Ladies and gentlemen, good day and welcome to Dilip Buildcon Q2 and H1 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 touchtone phone. Please note that the 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, Mr. Akshay. Good morning, everyone. Welcome to Dilip Buildcon Q2 and H1 FY 2023-2024 earnings call. From the management, we have Mr. Devendra Jain, Managing Director and CEO, Mr. Rohan Suryavanshi, Head, Strategy and Planning, and Mr. Sanjay Kumar Bansal, CFO. Now I request the management to take us through the key opening remarks. After that, 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. Good morning, ladies and gentlemen. A very warm welcome to all of you for the quarter two and first half FY 2024 earnings call of Dilip Buildcon Limited. The results and presentation have been uploaded on the stock exchange, and I hope all of you have had a chance to look at it. Before I begin, let me mention our 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 in such forward-looking statements. Let me now share some insights on the macroeconomic environment of the sector and give you some company updates as well.
Following that, our CFO, Mr. Sanjay Bansal, will present the financial update of the company, post which we will dive into the Q&A session as Jill updated you. The global economy faced a slowdown due to shifts in global geopolitics and rising oil prices. Although headline inflation is showing signs of improvement, it continues to surpass targets in major economies. In contrast, the local economic landscape displays resilience supported by robust domestic demand. Agriculture activities in quarter two 2024 maintained their momentum despite uneven monsoon patterns. The government's gross GST collection grew 11% YoY for the first half of FY 2024 and stood at INR 9,92,508 crore. Now moving to some updates for the sector. For the half year ended 30th September 2023, MoRTH has constructed 3,567 km and awarded 2,286 km.
The Ministry of Road Transport and Highways aims to accomplish 91% of the GBS capital expenditure outlay by December 2023, targeting an annual sum of INR 258,606 crore. As of September 2023, the expenditure reached INR 162,220.86 crore, which constitutes 62.7% of the annual target. You can see the government spending is going at a good pace. According to the Ministry of Road Transport and Highways, the sector's health has significantly improved, bolstered by various policy interventions. The Indian government's renewed commitment to fostering public-private partnerships in road construction can be seen in their constant support to the sector. The government plans to award INR 2 lakh crore worth of BOT projects by March 2024.
Projections indicate that India is on track to achieve a record net toll collection of INR 67,000 crore by the end of FY 2024. The ministry has also announced the government's extensive plan to construct 10,000 km of greenfield expressways nationwide, amounting to a total cost of INR 4.5 lakh crore. This initiative aligns with the overarching Bharatmala Pariyojana, aiming for a comprehensive 65,000 km highway development program across the country. The initial phase focuses on a road network spanning 34,800 km. The Honorable Minister also highlighted the successful financial strategies employed by NHAI, generating over INR 70,000 crore through innovative financial modelings. This includes INR 26,000 crore from TOT model, INR 10,000 crore via the NHAI InvIT, and INR 34,000 through securitization via SPVs.
According to a recent report, the National Highways Authority has the potential to monetize around INR 2 lakh crore from its HAM assets between fiscal 2024 and 2027. Let me shed some light on the recent developments on the company side. I am very excited to tell our partners about a new development and direction for our company. DBL 2.0 is a vision which was drawn after the turbulent times of COVID. We looked at all the challenges we faced in what was the most unprecedented event of our lifetime, and deliberated on the way forward for us as a company and management. As you all know, our business is a cyclical business, and we are heavily dependent on the state of the economy and the government's spending capacity.
Knowing these facts, we aligned our goals to the reality of an uncertain world with a view to reduce the volatility in our business and ensure smooth, predictable cash flows in future. One of the key focus areas of our strategy is to make our balance sheet leaner and lighter, as we have already stated in the past as well. In consideration to that, we have reduced about INR 300 crore of debt from the FY 2023 levels, and are on target to reduce a total of about INR 800 crore-INR 1,000 crore from FY 2023 to FY 2024, as we had stated on our last call. That would take our net debt to somewhere in the range of INR 1,300 crore- INR 1,500 crore by the end of this financial year. Our target is to make DBL a net debt free company by the next financial year.
A company like ours, which has been known for our large CapEx commitments, has taken a conservative choice that we will now focus on improving our cash flow. We will focus on reducing our CapEx and monetizing our assets. In that same breath, we also decided that our large, big target is to have both long-term and short-term revenue streams contributing to our top line and bottom line. Our EPC work is a short-term revenue stream, and our asset business will be our long-term revenue stream. With that goal, we have decided to set up our own InvIT with a reputed financial partner. Think of this partnership on the lines of an Embassy and a Blackstone REIT, where one partner brings in the financial experience and the other partner brings in operational heft.
