Good afternoon, ladies and gentlemen. I am Felcia, moderator for the conference call. Welcome to ITD Cementation Q3 FY 2024 results conference call. As a reminder, all participants 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 the operator by pressing star and then zero on your touchtone telephone. Please note, this conference is recorded. I would now like to hand over the floor to Mr. Nikhil Abhyankar from ICICI Securities Limited. Thank you, and over to you, sir.
Thank you, Felcia. Good afternoon to everyone. On behalf of ICICI Securities, I welcome you all to the Q3 FY 2024 earnings call of ITD Cementation India Limited. Today, we are pleased to host the management of the company, which is represented by Mr. Jayanta Basu, Managing Director, and Mr. Prasad Patwardhan, CFO of the company. Without much delay, I will hand over the call to the management for their opening remarks, which will be followed by Q&A. Thank you, and over to you, sir.
Thank you, Nikhil. Good morning, everyone, and thank you for joining us on this Q3 FY 2024 results conf call. This is Prasad Patwardhan, CFO of the company. Before I begin, I would like to remind everyone of our standard disclaimer that this call may contain certain forward-looking statements and business prospects of the company, which are subject to a number of risks and uncertainties, and the actual results may differ materially from those made in such statements. I will start with the financial performance of the company during the quarter and subsequently our MD, Mr. Basu, will take you through the operational performance. We are happy to report a very healthy financial performance in this quarter. Total operating income for the quarter was INR 2,017 crores as against INR 1,327 crores, which represents a growth of 52% year-on-year.
EBITDA was INR 220 crores in the quarter as against INR 118 crores a year back, resulting in a growth of 87%. EBITDA margins stood at 10.9% as against 8.9% a year ago. Profit after tax was INR 79 crores during the quarter, as against INR 37 crores a year back, representing a growth of 113%. Our balance sheet and leverage on the balance sheet continues to be at subdued levels. Our net debt to equity is about 0.3x . We have secured orders for about INR 1,300 crores during this quarter. If you look at our nine-month performance, our total operating income was INR 5,460 crores as against INR 3,460 crores a year back, which represents a growth of about 58%.
In the nine-month period, we have exceeded our turnover that we achieved in the previous financial year. So we have exceeded the entire previous year's performance in terms of top line. Our EBITDA for the 9-month period was INR 567 crores as against INR 315 crores a year back, a growth of 80%. PAT came in at INR 185 crores for the nine month period as against INR 87 crores, which again represents a growth of 112%. That is all from my side at the moment. I will now hand over to Mr. Basu for his initial comments, and then we will take your questions.
Prasad, thank you, and good afternoon to all. Thank you for joining this conf call. As we have seen and noted that our Q3 performance was significantly better compared to what used to do a few years back. At INR 2,000 crore revenue, we have achieved. At the same time, bottom line also is quite healthy. We expect to maintain this sort of revenue as a growth coming forward. We are able to manage the cash flow also very well. Debt-to-equity ratio is under control. We have almost secured INR 6,000 crore+ job in this year. There are few more in pipeline. In terms of execution, I like to highlight one point here. We have got around 50- 53 projects going on. Out of that, our work in hand is around INR 20,000 crore+ .
If you see 10 projects, that itself contribute more than INR 15,000 crore of work in hand. That is the beauty of doing bigger work. If we monitor 10 projects very closely, 80% of the project control we can have. These big projects are Chennai Metro underground, Bangalore Metro on verge of completion, and tunnel at Sikkim, also doing well. Ganga Expressway, a large contribution comes from Ganga Expressway. Udangudi Marine job. I am happy to say that two critical item, that is ship unloader, which was ordered to a Chinese company, has reached site yesterday. With that, we have almost completed the job. We have started a navy job for Indian Navy at Project Varsha, that is near Vizag Port. Seabird, another navy job is verge of completion. Rest of the job in marine going pretty well.
In building sector also, Thal Sena Bhawan, that is army headquarter, took off very well. Customers are very happy. We are doing Sikkim University. Recently, we have completed Trichy Airport. You must have noticed that PI was inaugurated 30 months back. Pune Airport also have been completed. The executions are quite under control, and there are good jobs in pipeline. That is all from my side, and we will request you whatever question you have, we will be happy to answer them. Thank you.
Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star and one on your telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing star and one again. Ladies and gentlemen, if you have any question, please press star and one on your telephone keypad. We will wait for a moment while the question queue assembles. First question comes from Deep Mehta from Bank of India Mutual Fund. Please go ahead.
Thank you for the opportunity and congratulations for a very robust set of numbers. A couple of questions from my side. First is, what is the contribution of legacy low margin orders in this quarter in overall revenue?
Since the legacy orders are mostly more or less out of the system now, there are a few residual work that is pending on the projects, but the larger contribution is coming through from the newer projects that were awarded to us maybe last year or past couple of years. So the contribution of legacy orders now is significantly lower and probably it is out of the system now.
Okay. Now with this legacy orders being more or less over, do we expect similar margin trajectory for this year as well as next year?
Well, we have seen our operating margins. The EBITDA margins have been improving during the year, and our endeavor is to keep performing the way we have performed during the year. Hopefully, we will see an improvement in the margin going forward.
Sure, sir. That is very helpful. My second question is regarding bid pipeline. What is the bid pipeline currently, and how should we look at it going ahead?
Well, I think we have a mix of all the jobs. If you take around INR 10,000 crore plus job in bid pipeline, either tender submitted or tender to be submitted. It is a mix of some marine job and few of the jobs belong to water, industrial structure, and building. There are around INR 13,000 crore jobs on the pipeline. Yeah.
Sure, sir, that is very helpful. Last question. What is the CapEx target for us for this year as well as next year?
Our CapEx was a little bit more last year because of a few jobs where we have to invest a big amount of plant and machinery. This year, CapEx target will be around INR 200 crore plus, say INR 200 crore to INR 250 crore.
For next year?
It will remain almost in the same range. Not much.
Okay, sir. Very helpful. That is all from me. Thank you and good luck.
Thank you. Next question comes from Sunil Kothari from Unique PMS. Please go ahead.
Thanks for the opportunity, sir. Congratulations for such a good performance. Sir, one question is on our execution capability during last three years has gone up from, say, 2021 December, 2022 December, then 2023 December. We are executing almost from INR 800 crore to now reach INR 2,000 crore. So looking at the-
Increase our execution substantially. If you want to increase the way you are targeting some whatever growth rate of 20%, 25%, the CapEx will be enough or we will require something to do, say, quarterly run rate of INR 3,000 crore, annual rate of INR 12,000 crore-INR 13,000 crore size of the business. This capability, manpower, technical capability and machines are enough for this INR 200 crore is good enough to support that.
Yeah. If you see one by one, first of one, manpower. Manpower, we have got enough knowledge. Number-wise is another thing, another thing is the quality. So we have got quality team. That won't be a problem for us to manage. Workforce is always challenging Indian scenario. We are trying to migrate to the more some mechanism work, so that we rely less on the labor force. Third is your CapEx. The CapEx sometimes what happens nowadays, because a lot of modern technique has come and people are more educated, lot many good wanted machinery you get on rent. There is no point buying a costly machine and use it for a year or less than a year and wait for future business, because those are available in market, in hire internationally.
We have to make a balance, and I hope that INR 200 crore-INR 250 crore should be enough considering the rental plant.
Great, sir. Wish you good luck. Thank you very much.
Thank you.
Thank you. Next question comes from Dhananjay Mishra from Sunidhi Securities & Finance Limited. Please go ahead.
Yeah, thanks for the opportunity and congratulations on very excellent set of numbers. As of now, we have a quite good growth and good high base in terms of revenue.
Hello?
Hello, am I audible?
Yes, now you are audible. Can you please repeat the question?
Yeah. So we are talking about 25% growth next year, which will be around, we will be reaching close to INR 9,500 crore kind of turnover. We have a current bid pipeline of INR 12,000. Being an election year, do you think we will be able to maintain INR 10,000 crore-INR 12,000 crore order inflow for this year, just to maintain the momentum of growth? What is your take on that?
