Ladies and gentlemen, good day and welcome to Larsen & Toubro Limited Q1 FY 2023 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. P. Ramakrishnan. Thank you, and over to you, sir.
Thank you, Abhirup. Good evening, ladies and gentlemen. A very warm welcome to all of you into the Q1 FY 2023 earnings call of Larsen & Toubro Limited. The earnings presentation was uploaded on the stock exchange and in our website around 6:40 P.M. IST. I hope you all had a chance to take a quick look at the numbers. As per past practice, instead of going through the entire presentation, I will take you through the key highlights for the quarter in the next 20 minutes or so, post which we will get into Q&A. Before I begin the overview, a brief disclaimer.
The presentation which we have uploaded on the stock exchange and our website today, including the discussions during this call, contains or may contain certain forward-looking statements concerning L&T's business prospects and profitability, which are subject to several risks and uncertainties, and actual results could materially differ from those in such forward-looking statements. During Q1 FY 2023, the Indian economy continued to exhibit resilience supported by relatively strong macroeconomic fundamentals, and as evidenced by improving high-frequency economic indicators. Despite global turbulence and the rise in energy prices, both the government and the Reserve Bank of India have succeeded in maintaining fiscal and monetary stability in the country. We can safely conclude that during this quarter, India remained a bright spot amidst continuing global chaos. Our group also reported a strong all-round performance in an otherwise seasonally weak quarter.
Before I move further, I would like to mention that effective April 1, 2022, that is the start of this financial year, the operating segments of L&T have been reorganized in line with the business strategy to be adopted by the company under its five-year Lakshya plan 2026 . We had articulated on this aspect when we spoke about the strategic plan roadmap for FY 2026 during the Q4 FY 2022 earnings call. Just to refresh, some of the existing segments have been realigned to reflect the group's Lakshya 2026 strategy. The changes are as follows. Energy projects. This is a newly formed segment that constitutes the current segments of hydrocarbon and power to reflect the company's integrated pursuit of opportunities in a rapidly transforming energy sector, including green energy EPC opportunities.
The second segment is high-tech manufacturing, this being a segment that comprises the heavy engineering and the defense engineering business being combined to leverage the extensive engineering, manufacturing, and fabrication expertise across the various customer segments. IT and technology services. This segment, earlier comprising of the listed three IT&TS subsidiaries, that is L&T Infotech, L&T Technology Services, and Mindtree, will now also include the new age businesses of data centers and e-commerce and digital platforms. Both data centers and e-commerce digital platforms are recently incubated businesses were shown under the other segment in the previous year. I will now cover the financial performance parameters for Q1 FY 2023. Our group order inflows for Q1 FY 2023 at INR 418 billion registered a YoY growth of 57%.
Within that, the projects and manufacturing businesses secured order inflows of INR 281 billion for this Q1, registering a YoY growth of 85%. Our current year Q1 order inflows in the projects and manufacturing portfolio are mainly from infrastructure, hydrocarbon, and defense businesses. During the quarter, our share of international orders in the projects and manufacturing portfolio are at 33% vis-à-vis 15% in the Q1 of the previous year. The domestic ordering environment in Q1 was also significantly better compared to Q1 of the previous year. At a macro level, there was an improvement in domestic tendering and awarding activity. Secondly, we expect public CapEx spends comprising of central, states, public sector units in the current year to be better than that of the previous year.
Hopefully, the private CapEx could also witness improvement in the second half of the current year. Our order prospect pipeline for the remaining nine months of the current fiscal is around INR 7.6 trillion, comprising of domestic prospects of INR 6.1 trillion and international prospects of INR 1.5 trillion. The broad breakup of the overall prospect pipeline of INR 7.6 trillion is as follows, infrastructure segment, INR 5.6 trillion, energy, INR 1.6 trillion, and projects and manufacturing, around INR 0.4 trillion. Finally, we remain confident of achieving the annual guidance we gave on order inflows at the beginning of this year. Moving on to order book. Our order book at INR 3.63 trillion as on June 2022, is once again at a record high.
As our projects and manufacturing business is largely India-centric, 72% of this order book is domestic and the balance 28% is international. Of the international order book of roughly around INR 1 trillion, INR 1 trillion, around 79% is from the Middle East and 11% from Africa. The remaining 10% is from various countries, including Southeast Asia. Clearly, the Middle East CapEx in infra and hydrocarbon is on an upswing post-recovery due to the high price. The breakdown of the domestic order book of INR 2.63 trillion as at June is as follows: Central government 11%, state government 30%, public sector corporations or state-owned enterprise at 42%, and private sector at 17%. Approximately around 26% of this order, total order book of INR 3.63 trillion is funded by bilateral and multilateral funding institutions.
As you can see from the slides, 91% of our total order book is from infrastructure and energy. Within infrastructure, our order book is well diversified across various businesses like heavy civil, water, power transmission and distribution, buildings and factories, transportation infrastructure and minerals and metals. During the quarter, we have deleted around INR 14 billion of non-moving orders from the order book. Our share of slow-moving orders in the order book is just around 3%. Coming to revenues, our group revenues for Q1 FY 2023 at INR 359 billion registered a YoY growth of 22%. International revenues constitute 37% of the revenues during the quarter. The IT&TS portfolio continued to report industry-leading growth in Q1 as well.
In the projects and manufacturing business portfolio, our revenues for Q1 FY2023 were at INR 221 billion, thereby registering a YoY growth of 23%. The robust execution in infrastructure and power within the projects and manufacturing business portfolio during the quarter was to some extent offset by other businesses. I will cover the details a little later when I cover each of the segments. We remain confident on achieving the annual guidance on revenue given at the start of this year. Moving on to EBITDA margin. Our group level EBITDA margin without other income for Q1 FY2023 is 11% vis-à-vis 10.8% in Q1 FY2022, up by 20 basis points. The detailed breakup of the EBITDA margin business-wise is given in the annexure to the analyst presentation.
You would have noticed that the EBITDA margin in the projects and manufacturing business for Q1 FY 2023 is at 8.2% vis-à-vis 8.8% in Q1 FY 2022. This drop of 60 basis points for the quarter is explained by cost headwinds and the change in the job mix. Despite the recent correction in commodity prices, our average procurement cost for the quarter was still higher compared to the corresponding quarter of the previous year. We retain our annual guidance on EBITDA margin in our projects and manufacturing portfolio at 9.5%. The recent commodity price correction brings in the much-needed relief.