DBL has had a long and storied track record of winning and building the biggest percentage of HAM projects awarded by the government until now. In terms of numbers, we have won 37 HAM projects worth INR 45,000+ crore till date, out of which we have sold and divested 19 projects worth INR 24,000 crore. Currently, we are left with 18 projects worth INR 21,000+ crore. It is DBL's strength to do EPC, and DBL will always keep winning good projects on the PPP model. Hence, what we want to do going forward is we want to retain the EPC profits at DBL and make sure that we return the invested capital of equity as soon as possible to the parent. At the same time, we want to set up a permanent mechanism where we are not always looking for a buyer to sell our projects to.
Because this way we realize we can also maximize the value for our company and our shareholders. This InvIT will be a milestone for us as it will not only give us a committed buyer for our own future assets, but it will also open a new stream for us to look at asset business opportunistically. The level of commitment of our financial partner can be gauged from the fact that not only are they partnering with us on the InvIT, but they are also taking a significant minority stake in the company as they see a good value unlocking happening at the company level as we become a net debt free company in the next financial year, with a top line of INR 11,000+ crore and operating in 8+ sectors of the infrastructure business.
We would be the most diversified company in that kind of revenue stream amongst all the EPC companies, where now all the different businesses are contributing a significant percent to our revenue. That is what excites our partner as well as we see significant investments by the government in the infrastructure sector. Us being a beneficiary of all those investments, whether it is in roads, whether it is in waterways, whether it is in mining, whether it is in metros, airports. All the different sectors that DBL is currently operating in, there is a decent amount of work that will be coming, and that is how Alpha, who is our partner, is looking in the EPC business.
Let me also give you some brief information on our partner, Alpha Alternatives, while we have attached some information on them on the presentation. I am sure a bunch of you already know them.
Alpha was founded by Mr. Naresh Kothari who was earlier with Edelweiss and worked very closely with Rashesh Shah there in setting up and building the Edelweiss business. He is supported by a team of very experienced professionals, all of whom come from IIT, IIM kind of backgrounds. Currently, they manage about INR 10,000 crore of assets under management, and this is managed under different verticals that they have. They have a track record of setting different verticals for different businesses with different risk-return appetite and appetite for different kind of investors. They were very excited about setting an infrastructure vertical where they see us partnering with us not just on the roads, but also other sectors going forward as the government opens up more and more sectors into the PPP model. That is how this partnership came about. Let me also give you some brief about the deal.
The total value that DBL is expecting in through this partnership, in terms of capital coming from Alpha, is about INR 2,000 crore. Now this is divided into three different buckets. One are the warrants, so they're taking up to 10% stake in the company at a price which is decided by the SEBI methodology. Along with this, they're taking 26% stake in the eight HAM projects, which are either completed or almost about to complete in this financial year. And they will also be taking 26% stake in the balance ten under-construction HAM projects. So these three buckets, they will be pouring in about INR 2,000 crore of capital in DBL. And this money will come in this financial and the next financial year. In FY 2024, we're expecting about INR 700, INR 800 crore of capital coming in from them.
This is divided between the 25% warrant that they will come in and the 26% stake that they're taking in the first eight HAM projects. So majority of that money in that will come in this FY 2024. In FY 2025, we expect another INR 1,200 crore, INR 1,300 crore to come in. This will come in the balance value of the eight HAM projects that are developed. Plus the 26% in the 10 HAM projects that are currently under construction, and the 75% money of the warrants. So this is the INR 2,000 crore breakup. Along with this, what DBL will also get in FY 2025 is InvIT units of about INR 2,500 crore- INR 2,600 crore. This will back become to DBL for the first eight projects.
In FY 2026, as our other 10 HAM projects also get completed, we will get another INR 1,300- INR 1,500 crore of InvIT units that will come.
To summarize, DBL is getting through this deal about INR 2,000 crore of capital from Alpha, plus about INR 4,000 crore worth of InvIT units. Now, these InvIT units will translate into a cash of upwards of INR 400 crore per year for DBL. So as you can see, our idea and agenda of the EPC business giving us regular business, plus us making sure that we are taking off whatever invested capital DBL has put in these projects, taking it and giving it, plowing it back to the company via this deal. Plus the leftover, we are trying to make sure to maximize and set up a long-term revenue stream, which will be the InvIT units and the cash that they will keep on providing.
As our EPC given business keeps on growing and the PPP projects that we keep on building, keep on increasing, we will keep adding to more and more units into our InvIT. We will also be looking at other projects opportunistically of other players, and it will all depend whether they meet our IRR hurdle, and that's the idea of this partnership. It is a monumental change and shift for us as everyone at DBL, and we're very happy to be sharing this information with all of you. Now, let me hand over the call to our CFO, who will give you the insights and comment on the financials of the company.
