HG Infra Engineering Ltd (Part IX)
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HG Infra Engineering Ltd (Part IX)
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Ladies and gentlemen, good day, and welcome to the Q2 and H1 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 of H.G. Infra. Thank you, and over to you, sir.
Thank you. Good morning, everyone. I welcome you all to our earnings conference call for Q2 and H1 FY '21. I have with me on the call Mr. Rajeev Mishra, our CFO; and Pareto Capital team, our Investor Relations adviser. I hope you all and your families are keeping safe and healthy. Even during these COVID-induced challenges and lockdown, it is heartening to see that the government has showed tremendous proactiveness in growth, spending and awarding Infra projects. The government is actively pushing on -- for it's Infra development to revive the economy, a scenario not witnessed in decades. NHAI has already awarded about INR 47,000 crores of orders in the first half of the year and have plans to award close to INR 2 lakh crores during this year. While project awarding has been robust, the road construction has lagged compared to the awarding last year primarily due to COVID-induced lockdown in the first quarter and an extended monsoon. With the receding of monsoon and economies opening up, road infrastructure is expected to gain momentum in the coming months. Even our execution has gained momentum, and we have seen -- we have steadily resumed operations at most of our ongoing sites. Execution is running smoothly, and we are operating at pre-COVID levels now. I will give a -- first our quarterly performance overview. During the quarter, we reported revenue of INR 467 crore. The revenue for the corresponding period of last quarter stood at INR 474 crore. We are glad that we were able to maintain the same revenue as Q2 FY '20 given the challenges imposed by COVID. The EBITDA stood at INR 77 crores in Q2 FY '21 compared to INR 73 crores in Q2 FY '20. EBITDA margins grew from 15.5% in Q2 FY '20 to 16.5% in Q2 FY '21. The improvement in EBITDA margins have been driven by better project site efficiencies. Profit after tax for Q2 FY '21 stood at INR 33 crores with a margin of 7% as compared to INR 39 crores in the corresponding period of the previous year. Please note that during Q2 FY '20, we have shifted to new test regimes and made adjustments for higher tax paid during the previous quarter that year, leading to the low tax in Q2 FY '20 as compared to Q2 FY '21. Otherwise, our PAT growth year-on-year would be -- would have been much higher. Now coming to the half yearly financial performance. Revenue for H1 FY '21 stood at INR 755 crores compared to INR 1,000 crores last year. EBITDA stood at INR 126 crores, while EBITDA margin of H1 FY '21 improved and stood at 15.5% as compared to 15.3% of H1 FY '20. Net profit after tax stood at INR 48 crores for H1 FY '21 as compared to INR 73 crores during the same period last year, and the PAT margin for H1 FY '21 stood at 6.2%. Our gross debt as on 30th September 2020 on a stand-alone basis is at INR 304 crores. This includes working capital debt of INR 80 crores, term loans plus current maturity of INR 190 crores, and the balance amount of INR 33 crores is interest-free unsecured loans from the promoters. Cash and bank balance stood at INR 135 crores. Our order book stands at INR 6,444 crores as on 30th September 2020. Out of the total order book, 78% are EPC contracts and 22% are HAM projects. Coming to some of the recent developments. We received the appointed date for Telangana Adani project in August 2020. We have completed close to 5% of this project. We have also received the appointed date for Delhi-Vadodara (PKG-8) on 7th of November 2020. We have -- we were already mobilized, and there, we have started the execution at good pace.In addition, we have also received the PCOD for 4 out of 7 more EPC projects in the state of Maharashtra. We are expecting PCOD for another 2 more projects shortly, which we have already applied and completed. Let me now give you the status of some key project exits under execution. I'm glad to share that we have completed around 69% of Rajiv chowk HAM project. That is Gurgaon-Sohna. The execution of Hapur-Moradabad EPC project is also progressing well, and we have completed close to 23% of the work. We have completed close to 33% on the Delhi-Vadodara (PKG-4) EPC projects. In the Narnaul Bypass HAM project, we have completed close to 37%. We have completed around 41% in our Rewari-Ateli HAM project. Coming to the projects where we are yet to start execution. We expect the execution of all these to start in the third quarter only of the current fiscal. For the Delhi-Vadodara (PKG-9), we expect to receive appointed date this month only, and subsequently, start execution of the project. The land availability here is almost 89% as of now. Our HAM 4 Rewari-Ateli (PKG-4), that is Rewari bypass project. We have received the confirmation of sanction from Canara Bank for the financial closure, and we expect to get appointed date within a month. The land availability is more than 85% in this project. Coming to the outlook and the guidance. We continue to remain optimistic. We are seeing NHAI increasing their bidding activity, and we have been actively bidding in multiple EPC and selective HAM projects. We are targeting an additional order inflow for INR 3,500 crores to INR 4,000 crores this year. In terms of execution, our entire order book will become operational in third and fourth quarter. Thus, our execution should pick up in coming months. We are confident of achieving last year's revenue number and are working hard to surpass that. That is from our side, my side. I would now request the moderator to open the call for the question and answer. Thank you.
[Operator Instructions] The first question is from the line of Ashish Shah from Centrum Broking.
