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HG Infra Engineering Ltd
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Ladies and gentlemen, good day and welcome to the Quarter 1 FY '21 Earnings Conference Call of H.G. Infra Engineering Limited. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Harendra Singh, Chairman and Managing Director, H.G. Infra. Thank you, and over to you, sir.
Good morning, everyone. I welcome you all to our earnings conference call for the quarter ended June 30, 2020. I have with me on the call Mr. Rajeev Mishra, our CFO; and Pooja from Pareto Capital, our Investor Relations advisers. I hope you all and your families are keeping safe and healthy.Further to our last call, as lockdown restrictions have -- were eased, we have steadily resumed operations at most of our ongoing sites. Execution is running smoothly, and we are operating at about 70% to 80% efficiency today. The labor shortage of the prior month has also significantly improved, and we are currently running at about 80% to 85% of our required workforce. We are confident of reaching pre-COVID levels of execution by the second half of this year.During the quarter, we reported revenue of INR 298 crores. The revenue for the corresponding period of last quarter stood at INR 526 crores. I'm glad to report that our profitability remains robust. The EBITDA for the quarter stood at INR 49 crores with a margin of 16.5% compared to 15% in Q1 FY '20.Profit after tax for the quarter stood at INR 15 crores as compared to INR 34 crores in the corresponding period of previous year. PAT margin stood at 5.1% for the quarter. As on 30th June 2020, our total consolidated debt stands at INR 545 crores, of which INR 164 crores is project debt. Cash and bank balances stood at INR 110 crores. Our order book stands at INR 6,831 crore as on 30th June 2020. Out of the total order book, 77% are EPC contract and 23% are HAM projects.In terms of state-wise breakup, it is as follows: 52% is from Rajasthan, followed by 18% from Haryana, 14% from Uttar Pradesh, 13% from Telangana and 3% from Maharashtra.Let me give you now the status of some projects under execution. I'm glad to share that we have completed around 60% of Gurgaon-Sohna HAM project. The execution on Hapur-Moradabad EPC contract is also progressing well, and we have completed close to 28% of the work. We have completed close to 33% on Delhi-Vadodara Package 4 EPC project. In the Narnaul Bypass HAM project, we have completed close to 20%. We have completed close to 28% in our Rewari-Ateli HAM project.Coming to the projects where we are yet to start execution. We expect the execution of all these 3 -- all these 4 projects to start in the second and third quarter of this current fiscal. For the Telangana Adani project, we have already mobilized our resources. We expect to get appointed date during this month only and start execution soon. For the Delhi-Vadodara Package #8 and 9, land availability is at 65% to 70%. We expect to get appointed date for Package 8 in September and Package 9 in October. We have already signed the contract agreement for both these packages.Our HAM 4 Rewari Bypass package, the concession agreement has already been signed in June 2020. The project is under financial closure. We expect to start execution there by October end. The land availability there is approx 75%.We continue to remain optimistic about our business. We are seeing NHAI increasing their bidding activity, and we have been actively bidding on multiple EPC and selective HAM projects. We are targeting an additional order inflow of INR 3,500 crore to INR 4,000 crore during this year. In terms of execution, our entire order book will become operational in third quarter. The challenges in terms of labor or supply chain have also come down considerably. Thus, our execution should pick in coming months. However, given a bit of uncertainty due to COVID, we believe that giving any top line guidance would not be right at this point of time. Our focus continues to be on profitable growth, and we have achieved that through sustained increase in the margin. We have been very selective in bidding for the projects, not compromising on our margins and will continue to do so. That is all from my side. I would now request the moderator to open the call for question and answers. Thank you.
[Operator Instructions] The first question is from the line of Mohit Kumar from IDFC Securities.
Congratulations on a decent set of numbers given the COVID situation. Sir, my first question is, given the -- out of INR 6,800 crore order book, Package 8 and Package 9, I think, comprise roughly around INR 2,000 crores. The balance, INR 4,800 crores, has to be executed within 12 to 18 months. Am I right in that? Am I right in saying that?
Yes, obviously. Because most of the projects, which are under execution, there, the completion is scheduled to be done within the next 18 to 20 months. Except for Package 8 and 9, which is INR 2,000 crore and the other Adani project, again, 24 months duration, the projects under execution are to be completed within a period of 15 to 20 months.
Okay. So it means that our [ business ] should pick up sharply in Q3, Q4 and next year Q1. Am I right in saying that?
Yes, quite right.
Yes, sir. I missed your opening remarks. So can you just please mention again how much is the labor force right now? And how do you expect it to ramp up in the next 2 to 3 months? And what kind of challenges you are facing increasing the labor? Can you please comment on that?
Yes. Initially, there were some challenges, but now the things are improving a lot, and people are coming back to the work. And now availability of about 80% to 85% that we can see at most of our projects site, irrespective of the area where we are operating on our business, we would like that -- within a month and 2 months, there would be significantly 100% improve -- we would be at a pre-COVID level only.
By end of September, am I right?
Yes, by end of September. Yes.