Since our EBITDA guidance for the current year was constructed based on the average price levels of FY 2022 assumed, we believe it is prudent to retain the margin guidance for the year at the same level at this juncture. We will have better visibility on improvements, if any, as the year progresses. Our operational and reported PAT for the quarter at INR 17 billion registers a healthy growth of 45% over previous year Q1, largely aided by the improved group level EBITDA margin, as well as improved treasury operations and a lower tax expense.
The group performance P&L construct, along with the reasons for the major variances under respective functionaries, is provided in the analyst presentation. Coming to working capital, our NWC to sales ratio has improved from 22.9% in the quarter one of the previous year to 20.9% in the current quarter. However, this ratio has moved up from 19.9% that we reported for last year as a whole. NWC to sales moved higher on a sequential basis, primarily due to vendor payments which fell during the quarter. As we have stated before, Q1 of every financial year is seasonally a weak quarter for our customer collections. Having said that, let me mention here that our customer collections for Q1 FY 2023 is substantially higher than that of the corresponding quarter of the previous financial year.
Our group level collections, excluding financial services for Q1 FY 2023, is around INR 0.34 trillion vis-à-vis INR 0.27 trillion in Q1 FY 2022. Although we expect some interim volatility in the NWC to sales ratio for one or two quarters, we will endeavor to bring down our NWC to sales ratio closer to 20% by March 2023. Just to reiterate here, we had guided for NWC to sales ratio of between, ranging between 20%-22% for FY 2023. Moving on to the balance sheet. If you glance through the balance sheet given in the annexures to the analyst presentation, you would notice that at the group level, the group debt equity ratio has improved over March 2022. We are at the same net debt equity ratio in June 2022 vis-à-vis March 2022.
This is mainly due to repayment of liabilities of the financial services business, around INR 36 billion and development projects INR 19 billion, offset by INR 23 billion increase in the parent. Some portion of our debt in the parent company is coming up for repayment, and therefore this incremental borrowing at parent is largely front-ended in an environment of rising interest rates. Finally, our trailing 12-month ROE for Q1 FY 2023 is 11.55% vis-à-vis 17.2% in Q1 FY 2022. As you are aware, the trailing 12-month ROE for Q1 FY 2022 includes the benefit of a one-time gain on the divestiture of our electrical automation business, net of exceptional items. However, on a sequential basis, our ROE has improved from 11% in March 2022 to 11.5% in June 2022, an improvement of around 50 basis points.
A robust business portfolio focus on working capital management, better improve working capital management, and focus on cash generation through distribution. Finally, the divestment of core assets will lead to better ROEs as envisaged in L&T's strategic plan for FY 2026. Very briefly, I will now comment on the performance of each business segment before we give our final comments on our outlook for the near term. Infrastructure segment. On order inflows, our Q1 FY 2023 order inflows are well spread across various sub-segments. Infrastructure segment secured orders of INR 183 billion for Q1, registering a healthy growth of 66% over Q1 of the previous year. During the quarter, orders well diversified across public spaces, metros, waste management and wastewater, minerals and metals, factories, data centers, and power transmission and distribution.
Our order prospect pipeline in infra for the remaining nine months of the current financial year is around INR 5.61 trillion, comprising of domestic prospects of INR 4.76 trillion and international prospects of INR 0.85 trillion. A sub-segment break-up of the total order prospects in infra is as follows: power transmission and distribution would be around 19%, water 22%, transportation infrastructure 19%, heavy civil 18%, buildings and factories 20%, and minerals and metals for the balance. The order book in this segment at INR 2.64 trillion as on June 2022. The book-to-bill for infrastructure segment is around 36 months.
The Q1 revenues at INR 142 billion registered a growth of 36% over the comparable quarter of the previous year, aided by improved execution momentum as the COVID-related challenges receded in the current quarter. Our EBITDA margin in this segment dropped from 7.1% in Q1 FY 2022 to 6.5% in Q1 FY 2023, largely impacted by input cost escalation and changes in the revenue mix. Moving on to the next segment, which is energy projects. The receipt of a large order from the Middle East in the offshore vertical of hydrocarbon business buoys the order book of this segment, whereas subdued ordering environment continues in the thermal power business. The order prospects pipeline of INR 1.6 trillion for the balance nine months is healthy.
The order book for this energy segment stands at INR 654 billion as on June 2022, with the international order book constituting 58% share. The Q1 FY 2023 revenues at INR 50.7 billion registers a growth of 3% over the comparable quarter of the previous year that is largely attributed by healthy execution in the power business on the back of a robust ordering, opening order book. The hydrocarbon revenues, on the other hand, were impacted to some extent due to plant delays and supply chain issues. EBITDA margin for this segment at 8.5% for Q1 FY 2023 improved compared to 7.5% over the corresponding quarter of the previous financial year. The execution cost savings aided hydrocarbon margins where cost contingency release improves the power margin.
We will now move on to the high-tech manufacturing segment that comprises the heavy engineering and the defense engineering businesses. In Q1 FY 2023, this segment witnessed a broad-based pickup in order inflows across defense and heavy engineering businesses. We have an order prospect pipeline of INR 300 billion in the remaining three quarters of the current financial year. The order book of this segment is at INR 194 billion as of June 30, 2022. The revenues for Q1 FY 2023 at INR 12.7 billion registers a marginal growth of 3%. Improved execution drove heavy engineering revenue, whereas tapering of certain shipbuilding jobs in the defense engineering business impacted defense revenues. EBITDA margins in this segment is at 15.1% in Q1 FY 2023, vis-à-vis 19.2% in Q1 FY 2022.
The previous year margin in this segment was higher, primarily due to release of cost provisions on the completion of a key project and also due to recognition of certain customer claims. As we repeat in every quarter, let me once again mention that the defense engineering business does not manufacture any explosives nor ammunitions of any kind, including controversial weapons. The business also does not customize any delivery systems for such munitions. Coming on to the IT&TS portfolio. Our revenues for Q1 FY 2023 at INR 94.2 billion registered a growth of 30% over the corresponding quarter of the previous year, reflecting the continuing growth momentum in this sector with a surge in demand for technology-focused offerings. The business outlook for this segment continues to be good.
