Ladies and gentlemen, good day and welcome to the Ashoka Buildcon Limited Q4 FY 22 and FY 22 Earnings Conference Call, hosted by Anand Rathi Share and Stock Brokers. 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. I now hand the conference over to Mr. Meet Parikh from Anand Rathi Share and Stock Brokers. Please go ahead, sir.
Thank you, Peter. On behalf of Anand Rathi Share and Stock Brokers, I welcome everyone to the Q4 FY 2022 and FY 2022 full year earnings call for Ashoka Buildcon Limited. From the management side, we have Mr. Satish Parakh, Managing Director, and Mr. Paresh Mehta, the CFO, with us. We will start with the opening remarks from the management regarding the industry results, and post which we will open up for the interactive Q&A. Over to you, sir.
Yeah, thank you, Meet. Good afternoon, everyone. A warm welcome to everyone on our earnings conference call for quarter ended and year ended 31 March , 2022. Along with me, I have Mr. Paresh Mehta, our CFO, on the call. Let me start with the highlighting key developments in the financial year 2022. We have finalized the long-awaited equity sale of 6 projects, and we'll be able to provide exit to SBI Macquarie, private equity investor in Asia. We have registered highest ever revenue till date, and we have achieved highest order intake in any financial year and recorded highest closing order book. Let me give an update on the equity sale of Ashoka projects.
As mentioned earlier, we have successfully entered into 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 to be completed by September 2022 after receiving required approvals from lenders, NHAI and other relevant authorities, and completion of certain conditions precedent. We have received approvals from a few lenders and some permissions from NHAI. We are in the process of completing the balance CPs. The deal transfers the entire share capital of these five realty projects, including repayment of shareholders' loan for an aggregate consideration of INR 1,337 crores. The total proceeds will be utilized to facilitate the exit of SBI Macquarie from Ashoka Concessions Limited, allowing SBI Macquarie to exit the company fully.
The transfer of these SPVs will reduce the consolidated project debt of ABL by INR 3,090 crore. Also, we have executed a share purchase agreement with National Investment and Infrastructure Fund for the sale of 100% equity of Chennai Outer Ring Road, for an aggregate financial consideration of INR 686 crore. Out of INR 686 crore, ABL is expected to receive INR 450 crore, that is INR 250 crore for loan repayment and around INR 200 crore towards its 50% equity stake in SPV. Post this transaction, the company will remain with the following major projects in highway portfolio: 74% equity stake in one toll project, that is Jaora-Nayagaon, three fully owned annuity projects, that is Hungund-Kudala, Bagewadi-Saundatti, and Kosi Bridge, and fully owned portfolio of 11 HAM projects. As mentioned earlier, we are in discussions for the equity sale of Jaora-Nayagaon project.
Coming to HAM projects, we have executed construction agreement with NHAI for INR 1,079 crore for the development of six-lane access-controlled greenfield highway from kilometer 162.5 to kilometer 203.10. That is Baswantpur to Singnodi, a section of NH-150 on Hyderabad-Chennai road under Bharatmala Pariyojna. The construction period is 912 days, and the operation period is 15 years. The total equity requirement of all 11 HAM projects is about INR 1,080 crore, of which we have already invested INR 739 crore as of March 2022. Coming to our order book, as mentioned, we have received a robust order book inflow of around INR 9,793 crore from 1 April 2021 till date.
Some of the key and large orders above are, we have received LOA from NHAI of INR 829 crore for construction of six-lane from Belagavi to Sankeshwar Bypass on NH-48 in the state of Karnataka on EPC mode. We have received an LOA for a railway electrification order of INR 618 crore in the state of Assam from Northeast Frontier Railway. We have also received LOA for MCGM, which is INR 110 crore for construction of a sewage treatment plant based on SBR technology. As I said earlier, we have executed a concession agreement with NHAI for INR 1,079 crore for the development of Basavantpur-Singnodi, which is a section of NH. The breakup of the INR 14,731 crore order book as of 31 March end.
Road projects comprise around INR 7,906 crore, which is 58% of our total order book. Among the road projects order book, HAM projects are to the tune of INR 2,454 crore, and EPC projects are to the tune of INR 5,452 crore. Port, railway, and others account for around INR 2,258 crore, which is approximately 17% of our total order book. Railways contribute around INR 2,177 crore, which is 16% of the total order book, while the railways stood at INR 1,236 crore, which is 9% of the total order book. The EPC order of CGD is to the tune of INR 65 crore. The current order book, including the projects received post March, stands at INR 14,633 crore.
Let me reiterate that our focus remains to build strong EPC business in segments of highways, railways, port, railway, and buildings. The current order book of INR 14,633 crore provides us with a good visibility of EPC business growth. On assets portfolio front, we have already built 11 project portfolio in terms of new project building. Our priority will remain for HAM projects and strengthen the HAM project portfolio further. This is all from my side. I will now request Mr. Paresh Mehta to present financial performance of Q4 FY 2022.
