I now hand the conference over to Mr. Meet Parikh from Anand Rathi. Thank you, and over to you, sir.
Thank you, Tanvi. On behalf of Anand Rathi Shares and Stock Brokers, I welcome everyone to the Q3 FY22 Earnings Call for us, for ABL. From the management side, we have Mr. Satish Parakh, MD; and Mr. Paresh Mehta, the CFO with us. We will start with the opening remarks from the management regarding the industry, the results, and post which we will open up for an interactive Q&A. Over to you, sir.
Yeah, thank you. Good morning, everyone. We would like to extend a warm welcome to everyone on our Earnings Conference Call for the quarter ending December 31, 2021. Along with me, I have Mr. Paresh Mehta, our CFO. Let me start with the equity sale of ACL Projects. We have successfully completed 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 stakeholders, and completion of certain conditions precedent. The deal transfers the entire share capital of these five projects, including repayment of shareholders' loan for an aggregate consideration of INR 1,337 crore.
The total proceeds received will be utilized to facilitate the exit of SBI Macquarie Infrastructure Management from Ashoka Concessions Limited, allowing SBI Macquarie to exit the company fully. Further, the transfer of these five SPV will reduce the consolidated project debt of ABL by INR 3,166 crore. Post this transaction, the company will remain with following major projects in highway portfolio: 74% equity stake in one toll project, that is Jaora-Nayagaon, in the state of Madhya Pradesh. Four annuity projects, which include 50% equity stake in Chennai ORR. And three fully owned projects, Hungund-Talikot, Bagewadi-Saundatti, and KSHIP, and fully owned portfolio of 10 HAM projects. As mentioned earlier, we are at an advanced stage of discussion for equity sale of Jaora-Nayagaon BOT toll and Chennai ORR BOT annuity.
Also, the HAM projects portfolio, we are evaluating to exit options like InvIT or sell to investors. Coming to industry updates. The rise in addition of National Highway is compared to 13,326 km of road constructed in 2021, and 1,237 km in 2019-2020. In 2021, the construction of roads per day increased to 36 km per day, against 28 km in 2019-2020. In an effort to boost the logistical capacity of India's road network, under the PM Gati Shakti Initiative, the Indian government has stated that the National Highway Network will be expanded by 25,000 km within 2022-2023. The government is expected to increase pace of highway construction. Existing highways will be made into a bigger, stronger, and new ones to provide connectivity to all economic nodes under PM Gati Shakti Initiative.
The target national highway expansion of 25,000 km in FY 2023 will put an impetus on strong project award. The current expansion plan by government is expected to help the faster movement of people and goods. Coming to HAM projects, we have received appointment date for Ashoka Mettupalayam, Shivamogga, that is Tumkur-Shivamogga, Package 4, in the month of October. The total equity requirement of all 10 HAM projects is about INR 1,337 crore, of which only INR 960 crore have been invested as on December 2021. Coming to the order book. As mentioned, we have achieved a robust order inflow of INR 8,526 crore in current financial year.
Some of the key large orders are as follows: We have received an order from MCGM for a sewage treatment plant of O&M with 15 years, and this order is a breakthrough order in sewage treatment for the company. Along with this, we have achieved work orders in Goa on a highway project from MoRTH, amounting to INR 687 crore. We have also received LOA from NHAI, worth INR 829 crore, for construction of six-laning from Belgaum to Sankeshwar Bypass of NH-48 in Karnataka on EPC mode. Recently, we were L1 for railway electrification order, worth INR 693 crore. Also, we have received work order of INR 263 crore from Navi Mumbai Airport. The breakup of INR 12,250 crore order book-...
As on December 2021 is: road projects comprised of INR 7,633 crore, which is 62% of our total order book. Among the road projects, the HAM road projects are to the tune of INR 2,638 crore, and EPC projects are to the tune of INR 4,995 crore. Power T&D other projects account for around INR 1,902 crore, which is 16% of our total order book. The EPC building segment contributed to INR 1,905 crore, which is also 16% of our total order book, while railway stood at INR 729 crore, which is 6% of total order book. The EPC work and CGD comprises of balance of around INR 82 crore.
The total order book, including the projects received and the railway project, where we are L1 in current quarter, stands at INR 14,500 crore. Let me reiterate that our focus remains to build strong EPC businesses in the segments of highway, railways, Power T&D, buildings, and now water treatment. The current order book of INR 14,500 crore provide us with good visibility of EPC business growth. On asset portfolio front, we have already built 10 HAM projects portfolio. In terms of new projects bidding, our priority will remain for HAM projects and strengthen the HAM project portfolio further. This is all from my side. I would now request Mr. Paresh Mehta to present the financial performance of Q3 FY 2022.
Thank you, sir. Good morning, everyone. The result presentation and press release for the quarter have been uploaded on the stock exchange, exchanges and on the company website. I believe you all may have gone through the same. Now, I will present the financial results for the quarter ended December 31, 2021. Starting with the consolidated results, the total income of Q3 FY22 grew by 10.8% year-on-year, to INR 1,475 crore as compared to INR 1,331 crore in Q3 FY21. EBITDA stood at INR 433 crore in Q3 FY22, with a margin of 29.4%. Profit after tax is at INR 389 crore in Q3 FY22. The exceptional items in the consolidated financials is write back of INR 326 crore on account of remission towards investors in ACL.
