Ladies and gentlemen, good day and welcome to the Dilip Buildcon Limited Q1 FY 2025 earnings conference call hosted by S- Ancial Technologies Private Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Jill Chandrani from S- Ancial Technologies. Thank you and over to you, ma'am.
Thanks, Neil. Good evening, everyone. Welcome to Dilip Buildcon Q1 FY 2025 earnings call. From the management, we have with us Mr. Devendra Jain, Managing Director and CEO, Mr. Rohan Suryavanshi, Head, Strategy and Planning, Mr. Sanjay Kumar Bansal, Chief Financial Officer. Before we begin this call, let me mention the standard disclaimer. The presentation that we have uploaded on the stock exchange, including the interaction in this call, contains or may contain certain forward-looking statements concerning our business prospects and profitability, which are subject to some uncertainties, and the actual results could differ from those. Now, let me hand over the call to Mr. Rohan Suryavanshi for his opening remarks. Thank you, and over to you, sir.
Thank you, Jill. On behalf of Dilip Buildcon Limited, I welcome all the participants in our quarter one FY 2025 results con call. The results and presentation have been uploaded on the stock exchange, and I hope all of you had a chance to look at it. At the outset, I would like to share some industry updates. It has been evident in the recent union budget that the government has high aspirations for the infrastructure sector with a view to making it a powerhouse in our economy. There has been an allocation of INR 11 lakh crore for the infrastructure sector this year, indicating a growth of 11.1% as compared to last year's budget. This contributes to approximately 3.4% of the GDP. Road transport and highway has been allocated INR 2.78 lakh crore. Railway has been allocated INR 2.65 lakh crore.
Logistics and supply chain sector has been allocated INR 2 lakh crore, and metro rail has been allocated INR 24,900 crore. The cabinet has also approved eight national high-speed rail corridor projects worth over INR 50,000 crore to improve logistics efficiency and connectivity across the country. All these things are said to have a multiplier effect on our economic growth and also boost employment opportunities. Above all, it will give impetus to India's unwavering commitment to a futuristic and connected India. This scenario definitely augurs well for our growth trajectory given the government's sharp focus on the infrastructure segment. Now coming to the sector and the company. During the quarter under review, the ordering activity was weak across all sectors, which was as expected because of the elections. But now is expected to pick up.
For us also, we received a single order in the railway segment of INR 926 crore. But going forward, on the back of a strong order pipeline and across all our segments, we are confident that we will get an order inflow of INR 15,000 crores-INR16,000 crores for the full-year, and there is enough orders across the segments, like I mentioned, that we look at. This quarter onwards, in our order book, we have also started including order values from our coal MOUs, which we were not doing in the past. As is the current market practice, players are including that, so we have also made changes. In our current order of INR 18,600 crores, we have added three years coal MOU order of INR 2,400 crores.
While the total estimated revenue from our coal MOUs would be around INR 5,500 crores over the next three years, this will be accounted at the SBU level, out of which DBL will be getting around INR 2,400 crores, like I mentioned. On the execution front, we have experienced payment-related challenges, primarily from JJM projects, that resulted in higher debtors and stretched working capital. Now, it is a temporary phenomenon because of elections and other things that were happening in the government, but it is the top agenda of the central government, and the sector would see a major execution ramp-up soon, along with solutions for all these stuck payments.
While our debt has temporarily increased, we are very confident that as the financial year goes forward and the payment from the government gets normalized, we will achieve our target debt levels of INR 1,000 crores funded by the end of this fiscal year, as we had indicated on our last call. In our investment portfolio of HAM assets, I am happy to inform that recently we have fully concluded the Shrem InvIT deal with transfer of 51% equity stake in the last asset, that is Patrapali-Khadkholia project. With this transfer, our entire deal is concluded with the Shrem Group. While we will continue to do O&M of their assets for the life duration of those assets. In other news, in our Alpha InvIT asset deal, we are progressing as per plan.
Till now, we have transferred 26% stake in four assets out of a total deal of 18 assets. Our InvIT formation process is also progressing well. We have applied to SEBI, and we have already received initial remarks. We are still very confident that we will be able to create the InvIT by the end of this financial year. In our coal MDO business that constitutes Siarmal Coal MDO, which is the largest coal MDO in the country, I am happy to report that we have achieved production of 3.27 million metric ton in the last quarter. To give perspective of our execution progress, last year we had done a total production of 7 million metric ton versus contractual requirement of 5 million metric ton at Siarmal.
This year, our contractual requirement is 10 million metric ton, but we are already running with a run rate to achieve 50% more than that. That is 15 million metric ton in this financial year. In other good news, Pachhwara MDO, we are also progressing as per plan. During the quarter under review, we have achieved our coal production of 1.46 million metric ton. Here, we are on target to achieve the 7 million metric ton, which is the full capacity for this.
