Good evening, everyone, and sorry for this delay because of some exigencies. My name is Rahul Shukla. I am Assistant Vice President, Finance. Joining us for today's meeting are our management team here. Also, we have our Vice Chairman, Mr. Arjun Dhawan, and our CFO, Mr. Girish Gangal, will also be joining shortly. We welcome you all in this Q4 FY 2024 presentation, and I'll just take you through the summary of this presentation. Just to give you a snapshot, with 100-year-old legacy, HCC has completed more than 4,000 km of highways, almost 400 km of complex tunneling. We have been part of almost 60% of India's nuclear capacity and 26% of installed hydropower capacity. We have got a nationwide footprint with almost 30 projects all across various states of the country, including overseas, which is Bhutan, and we have done quite well over there as well.
As of March 31, 2024, our order backlog is INR 10,475 crore, which is well diversified across various sectors, with transport leading the show, followed by hydro and water. The diversification also pans across various states. So, with Uttarakhand and Maharashtra leading the pipe. Key performance highlights for Q4. As you can see, we have achieved a consolidated revenue of INR 1,773 crore, which is lower in comparison to last year, which was INR 2,426 crore. This is essentially on account of sale of Steiner Construction business, which we had updated earlier as well. Our consolidated net profit stands at INR 246 crore, which is more than previous years' Q4, by almost 22%. Again, because of some gains on account of Steiner Construction sale. Our standalone turnover is slightly down. I mean, it's at INR 1,428 crore, as against INR 1,845 crore last year.
Obviously, we were expecting much better performance, had couple of projects not seen some unforeseen things, which are now sorted. Those were temporary hiccups. So we see that going forward, there will be some improvement over here. Standalone net profit is INR 38.8 crore, which again is down in comparison to last year, obviously due to a reduction in our turnover. EBITDA margin is improved, which is 15%. So there has been a very good outcome in one of the hydro projects wherein there have been some reduction in financial liabilities because of our settlement and agreement with client, which has resulted in improved EBITDA margin. We have completed our Nikachhu project in Bhutan in the month of March, for which Taking Over Certificate has been received.
We have been, I mean, nothing to be proud of, but we have been consistently paying all our lender dues, and in March, we have paid INR 340 crore. Nothing is due or outstanding to lender at any point in time in last. We have also, as you know, we had updated you that we are embarking on a rights issue, and we are proud to inform you that we have successfully completed INR 350 crore of rights issue, which was oversubscribed by 250%. So we received application for more than INR 800 crore for this issue, which obviously shows the confidence of investor community on the company, our performance, and the results that we have been showing. On the business development front also, we have been the lowest bidder for INR 4,500 crore worth of project, for which we can expect LOI to be issued very soon.
Our bid pipeline is very strong. INR 10,400 crores worth of bids are under evaluation. Additionally, almost INR 46,000 crores of the project have already identified for bidding purposes, which will be fueling our growth going forward. Just a graphical representation of our performance. You can see that we have been consistent, more or less, in terms of revenue, EBITDA, PAT, and EBITDA margins. Year-on-year basis also, just a graphical depiction, which shows that performance is consistent even in the medium to long term. Coming to operations update, Mumbai Coastal Road project, which you must have seen in the newspaper media also, we have achieved some significant milestones, wherein we have put in this arch structure in place, a couple of arch structures. Every structure is almost 140 m in length and 2,600 metric ton in weight.
The second one was put in place even when the seas were not very supportive. There was some cyclone a couple of days back. It shows the tremendous skill and capability that company has got in terms of executing complex projects. We have successfully achieved this, one of the first icons in India. Nikachhu, as I already updated, we have received Taking Over Certificate. In NH-34 also, we have achieved final commercial operation for the last almost 10 kilometer stretch. This completes the project from all the aspects. Anji Khad Bridge is almost completed, apart from some minor slope stabilization and miscellaneous works which are there, which are going to be completed very shortly. T49 tunnel, again, all major works completed. Some variations are there, which are under progress. Numaligarh-Jorhat, this again, almost completed project, and some utility and miscellaneous works are in progress.
