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Engineers India Ltd
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Ladies and gentlemen, good day, and welcome to the Engineers India Limited Q4 FY '24 Earnings Conference Call, hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Bhoomika Nair from DAM Capital Advisors Limited. Thank you, and over to you, ma'am.
Yes. Good morning, everyone, and a warm welcome to the Q4 FY '24 and FY '24 earnings call of Engineers India Limited. We have the management today being represented by Mr. Sanjay Jindal, our Director of Finance; Mr. Suvendu Padhi, Company Secretary and Investor Relations; Mr. R.P. Batra, Executive Director of Finance and Accounts and Investor Relations; Mr. Sunil Saxena, Executive Director, Technical and Investor Relations; Mr. Amanpreet Singh Chopra, Senior General Manager, CMD Officer and Investor Relations; Mr. Vivek Midha, General Manager Marketing, Business Development and Investor Relations; and Neha Narula, Senior Manager, Company Secretary and IR.
I'll now hand over the floor to Mr. Jindal for his initial remarks, post which we'll open up the floor for Q&A. Thank you, and over to you, sir.
Thank you, Ms. Bhoomika. Good morning, everybody, and warm welcome. We have declared our annual results for financial year '23, '24 on 28th May 2024. Our stand-alone information are [indiscernible] with respect to financial performance for the year ended 31st March 2024. On a stand-alone basis, the company has [ restarted ] turnout of [ INR 3,252 ] crores in comparison to INR 3,284 crores in the last year ended 31st March 2023. The turnout from Consultancy and Engineering segment stood at INR 1,454 crores, and from the Country segment was INR 1,778 crores.
In the fourth quarter, the company achieved a turnout of INR 790 crores, which [ are not ] from Consultancy and Engineering segment amounting to INR 388 crores and INR 402 crores in the [ Turnkey ] segment. During fourth quarter ended 31st March 2024, the company earned a profit after tax of INR 91 crores in comparison to INR 50 crore earned in the previous quarter ended 31st December '23. During the year ended 31st March '24, the company earn a profit after tax of INR 357 crores in comparison to similar profit of INR 342 crores in the last year.
The company is having a healthy earning per share of INR 6 [indiscernible] it as comparison to last year of [ INR 6.09. ] Other income during the financial year '23/'24 increased to INR 225 crores as compared to INR 169 crores during the last financial year.
On the consolidated front, the company earned a profit of INR 445 crore for the year ended 31st March 2024, in comparison to INR 346 crores earned during the last financial year, '22/'23. Therefore, there is an increase of around 29% in the consolidated profit on a year-on-year basis. During the finance year '23/'24, the order inflow in the company amounted to INR [ 3,406 crores ], the overall status of order book position as on 31st March '24 is [ INR 7,823 crores ] in comparison to [ INR 7,695 crores ] during the last year. Further, during the current financial year, up to 29th May '24, the order inflow is [ INR 1,230 crores ]. And after including the [ go head from ] our line, the same works out to be [ INR 1,835 crores ].
Further, during the current financial year, [ real estate ] receivable reduced considerably during the financial year 2024. The debt stood at INR 314 crores during the financial year . And in the last year, this was INR 353 crores. The [ data as on ] number of days after [indiscernible] has declined to 35 days during the financial year '23/'24, from 39 days during the financial year '22/'23.
Thank you, Bhoomika. Bhoomika, it is now -- it is up to you.
Yes, sir. Thank you very much. We will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Noel Vaz from Union Asset Management.
Yes, sir. Just one question. So regarding the expansion, which is going on at the new [ Mollica ] refinery, are we involved in that particular project from the expansion from [ 3 to 9? ] That is my only question.
This expansion is being done by some other [ construction ]. We are not part of that expansion.
Part of the expansion project, there's the pipeline that is being done by [indiscernible] and there's another unit [indiscernible] is not part of the expansion. There's a [ coker ] that is being done [indiscernible]
Sure, sure. And just one follow-up. We currently have a lot of a small minority stake. Is there any plan to monetize this as such? Or I mean some clarity on that.
