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Ashoka Buildcon Ltd
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Ladies and gentlemen, good day, and welcome to the Q4 FY '23 Earnings Conference Call of Ashoka Buildcon Limited hosted by PhillipCapital India Private Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions]
Please note that this conference is being recorded. I now hand the conference over to Mr. Vikram Suryavanshi from PhillipCapital India Private Limited. Thank you, and over to you, sir.
Thank you. Good afternoon, and a very warm welcome to everyone. Thank you for being on the call of Ashoka Buildcon Limited. We are happy to have the management with us here today for question-and-answer session with the investment community. The management is represented by Mr. Satish Parakh, Managing Director; and Mr. Paresh Mehta, Chief Financial Officer.
Before we start with the question and answer session, we will have some opening remarks from the management. Now I hand over the call to Mr. Satish Parakh for opening comments. Over to you, sir.
Thank you, Vikram. Good afternoon, everyone. I would like to extend a warm welcome to everyone on this earnings call for the fourth quarter and full year ended 31st March 2023. I have Mr. Paresh Mehta, our CFO; and SGA, our Investor Relations partner, along with me on the call.
During the quarter gone by in March '23, company along with the North Haven India Infrastructure Fund, an India-focused infrastructure fund managed by Morgan Stanley Investment Management Private Limited has entered into a share purchase agreement with Mahanagar Gas Limited to sell its equity stake in its subsidiary, Unison Enviro Private Limited, UEPL, for a total consideration of INR 531 crores for 100% stake.
The transaction is subject to satisfaction of some customary conditions including approval by Petroleum and Natural Gas Regulatory Board and lenders of UEPL and is expected to be completed by 31st March 2024. Just to reiterate, the company has 51% stake in Unison Enviro.
Similarly, the company has earlier entered into SPA with National Highway -- with National Investment and Infrastructure Fund, NIIF, for sale of Jaora-Nayagaon Toll Project and Chenna ORR project. The company continues to work towards achieving specific condition precedent as per the respective SPEs.
Now I'd like to touch upon the mutual termination of SPA with Galaxy Investments II Private Limited, which is an affiliate of KKR. We have been in continued discussion with Galaxy for achieving various CPs as per the SPA. However, there has been unanticipated delays. Based on our discussions with KKR, we have mutually reasserted the transaction and then agreed to terminate the SPA without any financial implication to either party.
I would like to highlight that we have reinitiated the divestment process and our discussion with various investors and parties. We are also divesting 11 [indiscernible] projects and discussions are at advanced stage. We will keep all the -- all of you abreast on the progress of the sale.
Today on this call, I would like to clarify regarding the department of company and subsequent cancellation of EPC project on 7th March 2023. We received communication from IMRTS regarding the company's department for 45 days on 25th Jan. We have received LOA of the EPC project worth INR 2,161 crores. Subsequently, the authority has announced the bidding process and is invited a [indiscernible] bid for the said project. I would like to highlight that the department expired on 15th April 2023 and company is eligible to participate in all the bids being called by various authorities, including NHI.
Coming to the order book status. As on 31st March 2023, order book stands at INR 15,805 crores. And as on date, it stands at INR 18,090 crores, including projects awarded after 31st March 2023. In road construction, company has bagged another award from Ministry of Transport and Bridges, Government of Bangladesh, for the project improvement of Baraiyerhat - Heanko - Ramgarh, widening and reconstruction of existing pavement for an accepted contract value of USD 80 million.
In [Baraiyerhat] infrastructure development, company received notification of awards in the state of Maharashtra, from Maharashtra State Electricity and Distribution Company, MSEDCL. And in Bihar from North as well as South Bihar Power Distribution Company Limited for development of distribution of infrastructure for an accepted contract value of INR 2,285 crores and INR 632 crores, respectively.
In railways, company received letter of acceptance from Ministry of Railways for an EPC project in connection with Gwalior -- Sheopurkalan GC project from North Central Railway for accepted contract value of INR 285 crores.
Let me reiterate that the focus remains on building strong EPC business, in segments of highway, railways, power, [indiscernible] buildings and hybrid annuity projects from NHAI. Our balance order book as on 31st March 2023 is INR 15,805 crores. The breakup of the order book for roads and railway projects comprise of INR 9,595 crores, which is 61% of the total order book. Among the road project order book, [indiscernible] to a tune of INR 1,728 crores and EPC road projects are worth INR 6,318 crores. And railway is around INR 1,549 crores.
Power T&D and others account for around INR 3,965 crores, which is approximately 25% of the total order book. The total EPC Building segment is around INR 2,221 crores, which is 14% of the total order book and EPC work of CCT business compromises of balance INR 35 crores.
This is all from my side. I would now request Mr. Paresh Mehta to present the financial performance of Q4 and full fiscal year 2023. Thank you.
Thank you very much, sir. Good afternoon to [indiscernible] and all present on this call. The presentation and the press release for the quarter have been uploaded on the stock exchange and the company's website. You must have had an opportunity to go through the same.
Here, let me introduce that SGA Growth Advisors have been appointed as our IR from this quarter onwards. So they will be taking care of all the requirements of the investors information as well as any guidance from the company's side. Of course, the company also will be available at any time for information.
