects actually wind down and we've had superior execution, we're expecting some of these settlements and some of these closures of our final bills, variations, et cetera, to happen in the coming months, from which we could also see some potential upside. When projects close out, that's also basically a time that you will potentially see some additional benefits from the closure of certain matters.
Our goal is never to actually be in an arbitration with a client. I mean, some of these legacy arbitrations, yes, we will see through, but the goal is on many of the projects that we actually now continue to execute, the goal is to basically have our final settlements and close out those projects as early as possible.
Got it. Just one last one. Although we have an L1 of INR 6,000 crores, out of this INR 40,000 crores of bid pipeline, are the bids already submitted or it is yet to be submitted? How much do we think can get materialized in terms of inflows for the full year FY 2026? That's it from my side. Thank you.
Yeah. The bids are to be submitted, because these are all identified bids. I will say a very aggressive assumption would be that we are able to secure 30% of that.
Got it. Okay. That's it from my side. Thank you.
Thank you.
Sampath, if you may please start. Unmute and start.
Yes. Good evening, sir. Since you are projecting high growth from FY 2027 onwards, if you can just give some brief idea about what sort of a growth we are looking CAGR from that year onwards.
Sampath, we are certainly looking at somewhere around 20%-25% kind of growth. That you will start seeing from our order booking also. Based on that, you can make your estimates. We do not see that achieving 20%-25% is a very big target for us from where we are sitting today.
Okay. For that, would we require any further capital for the same? Will you be raising capital from next year or
We are anyways, we mentioned that some capital that we are raising this year, some part of that will be kept to fund these growth objectives as well. EPC business per se is not something wherein we need to infuse capital if we are bidding rationally, which we are. Identification of project, cash flow profile of that project. We don't really have to have significant capital with us. But yes, we will keep on assessing that requirement and we will do the needful as and when that requirement comes.
Okay. This growth will come at a good margin. You'll be keeping sufficient margins for yourself. What sort of EBITDA margins for these projects you bidded generally?
Our margins will continue to be in the 13%-15% range. The kind of projects that we're looking at and some of the mega projects that we're now going to be participating in, where we see a return of capital that is substantially higher, is the reason why we will also be looking at very selectively, the capital raisings. Look, I think that where some amount of the capital raising that we do also goes to prepaid debt. I think that internally, the board and the management team is very keen that we deleverage and have our full fund-based debt basically paid down as early as possible.
I think that with our investment-grade rating and then the goal to actually make that even higher, I think the fact is that we would prefer to have the free cash flows of the business build up as reserves rather than actually have fund-based debt on our books that is basically continuing to accrue. I think, frankly speaking, it's a philosophical point, having actually been through a debt restructuring before and having gone through the pains of the business opportunity that we've lost during that time. I think that we simply just want to be a debt-free company. We would like to have- At our disposal, we'd like to have very comfortable and substantial non-fund based limits for the substantial growth of our business.
We'd like to have a credit facility, which we will be very selective about drawing down upon when some of our projects require some working capital support. But really, I think that when this question has been asked to me, look, our equity, our shareholder capital is the most valuable capital, right? It's the most expensive capital. But I think that the opportunities we see before us and our ability to do that in a de-risk fashion where we have no debt on our books is something that we're thinking very strongly about. That balance for us is actually very important.
Great, sir. Sir, now my last question. I assume that the growth that currently we project around 20%- 25% from FY 2027 onward does not include the opportunity that may arise or may not arise from the nuclear standpoint of view. Currently also that is.
It excludes, yes. It completely excludes that. Santosh can talk a little bit about that. Again, the fact that we've actually contributed to more than 55% of the nuclear reactor construction, the buildings in the past, just means that this ends up becoming big option value for us. We are a choice partner for foreign strategics, but we also see tremendous basically opportunity with local players that either want to participate on the private side, but also basically with Department of Atomic Energy and the Nuclear Power Corporation of India Limited, with whom we actually have had a very long and fruitful relationship. I'll let Santosh add to that.
Yeah. No, fair enough. Nuclear anyway is not a very quick moving sector.
Mm-hmm. Yeah.
You will obviously, one or two projects coming in every two years or three years sometimes. Maybe the only change that may happen is going ahead if the Small Modular Reactor and this Bharat Small Modular Reactor program, coupled with the clarity on the nuclear liability law and everything is clear, then we can see some more traction in this sector.
What is the best possible scenario in case of all the nuclear liability also being passed by the cabinet and what sort of optionality value means you are looking at, best case scenario.
If you ask me, I think it will take one and a half to two years for this change.
Okay. But after two years also, what sort of project
SMRs are not going to be very big opportunity in terms, meaning in sizing. An SMR reactor could be like INR 1,000 crore, and it all depends upon who are the developers who are coming in, who are able to put into that. We may see couple of SMRs, maybe four or five of them coming, launched at one point of time.
