Ladies and gentlemen, good day, welcome to the Larsen & Toubro Limited Q1 FY 2020 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. To listen to the conference call, please press star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Arnob Mondal. Thank you, over to you, sir.
Good evening, ladies and gentlemen. A very warm welcome to the earnings call for Q1 FY 2020. We will follow the usual format where I'll first read you through the analyst presentation. We uploaded the presentation around one hour back. I hope you downloaded it so that you have had a chance to go through it. You will be able to follow it as I walk you through. After the end of the presentation, we'll open the session to question and answer. With that, I'll first go to the disclaimer slide. Here, of course, I think this is it, except for the fact that, just as a gist, we often make some forward-looking statements which may or may not materialize due to causes beyond our control.
That's just a disclaimer that we like to put on the table before we get into the main presentation and commentary on the results. Just before going to the next slide, I'd like to highlight two important things that happened this time. One was the Mindtree acquisition. All of you would be aware that we bought over the stake from Mr. V.G. Siddhartha, slightly over 20%, that happened just before the year-end.
During this quarter, we bought some shares from the open market, and we also came up with the open offer, which was closed on 30th June. As on 30th of June, of course, the open offer stake was not being transferred to our control, so we had slightly less than 30% of shares. Since we did not have any board representation yet, the board representation was approved by shareholders in the general meeting in July.
The investment that we had made till then, around 30%, has been shown as an investment. Mindtree, as a result, it's also not being shown as an investment in associate companies. That means Mindtree has not been consolidated in this quarter's results. That will happen from Q2 onwards. The second point to note is that in this quarter, we also got CCI approval for divestment of the electrical and automation business to Schneider Electric. Even though there are quite a few formalities left to be completed, some conditions, of course, from Schneider's side, but from our side as well, there are some legal formalities, like carve-outs of certain factories, including transfer of land and building and plant and machinery to their names and things like that.
While it may take some time, a few more quarters, before the transaction is finally concluded, we do think that it will be concluded. We are fairly certain of it being concluded. In the interim, going by the requirements of accounting standards, this business is now classified as discontinued operations. The effect of this is that in the P&L, in the profit and loss accounts, you will not find any revenue or expenditure line item.
It appears just as a one-line consolidation on the PAT as profit after tax from discontinued operations. Of course, some of the comparisons that we'll do are interesting here because when we gave our guidance in the beginning of the year, obviously it was considering Electrical and Automation for so far this year, continuing with that till it finally gets divested.
In the balance sheet as well, all the detailed assets and liabilities, whether they be fixed assets or working capital or debt or any other liabilities, are also removed, and it appears as an asset held for sale as a one-line item in the balance sheet as well. These are the two main events that happened during this quarter.
I'll now go to the next slide, which is a highlight slide. Slide number four. Here you can see that we have done well on all operating parameters. It's a very decent set of numbers in a difficult environment. Order inflows grew by 11%. More on that later. Order book, of course, is a derivation of order inflows and revenues, along with the opening order book, and that has grown by 9%, essentially because our absolute quantum of order inflows is significantly higher than revenues.
As far as revenue is concerned, it grew by 10%, which is decent in the present circumstances. The profitable growth has obviously translated to a higher EBITDA overall at a corporate level of 20% growth. The EBITDA obviously has held on to the PAT level as well, because PAT has grown by 21%.
Going to the next slide, which is slide number five, dealing with key financial parameters. As far as order inflow is concerned, we have grown by 11%, as you can see, INR 38,700 crore. Large part of this has come from PSUs and direct sectors, and I'll show you that in the next slide. Here, as per the order book, accrued revenue, EBITDA, reported PAT.
Net working capital is something which you can see has gone up to 23% this quarter against 21% in Q1 FY 2019 and a lower amount, around 18%, at the end of last year. It has increased significantly. Here I'd like to touch upon why it has gone up so significantly. Firstly, in this quarter, we have seen all-round sluggishness in releasing payments by both central and state government, as well as in some cases PSU and private sector.
Of course, the central and state government sluggishness is probably worse probably because of the election overhang. Be that as it may, in fact, in state government orders particularly, we saw significant holdback of payments. In some cases, reason given was that state budgets have not yet been approved. That was one major reason for increase in working capital.
Another thing is that I think all of us are well aware that we are operating in an extremely tough liquidity environment. Media has reported ad infinitum on things like NBFC liquidity and banks needing recapitalization and lack of credit and slowdown in economy and stuff like that.
What has also happened is that some of our vendors who are much smaller than us have also been affected by this tough liquidity. In this quarter, we have actually supported vendors to a large extent, and we have released a significant amount of payments to vendors, which has brought down the vendor credit which was sitting in current liabilities, which in turn has led to an increase in net working capital. These are the three essential reasons for increase in the net working capital.
We do hope that going forward, as the environment improves, we'll be able to claw back some of the increase going forward. Of course, I always maintain that working capital, since it is spread across hundreds of sites, is one of the most difficult things to monitor and control.
By and large, I think you can rest assured that we are taking every effort, businesses are taking every effort to control that. The return on net worth, return on equity compared to Q1 FY 2019 of 14.6% has gone to Q1 in 15.4% in Q1 '20, and this is for trailing 12 months. We continue our journey of steady improvement of ROE, and our target of achieving 18% by end of FY 2021 still holds good. We now move to the next slide, which is order inflow and order book.
This year, in this quarter in a very difficult environment, as I mentioned earlier, we have grown our order inflows by 11%. The order inflow momentum has largely been sustained through PSU and private sector orders. As I mentioned, one thing which was very clear is that central government and state government ordering became very sluggish during this time. Of course, we do think that again, is largely due to an election overhang. To give you an idea, around 90% of our orders have come from PSUs and private sector, almost equally divided. That's the extent of support that we have got from PSU and private sector.
Actually speaking, in the beginning of the year, I think all of you would recollect that we guided for few order inflows towards the second half of the year, primarily because we had assumed that there'd be an election overhang and the first half would witness a slowdown in ordering momentum. Fortunately, we've grown by 11%. As far as the order book is concerned, you can see that it's still a very healthy INR 2,94,000 crore order book.
This, of course, provides a good operational hedge against cyclicality in different sectors that are inherent in the space that we operate in. Go to the next slide, please. One thing about order book I'd also like to Slide number seven. In the order book, we have shown INR 2,94,000 crore. There are now six business verticals.
