Ladies and gentlemen, good day and welcome to the Q1 FY 2023 earnings conference call of Ashoka Buildcon Limited hosted by Centrum Broking Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Shah from Centrum Broking Limited. Thank you, and over to you, Mr. Shah.
Yeah. Thank you, Margaret. On behalf of Centrum Broking, I welcome everyone to the Q1 FY 2023 earnings conference call of Ashoka Buildcon Limited. We have from the management Mr. Satish Parakh, Managing Director, and Mr. Paresh Mehta, CFO. And we also have Stellar IR connected on the call. Let us begin the call, and over to you, sir, for the opening remarks.
Hello. Yeah, good afternoon. We would like to extend a warm welcome to everyone on earnings conference call for the first quarter that ended June 30th, 2022. Along with me, I have Mr. Paresh Mehta, our CFO, on the call. Let me start with key developments in the first quarter of FY 2023. The company recorded an order book of INR 14,780 crores backed by healthy order intake. Let me now give an overview of these sale projects. As mentioned earlier, we have entered an asset sale transaction of Ashoka Concessions Limited of five SPVs by entering into a share subscription and share purchase agreement with Galaxy Investments II Pte. Ltd., an affiliate entity of KKR. The deal is to be completed soon after receiving required approvals from lenders, NHAI and other relevant stakeholders, and completion of certain conditions precedent.
We have received approvals from a few lenders and other stakeholders. We are in the process of completing the entire process and balance CPs. The deal transfers the entire share capital of these five BOT projects SPVs, including repayments of shareholders' loan for an aggregate consideration of INR 1,337 crores. The total proceeds received will be utilized to facilitate the exit of SBI and Macquarie from Ashoka Concessions Limited, allowing SBI and Macquarie to exit the company fully. Further transfer of these five SPVs will reduce the consolidated project debt of ABL by INR 3,013 crores. We have executed a share purchase agreement with National Investment and Infrastructure Fund Limited for a sale of 100% equity of GVR Ashoka Chennai ORR Ltd for an aggregate financial consideration of INR 686 crores. Out of INR 686 crores, ABL is expected to receive INR 450 crores.
INR 250 crore towards loan repayment and INR 200 crore towards its 50% equity stake in SPV. Post this transaction, the company will remain with the following major highway portfolio. 74% equity stake in one toll project, Jaora-Nayagaon, three fully owned annuity projects, Hungund-Talikote, Bhadravati-Sondur, and KSHIP, and fully owned portfolio of 11 HAM projects. As mentioned earlier, we are in discussion for equity sale of Jaora-Nayagaon BOT project. Coming to HAM projects, we have executed a concession agreement with NHAI worth INR 1,079 crore for development of six-lane greenfield highway from Baswantpur to Singnodi section of NH 150 on hybrid annuity mode under Bharatmala Pariyojana. The construction period is 912 days, and the operation period is 15 years.
The total equity requirement of 11 HAM projects including this is about INR 1,337 crores, of which we have already invested INR 1,107 crores including this as on June 2022. Coming to the order book. As mentioned, we have achieved a robust order inflow. Some of the key and large orders received from those that will are as follows. As I said earlier, we have executed a concession agreement of INR 1,079 crores for development of six-lane controlled greenfield highway from Baswantpur to Singnodi , 162.5 km-203.1 km. ROI from government of Republic of Guyana, $106 million for construction of East Coast Road Linkage at Guyana. ROI for a project of construction of iNTEC Digital Institute at Jodhpur from government of Rajasthan for INR 600 crores.
This project is in JV, where Ashoka Buildcon is having 55% stake and Ashoka Buildcon is the lead member. This project is to be completed in 18 months. LOA from East Central Railway of INR 208.89 crores for provision of train collision avoidance system. This project is to be completed in 24 months. The breakup of 14,780 crores order book as of June 30-
Mr. Satish? Satish Parakh. Satish Parakh, sorry. Sorry, this is Ashish. Sorry to disturb. Actually, we are getting some feedback that, you know, the line is not clear. Margaret, can you look into it? Because we're getting the feedback that, you know, you're not being audible.
Uh, sir-
Sorry to disturb, sir.
Actually, I can hear. No problem. Ashish, can you hear me?
Yes, I can hear you.
Yes. I'm saying, I only-
Ashish, can you hear me clearly?