Sir, I just wanted to -- I know you briefly covered the status of the major projects. But when I look at the numbers, it seems that there hasn't been much progress in Hapur in Q2, as well as when I'm looking at the Adani Telangana project. I mean we got the accounted on August 15. But again, the start has been a little on the slower side is what that I see. So just wanted to know if everything is okay with these projects? And how do you expect them to ramp up in the remaining 2 quarters?
See, things are all okay in these 2 projects. Only thing is get in Adani [indiscernible] project because of the extended monsoon and it has been delayed withdrawal from Telangana especially because of the low pressure there or Bengal. And that has led us that we could have progressed much, much better that we now has progressed almost 5%. But then again, this 5% is the progress, which I'm talking about is the 30th of September. It's not as of now today. As of now, we are even better see -- during the month of October, we progressed from 2% to 3% -- more than 3%. So that is how it is now at about 8%.About Moradabad project, definitely in quarter 2, the progress is not up to that extent because we could do almost INR 80 crore plus. But the only thing is because of the few of the areas where the aggregate supply was not that supportive, and the monsoon has been really, really very aggressive in UP. So that is the reason where the progress is not through that mark. Now that things have been geared up and we are well poised that we would be at all track as for the work program.
So sir, if you want to give a target for the end of the year, let's say, by March '21, what would be the cumulative progress in Telangana, Adani Telangana project and Hapur?
In Telangana project, that is Adani one, that we would be close to 30% by March '21. And in Hapur-Moradabad, we will be surpassing almost 50% plus.
Okay. And sorry, one more. Also in the Gulabpura Chittorgarh project, again, there not only...
Project -- that is almost nearing completion. The only thing is because there is the quite modification and the change in scope negative and positive. So that is why it's not being ascertained exactly. So -- but we are targeting that, that would be completed somewhere in the month of January. So it's -- almost 30% of the work is left out, but it is not like that. Some positive/negative changes are going on. So accordingly, it would be completed by January only.
Okay. So within this financial year, that too will be completed?
Yes.
And Maharashtra, sir, the balance order book is about INR 226 crores. Now we know that there is some part of the work, which may not proceed until the land is available. So have you already reached that stage and now we should assume that the balance INR 226 crores will not proceed or there is still something to book?
No, See, the government has taken the stand that whatever was in the scope of work where the work could not be started because of land, now they have executed a supplementary agreement in 3 of the major projects. There are almost INR 115 crores of supplementary agreement done. That would be done by us only, whenever the land is being handed over, and that is on lock-in period of about 12 months is there from the date of this completion that they have given. So this is one. And one of the those package#7 is there of MSRDC. That is a [indiscernible] project only. There are almost 75 of work is left out, where there's a major bridge was there, which was inducted later. Now the work is progressing there.
So from here, visibility is for INR 75 crores, you are saying?
Yes.
And the remaining INR 115-odd crores will still have to see when the land is available?
'21, '22.
In '21, '22. And sir, last question. What is the status of Rajasthan receivables?
See, Rajasthan receivables, we have received INR 32 crores during the last quarter, Q2. As of now, the debtor part is about INR 268 crores, that is INR 268.58 crores to be very specific. And there has been a significant increase in the unbuild portion in the quarter 2, as the government was not certifying the bill, and it remained unbilled as to a non-certification, because the government was not having the clear instructions regarding the budget, what exactly would be the budget, say, story, during the current year because of the COVID. So they were supposed to curtail the budget. So now it has been indicated that there is no curtailment for these projects because since they are almost 85% to 90% completed. So here, the debtor now it has been increased, but there is no unbilled portion this time. Now the entire thing is being certified. We have received INR 32 crore during quarter 2. In first half, we received INR 60 crore. Now we have already been -- the allocation of INR 84 crore has been given that is being received this in the month of November only. So going further, as already indicated, that government has an annual outlay of INR 448 crores. So INR 448 crores, this is INR 92 plus INR 84 crore already released, which is almost, say, INR 177 crore exactly. So with that INR 268 crores remaining, this INR 268 crores is almost INR 100 crores would be left out by the year-end, remaining that amount would be released in Q3 balance period and Q4.
So just to clarify, INR 268 crores is an all-inclusive number, right?
All-inclusive.
There's no unbilled beyond this, right?
Sorry?
INR 268 crores is an all-inclusive number, okay? There's no unbilled portion beyond this INR 268 crores?
For these projects. Yes.
[Operator Instructions] The next question is from the line of Alok Deora from Yes Securities.
Just a couple of questions. One was on -- we have not received any order flow -- order inflow during the quarter, right?
Yes.
So what's the outlook now? Because I believe in the entire first half, I mean, in this year, we have not received any new orders. So how are we looking at the order flows? And you mentioned about INR 3,500 crores sort of order inflow, but how confident are we of getting that?
You are right, we could not receive any of the orders during the current year, though we have bidded for many project like, EPC and HAM projects, but that because is where our number or aggression has been. But going further, there are not many bids which NHAI and other sectors like IRCON, we have already bidded for RVNL -- few projects we have bidded for railways as well. So for NHAI as well, we have bidded for quite selective hands in EPC project. And going further, we are having a strong bidding pipeline over there. So we believe that the INR 3,500 crores to INR 4,000 crores or whatever number we have given as a guidance during the current year, new orders much possible. We would attain that. We would achieve that.