There's no plan for monetizing as of now because it's a long-term [indiscernible]
The next question is from the line of Amit Anwani from PL Capital.
Hi, good morning. Sir, first question, we did guided -- used to guide about INR 4,500 crores to INR 5,000 crores intake, and we saw roughly about INR 3,400 crores and debt to in Consultancy, I can see INR 500 crores coming from overseas market this year. So just wanted to understand, was there a major slippage in order? And also would like to understand what are the key orders in Consultancy side and Turnkey side, which we are now considering as a pipeline for FY '25? And if you could highlight the value also, yes.
This is Vivek from Marketing and Business Development. I would like to answer that question. Like we were negotiating a few [ of the contracts towards ] the closure of this financial year, but those could not be concluded at that point of time. And those exactly got concluded after the completion of the financial year. So that's how you are seeing that kind of impact. For your information, as of now, as of today, we have reached [ almost ] INR 1,800 crores worth of business, which includes the awarded work as a [ certain go ahead already been ] given to us.
So those orders got realized late. Most of them got realized in April itself. So that is the impact that we could not reach the earlier promise figure of around INR 4,700 crore and [ INR 500 crore. ] So similar kind of figure we have already reached in 1.5 months. It's approximately two months, [ you can ] say.
With respect to the future prospects, there are still major opportunities available. There are two major petrochemical complexes are in the bidding process. We are in the process of bidding for that. Let's see, would be live in a couple of months' time. Internationally, also, we could partially close one of the petchem complex and the balance part is still pending, and it could be closed in a couple of months, it's there. So there are a lot of prospects out there in the market itself for the refinery and petrochemical projects are there on the [ end ]. So we see that we should be able to get good business out there. As far as this, at least the last time's figure, we should be able to meet unless there is any [indiscernible], but we are only actually good track right now.
Right. So sir, apart from this INR 1,800, you said [ YTTV ] already did. So can we expect [ INR 3,000, INR 4,000 more ] in the remaining nine months?
Yes, yes. If this continues, we have opportunity for getting [ INR 3,000 to INR 4,000 ].
And sir, how is the expectation on mix consultancy versus Turnkey?
[indiscernible] remains the same. [indiscernible] Sometimes LSTK goes more. This time, [ electric ] has gone more. [indiscernible] but it is going to be more or less in the same [indiscernible]. LSTK is specifically -- it's more of a kind of consistency on this. So we don't take the high-risk job. We -- very comfortable job. So we'll be targeting [indiscernible] only in the Electrical segment also. So ratio is going to be as similar as we have to [ be having earlier. ]
Right. Second, on the revenue and margins. Again, the top line also did not grow too much, though we were expecting some growth for the full year. And second, so I wanted to understand what is the guidance now for FY '25? And second, on margins now, the key margins appears to be an EBIT level of almost more than [ 4.8% ] [indiscernible] for the past two quarters. So what are the expectations of margins now? And on the top line, was there any slippage in what is the outlook for FY '25?
Basically, as you know, we are operating in the cyclic nature of industry. And our [indiscernible] basically depends upon the orders in our hands. Though we have had some order book of [ 7,800 ]. But in the last year, we were expecting some new orders and we were having some -- we were expecting some turnout from that new jobs also. But these jobs, new jobs were shifted either in the late month of March or it is coming in the first quarter of this year. So there is a 2% or 3% down the turnover portion. But on the margin side, you may [indiscernible] there is increase in the EPC business segment. Earlier, our margins were in the range of 3% to 4%, 3%, now it is more than 5%. And in the Consultancy segment, also, we are maintaining our margins.
Sure. Sir, lastly, on the all the sunrise sectors which I highlighted, and we saw a past couple of days, there was announcements on the [ coal gasification ] striking, and there was announcement a few months back on bio-related sector, there could be policies coming in. I wanted to understand, are we expecting anything significant for EIL in FY '25, where it is green hydrogen pilots which we're already doing [ compressed fire gas ], coal gasification. So just wanted to understand the opportunities here in 12, 24 months for us.