Lot of spends today are being directed towards cloud, data center, security, machine learning, and intelligence, and artificial intelligence. The margins for this segment is a function of wage costs offset by operational efficiency. The merger between LTI and Mindtree is progressing satisfactorily and should hopefully be concluded by the end of this financial year once all the regulatory approvals are obtained. I will not dwell too much on this segment as the fact sheets of all the three companies are already available in the public domain. We now move on to financial services segment. Here again, L&T Finance Holdings is a listed subsidiary, and the detailed results are available in public domain. L&T Finance thrust towards retailization continues, and as of June 2022, the share of retail in the overall book has moved up to 54%.
The strategic deliverables in this business revolve around portfolio reorganization, strong asset quality, and improvement in return on assets. This business endeavors to be a top-class, digitally enabled retail finance company, moving from product focus to a customer focus approach. Finally, to conclude, sufficient growth capital is available in the balance sheet. Moving on to development project segment. This segment currently includes the power development business that comprises of Nabha Power. Last quarter, on the Q1 of the previous year, also included L&T Uttaranchal Hydropower that was divested in August 30, 2021. Besides Nabha Power, the segment also includes Hyderabad Metro. As you may be aware, the roads and transmission line concessions which are forming part of L&T IDPL are consolidated at a group level under the equity method. The majority of revenues in this segment is contributed by Nabha Power.
Improved ridership in Metro and a 95% average PLF in Nabha drive revenue growth for this segment. Just to give you on some statistics, the average Hyderabad Metro ridership improved from 55,000 passengers a day in Q1 FY 2022 to around 285,000 passengers per day in Q1 FY 2023. Our average ridership in the preceding quarter, that is Q4 FY 2022, was 199,000 passengers per day. We are happy to report that as we speak, the current ridership in Metro has touched also a peak of 377,000 passengers on one of the days this month. The Q1 FY 2023 margin in this segment at 4.5% is contributed by Metro operations only, as Nabha margin is not being recognized from Q3 of FY 2021.
The improvement in average daily ridership has enabled Metro to report positive EBITDA for Q1 FY 2023, vis-à-vis an EBITDA loss for Q1 FY 2022. The Metro at a PAT level, the consolidated loss of INR 3.25 billion in Q1 FY 2023, vis-à-vis a loss of INR 4.72 billion in Q1 FY 2022. The operating and amortization costs are around INR 0.75 billion, whereas interest cost is INR 3 billion for the quarter. At this juncture, I would like to give you a quick status update on the divestments of our concessions portfolio. As all of you are aware, our stake in hydropower plant, that is the Uttaranchal Hydropower project, was successfully divested in Q2 FY 2022. For Nabha, various divestment options are being explored currently.
Coming to IDPL, we are also exploring the possibility of divesting our remaining 51% stake in favor of third-party investors. For Metro, with the prospect of improved ridership and the confirmed government assistance, including a phased TOD monetization and with the recently concluded debt refinancing, the performance parameters for Metro should definitely look up in FY 2023. We are also discussing with strategic investors for equity infusion into the SPV. However, it is premature to comment on timelines at this juncture. Moving on to the last segment, Others segment. This segment comprises realty, industrial machinery, industrial valves, and smart world and communications businesses. During the quarter, the strong revenue growth in realty due to the higher number of handing over of flats and the industrial machinery business was offset by subdued revenues in valves and smart world and communications.
Despite this, the revenues for the segment at INR 16 billion registered a growth of 21% over the corresponding quarter of the previous financial year. The EBITDA margins for this segment at 17.2% for Q1 FY 2023 remain stable compared to 17.1% during the corresponding quarter of the previous year. Coming to the last part of my presentation, we remain optimistic on India recovery despite the ongoing global geopolitical uncertainty. The government's persistent efforts to jumpstart economic growth through higher infrastructure spend and incentivizing domestic manufacturing should yield benefits in the medium term. Possibly, the private CapEx should also join this bandwagon in a couple of quarters. On the global front, amidst the continuing chaos, we are closely monitoring the movement of commodity prices and resultant supply chain disruptions.
Surprisingly, the Middle East has a better budget visibility due to the high energy prices and continues to spend on hydrocarbons and infrastructure projects. This augurs well for the company in terms of providing a larger scope of contracting opportunities. For the year FY 2023, we retain our guidance of 12%-15% growth in the group order inflow and revenue, and our margin in our projects and manufacturing business portfolio to remain around 9.5%. On the working capital side, the group level NWC to sales, we have given a guidance for a range of 20%-22%. We will continue to ensure end March 2023 at around 20%. The company in its first year post announcing its Lakshya 2026 strategic plan, expects to continue its planned trajectory of profitable growth through efficient and timely execution of its large order book.
Along with its many value-enhancing measures, retain its leadership position and improve shareholder value on a sustainable basis. The company is on the path of diversification into new businesses of green energy and e-commerce and digital platforms. At the same time, we are seeing exit options through divestments or limiting exposure in non-core businesses over this Lakshya 2026 strategic plan period. Thank you, ladies and gentlemen, for the patient hearing. We will now take the Q&A.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, if you wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is on the line of Mohit Kumar from DAM Capital Advisors. Please go ahead.
My congratulations on a very, very good quarter, especially on the order inflow. Sir, does your confidence level on the order prospects have improved compared to the end of Q4? It seems there has been increase in prospects because I think the prospect come down from INR 8.5 trillion to INR 7.6 trillion, while the last quarter order inflow was around INR 50,000 crore . Which are the segments where the prospects improved?
Thank you, Mohit. In fact, at the start of the year, we had given the order prospects at around INR 8.6 trillion, and today it is at INR 7.66 trillion. Even at the start of the year, we were very careful in targeting the opportunities that will come up, and we are pursuing a very selective basis of bidding. This is the kind of awards that have been awarded, tenders that were opened during the quarter and the awards that got finalized and the share of L&T's awards. We do believe that we have, against the current order prospects of INR 7.66 trillion, considering the award win ratio that we expect to happen, we are reasonably confident to meet the order inflow guidance of 12%-15% that we have given.
Essentially, the orders that we expect to happen in the next nine months or so will once again be a share of infrastructure will continue to have a lion's share and followed by hydrocarbon opportunities. As I mentioned just now, that the hydrocarbon opportunities in the Middle East has also picked up. We do believe that we have a fair share of getting order wins in both infrastructure and hydrocarbons. This is, I would say, a very positive ordering environment that we see in India and Middle East in the next nine months or so.