Sure. And sir, this -- in the Rewari project Package 4, the FC, we have not received yet. So what's the timeline for that if you would just indicate?
We are just within this week, only, we are going to submit our FC document to NHAI as we have received the final sanction from Canara Bank very recently. So this is going to be submitted. And within, I think, 15 days, we will be receiving the SP from NHAI then appointed it would be declared by November-end only, and that we expect.
Sure. And sir, what's the rate we have sort of closing in the current scenario? What's the interest rate?
For your [indiscernible] of the HAM project?
Yes, yes.
8.75.
[Operator Instructions] The next question is from the line of Jiten Rushi from Axis Capital.
Congratulations on a good set of numbers. So my question is related to the, a few questions I want to know. Sir, can you give us a breakup of the mobilizing advance outstanding as on September the unbilled revenue and the retention money?
The total -- you are talking of debtor or unbilled portion?
Sir, I'm just talking about debtor or the unbilled portion and the retention money? And then if you can again break it up [indiscernible] as possible and the mobilization advances outstanding.
Yes, the entire mobilization advance at September '20 is INR 252.9 crores.
INR 252.9 crores, okay.
And the debtor is INR 723 crores, including retention. If you take out the retention, that is INR 165 crores, the net is INR 577 crores is the total debtor.
Unbilled revenue, sir?
Unbilled revenue is INR 280 crore, which was at INR 473 crore in June '20. And in March, it was INR 350 crore. It is INR 280 crore now.
And sir, on the Rajasthan project, as you said, so we have received almost INR 92 crores so far. And INR 84 crores we are expected to receive in November. So basically, in Q4, we are expecting around INR 100 crores?
Let me correct you. This INR 84 crore, which the government has already issued the LC that net of credit has already issued to treasury. Any time is expected say, within that I think within this week, we are expecting the funds to be in our account.
Okay. And then you said INR 100 crore in Q4, and then balance remaining in Q1 of next year, right, sir?
Yes, out of INR 268 crores, which is the debtor balance as of now, there's no unbilled portion now in these projects. So we believe that the government has given the indication that during the quarter 3, they again would be releasing some INR 55 crore to INR 60 crore. In quarter 4, they will be releasing almost, almost more than INR 100 crore. So that stands that by quarter and say, end of this year, it would be INR 100 crore, which is been left unpaid. That they would will be paying in Q1 FY '21 -- '22.
Okay. Sir, outstanding order backlog, the remaining order backlog now in Rajasthan is how much, sir? Excluding the portion which is not executable of land issue?
See, the total amount is about INR 596 crore. Out of that, almost INR 45 crore would not be executed. So the INR 550 would be executed if the bill which is certified is about INR 510 crore. Now exactly INR 40 crore would be for the INR 35 crore, which we are going to execute during, say, October, November, December. By December, it all would be completed. Only left-out portion would be there where the land is not given to us.
So -- and the supplemental agreement we are looking for this or you...
No, of course, they would be executing the supplementary agreement. There are 2 ROBs, basically. They would executed in that supplemental unit.
Right. And sir, in terms of order inflow, can you just give us the big pipeline where you have made bids -- outstanding bids and the likely -- when it's good to get open?
There are many bids we have already bidded for the almost for IRCON and railways. These are almost 5 number bids we have already bidded almost 4,000 crores of those bids. And apart from that, Phase 4 of EPC bids of NHAI and 3 of HAM bids of NHAI altogether, it stands at about INR 8,000 crore HAM and EPC, both.
So the IRCON projects are related to roll projects? Where are these area sir?
I really don't know this. Only the railways.
And so this NHAI projects of EPC and 3 HAM is in which region, sir, which projects...
Spread across in Gujarat and Maharashtra and then Haryana, they all spread -- and NCR also in Delhi, UP.
So [indiscernible] or what kind of work is this sir?
That is all a similar kind of work, type of work where the RBNL that is [indiscernible] upgrade and blanket layer and tracking. No electrification.
So no subcontracting as of now, right, sir?
Sorry?
[indiscernible] subcontracting you are targeting?
No, we are not targeting any subcontracting as of now.
And the diversification strategy like airport or water distribution that you're talking about...
We have already indicated that railways, we are quite actively participating in the bids where we are already qualified as a sole entity. But above all that, we are looking into few of the water supply project where the possible alliance can be done. But again, we are looking ahead that it is a possible area where we would be bidding further. For airport, as of now, we are not having any, say, proposal in the pipeline. Though definitely, we are looking further.
And sir, receivables in your outstanding in last quarter we had discussed in detail, so what is the status like [indiscernible] from IRB data projects and from [indiscernible] and CVK. So can you...
CVK, it is a [indiscernible] that is -- now what they're paying is almost INR 1 crore per month that we have received INR 3 crores during quarter 2 and almost INR 5.5 crores during the entire first half. And during the month of October, we will have -- we have received some INR 1 crore again. As far as the IRB is concerned, almost -- we have received substantial amount during this particular year. There's INR 148 crore being received during the -- sorry, it is INR 185 crore we received for both the projects during the first half.