Now I'll present the financial results for the fourth quarter ended March 31, 2023. Starting with the standalone numbers, the total income for Q4 FY '23 stood at INR 2,067.9 crores as compared to INR 1,622.7 crores in the corresponding quarter last year, registering a growth of 27%. EBITDA for the quarter was INR 174.4 crores with an EBITDA margin of 8.4%. EBITDA margins have been impacted mainly due to inflationary pressures, high competitive bidding in some of the projects.
The profit before tax stands at INR 108.7 crores before accounting of exceptional gains of INR 349.2 crores, which is on account of reversal of impairments on its investments and loans in its subsidiaries, including ACL. The reported PBT is INR 457.8 crores, and PAT is INR 434.8 crores.
For the full fiscal year 2023, total revenue was INR 6,478 crores, up by 35% year-on-year. The EBITDA stood at INR 639.4 crores with a margin of 9.9%. The profit before tax stands at INR 424.1 crores before accounting for exceptional gains as elected earlier. If you recollect, during FY '22, we had recognized INR 769.6 crores as exceptional expenses on account of impairment of investment loans in subsidiaries, including ACL.
Just to elaborate, during FY '22, the exceptional expenses of INR 769.6 crores pertain to an impairment of our investments in ACL and measurement of our obligations towards investor in ACL. However, during FY '23, we have reversed these impairments on our investments in ACL and also reverse obligation towards investments in ACL due to increase in valuation of ACL, mainly on account of increased cash flow in its hand projects, consent to increase in interest receivables on annuity payments.
Reported profit after tax for FY '23 stood at INR 671.3 crores. Coming to the consolidated results, the total income of Q4 FY '23 grew by 20% year-on-year to INR 2,478 crores as compared to INR 2,057 crores in Q4 FY '22. EBITDA stood at INR 585.2 crores for Q4 FY '23 with a margin of 23.6%. Reported profit after tax is at INR 334.2 crores in Q4 FY '23.
For full fiscal year 2023, on consolidated basis, total income was INR 8,235.1 crores, up by 34% year-on-year. EBITDA stood at INR 2,103.4 crores and a margin of 25.5%. Reported profit before tax stood at INR 372.9 crores. During Q4 FY '23, BOT division recorded a total collection of INR 309.9 crores as against INR 262.6 crores in Q4 FY '22 and INR 291.4 crores in Q3 FY '23. It may be noted here that the year-on-year growth on the five BOT projects which was -- where we had signed an SPA with KKR, there, the revenues have grown in the last year from INR 745 crores to INR 910 crores with a 22% jump in revenue. So the revenue growth has been robust in the past 2 years.
Coming to debt, the total consolidated debt as on 31st March 2023 stood at INR 6,895 crores, of which project debt was INR 5,819 crores, of which INR 2,732 crores stand for the 5 BOT projects. NCD stood at INR 200 crores at the ACL level. The standalone debt is at INR 876 crores, which comprises of INR 134 crores of equipment loan and INR 742 crores of working capital loans.
With this, we now open the floor for question and answers. Thank you.
[Operator Instructions] We have the first question from the line of Mohit Kumar from ICICI Securities.
My first question is on the deal which [indiscernible] through. Why there was delay? Is it due to NHAI? And wasn't there any scope for renegotiation with the same buyers? And the related question is, realistically, when do you think the new deal you'll be able to close?
See, this deal we have been negotiating and we had almost taken 15 months. Basically, the biggest project [Dhankuni] was a typical concession agreement where pre-COD condition was not envisaged or mentioned. We had final COD. And final COD happened very late because of the land acquisition issues in the project. And our contract agreement stated 2 years after final COD.
Now we were trying with NHAI to get relaxation, which they have given to HAM projects. But finally, we could not succeed in that. And there are also timelines elapsed. So in this, the project completely got -- the deal completely got canceled.
As far as new deal, yes, we have already soft launched the process has started. We have good inquiry. And as Paresh has said, the revenues have also gone and last year, we have seen around 32% average growth in the revenues. So we feel we'll be able to close this in this year -- financial year.
My second question is on the [indiscernible], sir, of course, the execution wise last year was decent, but EBITDA margins were below par. Of course, we have asked this question again and again. But for Q4, there was no jump in EBITDA margin compared to Q3. So realistically, based on the current order book, what is the kind of EBITDA margin one should bake in? It should be 9% is a fair assumption based on the current order book?
So you're right. What we discussed in Q3, the same situation will continue for another Q4, which is visible, and another two to three quarters. We believe Q4 margins will correct themselves to the normal margins which we used to declare in the previous years. So there are certain contracts which will -- of low margin, which will get executed in this next 3 quarters, and most of it will get executed when completed then.
So we expect to get back to 10% for...
Yes. Right.
My last question, sir, we are again taking state distribution projects. I understand these are the revamped development-linked scheme. This is something where the working capital has been an issue in the past. Do you think under the new RDSS scheme, that is expected to be far better? Do you think the payments [indiscernible] will be more regular? Have you got any comfort from the state discounts about the payment?
Yes. Earlier, the 10% payment used to get locked for final completion and even after completion of defect liability, we used to get. Here, we are going to get on part completion. So the payment terms are a little better than what we used to have earlier.
What is the kind of working capital do you think this 6 months last [indiscernible] if I remember correctly.