People will need to get their confidence on them. And I think it will be slow off-take only.
Okay. So, in terms of size of the market that the project execution will require, what could be the total size of that, sir?
Of which? Nuclear sector?
Yes, sir.
For the sake of it, yearly, I will say INR 10,000 is a big number for nuclear sector. You can say-
10,000?
Yeah.
INR 10,000 crores?
Yes.
Yearly? Okay. Got it, sir. Thank you, sir. Thanks a lot.
Thank you.
Thank you.
Kunal Tokas, if you can start. Unmute and start.
Am I audible?
Yes.
Just two questions. First is on PRPL. Can you update us on the progress of claims in PRPL?
Yeah, so there are many-
The resolution of claims.
Yeah. There are many claims in PRPL, and they are at various stages of arbitration, pre-arbitration. Then there are more than 2,500 crores of awards. They are at various stages of court. Some are at final hearing level. It is very difficult to give you answer in one statement. But, yeah.
I mean, compared to the September 26 deadline or the start of payments to-
Yeah.
Do you think those will be fine?
Yeah. Those are fine. We will be able to make those payments. That is not a problem.
Okay. Just another quick question. Outside of HCC standalone, in which other entities do you have debt? Materials debt.
Other than HCC, there is Mauritius subsidiary of HCC. There is some debt, and for that, we are working on a resolution, and hopefully by September that will be resolved.
You have nothing in HCC Infra?
No.
This is the holding company that held the Steiner business.
Steiner. Okay.
Now that the Steiner business has been divested and the cash flows from that are basically expected, we are also expecting that in the coming couple of months, that the full debt of that subsidiary will be repaid.
Oh, thank you.
We should be. I would expect certainly that, I do not like making forward-looking statements, but you would certainly expect certainly by the end of this fiscal year that full debt would be repaid. So really, we are looking at, as a group, our subsidiaries will all be effectively debt-free. HCC standalone, as we have already talked about, our goal is that by the end of this fiscal to effectively maybe within the next 15 months or so, that we should be well South of INR 2,000 crores of debt. So substantially bringing down our debt burden and then continuing to actually move towards the path of getting to a debt-free position.
A combination of effectively a lowering of that debt and a growth of our order backlog and our free cash flow just means that a substantial amount of free cash flow will actually then go to the reserves of the business rather than actually going to address basically debt service.
That is good, sir. Thank you, and have a good day.
Viraj, may start.
Hi. Congratulations to Arjun and the management team. Seems like the turnaround is well underway, so super job on that. Couple of questions from my side. For the existing orders that you're executing, which are long cycle orders, when do you expect them to hit maturity in terms of a billing where they can start flowing through the P&L? Is it more next year, which is why you allude to next year being a higher growth number, FY 2027?
Yeah. I mean, FY 2027 will be a right assumption where they can start throwing their maximum output.
Great. Secondly, sir, do you have the adequate working capital limits now through your bankers in terms of limits to go and bid for new projects aggressively? Is that all completely sorted or are there any bottlenecks there?
We do have what we need at this point in time, and as far as our consortium is concerned, the feedback that we have received is that, as and when we start to basically continue to ramp up our order booking and our current limits start to sort of get utilized, we would be very comfortable in approaching our lenders to provide further limits. I think it's a process by which I think the projections that we're giving and the growth that we're expecting, I think that we're very comfortable of meeting those targets.
Understood. Just a last point. Like some of your peers who have gone through this balance sheet fixed journey
Yes
What would be really helpful from the investor presentation point of view, if maybe you can articulate a slide around non-core assets or arbitration awards that are there, and what amount can be available through them, even if you don't attach timelines. It'll just give us a better sense of where can this deleveraging come from in addition to operating cash flows.
What we've said, and I think Rahul said this before, is that currently, if you look at HCC's balance sheet, besides our projects and our cash flow and the cash on our books we have INR 2,000 crore approximately of arbitration awards in our favor, where we can, at any point in time, have those monies deposited in court and have that money withdrawn against four bank guarantees. We have a number of our banks that are very supportive and are keen, as we have built up these arbitration award assets in the recent months, to actually have a substantial deleveraging done.
As we've talked about, every quarter, I guess we will keep you updated with regard to that, but we continue to have a substantial reserve through which we can either have settlements with our clients or we can actually execute the awards and take the money out if we don't want to leave any money on the table. But we will provide you with that same color every quarter.
Understood. Non-core assets would be helpful as well.
I don't think that there's much non-core to actually talk about. I mean,-
Okay
-we have a substantial value in our land where our head offices basically sit in Vikhroli.
Right.
