Ladies and gentlemen, good day and welcome to Dilip Buildcon Limited Q4 and FY 2024 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 conference 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.
Thank you, [Sagar]. Good evening, everyone. Welcome to Dilip Buildcon Q4 and FY 2024 earnings conference call. From the management, we have with us today Mr. Devendra Jain, Managing Director and CEO; Mr. Rohan Suryavanshi, Head, Strategy and Planning; and Mr. Sanjay Kumar Bansal, CFO. Before we proceed with the 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 certain uncertainties, and the actual results could differ from those. Now, I request the management to take us through the key remarks. After which we can open the floor for question -and- answer session. Now, I 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 the whole DBL family, I'd like to welcome all our partners here who have come here for our hearing call on the auspicious occasion of Akshaya Tritiya. The results and the presentation have been uploaded on the stock exchange, and I hope all of you had a chance to look at it. Today I'd like to start with some data on the industry, just getting straight into business. For FY 2023-2024, as per the government data, MoRTH has constructed 12,339 km of roads, registering growth of 20% year-on-year. This roughly translates into 34 km per day of road construction. While the execution was decent, on the awarding front, there was a major fall this year, and it stood at a total of 8,581 km.
This slow awarding was primarily because of this being an election year, and as we have seen in all the election years preceding this. If you look at the trends for the last five elections, it's been the same trend that the election year has a slow awarding. But we expect this scenario to now improve significantly in this financial year and expect the second half of FY 2024-2025 will be quite heavy in terms of ordering from all sectors of the government. According to the company, in FY 2023-2024, the company won orders worth INR 3,602 crore, which obviously was lower than expected for the reasons that I mentioned. Of this total orders won, 42% of the projects are in irrigation, 35% in water supply, 15% in roads, and 8% in urban development.
Now, over the years, as part of our risk mitigation strategy, we have reduced [audio distortion] sector to a great extent. In the pre-COVID year, [audio distortion] was 65%. In the current year, it is at 67%. How we have prioritized and expanded our business vertical from purely the road segment to other business verticals such as irrigation, water supply, urban development, metro, special bridges, mining tunnels, et cetera. All these diversification strategies that we have done sectorally and geographically have provided DBL a strong footing in all these areas. As orderings have kept on increasing in all these sectors, we are very optimistic of accomplishing targets that we are setting for ourselves this year.
I am very happy to report that when we spoke last year at the end of last financial year, I said that we are looking to reduce our debt by INR 800 crore to INR 1,000 crore. I am very happy to say that we have reduced our debt this year by INR 861 crore through our various initiatives. This, I am talking about the standalone level. What this translates into is now the net debt to equity ratio stands at 0.29 x. This in the COVID year was at almost 0.8 x and when COVID had hit. If I talk to you in terms of net debt to EBITDA, now we are almost at 1.15 x net debt to EBITDA. This obviously shows our company's commitment in fulfilling our promises and our focus, as I mentioned, on debt reduction.
I am happy to report that in this financial year, in FY 2025, we are targeting to further reduce the net debt by at least INR 500+ crore . As the year goes, we will keep on seeing in how we need to more look at our target or reaffirm it, but we can safely say this is a target that we are putting. Moving on, let me also update you on some of the other deals in the company. Let me start with the Alpha deal. In this year, the company issued warrants worth INR 533 crore to Alpha Alternatives. Out of which, Alpha has taken 25% as are the rules for the warrants, and the company has received INR 133 crore.
The rest of the money, as per the guidelines and rules put forward by SEBI, will need to come into the company by June 2025. In the same deal, in terms of diversification and divestment, the company has divested 26% in three HAM assets to Alpha, in which we have received about INR 130 crore.
In this financial year, we will be divesting 26% in balance five HAM assets, through which we are expecting INR 508 crore as money to come. This money is expected in the first half of this financial year. Now let me focus on our coal business. In Siarmal coal mine, in this financial year, the company has overachieved its target by more than 50% by extracting over 7 million tonnes compared to our target of 5 million tonnes. For the next year, we are planning to achieve production of 15 million tonnes compared to the scheduled target of 10 million tonnes. We are expecting almost 50% of overachievement in next year as well based on the current run rate.