As I have discussed before as well, but just to reiterate as I conclude my remarks here, this is DBL 2.0, where we are in the process of creating a fully diversified company working across eight, 10 different infrastructure sectors with an aim to achieve zero net debt in the next two years, along with having a healthy mix of short-term and long-term assured cash flow businesses and industry-leading return ratios. That is the goal that we are working towards, and we hope to keep delighting you quarter after quarter. Now I would like to hand over the call to our CFO for the financial overview. Thank you.
Good evening, everyone. I welcome all our stakeholders to our earning call. Let me present the results of Dilip Buildcon Limited for the quarter ended June 30, 2024 and highlights of current financial year. The company has completed four projects aggregating to INR 3,604 crores and one railway projects worth INR 926 crores. On financial side, on year-on-year basis, quarter one FY 2024 versus quarter one FY 2025. On revenue front, the revenue is decreased by 9.61% in quarter one FY 2025 from INR 2,609 crores in quarter one FY 2024 to INR 2,358 crores. This is mainly due to lesser revenue from roads and highway business.
EBITDA decreased by 21.62% in quarter one FY 2025 from INR 335 crore in quarter one FY 2024 to INR 262 crore in quarter one FY 2025. The EBITDA margin mainly decreased on account of reduction in revenue and overhead expenses on the reduced revenue. Profit after tax is also decreased by 43.17% in quarter one FY 2025 from INR 83 crore to INR 47 crore in quarter one FY 2025. This is mainly on account of reduction in revenue and corresponding EBITDA margin reduction. Thank you all, and now we can open the floor for questions and answers. Thank you again.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Shravan Shah from Dolat Capital. Please go ahead.
Thank you, sir. Sir, first on the order inflow front. Now we are seeing a higher order inflow of INR 15,000 crore-INR 16,000 crore versus last time you said INR 10,000-INR 12,000 odd crore. Just trying to understand further, how many value of projects we have already bid and where bids we have to open? That is one. Second, how much more we are planning to bid? Broadly, if we break up this INR 15,000, INR 16,000 crore order inflow, how much we are looking in the HAM and any other sectors which you want to highlight?
Thank you, Shravan, for your question. Yes, you are very right. In the last quarter, we had given a more muted guidance. But as the year has progressed, and as you are well aware, the sector has seen a depleting order book because of weak ordering from last year. To ensure a steady growth going forward, we have reassessed our numbers, and that is why you see the numbers of INR 15,000 crore- INR 16,000 crore that we have done. We are quite confident of reaching these numbers across all the sectors that we are working in, that is the sectors that you know that we are in. Besides the sector that you are aware that the company works in, we have also gone in the optic fiber segment, and about INR 50,000 crore worth of orders were floated in that.
So we were participating there as well. Those bids have also already been done. Let us see.
We are hoping to have some good news there as well and start there. I cannot give you very specifically sector-specific breakup of orders, how it will flow. But, like I mentioned, we look across all the sectors, and it has been our endeavor in the last few years to move away from a single sector dependency to a more robust, multi-sector sort of order book, and that is what our agenda and aim will be this year as well. Talking about the HAM versus EPC, our primary focus and our primary liking is always EPC projects. The HAM route has always been used by DBL to fulfill its EPC needs. But even since you asked, I think we would still be thinking about at least INR 5,000 crore- INR 6,000 crore of HAM in this total order book.
To break it up, 2/3 of the order book would be straight up EPC. 1/3 would be about— Would be HAM/BOT, like any kind of PPP project.
Okay. Second, in terms of the power on the revenue front. This quarter was a muted one, and we were looking at a kind of a flat for full-year FY 2025. Now is there any upward revision in the revenue also this year or maybe if possible for next year, given the order inflow will be higher this year, so FY 2026? Is there any kind of a guidance that are we likely to give for FY 2026?
Shravan, it will be too early to give you an indication for FY 2026, but I am very confident that it will be much better than this year because once the order book formulates. This year, in fact, we had given you a flattish guidance earlier as well. But I think, looking at how the ordering has still been weak till now, we would actually be looking at a 5% de-growth from last year's numbers. I think that would be a better assumption to make at this stage, given the order inflow sort of pace that has happened. We were expecting it to start much faster, but given that, we think that is a better number. But FY 2026, I think, would be a good year.
But we would only be able to comment on that once the end-of-the-year numbers are in hand where we know how the order book looks and stands. Anything earlier than that would be premature.
In terms of the margins also, this quarter was 11.1%. We were looking at 12%-14%. Given now we are saying a 5% lower revenue growth or de-growth rather this year. In terms of the margin also, will it be a kind of 11%?
Yeah, I think given that we've geared up more and the margin should, I think as a good prudent study, it would be good to take the current numbers as the better numbers, which is around 11%-12%. I think that would be a good way to think about it. I think earlier we had indicated 11%-13%, but I would say 11%, 12% is a good figure to kind of think about, given the, like I said, some of the challenges around the depleting order book.
Okay. And sir, on the debt front, correct me if I'm wrong. You mentioned this year that though this quarter INR 700 crore, their gross debt has increased because of the working capital. So want to understand two aspects, whether this working capital, particularly debt, has it collected post June till now, and how we look at the working capital by end of FY 2025. And broadly, you mentioned INR 1,000 crore gross debt reduction in FY 2025.