Understood, sir. On the private CapEx, the first time we are seeing a very positive commentary compared to last two quarters. How confident are you of, you know, private CapEx to pick up, especially in 12-24 month horizon?
Okay. In the sense of L&T's scope in the private sector CapEx, I would say would be largely focused on minerals and metals and also to some extent in the buildings and factory space. As is already available in the public domain, the steel sector and including the other non-ferrous metal producers are looking forward to expansions of their existing production lines, including putting in additional complementary equipment in their existing plants. Most of the metal majors in the country are longstanding L&T clients, and we do expect that announcements that they have been making should fructify into reasonably good ordering opportunities, at least in the later part of the current financial year. Similarly, on the infrastructure side, we see a reasonable uptick of opportunities in the IT real estate space.
Many of the IT companies, given a hybrid kind of a working environment, they are also looking forward to putting larger, more number of campuses, if not in size, but more in terms of campuses across the country as they tap talent to work from a sort of a work from anywhere kind of a situation. We do expect some amount of CapEx opportunity to come for us. Besides this, the country is also witnessing a lot of investments in data centers. There again, L&T does have belief that some of this data center ordering that will happen, L&T stands to get a good share.
Lastly, the e-commerce businesses are also set to expand their delivery capabilities, and that requires more amount of logistics and warehousing spaces, and we do expect a strong momentum of ordering opportunities in this segment also.
Lastly, sir, are you bidding for coal-based projects, or is it completely no-go for us?
Unlike the last quarter when we went with the Q4 FY 2022 call, the amount of coal-based opportunities that we witnessed was not as much as what we see today. We do believe that some of the major thermal power producers are thinking of putting up newer plants almost in the nature of 6,000 MW-7,000 MW. There is, obviously, a good amount of competition, and we will be selective in the bidding in this particular sector. Definitely we see an uptick of opportunities coming up for coal-based power plants in the near term.
Understood, sir. Thank you and all the best, sir. Thank you.
Thank you, Mohit.
Thank you. The next question is from the line of Ashish Shah from Centrum Broking Limited. Please go ahead.
Yeah, good evening, sir. Hi.
Good evening.
My first question is on the Hyderabad Metro. So could you update on what is the status of the support that we are expecting from the Government of Telangana? Where are we in that process? And secondly, you know, in the cash flow one sees, INR 910 crore of long-term investment being made in the first quarter. So would that be to support Hyderabad Metro or is any, some other asset that we have purchased?
The first point of your question, Ashish, is that with respect to the Hyderabad Metro, the Metro SPV company has executed the supplementary agreement with Hyderabad Metro Rail Corporation which is the grantor of the concession. We are looking at getting a funding assistance of almost INR 3,000 crore in the next two years in the form of long-term interest-free loans. We also have the approval of the grantor to monetize the TOD rights that the L&T Metro Rail Corporation has. In terms of the approval contains in terms of delinking our ability to TOD monetize irrespective of whether the metro operations, you know, continues with L&T or not. To that extent, it's a very favorable development.
We have been talking of this in the past as well, but I would like to tell you that, in the current month, we have executed the supplementary agreement, and that is going to hopefully, as I stated earlier in this call, the improved ridership, the government assistance, the TOD monetization and the possibility of a new investor, if we are able to tie it up, obviously the impact of Hyderabad Metro on L&T's financials should hopefully come down. Secondly, to the question of the long-term, you know, the other question that you talked about, that is essentially, L&T Finance, security receipts by converting some part of their loan book into ARC.
What is the support that you would have given for Hyderabad Metro this quarter or next quarter? This quarter.
The financial support that we gave in the current quarter is almost around INR 230 crore . The exposure of L&T to Hyderabad Metro as of June is around INR 7,000 crore.
Well, just one more quick thing. The tax rate for the quarter is low. One, what is driving that low tax rate? In general, what should we expect for FY 2023? Because it's kind of becoming a little difficult to predict that, plug in that tax rate. If you can help with it.
Okay. In this quarter, as you may be aware, Mindtree has shifted from the old tax regime to the 25.19 new tax regime in the current quarter. When L&T, and this is a CFS adjustment, that is a consolidated financial adjustment, pursuant to Mindtree shifting to the new tax regime at a lower rate, the deferred tax liability that we had accrued at the older rate at the consolidation level has also taken an appropriate entry. To that extent, the tax provisions I would say has been by way of a credit in the DTL of almost INR 134 crore. To that extent, I would say it's one type of an event, one-off event in the current quarter which should not happen again. Based on that, you can see in the next nine months, the normalized tax rate should apply across the group.
Would that be like closer to 30% on a consolidated basis?
It would be around 25%-27%.
25%, 27%. Sure. Thank you. I'll come back if I have any. Thank you.
Thank you. Next question is from the line of Ankur Sharma from HDFC Life Insurance. Please go ahead.
Yeah. Hi, good evening. Thanks for your time. I have three questions. One, a little surprised to see the, you know, the slowdown in execution on the hydrocarbon business, given the fact that, you know, we had a very strong order booking and order book, as of end of FY 2022. While you did highlight some supply chain issues, and some client delays, if you could help us understand, is this more of a, you know, the Q1 phenomena, you know, it kind of picks up as we go through the coming quarters?
Ankur, let me tell you that this is a Q1 specific issue that there were certain client delays in terms of approvals and there was some supply chain issues. It doesn't mean that the execution momentum will not get into higher level. This is specific to Q1. We don't expect that to happen in the balance nine months.
Okay. Secondly, sir, you know, on the infra margin trend, now, of course the backdrop is that, you know, L&T have collected meaningfully, you know, across steel, pretty much, all metals. Is it fair to assume that at least, you know, as we go into the coming quarters, at least on a YoY basis, you know, we start seeing margins on the infra segment look higher. Would that be a fair assumption? Not wanting an exact number here, but at least on a year-over-year basis, it's fair to assume that, infra margins are better, from Q2 onwards on a YoY basis.
Okay. In Q1 FY 2023, the infra margins was at 6.5% as compared to 7.1%, in the previous year. Now, I mean, instead of talking specific to infra margins, if I take as a projects and manufacturing portfolio, given the fact that it's an EPC contracting company, you know, quarter-on-quarter developments on the execution side. The amount of projects that get into valuation threshold, the closure of projects, the release of cost provisions towards closure, all of that is a sense of a dynamic situation. However, in Q1, the impact of the drop is largely because of commodity prices, because these procurements, what we have, put on the site during Q1 are essentially against orders that would have been placed in the previous quarter at elevated commodity prices.