So here, the working capital would be in the range of 3, 3.5 months, better than that on an average collection point of view, though there will be processes of payment on completion, but there will be part payments in between, which will take care of the overall kind of life of the working capital for these projects.
The next question is from the line of Vasu Gupta from Green Portfolio Private Limited.
Can you hear me?
Yes.
Yes. My question is on the recent order win of INR 2,284 crores from MSEDCL, just wanted to know that management view on the counterparty risk in it since MSEDCL in financial distress and is not able to pay its dues to power generators.
Yes, these are 100% funded by PFC. They have a 60% grant and 40% loan being given for this project from PFC.
So you don't...
We are completely centrally funded here.
Okay. So can you tell me what are the payment terms? Any mobilization or advance received for the project?
Yes, these have mobilization advance to the tune of 10%. We have not yet received, which we will get in maybe this month or next month. And then earlier, they used to pay only 90% till the completion. Now as you complete a section, you will get, even for part completion, you're going to get your 100% payment and only performance securities, which will remain up to [indiscernible] period.
Okay. My second question is on the investigation of the alleged bribery case. What do you -- what are the views of the management on it?
See, this is -- still, they have to -- we have to yet to receive complete information on this. This is what it was in the last call.
It would be 45 days...
[indiscernible] period is over on 15th of April. Now we are able to build for all the projects.
Will the effect of it will move over there?
Beg your pardon?
The negative effect of the department will not be in the future?
No. There is no negative impact to any from the department or anybody.
The next question is from the line of Nikhil Abhyankar from ICICI Securities.
So you said that we are looking to monetize around 11 operational assets that we have. So what is the mode of monetization that we're looking at?
Excuse me, 7 -- we didn't follow. What was that 7?
I said we are looking to monetize our operational assets, almost 11 operational assets we have.
Okay. HAM projects?
Yes. So what is the mode of monetization that we're looking at?
It will be a sale to prospective fund.
Okay. And sir, why aren't we looking at something like [indiscernible] or something?
We believe that we would like to exit 100% and not be an invested party because then you end up holding more than at least 20%, 25% of the equity to hold for another 3 years. So we believe that instead of being a sponsor for [indiscernible] rather than sell it to a fund who intends to create an [indiscernible] and accordingly, we are negotiating for the pricing.
Okay. Okay, sir. And I understand you have mentioned earlier about the margins as well. So should we consider that by FY '25, we will be coming back to double-digit margins?
Yes, sir.
To around 10%, 11%?
Yes, 10% to 11%, in the range of that, definitely.
Okay. And sir, what is the kind of order inflow guidance that we have for FY '24?
So FY '24, we'll continue to bid for road projects definitely and we'll try to take up road projects in the range of INR 6,000 crores to INR 8,000 crores for this year, partially in EPC business and partially in HAM projects. And other sectors also we'll continue to bid and try to take orders to the tune of -- in the power approximately INR 3,000 crores to INR 4,000 crores and other businesses in the range of INR 2,000 crores to INR 3,000 crores.
Sir, in power, you mentioned will these be linked to RDSS? Or will these be PMD as well?
Basically, RDSs schemes, which are centrally funded. We are working in four sectors, basically, roads, railways, buildings and power. So roads will be our focus area to bag maximum orders. And HAM would be our preferred mode going ahead.
The next question is from the line of Sanjeev Kumar Damani from SKD Consulting.
Am I audible?
Yes, you are audible.
Sir, my first question is regarding the fact that you have just now said that in next 3 -- I mean, in 3 quarters of this year, you will be completing the low-margin businesses or pending orders. So sir, can I know the quantum that we are targeting to complete in the next 3 target of the old orders? And can I also know the amount that -- of high-margin business that we will execute in coming 3 quarters -- I mean, current -- 3 quarters of current year? Kindly reply, sir.
Yes. I probably don't have that information in that kind of a format which you're asking for. You could take it offline.
Okay. Second thing is that our balance sheet is very heavily loaded and there are a lot of subsidiaries. I mean is there any thinking of the management to reduce the subsidiaries and make it a single company for better understanding of the analyst community? Is there any such plan of reducing the subsidiaries in coming days?
So our asset monetization plan is typically directed towards that. All these subsidiaries, which are below our holding goals [indiscernible] subsidiary, that is ACL. This is what we intend to monetize. So there are 11 HAM projects under various SPVs, which are subsidiary of a subsidiary. And there are 6 BOT projects, one big annuity project and the CGD business.
So all this, we have already put it on the block for monetization, and we expect that within a year and so we should be able to clean up -- monetize most of it.
So my last question is regarding the fact that the time we were negotiating to sell certain projects, to monetize those road projects or some other projects, now the revenue from the toll collection must have gone up. So do we see that we will be able to better realize the money from same asset now when we are negotiating?
Definitely, that's what the trend definitely shows. When we did the valuation in 2021, when we signed up a deal with KKR, that time, revenues and the growth rates were not looking as positive, but things have changed substantially for the last 2 years. And definitely, we see a better valuation stacking up for these BOT projects.
Sir, my salutation lastly and all the regard for the kind of organization that you have created and the kind of work that you are executing for the growth of the country. And I wish you all the best.
The next question is from the line of Riya from Aequitas Investments.