Yeah, rightly said, this we are doing day in, day out. We are doing such exercise. What are the opportunity and mostly that we try to increase our geographical footprint in the segment where we are strong, like marine and underground metro. The moment you increase your geographical footprint, your opportunities are also more. This is a routine work, I think, and I do not think that the growth of 20% to 25% in terms of bidding and getting job is a problem.
Okay. So you are maintaining this year's guidance of INR 9,000 crore order inflow?
This year means up to FY 2024, FY 2025, INR 9,000 crore.
FY 2024, you are saying we have done close to INR 6,100 till date, so FY 2024 will be around INR 8,000 crore?
Yes. See, hardly another, not even two months, one and a half months.
Okay.
Some of the order, if you get matured, it will be around INR 8,000 crores or little less than INR 8,000 crores, or maybe little more than INR 8,000 crores. It depends upon when the order comes.
Next year you are guiding for how much in terms of order inflow? INR 5,000.
Around say INR 10,000 crores, INR 8,000 crores-INR 10,000 crores.
INR 8,000-INR 10,000. Okay, sir. That is all from my side. All the best. Thank you.
Thank you.
Thank you. Next question comes from Nihar Shah from Crown Capital. Please go ahead.
Hello, sir. Just one small question on the revenue side. This year we are expecting to cross INR 7,000 crore, right, in revenue?
Yes.
Okay. That is all from my side. I am good with questions because all my questions you have answered. Thank you.
Thank you.
Thank you. Next question comes from Shrey Gandhi from Mangal Keshav Financial Services. Please go ahead.
Yeah. Good afternoon, sir. Basically, my question would be regarding quarter four. Like quarter four, what kind of revenue growth rate you are expecting? Because, I've seen historically, I've seen in quarter four, like it has your revenue grow by around 20%-30%. Can we expect the same growth rate for quarter four also? 20%.
Actually, we have already done quite good in quarter three. So what we used to do in quarter four, we have achieved in quarter three. So quarter four will be almost same like quarter three.
It will be same like quarter three. Margins you have told, you will be maintaining double-digit margin. Last time you had given the guidance. So you have been maintaining 10% margin around, 10.3%. Can we expect the same margin before or some improvement like by around 2.4 or will it be 24?
I don't expect a growth in margin. Margin will be almost whatever we have achieved in quarter three, in that range.
Okay. So same like 10%, around 10% around.
Yes.
With regards to order inflow also already?
Yeah .
Thank you so much. That was it. Thank you.
Thank you. Next question comes from Vignesh Iyer from Sequent Investments. Please go ahead.
Sir, congratulations on strong set of numbers, and thank you for the opportunity. My question is on the interest paid part of our line item. We have paid around INR 58 crore interest in this quarter as compared to INR 52 crore last quarter. Just to get, I have an understanding, what is our borrowings as on 31st December , and what is the way forward? I mean, what would be the ramp-up in the interest payment as we keep on scaling the execution?
Well, the gross debt on our balance sheet as of 31st December is about INR 860 crore. We do not expect any major variation in the debt number in this quarter. It should be around the same level, maybe a little bit, 5% up or down.
What is our cost of debt?
Well, cost of debt is around 10.5% of the bank debt. This interest cost also includes the guarantees, the payments to the banks for the guarantees and LCs. It also includes interest on the mobilization advances that we give from our customers.
Okay. So if I read it right, as we keep on scaling this revenue, more or less on the proportion to it, the interest will keep on scaling, right?
I would expect that to be, but it depends on the mix. One is the rate of interest that the banks charge for the borrowing or on the guarantees and LCs. The second aspect is the interest on the customer advances. So that also is more or less linked to market. These two factors impact the interest costs that we make.
Okay. But, sir, historically, if I see, okay, like in around 2013 or 2014, 2015, so we have been to a point where interest outlay has been very high. Okay? I wanted to understand what is the step that the management is taking to ensure on that part, the interest outlay is less. I mean, we are doing excellent EBITDA as of now, but that is not much transforming into the PAT levels, right?