We call them independent companies, which are almost of equal size, around 13%-14% of the order book. Hence, we think that our order book is sufficiently diversified and there is no dependence on one single vertical within our business portfolio. Now, I move to the next slide number eight, which deals with sales and cost. Here you would have seen a 10% revenue growth. That entire revenue growth has come from domestic. Domestic revenue has actually grown by 15%, and international has de-grown by 1%. This is primarily due to flat order book in international. It remains the same, practically at around INR 62,000 crore approximately. NPU expenses is by and large in line with revenue fees.
The finance charge of financial services and finance lease that we have today has grown quite a bit, and this is in line with the loan book of financial services, which if you had gone through the results, you would have seen that it grew by 15% or so. As far as staff costs are concerned, there's been a 10% increase, and this is essentially on the back of resource augmentation in our services business of L&T Infotech and Technology Services, and financial services.
In fact, on a net basis, if you take average of Q1 FY 2019 versus average of Q1 FY 2020, we've added around 10,000 people in terms of headcount. We move to slide number nine, which deals with the backup from EBITDA going right down to P&L. EBITDA, as you can make out, has grown very healthily at 20%.
The type of other income has grown significantly, this is essentially because of treasury income on a higher average investment debt. In fact, we had created a fair amount of liquidity buffer, which has proved to us in good stead as a Mindtree acquisition in terms. During the quarter, on the standalone balance sheet, we had around INR 10,000 crore of investment versus average of INR 8,000 crore in the last year. That has also given us a very good thing.
Treasury yields have also gone up to around 10% versus 5% last year. As far as finance cost is concerned, that has also gone up because our debt has also gone up, and the average debt, again, in the standalone entity was around INR 35,000 crore versus INR 17,000 crore a year back.
Actually, here again, as I mentioned, it's essentially on account of the liquidity buffer that we've built up. Tax expenses have gone down. There were some changes. One reason was a change in the treatment of dividend distribution tax. Non-controlling interest has gone up, primarily representing a higher share of the profits from entities which are subsidiaries we can expect.
The Transmission and Distribution company buyup clearly reflects IDPL Road's and tolling performance, as well as the Mitsubishi Power Equipment manufacturing joint venture. The previous year, if you recall, includes the one-time invoice gain. That is one of the reasons why it is negative, primarily because of IDPL initial stage of road losses that we continue to get, and without that one-time gain. Discontinued operations, as I mentioned earlier, represents the PAT from Electrical and Automation Business, and that's around INR 1.1 billion.
It's grown by 31%, done very well. PAT, before exceptional, has actually grown to 29%. Of course, the reported PAT has grown by 21%. The exceptional represents impairment in a road SPV, which is under IDPL. We impaired the equity here because the financial creditor has referred it to NCLT and got the proceedings admitted in NCLT. By way of abundant prudence, we impaired the equity investment in this particular deal as well.
Coming to the next slide, which is the segment composition on slide 11. This is essentially for reference, and here you'll notice that we have classified Electrical and Automation again as a discontinued operation, and we put it right towards the end. This is for reference in case anybody wants to see the details of individual segments. Moving to the next slide number 12. This is again essentially for reference.
This gives a better breakup of order inflow composition. Here again, you can see both the geographical breakup as well as the vertical-wise breakup. In the vertical-wise breakup, a notable item this time is power, which accounts for 17.3% of the total order inflow, and more on that later. We enter the next slide, which deals with order book. This also is for reference. One thing you can see again here is that in the past, we have talked about our foray into what we call near-shore geographies outside the Middle East, essentially in parts of East Africa, including Mauritius, North Africa, as well as East Asia and South East Asia, wherever possible. We've been plugging away at that, and the results are there for all to see.
In fact, if you take the total international order book, around 1/2 of the order book is now from non-Middle East countries, as well as industry ones. Now, we move to the next slide number 15, which gives you the revenue composition. Here, too, this is essentially for reference. You can make out that as far as the geographical spread is concerned, fairly spread out across Middle East, U.S.A., Europe, essentially through L&T Infotech and Technology Services, as well as the rest of the world.
Infrastructure here again is a big daddy, as far as we are concerned, and they account for 47% of the total revenue pie. Coming to the next slide number 15. Infrastructure segment, which happens to be our largest segment. Order inflow was fairly decent, and this time we've got some notable inflows, some airport orders.
We got a water order from Sri Lanka. We got a desalination order from Qatar. We got a gold beneficiation order from Saudi Arabia, as well as a defense telecom network order. All these have led to a decent order inflow in this segment. Revenues have grown by 14%. It's a very noteworthy growth in this difficult time, as I mentioned earlier. The strong revenue growth is on, number one, we have a robust coupling order book, and secondly, it's a conversion of the order book across business verticals. As far as the margins are concerned, the margins, of course, reflect change of execution in job mix and it can also have seasonal volatility and where it's also dependent on percentage of completion.
Right in the beginning, every quarter, I continue to say that please do not view quarterly margins as representative of a year as a whole, and certainly not for project duration, which typically goes up to two years. One point I must also mention here, as far as revenues are concerned, you can see that the revenues are almost entirely driven by domestic.
Domestic revenues have gone up from INR 28,400 crore to INR 102,000 crore , whereas international revenues have declined a bit. That is essentially because of some large marquee orders which we had in international markets tapering off now. They're nearing the end stages of execution. We now move to the next slide, which is Power. Here, of course, I think most of you would be aware that we got a very large order, EPC order, which replenished the Q1 order book.
This is a order from SJVN in Buxar , 2 into 660 MW. It is very significant for this sector because this sector was being plagued by a lot of issues where overcapacity is concerned. We have boiler and turbine manufacturing capacity in excess of 20 GW, 20- 25 GW, whereas annual ordering is barely around 7- 8 GW a year. This order is very significant for us.
We are also targeting around another 7 GW of coal-fired power plant PTC orders, which is on our process sheet. If all those get ordered out, then we hope that we will be able to garner some more business there. Emission control equipment, both flue gas desulfurization as well as selective catalytic reduction for control of NOx emission controls.
There are around 60 GW of retrofit clean process in the pipeline. We are now seeing this coming out hitting the streets quite thick, fast and thick actually, primarily because most of you would be aware that the contentious issues of whether PPA could be revised because of increased capital cost offered to the power plant operations has been settled.
Since that has been settled, that's why you're seeing orders coming out for Q2. We're also targeting some Bangladesh jobs and hope to get some international business as well from there. Here, the revenue decline of 48% is essentially because of the low opening order book. All of you would have seen quarter by quarter by quarter, the order books have been depleting. Of course, this quarter it got replenished.