Thank you, sir. The financial release for the quarter has been uploaded on the stock exchanges and on the company's website, too. I believe you all may have had an opportunity to go to them. Now, I will present the financial results for the quarter ended 31 March , 2022. Starting with the consolidated results, the total income of Q4 FY 2022 grew by 15% year-on-year to INR 2,057 crores, as compared to INR 1,780 crores in Q4 FY 2021. EBITDA stood at INR 632.6 crores in Q4 FY 2022, with a margin of 30.8%. Profit after tax is at INR 224.6 crores in Q4 FY 2022.
Now, coming to the standalone numbers, the total income for Q4 FY 2022 stands at INR 32.7 crores, compared to INR 1,433 crores in corresponding quarter last fiscal, a shrink or growth of 30.2%. EBITDA for the quarter was at INR 219.8 crores, with an EBITDA margin of 13.5%. The company reported net profit after tax for INR 188 crores in Q4 FY 2022. During Q4 FY 2022, the UT division recorded a total collection of INR 269 crores as against INR 261 crores in Q4 FY 2021 and INR 257 crores in Q3 FY 2022.
Total consolidated as of 31 March , 2022, we get INR 6,698 crore, of which project debt is INR 5,961 crore, of which INR 3,090 crore stands for project debt of five UT projects. NCDs stood at INR 250 crore at retail level. The standalone debt stood at INR 486 crore, which comprises of INR 201 crore of equipment loan and INR 25 crore of working capital loans. Out of the total consolidated debt of INR 6,698 crore, INR 3,900 crore will be transferred along with five SPV to UT. Post the state transition, effective consolidated debt would be INR 3,608 crore.
Q4, company has initiated the sale of its investment in GVR Ashoka Chennai ORR JV, a joint venture of the company, for which share purchase agreement with NIIF has been signed for a consideration of INR 650 crores, subject to certain adjustments specified in the SPA towards the equity investment, loans given and other receivables from the said joint venture. Accordingly, the said investments, along with loans and other receivables amounting to INR 346 crores, have been classified as asset held for sale. With this, we now open the floor for question 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 their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use the handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Nikhil Abhyankar with DAM Capital. Please go ahead.
Hello, sir. Thank you for the opportunity. Sir, congrats on a good set of numbers, first of all. And, sir, I just wanted—I have had two questions. So can you give us a revenue margin and order book guidance for FY 2023?
So FY 2023 looks very good with the program of Ministry of Road Transport and Highways, and they are really very aggressive in that planning around 18,000 kilometers of roads in NHAI, MoRTH, NHIDCL, and state entities together. So we feel we should be able to... The order entry should be 10,000 plus in this year, and revenue guidance, it should grow by 20% to 25% in this year.
Even our current balance order book is also quite significant.
Yeah. And the margin, sir?
Margins will remain same what we have been-
Yeah.
- already targeting the same margins.
Somewhere around, 13% to 15%?
Around 11% to 12%.
11, okay. Sir, and what... So, you talked about this Chennai ORR. So will we book any gains through the sale in Q1 FY 2023?
We expect the sale transaction to happen Q1, hopefully, or latest by Q2. So the moment it happens, there could, there would be possibility of a gain book based on the price which we have been saying.
Okay. And, sir, any further updates on NTPC EPC project that we had? Did we reach any middle ground with the department?
No, NTPC is, we are proceeding with all balance works, except the modules.
Okay. And one last final question, sir. Sir, what is the status of Jabalpur asset sale?
So you're referring to Jaora-Nayagaon asset sale?
Yes, sir.
Yeah, the Jaora-Nayagaon asset sale, we are in talks with the potential investor, and we expect it to close as early as possible. We have two investors, Ashoka Buildcon and Ashoka Concessions, along with Macquarie, as a separate investor there. So, we are negotiating with a potential investor.
Okay. And just if I may add one more, sir, are we looking to add more solar EPC projects?
See, solar EPC, we will evaluate if it comes across.
Sure, sir. Thanks a lot. That's all from my side.
Thank you. Our next question is from the line of Ashish Shah with Centrum Broking. Please go ahead.
Yeah, good afternoon, sir. Thank you. First question is on the Belagavi-Khanapur project. Over the last couple of quarters, we are not seeing much progress in terms of execution. Just wanted to check what is the status there?
See, Belagavi-Khanapur actually has a major bypass of 10 km, and this got relieved only after pre-COD we got. So we got pre-COD at 56%, and now Belagavi bypass is released, so we'll see progress in coming months.
Sure. Okay. So by when do you think this could get completed, within 2023?
One year exactly from now, so-
Okay. So, by and large, within FY 23.
Yeah.
Right. Also, on some of the newer projects, on the building EPC side, if you can just highlight where we are in terms of being able to start the work, especially, Maldives, the Zodiac Hospital one, the sewage treatment project in Mumbai, if you can just highlight.
So all these projects were basically expected to start in Q2. Maldives, we are yet to get clearance from Exim Bank to start the project, which we are expecting in Q1 or maybe early Q2. Jodiek Hospital, again, same thing, either we get it in Q1 or maybe early Q2. So sewage treatment, though, we have signed the LOI, agreement is yet to be signed, which will happen in Q1, and real project will take off in Q3, Q4.
Okay. In Maldives, sir, is there any chance of the order getting canceled? I mean, because if they're not able to tie up funding, is there any possibility of that project being taken out?
Well, there is absolutely no chance of this project being deleted. It's on priority of government, and definitely it will happen.