And sir, last question, sir. Just this last package HAM projects, which -- where the financial closure has not been approved, sir what is your deadline? What is the pipeline? And what is your deadline? And when this financial closure [indiscernible] put in place?
Sorry, your voice was not quite audible.
Sir, I was asking about the financial closure of the last HAM project, which is still not [indiscernible] is this likely to happen? And by agreement, what is the big [indiscernible]?
It still was not clear, but I could just make out. I think the financial closure documents have already been given to the bank, and we are -- most likely within a week or so, we will be getting the in-principle approval and, say, within the total concession period that we have signed in June, and by the time in October, we would be completing our entire formalities for the financial closure and taking the appointed date by end of October.
The next question is from the line of Alok Deora from Yes Securities.
First question I had regarding the order inflow, sir, I think, Q1 we have not received any fresh order. So have we not bid in projects or it's like we have been very selective? Just what's the update on that?
No, no. We have bidded for quite a few projects of EPC, about 7-odd projects, and -- but we could not win them -- any of them. And again, just 2, 3 bids are yet to open in EPC. For HAM as well, we have bidded for 4 projects. Two of the results are already out, but we have not, say, been the winner; and 2 are yet awaited. So we have been very selective. It's not that, but we are continuously bidding for EPC projects as well as HAM projects.
Okay. So you mentioned that around 7 EPC projects. So just if you would throw some light on how is the competitive intensity? Because -- is the intensity very high or what is it exactly at this point?
Yes. Of course, the intensity and aggression that is kind of at the peak level that we have been. And most likely, within a period of, say, next 2, 3 months, we would be going and looking ahead. The aggression is there, but we are bidding our rates, and most hopefully, we would be getting the projects that we are targeting to.
Okay, okay. No, the reason I was asking is because we have not -- I mean we have seen a lot of other companies win. So how confident are we of getting this INR 3,000 crore to INR 4,000 crore of fresh orders in this year?
Spread is -- again, we have spread out of almost 10 to 12 states. We are bidding in MP, Gujarat, all the areas. And again, it's not that important that cost-cutting and aggression is on bidding, but there are -- there are many selective players, but they are not very aggressive. There are only a few players, 1 or 2 or 3 that can just target and take the bids. So we are quite hopeful.
The next question is from the line of Shravan Shah from Dolat Capital.
Sir, just first wanted to understand in terms of the gross debt, I think in the June last week call, we said that our debt has -- stand-alone level has came down to INR 290 crore odd from INR 368 crore at the March level. But I think now it is standing at INR 381 crores. So just trying to understand how come it has changed sizably by INR 100-odd crores? And how do we expect by end of this year? And at the same time, was this related to the Rajasthan World Bank-funded projects and also update on that please?
See, your first question is basically the debt. The debt, which is now at about INR 380-plus crore, INR 381 crore, and during this particular 3-month period, we have repaid our debt that we have borrowed for payment of MSME vendors as well as the term loans, which we have -- we already paid some INR 55 crores during the quarter.But the working capital debt, the OD is at about INR 144 crores, that is, increase of about INR 72 crores from March level. Just because of -- the reason behind it is because we want to have a, say, clarity on at, that we need to pay our vendors well within the time during the COVID times only. But because the people, they would be always try and coming back to work once we are paying them on time. So that could be significantly reduced now onwards, since quarter 2 and quarter 3 onwards, that term debt would be reduced by another INR 100 crore now onwards.So we will see that the working capital normally stood at about INR 100 crores. That is our average utilization of OD limits. We would be at that level only. By the end of the year, we, again -- just completing it. The end of the year, what we are assuming that we would be at about INR 310 crore, INR 315 crore. That would be our stand, and we would be there. And as far as your second question is concerned, regarding Rajasthan projects, we could receive some INR 60 crores in the month of June in this particular first quarter, and again, we had completed some INR 70 crores of the work within this quarter only -- during this quarter. So again, the debt level is at the same level, which is, almost INR 211 crores is certified debt and some INR 60 crores is revenue, which is not yet billed. Certification is pending. Now it is being certified in the month of August.
So just to clarify, so total receivable in the Rajasthan project is INR 270-odd crores, which was there last time when we said in the call it remained on the same level. And you mentioned...
Almost.
Okay. And you mentioned that, I think, our INR 40-odd crore order book was left. And now we are saying how much is left?
During the quarter 2, we will be completing whatever order book, which is about INR 78 crores, which is left out of the total scope, which is reduced from INR 596 crores to INR 550 crores because of the land availability. So balance is about some INR 78 crores, which would be completed during this quarter only. And we are about -- we expect that during this quarter 2, we would be receiving some INR 75 crores to INR 100 crores by the government.
Okay. And the entire amount would be clear by end of March [indiscernible].
That is quite visible because the government has already allocated some INR 448 crores for these projects for the entire year. And out of this, only INR 60 crore has been paid as of now. So we believe that in quarter 2, some INR 75 crores to INR 100 crores. In quarter 3 and quarter 4, we would be expecting as the cash -- revenue -- cash of the government would be significantly improved, then they would be paying off their entire liabilities.