We have entered into agreement with SBI Macquarie, through which we have reduced obligation to INR 1,200 crore from INR 1,526 crore. Now, coming to the standalone numbers, the total income of Q3 FY22 stands at INR 1,133 crore as compared to INR 1,028 crore in the corresponding quarter last fiscal, registering a growth of 10.2%. EBITDA for the quarter was at INR 150 crore, with EBITDA margin of 13.2%. The company reported loss of INR 694 crore in Q3 FY22, as we have recognized the exceptional item of INR 796 crore - INR 769 crore. The exceptional item in standalone financials is expense of INR 769 crore towards impairment of its investments in equity shares, CCDs, and loans given to ACL.
This is mainly due to sale of equity of five BOT projects to KKR for an aggregate consideration of INR 1,337 crores and giving exit to Macquarie. During Q3 FY 2022, BOT division recorded a toll collection of INR 257 crores as against INR 260 crores in Q3 FY 2021, and INR 243 crores in Q2 FY 2022. Total consolidated debt as on December 31, 2021, is at INR 6,822 crores, of which project debt is INR 5,923 crores, of which INR 3,166 crores stands for project debt of five projects. NCDs stood at INR 250 crores at ACL level. The standalone debt is at INR 649 crores, which comprises of INR 140 crores of equipment loans and INR 509 crores of working capital loans.
Out of the total consolidated debt of INR 6,822 crores, INR 3,163 crores will be transferred along with the five SPVs of BOT projects. Post the sale transaction, effective consolidated debt will be at INR 3,656 crores. With this, we now open the floor for question and answers. Thank you.
Thank you. 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 withdraw yourself from the question queue, you may press star and two. Participants are requested to use only 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 Vibhor Singhal from PhillipCapital. Please go ahead.
Yeah, hi. Good morning, sir. Thanks for taking my question, and congrats on the great execution this quarter. So just wanted to confirm on one thing. I think when we had this call regarding the sale of the five assets to the KKR group entity, we had mentioned that I think we are expecting the write-off to the tune of INR 500-INR 600 crore. Any specific reason that it ended up being significantly higher than what was estimated?
So, when we had, on the call post the transaction, the amount was not including any provision for exit for SBI Macquarie. It was only talking about the projects, on an estimated basis on the projects, of the five BOT projects only. So from that perspective, additional provisioning is on account of the exit to be given to SBI Macquarie, which was accounted in this quarter.
But, sir, why would that lead to a incremental provision in standalone books? I can understand there could be some provision, but why would it be required in our standalone books?
So what happens is the total obligation to be paid to Macquarie will depend on the ACL's net worth, which the ACL's realizable value. The balance has to be funded from ABL's holding in ACL. So from that perspective, this provision of a total INR 770 crores has been provided for in Q3. Probably we can discuss on a 1:1 basis.
Sure, sir.
On a 1:1 basis also.
Okay, sir. And this is the total provision, sir? Do we expect any more provision after this, or this takes care of the entire transaction requirement?
This is the total provision for the valuation of ACL on these five BOT projects. Then we are left with the one project that is Jaora-Nayagaon, which will typically fetch more value than its book. And also, then there are the HAM projects, which are at book almost.
So we do not expect any more, write-offs, maybe going forward, even if we were to sell Jaora-Nayagaon or Chennai ORR other projects?
Nothing very significant.
Sure. Got it, sir. Got it. Sir, in terms of the order book, if I could, basically, get, sir, Satish, to, maybe comment. Sir, I think we've had very strong order inflow, but even then, I think, sir, our order book right now, which is around INR 12,000 crore and maybe INR 14,000 crore, including the L1, we, basically are looking at an order book which is slightly on the softer side of more like 2.5x, 2.8 x book to same. So are we looking at basically, aggressively bidding for more kind of HAM projects? I think it's been some time we won some HAM projects.
One is on that front, and second is I just wanted to check again on the fact that recently the mega projects of Mumbai Expressway were awarded to IRB InvIT Group. If it works for us, would we be open to working for them as a subcontractor, given the mammoth size of the projects that they are?
Yeah. So see, our focus will always remain on highways, and, budget also shows very optimistic, aggression by government to build highways. This will be come on EPC as well as, BOT mode. Recently also, we have won EPC, two highways, one in Goa and another in, Karnataka. So our participation is going to be there in all these highways. And, the projects which are won by major players like Adani and all, we are also taking interest in participating and trying to get EPC part of this portion. So we are open to such, offers in the market.
Got it. Got it, sir. Sir, just last connected question. We recently won this project on BOT basis in the sewage treatment plant. I think we've been testing those waters with, earlier with CGD and now with the sewage treatment. Will we be looking for similar kind of more projects on a BOT basis? I thought that we were basically looking more like either HAM projects or more EPC projects only. But, if similar kind of projects, let's say, come in sewage treatment, CGD or water or mining, are we open to bidding for these kind of projects on BOT basis?