With respect to the Sunrise sectors, we have secured the business. I think in the range of 80% of the total [ auto value has ] come from 8% to 9% comes from the -- at green areas. So with respect to the coal gasification, coal [ ratification ], we are in touch with -- we are already executing a few of the assignments and coal [ classification ]. So the studies we are doing. And we are also in touch with a few more direct investors who are interested in developing a coal gasification based [indiscernible] plant. One is in the steel industries, which is a coal-based -- gasification-based projects, and they are thinking of going for the [ DRI ] plants.
So we are in touch with only private investors in this sector. But mostly being coal classification, it is coming from the private company. And also recently, the coal and [indiscernible] Coal India and [ DHA ] have also signed an agreement, they are also anticipating some major commercial projects. We will be also pursuing that project too and other projects are [indiscernible] also, which would be signed after this because they also have the two more projects in the pipeline in future where they would be investing and setting up [indiscernible] So we pursuing those [indiscernible] also.
So on compressed [ part ], are we expecting orders this year?
Sorry?
[indiscernible] [ CBG ]?
CBG, yes.
On the CBG, actually, the plants -- all the [ OMCs ] are in the process of preparing the DFRs. So the DFRs will be submitting it for real investment that we are expecting during this year. So we are expecting a pie of the CBG plant [ segment ] that once the OMCs will take investment decision, then it will go for the [indiscernible] stage.
Thank you. The next question is from the line of [ Pratish Saruk ] from PL Capital.
I just had a simple question in our order intake. So in our presentation, we have said that one of the jobs awarded in Q3 was considered in Consultancy and now it is considered in Turnkey. Just wanted some more color on it, which order was it exactly? And what was the value?
It was a Consultancy [indiscernible]. It was actually a depository, which was received for the Intelligence Bureau. It was the construction of their office facilities. It was about INR 350 crores. So initially, we were thinking of -- we were having a discussion with the clients with [indiscernible], [ panels and needs to ] be used initially. They were not agreeing based on the agreed on the philosophy. And we could convert that into a depository mode. So that's how it was shifted from the Consultancy to further in the [indiscernible] segment because we could convert back into job into a depository mode.
Okay. Understood. Thank you so much for answering the question. All the best.
The next question is from the line of [ Nidesha ] from CCI Securities.
So as you just mentioned about the projects that moved from Consultancy to Turnkey, is there any change in value given that the project has now become a [indiscernible]
[indiscernible] Line is not clear.
Hello, am I audible now?
Yes, ma'am. Please go ahead. Thank you.
So the project that you mentioned is now that has moved, is there any change in value since the project has now gone in depository mode?
So there's no change in value at all.
[indiscernible] A couple of [ final ] questions that I had was that this year's finance cost on the consolidated level is much higher than before and so is the other [ income ] Could you just give me some color on that?
On the consolidated [indiscernible] our profits have increased from INR 346 crores to INR 445 crores. This is mainly on account of our share in our FCL project. In this year, EIL share was [indiscernible] crore only.
Okay. And what is the reason for the increase in interest costs?
Other income, we have settled a change order with our client. And the major portion was -- some portion was in the [ Peace portion ] and [indiscernible] [ interest on the ]a long outstanding payment. So that's why there is increase in the interest payment. So we have got around INR 55 crore interest from our client in settlement of our [indiscernible]
All right. And lastly, the business and guidance for FY '25 in terms of revenues and margins?
Definitely, [indiscernible], as you know, we are in the cyclic nature of business, though we are having a strong order book of [ INR 70 crores, INR 80 crores ]and we have good order flow in the first quarter of -- the first quarter itself. And we are sure that there will be increase in the turnout as well as in the [indiscernible] But -- and right at this moment of time, we cannot quantify. But definitely, this will be better than this year.
So can we expect single digit or low double-digit growth? Is there some color [indiscernible] [ possibly ] on that.
Because we are in the cyclic nature of business, it totally depends on the order inflow during the current year also. Therefore, it is difficult to quantify, but we assure you, our performance will continue to be better than last year.