Besides that, we have some other land that is in Vikhroli as well as in Thane that has certain encroachments. We have received offers for that from time to time, and we're waiting for the right opportunity to actually have a substantial value generation for that. That's not something that you should hang your hat on that's going to happen probably a few months from today or a couple of quarters from today. I think it could happen as a surprise, as upside.
Sure
but it might take a little longer as well. Now, what I am hopeful of, as Mumbai makes its way towards basically being slum free or actually starts to actually ramp up its slum rehab efforts, we should probably see the substantial tract, the acreage of land that we have that is encroached upon actually find some considerable value. But we are being a little patient to see the quality of offers those.
Understood. All the very best.
Thank you.
Kunal Tokas, you can please start. You have some additional questions, Kunal?
I just forgot to lower my hand.
Okay, fine. Then I am going to Kapil Agarwal because he has not been asked any question. Kapil Agarwal, if you can unmute and start. Yeah.
Good evening, sir. This is regarding HCC Infra, which is our subsidiary. We have investment in that approximately INR 1,300 crore at book value. Any plan to divestment of the same or something like that?
I am sorry, what is your question?
The question is regarding HCC Infra, which is our subsidiary. Am I audible?
Yes, sir, you are audible. I think we did not get the precise question.
Is there any plan to divest this HCC Infra, or how we can recover this INR 1,300 or INR 1,500?
There is no plan to. Let me just say this, without giving you sort of a forward-looking plan on divestment or not. But I will just say that our BOT subsidiary has a tremendous amount of PQ. We have considerable assets in that company form of awards. We have an ongoing business where we are ongoing BOT business. Yes, we may have divested a considerable sum of our assets there, but we are looking to actually have this company build up its asset base. In fact, we are actively basically sourcing projects for it. And in the coming weeks and months, you will actually positively hear our updates in this regard.
Okay. The second question is regarding is there any particular reason for sudden resign of our ex-CEO? Is there any impact on our, we can say, operational, like that?
No, there's nothing to basically be concerned about in that regard. He had served the company for a little over three years and there was a parting of ways, which was very amicable. There's nothing really to say beyond that front. As far as the bench strength in the company is concerned and the quality of our team, it's absolutely 100% solid. You don't need not be concerned with regard to our execution capabilities or for that matter, any gaps in the business at all.
Okay. Is there any plan to increase the promoter stake to right issue or something like that or?
I mean, Rahul talked about that. I think that when we talk about equity raising, what we're very, very clear about is respecting equity shareholder capital and the cost of that. So any equity that we would be looking to raise would be actually through a rights issue. Where the promoter group would be looking to underwrite that, and we stand behind the company solidly. Our goal is to actually see how we can, over a period of time, ensure that the dry powder we have not only comes in at the right time to support the business and underwrite matters like rights issues, but also potentially over a period of time increase the stake in the company.
Okay. The last question is regarding that Patna project. One of that we have bidded for estimated cost minus 22%. Over that we are expecting that we will be maintaining 13%-15% of margin. Are we sure, I know that we would have been proper assessment regarding that. This kind of margin was there in the estimated cost?
One of the things that In fact, I'm glad you asked that question because the easiest thing for us to have done in the last one year is to have actually built up our order backlog with bidding on projects any which way we wanted. Right?
Yes.
The one thing that we are very, very clear about, and certainly I'm personally very clear about, is the pricing of risk with our projects. We are very, very comfortable with the bid that we've made. We don't get into the details of that on investor calls. What I will say is that generically speaking, it depends on the equipment base we have, depends on the manpower and mobilization we have in that area. It also happens to do with a substantial amount of planning that you do well in advance of that bid coming up, so that you are best positioned with regard to of having procured all the resources, including the capital equipment for that project. That is what gives basically our edge. I don't believe that you happen to be accurate with regard to some of the figures that you mentioned.
Certainly, those numbers seem a bit off. We can probably offline continue this and to give you a little further detail in terms of where the positions were, but we are very, very comfortable with our bid. As far as the profitability of the project is concerned and our margins, we maintain our position on the same.
Sure. Okay. So one more, if I can ask. Regarding last presentation we have given that submitted bids was approximately INR 30,000 crore. In this presentation, we are saying that we will be having pipeline of INR 40,000 crore. Out of this INR 30,000, is there any, some we can say, bids were opened in this period or what is the status if you can explain?
In fact, one of our large bid, which was a very large bid, the owner's estimate was almost INR 17,000-INR 18,000 crore for that, got canceled and has been reinvited.
Okay.
Yeah. I think that's what is skewing it. But that's still there in the pipeline, and we are bidding for it.
Okay. Thank you. Thank you, sir.
Thank you, Kapil. Thank you.
Rushmik. Rushmik, if you can please start, if you have any additional questions, unmute and start.