We have collected some after the June this thing. I didn't mention in terms of the target debt level you mentioned. Yeah, from here we are looking at a reduction of INR 1,000 plus crore of debt levels from where we are standing right now. So you're right about that. From the current levels where we look at. But I'd given you a target of around INR 1,000 crore by the year-end, which was INR 1,500 crore as of last financial year. But to elaborate more on collection, I will hand over to our CFO.
Shravan, basically total net debt on 31st March was INR 1,515 crore. Now it is increased by almost INR 700 crore. The total term loan is only INR 140 crore as on 30th June. So the reduction in debt will happen only in the working capital. So what Rohan said, the reduction in the working capital will remain from INR 1,500 crore- INR 7,000 crore. So today, the outstanding is around INR 2,226 crore. So that will be reduced to, say, INR 1,000 crore at the end of this financial year. I feel this is clear.
Okay. From INR 1,226 crore net debt, we will be reducing by close to INR 1,000 odd crore. Around INR 1,200, INR 1,250 odd crore net debt by end of March that we are looking at.
This is right.
Okay. The next year, the entire will become a net cash kind of a company by FY 2026.
Yes. Positively.
Yes. That is the agenda.
Okay. Just wanted to elaborate further. How much, in terms of broadly the Alpha Alternatives, how much already, obviously for four projects we have mentioned that INR 161 crore we have received. How much more cash are we going to receive? That would be a major driver in terms of the debt reduction and plus the working capital.
I think we mentioned that in the presentation on page number, let me tell you how that deals 26?
26.
Which one is it? On page 26, we mentioned how the equity would flow from the investment that will come from Alpha and in the years. If you want to look at it, Sanjay sir will explain.
Shravan , as of March 31, we had divested three assets in 26%. This quarter, on July 1st week, we divested 26% in another asset. Out of this INR 478 crore, which is shown in page number 26 of our investor presentation, around INR 160 crore, INR 190 crore precisely we received in July. Out of the balance, this will be received majorly in this quarter, and one asset may go to early next quarter. Balance money, out of INR 477, we received INR 190, and balance will be received in quarter two, majorly, and some money in quarter three.
Okay. Understood. Lastly, just particularly on the standalone in terms of the finance cost and other income. Just wanted to understand. We were kind of looking at INR 350 odd crore kind of total finance cost for this year, the standalone. This quarter, because of the debt has increased, so finance cost has also increased INR 190 odd crore. How do we look at for full-year, the finance cost? In the same way, the other income was just INR 30 odd crore. There, how much more are we going to receive any kind of a dividend from any of the InvITs of Shrem or any other MDO through where this other income can go up?
Still, even after increase in debt in first quarter, we still believe the debt cost will be between INR 350 crore- INR 400 crore. This is number one. In terms of other income, let me tell you, the other income consists various items like dividend from the existing Shrem InvIT units, distribution like the interest distribution and interest on our income tax refund and all. Yes, in quarter one, there's a reduced other income, but we feel this income, because this quarter, the distribution from Shrem was around INR 5, which is more than our expectation. Going forward, we think, whatever we had given in slide number 26, will be more or less achieved.
Okay. Got it, sir. Thank you and all the best.
Thank you.
Thank you, Shravan.
Next question is from Ishita Lodha from Svan Investment. Please go ahead. Ishita Lodha, you may go ahead.
Yeah. Hi. Am I audible?
Yes, Ishita , you are audible. Please go ahead.
My first question is on the coal mining business.
Ishita , can you be a little loud, please? You are audible, but your voice is very low.
All right. The revenue in coal mining business has actually declined despite better production volumes. Is this due to lower realization or what has led to the reduction in revenue from INR 162 crore in last quarter to INR 150 crore in current quarter?
Madam, let me answer this question. First of all, we have not given the coal revenue in the investor presentation. What we are saying, out of the total order book of the SPV two MDOs, INR 5,500 crore is three-year revenue. Out of that, INR 2,400 crore revenue in next three years will accrue to DBL. We had given the MDO performance in terms of CIP critical. Against 15 million ton target, we have already done 3.23 million ton coal production in quarter one, and in Pachhwara, we did one point. So Pachhwara, against the 7 million ton capacity, we did 1.46 million ton. I do not know from where the revenue is taken. If you can elaborate, we can answer for that.
Hi, sir. This is Deepak Desai. Just continuing on that part, in the standalone revenue, on the vertical wise, we have shown the segmental breakup, where we have shown road, special bridges and tunnel revenues of INR 1,081 crore, which has declined 43%, and mining has come down to INR 150 crore, which has declined by 6.74%. On the standalone basis, this quarter, there has been a decline on the vertical wise. Just wanted to understand on that part.
Ishita and Deepak, we had given the total revenue of DBL. Nowhere we have given the coal revenue separately. We had even given the order book breakups. In order book breakups, as Mohit explained, we have added INR 2,400 crore revenue from these two SPVs to DBL for the order book purposes. But revenue—
Which page?