Margins here again, 4.1% to 3.3%, are reflective of public and stage. I would not read too much into this. Here again, like Infra, margins are also subject to a fair amount of quarterly volatility. Another point to note, which I keep on reiterating, is that the profits of our Mitsubishi JVs, Mitsubishi Hitachi Power Systems JVs, both in boiler and turbines, and other JV companies, smaller JVs like Howden and Larsen & Toubro, are consolidated under equity methods.
They do not find a place either at revenue or at EBITDA level. Going to the next slide, which is Heavy Engineering segment. Here, you would recollect that last year they had a very slow ordering close, and they still carry a very healthy order book, a fairly decent order book of around INR 4,000 crore or so.
Opening large order book has led to a significant revenue ramp-up in this particular quarter of 162%. It's a stellar revenue growth and essentially driven by the opening order book. One point as far as orders are concerned, in the current quarter, we have also seen some order inflows getting impacted by deferment from contracts. The revenue which we have notched up, which is close to INR 900 crore or so, is actually essentially high-tech manufacturing.
Today, we are executing around pressure reactors, thermal expansion. Our shop floor capacity is running at full capacity. As far as margins are concerned, optically, there's a significant drop in margins from 36% to around 20%. Here again, I must also point out that last year, under a new standard, Ind AS 115 standard, we were required to start recognizing expected credit loss on contract assets.
Because they, Q1 of last year, they managed to control their working capital contract assets significantly. They landed up with a credit whereby they got around a particular write-back of expected credit loss provision. To some extent, that has also led to an optical reduction in margin. 18.5% is a very healthy margin level, as all of you would understand, by any standard whatsoever.
The reason why they get such high margins is essentially because of their global competence. They're known worldwide for their competence. They demonstrate technology differentiation. They mark 1,000 of welding processes, for example. They have a proven track record, and they've also managed to extract cost efficiencies, all leading to very healthy margins. Going to the next slide, which is Defense Engineering.
Here, this sector continues to be plagued by, you could call it very slow policy change initiatives, whereby while the government for years has been articulating its desire to involve private sector participation in defense manufacturing in a meaningful manner. Very little has actually translated to actual ordering to the private sector. Predominantly public sector-driven, and even today, a fair amount of nominated orders go to the public sector.
The slow pace of policy change continues to limit this particular sector. However, we did get a very significantly large order, slightly less than INR 5,000 crore a couple of years back. That was the K9 artillery gun, the Vajra. The execution of that is on in full swing, and that is the main reason why you see a 33% growth in the revenue of this particular sector. This order continues to drive both revenues as well as margins.
Here again, margins reflect the scale of execution and job mix, as well as, of course, operational efficiency. This is a quarterly variation, which I think you should wait till the year-end before taking a view on the full-year margins. Going to the next slide, which is hydrocarbons. Here, all the ordering flows are entirely domestic. This quarter, we hardly had anything and any international orders, and of course, a large international order, which we're expecting to happen in Q1, move to the early part of Q2.
Hopefully, that portends well for the Q2 numbers. The revenue growth here is again on the back of higher order book. What you can see is that revenues now, this particular business account for almost 60% of the total, close to 60% of the total revenues, which is in line with its business, because hydrocarbon is a global business.
What we are seeing is that firm oil prices is also leading to a very healthy prospect pipeline in the countries that we target. These are essentially Saudi Arabia, Kuwait, UAE, and Algeria. Margins are fairly stable between 7% to 7.6%, and this is once again through efficient execution.
Here, though the margins may seem slightly lower on an optical basis compared to other segments, the fact is that because of its superlative working capital management, this particular business runs up one of the highest return on invested capital that we have in most of our business verticals. Going to the next slide, which is Information Technology and Technology Services. I think here, before commenting on the results, I think here, all of us are aware that this space is going through a very difficult period on two counts.
One is increased localization in the U.S., particularly, which is leading to higher staff costs for most IT majors. There's also increased protectionism by way of visa restrictions and higher visa fees, and this is a quarter that is usually impacted. This business has been no different as far as that is concerned. However, growth has been decent. L&T Infotech revenues grew fairly well, and it was led by CPG, retail, and pharma, high tech, media, and entertainment, as well as by energy and utilities. Energy technology services, which is essentially into outsourcing of R&D engineering, also had decent revenue growth led by the transportation vertical, plant engineering, and medical devices verticals.
As far as we combine both these segments together for the purpose of segment reporting, and obviously, if any of you would like to get better granularity into operations, you can always go through. Both of these companies are listed companies, so you can go through their investor presentations and fact sheets, which are listed on their site.
Be that as it may, the margins have fallen slightly, and here, of course, the reasons that I mentioned earlier, which is essentially due to increased staff costs and higher visa fees. Moving to the next slide, which is developmental projects. This, of course, is a bit of a difficult segment in the sense that there's a large one-off last year. When we sold a container port in Kattupalli, we had a large one-off gain, which was sitting in the revenues and margins there. Strictly speaking, the margins are not comparable.
The segment today, it does not include ports because we have divested that. It includes power development business and Hyderabad Metro. I mentioned that the Kattupalli port divestment last year drove the revenues and margins. This year, the revenues, you can make out, have largely been driven by Nabha, around INR 990 crore.
In fact, in case of Nabha, the PLF margin increased by 1% from 75% to 76%, in spite of some planned outage for maintenance. Hyderabad Metro, all of you will be aware that we achieved partial COD in different phases. 31 km on November 2017, 16 km in December 2018, and 9 km in March 2019, a total of 55 km, and the remaining part is well underway. Hopefully, over the next one or two quarters, we should be able to commission the full metro.
Since it is still under construction and we are yet to see the benefit of network effect, as well as completely computerized scheduling of trains, the margin profile is still emerging, and once it is fully commissioned, we should be able to give you a better idea of the margin profile. Be that as it may, Hyderabad Metro has first-up revenues of INR 190 crore.
The increase over last year is essentially last year was slightly over INR 100 crore, Q1 of last year, and the increase is essentially on increase in the farebox revenues. The Metro itself is also EBITDA positive, as is only expected. Here, this segment does not include revenues and EBITDA here are not included as far as IDPL roads and transmission line are concerned, because these are also consolidated at PAT level on the equity method on a single-line item. Going to the next slide number 22.
Other segment. This is a residuary segment and it comprises of construction and mining equipment, which is our CME, rubber processing machinery, industrial valves and realty business. Here you would have seen a 14% decline in revenues and while rubber processing machinery has done reasonably well on both revenue growth as well as decent margins, you would recollect that last year, Q1 had a fairly significant amount of bulk handover of apartments in our Parel project, which led to a bump-up in revenues in that particular quarter. This year we don't have that. That's why you see a revenue decline.