In this mine, in the next four years, the total extraction will be about 80 million tonnes cumulatively, and from the sixth year onwards of this mine, we will be extracting 50 million metric tonne of coal per year. On the other Coal India , in the Pachhwara mine, we have delivered 4.6 million tonnes in this financial year as per the agreed terms and based on when we started this mine. The next year target is 7 million tonnes, which is a full year target, and we are on target to deliver that, too.
Friends, when I spoke to you at the end of last session, I had mentioned, and earlier [in this financial] mentioned, we are now gearing up for DBL 2.0, and I explained DBL 2.0 is how we have in the post-COVID era aligned our company's strategy, our focus towards us building a stronger DBL, which can withstand any kind of external unseen problems such as what we faced in COVID. The two parts to that were, A, we will have our short-term business, and then there is the long-term revenue business. In the short-term business will be our EPC business that we continue to do. In the long-term strategy, there are two things that the company is focusing on. The asset business, where one is the coal MDO assets and the second is the InvIT assets.
In three years from now, there will be three different powerhouses for DBL. One will be the EPC company, one will be the coal MDO powerhouse, and then there will be the InvIT powerhouse. The InvIT and the coal will assure long-term revenue visibility for DBL. In two years, as our coal InvIT gets completed, we are expecting INR 400-INR 500 crore of free cash flow coming from the InvIT as dividends and principal repayment back. Besides that, the coal business will also be providing a good cash flow and a visible cash flow, which gives us visibility from current to the next 25 - 55 years. And the EPC business will be our short-term business, which will keep on giving revenue on a regular basis. Our aim is to become a net debt-free company on a standalone basis within the next two years.
FY 2025 and FY 2026, we will be a net debt-free company. Our focus is on generating free cash flow, which is what we are doing, and reducing our debt through that. Our focus is on improving our return on equity and our return on capital employed. I am very happy to report that if we look at our return on equity, on a core basis, where we minus our investments into our assets, it has jumped from 6.9% of last year's ROE to 13.8% ROE this year. Our focus will be to keep on enhancing this, and same goes for return on capital employed also. Our focus is also to mitigate concentration risk across sectors, across lines, and across geographies. We are also reading our order book accordingly.
All these different actions that we are doing have also facilitated in the enhancement of the company's credit rating. We're happy to report that CRISIL has reaffirmed its rating for the company and also improved its outlook to positive. We are also hoping for an increasing rating for the company in this financial year. That trend should continue in the next year as our debt keeps on getting paid down and as our cash flow keeps getting stronger. Friends, now I'd like to hand over the call to our CFO for the financial overview.
Thank you, Rohan. Good evening, everyone. I welcome all our stakeholders to our earning call. Let me present the results for Dilip Buildcon Limited for the quarter that ended 31st March , 2024, and financial year 2023 - 2024. During quarter four, the company has completed four projects, and on a yearly basis, the company has completed nine projects worth INR 7,400 crore. During FY 2024, the company won six projects worth INR 3,602 crore, and during last quarter, the company won two projects worth INR 961 crore. Now moving from business to financial performance. Quarterly performance. Quarter four FY 2024 versus quarter four FY 2023 YoY basis. The company's revenue increased by 2.5% in quarter four FY 2024 versus quarter four FY 2023. This is due to better execution of the projects.
The EBITDA increased by 29.56% in quarter four FY 2024 on YoY basis from INR 272 crore in quarter four FY 2023 to INR 352 crore in quarter four FY 2024. The EBITDA margin witnessed a significant increase by 250 basis points. The EBITDA margin increased on account of higher revenue and reduction in construction materials costs. In terms of profit after tax, the profit after tax increased by 112% in quarter four FY 2024 on YoY basis from INR 58 crore to INR 124 crore in quarter four FY 2024. The PAT margin also witnessed a significant increase by 218 basis points. This is mainly on account of better EBITDA margin and reduction in expenses.
On yearly performance, FY 2024 versus FY 2023, the revenue increased by 4% in FY 2024 on YoY basis from INR 10,119 crore in FY 2023 versus INR 10,537 crore in FY 2024. This is due to the better execution of the projects. EBITDA margin increased by 31.44% in FY 2024 on YoY basis from INR 988 crore in FY 2023 versus INR 1,299 crore in FY 2024. The EBITDA margin witnessed a significant increase by 256 basis points. The EBITDA margin increased on account of better execution of the projects and reduction in cost of construction material. Profit after tax also increased 90% in FY 2024 on YoY basis from INR 222 crore to INR 422 crore in FY 2024.