Sir, I am able to hear you, but I'm getting feedback from some other participants that your line is not very clear.
Okay.
Actually, I can also hear Mr. Parakh.
Okay.
The volume is fine, so I would request those participants who cannot hear him, can you please reconnect your line?
Right. Fine. Go ahead, sir. Please go ahead. Yeah.
Yeah. The breakup of INR 14,780 crore order book as on June 30th, 2022 is road projects comprise about INR 8,929 crore, which is 60.4% of total order book. Among the road projects order book, HAM road projects are to the tune of INR 3,062 crore and EPC projects are to the tune of INR 5,867 crore. Power, T&D and others were around INR 2,355 crore, which is approximately 15.9% of the total order book. The EPC building segment contributed INR 2,302 crore, which is 15.6% of the total order book, while railway stood at INR 1,142 crore, which is 7.7% of the total order book.
EPC work of CGD business comprises the balance of INR 51 crore. The current order book, including projects received over June 2022, stands at INR 15,355 crore. Let me reiterate that our focus remains to build strong EPC business in the segment of highways, railways, power, T&D and buildings. The current order book of INR 15,355 crore provide us with a good visibility of EPC business growth. On the asset portfolio front, we have already built 11 HAM projects portfolio. In terms of new project bidding, our priority will remain more HAM projects and strengthen the HAM project portfolio further. This is all from my side. I will now request Mr. Paresh Mehta to present the financial performance of Q1 FY 2023. Thank you.
Thank you, sir. Good afternoon, everyone. The results presentation and press release for the quarter have been uploaded on the stock exchanges and on the company's website. I believe you all may have had gone through the same. Now, I would like to present the financial results for the first quarter ended June 30, 2022. Starting with the consolidated results, the total income for Q1 FY 2023 grew by 46% year-on-year to INR 1,916 crores as compared to INR 1,310 crores in Q1 FY 2022. EBITDA stood at rupees 521 crores in Q1 FY 2023 with a margin of 27.2%. Profit after tax is at INR 301.35 crores in Q1 FY 2023.
The revenue mix has changed and is higher on the EPC side compared to the HAM, due to which margins are impacted. Coming to the standalone numbers, the total income of Q1 FY 2023 stands at INR 1,510 crore as compared to INR 1,058 crore in corresponding quarter last fiscal, registering a growth of 43%. EBITDA for the quarter was at INR 176 crore with EBITDA margin of 11.6%. The company recorded net profit after tax of INR 104 crore for FY 2023 Q1. During Q1 FY 2023, BOT division recorded a toll collection of INR 287 crore as against INR 207 crore in Q1 FY 2022, and INR 268 crore in Q4 FY 2022.
Total consolidated as on 30 June 2022 stood at INR 7,127 crores, of which project debt was INR 6,015 crores, of which INR 3,014 crores stands for projects, project debts of five BOT projects. NCD stood at INR 250 crores at face value. The standalone debt is at INR 862 crores, which comprises of INR 187 crores of equipment loan and INR 674 crores of working capital loans. The standalone debt has increased because of delays in collection in the road sector, typically in Q1. However, things will have improved since July. Out of the total consolidated debt of INR 7,127 crores, INR 3,014 crores will be transferred along with five SPVs of BOT projects. Post the sale transition, effective control debt will be INR 4,113 crores.
With this, we now open the floor for question and answers. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mohit Kumar from DAM Capital. Please go ahead.
Good afternoon, sir, and congratulations on decent set of numbers. My first question is on the working capital. As you said, you alluded to the fact that the working capital has increased primarily because of delay in getting some receivables. Is it from the EPC or HAM? At what level you expect it to normalize in the next nine months?
Historically, if you see, the September quarter, the June quarter and the December quarter, generally working capitals are slightly higher than what is normal. If you see the first couple of weeks of July, certain delayed payments of June end were received in May for more than INR 100 odd crores. Going forward, for the HAM projects, the disbursements would happen in this month, so they would take care of the additional burden of debt. We believe that, going forward, this working capital requirement would be in the range of INR 400 odd crores, plus equipment debt of INR 180 odd crores.
Understood. INR 400 crore is the number which we should see by the end of this, end of Q2 or fiscal. Is the understanding correct, sir?
Yeah, around Q2. INR 400-INR 450 crores.