So Hapur and Gulabpura right, sir?
That's right, right.
So first half produced is INR 180 crores, so what is outstanding, anything now?
So at the end of June '20, the debtor was about INR 146 crores. Now it is at INR 111 crores.
Okay. And sir, the [indiscernible] outstanding is how much?
It is INR 13 crore in the billings, what we have built and INR 7 crore is the retention. That altogether, it is INR 19-point something crores.
I think equity was almost INR 40 crore, INR 45 crore outstanding. So any updates on that?
It is almost INR 40.5 crore, which is outstanding. We have received during the, say, October and until now, we have received almost INR 8 crore during these 40 days.
So now the offsetting must be 40 -- INR 32 crore or something.
Yes, now it is like that, yes.
And sir, Maharashtra, also there was some outstanding, so I think now we have received PCOD, we could have received the money back on that.
Maharashtra, there has been significant movement during the quarter 2 since they have issued the PCOD and the positive/negative CES or already see all the projects they have already approved. So with that, only a small portion of about INR 30 crores is left out in Maharashtra projects. That is more Maharashtra.
Okay. And sir, are there any mobilization issues from [indiscernible]?
We have received 5% of the mobilization advance as per the contract. Now we are applying for the balance 5%. That will be received in the month of October.
The next question is from the line of Viral Shah from Prabhudas Lilladher.
Yes. Congratulations on a great set of numbers, sir. So to begin with, sir, most of the questions have been answered. Sir, we have been looking out of the space in terms of new verticals, and we have done reasonably well migrating for IRCON and railways. Sir, how has been the competition in this segment? And where do you feel your margins will be from EBITDA margin point of view?
I think margins, which for these sector as well, we are not compromising on the margin. We are looking at about 15-plus margins for these projects as well. For the project which we have bidded in the month of March, that was opened, that was RVNL projects, and it was in Yavatmal, Maharashtra. We have seen that we stood L4 in that particular project, so the INR 800-crore size project. So that is how it's out of the 15-odd bidders. So I do not think that, that the aggression is too high. But definitely, it was between L4 and L1, there were the business of about INR 50 crores, that is almost 7%.
Okay. Fair enough, sir. Sir, secondly, you have explained the margins being high on stand-alone basis as well. So what was the reason for margins substantially being high because when you look at stand-alone consol, there is a difference of close to around 300, 350 bps plus. So what is the reason for that? Why the margin has been higher in consol? And there is a significant sense we have been reporting 18.5%, 19% margin on consol. So what is the reason for that?
The consol number is not much been added only the SPVs where there is a differential. That is where the consol and the standalone in a gap in. As far as margins, what you're talking about a stand-alone figure. You're talking of that margin or that is significantly...
No, no. I am talking about the console [indiscernible].
You're not audible. Please...
Yes, yes. So when I look at 2Q FY '21, the margin reported on consol was 18.8%. And when you look at the standalone, it's 16.5%. And when you look at last quarter also, the margin for consol has been around 19% [indiscernible]. So because that 200 bps, roughly 250 bps kind of difference which has been there. So that is -- because we are -- none of the SPVs are operational, right, in terms of annuity revenues from HAM projects or something like that. So also that 200 basis point variation is mainly because of service income coming from SPV's or related to something else? Or why that has been the case?
That is strictly related to SPV only. It is not else. And you're talking as if the 483 is the consol number and against 467. That is about [ INR 60 crores ] that majorly out of that about INR 11 crores is SPV only. That is the net of, say, the net portion, which has been taken here in the consol part. So that's why the margins are a bit higher by 2%. That is almost 16.5% to 18.6%.
Yes, yes, yes. So margins are higher on that side. And this trend would continue going forward as well, right?
Yes, that would be the same track.
Okay. Fair enough, sir. Sir, secondly, in terms of CapEx, what we are looking at in terms of CapEx per se for FY '21? And what has been the CapEx spend till date, sir, in the first half?
We have already added some INR 31 crores of addition during the current year. But during this particular 6 months, we have sold INR 20 crores as already discussed various times that we phase out quite a few equipments, which are at, say, 5 years, 7 years, 10 years age. Likewise, we have sold some INR 20 crores. So net addition is INR 11 crores during the year. And going further in this next 6 months, we believe that as indicated about INR 60 crores to INR 70 crores of CapEx additions every year.
Next question is from the line of Ashish Shah from Centrum Broking.
Yes. Sir, just a couple of clarification. For the Delhi-Vadodara package 8 and 9, our big project cost quoted for 8 was INR 880 crores and our EPC carrying value INR 825 crores. Similarly, for Package 9, it was INR 1258 crores and it is INR 1164 crores. So the difference will be explained by GST impact or if there is anything else here?
No, no. There was no GST impact as such, because these are all -- were the big project cost or the EPC being arrived by NHAI. It is including GST only. That is not the reason. It's only a specific area wise you can see there the variation we have seen in all BV projects that is as down at 7% to 8% to our highest 11%, 12% a few of the CMB projects on that. So that is not -- the only depending upon the demographic condition and the condition execution. But -- so GST has nothing to be -- no impact was there.