If you see the margin moving from 26.5% to 24.1%, even though all businesses have done reasonably well as far as EBITDA margins are concerned, since realty has slightly higher margins than the rest of it, the lower share of revenues of realty compared to the previous year has led to a small dip in the EBITDA margin profile of this particular segment.
Here again, I'd like to also highlight that ever since Ind AS 115 was implemented, where we started accounting for revenues on handing over of flats or legal handover of flats, the revenue profile has become a bit lumpy from quarter to quarter. Here again, I would like to point out that on a slightly longer term basis or even on a yearly basis, it's not as if the revenues are one-off.
To give you an idea, today we have a number of projects which we are executing, 2 in Powai, 1 in Parel. In Raintree Boulevard, in Bangalore, we've also launched the second phase of that, and we've also launched a residential project in Seawoods now that the Mumbai Trans Harbour Link has started work, so connectivity has improved. Land prices have also gone up there, and we felt it was an opportune time to launch a residential project there.
The total number of apartments launched under these projects is around 4,500 apartments. We handed over 1,500 apartments approximately, give or take a few here and there, for which obviously the revenues have been credited to the P&L. We still have to hand over 2,900 apartments where the revenues will come over the next two to three years or so.
Out of the 2,900 apartments, we sold a fair amount close to around 1,900 apartments, and we are yet to sell around 1,000 apartments are yet to be sold. The limited point I'm trying to make here is that while revenues may be lumpy from quarter to quarter, on a slightly longer term basis, they are certainly not one-off. Going to the next slide number 23, which deals with financial services. This is a group level.
Some of the numbers you see may not tally with what we have reported. As far as PAT is concerned, we obviously knock off the head controlling interest before incorporating the numbers in our consolidated financials. I'm going by those. This business has seen a strong growth in a challenging environment and remember, disbursements ahead their loan book increased by 16%.
I think all of you would be aware that there have been many concerns around the NBFC space, particularly after the IL&FS as well as the housing issues surfaced. The point to note as far as this business is concerned is that in a very difficult environment, they've managed their liquidity very well, both liquidity as well as interest rate sensitivity.
Asset liability maturity mismatches, they've done very well. In fact, as far as their inland buckets are concerned, every single time bucket 0-30 days are going right up to different buckets within a one-year period. The receivables are more than the payables, so they are in a decent position as far as liquidity management is concerned. Their focus continues to be on retailization of the loan book, holding on to robust NIM and fee income, which is very robust, around 6.8% today.
I also mentioned prudent ALM. They are focused on improving the quality of assets, which has led to lower credit costs and increasing the diversity of funding sources instead of being completely dependent on banks and mutual funds. The PAT in this quarter has been impacted by a credit provision on an exposure that they had subject to some bonds issued by a housing finance company, and because of a thinning credit rating, they provided for 50% of the exposure, and that's why you find a small dip in the PAT compared to Q1 of last year. Going to the next slide number 24. We purposely kept the last slide as segment-wise. Here, the growth has been essentially obtained through good performance of standard products and metering business.
Metering business, of course, was very positively impacted by the Saubhagya initiative, where the government has been trying to reach metered power to all houses across the country, including rural and semi-urban areas. There's been a marginal improvement as well, and this marginal improvement represents both operational efficiencies as well as a better realization from a favorable sales mix. With that, I now go to a very complicated slide, which is slide number 25.
Here, of course, like as usual, I will not dwell on each and every factor, but essentially that round circle at the bottom represents our strategy five years. Essentially, it captures the essence of our five-year strategy, that is up to FY 2021, and we think that that is a rock solid strategy. Outside that semi-circle represents the various external factors which affect us directly or indirectly. There are four broad segments to that as well.
One is the sectoral drivers that affect us, macro drivers, there is government policy, and of course, there are global factors. I've highlighted some of the points in green, which today tend to be slightly favorable as far as we are concerned. More than that, I'd like to briefly give a commentary on the environment as well as outlook in general. When we declared our results last time around, the elections were yet to happen. Now we have a stable government.
The election outcome is known. We do think that that will lead to continuity in policies and channelization of resources into productive areas, particularly as far as infra is concerned. There's one thing which I think all of us are aware of, is that there's been some deterioration in economic indicators. If you really look closely, these are centered around the consumption and industrial activity.
Things like fall in COVID and sales or IIP all over the place. As far as we are concerned, we generally operate in areas of infrastructure where that data doesn't find a place in many of the economic indicators that you are seeing. That is one area where we are seeing significant strength, even though most of that strength is coming from the public sector and even the private sector, there has been some investment momentum, but it's not broad-based as yet. All of you are aware that every year we do a bottoms-up assessment of the prospect pipeline, project by project, which we aggregate at the corporate level. We find that the bottoms-up assessment is still very strong.
In fact, even at the end of Q1, when not many government projects, state government or central government projects were ordered out, the prospect pipeline is still strong and even today stands at around INR 840,000 crore. Coming to the domestic order book. I mentioned that we have a domestic order book of around INR 230,000 crore, slightly over INR 230,000 crore.
The broad composition is that our private sector accounts for 23% of that and central government, state government, and PSUs account for the balance 77%. The sectors which are showing strength in investment momentum are essentially roads and road adjacencies like expressways and special bridges and flyover projects. Metro rail is seeing a very decent investment momentum, primarily because almost every city in the country is looking at a metro rail solution as a solution for terrible problems of urban traffic congestion.
Water projects, the prospect pipeline is still very strong, whether it is supplying distribution projects or whether it's wastewater, covering effluent treatment plants or sewage treatment plants or even its irrigation program. Power transmission distribution is still decent, even though we do think that the Saubhagya initiative will probably start tapering off a bit, maybe from FY 2021, because a large part of it has got ordered out by the end of this year.
Hydrocarbon has also seen decent strength both onshore and offshore in the domestic market and international markets as well. As far as railways are concerned, while we have not seen much traction from Indian Railways, the high-speed rail program is starting to happen now, and some tendering activity has started. As far as private sector is concerned, we have seen some strength in airports, commercial buildings, and healthcare.
Nothing very much in industrial output, whether that is episodic or whether it heralds an upswell in the investment momentum is extremely difficult to say at this point of time. We'll have to wait and watch. There's not too much happening on the industrial CapEx front. Of course, the PPP space is something which, apart from hybrid annuity projects, is not seeing much traction. Of course, airports is also PPP, that is seeing traction, other areas are not seeing much traction. Our guidance remains unchanged, just to reiterate, we've guided for an order inflow growth for the full year of between 10%-12%. We've guided for revenue growth of 10%-15% for the full year.