Thank you, Rohan. Good morning, everyone. I welcome all our stakeholders to our earning call for the quarter ended September 30th, 2023. Let me present the results for the quarter ended on 30th September . During quarter two FY 2024, the company has completed two projects. That is a greenfield airport at Rajkot on EPC site of INR 570 crore and a HAM project on National Highway. That is Dhrol-Bhadra Patiya section of INR 538 crore. Further, during quarter two FY 2024, the company won three projects across three sectors. That is irrigation, water supply and urban development, aggregating to INR 19,423 million. Now, moving from business to financial performance. On YoY basis, the revenue of the company increased by 7.30% to INR 24,270 million from INR 22,619 million, which is due to better execution of the projects.
On YoY basis, the EBITDA of the company increased by 12.32% to INR 2,935 million from INR 2,613 million. The EBITDA margin increased on account of better execution of the projects and reduction in the prices of construction materials. On YoY basis, the profit after tax increased by 86.45% to INR 1,197 million from INR 642 million. This is mainly on account of better EBITDA margins and exceptional income from sale of equity of few HAM projects to Shining Bid during the reporting quarter. Now let me take you through some important balance sheet items. During the first half FY 2024, the company has reduced long-term and short-term debt of INR 300 crore in line with our provision. The net debt equity ratio improved to 43 basis points at the end of quarter two, FY 2024, versus 52 basis points at the end of quarter four, FY 2023.
The debtors also decreased by INR 2,615 million to INR 16,018 million at the end of quarter two, FY 2024. Thank you. Now we can offer 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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset 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.
Thank you, sir, and congratulations on signing the deal with Alpha Alternatives. Before asking the question on this Alpha Alternatives, just broadly understanding the broad guidance of the basic numbers. First on the revenue margin guidance. On the revenue we said 8%-10%, we have done 3% in 1 H. For the second half, we need to do 13%-16%. Are we on track? Also we mentioned INR 11,000 crore revenue in initial opening remarks. Is this for this year or FY 2025?
Shravan, we have given a guidance earlier as well, and we are sticking to that same guidance that we have given, that the 5%-8% growth will come from FY 2023 numbers. The EBITDA will also be as what we have guided earlier. When I gave you that INR 11,000 crore top line number, I said we will be an INR 11,000+ crore top line company in future. This year and that year as we keep on growing. When the investor who is coming in, he is looking at the company of that size with such a diversified portfolio, which will be a net debt free company by the end of FY 2025. That is how they are also investing on the parent level through warrants.
True. Margin at EBITDA level on standalone 13%-14%, that is how we are maintaining an inflow, what we have received is INR 2,641 crore. This is all EPC value excluding GST and 100% stake of us because one project is with the JV with the Patel. There also we are doing 100% stake.
Sir, your last point was not very clear. For some reason, the audio was not very clear.
Yeah. I was saying, one of the project that we have bagged is with a JV with Patel Engineering. There I think our stake is 65%, but we have taken a full value in our order inflow. Just clarifying that we will be doing 100% execution.
Yeah, we'll be doing that project. That's an EPC project that we're doing. We'll be executing it. 100% we'll be doing that project, sir.
Okay. For order inflow now, for this year, we were previously looking at INR 10,000 crore-INR 12,000 crore. Are we having the same number, targeting same number for this year?
Yes, sir. We are looking at the same target what we had given you in terms of new order inflow, t hat we had mentioned.
Okay. CapEx, till now we have done 84 odd crore INR in 1H . Last time we have said INR 50 crore- INR 75 crore . Now what's the higher number for this year?
Shravanji, the CapEx will be in this range only, but when we talk about the CapEx, it is net CapEx, because certain equipments are very old. From there also we are getting money. Net basis, the CapEx will be in the range what we had given.
Okay. INR 50 crore- INR 75 crore. Okay. Got it. Now, the main question on the Alpha Alternatives and whatever is remaining on the Shrem part. Two, three aspects just to understand clearly. These 18 HAM projects, broadly, what will be the equity that we will be needing to invest? What is the equity requirement for these 18 projects where Alpha Alternatives is taking a 26% stake? That is first aspect. Second, against that, remaining 74% when we will be transferring to the InvIT, and we are getting close to 4,000 crore units, where we will be receiving a INR 400 crore kind of a dividend plus interest on an annual basis. Just trying to understand that aspect. INR 2,000 crore, what they will be investing.
Broadly, if you can help us in terms of 10% equity stake when the warrant will be converted by end of next year, what would be that value roughly?