Right, sir. Thanks, I'll come back in the queue. Thank you.
All right.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Our next question is from the line of Vibhor Singhal with PhillipCapital. Please go ahead.
Yeah. Hi, good afternoon, sir. Thanks for taking my question, and congrats on great execution, again. So my question, so got a couple of questions. The first question was, in terms of the remaining HAM projects, the four packages of Tumakuru-Shivamogga, and the complete Kandi-Ramsanpalle project. What is the status on these projects, and when do we expect any COD for these projects, going forward?
Tumakuru, Shivamogga, PS1, COD is already recommended.
Okay.
PS2, we'll get in the end of, maybe Q1 or early Q2. PS3 and PS4 are,
fresh.
They just started, should go getting by, so yeah, maybe into next year.
You might have just started there.
Beg your pardon?
Same with the Kandi-Ramsanpalle project also. There also-
We also, we are expecting in Q2.
Yes, sorry.
We get COD in Q2, yeah. These are all at advanced stage of completion, yeah.
Got it. Got it. Sure, sir. Also, sir, my second question was on the margins front. I mean, this quarter, we saw margins dip slightly, though not very sharply.
Margin front, definitely there was pressure due to, you know, on commodity prices going up.
Right.
And also fuel prices going up, which were not exactly matching with the pass-through available in the project. But of late, if you see, last 8 to 10 days are very positive after government taking certain measures on export and import duties. So steel prices are now coming down to the normal, and cement also will follow, is what we see. So going ahead, we'll be able to retain the projected margins. This is what is-
That's direct to... Got it. Sir, during the course of this 11% to 12% margins, in next year, should we see more softening in Q1 or Q2, and then maybe pick up in Q3, Q4? Or do you think next quarter itself should be good enough?
The pick up, see, normally, pick up will happen only in Q3, Q4. Q2 is affected by monsoon badly, so it all depends upon how much it affects, in which areas it affects. But, we will see decent growth in Q1, and Q3, Q4 will be our best growth year.
Okay. So got it. Last question from my side. I know it is difficult to predict, and I think there are multiple permissions which are remaining. But any timeline that you believe that you would be able to complete the BOT sale deal, and the cash could be in our books and Macquarie could be provided? When do you think this entire thing will get completed, in your estimate, if I may?
Yeah, these are at advanced stages now. So definitely, September is our targeted timelines.
Okay.
But even if a delay happens, it could be another 1 or 2 months. It cannot go more than that.
Got it, sir. Got it. Great, sir. Thank you so much for taking my questions, and wish you all the best.
Thank you.
Thank you. Our next question is from the line of Vasudev with Edelweiss. Please go ahead.
Hello. Yeah, thank you for the opportunity, sir. So the first question is, what is the pending equity infusion in the HAM projects? And, if you can give the year-wise schedule for the equity infusion?
Yeah. So, total equity to be infused, including the latest 11 projects we have got, that is, the Singnodi project, we have total equity, INR 35 crore. Of which, INR 255 crore will have to be funded in FY 2022-23, and 90 crore in FY 2023-24.
Okay. Okay, got it. Thank you. And what was the CapEx that we did in Q4, and what is that we're planning for FY 23?
... So CapEx is almost to the tune of around INR 90 crores. And for 2022 to 2023, we are expecting a CapEx of approximately 150 crores, 125 to 150 crores.
Okay. 125 to 150. For the Q4, can you give the revenue break up between the segments, like road, power, railway, et cetera?
So on the for Q4, on road sector, the total revenue was INR 1,100 crores. On the power, it was INR 267 crores. On railway, it was INR 136 crores. And other sectors put together was approximately 50 odd crores.
Sorry, can you repeat?
50 crores.
50 crore. And for railways, you said INR 136 crore, right?
One thirty-six.
Okay. And what would be these figures for FY 22 as a whole?
For FY 2022 as a whole, it would be approximately for road sector, INR 3,501 crore.
Okay.
INR 408 crore for power, INR 448 crore for railway, and balance, approximately INR 130 crore for the other, like CT smart.
Okay. Sir, for the Jaora-Nayagaon project, you said that we are in advanced stages of discussion. Any timeline by when we can expect this?
As I said, we are under discussions with investors, and we expect it to be closed in a proper time. It all depends how all things fall in place.
Okay. So could we expect it in at least FY23, or it can spill over to the next year?
Should definitely happen in FY 2022.
Okay, that's great, sir. One last thing, what are the debt levels that we're targeting for FY 23?
Expect 23, and with new projects to be executed, the balance is to be executed, and we would be in the range of around INR 700-odd crores, INR 7,000-odd crores.
Okay, INR 7,000 crore. Okay, that's it from my side, sir. Thank you, and all the best.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Our next question is from the line of Jiten Rushi with Axis Capital. Please go ahead.
Yeah, good afternoon, sir. Thank you for taking the question, and congratulations on super quarter. So, on the question, we all have been so any progress in on that side, sir?
So Ganga Expressway, we have not participated as an EPC contractor. So we are expecting order inflow from NHAI for the projects.
Any outstanding bills as of now in NHAI, or are we submitting them?
There are some things on the construction.