Yeah. Thanks for the follow-up opportunity. Sir, you have given a path for the deleveraging from here on. My question was on the interest cost. Last year, interest cost was around INR 600 crores. First quarter it is INR 121 crores. So should we assume that the interest cost for the whole year FY 2026 will be below INR 500 crores? And maybe should it go down by INR 100 crores per year for the next two, three years or some color on this will help, sir.
Yeah. No, absolutely. Look, I think that I'll let Rahul go through the specifics of detail, but based on where we intend to end the year in terms of a substantial debt reduction on a pro forma annualized basis, certainly we would expect, if you assume, let's say, and Rahul, correct me if I'm wrong, but if you assume a sub INR 2,000 crore debt level of INR 1,800 crores, you certainly expect basically a INR 100 crore plus basically interest saving on an annual basis. That impact is what you start seeing through FY 2027 flow through our books. The other benefits obviously, as we have talked about, which is the higher investment grade rating, the greater access to capital, higher market cap. Obviously, having an EPC company that's no longer leveraged.
I think that from a point of view of freedom of business, I think, is something that we look at from a very positive perspective. Rahul, do you want to quickly comment on the?
Yeah. So interest reduction, that number you are seeing is going to be in the same trajectory, and by year-end, we can see that it should be somewhere around INR 400 odd crores, INR 400, INR 420 kind of number will be there for entire finance charges this financial year.
Thank you so much for the explanation. Thank you.
Anirudh.
Yeah.
Yeah. Actually, I just missed out that part because in the earlier concall also, you had mentioned about in the fund raise. How is it going to be planned in this quarter?
Well, look, we're speaking very generically. I think that once the board actually takes a decision, we will communicate that. I think that anything else would be irresponsible to say at this point in time. What we are saying is that there is a plan, given our accelerated growth in the projects that we see that we will bank in the coming months, along with the fact that we would like to have a substantial cash reserve as we deleverage the business. We will be looking to do a rights issue which the promoter group will underwrite. The precise timing of which we will basically communicate at the appropriate time.
Can we expect it in next two to three months? Because last time-
I think it's fair to say that you could probably expect that for the simple reason that, if we are going to raise capital, I'd rather effectively see a prepayment. Because we are sitting on substantial cash in our books, I think that the conversion of certain orders, that I think Santosh has already talked about, will happen very relatively soon. I think that we're expecting some of the larger bids that we've also made to be open relatively soon. I think it'd be fair to say that we would like to be ready with all the dry powder available to us, as well as actually take the benefit of using all the cash in our book to prepay debt.
Because frankly speaking, I would rather effectively use free cash flow to prepay debt and to really boost our PAT on an annual basis, rather than to actually have that money lying around sitting in an FD.
Okay. Sir, any updates on the hydro project in Arunachal Pradesh? There was a big project which was-
Yeah, that was a job which got canceled and has been re-invited again.
Is it in August or sometime in August?
Yeah. That bid is due in August.
We remain. In fact, when it was basically bid out, there were three bidders. We remain obviously, in the hydro sector. We happen to be one of the few players that are capable of doing projects like that. We certainly are looking forward to some of these tenders coming out.
Yeah. We were one of the strong contenders. Why was it canceled? Any reasons for that?
We can't comment on that. I think that's a prerogative of the government of India and the client, NHPC, and they took a call in their wisdom to do so. I think we can leave it at that.
No. Why I am asking is because if there are only three people who were bidding, and in all likelihood we have the expertise also, so shouldn't we contest if this has been just canceled without any justification?
No. Actually, all these tenders comes with a very crystal clear condition that it is the client's right and he can cancel the bids at any point within the bid process.
NHPC Limited is a public company. It's a question you can ask them. They are our client. Our clients come first. And frankly speaking, the client is always right as far as we are concerned. At least mostly right. And I say that in a lighter vein. But this happens from time to time. I am sure that they must have had their reasons. We have a view, but it would be very unfair for us to basically give a view on the subject, which would be somewhat speculative. I think it's like I said, the client's prerogative.
Sir, just on that fundraise part, because we had done QIB also and rights also earlier. So this time around, we are planning to do rights issue instead of QIB. Is that-
That's right. My point is that we're not expecting our existing shareholder base to get diluted. In fact, rights would be done at an appropriate discount to actually have each of our shareholders benefit considerably from it. As a result of it, you would actually see the reason for obviously doing it is a very positive reason. As far as we're concerned, I think that we could look forward to our shareholders all benefiting from it.
Okay. Thank you.
Thank you.
Sir, no more hands is raised, so we can conclude the call.
Okay. Thank you, everyone. Thank you for joining this call and look forward to seeing you in the next quarter.
Thanks, everyone. We appreciate your support.
Thank you.