My first question is in regard with the debt level. So currently, we are at around INR 6,800-odd crores at consolidated level. So what are the plans to reduce this? I understand that part of it -- majority part of it is because of the projects. So how -- what are our plans in the next coming 2 years, how do we plan to reduce the debt level?
So as we -- it's a follow-on effect of the monetization of assets. Once we have the assets monetized, almost INR 6,000 crores of our debt will go off the consol balance sheet. And also, once we recognize or get the equity money into the company, the stand-alone debt also could be reduced substantially so that the debt levels could be substantially low in the 2 years' time -- in the next coming 2 years' time.
I believe that the monetization would take -- the monetization is completed by the year-end. It would take more -- some time to get consummated. So in FY '24, it seems difficult to reduce the debt levels. Is it fair to assume?
FY '24, at least on the HAM projects, the Chennai ORR project and Jaora-Nayagaon and KKR. The KKR, on the 5 projects which we had sold to them, they will come on the block too, and there is a good possibility that this could exchange hands. Just to back up, the reason being that most of the process being run at NHAI level and at the net debt level, well done for the previous deal. Now everything is ready for. We will be in a better position to crunch the timings. And if not FY '24, definitely first half of FY '25, we should see most of the assets, the process over for monetization.
Okay, I understand. My second question is in regard to the order book. I understand you said that the growth area would be roads and we are focusing on power as well. So I believe post election, the ordering for roads would see a little slowdown. So for the next year, how do you see -- where do you see the demand coming from? And what kind of pipeline do you see, pre and post election?
See, the focus on roads of government pre or post-election would remain same. That is what we understand because there's a lot of work being done and there's a lot of focus on building good infrastructure. And railways would be another area which will catch up. So these two are going to give major opportunities going ahead.
And what would be your guidance for order book for FY '24?
So we should cross INR 20,000 crores next year. We should open with at least INR 20,000 crores plus. So we are having currently INR 18,000 crores, where we do work in this year. After deducting that, another fresh orders of around INR 8,000 crores to INR 10,000 crores we should be able to win.
Right. And in terms of working capital, what changes or what activities are we going to reduce the working capital time?
So in the light of the growth in the execution, definitely, working capital also will grow, requirement will grow. So that will -- so today's level, approximately would continue with the increased turnover of -- that we have increased from INR 4,000 crores to INR 6,000 crores in this year, and then we expect to grow another at least 30% -- 25% to 30% every year. So I think these levels of debt on the working capital side would be there for some time. Subject to monetization of assets, probably this would go down, but that will be [deficit] [indiscernible].
What will be our cost of funding -- average cost of funding?
So this would be in the range of a weighted average of around 9%, 9.25%.
9.25%. So going forward, we assume that our interest cost will only increase going forward. Is that the right assumption?
No. So it should -- it has already increased if you see the FY '23 numbers, which will continue to be remain same because the volume and the interest -- the interest rates we expect to stabilize or probably move South. Volumes, if they continue, then I think so these interest rates would -- the interest amount would continue to be approximately same or slightly go down.
Okay. And we also had an order which I think the government had given it to us, but then we were not qualified, so it was again put to bid for. So right now, why did we have the disqualification in the first place? And how is -- what is the current situation there? And do we have any projects from there?
See, we have explained we were debarred for 45 days because of the Patna bribery case. There is allegation wherein our employees were implicated in that. So this 45 debarment period exactly came in between when this order was being -- agreement was being entered. But they had to debar us, so it has gone for re-invitation of the bid, which we are eligible to bid now.
Okay. So we would be L1 there?
That's a fair competition will decide, Riya.
Okay. And in current pipeline, could you specify which all major projects are there?
So currently, NHAI is very aggressive in coming up with a lot of expressways and 4 to 6 lane projects. So we have a pipeline of around INR 72,000 crores. So we have identified around INR 30,000 crores we will be bidding in -- by the end of this quarter.
Okay. And in power -- power and railways?
Power and railways, continuous opportunities are coming in. So railways is throwing another INR 20,000 crores around. So we'll be participating in various bids of railways. Power is very unpredictable, like most of the states have bid before March. So maybe this quarter, we may not see much power activity, but maybe next quarter onwards.
We have the next question from the line of Anupam Gupta from IIFL Securities.
Sir, a couple of questions from my side. Firstly, what is the equity commitment for FY '24 and '25 for the HAM project?
So for the HAM projects, which are going to be executed -- last 3 or 4 HAM major projects which are pending for -- to be funded for. For '23, '24, the amount would be INR 113 crores. And for '24, '25, it would be INR 56 crores. So totally INR 169 crores, which will be required for HAM projects.
Okay. Sir, the second question is, of this INR 15,800 crores of order book, what number would be under execution at this point of time and what is the balance?
So most of the projects are under execution, except for a few projects on the building vertical, which are which have not taken off due to back-to-back funding by the employers. Otherwise, other all projects are -- have -- are in execution stage.
So the building, if you can you quantify what number and which are the projects which are yet to start off?
So it is basically Maldives project, which is around INR 1,100 crores. It it yet to start. Otherwise, all other projects are absolutely on.
Okay. Okay. And one more question. Now this -- the KKR deal is not happening. So what happens to the INR 1,200 crore payout which we have to do to SBI Macquarie? Will that get linked to fresh bid -- a fresh deal? Or do you go ahead paying that still?