The point here is, purpose of showing all this is that there has been considerable progress and delivery of all these projects which had been there for a long time. For last two to three years, the way we have executed them and delivered to the client, this has generated tremendous amount of equity with our clients as well. Coming to other projects, Vishnugad, Tehri, these are our hydro projects in Uttarakhand, and they have also been going quite well. Especially in Tehri, we have achieved one of the milestone by lowering 250 MW rotor to the generator pit. In Vishnugad, our tunnel boring machine, which had faced some problem, which is also one of the reason from slightly lower revenue, because once TBM starts, our revenue generation is quite fast. Now this is on track, and it is working fine.
Mumbai Metro line also doing quite well. Our CST station is almost complete, and other station at Kalbadevi, Girgaon, Grant Road are also progressing quite well. Now, coming to financials. I have already explained key financials in the previous slide, so I will not be dwelling upon it. You can have a quick look at it, then we will move on to the next slide. That is consolidated numbers for the consolidated number for the financial year. Now coming to Steiner. We just wanted to give you a little better view this time. Last time also, we had explained a little bit about our business reorganization that was going on, and the fact that we had carved out construction business of Steiner based into another subsidiary. Just to give you a complete overview. Steiner AG business comprises of construction business and real estate development business.
And obviously, company wanted to monetize this business and generate capital for shareholders. In that process, in FY 2024, we had carved out Switzerland West construction business into a separate company. This company was sold to Demathieu Bard, who is a French construction contractor. That particular business, in terms of financials, was generating almost 300 million of revenue with a very small profit margin of almost 2%. Transaction was at a CHF 19 million , and along with its liability of almost 60 million. After that sale, the business is now left with the construction business, which we are binding now, and the real estate development business. So real estate development business is the one which strategically we have been focusing, because it is a very large portfolio that we have, along with good PAT margins that are there.
Very stable business, takes some time to develop, but once it comes to that level, it is a very good business pipeline that we have. As of now, Steiner pipeline that is there comprises of almost 65, 70 projects. But we are in the process of transferring 57 projects to a new company, which will have a portfolio of 5.5 billion comprising of these 57 projects. As an estimate, we can expect that this will give a turnover of 300 million per annum, with maybe PAT margin of around 5%. To monetize this, we have already appointed an investment banker who is running this process. Lazard is a well-known investment banker.
The goal is to basically, with this helps in bifurcation of real estate development business from the construction business, which had its own legacy issues, and makes this investment much more lucrative and potentially will help us accelerating the process of capital. Coming to the next slide. These are some of the ongoing R&D projects. Just to give you a sense, there are multiple such projects. As I mentioned, there are the 57 projects we are transferring to another entity. You can see that these are residential, commercial, mixed-use, all marquee projects, which once reach advanced stage have got tremendous scale. Here are financial snapshot. You can see that the 31st March 2024 order backlog is CHF 425 million , which translates to almost INR 4,000 crores . Turnover for FY 2024 was CHF 123 million , translating to INR 1,679 crores.
Profit before tax was CHF 24 million , equivalent to INR 220 crore . Obviously, this excludes discontinued operation of Steiner Construction SA, which we have already sold. So yeah. This ends our today's presentation, and the floor is now open for our question and answer. So you can raise your hands and we will take your question.
Sanjeev Damani, you may please start. Sanjeev, you may please start.
Hello, am I audible?
Yeah, now you are audible.
Oh, so kind of you, sir. Sir, [Non-English content]. Congratulations for company being brought to a level where we are now doing new biddings also. Sir, one thing I want to understand, we are lowest bidder in INR 4,600 crores worth of project. Can I know the nature of such projects that we are at the lowest and likely to get them. Can I know, sir?
Sanjeev, as you know that we have got a diversified portfolio, essentially in transport, hydro, nuclear, and water. These projects that we are L1 on, essentially are from transport and hydro sector.
Okay. Transport and hydro. Now, coming to second one, that we have repaid some INR 350 crores worth of loan, was mentioned in the presentation. Would just like to understand, sir, that it is the rights money that has been paid back, or this amount was paid earlier and this rights money will be used as working capital in the company.
This amount was paid earlier, Sanjeev. As you know that before March 31, we make all those payments to lenders. That's what we have already done before rights issue money actually hit our account.
Okay.
This has not been paid from rights issue.