My second question is on the monetization bit. It seems like you're working in parallel, you know, multiple things. Out of Jaora-Nayagaon or let's say the sale of HAM through InvIT or to investor, which one do you think is likely to happen near term? If the HAM you're looking for InvIT, that will take some time, right? Is the understanding correct?
As regards the BOT projects, five BOT projects and the Chennai ORR project, we expect to close the deal by September and around September or maybe a month or so, plus minus. As far as the other projects are concerned, they are in the pipeline. The HAM projects, the 11 HAM projects or rather 10 which are almost under construction, except for one which is under FC, these are expected either there could be a buyer for it or we may float an InvIT. If we float an InvIT, definitely there is some time away.
Okay. On the Chennai ORR, what is the inflow which one can expect from this sale to us?
As we said, the total consideration is INR 686 crores, of which approximately ABL expects to get around INR 450 crores, of which 250 would be against debt financing to the SPV and 200 against its equity.
INR 200 crore will be the free cash flow to us. Is it right, sir?
Right, sir.
Understood, sir. Thank you and all the best, sir. Thank you.
Thank you. Anyone who would like to ask a question, you may press star and one. The next question is from the line of Vibhor Singhal from PhillipCapital. Please go ahead.
Yeah. Good afternoon, sir. Thanks for taking my question. Congrats on strong execution once again. Sir, my question was basically pertaining to the couple of new orders that we have procured. One order, as we had earlier announced is for the railways in terms of the Kavach scheme that we have announced. That's a decent around INR 186 crores kind of an order. There's also one more order from Rajasthan, Government of Rajasthan for IT and communications. Can you just maybe give us some highlight as to what exactly is the nature of our work or the scope of work for these projects? Hello?
Yeah, one second. I think so, Mr. Parakh.
Sure.
Thank you. I think Mr. Parakh probably is not available on the call. Kavach is typically the signaling system.
Anti-collision.
Anti-collision system, which we will be addressing. The Rajasthan project is pertaining to fintech, which is building construction for iNTEC Digital Institute.
Okay. Sir, the Rajasthan project is just about constructing a building for the Digital Institute, right?
Approximately 11.56 lakh sq ft.
Okay. Our scope of work is just constructing the building.
Right.
Sir, for the Kavach project, what is our scope of work? What will we be doing?
We will be providing all the necessary equipment for avoiding collision and other railway signaling system.
Are we going to lay the optical fiber cables, or are we going to basically help them provide equipment for the anti-collision system itself? I mean, our work will be mainly EPC only, right, in terms of laying down the cables and all that.
Right. It will be a total solution for this part of the contract.
Right. Just wanted to get more color on this. I think we have been bidding for a variety of projects now. I mean, of course, we have power transmission, railways, and roads, which are our bread and butter. Buildings, of course, something which we've always excelled in. This seems to be an entirely different kind of a domain. I mean, just want to understand why are we going into this kind of a domain in which we've never ventured before? It's not a huge opportunity if you look at it in terms of if we compare it with roads and buildings or railways.
What is the specific reason that we have gone for this kind of a project?
Ladies and gentlemen, we have the line reconnected for the management. Over to you, sir.
Yeah.
Yes, sir.
So, Abhi-
Go ahead.
You are on the line, right?
Yes, sir. Did you get my question or should I just maybe repeat it once again?
Can you just repeat it?
Yeah, sure, sir. Sure. Basically, as you mentioned that the details about the Kavach project, what I wanted to understand was, sir, what is our specific reason for going for this kind of a project? This is completely uncharted territory for us. We've never done these kind of projects before. Opportunity-wise also, I'm sure this project, this domain cannot be as big as the railways or roads or any other domain that we are already very experienced in. Is it that we are seeing some very strong opportunity in this segment? Are the margins in this segment better? What is the specific reason for us going into this very niche segment of the laying out these optical fiber cables and this project?
See, yeah, this is an anti-collision safety point of view. Railways is now putting up this for the entire railways. This definitely is going to be a big opportunity, and only few players are there in this segment. We have a good control on doing such projects because we have been, we are dealing with Smart Infra doing hardware and software projects. Actually, we have skills which are required completely for this kind of works. Therefore, we have entered into this, and we see a good opportunity going ahead, yeah.
Sir, just to maybe ask my first question again, what is exactly going to be our scope in this project? Is it only going to be laying out of cables, or are we going to provide some electronic equipments also for this anti-collision project that we're talking about?
See, laying of cable is a very small portion of the whole order.