So the payment of INR 1,200 crores is linked to monetization of assets. So any asset monetization only will give an opportunity for Macquarie to get its INR 1,200 crores. So we are -- both the partners are working towards monetization. Though the KKR deal has fallen off, we are still looking at alternative potential investors. And we believe that as soon as these monetizations happen in this next 12 months, we should be in a position to give them exit. Basically, there is no talk or intention of giving them an exit without monetization done.
Okay. Understand. And one last question. So the strong 22% toll revenue growth, which you have reported, is that -- does it have some component of double sort of toll which, let's say, because of Fastag not being there? Or this is the actual number which is there in terms of revenue?
These are actual numbers here.
Okay. But incrementally -- so this year, obviously, you would have got high toll increase because of the inflation. But next year onwards, once the inflation normalizes, it should normalize, right? You don't expect that to continue for the next year as well, FY '25?
Yes. So next year expectation for inflation is around -- between the range of 5% to 7%. So keeping growth in the mind, I think so we should -- it may not be 22%, it will be definitely on the -- more than 11% to 12%.
For this year, for these five projects, what was the toll rate hike, broad number?
Approximately for '22, '23, it was around 10.5% on the toll rate rise, the balance was -- yes.
Okay. And just one last question. What is your revenue guidance for this year?
So as we suggested, we would -- based on order book and new orders, we would target for a growth of 25% to 30%, we would try to see that.
Your guidance would be 20% to 25%.
[Operator Instructions] The next question is from the line of Rikesh Parikh from Rockstud Capital LLP.
I wanted to understand on the diversion front, whether this Chennai ORR and Jaora-Nayagaon will face the same kind of problem what we faced with the first thing?
See, all these projects are at advanced stage of getting approvals. So we hope we'll be able to clear Chennai ORR by September, it should be through. And Jaora-Nayagaon will go up to December because Jaora-Nayagaon was the last SPA which was signed.
[indiscernible] suggesting by first quarter of this year, we will be able to go through. And we were not able to get the approvals from the NHAI. So just wanted to understand, do we have the same kind of concern over here in these two deals also?
See, concerns are there because these are -- we have to deal with states. Dealing with state is a little slow. The whole mechanism is very slow. So we are taking a little time, but we think we'll go through all this.
And as you just said, previously in the question, you suggested that the exit to Macquarie is dependent upon the deal getting close. So hypothetically assuming these two deals that were closed, so would it mean that we will have to make a payout of PPD component to them? Partial exit to them?
Sorry. So whatever cash comes in, we would like to pay them off. And accordingly, I think -- I mean that's all it will happen. Chennai ORR and Jaora-Nayagaon give that much cash by December end, we will pay them off and -- it stacks up to INR 1,200 crores plus, so then we'll pay them off.
And last, does the deal change because there has been a delay in the repayment? So there was some concession being given at the time of INR 1,200 crores coming up to the figure, so does the terms change by any chance?
I didn't follow, what was that?
That revised IRR between Macquarie [indiscernible] INR 1,200 crores. So does the [indiscernible] amount presents to or we have to pay more with -- since there's the lapse of time?
So the understanding was that they would get -- so if we get a carry on the monetization of assets, we will pass part of it to them. So they will get some kind of an additional amount based on whatever we get. So typically, it would be in the range of 8% around.
The next question is from the line of Anant Mundra from Mytemple Capital Advisors LLP.
So my question is around the exit that we are obligated to give to SBI Macquarie. So initially, before we had closed the deal, I think the amount was more than INR 1,500 crores, the deal with KKR. Then it was renegotiated to INR 1,200 crores. Now that the deal is off, I just want to be sure that the number still remains INR 1,200 crores, right? There's no scope for renegotiation here. Is that assumption correct?
No. So as I said, explained just now, it would be INR 1,200 crores plus any carry. The understanding then also was the INR 1,200 crores plus any carry which we get from monetization would be passed to them based on their INR 1,200 crores investment. So that kind of understanding has been reached at say, approximately 8%, which will be paid to them based on what we get from the modernization process.
From the monetization of only the BOT assets, whatever carry we get or any kind of monetization?
BOT or HAM, yes, it's the ACL bucket.
Okay. So that's an 8% basically carrying cost on whatever...
Would be, in the range of that, yes.
Okay, okay. And sir, my next question is with respect to the NHAI premium and NHAI deferred payment liability on the five BOT assets. Can I have that figure, please?
Didn't follow, what is that?
NHAI premium. On the liability side, there's a NHAI premium and an NHAI deferred payment liability on the five BOT assets when we see their balance sheet. How much would that figure be at the end of March '23 for these five projects?
So there is only two major projects where deferment premium has happened. One is the Dhankuni project and Belgaum project. I think the total deferred premium there is in the range of approximately INR 700-odd crores. I'll come back to you offline on the exact amount.
And sir, do you -- because there has been a very good jump up in toll revenues in March '23 for these 5 assets, do we expect to continue providing funding support to these 5 BOT projects? Or now all of them will be self-sufficient?
No, except for Sambalpur, all others are self-sufficient. Sambalpur will still need support, though, they have got -- they already have what you call, [indiscernible] recommendation for increase in concession period by 6 years, which will take care of the project's IRR. But in the short term, they will require cash still. Other projects could be self-sufficient.