Sir, sorry, I wasn't very clear then, if it's not a taxation impact, then the INR 880 crores bid that we would have submitted, why is the carrying value of EPC INR 825 crores for example, in Package 8?
So you're talking that we have indicated INR 825 crores? So that calculation, what exactly is...
Sorry, go ahead.
The INR 1258 crores, that is inclusive of GST, okay? So what -- and while calculating the balanced order book, we take out the GST portion of the -- and then we add the CS, CS means there are utility shifting, which is to be done within this scope of work. So that is being added.
Right. So that is what I was trying to understand. So this is a net impact of reduction on account of GST addition in account of some scope changes?
Yes. The scope as well as some utility scope is there.
Right. Sir, also on the bidding for road projects, highway projects, have you bid for any project during the last quarter and lost a bid? And if yes, then what is the margin that we would have lost to? I mean what I'm trying to get is that are we finding the competition too much to bid at this point of time?
Definitely, there can be various factors, which we could not bid -- win on any bid. But the only thing is where we could make out -- we are not compromising on the margins that wherever we are selecting any of the projects. We are taking on that, the margin should be intact, bottom line, more important. Number two is definitely with the COVID impact and the government focus and the panic situation is there, where the people are bidding a cost cutting is there. We have seen quite a hand bids there. Earlier there were 4, 5 bidders, 6 bidders. Now it is coming at about 11 to 15 bids -- bidders in these HAM projects as well, as their a big size project. So that is all visible. So there can be various factors.
Sure. But how many projects we would have bid and lost during the quarter?
Almost, almost there are 16-odd projects, which we have bidded and could not win.
And we would typically be wehre in 3 and 4 or?
No. It varies. It ranges from L3 to almost L8 or, say, highest one.
[Operator Instructions] The next question is from the line of Shravan Shah from Dolat Capital Markets.
Sir, most of the questions have been answered. Just coming back to the revenue part. I think last time, we were expecting close to INR 800 crore to INR 900 crore every quarter for third and fourth quarter to kind of INR 1,700-odd crore and now slightly INR 200 crore kind of a reduction is there on that guidance -- on the revenue. So is it that now in terms of the delay in the appointed debt in the projects or the slowdown in some of the projects?
No. Except for Gurgaon-Sohna, there is no specific project where the slowdown is there. There were the COVID -- just because of COVID and right, few results were there. Otherwise, there are no any projects where we are -- execution is at the pre-COVID level. Now we have achieved at the pre-COVID level. Only thing is, as the guidance has been there earlier, it was projected from 31 -- INR 3,200 crores of total, say, top line during the year, say, FY 2021, okay? So in that, we are at about INR 750 crores out of -- against INR1,000 crores of the last year number. So if you compare, let's say, with next -- the Q3 and Q4, with our pointed debt declared for all the projects, the execution would be on and operations will be at the aggressive pace in all these projects. And with the working season, this is a peak working season, post-Diwali to March. And we will be seeing that almost the number as I've given the guidance that we will be surpassing the last year number. So that was the visibility that out of INR 765 crores, you're talking of 22 and plus the [ INR 2,200 crore ] to [ 765 ] is already done, so almost 1,500. That sort of a number is only possible once we're at a pace of about INR 750 crores to INR 900 crores a quarter.
Okay. Okay. And secondly, on the debt front, I think of no issues on that front. We are just trying to, once again, reiterate we will be having the same kind of a date INR 300 crore kind of? Or can we expect some further reduction by end of March?
We are targeting it about maintaining this INR 300 crores level only and it can be, say, minus plus just INR 5 crores to INR 10 crores. Not a big number difference would be there.
Okay. And now how much more mobilization advances can we expect from all these projects where we have one project that still need to get appointed date and wherever we have recently got the appointed date?
See, we could say there's almost almost INR 255 crores of mobilization advance is balanced, which can be received by the company in all these projects like DB8-9 where we recently appointed it and yet to be declared and Ateli bypass and Rewari bypass project and Adani balance 5%. So that is INR 255 crores. And again, out of the total INR 250 crores mobilization advance, which is balanced as of now. And that, in those, the recovery of almost INR 150 crores would be expected in during that current 6 months only. This -- later on with the H2. So that, again, would be sincerely about INR 300 crores to INR 50 crores would be the end of this year number as far as mobilization advance is concerned.
Okay. So you are saying out of INR 255 crores that we had yet to receive as a mobilization advance or we can expect INR 150 crores can be received in the second half of this year?
Right, right. INR 250 crores is yet to be received and about INR 125 crore to INR 150 crore would be, say, all required during this year. Out of the already availed mobilization advance.
Okay. Okay. And sir, anything, are we looking at in terms of the asset monetization, particularly on HAM front?
Yes, the discussions are already initiated post the COVID level. And we are expecting by March, I think 2 of the projects can be discussed and finalized, which we are nearing completion, if we are talking of HAM 2 and HAM 3. As of now, it is about 50% and 48% in these 2 projects. So we believe that about state would be 75% to 80% in one of the projects and about more than 70% in other projects. So with that, we expect that the state would be there, really state would be there where the monetization can be concluded.
Okay. And in terms of the -- in 2 projects, I think we have almost kind of -- just trying to get a figure in terms of how much more equity would be investing in all these 4 projects.