Going forward, whatever procurements that will happen, that will get into the the activity level and thereafter revenue recognition, hopefully, I think it should be at a lower level. As I said during the earlier part of my call, while we gave a guidance on the entire production manufacturing portfolio at 9.5%, we also stated that the cost of commodity prices that we have taken for FY 2023 is an average of FY 2022. What we see today is essentially most of the prices are coming to what we call an FY 2022 average levels. This in a way has been factored in our yearly guidance that we have provided at 9.5%.
Okay, fair. Lastly, this is on the domestic ordering, and it's nice to, you know the pipeline, which I think now you share every quarter, so that's extremely helpful. Just going into the domestic part and just a little more, you know, in terms of the end segments within the domestic infra piece, you know, which segment looks the most promising? You know, state ordering obviously has been quite weak over the past year or so, you know, which is reflecting in weak orders in water, you know, in some way, other segments as well. Just if you could help us, you know, sitting here today, which are the segments you are most positive?
We've also heard about some tendering pick up on the bullet train side from Maharashtra section as well. Some color there would be appreciated. Yeah. Thanks a ton.
Okay. Ankur, the total order prospects pipeline for the balance nine months that I mentioned at INR 7.6 trillion, against that INR 6.14 trillion is domestic opportunities. Okay?
Yeah.
Give you a slightly granular details, in terms of infrastructure segment, that comes to around INR 4.76 trillion against that INR 6.14 trillion. That's the order prospects we have for domestic infrastructure.
Mm-hmm.
There, where we see, in terms of the order prospects which are likely to come into ordering momentum, in the buildings and factories sub-segment, we do see a lot of ordering opportunities across public spaces and health. When I say refer to public spaces, I am referring to, you know, central secretariat, state secretariat buildings. I'm referring to railway station, new railway station developments. On the health, it is a lot of money is being spent at the various state level on setting up of hospitals. This itself is a significant chunk, I would say, in the B&F portion, that is buildings and factories. In the heavy civil portion of the prospects, I do feel, we do feel a lot of opportunities or prospects in terms of hydels and tunnels and metro.
This itself is a large piece of action that we expect to happen.
Sure.
The water segment also has a lot of opportunities in rural water supply and irrigation projects. Again, a major part of the entire prospects of opportunities in the water segment. Power transmission and distribution, more on the transmission and distribution of almost 70% of opportunities coming there into segment. The balance 30% is renewables. That's the overall, I would say, on the infrastructure space, in terms of where do we see opportunities, public spaces, health, hydel projects and tunnels, metro, rural water supply, irrigation, and the entire scheme of renewables and power transmission and distribution. Coming to the hydrocarbons piece, the total prospects pipeline in domestic is around INR 0.39 trillion, largely comprising of onshore, I would say onshore means not offshore. Onshore and construction-related prospects of majorly, comprising of this INR 0.39 trillion.
Mm-hmm.
On the power, as I mentioned, I responded to an earlier question, the power opportunities in India is almost INR 0.58 trillion, largely led by coal, which is around INR 0.49 trillion. Coming to defense, we do have almost INR 0.25 trillion of order prospects that we are looking at in the next nine months or so.
Great. No, that's it. Thanks and all. Very helpful.
Thank you. The next question is from the line of Sumit Jain from ASK Investment Managers. Please go ahead.
Yeah, thank you. Sir, if you can quickly spell out the balance sheet for Hyderabad Metro as in equity, the debt as per from L&T and accumulated losses.
The total balance sheet would be in the range of INR 19,000 crore. If I say the total balance sheet of around INR 20,000 crore, out of which LNT equity is INR 2,400 crore, then there is a total, I would say, external borrowings of around INR 13,000 crore. The balance, as I said, L&T's exposure to Hyderabad Metro is around INR 7,400 crore minus INR 2,400 crore equity. That comprises the additional funding assistance. External borrowings are INR 13,000 crore. INR 13,000 crore external borrowings plus the L&T exposure at INR 7,000 crore, that sums up at INR 20,000 crore.
The current accumulated losses, as they stand?
I see around INR 4,000 crore.
Just to quickly understand the sales, the operating profit before interest and tax for the quarter.
I have already told that it is around INR 0.75 billion for the quarter and [INR 300 crores] as interest.
If you can just spell out the depreciation so that we can calculate the cash flow.
INR 75 crore per quarter.
Sure. What will be the capital employed that will get released from the three assets, that is L&T's additional 51% stake, Nabha Power, Hyderabad Metro, you already told. If these were to get sold, what is the capital employed that is currently sitting on the consolidated balance sheet?
As I mentioned earlier that we are looking forward to limit our exposure in the concessions. We are looking to divest in IDPL and also Nabha Power. It is all work in progress. In terms of our exposure to IDPL would be around in the nature of INR 1,100 crore and Nabha exposure INR 2,400 crore. That's the current carrying value that we have. Question of time as to when we will release and how much we'll release.
Sure. Just one last question on slide 20. That is a cash flow statement. Net sale and purchase of, you know, current investment that has released INR 28 billion for Q1 FY 2023. If you can just explain that.
That's the reduction of our, I would say, overall surplus that we have at the group level. Cash surplus.
Oh, okay. Sure. Sure sir. The long-term investment sale, INR 9.1 crore, was on the account of ARC?
As I said earlier that there has been a sale of a portfolio of L&T Finance to ARC, no? Security receipts of almost INR 645 crore.
Right. Thank you so much.
Thank you. Next question is from the line of Renu Baid from IIFL Securities. Please go ahead.
Yeah. Good evening, sir, and thanks for the opportunity. Two questions from my side. First, it can help us understand the flow. There seems to be one or two orders which were debooked this quarter. Can you elaborate which segments or which orders were they related to? Domestic, international, which business segment?
In terms of the international orders, we had secured one order in the hydrocarbon space, one large order. In the other part, we had secured one reasonably large order on the defense engineering space also. Similarly, we have secured one order in the Middle East with respect to power transmission and distribution. All of this would aggregate to around INR 10,000 crore or so.
Okay. Which segments were the orders which were canceled during the quarter or which were debooked related to?
That's a small amount. Essentially, it was smaller orders aggregating to INR 1,400 crores, essentially in power transmission, distribution and transportation infrastructure.