Which page you are referring to, can you please tell me?
Basically, in the press release we had given the segmental breakup. Just a second, I am sharing the details. On the page number 20 o f the press release.
Basically, you are referring to the. If you can see my order book position.
Out of—
So on order book, basically the total order book, if you are referring, still I'm not getting—
That's better.
Sir, I think, you're looking at the press release, right? You're looking at the press release?
Yeah, press release, segmental contract revenue break up on the page 22.
Right. So there, why the reduction you are seeing is because besides the two coal MDOs where we are doing well, there were also EPC contracts that we were doing, which are finished.
Nigahi and Samaleswari.
Nigahi and Samaleswari are finished. That is why you are looking at that number, because the revenue that was contributed by Nigahi and Samaleswari is over now. That's why there is that reduction. Because of the other projects getting done. But those are very small contracts compared to the MDO contracts that we will be doing, where we have mentioned the revenue potential is INR 5,500 crore for the next three years.
Basically, in the mining division, external orders have been finished. Now internal orders will get executed over a period of next three years, which will drive the revenue growth for that period of years.
This is not an internal order. MDO is also an an external order. Sir, it is just the nature of the contract is different. An MDO is a long-term contract. The Siarmal project is a 25-year contract, and Pachhwara project is a 55-year contract. It is just the nature of the contract. This is not an internal mine for us. This is ultimately we are supplying to the government at a predetermined price, which also includes inflation indexes. That is what we are doing in the MDO processes. The thing that it does for us, it gives us predictability of revenue and the stability of our income coming on a long-term basis.
Okay. Secondly, looking at the debtor position, debtors from the last quarter, from INR 1,392 crore, it has moved to INR 1,766 crore. I do understand you mentioned about the payment related these things. I just wanted to get the sense, what is the updated position at the current juncture? Has there been any further reduction in this? In the current debtors of INR 1,766 crore, how much is from the JJM projects?
Sir, there is a reduction on this from the numbers where we are looking at what you are looking at. There is definitely reduction. We do not provide separately breakups on that. If you want to get in touch with my team separately, you can talk about it separately. JJM is the larger bit of it. The big reason for this increase.
Sure. Finally, on the guidance front, I just wanted to check it again. On the revenue basis, we maintain the flattish revenue growth or would we expect some decline in this year? What is our current bid pipeline from the order inflow perspective at the current juncture?
Sir, like you mentioned, I think it would be prudent right now to take a more measured approach to our revenue. That is why we said, instead of the flattish, we should account for a sort of de-growth of 5%, given the weak order book that had happened. Going forward, there is a very good order book that we see in front of us of INR 2 lakh crores plus. The road sector alone has a very decent order book, along with the other sectors that we are working in. We are confident that we will be able to do INR 15,000 crores-INR 16,000 crores in new orders in this financial year.
How much is our current bid pipeline, the projects where we have done the bids at the current juncture?
I think less than INR 25,000 crores where we have already bid out.
Okay. Finally, just wanted to check it out. In this quarter, our margin profile has come down to 11.1%, and there I can see other expenses have increased to 4% of the revenues. Just wanted to check, is there any one-off in this quarter in the other expenses in terms of provisioning or any other expenses? What would be the broader margin we should be looking out for the year as a whole?
Sir, margin profile is weak because of the lower execution, and we have guided towards an 11% EBITDA only going forward, 11.1% EBITDA, that I mentioned. That should be the guidance going forward. Any larger details that you want, you can get in touch with my team and they can explain to you tomorrow.
Sure. No problem. Thank you. Thanks a lot, and all the best.
Thank you, sir. Thank you.
Thank you. Next question is from Darshil Jhaveri, from Crown Capital. Please go ahead.
Hello. Good evening, sir. Thank you so much for taking my question. A lot of my questions have already been answered. Just wanted to understand. Now we are also getting into another segment of optic fiber. How are things looking out there, sir? Just a brief, what will our strategy be? Because there might be some intense competition out there or no. How is it, sir? Hello?
Thank you for your question. We've already been out on those projects, the one that optic fiber. There were 16 packages and in total about INR 50,000 crore- plus of order book. Us, and I'm sure a few of our peers also bid in it. We went on a joint venture module in those projects. In next couple of months, as they open up, then we'll be able to give you updates. But those projects have already been bidded for.
Oh, okay. Fair enough, sir. And sir, just wanted to understand. I understand we are being a bit conservative, maybe how our Q1 has been, but is there a possibility of a good surprising H2 or execution pickup and order pickup? Is that a fair assumption? How are we looking at it, sir?
Sir, in terms of revenue pickup, I don't see a lot to happen there because the point of time where we are sitting in the financial year right now, with ordering still sort of not opened up completely. Had orders opened up a little bit more, there's more of a chance. While someone like me would always like to be optimistic, the realistic picture, I think that would be very sort of up at this stage. Let's see how the year shapes out. But how the range, how projects progress happens, if any unique surprises happen anywhere. Let's see how that progresses out, but what we have in hand, we are looking to do it with our sincere efforts.