Sir, again, on the balance sheet numbers, if you can provide unbilled revenue, mobilization advances, and the retention money as of March?
Yeah, I will do that. One second. So the total debt as of March 2022, total debt as well, including old and retentions, is INR 1,112 crore. Unbilled revenue is around INR 813 crore. Total receivable is around INR 1,926 crore, against which we have INR 408 crore of advances. And unbilled revenue is around INR 600 crore. So,
Sir, I'm not able to get you. So you said, sir, unbilled is around INR 813 crore. You said debtors, which is including retention, 1,012-
Of negative and positive impact is INR 613 crore.
6 13 crores is what?
Unbilled revenue. Net unbilled revenue.
Okay, net unbilled revenue. So, sir, mobilized advance you said is INR 408 crore, right, sir?
Yes, yes.
Retention, exact number can you provide, sir?
Retention, INR 232 crore.
Sir, on the quarterly result, we can see other expenditure going up, so largely gross margin declined by 30 basis point. But, majorly the EBITDA decline was due to higher other expenditure. And can you also explain the increase in other income in this quarter and the negative tax effect?
I didn't get the question, sir.
Sir, my question was on the other expenditure for the quarter, was high, other income was also high, and the negative tax impact. Can you please explain that for the quarter, this final result?
So other income is high basically because we have moved from a 2021 COVID period when quite a substantial portion of fixed expenses were reduced in 2021, which is now back to normal. There are certain CSR expenditures made in other expenses, which is accounted in this quarter. On the income side, there are certain write-backs of payables resulting in additional income. And as I said, on the tax side, there is a saving on tax because we have written off the interest receivable from ACL, which we have written off, and that we have taken as a credit in our tax workings.
Basically, as you said, other income was high, basically because of the write-back which you have done. What would be that write-back?
Certain write-backs and certain, miscellaneous receipts, like insurance.
Okay. And what is the CSR expenditure included in other expenditures, which resulted in the spike?
Around INR 85 million, right.
Okay. And this tax saving is because of the interest reversal, we have written off in ACL, because we received the tax credit, right, sir?
Right.
Sir, in the opening remarks, you said about the share you received from the state sale in Chennai overall at INR 450 crore. So balance is with GVR Equity. Is my understanding correct?
No, no. This is, this is a joint venture with-
Right. GVR. Okay, but sir, you mentioned here that we will be acquiring stake from GVR and supposed to the deal will conclude. So then we will be the 100%, owner of the SPV. So don't— So we only get the whole amount just on the mission?
I mean, it's more of a recalculation. No doubt, we are going to change 100%, but APA will retain INR 450, and balance sheet pass through through APA to GVR Infra as consideration.
Sir, as mentioned in the notes to accounts, this deal is at around 2x price to book, if you add up your equity, receivables and loans given to SPV. Right, sir?
Right.
Yeah, I'll come back in the queue. Thanks a lot, sir. Thank you very much, sir. I'll come back in the queue.
Thank you.
Thank you. Next is the line of Parikshit Kandpal with HDFC Securities. Please go ahead.
Hi, sir. So my first question is on the balance sheet. So can you please reconcile this, loans item, which is INR 1,094 crore, which has become zero now?
I'm unable to hear you.
In the balance sheet, standalone balance sheet, there is one item in the non-current asset side, which is loans of about INR 1,094 crore in March 2021, which has now become zero. I think this has gone into current assets. Can you just reconcile this?
This is loans given to ACL, Ashoka Buildcon Limited, which has now become payable as current, because we expect the deals to happen and all the accounts to get squared off.
Okay, so this is literally not in my time, right? This asset side, so it will come from Chennai overall, right? That's INR 425 crore.
Right, sir.
Okay. So another quick question on other income. So now, how do we read the other income? So on a recurring basis, now the interest which we used to charge on the loans and advances, so now that will get knocked off. Not, not, it won't get any more. So on a recurring basis, the other income will largely be the interest on our DRs and trappings and all other things, right? I mean, there won't be another item, big item here.
Yeah, yeah. Like, other items like miscellaneous, receipts, like, as you said, scrap sale, insurance claims, these kind of items would keep on coming in.
Okay. And just one last question on this ACL, sir. So, when the transaction closes in September, or say, you said maximum, possibly there is another delay of two months, so maybe by Q3 of this financial year. Do you anticipate any further write-offs, on account of, like, large funding for this portfolio for rest of the year? If you can just give some color on that.
As such, we have taken into account all the impacts of the deal which is to happen, and we don't expect any further write-offs.
Okay. And on this cash inflow, which we're expecting from Chennai overall, INR 450 crore. So, and plus general write-offs, which may happen, which will accrue some cash to us. So how do you intend to utilize this cash inflow, sir? So any, any thought there you can highlight in this financial year, how do we intend to distribute this or use this?
So, definitely, we will cross the bridge when it comes, but definitely from a planning perspective, initially, we intend to give it away to Macquarie, the initial portion of around INR 1,200 crore. The balance available will be used for the propping up of working capital and other, some other capital structure decision-making, which will happen at the right time.
Okay. Anything like working on some special dividend or some buyback, any plans on there?
That could be a possibility, because if there is surplus cash, there's no point in keeping the cash at the company level.