The PAT margin witnessed a significant increase by 181 basis points. This is mainly on account of EBITDA margin and the reduction in expenses. Let me take you through some important items of the balance sheet. During FY 2024, the company surpassed INR 5,000 crore net worth and reduced INR 861 crore of the debt. Due to the reduction in net debt and increase in net worth, the company's net debt equity ratio improved to 29 basis points as of 31st March , 2024 versus 52 basis points at the end of March 2023. In terms of debtors also, on 31st March , 2024, the debtors reduced to INR 1,392 crore versus INR 1,606 crore at the end of March 2023. Working capital days also improved by five days from 70 days to 65 days from FY 2023 to FY 2024.
Thank you all, and now we can open the floor for the questions and answers. Thank you once again.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Yeah. Thank you, and congratulations on the INR 800+ crore debt reduction. Sir, a couple of broader questions on the guidance front. First, on the revenue. What kind of a growth are we looking at in FY 2025? If possible, if you can guide for FY 2026.
Hi, Shravan. Thank you very much. Shravanji, as we mentioned earlier, the order book this year as we expected has not come because of the ordering. But as elections get over, we are expecting a flurry of orders. So in terms of order full-year guidance for revenue, I think it would be a little early to give you what kind of growth because you are all seeing what kind of orders have come. But even if you want to play and take a bet, it is like this revenue that we are doing this year, easily we should be able to do that kind of revenue next year as well. Now, how much increase or what growth will come will all depend on how the ordering opens up and how much should we win and at what times.
So allow us time, and as we move on through the quarters, it would be much better to do it. But right now, you can, like I mentioned, you can take a similar number as we have done in terms of revenue for this year. But as it opens up, we will give you more clarity on that.
Okay. In terms of now order inflow, obviously we have received a much less number in terms of the inflow in FY 2024. So in FY 2025 now, how much order inflow are we looking at? If you can help us broadly, how much are we looking at from the road and between our HAM? Based on that, let us say whatever the number you will say, out of that, how much revenue can be expected from that in FY 2025?
Shravanji, this year, the total order inflow that we are looking at is INR 10,000 crore-INR 12,000 crore at least. That is the kind of range that we are looking. This is across all sectors that we work in. So on the cumulative basis, it is easy to take that kind of number, that those are the kind of orders that we are kind of looking at. It would be very difficult to give you a split on the different sectors, and it would also not be prudent on our part to be disclosing how much we are targeting where. But we can assure you it will be in all the different sectors we work in, and it will also be a mix of both EPC and HAM. So let us see how the orders come, what we end up winning.
But broadly, that's the strategy that has been in the past as well. We will be following a similar kind of strategy.
Okay. But let's say if you get a INR 10,000 crore and broadly, let's say for HAM, obviously the revenue will come in FY 2026 as the project date will take time. So let's say if you get a INR 4,000-5,000 crore EPC, can we expect some revenue from that? Just trying to understand what extra growth can come on the revenue in FY 2025.
Yes, of course, Shravan. As we win more EPC contracts, you will see revenue coming from there. Also, we've very recently won another INR 1,000 crore contract in the rail segment, railway. So that is also not visible here. So like that will start. So there are different sectors and orders that we are targeting. Based on which ones open up at what time, it will definitely have an impact on the revenue.
Okay. In terms of the EBITDA margin, CapEx, how much are we looking at for this year?
EBITDA, like we've given you a target of last time as well, we are looking at that same 12%-14% kind of EBITDA targets that I had mentioned earlier as well. In terms of CapEx, the same INR 50 crore-INR 70 crore odd of CapEx is what we will be looking at. I'm also very happy to report at the same time that currently our equipment debt only stands at about INR 180-odd crore . Sorry, INR 170-odd crore . Like I said, somewhere in that range is where we are standing. Almost 80% of which we will be paying down in this financial year anyway. That is a scheduled repayment. So our equipment debt is almost completely off, and we are on target, like I said. I already given you the kind of target we're looking.
By the end of this financial year, our net debt will be less than INR 1,000 crore.
Okay. And then, sorry, our net debt, you are saying will be less than INR 1,000. So at gross level, we are looking at a INR 500 crore debt reduction?
Yes, INR 500+ crore .
Next year would be a significant reduction will be there. Close to kind of INR 1,500 crore, INR 1,000 crore kind of a number will be there in the next year.