Right.
Mainly it includes a lot of hardware and software. 60 locations we have to cover and around 403 km of length of highways in Jharkhand, Uttar Pradesh, and Bihar we have to cover.
Got it. Got it.
Completely, yeah. It's a completely anti-collision system, which is automation as far as collision is concerned.
sir, these kind of, let's say, I would say, electronics related or optical fiber cables, fiber cables projects, are we going to bid for them ahead? Also, if they come from, let's say, not from just railways, but other departments also, are we going to go ahead with those projects also?
We have been doing this last two years. KFON, which is Kerala Fibre Optic Network, which we have already done, and more than around 20,000 km of fiber laying we have already done.
Mm-hmm.
In all our highway projects, we do around 300 km in each project. This is not new for us. As far as software and technology is concerned, we are well-versed with since last two years. This is a segment which we look forward. Automation, digitization, this will be another focus area for the company.
Got it, sir. Got it. Great to hear that. Sir, a similar question was on the project from Guyana. I think, sir, after Mauritius and Maldives, this is the third, basically overseas location that we are kind of venturing into. Just wanted to again pick our strategy here. Sir, are there some specific geographies that are there in our minds that, okay, we will go to these countries, and if there is an opportunity, then we will focus on these only in these countries? Or are we, like, open to working, I mean, in the vicinity of India, we are. Are we open to working in any country where we find a good opportunity?
After completing the first phase of Maldives, we bagged second phase, which is also now nearing completion.
Right.
There is a third project, which is, buildings, housing project, which we are likely to start in maybe Q3 or Q4 of this year. Maldives has been one strong area. Other than this, we have bagged Guyana, and we are focusing on African region. We are lowest in Exim Bank funded project of Bangladesh also. We have developed an independent vertical, you know, after doing Maldives. In last four years, there's an independent vertical for doing international projects. Wherever an opportunity there, wherever they are Exim Bank funded, where funding is guaranteed.
Mm-hmm.
Margins are intact, we are focusing on those areas. This vertical will be independent and grow on itself like we have been doing power and railways.
Got it. Sir, any target that we have set for ourselves, let's say maybe five years down the line, we want our international order book to be maybe 10%, 15%, or nothing like that, it will all be opportunity based?
100% opportunity based.
Got it, sir. Sure. Just one last bookkeeping question. If you could just provide, I mean, after the first quarter results, what is the overall revenue for FY 2023 and the margins that we are looking for in terms of guidance, what you're looking for FY 2023 revenue and margins?
From a revenue perspective, we target approximately 15%-20% growth minimum in this quarter based on order book now and the new orders to come in. We will keep on reassessing these values in the Q4 for revenue. Otherwise, 15%-20% is generally okay for the year.
Got it, sir. Sir, margins?
Margins are based on today's costing and the rating, so it would be in the range of 9%-10%.
Mm-hmm.
This is what we believe going forward, even based on what we want. These are basically because of high costs and certain projects which are taken at prices as an increase from an increase perspective.
Got it. Sir, many of the players are saying that from Q3 onwards we might see some uptick in margins because by then the commodity prices, most likely will probably cool off and also, with newer projects will start coming into execution. Do we expect a similar kind of a thing, or for us it could be just a maybe straight line walk?
It could happen. Depends on also our international projects picking up because their-
Okay.
Margins could be slightly better. It will all depend on the mix of the projects as well as whatever you have suggested, changing commodity prices.
Got it, sir. Got it. Great, sir. Thank you so much for taking my questions, and wish you all the best.
Thank you. The next question is from the line of Jiteen Rushe from Axis Capital. Please go ahead.
Yeah. Good afternoon, sir. Thank you for taking my question. My first question is on the revenue breakup. Can you please provide the revenue breakup segment-wise for Q1 and comparative YOY?
Our road EPC was INR 1,050 crores against INR 830 crores for last quarter.
Sir, I didn't get. I couldn't hear you well, sir. Can you please repeat?
Can you hear it? Can you hear me? Hello?
Yeah, now I can hear, sir. Yeah.
Road turnover for Q1 was INR 1,050 crores against INR 830 crores for Q1 2022. In the power division, we had turnover of INR 160 crores against INR 41 crores. Railway, INR 153 crores against INR 99 crores. CGD business was approximately INR 13 crores over INR 6 crores. RMC business and other sales, INR 50 crores against INR 35 crores.