Okay. Sir, coming back to the debt level, once again, I was still not clear. In the last call, at the end of June, we said our debt is INR 290 crores in the last week of June. And now the debt as on June is INR 380 crores. So in 1 week, we were -- we have to increase working capital by INR 100-odd crores. That's what you were trying to say, sir?
See, that is almost INR 70 crores to INR 80 crores of the unutilized working capital that we used for paying our vendors because that is the only sentiment which we want, that all the vendors should come and -- come back to their work within the reasonable period of time. We don't want to stretch their balance sheet for that reason. So that is how -- we believe that the improvement in execution is just because of those reasons.
Okay. Sir, I need some of the balance sheet numbers, mobilization advance, retention money, inventory, debtors and creditors.
So creditors, definitely -- I've just come out. The creditors are at about -- so debtors there -- that is now coming at retention -- do you want retention as well?
Yes.
Breakup of retention as well?
Yes. Sir, total debtors and what is the retention money?
So total debtor is about -- that is INR 726 crores, out of which INR 175 crores is retention. And what you want -- that is INR 110 crores is cash and bank balances, INR 110 crores.
Yes. What is the inventory amount?
Inventory, INR 109 crores.
INR 109 crores?
Yes.
And creditor amount?
Just -- I'll come back to the creditor and...
And mobilization advance, sir?
Yes. The mobilization advance is -- so that is into 2 parts, basically. The one is the material advance and one is mobilization advance. So that is about INR 274 crores, total, altogether, INR 274 crores.
Okay. INR 274 crores. And just lastly, on the equity inclusion in HAM -- in terms of whatever we have invested, how much more still we need to invest in FY '21 and how much to be invested in FY '22?
So we have already invested -- see, during the first quarter, it was INR 55 crores we have invested. In quarter 2, we have already done INR 25 crores. So that is almost INR 80 crores being done within this financial year. And balance, which is total of INR 180 crores, which is required during the current year, out of that, already INR 80 crores done, INR 100 crores is balance.
Okay. That's it from my side.
Shravan, creditor number you can note, INR 593 crores.
The next question is from the line of Jiten Rushi from Axis Capital.
So just coming back to the Rajasthan projects, sir, what is the outstanding debtors from Rajasthan World Bank-funded projects, sir?
As I told, INR 212 crore is a certified debtor balance...
INR 270 crores, right?
No, INR 212 crores is certified and balance is -- almost INR 60 crores is billed -- certified during the month of August. We have submitted for the bill. One executed during the month of June, May, but they are certified during the month of August. So that remains unbilled, basically.
So basically, sir, out of the INR 141 crores outstanding order backlog, you said INR 70 crores will be executing this quarter and balance INR 70 crores will be executing over the period of Q3, Q4, right, sir?
Yes.
And sir, now the total order backlog has reached INR 550 crores from INR 590 crore original value, right, sir?
Quite right.
From Rajasthan. Okay. So this -- so far, you have received around INR 260 crores from this project, right?
Total payment, which is receivable?
Payment we have received so far.
Yes.
INR 260 crores. Okay. Okay. And sir, on the -- can you highlight on the unbilled revenue? What is the unbilled revenue portion, sir?
So basically, unbilled portion is that where, at any point of time the project requires a change of scope approval or at the end of the project, any of the projects there all -- that remains in all of the projects about 5% to 7% of the revenue, which remain uncertified and that almost took -- take -- usually take almost 7 to 10 months for that certification. Primarily in Maharashtra projects -- say in Maharashtra projects, it is about INR 110 crores of the unbilled portion as of now, if we are talking about Maharashtra projects. Because we have already completed these projects in the month of January and February. So these are all under certification, means, change of scope is under certification, final bills are yet to be certified. So that payment is expected any time during the quarter 2 as well as quarter 3. So that is the unbilled portion.
So total around June, you said unbilled portion INR 110 crores. That is related to Maharashtra project. Any other unbilled portion...
Yes. Again, this -- what I was talking of is Rajasthan projects, where it is INR 60 crores not billed -- not certified in the -- during the quarter, but they are certified in quarter 3 -- quarter 2, sorry.
Correct. Correct. And sir, CapEx plan for this year and -- for this year?
We have added some INR 4 crores during the quarter and just about INR 50 crores more would be required during this financial year.
Right. And sir, on the equity side, you said that totally, you are going to invest INR 180 crores this year, of which INR 80 crores already invested and INR 100 crores will be invested in balance part. So sir, that is the equity totally we'll be investing in all the 4 projects put together or there will be more investment in next year?
No, no, no. We have taken into consideration HAM 4 as well, in which INR 40 crores is required during the current year. So considering that, about INR 100 crores balance is there. INR 80 crores already done.
HAM 4 will require INR 40 crores this year. Next year, no investment in HAM 4?
Yes, next year, of course, there will be -- INR 27 crores would be required next year for Rewari Bypass HAM 4 project.
Yes. And balance, sir, other 3, the investment would be done by this year only.
Totally, for next year, it would be -- INR 69 crores would be required for FY '22 and balance, say, INR 15 crores in FY '23.