Okay. Now, sir, we are on the completion of largely each and every project which we were in hand. Can I just know the amount of pending execution, likely amount of sales to be derived from pending execution and some other projects which are already going on. In next six months, how much we are estimating our turnover to be, billing to the customers?
Sanjeev, we cannot really give you an estimate of future turnover because that will amount to futuristic statement.
Okay.
However, we have already disclosed you our order book, and from that you can make your own estimate because we have been consistently performing at certain rate. You can basically will have to work out your own number.
Can you just quantify the pending orders as on hand, which are executable straight away, which are ongoing?
Sure. We have order backlog of INR 10,475 crores.
Okay.
All of this is executable.
All. As on March 31?
Correct.
Right, sir. We have not won any new order in last year or in this current year so far?
As I mentioned, the L1 positions.
Right.
That is what we have. Last year, we have not received any letter of awards. We have just been L1 in this INR 4,400 crores worth of order, and this will subsequently be converted into awards.
If I can just know the amount that we transferred to a separate company, SPV, for settlement with our lenders, some progress is there on that account?
Progress in the sense? Sorry, can you-
In the sense that if we have realized the money and bankers have been paid, we had pending awards from government.
Yeah. We have certainly realized some money. However, lender due payment starts after two years.
Okay.
We will take a judicious call whether to make some prepayments to them or keep it as a reserve for operating expenses of that company. Because for realizing money from those claims and awards also, we have to incur expenses.
Okay.
But that decision will be taken by management at an appropriate time.
And sir, finally, have we also got any additional award thereafter? Whatever we transferred to that company, thereafter, have we received any award in our favor for our pending litigation or claims?
Yes. We did receive, because it's a continuous process. HCC continues to have significant amount of historical claims, because we did not transfer everything to that SPV. Those claims keep on converting into awards as and when the time comes, as and when the arbitration process is completed.
Thank you very much, sir. You people are very cooperative, and you make us understand the business of the company very nicely. Thank you very much, sir. Thank you.
Thank you, Sanjeev. Thank you. Appreciate it.
Hello.
[inaudible], please continue with your question.
Sir, I had a couple of questions. The first question is on the debt side. How much debt we will be paying in FY 2025?
In FY 2025, we will be paying almost INR 430 crores. INR 425- INR 430 crores. This will not be entirely principal, but will also include yield. This I am telling about total payment that we have to make.
What would be the principal amount in this INR 430 crores?
Principal will be almost slightly above INR 200 crores, maybe around INR 220, INR 230 crores.
Correct, sir. Also, I wanted to understand, in this particular quarter, our subcontracting cost is a little on the higher side. What is the nature of this cost and any specific reason of such a high subcontracting cost?
Just a second. Yeah, basically, you are comparing it with last quarter, or what are you comparing it with?
No, I am comparing it as a percentage of revenue compared to last quarter as well as year-on-year.
Okay.
As a percentage of revenue, that is.
On a year-on-year basis, if you see that this is in absolute number terms, it is lower.
Correct.
Last year, in the last Q4, we had almost INR 1,159 crores of subcontracting expenses. This year, it is around INR 770 crores. It is lower. Ratio wise, yes, you can say it can be slightly higher. As I mentioned that we were expecting couple of projects to perform much better, should have generated much better turnover, which got actually postponed to the next periods. So the ratio is slightly that way. I would not say is comparable, but it is in line only. It is not too off.
Correct. Also, sir, I just wanted to understand this, that when I compare this subcontracting cost to the percentage of revenue, and I am talking about on the consolidated basis, can I get a particular percentage or something, any broad range would do?
So you can see around 60% odd percentage is the ratio that subcontracting cost comprises, but it can vary quarter- to- quarter. It cannot be a straight line.
Correct. That is for sure. Also, sir, I wanted to understand this fund of bidding that we do. The rights issue money that. So currently, if I consider the rights issue money that we have got, we are a net debt-free company, right? I mean, a net worth positive company. So how is the bidding going to take place? Will we be allowed to bid as a net worth positive company starting from today, or we will have to file an audited annual report or something kind of that to get into the biddings of the-
I get your question. I will answer this question, but I think we will have to limit our questions because others are also raising hands.
Sure, sir. This is the last question, if you could answer.
Sure.