So let me clarify. This is a pure EPC project with operations and maintenance only. That too, paid operations and maintenance for 15 years.
Got it.
This is not a BOT project.
Got it.
Your question of whether we will be open to bidding any of these kind of projects, it will all depend upon structures, availability of finance, if it is available, and if our role is to be a major EPC contractor, then definitely we'll be entering in there.
Sure, sir. Got it. Thank you so much for taking my questions, and wish you all the best.
Thank you.
Thank you.
A reminder to participants, if you have any questions, please enter star and one. The next question is from the line of Bharanidhar Vijayakumar from Spark Capital. Please go ahead.
Yeah. Good morning, sir. So are we interested in bidding for developing solar projects? Because I saw our name in one of the recent solar bids. And if so, you know, why are we bidding for being a developer on the solar side?
We are not trying to be a developer in solar side. What we have done is, we have been participating for EPC part of solar projects.
Okay. Because I remember seeing Ashoka's name in one of the hybrid solar-cum-storage bids recently. That is as a developer, right? If I'm not wrong.
See, there are arrangements where, you know, finance is made available, and we have to play our EPC part in most of these projects. So there are structures, there are structures available, where we actually pay our EPC part and not the investment part.
... Sure. So the idea behind-
Would like to remain as more of a EPC player than a developer.
Sure. The idea behind this bid was someone else will bring in the investment.
Right.
So who would that be?
Absolutely. Absolutely.
Who would that be, sir?
We cannot disclose. These are very strategic names behind this.
Okay.
Yeah.
And we continue to bid-
That's something we are not able to disclose, yeah.
We continue to bid for such projects in the future?
Yeah, if, if EPC, EPC is our strength, and definitely we would like to encash that.
Okay. So, even on the solar EPC side, you know, we are building our capabilities? Because I don't think we have solar projects executed in the past.
No, we are already executing a solar project for NTPC on EPC basis. So already we have experience-
All right.
Now executing solar, yes.
Correct. You're right. Sure. Okay. That's it from my side. Bye.
Thank you. Participants, if you have any questions, please enter star and one. The next question is from the line of Mohit Kumar from DAM Capital. Please go ahead.
Yeah. Good afternoon, sir, and congratulations on excellent quarter, especially on the order inflow. Sir, my first question is, I think you received Appointed Date for all the projects, and I assume that the work on the Panagarh to Palsit also started. How do you expect the FY 2023 to pan out in Q4? Can we expect in FY 2023, INR 5,000 crore kind of, you know, the top line?
Yeah. So let me clarify on appointed dates. Panagarh-Palsit, we have still not received appointed date, but we expect that to receive in this Q4. And other projects where we are L1, but we are not, or we have got LOA also, but appointed date are yet to be declared, like Mopa, highway at, Mopa Airport highway at Goa, we still not received appointed date. Sankeshwar, we have got LOA, but we are yet to receive appointed date. So all this we will receive either in Q4 or Q1 of next year, and definitely these all orders will pick up, as we go along in Q1, Q2, Q3, Q4. So next year we see a good growth looking at the order book available in hand and picking up all the projects.
Can I expect, perhaps some growth over FY 20 to 22?
I think we can easily target around 25%-30% for FY 2023. Yeah.
Secondly, sir, yeah, I think, we are in advance-
25%-30% in next year, yeah.
Understood, sir. Sir, I think we were advanced just to complete this Jaora-Nayagaon in Chennai ORR . Can I expect this in Q4? And the related question is: what will you do with the receipt from Jaora-Nayagaon, you know? Will this use to reduce the standalone debt?
Yeah. So, Jaora-Nayagaon and Chennai, we do, and we do target to get these deals signed out before 31st March. So that is what is our focus. Definitely what cash will come in will come in at EBITDA level somewhere around in the Q2, probably Q2 of next year. At that moment, definitely a debt reduction would be one of the targets at the standalone level. And, depending on sectors availability and the new contracts being available, we may decide allocation of the capital, either for debt or for investors, depending on how the execution pans out.
Last year was the water sewage order, which you received from MCGM of INR 10.5 billion. I think the order which you mentioned in the presentation is around INR 6 billion. So, should I assume that INR 4 billion is for O&M for 15 years, or is it in JV and somebody else has to do the balance work?
Yeah, yeah. It's a joint venture. So we have captured in our presentation only our portion of the execution, because that's EPC. The work is of INR 1,046 crores, which we have in the joint venture. So that's what we have declared in the stock exchange. It's a joint venture with another party.
Understood, sir. Thank you, and all the best, sir. Thank you.
Great.
Thank you. The next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Hi, sir. Congratulations on a decent quarter. My first question is on the bid pipeline. So if you can highlight, the bid pipeline now segment-wise, and, how much of the bids, have you submitted, which is yet to be opened?
Yeah. Bid pipeline, as we explained, NHAI is aggressive on putting up a lot of bids, and we are participating in most of the HAM and EPC projects. So...