So sir, if it's okay with you, can you give us the breakup project-wise, if it is -- because I can see you've given in the presentation for 3 projects equity invested so far. So what would be the balance equity required for Gurgaon, Rewari-Ateli, Narnaul Bypass, if you can give the breakup for it?
I think you can note it down. We have already done INR 52.5 crores in Gurgaon-Sohna. That is the first project. And total requirement is INR 72.9 crores.
Okay. So this year, you'll be covering it?
Yes, balance would be done during the year. And then Rewari-Ateli, total requirement is INR 76.5 crores, out of which we have already, say, done INR 38.2 crores. And Narnaul, that is a bigger one, INR 952 crore project [Foreign Language], that is, INR 138 crores is the total requirement, out of which we have already done INR 81.5 crores.
So Rewari-Ateli and Narnaul, we'll be investing how much this year and next year?
This year, another INR 20 crores would be required for Narnaul, another INR 20 crore would be required. And Rewari-Ateli would require INR 25 crores additional, that is, HAM 2. And Gurgaon-Sohna would be, say, INR 15 crores would be required in Gurgaon-Sohna during the year. And Rewari Bypass, of course, I've already given, that INR 67 crores is the total requirement, out of which INR 40 crores has been -- we have taken the provision for INR 40 crores during the current year, which is again yet to be paid. So this comes to be INR 100 crores during the year now onwards.
And sir, in terms of -- as you said, land acquisition is in advanced stages for most of the projects. So sir, can you just highlight, if at all -- if you get to the pre-COVID stage execution, so what can be the execution we can expect in H2 in terms of value, if at all you reach the pre-COVID level?
Yes. We believe that -- we are expecting that all the appointed date would be declared. So the execution would be at quite a fast pace in all the projects had it be new one or the old one. So we believe that somewhere INR 800 crores to INR 900 crores is visible every quarter, quarter 3 and quarter 4.
Sir, anything on the margin? Because we have seen good margin this quarter. So was it related to any projects reaching final stage of completion or final billing, which is filtered in higher booking of margins this quarter?
No. That is not the case. Basically, the major reason behind it is that the size of the project, the average ticket size of these projects will now come at, say, INR 600 crores to INR 700 crores level. So that is one where we have seen that the operating margins would be now -- going ahead, again, these are all big-sized projects we will be executing these projects. So that is the major reason that we believe that the margin would be quite stable at about 15 to 15.5 level.
That's great, sir. And sir, as you said about the opportunity, what is the opportunity you are targeting to build so that we can win at least INR 3,500 crores to INR 4,000 crores? Can you please break it up in terms of the future bid pipelines you're targeting in terms of value?
See, for NHAI HAM projects, we are looking at about 7 to 8 HAM projects where we would be bidding in this quarter as well as in the next quarter. That are all identified in Haryana, Punjab and in Gujarat. These are a few projects of HAM about -- value of about average INR 7,000 crores, that is INR 7,000 crores. Out of that, we believe only 1 bid that is good enough for us, having the clarity that the 25% of the orders are HAM.And again, for EPC, we have identified in and around NCR zone, there are quite big-sized projects. And apart from that, Delhi-Vadodara in Gujarat, EPC, there are again 4 projects, which are yet to be bidded. And coming to the Delhi-Katra Highway, that -- on Delhi-Amritsar Highway, it would be again -- the bids -- they are in the pipeline, the DPR already done and somewhere in the month of, say, December, they would be calling on the bids. So that is the indication which NHAI has given. Going further, we believe that the UP government for Ganga Expressway, they've already just completed their entire, say, preparation. In Q3 or Q4, we would be -- we expect that the bids would be all called [ further. ]
So basically, 7 HAM, we're expecting this quarter and next quarter INR 7,000 crores, and the NCR 5 project could be around INR 3,000 crores to INR 4,000 crores, EPC value total?
Yes, it will be more than that. There are 7 projects basically, 7 projects of EPC in and around NCR that are about INR 7,000-plus crore, and Delhi-Vadodara about INR 3,000 crores. These are 3 packages of Delhi-Vadodara, which has been left out in Gujarat.
Right, sir. I think -- any other sectors you're targeting now? The airport project, that Goa Airport, are you looking to rebid or something like that at [indiscernible].
No, no, no. As of now, not yet identified any of the airport projects. But definitely, for railways, we are looking ahead. But as of now, there's no significant number in the bids where we can just give the specific size and...
And no subcontracting work as of now going forward?
As of now, no. As of now, no.
The next question is from the line of Parikshit Kandpal from HDFC Securities.
Congratulations on decent set of numbers, sir. Sir, my question was, this quarter, your debtors have come down. So largely, I see inventory also stable, debtors is down from -- to INR 726 crores versus INR 810 crores last -- I mean, in 4Q. Inventory is also at the similar levels. I think creditors are also at the similar level because I think last quarter, it was INR 543 crores. And this quarter, it is INR 593 crores. Actually, it has gone up slightly. So -- and cash is also at similar levels. We have generated cash profit during this year -- this quarter. So I'm still not able to understand why the debt has gone up. So one thing I know that you have invested INR 55 crores of equity in this quarter. So that is one thing which is there, which has gone. But still -- so unbilled is one figure which I am missing here. So if you can give me the figure for the other financial assets. So that -- maybe there could be some difference there which would have gone up.