No, Rahul, I will answer this question. Girish Gangal this side. Our net worth was positive last year also, and it is positive this year also. Last year it was INR 700+, this year it is INR 900+. So there is no difference in bidding as far as last year is concerned or this year is concerned. We always have a positive net worth for last two, three years.
We did not-
Sir, on the con-
Restriction on bidding here, because as I said that every quarter we have been showing that our bid pipeline and bid under evaluation is this much and all. So we always, for last many quarters, we have been bidding, and now we have also started seeing the results.
Correct, sir. I will fall back into. Thank you.
Thank you.
Mahesh [Vaze], can you please start?
Hi. My first question is on typically between being L1 and getting LOI, what is the kind of time gap that one looks at?
Mahesh, it depends from client to client, project to project, obviously. But generally, we can expect maybe one and a half to two months on an average.
Okay. Are there any cases ever where you are L1 but you don't get the letter?
No, it doesn't really happen unless bid itself has been canceled. In our case, we have not really seen this kind of situation.
Secondly, this INR 10,000 crore odd number, which is under consideration. It essentially means we have— I'm just trying to understand it. It means that we have submitted the bids, but the client has not yet informed who is L1, et cetera.
Bids have not yet been opened. That's correct.
Okay. One last thing, there is some tax. I went through the notes, I could not understand. If Mr. Gangal could explain why the tax liability is so big, especially on the deferred tax side.
Yeah, sure, Mahesh. See, if you see current year, we had a substantial profit, correct?
Yeah.
Since we have a substantial profit, there are two counts. One, there is a current tax provision, okay, which you have to make because we are making a profit this year. One, which is on the book profit taxation basis, which is popularly known as MAT. At the same time, we have brought forward losses for past. Okay? While computing regular computation, we get a credit for those brought forward losses. Whenever we use these brought forward losses, to that extent, deferred tax asset earlier computed on these brought forward losses gets consumed. There is a creation of deferred tax liability now. That's why there is a tax provision higher than what you find last year.
Right. But net-net, it should be just about, not last year, the absolute tax rate, shouldn't it be at the corporate tax rate level?
No.
Higher.
No. See, Mahesh, it is like that. It is a little complicated thing, but I'll still try to explain. There are two methods of taxation. One is a regular taxation, a normal taxation, wherein you get all the advantage, a deduction, brought forward, a lot is set off, et cetera. And you arrive at a taxable profit. And parallelly, you have to also compute tax payable on your book profit without deducting anything except book losses. Correct?
Okay.
Now you will see last year also, we have made a profit, so there are very little book losses what we have. So on one count, on the regular computation, we could set up the losses, so the tax payable under regular computation is zero. But since on book profit or a MAT computation, there is a tax liability, you have to choose whichever is higher. That is the income tax provision. Okay? So either you pay on regular or you pay on MAT, whichever is higher, you have to pay the tax. So because of that, there's a tax provision this year.
Okay. But is there any extraordinary component to this or it will continue like
No. It will not continue like this. It depends on the book profit taxation, what you have, and how you are going to have your taxation carried forward. Suppose since this year we have made a profit, in case we have a book profit taxation next year, there will be a normal current tax provision as well as reversal of deferred tax provision on consumption of losses.
Okay. And one last thing, sir. In this financial year, our balance sheet has undergone significant restructuring, churning, whatever you can call it. If you could give some approximate guidance on next year's, for the full year, what the interest cost will look like.
Okay.
I just want some range because there are costs that are there in this year's P&L. Which obviously since then, our balance sheet has undergone some transformation.
Correct. No, frankly, this year, I don't see there is a major transformation in standalone accounts, if you see the balance sheet. The transformation has happened last year, where we have went into a restructuring of the loans and this arbitration awards, et cetera. This year, there is no major transformation. The interest cost will remain more or less at same level what we have, because we have a bullet payment to be made under resolution plan. So whatever is the principal repayment happens. To that extent, interest cost goes down. But at the same time, the existing interest, which is accrued but not paid, it gets cumulatively computed. It gets compounded. So more or less, we'll have a similar level of interest, what you are seeing in current balance sheet. More than that, I can't make any forward-looking statement as such.
Okay, fine. Thanks a lot.
Yeah.
Thank you.
Yeah.
All the best.
Yeah.
Yeah, Viraj. Please put your question.
Viraj, can you hear?
Hello. Hi, can you hear me?