Hello?
Hello.
Yeah, yeah, sir. Can you hear me, sir?
Yeah. Could you please just repeat what exactly you-
Sir, I was asking if you can give us segment-wise, like building, P&D, railways, highways. So what kind of ordering or bid pipeline is there for the fourth quarter? And also if you can highlight how much of bids we have already submitted, which is yet to be opened.
Bids submitted and to be opened, there are a few bids, of course, which are yet to be opened. Around INR 9,000 crore bids are there, which are yet to be opened.
Mm-hmm.
These are basically into highway sectors.
What about railways and the other segments, sir?
Railway, there are no significant bids which are yet to be opened.
Okay. Sir, other question is on margin. So you have guided for 25%-30% in standalone ECC revenue growth for next year. So for next year, given the commodity headwinds and, some of the other peers reporting drop in margins, so how do you see the margins, EBITDA margins for the next year? If you can give some guidance there.
I think margins we'll be able to maintain because, we also are taking into consideration while bidding the commodity price variation, which is, really affecting the sector. So these are part of our bid inputs, and most of the bids have, price variation clauses. There are very few, which are like fixed price contracts.
So what is the total fixed price contracts percentage in our order book? And is it safe to assume that next year you can do 12%-13% EBITDA margin?
In the road projects, most of the projects you may call HAM or you may call the EPC contracts have escalation clauses. Other projects, most of them are in the fixed price nature.
Okay. And so next year, EBITDA margin could be like in the range of the 12%-13%, or it'll be more like 11%-12%?
It could be in the range of 11%-12%. That's what we have. 11.5% is what this nine months is showing up, and so that means that would be range which will be maintained for 2022- 2023.
Okay. Please, lastly, if you can tell, who is the joint venture partner in the MCGM? So, I mean, just wanted to understand, is it more for technical scoring, that's why we partnered with them? Or, so what's the reason for doing it in JV? So if you can just highlight that.
For MCGM?
Yeah, yeah, yeah.
Yeah. This is basically from qualification perspective, certain requirements are there. So we need to... And also bring experience, this is a new segment for us. So the JV partner brings in the experience and also the qualification.
Who's the JV partner here, sir?
Gondwana Engineers is the JV partner, who have been doing sewage treatment plant since long.
Gondwana Engineers?
Yeah.
Okay. Okay, sir. Thank you. Those are my questions. Thank you.
Thank you. The next question is from the line of Renjith Sivaram from Mahindra Manulife Mutual Fund. Please go ahead.
Yeah. Hi, sir. Good morning. Sir, if you can throw some more clarity regarding the infusion, excluding the PIM portion in the hybrid annuities that will be required?
Hello?
Yes, sir, you're audible.
Okay, one thing, sorry, I was on mute. I am so sorry. So the equity infusion for the balance HAM projects in the coming 2021- 2022 and 2022- 2023, wherein most of the HAM projects, all the HAM projects will be funded for equity, other than PIM, would be INR 145 crores for this year, balance in the next one and a half month, and INR 139 crores for 2022, 2023. So total investment yet to be done in these HAM projects is INR 284 crores. So maybe some of the equity for 2021, 2022 may get spilled over for 2022- 2023, depending on execution and requirement of the project.
Okay. What's the update on this Maldives social housing project?
So on this project, the Maldives government is in the process of tying up debt with Exim. We'll have to wait till then, unless, I mean, if they are successfully tying up, then this contract will continue.
Okay. And any more large orders in the international geographies we are looking at?
Yeah, we have been participating in international geography. So Bangladesh, we are L1 for a INR 500 crore job.
Okay. Okay, sir, thanks and all the best.
All right, thank you.
Thank you. The next question is on the line of Subhadip Mitra from JM Financial. Please go ahead.
Good afternoon. Sir, so, I think you've already given a guidance of about 25%-30% growth in sales. I'm sorry, I may have missed some of the details. Just reiterating here that, are we looking at this kind of a growth for both FY 2023 and 2024?
Yeah, with current order book, and looking at the government focus on highway sector, we feel we should be comfortably able to grow by 25%-30% for both years.
Understood. Any target orders inflow that you have in mind for FY 2023- 2024?
Yeah, like, you know, INR 9,000 crore is yet to be opened. That is all highway sector. That is where we are quite optimistic of getting something, and also some portion in Ganga Expressway, which could be an EPC part for us.
Understood. So, what I was basically trying to understand is, is there any, you know, overall targeted order inflow or annual order inflow number that you have in mind, you know, going, that annually you would like, like to reach a targeted order inflow for a certain number?
Like this year, we have already done around INR 8,500 crore. So INR 8,000 crore-INR 10,000 crore should be, l ike, we should be able to cross INR 10,000 crore this year, and then next year, maybe even more.
Understood.
Up to INR 12,000 crore, yeah.
Okay.
Now the focus have gone on major highways like expressways, which really are of good size, and they give good fast turnover also.
Okay.
Looking at the spending of the government, we feel, coming two to three years will be a very good growth in highway sector.