Okay. Nothing material there.
Yeah.
Secondly, on the infra margins, so we understand that it was more of a transient impact of commodity costs. If you see, last quarter also there was an impact of commodity because of which we missed on the infra margin front marginally. At the onset of this year as well, infra margins have been sub-5%. Broadly, while the guidance is for the entire segment and not just subsegment infra, which is there today, do you think that infra margins itself as a subsegment should be back to 8%-9% levels once these commodity pressures ease out and the mix of projects which are under execution pick up?
Infra margins last year was around 8.2%, Renu. Okay? As a guidance, you will know that L&T, we give guidance at the overall P&L segment, for obviously the reasons because each of these subsegments are essentially an aggregate of pursuing EPC opportunities across multiple segments. In some segments you could have a mix of jobs that are getting to margin recognition. Some segments are having some orders are getting into closure, where we will be able to get some margin releases if the margins have been higher than what we bid for. When we gave the construct of 9.5%, is an overall construct at the overall portfolio level of projects and manufacturing, basis the assumption that commodity prices in FY 2023 will be an average of what FY 2022 was.
Q1 did not witness that because obviously the costs that have been booked is basis the elevated commodity prices that was prevailing the last six months or so. Now that with the recent, I would say softness in the commodity prices, hopefully, procurement costs also should come down and hopefully result into, I would say, better margins in each of the segment. Having said this, at this juncture, we would still like to maintain at 9.5%. We are working through improving margins, through, you know, better or more higher improved execution of projects, and also possibly if some of the customer claims that we have factored in last financial year did not materialize. If they could materialize, should hopefully improve the margin trajectory from whatever we have given guidance.
Sure. Just to clarify, the margin guidance probably will not assume much of, I mean, the bullet train project. Margin execution of bullet trains would be the first proper full year of execution. We cannot be able to cross the threshold limit this fiscal.
The C4 and C6 packages of the orders have actually crossed the threshold margin in the Q4 of the previous year. Yes, the momentum of execution will be the maximum in the current year and possibly the next year as well.
Okay. Lastly, what percentage of the backlog that we have today is on fixed-price business?
It's still around the same level, Renu, that at the overall projects and manufacturing portfolio, we would have 1/3 of the contracts at fixed price. The balance 2/3, I would say variable price in terms of actual reimbursements or linked to indexes.
Okay. Got it. Thanks much, sir, and all the best. Thank you.
Thank you.
Thank you. Next question is from the line of Aditya from Investec. Please go ahead.
Hi. Good evening, sir.
Good evening.
Sir, certain Middle East media articles have indicated that L&T has been the lowest bidder in a fairly large hydrocarbon production facilities contract for NEOM. Anything that you can speak about on that contract?
At this juncture, I think, we will not be in a position to comment on client names or the sectors, so kindly excuse me for that.
Sure. Are we pursuing renewable and hydrogen opportunities actively in the Middle East?
Like the way we are pursuing our competencies for opportunities in India, the same stress and emphasis goes on to Middle East as well.
Understood, sir. I just wanted to clarify, roughly similar time last year, our order pipeline would have been somewhere around INR 8.9 trillion-INR 9 trillion. Is that it been.
INR 8.6 trillion was the order pipeline.
Understood. In overall pipeline terms, we will be slightly lower as was the case in the beginning of the year. Could we have possibly?
Yeah, same. Like the way we started last year with a INR 9.06 trillion pipeline, but this time we started the year at around INR 8.56 trillion. This time we have been a little, I would say, selective in pursuing the bids and the ordering opportunities. We do believe with a better run rate on award, awards happening and we getting a fair share, we are reasonably confident to get into the guidance of 12%-15% that we have provided for order inflows.
Understood, sir. Understood. Thanks.
Thank you. The next question is from the line of Kunal Shah from BNP Securities. Please go ahead.
Yeah. Hi. Thank you for the opportunity, sir. I just wanted to hear your thoughts on how is the execution environment, you know, has it especially both on domestic and overseas side, has it improved and are we seeing any major constraints or now more or less, you know, most of the issues are behind us and we will see, you know, a much easier execution going ahead.
Kunal, I will restrict myself to Q1. Q1 was just like any other normalized quarter for L&T prior to the onset of COVID. In terms of workforce ability, in terms of overall, I would say, supply chain as well. However, as is normal in any normalized quarter pre-COVID, you can have certain things like the way I talked about hydrocarbons, there was write-off, there are some issues, client delays on on approvals and even some supply chain disruptions. I won't say supply chain disruptions, supply chain delays. I would put it like this. It seems to be a normalized nine months as well, but you never know because with COVID gone, now we are talking of something else like monkeypox and so on. I would say, as it stands now, it's a normalized, I would say, execution environment.
The only one point I would like to emphasize is that L&T for the last two and a half years or so, we have been focusing on execution ramp-up is a direct function of payments from clients happening on time. If we find that any particular project, the periodicity of payments is getting delayed or there has been substantial delay in payments, in such cases we are consciously ramping down, we are bringing down the execution, in such of those sites. Otherwise from an environmental perspective, as it stands now, it is normal.
Sure, sir. That was my only question. Thank you so much and best of luck for the future.
Thank you.
Thank you. The next question is from the line of Deepika Mundra from JPMorgan. Please go ahead.
Hi, PR. Deepika here. Can you hear me?
Yes, please. Yes, Deepika, I can hear you.
Okay, great. P. Ramakrishnan, I mean, I mainly wanted to understand how the commodity price, the recent fluctuation is impacting order inflows, as well as execution. Are you seeing better traction on, you know, the prospects materializing because of a shift, in the commodity prices?
See, Deepika, I mean, I have to provide you a statistic here because, I think that statistic itself will communicate in a way that the ordering momentum as far as India and Middle East is concerned, which are the two primary geographies for our projects and manufacturing portfolio, seems to be quite robust. The tendering activity in terms of the tenders that got announced in Q1 FY 2023 was almost INR 2.5 trillion, as compared to INR 1.35 trillion of Q1 FY 2022, which is almost an increase of 90%. Obviously, the tenders that have been opened out in the current quarter at that INR 2.56 trillion obviously takes into account that the clients are aware of the increase in the commodity prices.