What we do not have in our hands currently, but we are very optimistic about is the large order book. Typically, in a year after an election, we see the orders really flowing out for us. Usually, the second half of any financial year is heavier in terms of ordering. That is what gives us that comfort and confidence.
Fair enough, sir. Just last question. There are some state elections coming up. Will that also impact order inflow or majorly ours will be related to center? Or it can have positive or negative impact because maybe center has to allocate more projects. Just any idea on that, sir?
Yeah, there are only a few states that are going to election, and we are not very big on the state order book anyway. So we do not foresee that as a challenge, as a large challenge anyway. I think because the larger order book from our part is from the national government and other government subsidies, I do not foresee that as a large challenge.
Okay. Fair enough, sir. That is it from my side. All the best, sir. Thank you.
Thank you, sir.
Thank you. The next question is from Parikshit Kandpal from HDFC Securities. Please go ahead.
Yes, sir. Hi. Sorry. I am looking at your slide number 36. Sorry for this. On the Shrem InvIT part and the Alpha DBL unit. So it looks like you will be recording almost INR 280 crore plus INR 94 crore, so almost INR 375 crore of distribution in FY 2026. So this will get reflected in your standalone other income?
So basically, you must have seen in the Shrem InvIT units as well. So distributions are in three forms. One is dividend, interest and c apital return. We are talking about the total distribution. In slide number 26, it is showing total distribution. We do not know today whether it will be interest or dividend or capital return. The actual breakup will be at the time of distribution. This is projected distribution. From Shrem, we have taken around 13% distribution. First quarter was higher than we expected, and the DBL Alpha, we have taken 10%-11% distribution on the conservative side. These are the distributions we have taken into account.
Given the nature of the capital structure of these InvITs, how much do you think can accrue to your P&L out of this INR 380 odd crore in FY 2026? How much do you think can come into your P&L?
Though that is not known to us now, if you can see last year, it is 2/3, 1/3. 2/3 in the income and 1/3 as a capital return. This ratio will change based on—
Got it.
—various parameters. I don't know as on today.
This is a substantial number accruing to your profitability. That's why I was questioning. I understood you said 2/3 may, as of now, given the historical capital structure and distribution, it could be 2/3 , but it will be known closer to when it gets distributed. Second question is on the MDOs. These MDOs, at least in Siarmal, we are ahead of actual contracted production, and in Pachhwara we are lagging. I just want to understand why. If you can give us what was the total profitability of MDO in the last financial year? In this one quarter, how much these two MDOs would have contributed, and given that there's a significant ramp-up happening, how do we see the profitability of these MDO over the next few years?
Sir, Parikshit, we are not lagging in Pachhwara. We are on track for what we have to deliver, and we have to do only 7 million metric tons of coal production in the financial year. We are on track to achieve that. There is no lag there. Sorry if there's some miscommunication. That is completely true, like I said in my opening remarks as well.
More than the target.
Yeah. In Siarmal, we are 50% above target.
Yeah. Siarmal you are above target, but in FY 2024, I saw the number of FY 2024 where 7 metric ton was to be contracted.
That was the first year Parikshit Kandpal. That was the first year of the starting of the mine, so there were so many problems in the road transport, but now this year, we will achieve the full target of 7 million.
But sir, this way I am making it when it ramp up we can share some numbers on how the profitability has been in Q1, because if they are ahead of schedule, then your profits get pre-poured, right? Also, if you can throw some light on how much CapEx is pending to ramp up to the full potential in both the mines.
Sir, we do not share profitability by project or by sector. As a combined would be a better way to look at it, but the projects are better profitable than our number that we mentioned. EBITDA, it is better. But one should look at the company combined.
Pending CapEx in both projects to ramp up to the full potential, how much should be the CapEx you will need to incur to ramp up the mines?
Parikshit, Pachhwara we have no CapEx.
Okay.
In terms of Siarmal, the total CapEx originally projected was around INR 2,700 crores. Out of that, around INR 280 crores is already done, which is—
Okay
HEMM, we have bought in the SPV, the Siarmal SPV. Once the coal handling plant will start, then there will be more CapEx. Let me tell you, out of the total INR 2,700 crores, INR 2,040 crores financial tie-up is already done in FY 2022 with SBI, Union Bank, and Power Finance Corporation. That will be funded from there.
Okay.
That CapEx is in SPV level, not at the DBL levels.
INR 2,040 project finance against that you have given the equity outflow, I think in your slide where you show the HEMM. So total Siarmal INR 419 crores equity requirement has balanced.
Yes.
INR 1,600 crores will be your, so debt will be INR 1,600 crores?
Total I said INR 2,700 crores. Out of that, equity is INR 576 crores. Around INR 2,042 crores is the debt. Out of debt, we have already taken disbursement of INR 224 crores, and we have invested equity INR 157 crores. Total INR 380 is already done out of INR 2,700 crores.