Okay. And lastly, with regard to the solar EPC project that we are doing for NTPC, I think in the last call you mentioned that the modules for the same is still to be procured. Is the status still the same, or have you already procured the modules?
Status is still the same, and we are discussing with NTPC to how to resolve this ordering issue, or we'll take extension from them.
Yeah. So is there any possible penalty that could come up in this particular project? And what is the last, let's say, quarter by which you would have to, you know, procure the modules to, you know, finish it on by deadline?
So basically, we are in discussion with the authorities, and to date there is no such indication, and, because this is a complete problem for all the entire sector, for all the projects. So this is being discussed at policy level to resolve this issue.
Okay, so your best guess would be that the deadlines would get extended on this one?
Yeah, definitely. Our balance of work is absolutely as per targeted timelines. So all balance EPC is being done. Except for the module, everything is being kept ready, and this is very well understood by the authorities also, because for them, it's not a. They have a large portfolio, and they understand it across the sector.
Understood. Understood. Thank you. That's it from my side. All right.
Thank you. Participants, if you wish to ask a question, please enter star and one. The next question is from the line of Vibhor Singhal from PhillipCapital. Please go ahead.
Yeah, thank you, sir, thanks for the opportunity again. So just, I think I missed out on the guidance front. You mentioned 25%-30% kind of a growth in FY 2023, but what on FY 2022? More like a 20%, I mean, what is the guidance for FY 2022 in terms of revenues?
22%, we want to cross around 15%-20%, is what we still feel we will be able to achieve.
Okay. Got it, sir. Also, sir, just a small bookkeeping question. Our debt at the standalone level appears to have gone up this quarter, from, I think, at the standalone, the working capital debt that we're talking of. So any specific reason on that? And if you could just maybe tie it up with how is the payment cycle looking, how are the payments from government, various government bodies, looking at?
Yeah, so basically, there's realization which are happening in Q3, which will take care of the slightly higher debt, inflated debt, on the working capital. It's more of a catching up with the billing payments.
More of a timing issue?
Yeah.
Got it. And so the payment cycle from NHAI, from other government bodies, are they on track or, any specific delays that you might want to flag off?
No, nothing very significant on NHAI payment once we are approved, so that way that's comfortable.
Okay. And the power T&D projects in Bihar and Jharkhand, other states, are also on time, sir?
Yeah, we have received, in fact, a few collections which were pending for last in this quarter, and definitely some payments are in due course, and they'll come in. There are retention payments which will come in when they are due. So there's still some time to go for retention.
Got it. So but nothing, that is out of the ordinary that is being delayed?
There is one state, Jharkhand, where there is a bit of a delay, but we are following up on that keenly.
Got it, sir. Got it. Right. So just one last question from my side. Basically, now that we have managed to basically close this deal with the KKR group, and as you mentioned, that we will also be... should be able to wrap up the Jaora-Nayagaon and the Chennai project by March. That gives us a good amount of, let's say, headroom in terms of our bidding ability. So, could we see more HAM projects going forward? And could we also look at some of the BOT projects as we had bid for, the, some of the NHAI positions with Bengal? Are we also- would we be looking at bidding for BOT projects also, or is it going to be the same waterfall that we have chosen before of EPC, HAM, and BOT?
So basically, it will be more of EPC and HAM.
Very selectively, where we have some structured arrangements for investments and all, we will participate in BOT, where investments are taken care by the investors.
Right, sir. And the BOT would be, depending on the, let's say, if I'm talking about BOT roads, would that be in JV with somebody or would that be with want to go alone? Or would that also depend on...?
Yeah, yeah.
Got you.
It's project to project, completely.
Project to project. Sure. Great, sir. Thank you so much for taking all my questions, and I wish you all the best again.
One clarification, the West Bengal project is not a BOT for us, it's an EPC for us. It's a BOT for Adani Projects.
Right, sir. But I think, last year we had bid for a couple of the projects from BOT, which we were not able to win. I was talking about our overall strategy of bidding for BOT projects.
Right.
Got it. West Bengal is EPC. Yeah, got it.
Thank you. The next question is from the line of Jiten Rushi from Axis Capital. Please go ahead.
Good afternoon, sir. Thanks for taking my question. Sir, I have, can you give me the revenue break up segment-wide, sir, for the quarter or nine months?
Yeah. So, road total revenue was INR 898 crore for the quarter. Power was INR 49 crore, railway was INR 70 crore. PGD and smart infra was INR 37 crore.
Okay. So road, can you repeat the road sector again, sir?
INR 898 crore.
Thank you. Sorry, road, INR 898 crore,
RMC, INR 48 crore. Yeah.
RMC, INR 48 crores. Okay.
Yeah.
INR 49 crore; railway, INR 70 crore; CGD and smart city, INR 37 crore; RMC, INR 48 crore, and road, INR 898 crore. Right, sir?
Right.
Okay. And, sir, can you give me a few bookkeeping numbers like debtors, creditors, mobilization, advance, unbilled, revenue, retention, and inventory as on December?