Okay. Okay, sir, thank you. Those are my questions.
Thanks.
Thank you. Our next question is from the line of Deepika Mundra with Axis Bank. Please go ahead.
Yeah, hi, good afternoon. Am I audible?
Yes.
Yeah, can you tell me, I mean, this is a basic question, but can you tell me how does the cost of construction change? What was it split earlier, and what is it split now, in terms of because of the value increase, price increases, and also because of the change of team that the government has allowed?
Hello. Yeah, if I understand your question correctly, you're asking the impact of price rise, right?
Right, which is,
Normally, you know, all the NHAI projects or MoRTH projects, there is a pass-through, which is linked to indices of a particular commodity. So now, what happens is, the indices don't move in tandem with the market. There's definitely an impact on the overall working.
Right.
So what normally we follow is we try to delay those kind of purchases. Sometimes the turnover also get delayed. So if you see my particularly Q1, it gives, it will get slightly affected because of this price rise. The decisions have been delayed accordingly, so the progress has been delayed to see. And fortunately, it's now favoring us when government has intervened, and they are taking corrective actions.
Okay. Can you, can you also tell me, the breakup of, cost of construction of say, suppose it is in, highway roads? So the price rise, cement and steel.
So cement and steel should comprise around 30% to 35%. The three basic prices which affect-
Okay.
Cement and steel and cement. Fuel is another component, which normally varies from 10% to 10%.
Okay.
Yeah.
Rest is okay, thank you.
Thank you.
Thank you. Our next question is from the line of Alok Deora with Motilal Oswal. Please go ahead.
Good afternoon, sir, and congratulations on decent numbers. Just wanted to understand this INR 10,000 crore of order inflows which you are targeting. Any bids which we have made, which are yet to open, and from which segments we are looking at these new orders from?
So there are certain bids which are yet to open. There's around INR 3,000 crore, which include railways, metros and some NHAI projects. Order inflows, we are looking from, of course, from NHAI and MoRTH, where they have aggressive plan of 18,000 kilometers to be announced, as against 12,000 kilometers, which we did it last year. Then if you look at railways and metros and semi-high speed railways, they are also proving a good opportunity. Power sector also, distribution programs are now coming up, and they are also coming up with large budgets. So all these three sectors are going to grow good amount of opportunity.
Sure. And sir, on the margins, I believe you mentioned about margin guidance of maybe 11% to 12%, but if you see the margins now since the last couple, 2 to 3 quarters, it's been slightly weaker than that. And you know, so how confident are we on this 11% to 12% margin, sir?
See, going ahead, this volatility will be captured in the new bids. So what we are suffering is only on the fixed price contracts. And the fixed price contract, where we are suffering is, hardly 10% of the entire order book.
Sure.
Margins will definitely be able to maintain at 11% to 12%.
Sure, sure. I think that's all from my side. Thank you and all the best, sir.
Okay, thank you.
Thank you. Our next question is from the line of Devang Patel with RReco. Please go ahead.
Yeah, thanks a lot for the opportunity, and congratulations on the good set of numbers. So firstly, just wanted to understand about the consolidated balance sheet. So from what we understand is that roughly the, if we, net off the liabilities held for sale and assets held for sale, the remaining balance sheet is what is supposed to be the balance sheet that will continue, post, the deal. Is that the right understanding, post the ACL deal?
Right. Right.
In this case, what, any, what will be the adjustment to this balance sheet once the GVR deal is concluded? What will be the changes in that balance sheet, which is there?
What will happen is, this asset for sale, which is an asset, will get knocked off from the balance sheet, and some gain will be booked. As you said, it is 2x. So, whatever excess we get on the equity will be booked as income side.
That will flow through to the net worth, basically?
Right.
This when we are saying, so you are saying the GVR deal is also included in the liabilities held for sale?
No, GVR's change.
... That is the Chennai order on top of the 6,600, which I understand is with regards to the ACL deal, that is those five assets. On top of that, there will also be the Chennai order deal which is not being captured in this balance sheet, right?
No, it is asset held for sale. It's part of that.
Asset held for sale includes the five assets plus Chennai order as well?
Right.
Okay, okay. And so, apart from this, just wanted to check. So I think one of the earlier participants mentioned regarding dividend and/or buyback. So any, obviously, we all understand that buybacks are more friendlier than dividends on certain counts. So any thought process or any requirement that we have if we want to undertake a corporate action like a buyback, what kind of capital structure do we need to be at? And what kind of thinking would the promoter have with regards to, let's say, post this deal, what kind of capital structure we will reach, and what will we have to do to reach, let's say, if we need to reduce the debt or something, how will we go about it?
So, see, for doing a dividend, I don't think that there's a challenge from the group's point of view. On a buyback structure, there are certain compliances required to be done, for post doing the buyback, which we have to see, because unless those criteria are fulfilled, we will not be able to. In case the deal goes through, definitely we are confident that we would be eligible at least for doing a buyback. And once the buyback is done, it will all depend on what kind of amount of buyback we are looking at. Numbers could be anywhere than around the
So currently, sir, on that front, we have around INR 700 crore cash in bank with us, and plus, I think some small investment. What amount—Because we understand it is a, it is not an easy amount, easy thing to decide right now, but depending on the order book requirement, the growth requirement and all, what is, what would call it, what is the logic of thinking about what would be surplus cash as per, us?