Shravanj, the equity tracker for all the project what you asked, it is in the presentation. It is on page 26 of the presentation, where we have stated clearly how much was required in the 18 HAM projects, how much is invested till now, and what is the balance that will be invested in the years going forward. I think there, once you have a look at it, that will clear that part of the question. In terms of, you asked something around Alpha warrants. What exactly do you want to understand about the warrants?
2,000 crore, when we will be getting INR 2,000 odd crore from them. This will be against 26% stake in 18 HAM projects that we will be receiving because they will be taking the 26% stake, and 10% for the stake in the DBL standalone. Broadly, roughly on the 10% for the DBL stake, what would be the figure? Current market cap, if I look at INR 5,000 odd crore, so INR 500 crore, that's the way one can look at?
Absolutely, sir. About INR 500 crore is coming through the warrants, and the rest, that is for the 26% in the 18 HAM projects.
Okay. By end of, if I just to understand better in terms of the Shrem plus this. This year and next year on the standalone book, in terms of the equity investment in the HAM, how much will be the value broadly, whatever the numbers we have given in the presentation, and how much will be the InvIT units that we will be having on standalone book by end of FY 2024 and FY 2025? That's the one point I wanted to understand.
Shravan, as Rohan said, the equity, what is to be required in 18 HAM projects and the core projects, that is given on slide 26 of the investor presentation. But at the same time, you ask how the units will basically look at FY 2024 end and FY 2025 end. Today, we have around INR 500+ crore in Shrem InvIT unit as an investment in our standalone books. Further, from eight HAM projects, first 26%, at the time of splitting into InvIT, we will be getting INR 2,500- INR 2,600 crore units. So it is around total INR 3,000 crore. And after that, when we will split the 26% in the balance 10 projects, another INR 1,300- INR 1,500.
So the total would be around INR 4,000 from our InvIT and around INR 500 crore from the Shrem InvIT, s o put together, it is INR 4,500 crore worth units we will have in total.
The pure equity from the standalone by end of FY 2025 will be just only there will be no equity investment at standalone in the direct equity. It will be only the units that we will be having by FY 2025.
Shravanj, I said the equity breakup is given in presentation, but let me tell you, we had INR 825 crore projection of projected equity to be invested in FY 2023, 2024. Till today, we have invested almost INR 380, INR 390 crore equity and balance INR 472 crore equity will be invested this financial year end. In FY 2025, another INR 547 crore and year-on-year. Total equity as of 30th September to be invested is basically. It is basically around INR 1,700 crore.
No, sir, I got it. What I am trying to understand is that, you will be investing and against that you will be. This equity requirement, you are talking on 100% basis, but once the 26% stake will be taken by the Alpha Alternatives, and once you will be getting the InvIT units, InvIT units will be replacing the pure equity investment. In that sense, by FY 2025, once we have this INR 4,500 crore InvIT units in standalone books, then we will not be having any pure equity investment in the HAM assets. That is the way I can understand.
I understood your query. You are trying to say, once the equity from Alpha will come in, whether our equity investment will reduce. Yes, for first eight projects, the equity requirement was INR 910 crore, which is already invested. These projects are nearing completion. Balance 10 projects, when Alpha will invest 26%, yes, the equity requirement from DBL will go down and they will invest 26% equity with us.
Okay. Lastly, by end of FY 2025, how one can look at in terms of the finance cost? Till now, in the second half and FY 2025, how much one can think of in terms of the reduction in the finance cost?
So as we detailed out our strategy towards the debt in the short to longer term, we are trying to basically make this company net debt-free by next financial year-end. This year, the effect of reduction in financial cost would be INR 50 crore-INR 75 crore, so we will be in the range of INR 450 crore-INR 475 crore. Next year, because we will reduce significant debt this year, we are expecting the finance cost will be reduced around INR 300 crore-INR 350 crore in FY 2024-2025, and thereafter, around INR 200 crore year-on-year.
Okay, got it. And lastly, this quarter, other income was higher. Any specific reason, and is it recurring nature? So INR 34 crore, INR 34.5 crore, versus last quarter, INR 18.5 crore.
Shravan, we are holding INR 535 crore worth Shrem InvIT units, so we have got the distribution within this quarter and quarter one. Basically, our investment income is added.
Okay, so this number is sustainable on quarterly basis.
Yes.
Okay. Thank you, and all the best, and hope we will become a debt-free company. It's a great DBL 2.0. Thank you.
Thank you, sir.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. A reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Narendra from Robo Capital. Please go ahead.
Hi. Thanks for the opportunity, and congratulations on the deal, InvIT. A few clarifications. Are we saying that FY 2024 will be 5%-8% top line growth?
Yes, sir. That is what we had indicated earlier as well, that we will be targeting.
If I remember, in the last call, you had said 10%, so just wanted to clarify that.