No. If you see, our profitability has improved significantly in this year, and I would not be able to comment right now on what happened in 2013 or 2014. But if you see our balance sheet, the net on our balance sheet is significantly within manageable levels. We are not over-leveraged. There is growth in our operations. I really don't understand your question. The debt is at a manageable level.
Okay. Fine. It's okay. I'll get back in with you, sir. All the best.
Thank you. Next question comes from Mehul Mehta from Nuvama Wealth . Please go ahead.
Good afternoon, team. Thanks for the opportunity. Congratulations on great set of numbers. My first question is, sir, you have been guiding for focus on entry barrier businesses like, say, underground metro, marine, as well as tunneling kind of. If I look at, say, December 2022 end, our order book was comprising about 67% from these businesses, which has increased to about 73%. Going forward, can we expect maybe these double-digit margins which we have achieved, going forward exceeding even that?
It is true that these businesses are. We are good in this. You have to also understand that no business perpetually gives you equal results. Underground metro also will be crowded soon. The competitions will be there. Whatever margin we have achieved last year, coming year, margin would be less if we have to win the job. That is one factor. That is why we are planning to go elsewhere, like abroad, marine job, so that we are able to maintain the margin.
All right. Got it, sir. Thank you. In terms of, Mr. Patwardhan, regarding working capital cycle, is there any change as compared to September 2023 to this December 2023, or it remains in the similar trend?
Actually, the net working capital in terms of number of days has improved in this quarter as compared to the previous quarter. The change is for the better.
Can you mention that, I mean, in terms of numerical, how is that like?
The exact numbers right now, but it is around 80, 85 days. Hopefully, our endeavor is to maintain it at the same level or improve if possible.
Acha. That should be maintained, kind of. All right. That is about INR 865 crores you mentioned, right?
That is it.
As at December 23 end.
As we cross.
Okay. Got it. Thank you so much. I am done.
Thank you.
Thank you. Next question comes from Rajesh Kumar Rathi from Right Shopping Private Limited. Please go ahead.
Hello.
Yeah.
Congratulations for a good set of numbers.
Thank you.
My worry is, again, regarding the order intake. Order intake of late has not been as great as a lot of other infra companies. Can you elaborate a little more on that? Although I understand that you guys are a little choosy, but still, the total orders are not increasing as much. Can you please explain?
Yeah, we are constantly working. Sometimes, you see. The moment if we get an order of 2,000, 3,000 crores at a time, suddenly we will find the number has changed. It is not that every month we are getting at the equal rate. It comes once in three months, a big number. It is like that. We are constantly working on that, comparing that how much should be the order intake and what will be the revenue next year. We are quite aware about the situation.
You are still optimistic about the whole thing?
Yes.
Okay. Thank you so much.
Thank you. Ladies and gentlemen, if you have any question, please press star and one on your telephone keypad. I repeat, ladies and gentlemen, if you have any question, please press star and one on your telephone keypad.
Thank you very much.
Next question comes from Nikhil Abhyankar from ICICI Securities. Please go ahead.
Thank you, sir. Sir, I wanted to get some clarity on what you mentioned that we might also look up at marine jobs overseas. Which exact markets will you be looking at, and what kind of opportunities are available out there?
There are three areas. One is Bangladesh, as because the election is over and we have a long list of marine work in pipeline around Chittagong Port. That is one area we are focusing. There are two jobs in Middle East. We have submitted our offer. And one job in West Africa. All are marine jobs.
All are marine jobs. Sir, on the domestic front, a lot of companies are increasing their CapEx on port development. Are there any opportunities over there?
You mean to say that new ports are coming by government agencies, sir?
Yes, Greenfield expansions.
Yeah, as it JSW, JSPL.
Right.
So yeah, we are there. Always we are there.
Okay. Sir, just a final word on recently, a year back, government had announced a container terminal in the Nicobar Islands. So that might be a very big opportunity for us. Do you think it might take off anytime soon, within next one or two years?
See work going on at government level. I think it will take some time because feasibility study, and it is almost 1,000 km away from Andaman mainland. It is not going to be very easy. But yes, government is working behind that thing.
Okay, sir. Understood. That is all from me, sir. Thank you.
Thank you.
