KNR Constructions Ltd

NSE:KNRCON

Earnings Call Transcript 2023-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to KNR Constructions Limited Q1 FY '23 Earnings Conference Call.

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 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. S Vaikuntanathan, VP, Finance, KNR Constructions Limited. Thank you, and over to you, sir.

[S. Vaikuntanathan, executive]

Good evening, everyone. Thank you for joining us today on the call to discuss the financial results for Q1 FY '23.

Along with me, I have Mr. K. Jalandhar Reddy, Executive Director and CFO; Mr. K Venkatram Rao, General Manager, Finance and Accounts and Strategic Growth Advisors, our Investor Relations advisors.

I would like to touch upon some important industry updates, followed by a discussion on the company's financial and operational performance. The pace of highway construction was affected during Q1 FY '23, owing to sustained inflationary pressure on the key raw material prices and other input costs. The pace stood at 22 kilometers per day compared to 25 kilometers per day on a year-on-year basis. The pace is expected to remain subdued in Q3 FY 2023 as well as due to the ongoing unpleasant rains. The input costs have also started to soften. And as a result, we expect the pace of highway construction to bounce back from H2 FY '23 onwards.

As for the rating agency, CRISIL, the national highway construction is expected to be 32 to 34 kilometers per day during the current financial year. As per CRISIL, the Ministry of Road Transportation and Highways is likely to award 12,000 to 13,000 kilometers of national highway projects, largely under Bharatmala. As per the new report, the NHAI is planning to reduce the upfront payment made to highway construction companies by 50% by making changes in the existing HAM structure to 20% from 40%. Although this proposal is yet to be passed to the government, this could result in a higher capital outlay by the private players. The NHAI is also focusing on the monetization of the operational highway, which we believe is a positive sign for the whole industry as it will result into deleveraging the balance sheet of NHAI.

Now coming to the update on toll collections. The upward trajectory in the FASTag based on toll collection contributed in June 2022 and stood at INR 2,576 crores, a growth of approximately 21% on a month-on-month basis, which stood at INR 2,125 crores in May 2021. Daily FASTag-based toll collections also reached all-time high to INR 143 crores per day in June 2022. The growth in toll collection was mainly on account of lower base on a year-on-year basis and the improvement in commercial and passenger vehicle movement. The central government is intending to change toll using GPS technology and as per the news reports, a pilot project to test this new method is already under way. As per our Honorable Minister, Nitin Gadkari, toll plazas would be completely replaced with the GPS-based toll collection system and tolls would be collected via GPS imaging on moving vehicles.

Now coming to the key updates of the company. The percentage of physical progress as of 30th June 2022 for the HAM project is as follows. Chittor to Mallavaram is at 100% completion. Ramsanpalle to Mangloor is at 100% completion. Trichy to Kallagam is at 100% completion. Magadi to Somwarpet is 59.1% completion. Oddanchatram to Madathukulam at 68.3% completion. Ramanattukara to Valanchery bypass at 5.6% completion. Valanchery bypass to Kappirikkad at 6.4% completion. During the quarter, the execution was primarily driven by HAM projects. Total INR 1,098.51 crores revised PPP requirement for all the HAM projects, the company has already invested INR 522.04 crores as on June 30, 2022. The incremental equity requirement of INR 570.47 crores to be infused INR 305 crores, INR 160 crores and INR 105 crores for FY '23, FY '24 and FY 2025, respectively. You can refer to Slide #23 and 24 of the Investor Presentation for detail on each HAM project.

I will now take you through the key highlights of the company. The company has received financial closure for the product as follows. KNR Ramagiri Infra Private Limited HAM received financial closure from NHAI on 30th of March 2022. The company has also received a letter of acceptance for the construction of 4-lane road from IDA Pashamailaram Industrial Park to ORR worth INR 34.26 crores. The total collection for the Bihar project, that is Muzaffarpur to Barauni, the collection in Q1 FY '23 has been INR 12 crores.

Now coming to the order book position. As of June 30, 2022, the company had an outstanding order book portion of INR 8,585.9 crores. EPC road projects and HAM projects were 74% of the total order book, while irrigation projects constitute the remaining 26%. Client-wise, 30% of the order book from third-party clients and the balance 44% is from captive HAM projects. The third-party order book on our non-captive order book, which are close to 56% of the total order book position is skewed between state government contracts with 42%, whereas 11% is from central government and balance 3% order book from other private players.

The total order book portion is INR 9,350.9 crores, including 1 new HAM project with that the irrigation comes to 24%, roads 28% and HAM 48%. Please refer Page #29 of the Investor Presentation. The current order book position remains healthy and provides a clear visibility of execution over the period of the next 3 years. A robust project pipeline and already a DPR, detailed project report under the Bharatmala project should accelerate the project awarding activity going forward. The company is targeting a further order inflow of INR 4,000 crores to INR 5,000 crores for the year FY 2023.