Narendra, the revenue will be closer to INR 11,000 crore. We have already clocked 5,000+ crore revenue. Please note, the quarter two is a rainy season quarter. Always, every year, all infra companies, the revenue in quarter two is lesser. First half is always lesser than second half, so we expect we will close this year at the projection level, what we had given in last quarter con call.
Okay. Got it. The margins will be 13%-14%, right?
Yeah. We had said between 12%- 14%, so that's what we had given an indicative idea.
And on the deal, it is INR 4,000 crore in units and INR 2,000 crore in cash, right?
Yes, sir.
Okay. Got it. On a longer term perspective, how do we see the order inflow coming up? Your order book growth or top line growth, say, over the next two, three years, if you could provide some idea.
The order book for us, because it is coming from various sectors, it is not just roads. Roads currently is less than 40%, what used to be 80%+ for our business. Because it is coming from various different sectors and sources that we are doing, we see a very robust order book. Like I mentioned earlier, roads has also a very strong pipeline. Water, a good pipeline. We are looking at railways also opportunistically, metro projects also, airports, mining, dams, canals. All across the different sectors that we are working in, there is a good amount of pipeline, and our comfort is coming from the government's continued focus on it, and also what they have outlined in the National Infrastructure Pipeline that they want to build. There is a good push on infra that is happening, and we remain confident.
In terms of order book growth, it will be like a more measured growth year-on-year because we are not looking to grow at the pace that we used to grow in the earlier years of 20%, 25%, 30%. Hence, the order book would also be growing commensurately to what revenue we want to do. Typically, as a policy in the past, we've always targeted having about 2.5x order book to revenue.
We want to continue having the same kind of thing, and we will continue winning somewhere in the range of INR 10,000 crore of orders every year. Now, to give you an exact number for each year obviously would not be possible, because we would keep looking at projects year-on-year and seeing how the margin and how the landscape is panning out. But that's roughly how you should think about, broadly, strategically, how the company is thinking.
Okay. Got it. That's great. And also, before COVID, we used to earn those early completion bonuses. Is that thing behind us or are we looking at those again, returning?
What has happened is, before COVID used to happen, the timeline and everything, projects was different. The complexity of projects has also increased in the last few years. While we continue to target early completion bonus, it is not a god-given right, and that is only available in the road sector. Now we are doing various other sectors. Road business is, like I mentioned, it's only like 40% now of our total order book. Other sectors do not have an early completion bonus per se, given in. The value of the bonus that we earn on our own by doing a project before time is what we still try to do. But there is no written sort of bonus in the other sectors where the government will pay you more if you complete a project before time.
While we try to do and optimize our cost by controlling and trying to complete a two-year project in less than that time, there is no bonus.
Earlier our margins used to be 2%, 3% more due to this, if I am not wrong. Going ahead, we can assume that it will be around 14%-15% because there is no early completion bonus, right?
At the time when we had early completion bonuses, the direct benefit that used to come from the early completion bonuses was in the range of 1%-2%, and the indirect benefit, which is us completing before time, was another 1%-2%. It used to add another 3%-4% pop to our total margin profile on the bottom line. Right now, what we have indicated towards a 12%-14% is what you should sort of take as the indication for right now. If there are any changes in future, we will update you. But to predict the long-term how things will look is a function of how the competitive intensity is looking at what changes is happening in the government tendering system, all those things. It is difficult to sort of state a long term.
We are continuing to target in this range of EBITDA. But what the big change that will happen is, as we become a debt free, we will have a lot more to give and the PAT margins will keep on increasing. That will be the big sort of headline picture, and it will remove as we also focus on not doing CapEx. Future also, we will not be raising a lot of debt at the parent level. This will continue to do. And because we are working in different sectors, we will not be trying to win projects at aggressive rates. Also, the equipment that we already have, as we keep sweating it will give us a better return than just continuing to invest in CapEx.
Okay. It's a very great thing that we are trying to get lean. That's making our company very interesting. Another clarification regarding the finance cost. You said that FY 2024, it should be around INR 460 crore-INR 475 crore, FY 2025 around INR 350 crore, and going ahead INR 200 crore, right? Am I right? Roughly, ballpark numbers.
Yeah. Roughly, sir, that is what we did. Our finance cost is two parts. One is the interest component, and the other part is obviously the BG/LC cost because bank guarantees and all those are the large portion of what we also need for our business.
Yeah, I understand that. Okay, thank you so much. All the best and Happy Diwali to you and your team.
Thank you.
Thank you. The next question from the line of Vaibhav Jain, an independent investor. Please go ahead.
Hello. Am I audible?
Yes, sir. Please go ahead.