The INR 1,000 crore number for debt, you said—
Net debt.
—net debt?
Yeah, net debt reduction.
It will be less than INR 1,000 crore from where we are targeting.
Okay. Got it. On the working capital front, any further improvement from current 66 days? Particularly on the inventory front, there we are not seeing much improvement.
Shravanji, basically we are working towards reduction in overall working capital days. What I briefed in the beginning, five days improvement from 70 days to 65 days. Yes, on inventory side, more or less it is looking like the same. The inventory levels are same, but overall, this is five days increment. But individual item-wise, we are working on, there will be improvement quarter- on- quarter, every time. Yes, we are doing that, but it is basically coming in the results also.
Okay. Sir, now on other income and finance cost, how do we now look at the finance cost for this year, FY 2025 and if possible for FY 2026 and other income? Why I'm asking other income is, the Shrem InvIT we have received, I think close to INR 106 crore as a distribution. Also help me out of that, how much will be coming at the standalone level and now with the Alpha, whatever the distribution we will be receiving, the entire will be coming at standalone or how it will be?
In terms of finance cost, the finance cost this year reduced massively because the debt reduction significantly happened in quarter four. But for FY 2024-2025, the targeted finance cost is INR 350 crore against the INR 500 + crore finance cost. In terms of the other income, total from the existing set of Shrem InvIT, which we have already detailed out in the investor presentation, we will be receiving around INR 94 crore total distribution. Generally, the distribution principle is around 30% of the total distribution. Yes, you can say around INR 65 crore-INR 70 crore from the dividend and interest and the rest 30% from the principal return.
And this entire will be shown in the standalone other income?
No. Basically, the units are held in DBL and DIAPL. I gave the number on the consol basis.
So at standalone level, anything will flow as other income, whatever the dividend we will be getting from the InvIT?
Shravanji, the numbers DBL level and DIAPL level is not ready with me. You can connect with us separately. We will give you the breakups also.
Okay. On the DBL Infra debt it is the same INR 675 crore or has the number changed?
INR 675 crore as on today is, yes. We have already started prepayment of around INR 30 crore. By next month, this will be reduced by INR 30 crore.
Got it. Just a clarification on the presentation, the 16 HAM projects that we are showing. Currently right now we have 18 HAM projects and I think the one new that we have received. Alpha Alternatives, we will be transferring the 18 HAM projects, 26% equity stakes. In the presentation, why we are mentioning the 16 HAM projects and not the 18? We will keep owning the 74% stake in 18 HAM projects.
You can basically see the breakups is mentioned in the five portfolio. You can see there basically, total 18 projects were targeted to be given to Alpha, 26% stake. Just a second.
I was referring to slide 24, where we have mentioned equity and divestment tracker.
Basically total 19 projects what we have today. 19, breakup is 18 of Alpha and one project we got last quarter. Out of total 19 projects, three projects, 26% already given to Alpha after completion. So total 16 projects as of 31st March , 16 projects were under construction. Out of 16 projects also, five projects out of the first budget, eight budget is remaining. So out of five HAM projects, two projects, the COD is received.
Two projects COD will be received in May and one in June. So out of 16 also, 11 projects will remain after, you can say June, under construction. So after this quarter, only 11 projects will continue and five projects, 26% will be divested between quarter one and quarter two of FY 2025.
Yeah, I got the point. What I was trying to understand is actual invested equity as on March 2024 is INR 1,265 crore. So this is only for 16 projects or it is for 18 projects?
It is 16 projects only. Out of 16 projects, I said five projects. Two projects we already received the equity. Basically, you are basically saying the actual invested equity. It is all 16 projects.
It should be 18 projects now, because we also own the 74% in the two projects we are not mentioning here.
Shravanji, this INR 1,265 crore is relevant to 16 projects only. Whatever project we already completed, it is removed from this sheet.
Okay. Got it. I understood. Just a clarification, sir, whatever the remaining 10 projects that the Alpha Alternatives will be taking a 26% stake. There, once we complete the entire project and we will put 100% and then they will invest 26% and we will get back that 26% cash. That is the way it will work? Or we will invest 74% and then 26% invested by them?
We are putting our capital only, and while we have the option. But once the PCOD is done, then we will get Alpha's capital into those assets.
Initially, we will put the entire 100%. Once we get the PCOD, then we will get back the 26% from Alpha?