As far as EBITDA margins are concerned, you'll be aware that we guide on our businesses excluding services business of Infotech Technology Services, financial services, and developmental business. Now, excluding these services business, we have guided for stable margins compared to last year. One small point I'd again like to reiterate over and over again, that please do not view quarterly results as representative of the full year and do not try to interpolate or extrapolate it. That's rife with the danger of going seriously wrong. We've come to the end of my presentation, but I also request you to go through the annexures. This time, in the annexures, we changed the format of one annexure, which we've given an annexure of segment margins.
Primarily to link the segment margins that we talk about in our presentation, to link it with what is published in the advertisement for we reconcile it right to segment P&L. Which in turn is reconciled with the PBT, which is appearing in the main case of the profit and loss account. There are also other annexures like balance sheet, cash flows, share of profit from JVs and associate companies, which are there for reference. You can refer to those at your leisure. With that, I'd like to open the session to question and answers. Over to you, Aman.
Thank you very much. Ladies and gentlemen, we will now take the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use answers for asking a question. Ladies and gentlemen, if you wait for a moment while the question queue is unplugged. The first question is from the line of Debarpita from Investec. Please go ahead. Mr. Debarpita, your line is unmuted for questions. Please go ahead. I think there's no response from the line. We'll move to the next question. That is from the line of Sumit Kishore from JP Morgan.
Good evening, Arnob.
Hi, Sumit.
Hi. My first question is in relation to infra segment margins, not as much for the quarter. Management commentary post FY 2019 results in the annual meet was that infra segment margins in FY 2020 will improve versus FY 2019. Is there any change given the evolving environment? There were certain cost over and owing to client side issues, which were supposed to be recouped in coming quarters. What is the update on the same?
First, I'll deal with your second question. We never said it would be recouped in coming quarters. We said that we've raised claims on clients for cost overruns. Our experience is that it typically takes a significant amount of time. In fact, in some cases, we've seen the timelines extend into a couple of years as well. It is not a couple of quarters. I think we said couple of years. Because timelines are very, you can go seriously wrong if you try to forecast timelines there. As far as margin guidance for infrastructure, while we don't give guidance for individual segments, yes, we did say that we expect infra margins to improve from margins that we saw last year. That still holds good.
Okay. My second question is owing to recent developments in A.P., is there impact on execution of a portion of the guaranteed order book in that state and including the coastal road project in Mumbai? What would be the quantum of such contracts where execution is impacted currently?
Actually, as far as coastal road is concerned, it will be something maybe within INR 5,000 crore-INR 6,000 crore would be my estimate. It will take a couple of months before we expect it to come back. All the clearances as required are now obtained. Fortunately, we are in the very initial stages, so our exposure is very minimal there. As far as Andhra is concerned as well, our balance sheet exposure is concerned is not very large. We are in discussion with the state government so to see whether we can find a probable solution. All these projects were competitively bid, actually. It's not that we got them through nominated orders. We've signed contracts, we've mobilized initial resources. We'll have to wait and see whether at all it will have any impact.
I guess over the next few months, we will get better clarity on both the coastal road outcome as well as Andhra Pradesh projects.
I hope not as well as get the Amaravati project that A.P. has.
We have Amaravati project as well in our order book, but we'll have to wait and see how that turns out.
Okay.
We have contracts with the government. India is a country where there is still sanctity of contract, and avenues for redressal is required.
Sure. Thanks.
Thank you.
Thank you. Next question is from the line of Renu Baid from IIFL. Please go ahead.
Good evening, sir.
Hi, Renu.
Hi, sir. One thing on the order flow side, we see pretty strong numbers despite E&A not being a part of the mix. In terms of your comment also, you mentioned the prospect list continues to remain strong. In terms of outlook, do you perceive that the interest could be more export driven than domestic if the environment remains a bit tricky in the near term as in a couple of quarters?
Uh-
Give a state of the prospect list across segments, please.
Sorry?
How would be the mix of the prospect list across business segments?
Okay. First thing is, I think, Please recollect what we said in the beginning of the year when we declared our Q4 numbers. We also said that we expect order inflows to be more linear in this year than it was last year. Last year, it was much more evenly spread. That was predicated on the assumption that the general elections will have some overhang on awarding investment momentum in the first half of the year. That is exactly what is playing out. At the same time, I also mentioned that the prospect base is still bang on target. It's not that a large number of projects have been dropped. I mentioned the total amount of INR 8,40,000 crore. Now, a very brief idea of how that stacks up is that in infra, excluding power transmission distribution, the prospect pipeline is around INR 5,40,000 crore.
Power, taking power generation, is around INR 50,000 crore. Power TM is around INR 1,00,000 crore. Hydrocarbon, large number of prospects have been ordered out in the international space. We have not one goal. The prospect pipeline there is around INR 1,20,000 crore. Metallurgical and metal handling is relatively small, around INR 20,000 crore. Heavy engineering and defense-related is around INR 10,000 crore. Of course, we have not taken any possible things that could happen in defense. See, a large program is Private Sector Participation comes through. Even that, if it comes through, likely to take some time. That's how the stack-up of INR 8,40,000 crore stacks up. Of this, as far as international is concerned, international accounts for approximately INR 1,55,000 crore, essentially centered around hydrocarbons, power transmission distribution, and some smaller quantum in infrastructure.
Domestic is still fairly strong. The pipeline today is fairly strong. That's why we have kept our order inflow guidance unchanged in spite of having a blockbuster performance in order inflows last year.
Sure. Also within the quarter, would it be possible to highlight in terms of within the other segment, what would be the mix of realty? If we see, despite realty revenues qualitatively being bit softer, the margins still are relatively healthy at 24%. Realty tends to have 25%-50% kind of margins. Just trying to see what would have been the mix of realty this quarter versus last year.
I can't give you that level of granularity. Sorry, can't give you that level of granularity. I should say that it's not as if realty margins have suddenly fallen off a cliff. It's not that. We've also seen decent revenues in realty this quarter as well. It's just that last year we had a large number of fast turnover in our particular project.
Sure. Lastly, on the working capital side, again, most of the segments are seeing growth in line with your comments also in business environment. In heavy engineering where you would have expected more export-driven order, there the capital employed has seen a substantial jump. Are there any one-offs or certain elements there? The last couple of quarters, actually fourth quarter and again one Q has shifted from there.
No.
Any one-off numbers?