Okay. Understood, sir. Once on those InvITs, if you start getting these InvITs as dividends, what should be your intent? Will it pass on to the investors as dividend, or you will reinvest it into business? How do you look? This will be substantial cash flows which will accrue to us, because INR 400 odd crores, especially FY 2027 numbers, you are already showing INR 450 odd crores of inflows.
Absolutely right, sir. There will be a significant inflow to the company. In terms of how we think about money that comes into the company, it will be dependent on the opportunity that will be in from the company, whether if we see that we don't have any good opportunity, we might end up just giving the dividends to our shareholders.
If we see there is a better opportunity, higher return ratio, higher ROE for us and for our shareholders, and what they're looking at us from, then we might look at investing in those assets. Let me tell you a few things very categorically. Number one, our intent for the next, like we mentioned, for the next two years, is to reduce debt completely. Our intent is very clear. Whatever money that comes to the company, currently first and foremost, will be used for debt reduction to make the company debt-free at a standalone level. That is happening on a standalone. Number two, our intent is to make sure that the consolidated debt keeps on going to the InvIT. Even the consolidated balance sheet of DBL looks good.
Wherever we have debt, it is all backed by the project finances. That would be our number two intent. After that, whatever cash flows are coming, we will look to see whether we can deploy in long-term assets, which will keep generating returns for the shareholder of the company over a long term, and with higher return ratios, like I mentioned. If not, then we will take a call of distributing it to shareholders as dividends. It will all depend at that time, but our intent is as I'm sort of articulating to you.
Once all these InvIT units that you receive, my understanding 4,000 or 5,000, 4,500-5,000 crore are being put together. Is it right? The number will be close to about 4,500? If yes, then will you be consolidating this debt of this InvIT or it will become an associate once the InvIT is operationalized?
Oh, no. The debt does not come to this. We are only the unit holders of that InvIT. The debt is not the debt. Debt goes to the InvIT level. We are just like a shareholder to a company. We'll just be unit holders there.
So that debt, the HAM debt, which you are currently carrying on, will get knocked off because of consolidation, so it will not reflect in your consolidated balance sheet, right?
The asset-level debt, if you are talking about, so number one, sir, the assets that we transfer to the InvIT, the debt will transfer there. Instead of the equity that we have invested, against that, we will get the units. So the 4,000 crore- plus of units in the Alpha and DBL InvIT and the INR 800 crore lots of like units in the Shrem InvIT, those are all equity instruments. That is not any debt instrument. So those will be the equity holdings of DBL.
That means your consolidated will closely mirror your standalone debt, which will be anyways net cash by then in two years, which you are guiding. So you will be hardly carrying some debt on your MDO, which may be you said INR 2,000 crores and plus something in other coal mines. So that could be what will remain. So MDO debt will largely remain, right? Rest all debt will get knocked off.
MDO debt will remain, and if any new HAM projects come to us, that will come. But then those will only have a churning time. So every time we are using, you should think of it like DBL will be holding that debt for any time of three years. From the time we win a project to the time we are able to finally sort of move it to an InvIT. So from getting it in to finally getting rid of the projects to the InvIT or to investor, that timeframe is three and a half years, from the start of the debt date. That is roughly you should sort of think about.
This is just my last question on balance sheets. And where one thing which always creates, I mean, kind of like, which I am very not much comfortable is your inventory levels. Now you have started de-growing, you have stabilized your growth, but still your inventory is not coming down. It is still at INR 33 crores, INR 40 crores, which is almost one third of your sales potentially for this year. And this is the highest in the industry. When the industry is running at 40 days or 25, 30 days, still at 110, 120 days. So now we do not get any bonuses also from any of our early completion bonus. Where we used to maintain aggregate inventory and road as a percentage has also come down.
I just wanted to get a sense and guidance on how will be the rundown of this inventory, because this is what is depleting our return ratios and elevating our working capital. If this is not there, why still so much of inventory you are carrying on your books? If you can give some more color, that will be helpful. And where do you see it at the year-end, I mean, by FY 2025?
Parikshit, thank you for your question. I understand this has been a case of concern for people, but like I mentioned, you only looked at one bit of it, which is the inventory. When you look at a working capital level, our working capital days are in line with the industry only. How we are kind of sort of converting ourselves, that cycle is in line with the industry. Now, obviously, DBL, our business model, our way of working, has been one style for a very long time. It is a big shift. As we are turning around, as we are making amends to the way that we do things, as we also explore many, many sectors, it will take time. So while there are amendments and there are different targets that we have, this also will keep on coming down over the next two years.
To give you a target right now, because as the mix of projects change and all those other things change, our strategies keep on changing around how we are doing projects. These all things will change, but it would be early for me to give a target. But yes, we are aiming for reduction of that also.
Okay. I think this is the one last thing which you should, I mean, if you are able to tackle it, I think then there could be substantial improvement.