So, total debtors is in the range of INR 1,094 crores. Unbilled revenue is INR 1,071 crores. That's the reason, this as we said, there is a slight jump in the working capital requirement. Advance is around INR 360 crores to be recovered. So this is on the debtor side. And on the creditor side, INR 33 crores is what is outstanding. Yeah.
Inventory, sir, inventory and retention money?
Inventory is small, INR 155 crore.
Retention also, INR 300 and INR 500 crore? Two-
Retention is around INR 209 crore. So this is inclusive in the debtors, INR 1,094-
Includes in debtors, right. Right. So, sir, this, Sorry, sir?
Yeah. INR 1,090 crore of debtors includes INR 9 crore of retention.
Got it, sir. So this debt level, which has gone up, so now obviously our revenue mix is changing going forward, because the share of other segments is going up. So do we see this debt levels to remain elevated because the payment cycles in other segment are always like three to four months, while in road it has been faster. So this will be the consistent phenomena, working capital levels remaining elevated and debt level at this level, or you are expecting the debt level to come down by March? And what is your view, sir?
Maybe 50% of the impact of growth, debt level being higher is a mismatch in the payment of road sector.
Mm.
Once that is being taken care of in Q3, so then from that perspective, the impact on the working capital requirement and the debtor level would increase marginally because of the other sectors.
Mm.
Which will have increased working capital by approximately INR 125 crore.
Mm-hmm. So we can see debt levels of INR 650 crore-INR 700 crore by March, and it will not change significantly, what I see.
I didn't get you. What was that?
Sir, the current standalone debt is of INR 650 crore, so we can expect the same number. It will not change significantly.
Because the road sector mismatch will get resolved, so then it should be in the range of INR 500 odd crores.
Okay. Okay. Okay, INR 500 crore, right. And, and sir, and the obviously, you've given the, order inflow guidance for this year, we are targeting INR 10,000 crore. So we are expecting INR 1,500 crore more order inflows from the road sector. Is my understanding correct, sir?
Right.
Right. And, sir, now, what kind of revenue inflow, means, going forward, you have guided for INR 12,000 crore of inflows next year. So what kind of mix do we see in this, like, from the roads and the non, non-road segments?
Basically, we expect 75%-80% again, roads, and 20%-25% other sectors.
Others, okay. Okay. And, sir, are we going to participate in any TOT projects or any TOT builds? Because, as you said correctly, yeah, you might go selectively for BOT projects, as we saw in Ganga Expressway. So any TOT bundles or any future NHAI TOT bundles we would like to participate in?
No, as of now, we are not analyzing anything.
Okay. And sir, last question from my side. CapEx for nine months and for full year guidance and next year CapEx guidance, and the current bank limits, funded, non-funded, and utilization levels, sir.
So, the CapEx for nine months was very significant, but by end of this quarter, we'll have a CapEx around INR 50 crores-INR 60 crores for on machinery side and machinery and what you call it? Hyvas and other things. And on the as I said debt utilization, we've already given INR 650 crores as of INR 648 crores. And the BG bank guarantee limits utilized in the range of around INR 2,600 crores.
INR 2,600 crores utilized. What is the total, total limit is, sir?
INR 3,600, which will get enhanced by another INR 700 crores-INR 800 crores in the coming months. We've got sanctions.
Okay.
Very good-
Working capital, we have used almost INR 500 crore plus, so our, our limit is what, INR 1,000 crore in working capital?
No. So this is in two forms. Our basically working capital loan is INR 350 crore. We have dipped into based on our MPBF and our we have dipped into working capital demand loans with bankers at a very fine rate in the range of 4.25. So that's kept the interest rate also lower, but this will be liquidated over a period of time as these realizations which will come from the mismatch in the road sector. So that will go down.
Okay.
Otherwise, our working capital limit for non-fund based is INR 350 crores.
Okay. And so the CapEx guidance for next year, like this year, you said INR 50 crore-INR 60 crore total CapEx. Next year would be how much? Like same number, or we can expect more, sir?
So depending on the mix of projects which is in, so in the road sector and others, I think so we'll continue to... We'll probably have a total CapEx of around INR 80 crore-INR 100 crore.
Sir, any refinancing opportunity in the HAM projects? So what is the refinancing rate we are getting now, or for the new HAM projects, what are the financial closure rates we are getting now, sir, from the banks?
So, the completed road project, we have two totally completed-
Okay.
And one yet to be, one completed, but NFT yet to come, where we have opportunity for refinancing. These, these are due in May 2021 for reset. So from on that date, we'll do a refinancing with the, probably with the existing finance. So this would be in the range of 6, in today's rates, compared to today's rates, range of 6.9-7.1. Where we are, today's financing rate is around 7.9, so that will be arbitrage of approximately 1.6.
1.6. Mm-hmm. That's it from my side, sir. Thank you and all the best, sir.
Thank you. The next question is from Parvez Akhtar Qazi from Edelweiss Securities. Please go ahead.
Hi. Good afternoon, sir. Thanks for taking my question. So, my question is, what is the equity that we had infused in our HAM project this quarter?