Yeah. Thanks for the opportunity. I just had a couple of questions. One is on the raw material front. I wanted to understand, how do we think about procuring raw materials? Do we keep it as inventory or is it project-backed? Just wanted some sense on that.
For different raw materials, there is different strategy. For stuff like black metal, which is produced on site, what we know as 50, that we will try and procure because there is always a lag. For other raw material like steel and cement, we have different inventory levels that we have assigned at each site, depending on how the work progress is going. There is always certain inventory that is held for all the different items, whether it is for bitumen, whether it is for steel, for cement, for black metal. All those are different raw materials that we keep holding at our sites.
If I understood correctly, a part of your inventory, you hold it, and then the bulk of it, you procure it as per your requirement. Is that understanding correct?
Yes, it is different. Like I said, for black metal, there is a larger portion that we have to hold because that is all procured locally.
Okay.
It takes a certain time for it to be procured, m ining metals.
Yeah. On the debt front, I wanted to ask. Our net debt will be around September, the net debt is around INR 6,300 crore, and we will be getting an inflow of INR 2,000 crore from this deal with Alpha . How are we going to pay the rest of the, we are going to be a net debt zero company. I just wanted to understand that the gap of INR 4,000 crore-INR 5,000 crore will be filled.
Vaibhav, the debt, you should look at debt of standalone and console separately. Whatever we talked about on the call on debt side is standalone balance sheet. In infra company where we are operating in concession environment, the debt under on the SPVs where we are under projects under execution, same projects, that debt is self-sustainable. That debt will continue after also whenever we will be winning few further projects. When we are talking net debt means the standalone net debt free company. Console debt will always remain because we will continue to win projects and we will continue to execute projects. No HAM project will be without debt. If you are comparing INR 6,000 crore, then you should exclude that INR 4,000 crore of the subsidy debt separate.
Okay. Okay, sir. Got it. Thanks for the clarification. That is all from my side. Thank you.
Thank you.
Thank you. The next question is from the line of Vishal Periwal from IDBI Capital. Please go ahead.
Yes, sir. Thanks for the opportunity. One clarification, this Alpha Alternatives valued the 18 HAM project at a price to book of 2.6x . Is that a fair understanding?
Basically, we do not look the value in terms of equity and multiples. Basically, the eight projects were won by the company when the bank rate was at a low cycle around 4.25%, and the valuation is basically a based on bank rate and the annuities, future annuities, which we receive in 15 years. It is a combination. You should not basically compare the multiple basis. But yes, the numbers are like that only.
Okay. Fine. And in other income, can you give a breakup of what is the distribution income from a Shrem InvIT in this quarter?
Shrem units should say is distributing around INR 3.5 every quarter. Last quarter two, we have received around INR 26 crore total distribution. Distribution has three parts, dividend, return of capital, and interest. Whatever is reported in other income is dividend and interest.
Okay. This INR 26 crore, probably this will be the first quarter when we have received it. Can we say that it is quarterly basis, a recurring or how the structure will be?
It is basically recurring income. When I say INR 26 crore, 26 total units as on today, as a group we are holding 868 crore units. From there we are receiving INR 26 crore worth distribution every quarter. At DBL level, 535 crore units out of 868 we are holding. This is recurring income for the group, in future also till the time we hold the units.
Yeah, sure. Got it. Since a bit of conceptual. We already had this Shrem, I mean, InvIT. What is another thing, probably thought process in having one more InvIT and then the background of creating one more structure.
So sir, the Shrem InvIT is an InvIT which is owned by the Shrem Group, and they had bought out all our assets. And they build it on their own. So it is a different entity. Now with this InvIT, our idea was to build our own InvIT, a DBL InvIT. And that is why we have kind of done that. So they are a separate partner, and while we have enjoyed a great partnership run with them as well. But the idea of setting this up was setting up something of our own, which will give value to the company and to the shareholders on a long-term basis, where we do not have to keep scouting. So right now also we ran a whole mandate, looking at different investors and everything. And looking at all the numbers and everything, we decided this was the best way forward for us.
So hence we took this call of setting up an InvIT of our own sometime. And the idea behind when we were setting this up, as we were contemplating the various structures which we could do it, we were very sure that we wanted to do it with a trusted financial name and a trusted financial partner who would bring in all the financial expertise. And we will be running it in a very professional manner. So that is how Alpha Alternatives came on board. That was the idea. Like I mentioned on the opening remarks, the idea was to build a partnership like an Embassy and a Blackstone.
Sure. Maybe, going ahead, like any more HAM asset that we bring, that moves to this particular initiative that we have done with Alpha, that fair bit of understanding?
Yeah. Obviously now our future HAMs, that assets that we win, it will always be our first preference will be for it to move into our own InvIT, because that will be the best value unlocking.