Then we'll flip and do that. But like I said, here again, I repeat that while we have the optionality to pull that money earlier, but we will see. We'll take a call on it as our strategy goes.
Okay. Thank you and all the best, sir.
Thank you. The next question is from the line of Narendra from Robo Capital. Please go ahead.
Yeah. Hi, am I audible?
Yeah, you're audible.
Thanks for the opportunity. My first question is regarding the money that we are to receive from Alpha. What is the timeline for this money? I believe that the INR 133 crore has already come in, and about INR 400- odd crore is left from the warrants, right?
Yes.
When is that expected to come in?
Narendraji, from warrants, INR 133 crore you rightly said, received already in December 2023. INR 400 crore as per SEBI guidelines under warrants, they can put within 18 months from the first tranche. So 18 months will be completed in June 2025, around 20th June 2025. So this money, Alpha can put by June 2025. That is why we kept in 2026. This money may receive before because it is optional. They can put it earlier also. So the last time, the end line is June 2025.
Okay. Understood. What about the InvIT money? When will that be coming in?
Investment out of the total eight projects. The first set of eight projects, three projects we already received INR 130 crore. From the next five projects, 26%, we will receive total INR 508 crore. Out of INR 508 crore, majority money will be received in this quarter, and around INR 50 crore-INR 65 crore will be received in quarter two.
H1, we are expected to receive around INR 500 crore, right?
Right.
Can I also direct your attention to page 24 of our presentation, where we have highlighted how the money and this will come. It will be very simple for you to refer to it and you will understand how this money flow will be coming in.
Understood. Just a clarity on the deal. We are expected to receive around INR 4,000 -odd crore in units and INR 2,000 -odd crore in cash, right? Would that be fair?
No. In total, we will be receiving for our 18 assets. Our units will be worth about INR 4,500 crore. I am giving a very rough estimate right now. Our 74% would be around that kind of value. Besides that, we are receiving the other cash that we mentioned. The cash component has two components. One is the warrant money that is coming, and the second is the InvIT 26% money that they told. If you want to refer to the exact all those calculations, I would highly recommend, ekbar, please look at our earlier presentation as well, where we first spoke about the Alpha deal. We have detailed out how the different cash from Alpha would be coming. Here also in this as well—
It is mentioned.
—it is mentioned here in this presentation as well. If you want to look at it ekbar, please take a look. It will be very, very clear. Once this transaction is completed, DBL will be holding about INR 4,500 crore odd of InvIT units. That would roughly translate into INR 450 crore-INR 500 crore of cash flow per year. This is on top of the 18 assets that we have sold to Shrem Group, for the 18 HAM projects that we sold. That is one there. We are getting that cash flow coming from that.
Okay. Understood. The deal multiple would be around 2.5x of the equity invested. Would that be right?
One way. [Non-English content]. We have given you the idea of how much equity we had invested in it. That we put in our slide. Yes, there is a good multiple. If you want to do the exact calculation, look at the cash component that is coming to the company along with the value of the InvIT units that we are doing, and then you can subtract the investments to get an exact.
Okay. Understood. My second question is regarding the coal projects, right. What are the handling charges per tonne, and what kind of margins would we be making on that? Hello?
In the typical MDO project, what happens is we quote a price for extraction per tonne. In both the different contracts, there is a different price that we have quoted and we will be doing. In terms of margins, it is kind of similar margins what we are doing in terms of what EPC we are directly towards. Those kind of margins is what you should be looking at.
Okay. 12%-14%, right?
Yeah, mid-teens is what we have guided for that.
Okay. Understood. For the Siarmal coal unit, would you be able to give the handling charges per tonne or extraction charges per tonne, whatever it is?
The thing is, for all these contracts, there is an inflation component built in, and there is [audio distortion]. Siarmal, we are getting about INR 550 or somewhere in that range of price. The INR 500-something range from that. And obviously, this keeps on moving based on certain parameters that the government accepts for the contract.
Okay. Understood. That's it from my side. Thank you so much.
Thank you. The next question is from the line of Ketan Jain from Avendus Spark. Please go ahead.
Thank you. Good evening, sir. My question is, sir, what is the interest rate you are seeing at a project level for financing HAM projects?
The HAM project financing, because the MCLR of all the banks are close to 9%, so the various banks are basically financing new projects at between 9%-9.5% in the construction phase. And post-construction, it is on MCLR, so around 9%, 9.1% types.