Yeah. Go ahead.
Sorry for that. The INR 10,000 crore order book that you currently have, on top of that, the INR 4,500 crore L1 order book, assuming it all comes in as orders, over what period would these be executable?
To translate into revenues?
Yeah. See, generally, it depends on each contract. Either it has to be completed within 36- 48 or 60 months. It depends on each contract, depending on what type of contract it is. So on an average, you can say three to four years. The new orders, what I mean.
Right. The slide that you showed in the presentation regarding the Steiner remaining business, which is roughly INR 150 crore packed business with a large order book. I wasn't clear, so you've appointed an investment bank for a fundraise there or for outright sale?
So let me take that question. We cannot comment further. We are leaving that ambiguity at this point in time. I think as we pointed out to you before, we will basically look at alternatives for unlocking a value in Steiner. Part of the reason we are raising capital is also for the growth of the infrastructure development business. There will be some capital to actually accelerate growth there. Some of the monies will be used to take care of past liabilities of the construction business that we wound down. Certainly, obviously, I think that, assuming how the process basically goes, we will keep you updated with regard to how we are thinking about a return of capital to HCC, if that is appropriate.
Okay, understood. Lastly, why would interest costs remain the same in next year at INR 800 odd crore, given the restructuring of the balance sheet and some monetizations happened this year, would the principal amount not be reduced and reduce the interest cost next year?
I think I have answered this question to the earlier, Mr. Mahesh . See what happens, interest cost is first of all INR 663 in this standalone balance sheet. It is not INR 800. Why-
Yeah, I am talking about consolidated, sorry.
Consolidated. Okay.
Yeah.
In consolidated also, the majority cost comes from the HCC. Okay. Whatever repayment happens, repayment happens in a staggered manner, which is to be paid over a period of five, six years. So every year, the principal repayment happens maybe 10%, 15% of the original principal amount, and balance is the interest. So when interest is getting paid and principal is also getting paid, there is some reduction in interest on account of repayment of principal.
Correct.
But interest accrues at compounding rate. Whatever is the balance loan as well as interest, there is a compounding on this interest. So naturally that increases the cost. So it is a balance between reduction in interest on account of principal repayment, plus addition on account of cumulative or compounding of interest cost. That is why this interest will remain more or less same. It requires a calculation. Rather, I am just making a statement that it will be more or less same.
Understood. Thank you.
Yeah.
Kenil Mehta, you may please start.
My voice coming?
Yeah.
Sir, would like to know, you had won one contract for Agardanda Creek Bridge. Contract worth INR 1,200 crore. Is that contract going to materialize in coming months? My second question is, based on MSRDC has put several tenders for expressway project in Maharashtra. Based on the public documents I see, majority of our projects we are not the L1 bidders. Would like to know whether we have included that projects in our bid under evaluation process or it is separately filed?
Let me comment on the second question. We are involved basically in this particular corridor, and I think that is all I will say at this point in time. We will basically communicate at the appropriate time how we are executing part of this project, and if so. Regarding your question on Agardanda, I think that it already been addressed earlier. The project is L1. I think that we should probably expect the speed of conversion to be fairly quick, given the track record of the MSRDC.
Understood. Also, sir, would like to know your view on the pumped storage projects across the country as various companies are, public sector companies are announcing in the press release, power companies. So would like to know what will be the timeline and on what will be the base order size for each and every company. Hello?
Rahul, do you want to take that or do you want me to continue to answer?
Sorry, Kenil, I missed your question, if you can please repeat it.
Would like to know what will be the opportunity size for the pumped storage projects, and what is your viewpoint on that sector as a whole?
Yeah.
What will be the minimum order size and timeline for completing the projects?
Sure. Pumped storage schemes are obviously a strategic requirement of the country because they help meeting peak power requirement. There is very clear pipeline of these projects which are coming. HCC has got very strong track record. We are just completing our, executing our Tehri Pumped Storage Plant, which is 1,000 MW. We are very well placed over there. In terms of size of those projects, we can expect each project to be around maybe 800 MW- 1,000 MW size. As I understand, around eight to 12 projects are there in the pipeline which we can expect in coming years. We are there to bid for that.
What will be the timeline for completing an 800 MW or 1,000 MW project?