Thank you. Next question comes from Abhishek Dixit from Hem Securities. Please go ahead.
Yeah. Hi. Thank you, sir. Congratulations for the great set of numbers. Sir, my question is regarding around two months ago with a news channel, we had guided for INR 7,500 crores revenue by then. Are we sticking to that?
Yes.
Okay, sir. And sir, for 20%-25% growth in the FY 2025 also?
Yeah. Around that, yes.
Okay. Thank you, sir. That is all from my side.
Thank you. Next question comes from Vipul Shah from Sumangal Investments. Please go ahead.
Hi, sir. Thanks for the opportunity. Sir, one of our peers continuously reports 14%-15% EBITDA margin. Our margins are 10%, and previously it was around 8%. What is preventing us to reach those type of margins? Whereas they are also doing almost same type of work.
Well, I cannot compare with the other company. The business model is different, and we had some legacy jobs, as you must be knowing. That has downturned our margin till now. We really aspire to do margin of that kind. Let us hope for the best. Let us see.
I think one of the previous participant had also asked about legacy projects. What is the quantum of the legacy orders which is left, if you can quantify in terms of hundreds of crores means how much work is left for this legacy orders?
No. Today it is nothing. I mean, virtually zero, almost.
Today it is zero.
Yeah.
Yeah. In this quarter also, our peer is reporting a margin of 400, 500 basis points more than us. It is little difficult to understand why we cannot report.
No, I disagree with you. You may be comparing with some one or two company, but you have to see general in construction space. I think 10%, 11% is quite standard. I do not want to comment on others, but I do not think that you can expect 14%, 15% EBITDA consistently going forward. It is difficult. Very difficult.
Okay, sir. Thank you, and all the best.
Thank you.
Thank you. Next question comes from Kaushik Poddar from KB Capital Markets Private Limited. Please go ahead.
See, you have an exposure to a leading group. When they were in a problem because of some reports and all these things, your stock price had come down very sharply. When will that orders get executed completely? The one in Sri Lanka as well as the road project.
Road project almost by end of the year or beginning of next year should be completed.
Okay. And the Sri Lankan project?
Sri Lanka project, mid of next year, 2025, June, July.
Okay. They are on schedule. Schedule, I mean, in the sense that there is no delay on it.
Yeah. All of them are scheduled. We are getting well-paid. There is absolutely no problem.
Are you guiding for a 15%-20% growth next year?
Yes.
The government's CapEx has come down. The growth of CapEx projected for the next financial year is down to 10% from 25%-30% last year. Because of that, do you see any kind of order slowdown?
No. As far as we are concerned, I don't think that will affect us.
Okay. Thank you.
Thank you. Next question comes from Sunil Bothra, an individual investor. Please go ahead.
Good afternoon, sir, and congratulations on the good set of numbers. Sir, I just want to know, in international work, do we have better margins or is it similar to domestic?
International business should fetch you better margins than domestic. That is the idea for going outside.
Going forward, if we secure more orders from international, there is scope of improvement in margin. On a medium term, say one to two years basis, we see further scope of margin improvement from here since legacy orders are now mostly completed.
There are three things here. One is that, as I mentioned, legacy orders are no more there. That is a good thing. If we get international business, we can make better margin. That is a good thing. At the same time, the bulk of the revenue which comes from Indian market, the competitions will grow, the more competitor will be qualified. If you have to bid or get the job, your margin will be little lower than what it used to be.
You mean to say, sir, medium term margins can go lower, is that what you're trying to
Yeah, if you have to maintain around double digit, it won't be possible going forward with the Indian domestic business because competitions will be more. That we have to compensate by some job in overseas. It's like that.
On a consolidated basis, double digit margins is not sustainable?
It's sustainable. You have to continuously make your strategy. But if you are remaining only one segment in one geographical area, then naturally margin has to come down. Because today, if you see four years back, we are only three players in underground. Today, at least there are seven, eight players. Next year, it will be 10, 12 players. The more number of players, the margin will come down. That is the business.
But all players must be catering to different categories, right? I mean, some INR 1,000 crore projects or some INR 500 crore projects or above INR 2,000 crore projects. So in that way, I think you would be having a few competitors.