All right. And my last question would be on [indiscernible] has grown [indiscernible]? And what is the outlook on that for the coming years? And also if you could give me a break of the [indiscernible] profit as to which day is how much coming from .
Coming from our [indiscernible] fertilizer compression [ unit ], we are expecting the -- more than whatever we have achieved during the current financial year. We expect the similar rather more than that particular profit in the coming year.
[ Mana ], in the coming year, we are expecting more than INR 100 crores from the RSL project. [indiscernible] plant is running at around 85% capacity. And in the current year, it is expected that plant will run on 100% capacity, and it will generate more and more profit and ours will be more than INR 100 crores in the coming year.
Thank you so much.
[Operator Instructions] The next question is from the line of Bhoomika Nair from DAM Capital Advisors.
Yes, sir. Sir, just wanted to understand our -- you said about INR 1,800 crores of [indiscernible] is it possible to get a breakup between how much would have been [ constancy ] versus [ NFTK ] of this INR 1,800 crores?
It is approximately INR 1,000 crores is coming from the [ LSTK ] and balances coming from the Consultancy.
Sure. The other question was regarding international orders. We were expecting one from Nigeria, some more in MENA region, including Saudi and Abu Dhabi. So if you can just give some what is the status out there? When do we expect these orders to come through? And how large can possibly the size be of these three large orders?
With respect to the order in Nigeria, partially, we have closed the order, which we have booked in the INR 1,800 crores. We have booked that order in this INR 1,800 crores. It's a smaller value right now to the tune of [indiscernible] crores. But the major value is about to come in a couple of months' time because we are negotiating the contracts with them, and that's a bigger contract, we'll be able to close it in a few months' time because they are also [indiscernible] also taking some time and they want to do the initial phase 1 and then proceed with the next phase. So we shortly closing the other part of the contract, which were larger than this, much larger than this.
And with respect to the Saudi right now, we are in the initial stages of Saudi setting up an office. So it is going to take some time from Saudi. However, we have done quite significantly in the Middle East market, specifically with respect to the Abu Dhabi in UAE. UAE, we have been doing a lot of Consultancy business. It has increased -- is a good way if you see that out of the total business, what you have seen overseas, 50% has been considered from the -- that market, Middle East market and 50% is from the Nigeria market. So that kind of contribution is that the Middle East region is growing, and we are expecting it to grow further.
Okay. So are we expecting any larger-sized orders from the international market from any of these?
We are expecting [ actual unit ]. We will be concluding a major contract in Nigeria.
No. I mean, Middle East, sir.
[indiscernible] in Middle East are also in the process. If that successful, then we'll have good news probably.
Okay. And sir, there was also this IOCL [ Paradip ] order, which was to be -- what do you say the [indiscernible]
[indiscernible] being process now in the current market.
Okay. And any other IOCL pet chem orders or refinery orders which are there in the pipeline, which will come up...
Fairly majorly, the [ Paradeep ] is there in market. IOCL is only one project, major project is right now continuing.
Okay. Okay. And from the [ Bina ] refinery, sir, what is the status out there? I mean, when will that likely come...
[ It's also in ] the market. There are four packages, which are in the bidding process. We hope to see the results soon in a couple of -- in a month or so, we will get to know what [indiscernible]
Okay. Okay. Got it. Got it. So from that perspective, given that we win a couple of these orders, would it be fair to say that this year in Consultancy, we could probably see the order intake going towards INR 2,000 crores, INR 3,000 crores, kind of a number? Or do you think that will be a little difficult?
So it remains -- if we see the total order value to it as of earlier perspective was around INR 5,000 crores. And out of which 50% came from the Consultancy would be at least can achieve that kind of order value from there. If we get more, it would be good for us. And we are trying to assess more Consultancy would be on this penetration.