Actually, anything above around 50% would definitely be surplus. 50% could be utilized for growing business, because we have HAM projects to be taken up, periodically, so they'll get funded on its own. But, seed capital available will help the HAM projects to progress faster. But as you said, whatever surplus we have now, the 50% should be available for disposal.
Given the current cash balance is around INR 730 crore, you are saying after all the deals and everything, surplus could be what? Roughly around INR 1,000 crore or more total, including this current cash balance?
Yeah, but the current INR 730 cash balance is at the CFS level, which typically is what you call most of the same is parked at the SPV-
Right.
Which is quite extra than MRI. If we actually talk of
Free cash.
Cash balances would be in the range of, as per 31 March, what is denoted at the standalone debt of INR 1,216 crores, plus something from the SPV, which is parked there for just received in 31 March, would be around INR 62 crores, of which more than 50% would be for guarantees and other purposes as lead.
Correct.
The cash balance here would be normally approximately INR 50 to 100 crores, which is and then any further amount receivable from the stake sale.
What is the tentative amount which you are expecting from the stake sale towards this cash balance, which it will add, I mean, after netting off all the liabilities and all?
We've really not worked out that. We'll cross the bridge when we come to it, because there are 3 deals under review. One is the KKR, one is the Chennai order, and the third is in case we get into a Karnataka deal.
We understand we would also have sizable real estate on our balance sheet from the earlier buys, that we would have done. Any thoughts of monetizing that at some point over the coming... I mean, any thoughts on that front?
We do keep on looking at the possibilities of monetizing them. We have been doing a few, but in a very slow, slow pace, where we have given out this land parcel for development purpose to a developer and a recent player who is monetizing it. But we are looking out for possibilities.
Yeah, but just on a very rough, this is what would be the sort of size and tentative market value of this real estate which is lying with us in the balance sheet right now, the Pune, Indore, Nashik, all these areas?
Approximately, we have around INR 270 crore of assets per book value. We should be looking at more or less at least 2 x the price, if not more.
Sure. Finally, just on the order book. We understand normally people say that 15% to 20% order book of order inflow of their existing year revenues is good to sustain the revenue growth. Now, we have a very large order inflow compared to existing year revenue. So what kind of ramp-up in revenues should we expect? And are all the orders that we are showing in our current order book on an active note? And would it imply that there should be a 30% to 40% CAGR in revenues over the next two years?
This year particularly, we are expecting around 20% to 25%. Next year it will all depend upon how the new order inflow stacks up.
Sure, but the current order book that we have does not have anything which is, moving slow or dormant or anything like that. Most of it is moving. Is, is that the correct impression?
... The buildings order particularly are slow moving, so they really will pick up in Q3, Q4.
Okay, that is the 2,200 orders, which is there?
Right. Right.
Okay. Okay. Sure, sure. That's it from my side. Thanks.
Thank you. Our next question is from the line of Anupam Gupta with IIFL Securities. Please go ahead. Hello, Mr. Gupta, you can proceed with your question. Hello, Mr. Gupta, can you just-
Hello? Hello. Hello.
Yes, please go ahead.
Yeah, so, so the question is related to the standalone debt which you have reported, sir. In the balance sheet, the debt appears to be INR 559 crore and cash appears to be INR 144 crore, whereas in the presentation, the number is INR 486 crore of debt and INR 162 crore of cash. So, where is the difference which is not visible in the reported balance sheet?
Second debt is certainly to related party, the debt from our subsidiaries, basically. Those are not external, they are internal debt.
Okay.
486 is the actual external debt.
Okay, and cash, why is the difference in cash?
151 cash balance is talking about is approximately, around say INR 41 crore would be cash received on the last date of the year, which could not be appropriated with the lower amount. And balance around 120 odd crores are cash time balances, which are lent out to time balances lent out to bankers for guarantees and non-fund-based facilities.
Okay. Okay, understand. The second question is relating to the HAM assets. So you talked about Jaora being under negotiation, but what is the status on monetization of HAM? Will you be picking that up, or is it already in negotiation for the monetization of those HAM projects?
We are in the discussions, but, nothing very concrete at this point of time.
Okay. Okay.
We are intending to monetize these HAM projects. For which we have received only one full COD and other five under PCOD already received.
Yes.
After we are eligible to sell them off, almost all projects are there, ready to sell them.
Right.
But with the waiting time, I mean, definitely signals which have been coming, increase in earlier lending rates have helped in establishing a better market price.
Right. Okay. Understand. And just one last question, sir. In terms of order inflows, when you talk about INR 10,000 crore, so the mix, if you see the order book mix in terms of roads has come down versus FY 2021, will that be the target mix for FY 2022 also, or will we go back to roads being dominant?
We will remain road focused, but the how the orders pan out, because today we have large number of players in the market, so we're not very sure what the mix will pan out to be. But definitely our focus will be roads and highways. So our first preference, then railway, then power, and then buildings.
Understand. Okay. That's all from my side. Thank you.
Thank you. Our next question is from the line of Varun Murali, Canara Robeco Mutual Fund. Please go ahead.