Okay. Thank you, sir. That was my question. Thank you.
Thank you. The next question is from the line of Darshil Jhaveri from Crown Capital. Please go ahead.
Hello. Good evening, sir. Thank you so much for taking my question. Most of my questions have been answered. Just two questions, sir. One is, what is the current cost of debt that we have for the debt on books? That is my first question. Second, sir, with the elections coming in, do you see any risk of more orders slow down or maybe if the government doesn't form? So what kind of broad-based risk that you see in order inflows?
In terms of cost of debt, cost of debt fund-based facilities, we are around 9.5%-10% in short-term debt, including all costs. But at the same time, on non-funds, because the EPC business runs on non-fund base, there are LC and BGs issued. Basically, they are also around 1%-1.25% cost. Overall basis, we had given guidance of INR 350 crore overall finance cost for FY 2025.
Perfect, sir. And sir, with regards to the risk.
As in terms of election risk with regards to that. Like I mentioned in my opening remarks, election year is always a slow ordering year. If you look at this detailing back from Vajpayee's deal era to now, every election year is a slow year. But the year after it, you hear ordering increases significantly. I can also tell you right now that all the different ministries are working on a very aggressive 100-day plan. So the government is also very focused on wanting to start immediately off the blocks. So once the election gets over and results are out and the new government comes into place, we should see a flurry of orders happening. Even at the NHAI level, there is more than INR 1 lakh crore of orders that have already been floated.
INR 1,20,000 crore of orders purely on NHAI and MoRTH level that have been floated. There is a huge order line in the Road Ministry, in Railways, in every ministry. Order conduct, because of that, it is currently slow. But as soon as this happens, we should see a lot of altering.
Perfect. That helps me a lot, sir. All the best, sir. Thank you.
Thank you.
Thank you. A reminder to all the participants, if you have any questions at this moment, please press star and one. The next question is from the line of Shubham Shelar from IDBI Capital. Please go ahead.
Yes, sir. Based on the current order book that we have and the delivery schedule that is pegged to that, what kind of revenue that you are expecting, assuming that no inflow and any inflow is delayed, just based on the current order book.
Sir, even if we had zero inflow coming in this new financial year, even if there is zero number orders, we would still be doing a revenue of almost what we have done in this year. The same range we should be hitting in FY 2025 as well, t he same 2024 revenue. The revenue for 2025 is pretty much fixable for us. Year going forward after that is where we will be looking at all new orders. The only caveat that I made is depending on how much orders we win immediately afterwards, it does and how the execution picks up there. We can have slight changes to the revenue guidance for this financial year. Hence, I mentioned earlier that allow us some time and allow the year to move forward, and then how direction it does.
We will be able to give a more exact idea about the orders. About the revenue. Till then, I think taking this as a basis that this kind of numbers the company should be able to do next year as well is a good starting point.
Sure, sir. Recently, CRISIL has revised the outlook to positive. Does this also have a bearing in lowering our finance cost or only the actual rating upgrade that has a bearing on the finance cost?
Shubham, basically, the rating impacts the borrowing cost when it goes to the next category. We are in A category, positive outlook. Now, we are expecting credit rating increase also based on the plans of reduction in debt and all. We expect when the credit rating will go to next level, then there will be reduction in borrowing cost as well.
Okay. Typically, when this, say in the month of April, this outlook is revised. After a gap of how many months or quarters that rating change, they review it. How exactly does it work?
Basically, the review, they are doing closely, and I think every quarter, but the—j ust a second. Sir, basically, this time the upgrade is done after a year, but the review is done every quarter.
Okay. Sorry, I think I just missed. When are we expecting probably upgrade sort of reviews? I mean, if I have to put it that way.
Between 12 months, 12- 15 months, I believe.
From now, right, sir?
From now. Yeah, from now.
Okay. That's all from my side. Thank you.
Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Rohan Suryavanshi for closing comments.
Thank you again, guys, for coming and asking all your questions. In case we have missed out on answering anything, and if you have more follow-up questions, please feel free to reach out to our team. We will be happy to answer them. I look forward to seeing all of you guys in the next quarter. Hopefully, we will have more clarity on the order book going forward by then with the government's firming in place. Wishing all of you a great financial year ahead.
Thank you. On behalf of Dilip Buildcon Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.