INR 50 crores. Okay.
Correct.
Buildings, any exhibition buildings, any progress?
It is a small turnover. It's not very significant. It will pick up in the Q3, Q4 quarters.
Sir, in terms of the order backlogs, are these international projects covered by cost escalation? It is fixed-price contract and we build at a better margin, as you said, in a previous question. How it works like the international contracts.
These are fixed price contracts. International contracts are fixed price contracts. We do get benefit of dollar going up.
Mm-hmm.
This estimate, we have to estimate in contingencies, escalation, whatever. With our experience, we need to estimate that. If we go wrong there, then we can get a hit and if we are positive, then definitely it goes positive. Some coverage is there always because of appreciation of dollar or depreciation of rupee, whatever.
The market risk you have to take into account while bidding for such projects.
Yes. Yes, international definitely.
What is the mix between the fixed price contract and the variable price contract in this order backlog of almost INR 10,500 crore? Can we just give me the breakup in terms of percentage?
Around 80%, 20%, 80% around which is covered by escalation and 20% are fixed price contracts where we have to estimate escalation.
These should be mostly overseas contracts, right? Fixed price.
Mostly when one of the contracts are even in India, like which we have taken from Adani for West Bengal project.
West Bengal project. Road project, okay. Sir, you had said in the opening remarks about the equity, in the re-balance equity requirement being handled. What I can see is like, total equity invested is INR 812 crores and PMI received is INR 294, INR 295 crores. What is the total equity required, including PMI and excluding PMI, and how much have you invested? If you can give breakup including PMI and excluding PMI. Then, in terms of years.
Excluding PMI, which is typically will depend on how the inflation index moves. Excluding PIN and as well as including the last project 61, that is the bus equity project, total equity requirement is INR 247 crores for the HAM projects, which typically
How much, sir? How much, sir?
INR 247 crores. INR 247 .
Yes, sir. Sir, the total would be how much including all 11, excluding PMI?
INR 247 crores + 813 crores
Okay. That is excluding PMI. Okay. How much is invested so far with one three-
Invested INR 830 crore, as you said. INR 830 crore is invested. INR 247 to be invested over two years, 2023 and 2024. INR 163, 2023, and INR 84 in 2024.
Sir, including PMI, what would be that number, sir?
Including PMI. PMI number will vary, but based on our current budgeted PMI.
Mm-hmm.
Against estimated INR 380 crores of equity, we have received INR 294 crores. Another INR 70-80 crores yet to be received. That. This will change as project goes, right? This is more variable. The committed equity is what we have already.
Basically, sir, our equity is fully invested in all the 10 operational projects and only just INR 180 left on 10 under construction and operational mix of both.
Out of INR 247 crores, approximately INR 115 crores is pertaining to the last project, Baswantpur, which is yet to be financially closed. If you reduce that, then the net investment to be done is INR 130 crores on the.
Right.
Under execution, HAM projects.
That's interesting. You know, on the execution side, you said Maldives project is expected to start by Q3 and Q4. What about this NTPC solar and the Mumbai MMRDA project? Any updates, like, and this solar obviously it has been for quite some time now in the order backlog, but solar price is on non-renewing.
Could you repeat your question?
Sir, in terms of the order backlog, NTPC solar project, what is the status? Is that it is going to remain in the order backlog or we cancel it because the module price?
NTPC solar project is going on, so it is in the order backlog. Yeah.
What about the increasing module price, sir? Any cushion we have, or we have to pay penalty for that or what is the status as of now, sir?
As of now we are progressing without modules, and we are discussing with the authorities.
Mm-hmm.
Till now we have not reached any solution.
Sir, on the last question from my side on the deals with KKR and NIIF, what is the outstanding equity and debt in Chennai ORR as of now?
Debt is approximately INR 650 crores in Chennai ORR.
Mm-hmm.
Equity invested equity is approximately INR 189 crores.
This is including less funding and some debt, the equity of INR 189 crores?
No. This is basic equity and support given by Ashoka Buildcon is approximately INR 250 crores, which will be-
Yes.
returned when the deal happens. When the project is completed.
Sir, on these five projects, Ghodbunder, Narwar, so what is the current financial status of outstanding debt and the equity in terms of basic equity and support?
On the five projects? KUT projects?