Pumped storage schemes are relatively simpler than typical hydro project because it doesn't require a very heavy dam. We just have to create a small dam to pump water back to the original dam, and from there it is pumped down and power is generated during peak hour. Typically the timeline can vary, say around on an average almost four years of construction timeline, depending on what kind of geographical location the scheme is located. Because now we are expecting that these schemes will not be in a very difficult kind of locations. There are hydro projects which are in a relatively easier geographies. There also these pumped storage schemes are being planned. We can estimate a timeline of completion of almost four years.
Understood. Can I ask one more question?
Yeah, sure.
One final question, sir. As we industrialize again, the power sector is after a decade is starting to gain its trend based on new orders for nuclear and pumped storage and thermal. Should we expect going forward the power order book will be higher than our transport order book in coming years or quarters? As various company finalizes their order for nuclear and
Okay. We would not like to comment whether it will be higher than transport or not, because India's infrastructure sector is so big that there are orders and projects in every sector. Transport is obviously commanding very big chunk of those order books. There's no point in commenting that. We should rather be contented with the fact that we should be able to book good and profitable orders in whatever sector we see the opportunity.
Rahul, if I may just add, I think that if you look at our track record historically, we actually had our hydro contribute anywhere between a quarter to a third of our order book. Now, if you look at that historical track record, I think it would be fair to say that we would probably expect that to continue. We might see, depending on a wave of hydro projects coming at some point in time, we might see those percentages shift.
Mathematically, we could expect that considering that we are at a lower point at our order book cycle. So we expect a very strong growth in the next couple of years on the booking of new jobs. If we happen to bag a couple of large power projects, in the short run, you might see a distortion on that. I think in the long run, I think it would be fair to say that we would actually probably still maintain that sort of historical track record, more or less.
Thank you, sir, and thanks for walking the talk over large many quarters.
Can I add something here, Mr. Dhawan?
Oh, please, by all means, Mr. Bhullar.
Kenil, we have a very good track of delivery on hydro projects, and pump station is also a very similar project. Right now, just wanted to inform you as you asked, we are delivering one 1,000 MW, a large one, which is going to be commissioned within this financial year. This is the first variable speed turbine pump station project. We are there as one of the first ones who are delivering these sort of projects. This is going to be delivered this year. I am pretty sure that we will get some good traction with this segment again coming into picture in a larger way.
Thanks a lot, and thanks for walking the talk over large many quarters, sir. Hope the future will be better than earlier.
Thank you, Kenil. Sham Garg, you may please start. Sham, are you there? Sham Garg?
Hello. Am I audible?
Yes. Go ahead.
Most of the questions are answered. The only question I am left with is what is the conversion ratio of the orders we bid for?
What is the conversion ratio of?
Orders we bid for.
Historically, if you see, we had a conversion ratio of 15%-20%. It varies from sector to sector, but this is an average number that I am telling. It also depends on what is approach that we are taking. For example, if we talked about recent two, three quarters, our conversion ratio is much higher than 15%, 20%. Obviously, with the good orders being there in the market, which we want to take and we can take, then the conversion ratio will continue to be higher, maybe 25%, 30%. But once we have booked our required orders and we see that now the orders which are there are not really, they are run-of-the-mill kind of road projects and all that, probably we will be very selective and we will not be very aggressive in taking those orders. It all depends on how we plan our game.
Sir, is it right to estimate that from the order book of INR 10,000 crores, which is in pipeline and 45, which you have identified, we will be able to get order of somewhere around INR 12,000 odd crores?
Yes. You are right in your assessment. It could be even higher than that, slightly higher than that.
This could be awarded in FY 2025, or a few of them maybe will roll out in FY 2026 as well.
We certainly target that, but many times it also depends how fast client proceeds with the process of awarding those orders. When we are planning our bidding estimates, bidding budgets and all that, we certainly look at a timeline of one year. For us, window is FY 2025, unless it gets delayed from client side.
Okay, sir. That is from my side. Thank you for answering my question and all the best.
Thank you, Sham. There are no more hands. Rahul, we can end it.
Thank you. Thank you everyone for participating in this investor meet, and we look forward for your continued support and encouragement. I thank HCC management for being here and supporting. With this, we close today's meeting and look forward to connect with you in the next quarter. Thank you so much.
Thank you.