I will now request Mr. K Venkatram Rao, our GM, to present the results for the quarter ended 30th June 2022. Over to Mr. Venkat Rao.

[K. Venkatram Rao, executive]

Thank you, sir. Let me give Q1 FY '23 stand-alone financial performance. The revenue for the quarter grew by 20% year-on-year to INR 890 crores as compared to INR 740 crores in Q1 FY '22. EBITDA for Q1 FY '23 witnesses a growth of 15% to INR 165 crores as compared to INR 143 crores in Q1 FY '22. EBITDA margin in Q1 FY '23 stood at 18.5%. Net profit for the quarter was INR 100.9 crores as compared to INR 73 crores in Q1 FY '22, a growth of 38%.

Now coming to the consolidated financial performance. The company recorded a 21% year-on-year growth in the total revenue from INR 807 crores in Q1 FY '22 to INR 980 crores in Q1 FY '23. EBITDA came in at INR 211 crores in Q1 FY '23 as compared to INR 202 crores in the same period last year. EBITDA margin in the current quarter stood at 21.5%. Profit after tax stood at INR 90.5 crores in Q1 FY '23.

Now moving on the turnaround balance sheet. The company continues to maintain a strong balance sheet and stand-alone debt as of June '22 is INR 124.75 crores, that is towards working capital. The working capital days stood -- came down to 60 days compared to 63 days in March '22. The consolidated debt as of June 30, 2022 is INR 1,592 crores as compared to INR 1,410 crores as of March 31, 2022. The net debt to equity on the consolidated basis as of June 30, 2022 stands at 0.66x as compared to 0.49x as of March 31, 2022.

With this we can open the floor for question and answer.

[Operator]

[Operator Instructions] The first question is from the line of Shravan Shah from Dolat Capital.

[Shravan Shah, analyst]

First of all, congratulations on decent performance in this quarter. As I can see in terms of the irrigation order book versus March, it remains the same. So just wanted to understand how do we see the full year execution from irrigation projects, particularly if I name the projects, 2 JV projects NCC 1 and HES 1. How do we see that execution for this year? And the old one, the Palamuru lift irrigation and Kaleshwaram. So how do we see -- can we see these 2 projects to be completed in FY '23? And how much execution we expect from both the JV irrigation projects?

[S. Vaikuntanathan, executive]

Right now, the status is that outstanding there is quite enough as you understand, I think...

[Operator]

Excuse me, this is the operator. I'm sorry, you seem distant from the phone.

[S. Vaikuntanathan, executive]

Actually, as you know, that we are now suffering for the payment in the irrigation projects, as of now, the common, I think, during the last month, end of July, end of INR 850 crore is outstanding as of now. So now that outstandings are piling up and the payments are not realizing, we are little bit slowing down on this. However, we get the payments in a month's time, definitely will gear up and as per schedule it will go on. And I think in coming 1, 1.5 years, we will be completing entire job if the payments are intact.

[Shravan Shah, analyst]

Okay. So do you see -- as you mentioned, INR 850-odd crores are outstanding. So out of that, anything -- have you got an indication that in this month, August or in September, how much are we expecting to receive?

[S. Vaikuntanathan, executive]

Actually that department side, they say that you may have to wait for some more time as they're saying coming 1, 2 months parcel payments will be released. I think even state government is struggling to get out of that loan situation. So it is quite unrealistic thing now. If you say anything -- if I say anything, I think it may go wrong on time. But these are the predictions what the rumors are before 2 months, they are not saying anything that will happen.

[Shravan Shah, analyst]

Okay. Now coming to the HAM projects particularly. So the captive HAM project, how do we see the execution for this year and 2 Kerala HAM projects? So how much we see the execution? Because currently, we have close to INR 3,100 crores order book from these 2 HAM projects in Kerala. So can we see kind of a 40%, 50%, so INR 1,200 crores, INR 1,300 crores kind of revenue from these 2 projects for this full year?

[S. Vaikuntanathan, executive]

40% we can expect to complete. That's what the plan is. We have targeted 45%, but we have lost this season complete range, and there have been a lot of -- may completely lost. In April, also, 10 days, we suffered for the early -- some cyclone has come up because of that 10 days to 11 days we suffered for that in April. And May full was in monsoon. So the expected -- some preparatory works to do the rainy season work could not be done because of the early monsoons that have happened. Generally, in Kerala, they hit around April -- sorry, June first week or second week, most probably it is in the second week, sometimes it is in the first week also, but this time, May was -- it was around monsoon. It was the major flow, which has happened. So 47% was internal target for us to complete, but I think now we are revising it to 40%.