Five projects. TC, yeah, KKR and everything was from the-
Yes. In these projects, approximately INR 2,200 was the invested equity and support debt, which we are liquidating at INR 1,337. This is the position. As of April 1, 2022, project typically is theirs. We are just finishing the.
Uh-huh.
We are taking care on their behalf. Once the transfer happens, it will be their project.
Basically, sir, this equity, what is the breakup between equity and support debt, if it is possible to give?
Equity is approximately INR 735 crore, and debt is the balance.
Balance is support debt. Okay.
This debt is inclusive of both kind of debts. Some for construction debt also. Construction is many times funded part equity, part debt. Then debt also is in the form of support debt, majorly for projects like Sambalpur.
Sambalpur. Got it. Okay, sir. That's all from me for the questions and comments. Thank you and all the best.
All right.
Thank you. The next question is from the line of Ashok from Elara Capital. Please go ahead.
Thank you so much for the opportunity. Sir, I had two questions basically. First, have you started with the Adani road project in West Bengal? I mean, start from Q2 onwards or something, if you can just provide an update on that.
Yeah, this project is already started and 12% progress has been done on this project.
Okay. The second question is, so we'll receive around INR 600 crores, so from INR 140 crores from the KKR deal, as well as INR 450 crores from the Chennai ORR by September or probably Q3 onwards. What are we gonna use that money for? Are we going to pay off our debt on standalone basis, or are we going to give it as a dividend to our shareholders or something? If you could provide some guidance on that.
No, I mean, if we will come to the stage when we are ready, there could be both options you're talking about get on certain projects if required. Otherwise, I think, we'll take the step when we are very close to the realization of the cash.
By when will we get the money? I mean,
We should be-
Will it be-
The longstop date is September, so somewhere around that period, maybe depending on permission from NHAI, it may be plus minus one month, two months. Otherwise we expect that September is the longstop date.
Okay. Thank you. Thank you so much, sir.
Thank you. The next question is from the line of Nikhil Abhyankar from DAM Capital. Please go ahead.
Thanks for the opportunity, sir. Most of my questions have been answered, but I would like to go back to the margin. Historically our margin has been in the range of 11%-12%, and some of the companies have also seen a sequential increase in their margins in Q1. What exactly is the reason you're saying that will stick around 10%, irrespective of the international orders?
Our order book is a mix of projects which are bid at various margins. The HAM project would be bid at 13%, EPC around 10%-11%. The new entry level projects may be slightly lower just from an entry perspective. From that perspective, the mix would typically result in a 10%. This is also taking into account that the escalation continues to be as it is. If the escalation improves, the commodity prices reduce, then this margins could go up.
Is it fair to assume that the share of EPC execution will be way higher in this financial year?
Yeah, that is true.
Just, can you give us a break-up of it? What can be the revenue share from each segment?
Immediately I would not be in position to tell you what is. Because HAM is approximately INR 3,000 crores, of which almost 65%-70%, 60% would get over by March 2023. Rest all will be EPC contracts. Out of the total revenue estimate of around, say, INR 5,000-INR 5,500, INR 2,000 would be HAM-contributed by HAM projects and rest would be EPC, either road or other sectors.
Understood, sir. That's all from my side. Thank you.
Thank you. The next question is from the line of Parvez Akhtar Qazi from Edelweiss Securities. Please go ahead.
Yeah. Good afternoon, sir, and thanks for taking my question. So couple of questions from my side. First, how do we see the competitive intensity in the various segments where we are bidding? Going ahead, what is the kind of mix in terms of order intake from various segment is what we are targeting?
Yeah. Focus will always remain on highways. This could be mix of HAM and EPC, NHAI, MoRTH, NHAI, NHIDCL, or it could be even states like we did Bundelkhand Expressway and all. It's all the opportunities which are coming up in Q3, Q4 will decide the mix. Our definite strength is highways and that focus will always remain. In addition to highways, we are simultaneously developing our power portfolio, railways portfolio and building portfolio. While doing this, definitely there are challenges in terms of PQ, TQ and getting JV partners and bidding, like with, you know, getting entry into this sector and getting established. This is a phase when we are developing new verticals, so little overheads are also going up.
Sir, what is our stance on the competitive scenario for NHAI? I mean, especially post-COVID, we have seen very significant competition there. Do we expect that it will moderate this year or we expect it will probably remain at these levels only?