I think unbilled, you have not noted that. It is about INR 400-something crores, to be very precise.
So INR 400 crores, so -- which is up almost by INR 40 crores, INR 50 crores year-over-year and another...
Yes, that is [Technical Difficulty] INR 453 crore. That is INR 453 crore.
Okay. So INR 100 crores, it has gone up there, and INR 50 crores you've invested in the HAM assets. So total INR 155-odd crores, so that...
In this, major has been because of the, say, INR 59 crores -- almost INR 60 crore of that is -- I'm talking about the Jodhpur project. These were not certified. And then one SPV, again, INR 59.8 crore for bill of June not certified in June, it is certified in July. So that remain unbilled.
Okay. So these 2 are the major ones. So it's 50-50 each and then INR 50 crores in the equity which you have invested in the HAM during the first quarter...
INR 55 crores, yes.
Yes. So that tallies the working capital. Okay, the second question was, sir, on the total debtors. Out of the total debtors right now, what will be the SPV debtors which are due? So both in unbilled so you said INR 50 crores is uncertified. So what will be the -- what will be sitting in the certified debtors, the SPV debtors, amount in that, the INR 726 crores you said.
Certified debtors was -- that is INR 726 crore. Out of this, INR 175 crore is retention.
No. I'm saying how much is the SPV debtors here?
Okay. You're talking about SPV. SPV is -- that is INR 64.5 crores.
So, but why your EPC money is not coming for you because most of the people are saying that they hardly have any EPC outstanding, and it has been very prompt in paying on time. So is it because the private contractors are not paying on time? Or is it delay in collections from like the private contractor -- projects which you have taken on subcontracting basis from the private developers?
No, no, if you are saying that for EPC, SPV we are paying on time because NHAI -- from NHAI we are receiving the payments well in time. That is very clear. For SPV, this INR 64 crore is not a big number. That is...
I think balance is your EPC. So out of total INR 726 crore, INR 175 crore is retention, which I remove, and INR 54 crore is the SPV debtors, which I remove, so INR 500-odd crore is your, I would assume, will be your EPC debtors, right?
Yes.
So out of that, how much is private and how much will be the NHAI debtors?
NHAI was about -- this is about INR 75 crores, which includes NHAI, MoRTH as well as NHAI debtors.
So private debtors is INR 400-odd crores, you're saying?
No, no, no. Just...
I think Rajasthan is INR 200 crore...
Rajasthan is INR 212 crores, GVK is INR 16 crore. Tata Project is INR 45 crore. And IRB is again 100 -- some INR 146 crores.
INR 146 crores, huge amount? Because it's almost equal to your NHAI debtors.
NHAI is INR 75 crore, yes.
No. So I'm saying it's almost 2x your NHAI debtors and that is what I was wondering why your debtors were so high because the private debtors almost constitutes INR 200 crores plus your -- sorry, GVK, Tata Projects and IRB is INR 200 crore, Rajasthan is INR 200 crore, and NHAI is only INR 75 crore. Private debt...
But then IRB, on IRB, it is -- yes, of course, so one -- correct, correct.
So how do we address? Because -- I mean, if these private contracts were not there, working capital position and liquidity would have been much, much better because NHAI is hardly like INR 75 crores. Rajasthan, I understand, will come. So why there is a delay in collecting? So what will be the IRB revenue you would have booked this quarter?
IRB revenue has been INR 68 crore.
Sir, why there's so much of outstanding in IRB projects? So is it -- why they are not paying money? I mean, because I think that is, again, an NHAI project, right, the toll project. And is there any delay -- would it be -- outstanding will be like more than 90 days or like how much it would be?
In IRB, more than 90 days, of course, more than 90 days is about INR 100 crores. And remaining all are within 90 days.
But what's the issue there? Why they're not paying? I mean why the collection is delayed?
So I think with them, they have paid. It's not that they have not paid. They have paid some INR 36 crores during the current quarter, in quarter 1. And again, in this year, quarter 2, they have paid INR 40 crore. In fact, INR 48 crore. So they are paying. It was delayed. It was a bit delayed in quarter 4 of March and as well as in quarter 1.
Because I think similar amounts, if I see in the unbilled revenue, again, it is like INR 450 crores unbilled work -- sorry, financial -- other financial assets unbilled. So again, I think the trend -- out of that INR 450-odd crores, how much should be NHAI in that? NHAI and SPV? SPV, you said INR 50 crores. NHAI will be how much?
Mostly for NHAI -- it is INR 156 crores for NHAI and MoRTH project.
In unbilled?
On unbilled portion, yes.
So again, private is very high. So 200 -- almost INR 250 crore is private again there because I think INR 50 crore is your SPV debtors there, INR 145 crore is NHAI and MoRTH, so it's INR 200 crore and INR 250 crore has been with private debtors.