Hi, thank you. I had a couple of questions. First question, just wanted to check whether, with regards to your deal with KKR, I mean, do you see any risks to closure there, given the market scenario? And number two, also any update on that because last call in, even in the latest CRISIL rating report, there was mention of some of that arbitration amounts with NHAI. So any update you can provide on this?
So we don't really expect any hindrances in the KKR deal, irrespective of what's happening in the market presently. I think so, markets have been rather buoyant from both perspectives. They have. We have had good toll rate rise also. Interest rate rise are there, but they are not as significant, and they are already factored. So, we don't really feel much challenges in its execution of the KKR deal. Secondly, on the CRISIL note of arbitration, yeah, these are being pursued at high level about arbitration, but many are... We are also taking this into consideration also.
Okay. Just one other question that I had, or in fact, like two other questions, if you could bear with me. This whole standalone revenue that you have, so what is the percentage contribution that you have on the standalone revenue as a result of maintenance that you undertake at these five KKR projects and the Chennai ORR project? So just wanted to get some understanding, like what percentage of revenue would be, would you be booking because of maintenance activities at these projects?
... That could be very minuscule. So with five projects, it would not be really significant. And then, from a maintenance perspective, not more than 1%, 1% to 1.5%.
Okay. And, my final question, I think I heard you say earlier in the con call that you are, where you are giving a debt guidance of INR 7,000 crore. So did I hear that right? I mean, because the number looked a bit off, given the reduction in debt that is likely to happen over the next year.
Yeah, but, there, there are two parts. So because—so technically, I am not factoring the deal, which is where they will be part, because most of the debt is term loan debt, which are typically at SPV level. So, I'm not considering deal as part of the estimation of that INR 7,000 crore. And this INR 7,000 crore will be new projects will be, will be picking up debt. It will actually be more than that also, and some debt being prepaid for the current BOT projects.
Okay. So just to, just so that I get the understanding right, this INR 7,000 crore guidance that you are giving, that's not assuming the deal, right? I mean, because-
Yeah.
Okay. Uh-
Right. Keep going.
No, no, that is, that is all that I have. Thanks.
Thank you. Ladies and gentlemen, in the interest of time and fairness to all participants, please restrict questions to two per participant. Our next question is from the line of Mahesh Bendre with Nirmal Bang. Please go ahead, sir.
Hello, sir. Congratulations on good set of numbers. So a couple of questions from my side. So firstly, I just wanted to understand, we have received annuity on two HAM projects. So, was there any variation in terms of how much annuity you are supposed to receive, and how much you actually received because of GST?
So, we have paid the annuity as per the agreement, just to go penny by penny. But from an extent. It's INR 150 crores in GST.
Right.
INR 112. We have received INR 10, INR 10 will be received in the future. They're talking on the procedure and things, so we receive that same.
So the money that has been received, that has been adjusted for, GST, right? Or actual receivable, we have not, cut the GST, but we have actually raised the bill including the GST.
Yeah. We have raised the bill for that.
So basically, we have received the cash flows that we wanted to, but we still have to pay INR 12 upfront, which we will get it later.
Correct.
Okay.
Which we will have credit at our GST account, which will be cash flow for GST.
Okay. And sir, the second one is on the project Baswantpur-Singnodi, which you mentioned. So the project cost is around INR 1,079 crore, and EPC portion we have mentioned in the order book is INR 790 crore. The difference seems a bit large, so can you just explain that?
It's true that the EPC cost is at INR 790 crore, so around INR 800 crores against INR 1,079 crore. So, that is looked at SPV level for taking care of its, I think then as well as its IDC and other expenses.
Okay. Okay. Sir, just lastly, just wanted to check, how do you see competition in the bidding of HAM and EPC this year?
So we can see there is a large number of players participating, so competition is there, and one needs to be very careful and selective about picking a project.
Okay. So in terms of margins, we would, we, we'll have to go to lower margins to get the projects? Or I just wanted to understand, you know, compared to what we have done previously.
See, normally, bid margins are retained, and this all is about engineering around the project. So, bid margins sacrifice critical finally. We try to retain those margins. Last estimate, we could get around In MoRTH plus NHAI, or what is the INR 285,000 crore. So even though there is a regression, there is definitely an opportunity.
Okay, sir. Thanks a lot.
Thank you. Our next question is from the line of Jiten Rushi with Axis Capital. Please go ahead.
Yeah, thank you for taking my question. So my first question is on Jaora-Nayagaon. So what is the outstanding equity, including sub-debt in the project, sir?
Okay. The equity is INR 287 crore. There is no other debt.
Okay. And sir, on the balance sheet side, we can, we can see contract- Sorry, sorry, sir, I didn't hear you, sir. Can you come back, sir?
There is term loan of INR 165 crore from the financial lender.
... Okay, 1, 2, 3, 5. And so on the balance sheet side, we can see contract assets and contract liability. So, you know, contract assets going up significantly and contract liability coming up. So can you explain us the change in the underlying items in it, sir, in the standalone balance sheet? Hello?
Could you go again, contract asset?