Right. And sir, your [indiscernible] how -- when you're bidding for all these projects, whether it be the IOCL, BPCL or others in the domestic market, so how is the competitive intensity? And I mean, earlier used to get a lot of orders on a nomination basis, but now there's a lot of ordering at [ L1 ] So we've seen the Consultancy margins, which used to be around 26%, 27% going down to 20% to 23%. Now how should we think about margins? Is this one year -- and normally, you should see margins going back to the 25% range or you think it will be closer to this 20%, 22%?
It depends on the project to project wherever it is happening. It just depends on the geography outside India. [indiscernible] would be more or less competition [indiscernible] In India, there will be competition. Some would be negotiated. [indiscernible] today, also in the Consultancy, we are around 22%, 24% in that range is -- that's a good margin as far as the market is concerned because there is a [indiscernible] market, actually, the times have changed. Competition has increased. The companies are there. So we have to be the competition and [indiscernible] It's not the [ PSU ] market now, even government doesn't support any PSU. They are asking us to find the competition, so we have to fight the competition and we are [ winning ] the job. At least we can see the [ traffic point ] in the market. But despite of that, we are maintaining good margins around 22%, 23%. And a figure of [ 25% ] is not far away because this may fluctuate on a year-on-year basis. But we are very confident of 25%.
Okay. Okay. Sir, one last question. What was the dividend income booked from [ Numaligar ] in this year? And anything from [ Ramagundam ]?
Around INR 30 crores and [indiscernible] Ramagundam have not paid dividends so far, and we are expecting a dividend in this year if possible.
Thank you. The next question is from the line of [ Nishit Master ] from Axis Securities.
So my question was on two things. So one, you mentioned that obviously, Nigeria, a major part of the order is still pending. There were two other nomination-based contracts or the contracts which we were expecting in India. If you could give us a status for that.
And two, are we doing any projects for HPCL [indiscernible] refinery or you expect orders coming for [ Barmer ] anytime soon this year? And if you could give...
[indiscernible] two projects, one in [indiscernible] [ PMC ] and one is other [indiscernible] contractor. So far, most on the verge of completion in times to come. [indiscernible] is expected to be commissioned by the end of this year or early next year just to be conditioned.
Okay. Any further orders which we can expect from Barmer on the [indiscernible] downstream side if there are more...
[indiscernible] finally start and then [indiscernible] refinery would go in expansion in [indiscernible] There would always be modifications. Those kind of assignments will keep on coming to us. It will not be large assignments, but if [ the future ], they buy [indiscernible] and then naturally, it could be a bit bigger level. But first [indiscernible] refinery commission and then start [ operating ] The regular flow of income should be there from there.
Sure. And on the other two nomination-based contracts, which we were expecting...
There's a number of contracts we are discussing, some of them on nominations, some of them on a profitable basis. Let them realize because in one of the [indiscernible] we were earlier thinking of nomination that became into competition. So nothing is certain. So in any case, that those projects are there on the [indiscernible] we are bidding and we get some results in a couple of months in a month or so, we get some good business.
Okay. Sir, and on the fertilizer side, are you seeing any traction?
Sorry, any?
On the fertilizer industry, from the fertilizer industry, are we seeing further traction on ordering?
Fertilizer. Specifically, a smaller work we can expect, we are talking to the partner companies like [indiscernible] [ Cosco and Ramagundam ] All these companies are there, wherever they are small works are there. We will be part of that. Consultancy order will be there. There is no major anticipation of a major fertilizer complex other than what is expected in the [ green ] [indiscernible] segment from a private finding -- private investor. So that we expect in the future.
[Operator Instructions] The next question is from the line of Mohit Kumar from ICICI Securities.
My question is, do you see any tender from [ Petronet ] [indiscernible] or [indiscernible] in the fiscal year?
The number of inquiries are there from [indiscernible]
Something before I think they announced [ INR 20,000 crore ] worth project last year. I think are they looking for award on Consulting packages in the fiscal?
They are still in the initial stages of the project. We have [ been some ] pre-project activities for their projects. As a team when they take the investment decision and proceed to the [indiscernible], they will let us know.
I mean, last [indiscernible] from the deal?