No, I will just correct it. Basically, it's INR 80 crore plus INR 156 crore. NHAI and MoRTH project it is INR 156 crore and INR 80 crore is where the PCOD already declared and some bills are yet to be realized, where these are all old NHAI projects. These are all old NHAI projects like Sitarganj, Manoharpur-Dausa, Tonk-Sawai Madhopur, these are all these projects. So this is about -- INR 236 crore is for NHAI and MoRTH projects. IRB doesn't have much of this. Only INR 15 crore is COS, change of scope. That is all okay. But again, for Adani project, which is INR 31 crore because we have invested -- we have already done work in the Adani project, that INR 31.5 crore is -- remain unbilled. Now it would be billed because since we are going to start the work very soon.
Okay. So sir, what is balance INR 150 crores?
So INR 120 crore already that SPV is INR 60 crore and INR 60 crore is Rajasthan projects, which remain unbilled, which is certified in the month of August.
Okay, INR 402 crore. That tallies to INR 402 crore. I think in this -- I mean we should focus on collecting this because this is...
Definitely, because of the COVID time and these -- a lot of certifications remain pending, the officers are not attending, let's say, mostly in Maharashtra...
No, I'm saying private debtors, I'm not talking about NHAI. NHAI is paying...
Private again, bills are certified, but only the receivables are a bit stressed in the IRB. And Tata, again, not a big level, it's INR 45 crore only. So IRB, the collection is going on. In this current, we have received some INR 48 crores. We believe that by quarter 2 end, they will be paying on track.
What is your residual order book in the IRB project, sir -- sorry, this big 120 days will be?
INR 926 crore.
So Rajasthan and this one put together, the UP project put together, so Hapur Morradabad, so INR 900-odd crores you are saying?
Yes.
Okay. Okay, sir. So I think that is one thing which needs to be addressed because here the situation is -- because earlier we thought that Rajasthan is one thing which is the elephant in the room, but now this private developers are also looking a little bit stretched. So I think we have to address this issue, so that we improve our NWC days.Second thing is on the overall bidding, you said you're looking to add another INR 3,000 crores of order. So we have been studying your bids and we think that you are very, very conservative in bidding. So do you think you'll get a chance by third quarter or fourth quarter to win some projects? Because the way the bidding is done, there's a lot of aggression on the EPC side, but HAM, there is limited competition.
No, no. Whatever bids which are in pipeline, we expect in quarter 2 and quarter 3. So not many bidders are there. There the aggression is already shown and EPC lot is very keen on taking calls on these upcoming bids. So we believe that, not compromising on our numbers, we would be expecting that, that definitely, in quarter 2 and quarter 3, we expect that we'll be able to win the bids.
Out of INR 3,500 crore, how much will be the HAM you're looking to add?
I've already said only -- the balance of about 25 and 75. We believe that about INR 1,000 crore to INR 1,200 crore would be HAM and the remaining all would be EPC.
The next question is from the line of Viral Shah from Prabhudas Lilladher.
Sir, just one question from my end. In terms of consol numbers when we look at, the EBITDA margin for consol number has come in at around 19.5%. So what is the reason for that sharp jump because stand-alone and consol, there is virtually very limited difference. So what is the reason for higher EBITDA at consol -- consol basis?
See, in consol, only the SPV -- this profit and loss -- difference of stand-alone to consol is only SPV difference is there. There, the margin is about INR 5.7 crore is total margin that we have booked in quarter 1. Because of that, increase is significant that you can see in EBITDA level.
And it is not related to that service income which we had for FY '21. Is it also pertaining to that or no?
No.
The next question is from the line of Anjali Mahajan, an individual investor.
Am I audible?
Yes.
Sir, my question was more on the macro level. I think you said you have participated in the bids. So how are the bids looking like? What is the mood of ordering? Are this -- it is more skewed towards HAM or EPC?
The bids, you're talking of our focus or you're talking about the pattern?
The pattern as in and then what will our focus be?
Yes, of course, the pattern is very similar to the pattern we had last year, that about 30% to 35% bids, they would be on EPC and almost 50% plus that is on HAM mode. And again, our focus is -- that we usually see that out of the 25% of the total of size of our orders, there can be HAM, which will be -- we would be on a very comfortable stage of investing our equity. So that is again 75% to 25%, 75% EPC and 25% HAM.
Got it. Got it. And sir, the other question is around, would -- considering the model concession agreement changes that are coming up in the BOT segment, so do you think that, that will make it viable for the bidding on our side? Would you like to participate in it?
No, no plans.
The next question is from the line of Jiten Rushi from Axis Capital.
Sir, what is the mobilization advance expected this year from the projects awarded to us, newer projects? How much we're expecting? And any mobilization advance pending from any older projects, sir?
From the old projects, definitely, there is about INR 60 crores of mobilization that we can take from old projects. And within the current year, these 3 major EPC, one of Adani and 2 of NHAI are our EPC projects and 1 is HAM project, that almost INR 350 crores that we can take as a mobilization advance.
Old projects, you said INR 60 crore is pending, right, sir?
INR 60 crores, yes.
INR 50 crores, INR 50 crore, right, sir?
INR 60 crores, INR 60 crores, INR 60 crores.
INR 60 crores, that is for which project, sir?