And sir, my final question is on two subsidiaries, namely the Viva Highways and Viva Infrastructure. They are holding a lot of land bank, right? So are there any -- I mean is there some plans to monetize this or some kind of development that we plan to do ourselves on these land assets that are there in these two subsidiaries?
So we are looking at opportunities. Wherever it is possible, we would like to do that, but at the right opportune time, we'll definitely monetize that, preferably through direct sale or a joint development process.
And sir, these lands are majorly in Nasik, which geography are they in?
They would be at Nasik, Pune and maybe in MP on the highway at Indore -- Edlabad, which we owned sometime back.
And what is the book value of these land partials that we own?
It seemed to be around INR 270-odd crores.
INR 270-odd crores? Okay.
The next question is from the line of Vasudev from Nuvama.
So most of my questions are answered. I just had one question. If we look at our stand-alone balance sheet, the capital work in progress has gone up substantially in FY '23. So what is the reason for that? And how much CapEx do we plan to do in FY '24?
So we did a CapEx of INR 81 crores in last year. And in this coming year, the CapEx would be in the range of another INR 80 crores, INR 85 crores -- another INR 80 crores to INR 90 crores.
Sir, if we see, our CWIC as on FY '22 are INR 19-odd crores.
Yes. So that will be capitalized. These are for the new projects which we have started on -- in the Kerala project. So accordingly, that will immediately put to use, and will be capitalized. Major CapEx required is for a couple of these projects like the Kerala project.
The next question is from the line of Nikhil Kanodia from HDFC Securities Limited.
Sir, first my question is [indiscernible] bid pipeline is around INR 72,000 crores, right?
I didn't follow, what was that?
Sir, your bid pipeline [indiscernible]
Mr. Kanodia, your audio is not clear. I would request you to kindly use your handset, please?
Any better now?
Yes, sir, please proceed.
Sir, if I heard you correct, your bid pipeline is around INR 72,000 crores, right?
Right.
Okay. And sir, on the MGL deal, so when do you expect to -- that deal to complete?
Which deal, sir?
MGL.
MGL deal. Yes, by -- in October, November, we should be able to close it.
Okay. And sir, with all these three deals expected to be committed this year, what is the kind of cash that you are expecting in this year and like the balance payment of the cash, like what would be the breakup?
So -- see, approximately INR 450 crores is Chennai ORR project, around net INR 300 crores in Jaora-Nayagaon project and around INR 60 crores in the MGL deal. So that's the immediate cash which will come in. Then there are HAM projects...
This is FY '24, right?
FY '23, '24, yes.
Okay. And sir, like any spillover in the next financial year? Like what sort of amount are we expecting in the next financial year from this deal?
No. This will complete the deals as far as these three projects are concerned.
Okay. Understood. And sir, on your margin front, I understand that you mentioned that for the first 2 or 3 quarters, you might -- you will be executing the lower-margin projects and in the Q4, you are expecting the margins to normalize. So on an annual basis, what sort of -- like if you were to give any guidance on [indiscernible] level, so what sort of number could we assume?
I think it will be in the range of -- between the range of 8.75% to 9.25%.
8.75% to 9.25%, right?
Yes. Yes.
The next question is from the line of Vaibhav Shah from JM Financial Limited.
Have you removed any building order in this quarter? So last quarter, our backlog was around INR 3,000 crores. And this quarter, it is around INR 2,200 crores.
Yes. Grand Port Trust Hospital is what we have removed from the order book.
What hospital?
Grand Port Hospital in Mumbai. That order was not starting only. So that has been deleted by mutual understanding with the owners.
And value would be somewhere around INR 600 crores?
INR 600 crores, exactly.
Okay. Sir, secondly, what would be the current debt in the 5 BOT assets that was supposed to be sold to KKR?
Yes, one second. This will be INR 2,700 crores.
And what would be the loss funding that would be doing -- expected in Sambalpur asset for FY '24?
Around INR 60 crores to INR 70 crores.
And what was the same number for FY '23?
Almost -- slightly lower, but almost similar number.
We have the next question from the line of [indiscernible] from ICICI Prudential AMC.
Yes. So my first question is on the Bangladesh order. This $80 million project, so who is funding that? What type of pass-through agreements that we have here? When will the execution [indiscernible] start? And whether we have all approvals at place for this?
Yes, here all approvals are in place. Work has already started and this is completely Exim Bank funded project.
Okay. And what type of pass-through we have here in terms of some cost escalations or something or it is a fixed cost agreement?
This is a fixed price cost.
Okay. And we are not hedged for FX or something, right? So it is a fixed cost -- this USD 18 million is fixed?
Yes. The advantage what we got is appreciation in the dollars.
And my second question is other overseas projects. So any further update on those? Anything that we can expect to start, any movement...
See, [indiscernible] has already started now. We almost completed 60% of the work. And now there's a monsoon there, so post monsoon, maybe after 2 months, that will pick up and move fast. Maldives, we have to start, so we're still hoping for clearance from Exim Bank because this was a bias credit project, a different nature of project. This requires approval from Exim Bank, particularly from [indiscernible] point of view. So this, we are expecting maybe next quarter we should get.