In this quarter, there was not a significant infusion, around only INR 14 crore. But post that, in Q4, we've already invested INR 55 crore, but which includes major in TS-4. That is Tumkur-Shivamogga.
Okay. Have we received the Appointed Date for the Banur-Kharar project?
No, we have not yet received.
So, is that the only-
Post-election, we'll get this year.
Okay. So of the INR 12,000-odd crore order book that was there at the end of December, is that the only project where Appointed Date is still pending, or are there any other projects as well?
No, that is the only project where Appointed Date is pending, and the others which we have received in Q4, their Appointed Dates are pending, which I mentioned.
Yeah.
It's Mopa Airport and Belgaum Sankeshwar.
Thanks. That's it from my side then, okay.
Of course, Panagarh-Palsit, which we are expecting now.
Yeah, sure. Thanks.
Thank you. The next question is from the line of Varun Mulchandani, individual investor. Please go ahead.
Hi, thank you for the opportunity. I had a couple of questions. Just wanted to know what is the debt position on the HAM portfolio as of date, the HAM portfolio under ACL, and also on the two projects that you said are at advanced stage, basically? Am I audible?
Yes, sir. Mr. Parakh, Mr. Mehta, we are not able to hear you.
Sorry, I was on mute. Again, what is the question again? Can you just give me?
Yeah, I just wanted to know what is the debt position on the 10 HAM projects you have as of December, and also the external debt on the two projects that you said we are in advanced stages of selling?
So, the debt on all the HAM projects as of date is approximately INR 2,000 odd crores. And, which, on the, on the two, assets... One second, I'll just get you. Give me a minute, I'll just get back. Maybe you can come,
Yeah. So one other question that I had was you mentioned in your opening comments and also in your investor presentation around the monetization of the HAM project. So just wanted to check, given that most of these projects are still, like, in under construction stage, like, is this like a viable monetization near term, or like, is this something that we are looking out, say one, two years down the line, basically?
This should be in a range of around not more than one year's time for the completed project.
Okay. And is there any early thought process around, like, the monetization? Because I'm assuming even in an InvIT, you would like end up owning most of the stake. So, like, would the eventual decision be driven by what is the value you are getting? Or like, do you want to like, do you have a preference to continue ownership of these assets for the maintenance work, et cetera?
So, transferring it to an InvIT probably will not entail substantial stake on our side, maybe in the range of 25-30 on a revalued basis, not more. So some cash will definitely be monetized. Definitely, if we are the sponsors, we will definitely continue to maintain the assets and have revenue from that side.
Okay, thank you.
Coming back on the debt on the two projects which are completed, on the Khairatunda-Barwa Adda project, the debt is around INR 568 crore, and on the Ranasthalam-Anandapuram project, it is INR 391 crore. Total debt is around INR 2,000-
Okay.
Total debt is INR 2,200 crore as of December.
Okay, thank you.
Thank you. The next question is from the line of Ashish Shah from Centrum Broking. Please go ahead.
Yes,
Yeah, thank you for the opportunity. Sir, just, this question was asked in a slightly different way earlier, but in this total INR 1,337 crore of equity that we are investing in the HAM projects, what is the PIM component and what is the actual investment that we will end up making in everything put together?
On the total equity of INR 1,337 crore, which is envisaged, the PIM contribution would be around INR 386 crore.
Okay. The balance is the cash flow invested from your balance sheet?
Yes, share, share capital or quasi equity. Correct.
Sure. Sir, when you are, you know, evaluating or you are talking to an investor in terms of the monetization potential of these projects, the benchmark would be INR 1,337 crores of equity invested, right? I mean, at a fully invested stage, obviously. Because at the end of the day, the PIM which has got invested in the assets is actually the CapEx equity capital, which otherwise you could have kind of captured it elsewhere in your EPC, right? I mean, am I getting it right?
Yeah. So finally, end of the day, when the valuations will be arrived at, will be based on the future cash flows. So it will represent both the share capital and the PIM.
Right. So basically, you retaining the entire PIM component in the asset, that-
Mm.
leaves more value on the table in the assets. That's the point I'm trying to arrive at.
Good. Yeah.
Okay. Right. And, sir, directionally, on the, on the margin component, you know, we have, we have been, diversifying and we have indicated our intention to, to keep getting more and more diversified. So on an ongoing basis, what is the kind of margin trajectory one should expect? Should we be more in the range of, like a 10%-11%, 11%-12%, you know, that's a medium-term perspective?
This will be generally in the range of 10%-12%. The roads will be slightly higher because that's a high expertise field of ours. This may have a lower margin based on competition or as a new entrance. So the range would be in the range of 10%, 12%, or the mix probably would be in the range of 11.25% to then 12%.
Okay. And, sir, also on the, on the MCGM project that we have got, so, you know, if you can, talk on what, what is going to be our role, what is going to be our share, of the, of the EPC, and, and, you know, how do you- how does it help us in the future? What is our whole thought process behind, that project?
See, basically, this is all sewage treatment plants, and entire civil works are being done by us. So it's all 65-35 sharing in a JV ratio, and this also gives us a good amount of qualification going ahead, bidding in these kind of projects.