That is Delhi-Vadodara project in which we can get -- we can receive some INR 27 crores. We have already applied for that. And in the HAM project...
The Rewari project.
Rewari, yes, correct.
So INR 25 crore Delhi-Vadodara and then balance INR 35 crore is Rewari NHAI, okay. And then INR 350 crore in the 4 projects of Adani and 2 EPC and that we can get this year. So basically, this year, we can get almost like INR 400 crores mobilization advance.
INR 400 crores, correct.
[Operator Instructions] The next question is from the line of Shravan Shah from Dolat Capital.
Sir, in terms of the last time, I think we have talked about the increase in the nonfund base limit by INR 125 crore to INR 980-odd crores. So what is the status?
See, during the current year, the average utilization has been the same, and we have seen that not many retention money BGs that government has given in the Atmanirbhar Yojana. That retention, we had -- I would say we have received back almost INR 110 crores of retention BGs that was submitted for NHAI and MoRTH project. So that has helped us. But as of now, the unutilized limit is about INR 165 crores, which -- and again, so INR 110 crores of the limit would be released by the banks, where the sanction has already been received. So we are just about to sign the joint documentation. So we would be taking -- so almost INR 270 crores of the bank guarantees would be available with us with the signing of this joint documentation with the enhancement released by the banks.
So currently, our nonfunded limit is how much? INR 850-odd crores?
Out of the total INR 1,070 crore, working capital limit is INR 150 crore. That if you take out, it's about INR 900 crore, yes.
The next question is from the line of Jiten Rushi from Axis Capital.
Sir, any arbitration proceedings going for any claims? And any update on that?
Agra Development Authority, they've almost -- we have arbitration in process of around INR 46 crore, out of which, reward of -- the award of about INR 15-point something crore have already been given. Now we have applied in higher court, High Court, Delhi, were the arbitration is going on.
So basically, this money has not been received so far, INR 15 crores, right, because it is, again, under further arbitration, right, sir?
Correct, correct.
And sir, any promoter debt repayment this year or we will continue with that INR 43 crores?
No, we have not planned during the year. We will see how the things move on just for the cash flow and the other receivables against the mobilization advance and things like that. Then only we will see.
The next question is from the line of Rita Tahilramani from Invesco Mutual Fund.
Two questions from my side. I must have missed your initial commentary. Would you help us understand what is the labor availability at site today? And basis that, what is your sense -- I know it is difficult to give guidance in this time, but what in your sense would be the execution in FY '21?
See, the availability of labor workforce as of now is about 80% to 85% on all our projects, and it is increasing day by day. And definitely, as of now, we cannot give any further guidance for the year '21, but only thing is things looks like they would be improving. So once we finish this quarter 2, then we could be in a -- we would be in a better, better shape to just give the proper, proper number guidance.
Sure. And secondly, in terms of -- while we understand there are a lot of challenges in terms of selection across agencies, what as per you is -- what the debtor days maybe on FY '20? And how will that pan out for FY '21, your sense on it?
See, during the last year, major impact has been -- this is because of Rajasthan project and the debtor days goes about over 90 days and for this 1 or 2 private players in this IRB mainly. But during the current year, we believe that Rajasthan project, I think they would be -- they are having the committed budget. They would be paying off all the entire whatever we complete during the year. And for IRB as well as because they have paid significant amount in quarter 1. And quarter 2, they have, again, paid significant amount. And we believe that they would be all stable at about, say, almost 50 to 45 days.
Okay. So from 90 days, it will come back to 45 to 50 days, that is our estimate?
Yes.
Okay. And in terms of execution wise, you're saying that labor availability is almost 85%, assuming there is not much challenges even in terms of execution at this current rate. Is this the right understanding?
Yes. Going further, it could be much more -- there would be -- we expect much improvement would be there.
The next question is from the line of Prem Khurana from Anand Rathi.
So 2 questions from my side. So one was I think last quarter, you had given us a sense of almost around INR 100-odd crore of dues, which were recoverable from IRB towards material that you had purchased on behalf of IRB. So when you say, I mean, you have almost around INR 140-odd crore of money due from IRB, would that include that INR 100-odd crores as well? Or it is purely towards the EPC project?
Yes. No, no, no. It is including aggregate and the EPC. So out of that, we have received from aggregate -- against aggregate, we have received INR 40-something crore. And in EPC, we have received some, again, INR 40-something crore. So almost -- INR 80 crores received during the quarter 1 and quarter 2 till date.
And how much of aggregate is still -- you're saying INR 60-odd crore of aggregate is still pending.
Yes, it's INR 48 crore -- yes, it is almost 60 -- INR 52 crore balance.
Okay, okay. But I mean, does it make sense to kind of extend these kind of days only for the aggregate because -- I mean, I'm assuming, in agreement, they won't let you make any significant money on that part. So...
No. Going further, we have modified our agreement. We would be not going ahead for any such purchase. We have modified our agreement. The entire now would be in the scope of EPC only. So going ahead, this significant number which has -- what -- about INR 150 crore level, it would be reduced there.