Working capital, there is no one-off. There is a buildup that happens over a period of time. There's no large one-off there.
Right. The overall capital employed still is somewhat at a higher on a Q2 level as well.
See, capital employed also includes fixed assets.
Correct.
It also includes fixed assets. Example, last year, defense capital employed went up a bit because we put up a separate production line in Hazira for the Vajra artillery gun. Assets could also influence capital employed.
Okay. Got it. Okay, sir. Thank you so much, and all the best.
Thank you.
Thank you. The next question is from the line of Shubdeep Mitra from JM Financial. Please go ahead.
Good evening, sir.
Hi, Shubdeep.
Hello, sir. How are you doing?
I'm doing well. Thank you.
Great. Sir, congratulations on a good set of numbers. My question is with regard to the point that you mentioned on AP. While I do understand that clarity is still to emerge as to whether or not there will be any impact, is it possible to get an indication as to what portion of our order book or what quantum of the order book would have some exposure to AP?
It could be between 2%-3%, approximately. As a order book.
3% of the large handling book.
Yeah, correct.
And-
The orders which are less than 25% complete. Total AP orders would be more.
Okay. These would be only the orders which are less than 25% complete.
Yeah, correct.
May have some exposure.
Yeah. If they get finally canceled and if we exhaust all our avenues of redressal as well.
Understood. On the coastal road project, you did mention that that's about INR 5,000 crore odd. How do you see that panning out? It's supposedly a very important project on the table. What kind of timelines are you looking at?
We just about started the coastal road. We've hardly spent any money there. It's a very small amount that we have spent. Fortunately, it happened in the early stages and not when we are halfway through the project. We got the project and the state government got all necessary approvals that were required by law. It's just that because of public litigation, but the High Court has taken an appropriate decision in spite of an earlier Supreme Court decision. We do understand that the state government is appealing the High Court. Maybe within a couple of few months time, we think that we could see some resolution of this happening because we are editing, we go by signed contracts, and whatever permissions were required to be obtained were obtained.
If the Supreme Court directs the state government to get necessary clearances once again or additional clearances, we'll probably go about that. This could take a couple of months or so.
Understood. Thanks a lot. That is all from my side.
Thank you. The next question is on the line of Renjith Sivaram from ICICI Securities. Please go ahead.
Hi, sir. This is Renjith. This working capital issue, can you just help us understand what was the impact due to the receivables creation? What was the impact on the payability? Was payable more impacted, or which portion of this has been impacted more for the 2% increase?
The receivables were not impacted at all.
Okay. It's largely due to our vendor support we had to.
Yeah, correct.
Could this liquidity situation, if it continues like this, is there something to worry about, or are we seeing that improving?
Our sense is that we do think that it'll improve. If you recollect, the Union budget was just declared less than a month ago. Now those will be cascaded and percolated to individual departments. State governments will pass their own budgets. There's political stability. There's a bank recapitalization on the card. The center is sort of giving a sovereign backing to NBFCs, which could improve credit growth, could kick-start investment. We do think that it'll start gradually improving. I guess the question that you asked is somewhat like a crystal ball gazing exercise. Again, I'm making a forward-looking statement.
Okay. Again, this road EPC was kind of slowed down in the last year. Is that road EPC awarding those projects going to see an action?
More often than not, we are not bidding for standard NHAI road business. More often than not, we typically tend to look for expressways rather than plain roads. Expressways, of course, are perceived to be value add, is typically much more. A vanilla road may be what, around INR 12 crore-INR 13 crore per kilometer. An expressway would be in excess of INR 40 crore per kilometer. There's a lot of value add there, and there are some expressways and flyover projects across the country. I think the next wave of investments in the roads area would be more focused on expressways rather than plain vanilla highways.
Okay. On this highway, what is the status now, and where do you stand in the highway? It's a big project. Is there any increase in the overall project costing you start thinking? We read from the media that the project cost has increased or anything like that.
I think we'll have to wait and see. We're still in the very early stage. Some engineering has just started. We have to wait and see what sort of investment momentum happens on that front. Too early to say at this point in time, Renjith.
Okay, which road project was impacted, if you can name that?
It was a L&T Samakhiali road project where, if you recollect, a couple of years back there was an CDR where bankers converted their debt into equity. They became a majority equity holder there. There, the essential contention from what I understand is that the benefits that they were supposed to receive from the state government have not been forthcoming. They're treating that as an instance of default, and that's why they filed a case in NCLT for insolvency.
Okay. No further questions from my side. All the best.
Thank you, Renjith.
Thank you. The next question is from the line of Venugopal Garre from Bernstein. Please go ahead.
Hi, good morning.
Hi, Venugopal .
I just want to understand, get some clarity on the working capital side. In the opening remarks, you mentioned that given that it is an election year, understandably, broader issues with respect to state governments, etc., where you said that they didn't even have even after election being over, their budgets were not ready. That's the reason things at ease are still not done.
That has been in some cases, but overall, we have seen a sluggishness across the board, particularly from state governments.
You mentioned receivables were not impacted at all.
Because otherwise our execution could have ramped up significantly.
Okay. From that perspective. Got it. The second thing is, this coastal road, or the Telangana cancellation, is this a part of your order book currently or has it been removed? Because when I see the order backlog calculation, there seems to be some gap. Has there been anything removed this quarter in the order book?
We removed around INR 6,000 crore of orders which are not moving.
These are not big orders, basically.
These are not big orders.
Lastly, on the Mindtree thing, I think it is very apparent that you borrowed money in anticipation of the purchase that you had to do. There was a cost of borrowing and of course this would have been a cost for you this quarter. Correspondingly, there was no tax because you not consolidated it, right?
Correct.
To that extent, would it be fair to say that your tax would have been slightly higher if you hadn't consolidated the numbers?
It would have been higher if we had consolidated.
What about the dividend income that you have given? Is that factored in this quarter, the Mindtree dividend?
We account for it on receipt basis.
Okay. It's not yet come in. It's not in this quarter, basically.
Not in this quarter, no.
Okay. Thanks a lot.
Thank you, Venu.
Thank you. The next question is from the line of Abhishek Puri from Axis Capital. Please go ahead.
Yeah. Hi, Arnob.
Hi, Abhishek.
Sir, two questions. First, on the order side, since you have already clocked a good number in Q1 and of course the prospect line also remains very strong for you, is there a chance of higher ordering from the government side in the second half, which can pick up the order inflow more than the 10%-12%, higher than 10%-12%? Second, do you think there is a flavor of payment terms in these contracts have changed due to liquidity applications at this point in time, specifically because you've got some large power orders and some few other PSUs as well?