Even then, today a job of INR 1,000 crore plus, around say you will get around six, seven competitors.
Oh, okay.
I mean, that is a separate answer at this point. We have to discuss in detail how to go forward.
You will try and maintain these double-digit margins as much as possible, but in case there is more competition, the margins might face a little pressure. Is that what I can deduce from what you are saying?
Yes. You are right. Absolutely right.
Okay. Secondly, sir, what is the kind of order pipeline, the bid pipeline as of date, and what would be the success rate out of that, as per your assumption?
Order pipeline will be around INR 13,000 crore+ , and ballpark our success rate is 20% statistically.
20%, okay. The new orders would only start flowing in post-elections when the new government, right?
Yes. You are right.
Okay. If I have to take your outlook for the next two or three years, what would you say in terms of the business and the scope of work coming in and the outlook?
Well, whatever work we have, that will cater for next year or up to 2025, 2026, middle of that. So we have to secure some job. But the opportunity what we have and what is our capability, I can see that 20% growth we will be able to maintain coming two, three years.
Oh.
Top line.
Oh, okay. Great. That really helps, sir. Thank you so much for the answers. Thank you.
Thank you.
Thank you. Next question comes from Kunal Patodia, an individual investor. Please go ahead.
Good afternoon, sir, and fantastic results. The best ever performance. Congratulations for that. My question is regarding arbitration awards. Last quarter call you guided that we are expecting some inflow. Have we received that award, the money is in or do we expect any new awards inflow in this current quarter?
A few arbitration award we have. Some of them have been challenged to the court, and some of them will get sort out through new scheme called. During this quarter, we have not received any inflow. We hope that, yes, sometime something will happen. As you know that these particular things goes very slow in our country. We have got some positive side from three or four projects as well today.
Sir, the second question is, as you're saying that new participants are now eligible to bid and the competition is increasing, sir, aren't we also improving our eligibility for bigger and better orders, like INR 2,000, INR 3,000+ crore orders?
Yeah. If you see, historically, we used to joint venture with our partner, that is our promoter, to get qualified.
Now we are able to do by ourselves most of the job, including underground metro and airport. Going forward, there will be bigger job, and in some of the job, definitely we have to partner outside expert agencies, and the work is in progress.
Right, sir. So, whenever the shipping terminal in Andaman will come, do you think we will be eligible to bid for those projects?
Yeah, we are also eligible. They will make us eligible to participate in that.
Perfectly fine. Sir, my last question is, in the overseas orders that you mentioned, the bids that we have submitted, and you gave a guidance that the margins will be improved better. So, will it be 15%+ margins in these orders, or are we still expecting the same margins that we get in our marine jobs in India or Bangladesh?
It is difficult for me to say for future job absolute number in terms of percentage. It will be better. That much I can tell to now.
Okay, sir. Thank you, sir. Thank you. Bye.
Thank you. Next question comes from Nirvana Laha, an individual investor. Please go ahead.
Hi, thanks for the opportunity. Congratulations, Mr. Basu and Mr. Patwardhan, for delivering on what you have been promising. Congrats for that. My question is, how much can you tell me the CapEx that we have done for nine months? Based on the kind of CapEx you indicated for next year, I think you mentioned INR 200-250 crores. Mr. Patwardhan, can you help us with the depreciation number, the expected depreciation for next year?
We have done CapEx of INR 200+ crore in this year. Regarding the next year, I think Mr. Basu answered one of those questions earlier. Our depreciation charge for the quarter is about INR 56 crore.
Yeah, going forward, would it be possible to help us model that, how that will evolve?
Well, it will be difficult for me to give any indication because in the last couple of years, as we have done a lot of CapEx, there will be some CapEx going forward as well. The depreciation typically depends on the useful life of the asset, and different assets have different life cycles. So it will be difficult for me to give you an estimate of the depreciation, but historically we have seen it is around 2%, 2.5%, or 3% of our revenue. Maybe for your modeling purpose you can take that number into account.
2.5% to 3%. Okay. What is our net debt position today and by end of FY 2025 where do you expect that to be?