See, out of the total expected during the year, it was INR 180 crores of equity, which was required. We have already done INR 105 crores on -- sorry, it has -- it was to be, yes, INR 180 crores during the current year. Out of that, INR 105 crores already done. So it is INR 195 already infused.
Yes. So how much more in the second half and maybe particularly in delivery Rewari bypass package for how much can we expect trade equity in this year?
Okay. For balance in Rewari bypass, that is package 4, we would be requiring INR 40 crores of equity. And in Gurgaon-Sohna, again, we would be requiring some INR 10 crores that gives that total number, which is now required is INR 76 crores for the current year. And in these projects for the FY '22, it is INR 69 crores, and FY '23, it is INR 30 crore.
The next question is from the line of Pawandeep Singh from Girik Capital.
And it's Pawandeep from Phoenix Capital, not Girik Capital.
Yes.
So sir, congratulations on the good set. I just wanted to ask a basic question. I joined late on the call. You said that you have missed out on 14 to 15 projects due to our consciousness on the margin side, which is very good. But sir, what is the guidance going forward? Because missing out on projects of that magnitude, what are we planning to go ahead and -- because you said that second half, we are going to win INR 3,500 crores of projects, which is your earlier guidance also. I just wanted some sense and strategy on that part from the management team?
So there is not much a change in the strategy part as such, because they are almost, almost if you can count all numbers. They -- 25-odd bidders are there, that's frequently being listed in each of the bids. So with that mix, most of the players, they have, say, during this first half of the year, there has been quite aggressive of it can be -- their appetite is most at their level. So again, going ahead, we believe that the fair chances are there that the INR 3,500 crores to INR 4,000 crores is not a big number as far as government strong bid pipeline is there, railways are all there. So with that, we believe that this bidding 3 to 5 bids is not a big deal.
Okay. Sir, one more question is we are relatively new in this bidding of railway project KEI and KEC. There are some companies which have given big guidance on the railway front. What is the outlook there, sir?
Like for KAC and these companies, they are mostly mostly involved and not on the railway civil part. We are now capable and eligible for execution in the civil part. They are in 2 main railway electrification and track linking and those kind of station and say, signaling both the specific key elements where they are bidding. Now in these part, though we are new, but we are not that new that we are not understanding how the railway and what exactly are the numbers were -- it is fairly the same -- mostly the same as the highway behaves. I'm talking to that earlier question was that what it would be the strategies. We are open to new areas like Chhattisgarh, Jharkhand we have already bid in Jharkhand. Chhattisgarh we have already bidded, so like Gujarat, we are bidding MP we are bidding. So Punjab, again, and we're talking of this Delhi-Katra highway. That would be, say, all passing through Haryana, Punjab and JMK. so this again gives us, say, more exposure, more number of bids would be there with the bid strike ratio, though it would be percentage-wise this would be less. But fair chances are that we can have almost 4,000-plus bids -- crores bids that we can win.
Okay. Sir, just a follow up on the first one. When you said we are expanding into new areas, our base strength was our in-house capabilities in terms of equipment line. So what is the -- how is the sense going forward where we have to mobilize equipment and everything from our closer states, which were Maharashtra, Rajasthan and Gujarat? And where we have to mobilize these same equipment, equipment banks to further states? Are we confident of protecting our margins there also? Because I have -- what my sense is, we get a lot of advantages of -- in the mobilization aspect where if the states are closer by to your main headquarter states...
See, I got your question. The only thing is one we are just going ahead with the bidding on the cluster-based, very near to the project. We are already into that execution and then close by that. But again, the size of the project, now we are bidding at INR 1,000 to INR 1,500 crores, INR 2,000 crores there and we are talking of if Delhi state is there. Haryana and Delhi, there is not -- Punjab, Haryana is there is no big distances there. If you are talking about Maharashtra, it's close to Nagpur and Chhattisgarh, so the Raipur, that if that region is about 250, 300 crores -- kilometers away. So it's not that makes a big difference between what we are going to, say, compromise on the cost margin -- this profit margins. Okay.
Okay. Sir, last question, if I'm allowed to. What is the potential of these railway orders, which can -- what can it be as a percentage of order book in absolute and percentage numbers maybe in the next 3 years? And are we going to maintain the same margins in the range of 15% to 18%?
For sure, we are looking at these projects that with the intact margin impact, it's not less than 15%, that would be in the same range only as we are now moving on. The only thing is in next 3 years down the line, we are targeting 3 different, say, to diversify them into 3 that area. One is this railways, which we already started bidding with a sole qualification, say, the sole entity, we are qualified for those projects. For water supply as well as we are tying up with the alliance and then bidding for say 1 or 2, not a very big size project, the 300 to 400 project. And again, for the railways, we are open to that we would be looking ahead how the EPC, because we are not a developer. We would be looking ahead to associate with any of the developer other and -- or for the EPC. So going down 3 years down the line, we believe that it can 15% to 20% of the total orders can be from these 3 sectors.
The next question is from the line of Jiten Rushi from Axis Capital.
Yes. Just also wanted to know on the NGT issue for now we are entering in November. So any ban in terms of construction expected in November? Or you can still execute? Because you have lost significant revenue last year in the same period? So can you shed some light on that, sir?