Payment terms are pretty much the same. It's not that they changed. Payment terms became much tighter quite some time back. If you recollect 10 years back, the milestone payments used to be much more frequent. We used to get advances with every order we had those. Those days are long gone. Payment terms have become tighter a long time back, there's nothing very much different. As far as your order inflow guidance is concerned, I think it's too early to say, number one. Secondly, you've been tracking this sector for a long time, Abhishek, you realize that trying to predict order inflows with any level of certainty is fraught with the danger of going seriously wrong. I think we'd wait and watch to see how things pan out towards in the later part of the year before riding on whether they could be upside or downside.
I don't want to even speculate on that at this point of time.
Sure. That is understandable since it's been a young bidding basis, so obviously it's good to track. Since the prospect pipeline remains at the same level as start of the year, despite signing such large orders in Q1, I'm just trying to understand your flavor. In the private sector side, could you share some flavor there as well? Because in your commentary, you say industrial capex and CPT, there's not much traction. Your private sector order book is 23% of the overall order book. Where is that coming from and where are we tracking it? How are we categorizing it? Maybe the airports is in that, right?
Airports is in that. Commercial building orders we got from last year as well is sitting there. A fair bit of healthcare orders are sitting there as well. Of course, some orders of metallurgical and material handling are also sitting there. Some factory orders which we got last year, close to INR 2,000 crore of orders, mainly cement, are also sitting there. All that constitutes your 23% of order book together.
Understood. You have not talked about that segment in the overall list of prospects when you have given the feedback. Is there any number attached to that commercial, digital, healthcare, teaching and factory segment as well?
We can't get into that level of granularity. As I said, these are just prospects on the horizon, so we would not like to speculate on what could happen there. Suffice to say that healthcare prospects are decent.
That's helpful, sir. My last question is on the EBITDA numbers that are there in the annexure that you have given, segment margins. The previous year has been categorized at about INR 3,867 crore. It is 13.7% EBITDA margin in Q1 FY 2019. This is for the last year. In the beginning slide where you were giving the cost pickup, the EBITDA has been mentioned at INR 3,700 crore. I just want to understand what will be the difference there.
Sorry, could you repeat the question?
Q1 FY 2019, if we add up all the segments here.
That EBITDA is about INR 3,867. I understand we have to remove the one-time Real Estate division of about INR 750 odd crore.
Even if I remove that's still about INR 3,100 crore.
Look at the annexure. We've given a reconciliation line of total segment PBIT level, which is what we reported in our published private template.
Yes. Their PBIT is about INR 6,700 crore, whereas on your slide number nine, where you gave the performance-adjusted PAT data, there the EBITDA is at INR 2,700. That's what I'm just trying to understand.
One thing is that also includes Electrical and Automation, which the main P&L does not have. That's under a discontinuing operation. That's one difference as well.
Okay. It's about INR 130 odd crore.
If you look at the published advertisement in the segment page.
Right
2017 reconciliation is given right down to INR 2,017 PBT. Anyway, I don't want to get into a reconciliation as of now. Profit before tax for Q1 FY 2019 was INR 2,017 on the main face of the advertisement. In the segment information, that PBT, how it becomes INR 2,017 is there in the published segment information itself. We'll go through that, and we'll take it offline if required. Okay?
Sure. We will do that, sir.
Okay.
No problem.
Thank you. The next question is from the line of Inderjeet Bhatia from Macquarie. Please go ahead.
Hi, Arnob.
Hi, Inderjeet.
My first question is on this order inflow numbers. I think you'd mentioned INR 6,000 odd crore order get removed. Is it possible to kind of give a breakdown? Actually, in power, we see you have an out order inflows of INR 6,700 crore while there is an announcement of a mega order there. Are there any large orders in power space which have been kind of knocked off?
No, these are not power space. There's some orders in the metro space and a fair bit of real estate orders that were not moved, that were knocked off. I think everybody knows the stresses and strain that real estate sector is going through in general. This is an outcome of that.
Okay. How come power order inflow for the entire quarter is lower than, I'm assuming INR 7,000 crore is the threshold for that mega order?
Sorry, what?
We have announced a mega order in power, which is INR 7,000 crore.
That is inclusive of GST.
Okay.
Order value is inclusive of GST, but what we account for here is net of GST.
Got it. One very simple request. You've given this new annexure in terms of we have broken down to PBT level. I think in the previous presentation, we could get actually right up to the part level. If you could also kind of maybe for this, give us on the core E&C, what's the part level, if you have that number handy.
Sorry, I don't have that number handy.
Okay. That's it from my side.
Thank you, Inderjeet.
Thank you. The next question is from the line of Mohit Kumar from IDFC Securities. Please go ahead.
Yeah. Good evening, sir. I have two questions, sir. First is, have you restated the last year order book?
Sorry?
Have you restated the last year order book to exclude the Electrical Automation order inflow?
Yeah.
Okay. Second, have there been any meetings with the high-level negotiation committee on this? What is the call in the quarter?
I'm not aware of that granular level of detail, sir.
Oh, last question, sir.
I think that high-level committee was to discuss solar power tariff reduction, if I'm not wrong.
There are some committees. One is for infrastructure, one is for this, is what I mean.
We're actually involved in discussions with the same, Mohit, as none of the business has it.
Last question, sir. Is the recent loss despite the national hydrocarbon, has it changed from the beginning of the year since, I guess, compared to July?
Yeah, I mentioned that a number of projects were ordered out and some projects were also recovered.
Okay, sir. Thank you. That's it.
Thank you.
Thank you. The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
Sir, thanks a lot for taking my questions.
Okay.
Hello, sir. My first question is, if I look at the revenue growth in the services business, there are still quite a lot of quarters where this growth has moderated. Since we are giving a guidance of 12%-15% of top-line growth, would you be able to give a rough split of how much of that will come from services and how much is likely to come from the non-services business?
I'm sorry, I will not be able to give you that. We guide as a whole, but suffice to say that we do some very detailed budgeting exercise based upon which we give our guidance. All these are factored in our guidance.
No, sir. My question really is, did the core business or the non-services business grow at early double digits this time around? Given, as I said, that for the first time, your finance and IT business have actually grown in the mid to low teens, which was actually growing in high teen tiers in the previous six, seven quarters.
If you do the math, it does translate in the rest of services business continues to grow quarterly. We meet our growth guidance.