Our net debt as of December is INR 400+ crore. Okay. As I mentioned earlier, we do not expect the debt to go up significantly going forward. I guess it should be at the same level. I cannot give you an exact number at this stage. We expect it to be at similar levels as of March 2024 as well.
Okay. One year forward, it is not possible for you to project that?
It will not be possible to give you a number as of this.
Okay. With the improved performance on margins and the balance sheet being very strong, you have good pipeline, are you expecting a credit rating upgrade anytime soon?
Well, we are working with our credit rating agency. We are talking to them, and hopefully we should have some good news on this front maybe once we conclude our discussions with the rating agency.
At what time frame do you think that's expected, the news?
Well, I won't be able to comment on that right now. We need to discuss that with our rating agencies. It will be premature for me to comment on that right now.
Sure. Mr. Basu, we are very strong in marine, so I wanted you to tell us a little bit more about the competitive dynamics in marine, both for jobs in the SAARC region, India, and also for the jobs that you are competing with outside. Can you give us some picture of how it looks like in terms of competition?
Competition in India, if you have two kind of jobs which are more than INR 500 crore, and more than that, INR 1,500 crore, INR 2,000 crore. In that range, I think there are hardly three or maximum four competitor we are having. Below INR 500 crore, INR 400 crore, there will be another two, three more. Below INR 100 crore, there will be plenty. That is the number of competition in marine in India. Abroad, there are foreign players, mostly Japanese and Korean. They do not come for any job which is less than INR 5,000 crore- INR 6,000 crores. That is the opportunity we are looking for. Where two small job abroad, there are small players. In between that layer, there is nobody much. We are trying to do based on that.
You said that margins are higher in these international projects, but obviously, there will be some risk, like political risk will be there, and of course, price escalation risk, et cetera, will be there. Is your parent experienced in the geographies that you mentioned, Middle East, West Africa, and how do you think about the risk adjusted margin in these geographies?
When I say margin, that is of course after having considering the risk factor. Normally, we definitely take help of our parent whenever we go the places where they are working or they have worked before. Otherwise, we engage some good consultant out of for somebody to study in detail. Because you know work is 50%, another 50% is something else. That needs to be understood properly before you submit your bid. Yeah.
Does ITD have experience in Middle East or in West Africa region?
Yes. They have got experience in Middle East Africa, and of course, Southeast Asia.
Okay. One final question from my side, Mr. Basu. I will name one competitor. I did not want to do it, but I do not know how else to frame the competition, so you can understand my underlying question and answer accordingly. If I look at somebody like an Ahluwalia, they are doing similar kind of margins, but the balance sheet cash flow seems to be a little better. They are mostly into building construction on land, whereas you guys are more experts in marine. Can you help us compare these two segments in terms of marine? Is it more onerous in terms of more interest to be paid, more LCs to be encashed, and is it more balance sheet heavy to work in marine compared to buildings, and how are you thinking about this mix of marine versus building?
You see, the whole thing depends upon the culture of the company. For the last 100 years, we have been mostly in the foundation engineering, till 1990 or after 1990. We have a culture of doing heavy civil work, mostly foundation-oriented. Last 20, 25 years, we have started going to airport, metro, and now we have mastered them, and now even also we are doing the building also. I will not be able to comment on that particular aspect. The balance sheet also depends upon what are the job we had for last 20, 25 years or 15 years. We are coming out of some bad jobs. We have almost all the bad jobs are behind us. Hopefully, balance sheet also will improve.
And you cannot compare directly the building and marine because building work is done in a manner where you require more manpower, more labor, less plant-oriented job. But marine is different. So it depends upon the company's culture, what was the history, how they have built up, all these things. Yeah.
Got it, Mr. Basu. Thank you so much, and wish you all the best.
Thank you.
Thank you. We have a follow-up question from Sunil Kothari from Unique PMS. Please go ahead.
Thanks for the opportunity again, sir. Sir, one thing just wanted to understand is, what is our core strength on our cost structure which make us competitive in international market? We have to buy raw material, so many local contractors. So cost structure for us and for Japanese or Korean will be similar. So where we are stronger in terms of cost?