Every other investor out there will look at keeping some value for themselves in between as they do. Whether it's any of the buyers which will be there, whether it's the Canadian pension funds or Cube Highways or anybody else who's out there. They will be discounting these projects at a higher rate versus what an InvIT of our own will be doing. It's a better value unlocking for DBL and our shareholders.
Sure, sir. Sir, can you provide the breakup of this interest cost in financial charge or maybe the interest cost related to debt for this quarter? Maybe a number. The reason I'm asking is because you did mention from FY 2025 when we are seeing net debt to be almost zero, we still projected some numbers for FY 2026 in terms of interest cost. Just want to understand that.
Sure. You can speak to our team separately on it. Though as a policy, we don't talk selective information to investors. This is how we've always structured. But you can speak separately to my team on that.
Okay. Sure. And on this, a couple of more bit of clarification. On this standalone, I think in terms of revenue breakup, we have given a revenue mining. Is any mining activity happening at a subsidiary level? If you can just clarify why this income is coming in standalone.
Sir, the mining is under SPVs. There are different SPVs, which are the long-term mining projects. There are two types of mining projects that we have. There is the short-term mining contracts and then the long term, which are EPC. Even in the long term, which we have under SPVs, the EPC work profit is done by DBL. The mining revenue comes there. But let me hand it over to our CFO. He might want to add something more.
Let me add to what Rohan said. We have, like Rohan said, some overburden projects as a EPC in DBL itself, and we have two concessions, Pachhwara and Siarmal, so that is in SPV level. The EPC work, as Rohan said, is executed by DBL, and in terms of Siarmal, even mining is done by DBL for the subsidiary.
Okay, got it. One last question from my side. Can you give your understanding and reading of lack of ordering in road sector that we missed? That's all from my side.
It has been deferred. While the ordering could have been more, it will come. Currently the orders which have been floated by the government, which are already there, is about INR 75,000 crore in HAM and about INR 25,000 crore in EPC.
Okay. If I may ask, in terms of various segments, in terms of ordering, which segment you see bidding pipeline is pretty strong. Not pipeline, but actually the work is also getting awarded. Where do you find the opportunities there? Because I can see that, in terms of order book pie, it is moving away from sectors other than road. In other than roads, which pie, like a more exciting in terms of inflow for us.
We are seeing it in all the sectors that we work in. We are seeing activity in all the sectors that I mentioned we work in, whether it is roads, whether it is metros, airports, whether it is water projects, dams, canals, water supply projects, mining. All the sectors have a decent amount of activity happening. We are fairly confident of a very diversified order book by the end of the year as it is currently.
Okay. Do we also provide a bid pipeline for sectors other than roads?
No, we do not provide that, sir.
Okay. Sure, sir. Thanks for all the clarification. Thank you very much.
Thank you, sir.
Thank you. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Yeah. Thank you. Sir, first, how much is the DBL Infra debt as on September?
DBL Infra Assets, we had INR 675 crore outstanding debt as of 30th September.
Okay. Yeah. Because why I am asking, if I look at our HAM equity investment, which is INR 1,074 crore, and the Shrem InvIT that we have is INR 868.5 crore. Broadly INR 1,943 crore that we have in the form of HAM equity and Shrem unit. If I look at the balance sheet, correct me if I am wrong, I am trying to understand that. Non-current investment is INR 1,294 crore and the loans is INR 30 odd crore. INR 1,624 crore is the equity that we are showing in the standalone book and INR 675 crore is Infra debt which is used to fund the equity. It is not telling. Only INR 1,943 crore that we have on invested Shrem InvIT and HAM equity, whereas in standalone balance sheet it is INR 1,624 crore. Yeah.
I think there is some confusion in how you are reading the numbers. Why don't I recommend that you connect with our team after the call to understand, because I think there is definitely some because I think you are comparing consolidated and standalone or confusing between the two. It is separate, and the consolidated is separate. Huh?
Okay. I will connect. And second.
You connect with them and they will answer all your queries. There is no problem.
Yes, sure. And sir, on working capital, so we were looking at a 10 days kind of a reduction. So in one 1H, we have seen a marginal increase. So as per presentation, these two days, which has increased. So by end of March, as the execution pickups and maybe we will get some more, repayment from debtor or maybe working inventory reduction. So, are we looking at 8-10 days kind of a reduction in working capital days?
Yes, sir, we are looking at that kind of reduction. Yeah.
Okay, great. Second, how much value of projects that we have already bidded and where the result has not come?
We would have bidded about INR 10,000 crore of projects where the result would have not opened up till now.
Okay. The four HAM project appointed date are likely to be received by?
Sir, those are all in the presentation. I recommend several times. Please have a look at the presentation, please. So that it will be more valuable for everyone.