It's very uncertain to predict, you know, competitive aggression in the market. Last year we have seen a huge aggression. Going ahead, I don't know, Q3, Q4 should show enough orders, and those people who have taken aggressive projects also will understand what exactly they have done. Reasonable sense should prevail. Looking at the qualifications which have been diluted, we do not know whether new players come in, jump in, whether aggression will remain, not remain. That is why we have decided to ourself put into various sectors and become all around EPC player.
What is the status of land availability for the eleventh HAM project and also for the Banur-Kharar project?
The land availability for most of the project is 80%+. Except one project which we're suffering is Punjab, which is IT City Chowk project. Other than that, we are comfortable on land, as well as other HAM projects are comfortable. Elara has very straightforward in giving COD. If land is not available, they are even ready to descope it. Land is not going to really affect the portfolio to a major extent.
Sure. Just one bookkeeping question. What is the CapEx that we incurred in Q1 and what is the equity that we included in Q1?
CapEx in Q1 approximately INR 15 crore and equity invested in Q1 was INR 77 crore.
Thanks, sir. All the best for future.
Right.
Thank you. The next question is from the line of Jiteen Rushe from Axis Capital. Please go ahead.
Thank you for taking my question. Sir, on the CapEx spend, what is the target for this year because you have done INR 9- INR 10 crore now, so and full year target?
We have approximately budgeted total CapEx of approximately INR 150 crore, where the new projects which will take off in Q3, Q4 will require. This is at approximately INR 120-INR 150 crore in what CapEx we intend to do by March 2023.
This high CapEx trend we can expect in 2024 also because many projects will come into execution. By 2023 we'll see that high CapEx and 2024 we see suppression in CapEx. Any thought on that, sir?
I think so, this CapEx should be sufficient to take new orders also. FY 2024 should be typically not so high.
A few bookkeeping questions from my side. If you can, give the June ending numbers for debtors, creditors, inventory, mobile advance, retention and unbilled.
For the June ended, the debt position was around 1,000 odd crores against which advances was around INR 442 crores.
INR 442 crores.
Around INR 840 crores, yeah. Trade payables INR 847 crores and unbilled revenue around INR 200 crores.
Retention, sir, and inventory.
Inventory is what I said, 1,187.
INR 200 crores. Sorry, how much, sir?
Inventory is INR 120 crores.
Inventory is INR 120 crores.
WIP, which is called unbilled revenue-
Unbilled is.
-is around 1,180. 1,200, yeah.
Sir, retention, is how much?
Sorry?
Retention money outstanding.
Retention money would be approximately INR 183 crores.
INR 183 crores.
Yeah.
Sir, in terms of order inflow, so what is your guidance for this year? Because our first quarter has been really good, and since Q4 the order inflow has been you know, really good and we have been accumulating good order backlog and now the focus is on execution. Any thought on what is the target for order inflow this year, and also what is the current executable order backlog?
Order backlog, I told you it's INR 15,000 odd crore.
I am asking executable. There could be projects which are yet to start execution. What is the current executable order backlog? Because you have once said INR 11 billion number.
There are only two or three projects which are yet to start. Others will all take off in Q3, Q4. Maybe one or two projects will go to one of next year. We can say around 13,500-14,000 is what will come in by Q4 this year. Yeah.
Sir, the order inflow target for this year and what could be the mix in terms of order?
The ministry has been aggressively announcing that they want to really bid out more than 8,000 kilometers this year. What they have done is only 2,600 in Q1 or till date. Q3, Q4 should throw up a lot of bidding opportunity, particularly with Ministry of Road Transport and Highways. Also some of the other states would throw up a good opportunity. Other than this, railways we feel will throw up a good opportunity. In order intake, our target is around.
Yeah. Sorry, how much, sir?
order intake would be around INR 6,000-8,000 crores we should bag in Q3, Q4.
This is the additional we're talking about for next eight monthly cycles that is for the year. Sir, on the Jaora-Nayagaon, when can we expect any conclusion in terms of the deal? Because I think we were in advance talk last time.
We are almost in serious discussions on the documentation part, and we should be completing any time, so maybe a week or two's time to see some outcome.
Okay. We can see the announcement in a week or two then. Okay, sir. That's from my side and all the best. Thank you.
Thank you. The next question is from the line of Mohit Kumar from DAM Capital. Please go ahead.