The award to tender ratio, a more important metric, is for Q1 FY 2023, the award to tender ratio stands at 70% as compared to Q1 FY 2022 at 39%. We believe this itself in a way communicates that, yes, commodity prices have gone up, project costs have gone up, but I guess the kind of the India growth trajectory that we believe is going to be fairly positive. The government tax collections also has been quite, I think higher than what was expected. The government has, it seems, has collected INR 7 lakh crore of total in aggregate of taxes in Q1, which is far ahead of the estimates of, far ahead of almost a 25% increase of Q1 of the previous year.
With improved tax collections, we believe that the ordering momentum will continue, largely led by the government. Of course, there can be black swan events, but at this juncture, it looks to be fairly good for India, and we do believe that India continues to be a good spot for investment-led economic growth momentum.
Okay. Secondly, on the fixed versus variable price orders, I think last year there were far more variable priced orders which were being booked. On a flow basis, is that changing now, with the decline in steel prices?
No. Actually speaking, I think last year also, I mean, in terms of structurally it has been 2/3 variable and 1/3 fixed. Okay? Most of the infrastructure orders are largely orders where we get pass-through mechanism in some form or the other. Whereas in the case of hydrocarbons, typically some of those projects are usually fixed-price contracts. Now, if the momentum of ordering in hydrocarbon segment goes up as compared to infrastructure, then the percentage of the fixed price contract should be inching up higher. Otherwise, if it continues the way it has been for the last two years, I guess this 66%-33% tender book break up will continue.
Understood. Last one, could you comment anything on the competitive intensity in Middle East given that you're seeing so many large, you know, tenders coming through?
The opportunities, especially in the hydrocarbon segment, Deepika, I think is quite robust, and I believe that with L&T's capability and its scope of offerings, we still have a good chance of winning some of the packages. There is, I would say at this juncture, a place for all.
Understood. Thank you so much, and all the best for the year.
Thank you.
Thank you. Next question is on the line of Puneet Gulati from HSBC. Please go ahead.
Yeah, thank you so much, and congrats on good numbers. I think last time there was some commentary from your side that because of, you know, sudden change in commodity prices, some of the tenders seem to have been delayed. Government officials have gone back to recalibrate. That seems to have sorted out now, is it?
Puneet, in fact, in the second half of the last year.
Yeah.
We kind of, I would say, the tenders did get delayed. Okay?
Mm-hmm.
We did not see tenders being announced in the same robustness that we saw in the previous year, two quarters. The way the first quarter has started, as I just now responded to Deepika's question.
Mm-hmm.
I think the tendering momentum has regained pace, and hopefully, I think should continue to remain at elevated levels in the next nine months as well.
Excellent. Thanks. In terms of the commodity price correction, should we see some benefit coming in Q2 itself, or you think it goes with a lag of a quarter or so?
I think, Puneet, this is the fourth time the question on margins is coming. I have already explained that as we speak, given our order book and given the kind of execution plan that we have across all the segments, we are fairly confident that we should be able to touch that 9.5%, as we close the year. You can h ave quarter-on-quarter volatilities, but that's the intrinsic part of whosoever is following L&T business.
Right.
Typically, the second half of the year is a very busy second half as compared to the first six months. We have started Q1, I would say, quite favorably.
Understood. Lastly, on some of the new initiatives that you announced last time, any capital allocation so far in one, two, or it's too early?
It's still too early in terms of the investment cumulative that we have made on data centers and both at e-commerce and the digital platform all aggregate around INR 200 crores. No major investment has yet to happen on the green energy side. Because as we said earlier, the first priority is to tie up with the technology partner and then set up the JV.
The line for the participant dropped. We move on to the next question.
Okay.
The next question is from the line of Sumit Kishore from Axis Capital. Please go ahead.
Hi, good evening, P R. My compliments on a good set of numbers.
Thank you, Sumit.
Yeah, my first question is, you said the domestic order prospects have got helped most, in relative terms versus overseas because domestic order prospects have come up from INR 6.31 trillion in the beginning of that year, to about INR 6.1 trillion now. Is there any specific sub-segment in domestic which have been, like, having gain in terms of new prospects?
Sumit , in June 2021, I think the total order prospects that we had provided was INR 8.96 trillion. Out of which the domestic share was 70%.
Right.
Today as we speak, the share of domestic order prospects to the total order prospects is 80% at INR 6.14 trillion. Okay?
Right.
The share of infra was earlier at 5.05%. It's marginally down to 4.76%. Hydrocarbons was previously June 2021 0.52%. It's now at 0.4%. Power is also at 0.48%-0.58%. I don't think there is any structural change in terms of saying that, you know, a particular segment is showing higher prospects. I think it's more to do with the fact that we have been a little more selective this time, as compared to the last year, in targeting opportunities where we believe that these are large enough where L&T will bid and have a good chance to win.
Okay. These selections essentially means that you expect a better win ratio as time progresses.
Time will tell.
Yeah, you said in the product actually that L&T has signed up three projects, $50 billion in prime locations in MMR, about 2.4 billion sq ft with an INR 80 billion sort of development opportunity. Does that essentially mean that, you know, it's like a harbinger of a contract for the L&T for construction in Buildings & Factories which has already been booked or?
Sumit, obviously, yes, we have executed what we call in that industry parlance binding agreements to jointly develop certain plots across Mumbai. In terms of transitioning all of that into a business opportunity for both L&T Realty and potentially the construction arm of our infrastructure segment, I guess it's still some time away because we may have executed binding agreements to develop it, but, as you know, there are a lot of steps before we actually get into development in terms of approvals and all other stuff. We have joint development agreements, binding agreements for properties across South Mumbai, Andheri, and Thane. I believe that it will still take some time before we receive all the clearances before we launch these projects.
Okay. It may not be prudent for us to consider that as an order in Q2?
Q2 currently? No. I think it takes time off. We will.
Okay.
We will articulate that at an appropriate time.
Yeah. Just one quick question on the fact that like an instance of big water sewage treatment contract awarded by BMC almost INR 260 billion in contracts broken up into six different packages. L&T got one package. It's agreed upon this will take more than one. You know, the Jawaharlal Nehru Airport, many such projects. I know these are. In airports L&T had a sort of dominance with CHP, ETP, you know, among the big greenfield airports. What are your thoughts? Is the competitive intensity for big ticket contracts of INR 20 billion plus going up simply because, you know, bigger packages are being broken up into these smaller ones that are still INR 20 billion plus?
The set of players who can take INR 20 billion + contracts, is that going up?