Yeah, you have rightly said the material cost is same for any company, either Indian or foreign or whatever. It mostly depends upon the operation cost. Like temporary work, temporary structure, supporting structure, where we can do with much cheaper price, and there where we can be competitive as compared to international players. Yeah.
And sir, engineering part of any project we must be doing in India where we must be competitive, that is also one of the factor?
Yes, that's what I said-
Like design.
That engineering, there are two kind. If you do EPC, you do engineering for permanent work. There we are quite good in marine and we try to save some money there. Some job which is designed by the client, still there are opportunity to improve in the costing if you do temporary work design properly, and we have got all the things available with us for many years. Those kind of things help to costing.
Right.
Yeah.
Sir, last question to Mr. Basu. Sir, any one-time expense or income in this quarter which is not related to normal business of operation?
No. There is nothing like that in the quarter we released.
Thank you, sir. Wish you good luck. Thanks a lot.
Thank you.
Thank you. We have a follow-up question from Abhishek Dixit from Hem Securities. Please go ahead.
Yeah. Hi, sir. So, sir, in the recent budget session, government has focused more on the expansion of the existing airport and development of new airports and metros and Namo Bharat. On the ground level, are we seeing more opportunities in the aviation sector and despite the competition also in the sector?
Yes, aviation, there are great opportunities, and we are very much there. As you know, Pune Airport, Delhi Airport we have completed, Ahmedabad Airport we are doing. There is a list of around 20 airports. The tender will be out after election one by one. So there are opportunities, you are right.
Okay, sir. Sir, but this will be after election?
Yeah, I think code of contract and also things after election only will take off.
Okay. Thank you, sir. Best of luck for your next quarter anyway.
Thank you.
Thank you. We have a follow-up question from Mehul Mehta from Nuvama Wealth . Please go ahead.
Thanks for the follow-up opportunity. Can you please share in terms of contribution to revenue for quarter as well as 9 months from major projects like Ganga Express, Chennai Metro, Indian Navy kind of thing?
We won't be able to share with you the project wise numbers.
But broadly, I think last quarter it was disclosed. So maybe if you can, broad numbers.
Okay. Let me try. See, 20% of the jobs, as I said, 10 projects have contributed 80% of the margin. So these 10 projects are-
Sorry, can you repeat? Sorry, I am not getting. Sorry.
There are 10 projects out of 50-
Okay
which have contributed 80% of our revenue.
Right.
The 10 projects are Ganga Expressway, Chennai Metro, Bangalore Metro, Project Varsha Navy, Colombo, and Sevoke-Rangpo, and one or two more, around 10 projects.
This is for the quarter as well as nine months, should be similar kind of?
Yeah, almost same trend.
Okay. Thanks for the reply. In terms of other income, there is substantial increase. Is there any non-recurring income item for the quarter?
As in some income on fixed deposit, some tax refunds that we are able to get, there is some interest that we got on the tax refunds as well.
So there is nothing non-recurring. You are saying fixed deposit income and sort of like nothing.
Yes.
Okay. Sorry to bother Mr. Basu again, but there have been questions regarding peers. I was looking at one of the peers where our margins are quite comparable like to like. But in terms of when I look at employee costs and other expenses as a percentage, which is on the higher level for us as a percentage of revenue. Is it that we are provisioning for future growth and to that extent there can be operating leverage which can help us going forward in terms of expanding margin?
You are right. There are some expected credit loss sort of things are there. But you see the manpower cost, if you check our previous quarter or previous year, it is coming down. Earlier it used to be around 11%. It has come down to 9.5% and going for a further come down. It depends upon not only the delta cost, it depends upon what revenue you are getting out of that fixed manpower cost. We are improving. That is for sure.
Going forward, we can expect you even further reducing this percentage of it. Thank you so much. I am done.
Thank you.
Thank you. That would be the last question for the day. Now, I hand over the floor to management for closing comments.
Thank you everyone for a very intense and deep discussion on our results for this quarter. We appreciate the interest that you have shown in our company. We look forward to interacting with you again next quarter. Thank you very much.
Thank you. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now. Thank you and have a good day.