Okay. Got it, sir. Thank you, and all the best.
Thank you.
Thank you. The next question is from the line of Narendra from Robo Capital. Please go ahead.
Yeah, thanks for the follow-up. Just wanted to know that you said you are not aggressively trying to bid for projects with low margins. Just wanted to understand how the top-line growth will come, if we are targeting a INR 10,000 crore inflow and on the same doing that INR 10,000, INR 11,000 crore of revenue. If you could help me understand how the top-line growth will come going ahead.
The top-line growth will come from the diversified sectors that we have. We are not looking, like I mentioned earlier as well, at a very aggressive growth. We are looking at a very measured growth. When we target a higher growth, given our business model of doing everything on our own, we also needed to do a significant CapEx. Because right now we are looking at being a net debt-free company by the end of next financial year. Our target right now is to have a measured growth, which will be supported by our current assets and maybe a little bit of addition if needs to be. So that's the idea. The growth will come from all the different sectors. There's enough opportunity that is coming. There might be a higher competition in those sectors, but the other sectors are still looking pretty decent.
Can we say that we are targeting around the same rate that we are targeting for FY 2024 over the next couple of years?
Sir, I mentioned we are 7%, 8%, 5%, 8%, like what we mentioned, is that consistent growth that we are looking at 8% or so that you should think about it.
Okay. Got it. Last question regarding your tax rate. What is the effective tax rate? Hello?
Sorry, sir. You want to know the effective tax rate?
Yeah.
The rate we are taking is around MAT. We will be at about, margins about 25%.
Okay. Got it. Thank you so much. All the best.
Thank you. The next question is from the line of Gopika from Mint. Please go ahead.
Hi, can you hear me?
Yes, ma'am. Please go ahead.
Yes.
Hi. I just wanted to understand. Much of the capital that you're raising that will go into debt repayment, right?
The capital that is coming into the company will be increasing and will obviously help reduce our debt as well. That will be happening along with the profits that we make every year. Gopika, we make investments into our equity projects as well. So depend on how you want to look at it. The debt that is getting reduced is getting reduced via a function of our internal profits and also the external capital that we are getting. So it is a mix of it. Money is fungible.
Right. You said you would go slower on CapEx. Why is that?
Ma'am, we are going slower on CapEx. The DBL business model was, we would invest in our own equipment. We have a gross block of above INR 4,000 crore. The idea is right now we are not investing in our growth block, and that is the CapEx that we are avoiding. We will continue to look at PPP project selectively, those meet our higher levels. So those are the areas where we will be doing. But in the equipment side, we are not doing CapEx, and our idea is to reduce or make our balance sheet leaner and lighter, our kind of goal. To sustain the growth that we have in mind, we have enough equipment to continue that. Because we are a diversified infrastructure player, we will continue to look at all those sectors.
Right. With this, after this capital raise, you will not be looking at any more fundraising, at least for the next two to three years?
Yeah, ma'am, we will not be. Even currently, we were not looking at raising any funds in terms of warrants of the parent level company. But our investor was insistent that because they are coming in as a big way in setting up our own InvIT, they also saw a lot of opportunity that could have happened at the parent level company. That is why it was. Otherwise, as promoters, we were not looking to do. But given that the investors found a lot of comfort in where the current share price was and what they saw it going to, given our asset business alone would be valued at X amount, plus the EPC business would be valued at a certain multiple. Then when it would be a debt-free company, how that multiples would move.
I think when they were doing that is how they were insistent that they also wanted to do that in terms of the partnership. And because this was a large partnership that we are also looking to expand into other sectors of infrastructure, we were happy to sort of get them on board.
Like the mining and all of that?
Yeah, ma'am. Mining, pipeline, railways, PPP. Whatever PPP project, because there is a lot of PPP projects that the government is coming up with. The investor is looking at building a nice infrastructure portfolio. And they found that our EPC capabilities are commensurate to what they are looking at, and someone like us who can execute projects across the board. That is how this partnership happened. Them having the capital and us having the experience and the expertise of working across different infrastructure segments.
Right. Sure. Thank you. Thank you for this clarification.
All good, Gopika.
Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Rohan Suryavanshi for closing comments.
I thank all of you, all of our partners, for asking all the questions and being on this call today. In case any of you guys have more questions, please feel free to reach out to us, to me or Kuldeep, any of our team members, and we will be happy to address any of your queries. Also wishing all of you guys a very happy and prosperous Diwali in advance. I look forward to seeing you guys in the new year, I guess, speaking to you. So have a great Diwali and safe Diwali. Enjoy with your family. Thank you, guys.
Thank you. On behalf of Dilip Buildcon Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.