Sumit, it is like this, that competitive intensity, we do see as has always been in the recent past, very intense in some segments, and some segments we do see a reduced competitive intensity. Wherever there is competitive intensity is low does not necessarily mean that L&T should get. One thing I would like to tell that wherever we are quoting for jobs, we are very careful about our ability to ensure that we don't compromise on our margins. That is the, I would say, the fundamental pillar, taking into account, like in the case of airports, I believe we almost have a 90% share of all the contracting opportunities that have come.
Yes.
We have learned to bid and execute such contracts with some more experience.
Okay.
We are pretty careful in terms of pricing and obviously in many projects you can have L&T winning some and probably L&T losing some.
Fair enough. Thank you so much for answering my questions. Wish you all the best.
Thank you.
Thank you. Next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Hi, PR. Congratulations on a great quarter. My first question is on the tendering. We see the tendering is up 90% and the award to tender ratio is up from 79% to 70%. Our order book has only grown 57%, so have we lost our market share here?
No, no. I won't agree to that particular conclusion that, you know, whatever, order prospects that we had at the start of the year, against that, I would say that we have got reasonably a good share. Almost INR 88,000 crore of orders that we bid for, we have been close to getting INR 28,000 crore as award wins. If you see even award win ratio, this is quite favorable both for domestic and international put together. It is inappropriate to conclude that whether our competitive intensity is getting diluted. I guess it's a question of the type of project, and how, you know, confident, and, we are in terms of not compromising in margins and executing.
We have been a little careful, but our Q1 bids to award for us has been quite, I would say, on the positive direction.
Because if I look at the recent bids in the HC segment, so L&T is not at all aggressive. In fact, you've been L3, L4, L5. We don't see you bidding below for project costs most of the cases, which is quite a departure from the historical trends. Just wondering if we are connecting the two things. Thanks for the explanation. My second.
Yeah, go ahead.
My second question is on the real estate segment. INR 8,000 crore of GDV addition, I mean, it's phenomenal, and I think you're giving competition to some of the large listed developers or some of the larger developers in India. Just wanted to know whether this INR 8,000 crore is a one-off or do we have a plan for the full year where we're looking to add INR 15,000 crore, INR 20,000 crore of GDV? Also if you can touch upon what kind of pre-sales we have booked in this quarter or maybe last year. Rather give us some sense on how big this business is now getting into because this could be a big value add to the overall [uncertain]. Most of people are still not valuing this segment.
As far as you're referring to our real estate portfolio as a developer, no?
Yeah, yeah. It's a development business on the real estate side. INR 8,000 crore of GDV. Besides the new captive projects in Mumbai. Just wanted to understand this.
Parikshit, sorry to interrupt you, but your voice is not coming very clear. Can I request you to come in the middle reception area and speak through the handset?
Just one second. Yeah. Is it better now?
Yes.
Yes, please.
As I was referring to the real estate segment, we have added INR 8,000 crore of gross development value, which you've announced earlier. For the full year, I mean, this is like what the larger developers do in India. They have like INR 20,000 crore-INR 27,000 crore of GDV addition. If you can just highlight if it is just a one-off kind of announcement or we are looking for more such deals like this, because this will translate to more than INR 2,000 crore of pre-sales annually from this number if this project develops over the next two to five years. And also if you can touch upon what has been the pre-sales for this first quarter of the financial year or maybe last year, how much was the pre-sales from the L&T Realty?
Parikshit, I will tell you that we have gone on public domain to state that as per the entire strategic plan for L&T Realty is concerned, we will try to do 5 million sq ft of real estate development each year. Over the next three to four years, some of these developments will be largely from our own land banks in Powai, Navi Mumbai, Bangalore and Chennai. We could have, like I responded to a previous question, some joint development opportunities also that we could see in this particular area. In Q1, the pre-sales activity, we have around INR 649 crore of orders that we have secured in this particular segment.
Of this 5 million annually, which you are looking to do sales for, will have an average realization of about INR 60,000 per sq ft?
It depends on the property across the spaces. At this juncture it would be inappropriate for me to be so granular in terms of giving the rates, because this is a function of demand and supply. Wherever L&T projects have been launched, both in the Navi Mumbai side and also in Powai, they have definitely received a good, I think, I would say good amount of bookings and demand.
My next question is on the monetization bit. We have Nabha Power, IDPL and Hyderabad Metro which comes here. Do you think in this financial year all of this can happen or, I mean, which of the higher probability events or the deals which could happen for you, particularly in this year?
The divestment of Hyderabad Metro under the concession agreement would not be possible. The only way we can target is to bring down our stake up to 51%, and after some time to maximum, we can dilute another 24% to bring it at 26%. Definitely, we are looking at, I would say fast-forwarding the process of divestment of IDPL and Nabha Power. I mean, it's at the top, I would say, objective of the management. We do expect an early closure, but in terms of timelines, would be a little speculating if I had to talk about that today at this juncture.
Just, lastly, on the year-end disclosed carrying value of Nabha Power. Can you also tell us how much is the debt on this too?
Sorry?
The debt on Nabha and IDPL, if you can.
The debt on Nabha is around INR 4,000 crore.
Okay.
IDPL is not getting consolidated.
Okay. When you sell it, the enterprise value is that. Anyway, it's not getting consolidated. Your investment is INR 1,100 crores.
Yeah.
Just lastly, on the infrastructure. Infrastructure has been sharply cut by the government. Government used to mop around INR 2.2 trillion annually from this, which is now reduced to INR 0.4 trillion, which was largely going towards the fiscal support in the Union Budget for various infrastructure investments. Do you think any impact from that in your offering or awards?
The Union Budget for FY 2023, I think, referred to net tax collections at the center at INR 19.35 lakh crore. This is whatever Q1 numbers have come. We do expect that this number will be substantially higher than what they have budgeted for.
Okay. You don't see any impact of this in your offering?
At least in Q1, our numbers have been up, I would say, robust enough so that we don't see any negative implications in terms of tax collections as far as the government is concerned for the balance nine months.
Okay, sir. Thank you, sir, and wish you all the best.
Thank you.
Thank you. I now hand the conference over to Mr. Ramakrishnan for closing comments.
I hope all your questions have been answered. We have tried to be as granular as possible. Thanks to everyone for attending this call. It was a pleasure to interact with all of you. Thank you and good night to all. Thank you.
Thank you very much. On behalf of Larsen & Toubro Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.