We will. For 100%, that is also a work in progress, and we are doing that work as well. You will see that will also keep on progressively happening over the course of the next two years. Like I mentioned, as we keep on changing the direction of the ship, this will also happen.
Sure, sir. Thank you, Rohan. Thank you, Sanjay. Thank you.
Thank you, sir.
From Antique Stock Broking. Please go ahead.
Yes, sir. Thanks for the opportunity. A couple of questions. First, you mentioned on the coal side that we'll do something like INR 5,500 crore kind of top line for the next three years cumulative. Is it fair to say, because the order book for this coal is INR 2,500, which is kind of OpEx for the MDO. We can make a bid of like INR 3,000 crore cumulative for the coal business for us?
Well, I'm not sure what calculation that you're doing, but EBITDA, we're not giving sector-wide breakup, we're not doing.
No, I think, basically, based on the numbers, I would just, whatever is shared by you, and that's what, like INR 5,500 crore is the top line for three years.
Top line.
Yeah. You mentioned INR 5,500 crore is what we will do for the coal MDO business.
At SPV level, yes. You thought like because of I am answering your question, Vishal, basically this INR 5,500 crore is the total revenue of both the SPV. Out of that INR 2,400 crore, one scope is given to DBL. Balance scope is directly done by SPV. It is not correct to say if the EBITDA is INR 3,000 crore. It cannot be.
Okay.
There is only some scope given to DBL, which is INR 2,400 crore.
Okay. Got it. Second, you mentioned that the optic fiber cable, 16 packages that we have bidded. I know, though the outcome will be known in times to come, but in terms of, is it like, what exactly our role in this? Any JV that we have done, what is our share? Will it be okay to share that?
Sure. The site construction thing, which is trenching and laying of optical fiber, all those will be done by DBL. The site construction operations.
Okay. Is this done on our own, we are doing it or it is in some JV, whatever the order that we get, some JV that will be getting booked?
Yes, it is an EPC project, sir, but it is a JV with Sterlite.
Vishal, the total optical fiber business, as Rohan said, the trenching and laying of optical fiber will be done by us and balance, like supply work, like optic fiber and routers and all, will be supplied by our JV partner, Sterlite . There is a split between both the partners. The scope is split.
Okay. And maybe two bookkeeping sort of questions. In terms of tax rate, how exactly we see for FY 2025 and 2026 for us? This quarter it was something like 14% odd. Just got to check.
It will be around 33%, sir.
Okay. So it will be 33% for FY 2025 and similar for next year, right, sir?
Yes.
Okay. Then one last thing, even on depreciation, sharp reduction that we are seeing, is it just because the gross block is seeing a reduction, or we have changed our depreciation rate also?
There is no change in depreciation rate. The only reason is net block is reduced because we have not bought fresh equipment in last two years, whereas the depreciation is going on. So net block itself is reducing.
Okay. Got it, sir. That's all from my side. Thank you.
Thank you, Vishal.
Thank you. The next question is from the line of Vaibhav Shah from JM Financial. Please go ahead.
Yeah. Thanks for the opportunity. In the equity tracker sheet, we have mentioned that the invested equity till June is INR 1,646 crores. What would be the same number as on March 2024?
Allow some more minute, sir. We will tell you.
Yeah.
Around INR 160 crores, INR 165 crores is invested in this quarter. You can minus that from the total equity. It is or say 1,800 minus 160. Around INR 1,640 crores.
We have invested something in Siarmal in this quarter? I wanted the HAM equity as of March.
I am just opening the last quarter presentation.
In the last quarter presentation it was for 16 HAM, so it is not comparable. That is why.
I know the reason for that, because we changed it because of feedback from market participants that maybe the way that we were explaining was not giving a that is why we changed it.
You can see there is INR 160 crore investment in quarter one FY 2025. So you can minus from INR 1,800. So it is INR 1,540 crore as of March 31, 2024, out of 19 HAM projects in Siarmal.
The investment in HAM projects in first quarter would be how much out of that INR 165 crores is important. That is what my question is.
Sir, it's all largely to HAM project only. Siarmal might be very negligible, less than INR 5 crores I'm guessing. Yeah.
Okay. Secondly, the incremental INR 760 crores is pending, so that could be done from the standalone books now or some subsidiaries also would be investing incrementally?
Sorry, some what would be investing?
Subsidiaries. We have invested certain parts from other subsidiaries.
No, we are proposing to invest the balance equity from DBL from now onwards.
Okay. Sir, secondly, on the units which you are expecting the distribution from units of Shrem and Alpha, you have indicated the number. What will be the tax implication on this?
The tax-wise, the interest is taxable in the hands of the receiver at the maximum tax rate. If DBL is receiving the interest, then it is taxable at the DBL's tax rate. Dividend is free because Shrem is into the old tax regime. Then principal return, there is no tax. We can say out of the 13%-14% distribution from Shrem, the net tax return is around 11%.
And the same number for Alpha?
Alpha we have projected or estimated around 10 more percentage, so the net tax return would be lower than even 10.
Okay. Lastly, what are our CapEx plans on the standalone business for FY 2025 and 2026?