Okay. And my third question would be on the debt structure. So how is the debt structure within the total borrowings? So is it fixed? Is it floating? If it is floating, whichever rate, it is linked to repo or bank, right?
I'm sorry sir, your audio is too low. [Operator Instructions]
Yes, sure. So the question is regarding the debt structure. How is it? It is fixed, floating, whether it is linked to repo rate or bank rate? How is it?
So in the working capital side, almost most -- almost everything is for floating with certain debt linked to what do you call bank rates -- repo rate. And on the toll projects or the HAM projects, few projects are linked to repo rate. And otherwise, most are linked to MCLAR -- 3 months or 6 months MCLARs.
We have the next question from the line of Prem Khurana from Anand Rathi Shares. [Operator Instructions]
Sir, my question was with respect to the KKR transaction, which fell through. So just want to understand, I mean, I think in your comments, you said that the did not go through because you couldn't have approval from NHAI because there was some issue with the concession agreement for Dhankuni in terms of COD and PCOD issue. Given the [indiscernible] plannings and [indiscernible] efforts for these assets. And again, I'm assuming Dhankuni since it's a large project, it will still be a part of the transaction.
So do we have that comfort now? Have we been kind of made to believe by the nature that this time around, you will get to have it and the concession would be changed according to kind of go ahead with the transaction?
So this time, what happens, 2 years get completed on August 2023. So any way [indiscernible] this issue doesn't remain. So we are very sure that we'll be able to close this [indiscernible] in time.
But I mean if that is the case -- I mean KKR could have stayed back for another few months. I mean they waited for this transaction, so for all this while. And you canceled it in the month of May and August is I mean by when you would be able to have it even without a change in the concession, so we couldn't convince that I'm going to stay back on another 2, 3 months?
I think it's more also related to their fund life. That's what we gather. So there also fund life was ending in August. That's what I understand. So that would be too close and my permission would have started by August and would have got it by, say, September end or October. In the new set of deals, we will be able to pull it through once our negotiations over and the NOC will fall in line along with the August dates.
Sure, sir. Second question was, I mean, so when I look at the balance sheet, it seems that if an SBI Macquarie payout, which was around INR 1,200 crores, this has gone to INR 1,272 crores now. Am I right in my reading?
Correct. As I explained just now, 8% carry, which we have calculated from 1st July '22.
And sir, just I mean, if you could help us with the revenue breakup for the quarter, please? I mean in terms of segments, road EPC and road hybrid and the verticals?
Want it for the quarter?
Yes, sir, quarter.
So on the EPC roads, it was INR 1,410 crores, 1-4-1-0 crores. On the power front, it was INR 222 crores. On the railway front, INR 163 crores. And balance approximately including all smart infra building, all put together, around INR 190 crores.
Sir, how much would be CGD and how much would the sale of...
CGD would be small, around, say, INR 8 crores. Pardon, what do you say?
No. CGD would be INR 8 crores, right? I mean we also tend to have the sale of RMC. How much would that be?
Sale of RMC would be INR 56 crores. This is over and above the -- so this is above what I said INR 190 crores. So sale of RMC over and above INR 190 crores, so INR 56 crores is on RMC.
Sure. And INR 8 crores is a part -- I mean CGD is a part of that INR 190 crores, right?
Yes.
The next question is from the line of Ash Shah from Elara Capital.
Sir, can you give the revenue breakup for FY '23 as well?
Yes. For FY '23, roads is INR 4,393 crores, power is INR 675 crores, railways is INR 640 crores, CGD is INR 51 crores, RMC is INR 217 crores and other verticals INR 380 crores.
Okay. Also, how much have we invested in the CGD business till now?
CGD business, INR 67 crores.
INR 67 crores, okay.
The next question is from the line of Jitendra [indiscernible] from JD Capital. [Operator Instructions]. As the current participant is not answering, we move on to the next question, which is from the line of Bharani Vijayakumar from Spark Capital.
Can you refresh a bit on the Chennai ORR and Jaora-Nayagaon project total value for us and how we get to a [indiscernible] for Jaora-Nayagaon?
So on the Chennai ORR, the total value which we'll get is approximately INR 650 crores, of which INR 450 crores which -- INR 650 crores includes debt given by ABL to the SPV, the shareholders' loan. So Ashoka Buildcon will get INR 450 crores out of that monetization. And then the Jaora-Nayagaon project, Ashoka Buildcon will get approximately INR 500-odd crores, of which INR 180 crores is already drawn by Ashoka Buildcon from the SPV in the past. So net receipt would be around INR 300 crores.
And the Mahanagar deal, it will be full 51% on the total deal value?
Yes, INR 531 crores. So 51% of INR 531 crores.
And coming to the Dhankuni project's COD, which is the reason why the deal kind of got canceled. So just let me understand how this project -- because it's been operational for quite some time. So how is this PCOD and COD still delayed for so long?
We had pre-COD long back, around 8 years back, but COD was delayed because some of the underpasses could not be carried out because of land acquisition issues. And this particular project, pre-COD provision is not there. So commercial operation actually started from day 1. This was a 4 to 6 lane project.
Correct. So that's the same.
We could get COD only on completion of all the underpasses that [indiscernible] could give us, and technically, since only COD condition was there, 2 years from COD is the timeline which they have to adhere to, for which we tried for relaxation through various forms, but we could not achieve that.