[indiscernible] some of the projects there. They are also carrying out some feasibility studies for Petchem plant and [indiscernible] some of the assignments are there for [ PDH/PP ], we are in process of that [indiscernible] with them for their projects. Regularly, we get engaged with them for various [indiscernible] assignments from the [indiscernible] because it's a day-to-day activity with them.
Understood. My second question is on coal gasification. Of course, I think there are some few more projects which looks like that they will come up. Are you hopeful that this year, you can see some consulting packages, again, from coal gasification, especially from [ CIL JV ]?
We are right now in touch with [indiscernible] private investors who are eyeing for the government [ viability ] [indiscernible] funding and they're taking in, we are supporting them in the [ feasibility ] studies. So again, the funding from the government, so the [indiscernible] into execute, [ so this kind of a time is there ]. Already, we are executing one of the [ coal gasification ] for [indiscernible] if phase 2 is yet to start. So also the end -- apart from that Coal India has also [ flown ] setup [indiscernible]. So they would be coming on to depending on those assignments. We will be also discussing with them for the prospects in that project. That's going to be a commercial plan.
Understood, sir. Thank you and all the best.
Thank you. [Operator Instructions] The next question is from the line of Anuj Sharma from M3 Investment.
So my first question is on capital allocation. Historically, our dividend payout used to be upwards [ of 55%, 70% and ] gradually, it's come down and this year, it's been less than 40%. We have also seen that excess capital we have deployed in unrelated projects, so how is the management now thinking about capital [ liquidity ] [indiscernible]
Mr. Sharma, I request you to [indiscernible] your line once we're done. There's a lot of disturbance coming from the line.
Sure.
Can you just repeat the question [indiscernible]in there.
I was asking about capital allocation. Historically, we have seen that our dividend payout used to be upwards of 65%, 70%. And gradually, over a period of time, it has come down. This year, it's less than 40%. We have seen that excess capital we have deployed in unrelated projects. So my question is, how does the management and [ both think ] about capital allocation going forward?
In this year also, we have paid a 60% dividend, INR 3 on the face value of INR 5, and we think that this is a good dividend comparing the industry. And we sure will always reward their shareholders by way of dividend.
No, I was asking more about the allocation policy. So we are looking at payout rather than the face value as...
Allocation policy is 5% of network or 30% of PAT, whichever is higher. So whatever we have paid, that is more than the policy.
My second question is on [indiscernible]
Mr. Sharma, your line is breaking up, sir. May I request [indiscernible]
Yes. Is this better?
Yes, sir. Sir, slightly muffled, sir.
Yes. I'll try speaking a bit louder. So sir, in terms of NRL, historically, what's been our share of NRL projects? And going forward, how much opportunity still remains in NRL and [indiscernible] are expected in that?
Our share is [ 4.3%, 4%. 4.3% would be there, and we are going to maintain ] [indiscernible]
[indiscernible] going ahead. And after [indiscernible] expansion, some modification jobs will be there.
Okay. No, I was not talking about the equity share. I was trying to understand the share of the work, which has been given by [ NRM ] [indiscernible]
[indiscernible] in business. Right now, the expansion project will be done by us, but few of the units like [indiscernible] and one process unit, [ SRU ] is being done by us. And we are also trying for one of their upcoming [ polypropylene ] They have planned for [ PP ] units. We'll be discussing and getting those units. Last year, we got one [indiscernible] ammonia projects from them. So the projects are also being discussed with them. It's not that they are giving it on [ nominations heavy ] bidding and getting those tenders against the competition.
All right, sir. Thank you. Thank you.
Thank you. [Operator Instructions] Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Ms. Bhoomika Nair from DAM Capital Advisors Limited for closing comments.
Yes. I would like to thank all the participants for being on the call and particularly the management for giving us an opportunity to host the call. Thank you very much, sir, and wishing you all the best. Any closing remarks from your side, sir?
Thank you, Bhoomika.
Thank you, Bhoomika.
Thank you, sir.
Thank you.
Thank you.
On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.