Sure. And just if you could let us understand, I mean, how are we approaching hybrid annuities because you said, I mean, you've already bid for 4 wherein you couldn't have any success in 2 and there are 2 more in place, given the fact that, I mean, bank rate and MCLR spread is still adverse. So fair to assume, I mean you're bidding below bank rate by 300 basis points, which is why you're not able to make it a success or you're taking a call that bank rate would come back and you are assuming some recovery and bidding accordingly?
No, no, we are taking the call with the premium. We are bidding for the premium, not the bank rate as of now, not considering that, again, going further within a year or 2, this could be reduced. We are quoting our bids with the premium, so there is a difference in the bank rate and the NHAI rate.
Okay. So I mean, when you say, I mean, premium, it will be bank rate plus 300 basis points, and which is how you are working out your numbers, right? Or you're assuming some spread over MCLR?
No, no, no. We are not assuming. So whatever would be, that is incidental.
Sure. And then, sir, given the fact that, I mean, you would have observed some of these bids have taken place in the recent past, I mean, wherein you were a participant or you were also bidding. And it feels as some people are assuming some spread over MCLR, I think, which is how -- I mean your bids don't look to be very competitive at this point in time. I mean if the situation was to continue, I mean, would that make you change your assumption or you're fine not getting any hybrid annuity project and continue with the way you're bidding this?
We would be going ahead with our calculation only. We will be not easing out with a spread that one can expect in the coming years. So we will be going by our calculation as of now that we've put in some premium just because of there's a big difference between the NHAI and the bank rate and then [Technical Difficulty].
How is the NHAI approaching this? Because for them, I think it is as if -- I mean, if it is a negative spread, obviously, I mean, the bid project cost that you would give or the NPV bid price that you would give, there's a high chance that the number would be lower than their internal estimates. So would they go ahead? Or would you get to have -- I mean, some of these projects which have been bid very recently get canceled because they would say, I mean, we won't be able to give you approval because the bid is lower than our expectation because we've seen that, at least on the BOT toll side, we've seen that on the EPC side as well. So do you get to see that playing out in hybrid as well?
I think they have got their internal calculation. So accordingly, they just proceed, whatever bids, say if it is coming at about, say, 40% or 45% or 50%, they usually cancel that bid and then rebid for that.
Sure. Okay, okay. And just one last from my side. So I mean, you said, I mean, you're looking at almost around INR 1,000-odd crores of hybrid, incremental hybrid, which would mean another around INR 150-odd crore of equity requirement almost. So what is the plan to kind of churn the capital because we already have 4. We've already invested some money. I mean, there is another around INR 190-odd crore which needs to go. So when you look at these projects, I mean, do you go with the fact that I want to maintain a ratio between EPC and hybrid? Or you look at your cash generation to be able to kind of take a call that you want to go for these?
Of course, there are 2 ways to look into that. One is where we have already invested and we have certain, say, CapEx closures -- completion stage of few of the HAM projects. So the market is not yet conducive that we can have the potential investor taking on 1 or 2 projects. So -- but going further, I think within 3, 4, 5, 6 months, I'd say, by the end of the year, situation would be improved a lot and we would be just looking at the right investors who are capable and taking the -- so just looking at buying these projects. So we will be selling out 1 or 2 projects. Again, making the equilibrium means it is like where the balance sheet permits us that if it is the size of INR 1,000-odd crores every year, it is almost, almost matchable with our balance sheet.
Sure. No, my only worry was, I mean, let's say, recently you placed bids for 4-odd projects. What if you get to have all the 4 projects? Suddenly, I mean it works out to be more than what you were anticipating? Or is it that, I mean, with each passing bid, I mean, you tend to raise your expectation which is are you tend to be less competitive?
No, no. I think it is very specific that at one point of time, we are expecting that the NHAI is going to cancel the bid if it's at a higher rate -- higher premium. So another apprehension is see if we are receiving all 4 bids, so it is not possible, either ways, it is not possible. One way or the other, we are going to get that.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Harendra Singh for closing comments.
Thank you, everyone, for your participation in our Q1 FY '21 earnings call. In case of further queries, you may get in touch with Pareto Capital Advisors or feel free to get in touch with us. We look forward to interacting with you in next quarter. Thank you.
Sir, there is one participant who has just come. Shall we take the question?
Yes, yes. Please, please.
We take the question from the line of Shravan Shah from Dolat Capital.
For the bypass, has that scope has increased because last time it was INR 850-odd crore. Now it's INR 954 crore. So how much we executed? And how much the scope has increased?
You are talking about which project?
Hapur bypass.
There the modification is done, but I already told you that we have done to -- certain modification of our EPC contract. Because of the aggregate, which was earlier say -- certain part of aggregate we were supplying, we were procuring. So now it has been modified accordingly.
So how much...
So going ahead have to be ease in our operations in that way, and the cash flows.
Sorry, sir. So in terms of the order book, how much is the scope we have increased during...
So that is the change of scope. Basically, now it has been treated as a change in scope. It is a lot about -- value of about INR 140-something crores.
Thank you. That was the last participant on the queue. On behalf of H.G. Infra Engineering, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.