Sir, the contract asset and the contract liability, we can see a significant change. So if you, in the standalone balance sheet, the contract asset is, you know, gone up around 459 contract liability, so there is a change from. We want to understand what is this change and what are the underlying items in it, sir?
Sir, contract asset is basically, unbilled revenue.
Unbilled revenue, okay. So, sir, the unbilled revenue this time is high, but probably you expect this to come down this quarter, or how is it?
It will, it will come down as billing happens, obviously, and as turnover goes, it will be on a product, it will remain in that range. But it is from a total, it will come down by approximately 150 or close.
Sir, on the contract liability, does it include mobilization at all, or how it is, sir?
Yes, it includes.
This increase is because of the higher share of mobilization advance in contract liability?
Yes.
Okay. And, sir, on the Maldives project, obviously, the project you have received a long time back. So is this a fixed price contract or there will be revision in the contract price if you start the work in Q3, as you said in the opening remarks, sir?
This is a fixed price contract, but this is payments are in dollars, so dollar appreciation has already happened. And, more or less, these prices, which have mostly gone up, are now coming to normalized levels. So still it, you know, for that is still, you know, very much within margins.
We don't see any risk to the margin, right?
No, we don't see any risk, unless, again, we see some erratic, price rises.
Mr. Jiten, this is the operator. If you have more questions, please join the queue afresh. Thank you. Next question is from the line of Ronald Siyoni with Sharekhan. Please go ahead.
Good afternoon, sir. I had a couple of questions. Firstly, you know, the WPI inflation, you know, over the last 12 to 13 months has risen in double digits, and month-on-month, it has been increased lately to 15%. So, you know, does that, does it just not cover, you know, fixed price contracts, or are you baking in those numbers, and then you are saying that it's only the 10% impact on fixed price contracts?
WPI generally is not a factored aspect. But as we've already said, on the revenue side also, there are certain increases, like if it's a offshore overseas contract, dollar rates have improved. So that has ensured maintenance of the required margins. And as we have said, okay, our general margins would have been in the range of 11% to 11.5%, but now estimating around 10% to 10.5%. So there could be a marginal rate of 1% to 1.5%. It will all depend how these prices continue to... So at the time of execution, how these prices continue to behave.
As we have said, that these are looking better off in the last few days and in the coming few months. So we believe that the margins will continue to remain off what we are estimating.
Another question is that, you know, NHAI, MoRTH, you know, implementing restrictions or increasing restrictions on bidding with respect to net worth or network of bidding and those kind of things, which were earlier were eased. So this did not, this is not expected to have any impact on lowering competition or any such thing. Is that understanding correct? And one more that, you know, we are seeing a strong growth in, you know, building in those segments. So are you basically concentrated towards government buildings and not towards, you know, category A builders, you know, which will be throwing up ample growth opportunities? Because, buildings you did not cover much, you know, you are not as much optimistic in building segment. Yeah, that is from my side. Thank you.
We are focusing building segment, EPC segment, and these are normally government contracts, or it could be a private contract, but we are not working for builders as such.
Okay.
They are not a realistic player related to this. Yeah.
Okay. That question with respect to competition, haven't you seen easing because of tightening of some norms from FY 2023?
Slight tightening has happened, but that may not completely reduce the aggression in the sector. I think the valuation will remain low for some time more. Yeah.
Thank you, sir. Thank you.
Thank you. Our next question is from the line of Abhishek Mody with Emkay Global. Please go ahead.
Am I audible? Hello?
Yes, you are audible.
Yeah. Yeah, so my question is the same related to the one asked by one of the previous guys. See, you have told the debt level for FY 2023 will be approximately INR 7,000 crore consolidated. Post the deal, you will be left with INR 3,600 crore. So the INR 7,000 crore is assuming there is no deal happens. So if the deal happens, what is the-
As a going concern, okay, if the deal happens, then it should go down to INR 4,000 crore.
Yeah. So instead of the INR 7,000 crore for FY 2023, it is INR 4,000 crore. So there will be a INR 400 crore jump in consolidated debt.
Yeah, that is because new projects are, the HAM projects are being executed. Their debt drawn will be there. That is continuing to keep on happening. New credits will be taken, new debt will be taken. As and when the HAM projects are also sold off, again, the debt will go down. So it's a continuous process.
Okay. Sir, my next question pertains to CapEx. FY 2023, if I'm right, the CapEx is INR 125 to 150 crores. For Q4, INR 90 crores. So what is FY 2022 total CapEx?
Total CapEx is still not more than INR 125 to 130 crore. So let me check that. I'll tell you. I'll come back on that.
Sir, yeah. So my question was because the 90% of the CapEx is done in Q4, am I right? Assuming it is 105, so INR 90 crore was done in Q4. So just wanted to have that clarity. Hello?
I will just check that for you, Abhishek.
Okay.
Okay.
Yeah, that's it. Those are my questions. Thank you.
Thank you. Ladies and gentlemen, this was the last question for the day. I will now hand the conference over to Mr. Paresh Mehta for closing comments.
We thank you all participants for joining on this call. We are happy to take any further queries, if you have, and you may get in touch with us, or with Stellar Investor Relations, our IR team. So wish you all the best. Thank you.
Thank you. On behalf of-
Thank you, everyone.
Stellar Investments and stockholders, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.