Sir, if I understand right, the project has been collecting toll and been operating for 8 years, but we have not been able to get final COD because of land acquisition issues or these underpasses issues, right?
Correct. It has nothing to do with the revenues part. Revenues we were getting full from day 1. We got our revisions of toll in time, but a technical issue of getting project completion was delayed because of the land acquisition issue.
Okay. But that will now be obtained in August of 2023?
The COD we already got and 2 years will be complete by August '23. So in August '21, we got the final COD. So 2 years from that date is August '23, after which they can permit us to sell our shares.
Right. But isn't it 1 year now, new norm for BOT projects?
New norms for 1 year, those were for model concession agreement. This was an agreement before that. So that correction, again, was to be done, which was in the process and could not be done.
The next question is from the line of Akhilesh B, an Individual Investor.
Am I audible?
Yes.
Yes. Sir, what is the status of the project with NTPC?
NTPC, almost entire land acquisition is in position. Part of the land is yet to be transferred to NTPC. All the prework which has to be carried out, like doing piling and putting up the entire structure [indiscernible] 90% of it is over and only ordering of modules for which we have given the LOA and we are yet to finalize on the PO of the modules, which we would do in the month of June or July. And we have extension up to 2024 without any penalty to us.
And now do you anticipate any loss to us on the modules?
Yes, since we're given extension, we are negotiating for price variation with them. If we get price variation, then there won't be any loss. If we do not get price variation, only on ordering of module, you will be able to identify what exact loss we need to book. But the prices are substantially corrected from the peak, and we expect them to [indiscernible] should come to our expected levels.
And sir, I just want to reconfirm a couple of things. You have mentioned that the funding support to these bought projects is only to Sambalpur and it's only INR 60 crores to INR 70 crores that you expect in FY '24. Is that correct, sir?
Right.
And the deferred NHAI premium on these five projects is only around INR 700 crores in total.
Yes, I will confirm that, but that's what -- I don't have the number off hand, but approximately that.
Yes, INR 750 crores to be exact.
Okay. And you suggested that you are expecting a better valuation this time around for these bought assets compared to what we signed in '21. Is that right?
Yes. Definitely, I mean, seeing the revenue stacking more than what was considered at the time of valuation when it was given in '21, there is -- the model would be run in the same way. So definitely, it will throw up a substantially large variation to INR 1,337 crores. In fact, INR 1,337 crores, 2 years have passed of '21 valuation, now it will become '23 or '24 valuation. So that kind of a yearly increase will definitely happen. And based on the traffic incremental and even WPI being more than which was there in the past 3 years -- 3 or 4 years back, the valuation should be substantially better.
Sir, my last question is on the HAM disinvestment. So do you expect to close something by the end of Q1? Or will it take much longer?
So we expect to sign an SPA -- we are working on the SPA with the potential investors, trying to close it and try to do it as early as possible, giving a time frame of around 8 weeks' time maximum. And then work on the projects which are already PCOD done and 6 months are over what [indiscernible] the permission is available, it can be given by NHAI. So some of the assets will definitely -- pardon?
So we could avoid the issues like we had in the KKR transaction in terms of...
Here, the SOPs of NHAI are quite clear and simple. So -- and there is not much issue. There are not long-drawn issues also in these projects. These are hardly 2 years old projects. So issues -- and NOC should be given faster.
So this would be comparatively much more straightforward?
Yes. Yes.
The next question is from the line of Ash Shah from Elara Capital.
Sir, can you just repeat the order inflow guidance for FY '24?
Yes. So in road sector, we expect around INR 5,000 crores to INR 7,000 crores, and others like railways and power and buildings, on the INR 2,000 crores to INR 3,000 crores. So what we expect is around INR 8,000 crores to INR 10,000 crores should be what we should be able to clock this year.
The next question is from the line of Hari Kumar, an individual investor.
Am I audible, sir?
Yes.
Okay. The first question is regarding the interest of INR 1,100 crores on consolidated debt of INR 6,900 crores. Like are we paying a higher rate of interest or any other reason is there for these high rates? And also a related question is, is there any interest that is being capitalized in the books, sir? That is the first question.
Yes. So the asset is -- there's an Ind AS policy which is being adopted for amortizing the asset and providing of the interest. So interest rate is in the range of -- as I said, in the range of 9% -- 9% to 10% for term loan assets, like BOT assets and HAM assets are lower.
Is there any other bid value INR 6,900 crores, sir, because we are paying INR 1,100 crores of interest?
Maybe I'll just -- give me some time, I'll come back.
Okay. The second question is, this impairment, which we have written back like once we resell it again, we can like go for the impairments again?
So the movement of impairment was created by the reduction in the interest rate regime in the HAM projects 2 years back, in 2021. And due to that valuations of HAM projects got impaired. Due to increase in the interest rates in the past 8 months, these valuations have been reinstated and whatever impairment was taken then has been reversed.
Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
We thank all the investors who have joined for the investor call. I know there are a couple of queries, which [indiscernible] we are free to answer them once on an offline basis. The details of contracts are given in our presentations. So we're available to give any replies. And thanks again for joining the call.
Thank you, everyone.
Thank you very much, sir. On behalf of Phillip Capital India Private Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.