No. As of now, there is no ban stage in the pipeline. Only thing is they have imposed certain restriction in, say, for the defogging some kind of equipment there all NCR projects, they are using that. So with that, I think that is within the other last year. It was imposed at the of the October month only. It's for 40 days in. So by 7th of December, it was open. So we do not see in near future, it was going, but nobody says as Diwali is there, the all pollution level going higher. The government takes stand. But as of now, there is no, say, indication that they're going to impose any ban.
Usually, 15, 20 days is normal [indiscernible] because last time it was more than that.
Yes, yes.
And sir, any update on the bank limits fund based and nonfund based and what is the utilization level, sir?
The utilization is almost at about, say, 87%. You're talking of fundbased limit. I'm talking of nonfund base limit. Fundbased limit has been utilized about, say, 60%, 65%, and nonfund based utilization is 87%, and we are having some [ INR 1120 crores ] of total limits as a nonfunded fund, 980 is the nonfund and the 140 is the non-fund. Sorry, funed.
200? And sir, any outstanding from the SPVs on rate? And because last time it was 65 so any update on that, sir?
SPV [indiscernible]?
No, no, sir, the execution we do for this SPV. [indiscernible] so any outstanding from these SPVs to the current?
Debtor?
Yes, debtor, yes.
It's INR 64 crores.
Okay. So INR 64 crores is still time in? [indiscernible] What is your view in terms of income for the private projects and the central and state government better than other fund? How does the payment come out a [indiscernible]?
[indiscernible] Definitely, they are improved, but not to that extent as already as the contract phase, not to that extent, though I mentioned the NHAI, in both, there are significant improvement is. We are paying well within every month, they are paying. There, the improvement is quite visible.
On the average, you can say 50 days [indiscernible].
Yes. Because on an average, if you are talking about the working capital cycle because of the creditor and net of this, that is within our control, say, almost less than 50 days.
The next question is from the line of Parikshit Kandpal from HDFC Securities.
Congratulations on a good set of numbers, sir. Sir, my question was on -- I don't know, I joined a little later. So on the Rajasthan receivables, so what is the pending amount now?
I can repeat, say, the pending amount of the debtor balance is INR 268 crores. And we received INR 32 crores in quarter 2. In quarter 1, we received INR 60 crore. And in quarter 2, there was a significant -- so quarter 1, it was a significant amount was kept as unbilled being -- they were not set because of the COVID reasons. The government uncertainty was there regarding the certification because you used to pay the interest over the certified amount. So that has now been cleared. Now nothing -- no portion is unbilled. Now entire is being billed and certified now. So with that INR 268 crores, now government has really INR 84 crores in month of October. The LC has been issued, and we are about to receive within a week time, we are going to receive the INR 84 crore. So with that, INR 84 crores and INR 92 crores it's almost INR 176 crores, INR 177 crores being released by the government during the current year. And again, INR 448 crores is the total as there's no budget curtailment in these projects, because they are almost at 90% stage. So government is not cutting the budget for this particular project. So we believe that going ahead in the month of December, some INR 50 crore to INR 55 crore would be released. And then in quarter 4, they are going to release some INR 100-odd crores. So by end of this financial year, we expect that some INR 100 crores plus whatever we are going to certify -- get it certified, it's almost INR 140 crores would be less unpaid that they are going to pay in quarter 1 of FY '22.
So what is the balance -- order book on this one?
Which is to be executed? It's about INR 45 crores to INR 50 crores, which is to be executed in October, November, December. In December, we are going to complete the entire amount. Only INR 50 crores would be left out. That would be in the executed in the supplementary agreement portion because the land is not being handed over as of now.
You think INR 45 crores is pending as of now? And another INR 40 crores to INR 50 crores will be less so INR 100 crores is to be executed?
Yes. We already done is INR 510 crores then INR 510 crores to INR 445 crores would be executed in October, November, December. They are completed as per the scope. And balance whatever it would be left out as a land not handed over, that is -- that will be executed in supplementary agreement, say, next year.
Sir, the second question was on IRB project. So is the payment coming in as per the agreed schedule of payment? Or is there a delay on [indiscernible] payment?
A bit of a delay, not as per the agreed terms and conditions, it's a bit of a delay, but it's not that high as it was earlier. In the month of -- we are talking about the quarter of June. There was a big difference between whatever they were paying and now, because in total first half of the year, we have been paid to INR 185 crores. So that is a good number.
So Adani is also paid some more HAM projects. So we are doing a project for them. So are we looking at adding more projects from Adani or because I think earlier we said that we are not seeing for any more subcontracting work.
No, we are not yet anything being in discussion of any pipeline that they have offered us with quite a new project or MP, but we refuse that we are not going to take any more projects than the time we execute substantial volume in this particular project.
Okay. So just on your views on the new concession agreements, sir, which has come out yesterday. So any views on that? How do you see it? Or any initial comments on that?