Sure, sir. My second question is, when you say that part of the reason finance cost has gone up is also because of partial COD of Hyderabad Metro. Could you give a sense of how this finance cost would look like on full commissioning? 55 out of about 70 odd km. Should we look at financing costs going up much higher in the third quarter of this year? Any help on that would be very useful.
Pulkit, I am sorry to disappoint you, but you'll have to wait for a couple of quarters before we can give you any sort of picture on that.
Sure, sir. Thank you.
Thank you. The next question is from the line of Ravi Swaminathan from Spark Capital. Please go ahead.
Yeah.
Please go ahead.
The infrastructure margins have kind of come up. By your own impetus. This has been happening for the last year also. Just wanted to check with you, which subcategory in infra segment is creating margin pressures?
Ravi, right in the beginning, I very categorically said that please do not look at margins on a quarterly basis, particularly. Yes, I think it was also well-known that from Q3 last year onwards, we started taking some fairly significant cost provisions in our transportation infra projects. To that extent, that has also affected because the stress was not all that high in transportation infra last year in Q1. To that extent, it's also there. As I mentioned, a lot of it depends upon phase of execution and whether some large projects cross margin recognition thresholds. Wait for a few more quarters before taking a call, because trying to extrapolate full year margins on infra.
Got it, sir. Got it.
Yeah. Sir, this is Bharani. Just wanted to find out, from when would the Mindtree numbers be reflecting in the consolidated numbers, sir?
Hopefully, it should be reflecting from Q2 onwards, because we've now been certified as a promoter now, so it will be a land to land consolidation. Of course, with non-controlling interest adjustments and all that as well.
Understood. Bharani questioning from our side. Could you give us the number of Hyderabad Metro's 14 project costs and the existing debt in the books?
We will have to again wait for some time before we get into that level of detail, as far as Hyderabad Metro is concerned.
Okay, sir. No problem. I understand.
Thank you.
Thank you. The next question is from the line of Gurpreet Arora from Quest Investment. Please go ahead.
Yeah. Hi, Arnob. Congratulations. Good numbers.
Hi, Gurpreet.
Just one thing. Especially water segment, you've been highlighting those prospects last few quarters. You've also highlighted the sort of orders which you've been getting there. Lately, there has been a lot of noise on some segmentally water tech GPs. Is that a significant risk to our pipeline of INR 8.4 lakh crore and some views on that, please?
As far as that, I don't know. Are you referring to that Jal Jeevan mission, that particular thing which we announced?
River interlinking.
River interlinking could give us a decent opportunity.
Okay. Anything specific with water pipeline and lift irrigation that you can highlight in order one and Q1?
No, we've done decent orders. You will recollect that last year, Q1, we got some blockbuster orders from lift irrigation from Madhya Pradesh.
Right.
Difficult to match that performance in one quarter. Pipeline is strong, and we do expect to land up with a decent order inflow number this year as well.
Sure. Last follow-up on this is that, I mean, recently saw you got the big desalination order from Gujarat. That had an O&M component. We have been mentioning that we don't want to get into asset heavy businesses. I understand that O&M is not entirely owning the asset. How do you just evaluate each one, please?
That is O&M, as you rightly mentioned, it's not an asset ownership. We get paid for building the asset. It's just that we have an O&M portion for a few years after the hand over of the project.
As a project cost, we will involve or add the O&M cost within it. Is that how the deal is done?
Yeah, correct, sir.
Sure. Thank you. That's all from my side. Good luck with you, sir. Thank you.
Thanks, Gurpreet.
Thank you. The next question is from the line of Jagmohan Singh from Master Capital Services Limited. Please go ahead.
Good evening, sir.
Good evening.
My first question, what is the driving increase in the borrowing INR 63 billion on slide number 29 in others? Which is excluding financial services and development projects. Given growth, should it increase 1.9x from 1.8x?
Sorry, I couldn't get your question. Could you speak a bit louder, please?
Sir, what is the driving the increase in the borrowing INR 63 billion on slide number 29 in others in the borrowing-
Yeah.
Which is excluding financial services and development projects.
Let me put it this way. Large part of that is borrowing on a standalone entity. I also mentioned that to some extent, we are building up liquidity buffers. There was also another compulsion that our debt equity ratio in the standalone entity had fallen to something like 0.2, and we normally target a debt equity ratio of around 0.4. We brought it up to around 0.35, 0.36 or thereabout. That's an essential part of our capital structure management. It also ties in with our return on equity targets.
Okay. Sir, my second question is, what is your guidance on the revenue and OCF in relation to power segment?
We don't give any specific guidance relating to individual segments. I'm sorry to disappoint you on that.
Okay. Thank you so much.
Thank you.
To the next question is from the line of Girish Athitkar from Kotak Securities.
Yes. Thanks for taking the question. Just on the other income side, you said there's been some decline there. You explained it, just in terms of any mark-to-market impact in the quarter on the way the treasuries moved, et cetera, if you can quantify any number here which could be one-off for this quarter.
It's not a decline, it's an increase, Girish.
Okay.
It's a 10% increase.
If I'm looking at other income in fourth quarter, it is about INR 611 crore.
We are looking at fourth quarter.
Yeah. Fourth quarter versus third quarter now.
I'll have to get back to you on that. Sequentially, Q4 to Q1 is not really the way we look at it. Our business tends to be very lumpy from quarter to quarter.
Okay. Fair enough, because last three quarters it was above INR 600 crore. I thought, is there any one-off there?
I'll get back to you.
Okay. Thank you.
Thank you. Your third question from the line of Inderjeet Bhatia from Macquarie. Please go ahead.
Hi. On a couple of questions. One is on this E&A deal. Is there going to be any renegotiation on price? That price is set even after whatever changes of the future divestment?
Price is set.
Okay. Despite certain businesses to be retained or that will not get impacted.
No. What businesses to be retained, those are very small businesses which are decided upfront when the MOU itself was signed. That is not something which has come about now.
Okay. One thing on the staff cost, sorry, whether there was any provision made for, say, pension liability being revised up because of yields falling?
Part of it goes to OCI.
Okay. It's not in the soft cost.
Okay, got it. That's it. Thank you.
Thank you. Ladies and gentlemen, that will be the last question for today. I now hand the conference over to Mr. Arnob Mondal for closing comments. Thank you. Hand over to you, sir.
Thank you, ladies and gentlemen, for a very patient hearing, for a very long presentation, and a very interactive session thereafter. With that, we'll close this session. Thank you and good night.
Thank you very much. Ladies and gentlemen, on behalf of Larsen & Toubro Limited, I conclude this conference. Thank you all for joining us. You may now disconnect your lines.