FY 2025 we can guide you now because the total CapEx would be in the range of INR 150 crores-INR 170 crores. Out of that, INR 30 crores is already done in quarter one.
Okay. And sir, earlier they indicated that over a longer term, we are targeting EBITDA margins of say 12%-14% odd on the standalone DBL. This year has been weak in first quarter, and we are expecting somewhere around 11%-12% for FY 2025. Once the execution picks up in say 2026 or 2027 or maybe over the next two to three years, what would be our margin trajectory?
Yes, sir. Once the order book is in line and once we have good orders, and once the cycle goes back again, that is the margin profile that we think that is very achievable, and that's what we're targeting.
So 12%-14% looks achievable maybe over a longer term.
Yeah.
Yeah. Okay. Those were my questions.
Thank you, sir.
Thank you.
Next question is from Prem Khurana from Anand Rathi Shares and Stock Brokers. Please go ahead.
Yeah, thank you for taking my question, sir. Most of my questions are already answered. Just one small clarification on our financials that we've reported. So in consolidated numbers that you've reported, the segment highlights, there is this INR 510 crores of loss in annuity projects and others. What exactly would this be? And even on EPC side, the margin seems to be almost around to the extent of 30% odd, which generally used to be sub 10%. Would you be able to kind of clarify these two, please?
Sir, which page are you referring to?
The result release that you have. Result release page 15 of 19, the segment highlights consolidated.
No, you are looking at, you said the segment on the-
Which page you are looking for? 15 of 19 of the PDF.
This one. Which one? Allow a minute, sir. We will just take a look into it, yeah.
Sure.
I think, Prem, I think what you are referring to is the losses that are on project during construction period. I think those are the ones because of Ind AS rules. Why don't you have a separate call with my finance team to understand it in detail? Yeah.
Because when I look at the comparable quarters, this number was not this large any time in the past. Even the EBT side, INR 920 crores on INR 3,000 crores of top line again seems to be on a higher side versus when you look at Q4 or Q1 last year. Was sub 10% sort of number. No worry then, I will take it up.
Why don't you take it separately? Because
Yeah, sure. I will do that. Just one more small clarification. I think the money that we said we were supposed to receive from Alpha Alternatives, for the 26% stake, INR 478 crore that you show on slide 27, is adjusted for the INR 160 crore that we've received, right?
Sorry, sir. Out of the INR 478 crore, we received INR 190 crore this quarter, the current quarter in July 2024.
INR 190 crore in Q2, you are saying?
Yes. The balance will be received majorly in this quarter, and 1% probably may go to early next quarter. So, the balance revenue, around INR 300 crore, will be received during this quarter and early next quarter.
Okay, sure. Thank you.
Thank you.
Thank you. The next question is from Shravan Shah from Dolat Capital. Please go ahead.
Hi, sir. Sir, this unit distribution that we have spoken and what is there in the page 26 of presentation. So broadly, how one can look at in terms of how much this will come to standalone P&L, because something will also go to DBL Infra also. So, that can help in terms of broader percentage will help.
Shravan, out of these 18 assets, these units will come from the DBL Alpha. 26% is held by Alpha. The balance 74% is held by us. 51% is direct DBL and 23% by the subsidiary to DBL. So directly in DBL, you can see the ratio of 51% to 23%, in total 74.
Sorry, sir. Can you repeat the last line?
I'm saying in the DBL Alpha deal, the shareholding is like this, 74% by DBL Group and 26% by Alpha Group. The units will be 74% of the units, and the 74% is split between 51% by DBL and 23% by a subsidiary of DBL. Direct DBL, 51% out of this 74%. So if I'm holding 74 units, then 51 come DBL.
Okay. Broadly, 60%, if I broadly look at 51% of 74, broadly 64% that way. For Shrem, how one can look at?
Shrem 60/40, 60 DBL and 40 DBL Infra Assets.
Okay. So same way. For both, broadly it is a 60% that we will be receiving that standalone.
Right.
Okay. And sir, though we have said, I just wanted to further clarify in terms of for data among the entire working capital. Obviously, you have explained the inventory wanted to reduce. But in terms of the particularly the datas, will it come back to the normal as on March? It was 48 days. So now as you are saying, you have received some money. So by end of March 2025, we will be having the similar 48, 50 odd days, data days?
Yes.
Okay. And overall total, whatever the increase has happened, 15, 18 days, so that should also come back to the normal level in terms of the working capital days by end of March.
Yes, Shravan.
Okay. Got it. Thank you.
Thank you, Shravan.
Thank you very much. That was the last question in queue. I would now like to hand the conference over to Mr. Rohan Suryavanshi for closing comments.
On behalf of the whole DBL family, I would like to thank all of you guys for coming here and asking your questions. In case the questions that we were unable to answer, if you were unable to ask, please feel free to reach out to us personally, and we would be happy to answer any questions. I look forward to seeing all of you guys in our next quarter call.
Thank you very much. On behalf of Dilip Buildcon Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.