It's quite a positive news. That's for HAM concessioners. They are going to -- we link it with an average bank rate plus this and the average mobilization advance rate and then 5 to 10 -- taking 5 to 10 milestone payments. That would ease out the interest during construction that would be much lesser. So with these 3, 4 things, it is quite positive. But only thing is going ahead -- because earlier the government was having the clear focus that they would be bidding out some 50% to 55% HAM remaining EPC work like that. Now they are having a shift because of -- we can see that for Delhi-Katra highway, they've already, say, bid for 5-odd projects that are on HAM basis. Earlier, they were all bid to be supposed to be in EPC, because not many bidders are there. They are bidding in HAM projects. So with that government is quite positive to go with 100% EPC or, say, 100% funding during -- as the cash contract. They can have a deferred one with the HAM model. So that, again, is the positive sign. But the bidding -- bidders will be more aggressive then.
So how much of headroom we have now, because we think our share of HAM projects is coming up? So this year and next year, given the cash flow situation right now, so how much HAM projects can you take up?
See, as the balance sheet permits, because the next -- this year, only 76 crore of the balance equitie is to be required in this, say, quarter 3 and quarter 4. The next year, the number is quite less. So with that, we believe that if we can take on some -- because right now it is 22% of the orders, which are unexecuted orders of HAM size -- HAM model. In quarter 3 and quarter 4, there will be significant execution in these and we would be left on a total balance order of about 15%. If we see at the end of this financial year, if we do not take any more HAM projects. So with that, we see that INR 2,000 crores plus that 550 to [indiscernible] HAM can be taken this year.
Okay. And lastly on any relaxation in terms of terms for your HAM financial closure. So has your banker, I mean, because earlier they were asking for upfront equity and so has anything changed over there?
Definitely, it has been changed like the Canara Bank, which we have received the sanction. It is the same as earlier they were given with the earlier private banks because nationalized bank was insisting on the upfront 100% equity. But this is DSB Bank again, but again, they are following the same track as HDFCR [indiscernible] or other banks handling.
[Operator Instructions] The next question is from the line of Rachit Kamath from Anand Rathi.
Sir, my first question is pertaining to payments from clients. This quarter, we saw that the trade received is -- hello?
Yes.
Yes. So this quarter, we saw the received discounting component in the working capital loans has gone up by almost around INR 30-odd crores, if I'm mistaken. So I wanted to understand, like if we are seeing some kind of delay in payments or something like that?
No. See, this is trade receivable discounting. It's not trade receivable discounting. It is the vendor discounting, which is there, which is about INR 70-plus crores, and that has gone up from INR 42 crores to, say, this INR 30 crores plus from June number. This is a, say, unit feature of this particular, say, limit or say, we are used to get the fund from banks. If the -- any vendor is suppose, they are giving up the commercial discount on that basis the interest cost being bought by them. So on that basis, it is a case to case that we believe that it is in the interest of where we are saving the cost of interest as well as in commercial parts, negotiation parts that is done here. So that is a different platform. No, it's not a trade receivable discounting.
Okay. Sure, sir. So, and the last question was pertaining to -- can you give us FY '22 and '23, what kind of equity in infusion we are looking at?
Sorry?
The equity infusion and hybrid projects for FY '22 and FY '23. You said INR 76 crores in H2.
Yes. But I will -- thereabout INR 76 crores is to be done within this financial year is the balance, which is to be done. And for the next year, it is INR 68 crores. And then again, next year, it's INR 30 crores. So altogether, it is, say, almost coming at INR 175 crores, which is to be done over a period of 2.5 years. This half year of this one, and these for only existing for HAM.
Sure, sir. Sir, are you targeting INR 35 crores, INR 40 crores on [ INR 35 billion, INR 40 billion ] kind of in force. Is there any segmental base top you're looking at, what is the HAM component? What will be the EPC component term? And how much you're targeting from release?
Sorry, I could not get your question.
So of the inflows that we're targeting right now, INR 3,500 crores to 40 -- INR 4,000-odd crores...
We were talking of the orders to be taken. That mix of HAM and EPC. And also, that some INR 2,000 crore as per our financial balance sheet appetite if we cannot monetize any of the HAM project, that is about INR 2,000 crores size of ham and INR 1,500 crores to INR 2,000 crores can be EPC even more than that.
Okay. Certainly more like INR 2,000 crores HAM and then INR 1,500 crores of EPC either in roads or EVs. Is that the reason, correct?
Yes.
The next question is from the line of Pawandeep Singh from Phoenix Capital.
Sir, I wanted to understand what is our total retention amount on the consol level this quarter?
It's INR 165 crores.
And what was it last year and last quarter?
There is not much of the moment it's only INR 18 crores reduced, say, earlier, it was on some 180 something and INR 18 crores. It's almost the same, because we are not -- the retention is not deducted in the EPC project as of now. And a few of the EPC project which we completed the retention is released, but they mostly were in the BG format.
As there are no further questions, I now hand the conference over to Mr. Singh for closing remarks. Over to you, sir.
Thank you. Thank you, everyone, for your participation in our quarter 2 and H1 FY '21 earnings call. In case of further queries, you may get in touch with Pareto Capital or feel free to get in touch with us. We look forward to interacting with you next quarter. So thanks a lot, and happy Diwali.
Thank you very much, Mr. Singh and the members of management. On behalf of H.G. Infra Engineering Limited, that concludes today's conference call. Thank you all for joining us and you may now disconnect your lines.