So going ahead, sir, are we indicating that we are looking at sewage treatment or maybe desalination? I mean, is that the area that we are trying to build up the qualifications for?
Yeah, as a strategy, see, 70% would always remain, 70%-80% is road, and within 20%, we are trying to enter into EPC segment of buildings, sewerage treatment, water treatment, and railways.
Right.
Yeah.
Sure, and-
Require similar kind of skill set, which we already have. They all have a lot of civil portion in them, like railways are civil as well as electrification and telecommunication, which we are already doing. Sewerage has this, and treatment part is also not, like, very difficult to pick up and execute.
Who are our partners in this? Because we said we got it in a consortium.
Gondwana Engineers is our JV partner in this, and they have been doing these treatment plants since more than three decades now.
Sure. And so lastly, can you just talk about your thoughts on the CGD business going forward? Because in the recently concluded bids, we haven't sort of got anything. So what is your whole thought process on, on that business going forward?
So here we have three GAs with us, approximately with a project cost of around INR 850 crores, and all the three GAs are operational, and they have started revenues. We have an investor, Morgan Stanley, also in the joint venture, so they definitely will be looking out for an exit in a year or two's time. That is generally their horizon of four to five years. So from that perspective, this set of projects could be available, could be taken up for monetizing, too.
Okay.
Presently, because in view of most of the GAs have already been bid out and allotted, the next round of bidding may take a lot of time because most of it is almost covered now. Most of it, yeah.
So basically, sir, is it safe to say we are looking at an exit from this business? Because you said the partner also wants to exit, and if you're looking at monetizing this.
Yeah, there is one possibility. We don't mind running it, but, good possibility that in case, the, existing partner also wants to exit, it would make sense if we get a good valuation.
Okay. There is no guaranteed IRR obligation, et cetera, to the Morgan Stanley investment, right?
No.
Okay. Okay, just last thing, sorry, how much have they invested so far?
At present, we have invested approximately INR 140 crores.
Okay. And your investment is also matching amount, right? Around INR 150 or so.
No, no, no. Put, put together.
Okay, put together, sorry, it's INR 140, and is it equally split between them, between you and Macquarie? Sorry, Morgan.
50 and 49.
50 and 49. Okay. Sure. Thank you. Thank you.
Thank you. The next question is from the line of Jiten Rushi from Axis Capital. Please go ahead.
Sir, thank you for taking my question. Sir, one last question from my side is: what is the outstanding equity in Jaora-Nayagaon, including, subdebt and, loss funding, if any, and in Chennai and the outstanding debt balance as on, December, sir?
On Jaora-Nayagaon, the basic equity is INR 287 crore, which is intact, and there is no additional funding on the projects.
Uh.
On... Yeah?
Yeah. So basically, the Jaora-Nayagaon was total investment of, is INR 287 crore, right? Including subdebt, subdebt and, and actual equity. Right, sir?
Yes. There's no subdebt.
And-
Pure equity of INR 287 crore.
It's pure equity. Okay. Sir, what about Chennai ORR?
Chennai ORR, INR 189 crores is the pure equity, and there is a debt of around INR 240 crores.
INR 240 crore is the subdebt?
Yeah.
So sir, this INR 287 crore Jaora-Nayagaon is 100% level or it is 74% our stake, sir?
It is 100%.
Chennai ORR also 100%, right, sir?
Yeah, that is also 100%, but the debt which we are talking about has been funded by ABL.
Mm. Interest, non-interest-bearing, sir?
No, interest bearing.
Non-interest bearing. Sir, what is the outstanding, gross debt?
It is interest bearing, sorry.
INR 240 crore is interest bearing, sir, like around 10%-12% kind of. Okay.
Yeah, actually larger. Yeah.
Sir, what is the gross outstanding borrowings in both the projects as on December?
On both the projects, Jaora-Nayagaon, it's approximately INR 187 crore, and on Chennai Outer Ring Road, it's approximately INR 850 crore.
But then excluding the INR 240 crore, right, sir?
No, this is external debt, which I'm talking of-
External debt.
Term loans from lenders.
Okay.
The both numbers of INR 187 crore and,
Mm.
INR 850 crore. These are term lenders' money.
Okay. So basically, sir, if you have, go through the transaction, probably this INR 240 crore of loan will come back to you and any additional equity over and above what you, that will come back to you, right, according to your share. Sir, this 50% partner in Chennai ORR, what is the status? Like, GVR, like we were supposed to, you know, the, the stake of us was supposed to go back to 100%, so the company was in NCLT. So any, any update on that, sir?
The talks are on.
Oh, oh, okay, sir.
Yes.
Okay. Thank you, sir. Thanks a lot, sir.
Thank you. That was the last question. As there are no further questions, I will now hand over to management for closing comments.
We thank all the investors for joining on this call. We would be happy to take any other queries. We are available, or Stellar Relations are also available for queries. That's all from our side. Thank you very much.
Thank you. Thank you, everyone.
Thank you very much. On behalf of Anand Rathi Share and Stock Brokers, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.