Sir, thanks for the opportunity once again. So my first question is, when you talk about power segment, are we talking primarily about T&D, state T&D opportunity or do you still think, you know, you'd like to do more solar or solar is a complete no-no right now, no-no going forward?
Since the EPC can be T&D or it can be solar. Now, only what precaution we need to take going forward is not taking any fixed price contracts. Our focus will be on contracts where escalation is possible.
Does it mean that you're looking only for private EPC contracts? Because I believe that all the PSU contracts constitute-
No, all the PSEs are also coming up with variable bids. Particularly for solar, the models are now being provided by government. They are according to the new policy. They'll come up with this, probably this policy where model part will be taken care by them.
Understood, sir. Secondly, sir, from the sale of Macquarie, if I believe there'll be a tax shield available, right? That will reduce our outgo from the sale we shall do in the future. Is that a fair assessment?
You know, a tax shield from what perspective, sir?
From the sale of the toll road which you're doing at lower than book value, right?
No. I mean, I don't have no tax shield. I mean, there would be minimal tax, capital gains tax, but otherwise there's no tax shield as such available.
Okay, sir. I'll take it offline, sir. Thirdly, on, sir, what is your margin aspiration in medium term? Are we aspiring to go back to the 11.5%?
This will all depend on prices, commodity prices, bidding intensities. I think it will be in the range of 9%-11%. Or maybe around 12% if opportunities are better.
Lastly, sir, are you seeing any BOT opportunity from the NHAI or some other states?
Not really, anything significant.
Understood, sir. Thank you and all the best. Thank you.
Thank you. The next question is from the line of Vibhor Singhal from PhillipCapital. Please go ahead.
Yeah. Thank you, sir, for taking my question again. Sir, just following up on Mohit's question which he asked just now. I think what we're trying to ask is that as you mentioned that we have invested INR 2,200 crore of equity into the Macquarie portfolio, and we are selling it for INR 1,300 crore. Is there a capital loss that we would be booking, which will give us the benefit of any tax credit that we can utilize thereon? Or will-
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Hello. Hello.
Hello. Yes, sir.
Yeah, I think so. Can you hear me?
Yes, sir. Very much.
Yeah. There would be capital losses, which will be available at ACL level to be absorbed in future.
Okay. That would be at ACL level, right? Because the investment has been made from Ashoka Buildcon level, would that also result in some tax benefits? What he meant by tax shield is probably tax benefit that we would get from this sale, which we can utilize in the future years. If yes, is there any quantum to it that you can probably provide at this point of time?
At present, at ABL level, there would not be any significant movement because ABL will continue to hold ACL as a subsidiary.
Okay. Right. Got it. The benefit will all be at the ACL level.
Right.
Got it. Sir, just one small more question on the order book. Sir, two projects. One is this Banur-Kharar project in the EPC road segment, and the other is the Kwaram Taro in Assam. These projects haven't seen any execution for the past four to five quarters. Any specific reason that these projects are not basically showing any progress? Are they stuck somewhere from land? Yeah.
To the Assam project, we have just received appointed date.
Okay.
Progress will start in Q3, Q4. Q3 we will show some figures, and Q4 also.
Mm-hmm.
Which was the other one?
Sir, Banur-Kharar.
Yeah. That also is likely to start in Q3.
Okay. Sir, these orders were in our order book since Q1 last year, so it's the fifth quarter-
After only getting complete land and completion, then only appointed date is given. The appointed date has to be.
Right.
Yeah.
Sir, now the
Start of work is only after appointed date.
Got it. Sir, now the follow-up question is, are there any projects in the order book right now which do not have that appointed date and which could see no execution for the next four, five, or maybe two, three quarters?
Two, three quarters, there's only one building project of hospital of PCMC, which may not see, you know, going ahead, progress in next two quarters.
Okay. Apart from that, all the projects that we have in the order book, they're all under execution and they have all the land acquisition and appointed date.
Yes.
Got it. Great, sir. Thank you so much for taking my questions, and wish you all the best again.
Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Ashish Shah for closing comments.
Yeah. On behalf of Centrum Broking, I'd like to thank all the participants for attending this call. Also a big thank you to the management for giving us the opportunity to host the call. Sir, any closing comments from your side?
We thank all the investors to have joined the call. If you have any follow-up questions or any queries or inquiries, you can always connect with me or Stellar Advisory for further clarifications. Thank you.
Thank you. On behalf of Centrum Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your-