[Shravan Shah, analyst]

Okay. And regarding...

[Operator]

[Operator Instructions] The next question is from the line of Mohit Kumar from DAM Capital.

[Mohit Kumar, analyst]

Congratulations on another good quarter. My first question is on the -- can you just give the breakup of revenue in roads and irrigation? And the related question is that is there any change in scope in the order book, which you have booked in this quarter?

[S. Vaikuntanathan, executive]

Breakup is like that. In irrigation, actually, we did around 35% and road HAM rated 40% and our EPC road project reached 20% and 5% and back to back basis.

[Mohit Kumar, analyst]

So saying 35% HAM, right? 40% EPC?

[S. Vaikuntanathan, executive]

35% irrigation, 40% is HAM, 20% is our regular EPC road project and 5% is back to back.

[Mohit Kumar, analyst]

But the irrigation order book is flat. Does it mean that you have booked extra order in irrigation? Is the understanding right?

[S. Vaikuntanathan, executive]

It is because as per our accounting policy, actually, we book expenditure -- we book revenue based on our percentage of completion. So what our expense booked plus margin, we will consider it as revenue. But in our order book is we will go ahead for the standardization. So that's why if you see -- you've gone through it, there is no movement in the order book, but the revenue of around INR 300 crores has been booked in irrigation that is based expenditure accounting.

[Mohit Kumar, analyst]

Understood. And secondly, also the outlook in terms of order inflow, are we seeing the NHAI floating orders a bit for the area where we are comfortable? And what kind of pipeline you are seeing at this point of time?

[S. Vaikuntanathan, executive]

NHAI order book, I think quite good. I think we were expecting a new set of bidding to come into force from next month onwards. I think partially, they've come up with the 75/25 metrics. I think next month, it is expected to have its value. So definitely, we are getting up kind of -- as you know, we are uploading certain projects which are completed and getting up for the equity -- additional equity to because 75-25 will attract more equity and also -- so for the also, we are getting up to I think some better prospects could be there in upcoming months.

[Mohit Kumar, analyst]

And the number -- I mean any number of bids you are participating, which you're seeing on the ground?

[S. Vaikuntanathan, executive]

Actually, yes, in Kerala, we are participating almost a INR 3,000 crores, there is some work that's come up, we're participating and Tamil Nadu, there have been 3 setup projects like in Chennai flyover area, there have been projects -- 2 flyovers from Chennai and 2 projects in Bihar we are focusing as well, I think some projects are there in Telangana also this time. We are even focusing -- yesterday, we placed a bid on Telangana region also, EPC model. I think there have been good prospects. Only one sort of uncertainty is that unless the bidding big capabilities and all in place, I think definitely, the healthy bidding may not happen, that's what our estimate is. So hope for the best.

[Operator]

The next question is from the line of Niteen Dharmawat from Aurum Capital.

[Niteen Dharmawat, analyst]

A couple of questions. You mentioned in the notes about some IT search operations that were conducted in our offices. You mentioned that there was nothing found so far and which calls for provisioning. I wanted to understand, was there any IT search happened earlier in the past in offices, in company offices? And was there any adverse finding that time?

[S. Vaikuntanathan, executive]

Actually, in 2011, we got a search done. That time there's no big outstanding material, they got in, but they try to impose certain taxes, which were challenged later day. Initially, we paid and later, we challenged all this, and we got back also. And now again, some sort of thing is going on. But as of now, due to news was proceeding, we haven't received any sort of proceeding order from that. I think the search party is what I heard from the department is that search parties are now preparing the statement. I mean, appraisal report, they call it. They would prepare that and send it to the center circle. Center circle, they will investigate entire accounts. I think they will open all 5 years account and then they do the real assessment and then come back with their findings. And then I think they will open up the floor for us to some demand -- they may demand some taxes. Subsequently, it will be made challenge depending on the situation at that time.

[Niteen Dharmawat, analyst]

Got it. So in 2011, there was no adverse penalty that has come to us even that time, that is what we are concluding.

[S. Vaikuntanathan, executive]

Yes. Actually, they levied the penalties and all, but later, we got back all that. If they want to make this search, they do. They want to -- they're being given target like the government base we need so many targets from you. They try to impose by some interpretation, some sort of trauma drama or they do and all. But later, they get because after we submit everything, definitely, there is officer who is again making an allegation you may not agree. But if you go to the appealing forum, definitely, your argument will be listened to and then you get relief over there.

[Niteen Dharmawat, analyst]

Got it. My second question is, are we planning to get more orders? And how is the competition now in the bidding process? Last time you mentioned the competition was intense. So has this reduced now a little bit? And what is the order book position that you want to build?

[S. Vaikuntanathan, executive]

So actually, this year, we are targeting about INR 3,000 crores minimum order, minimum, I need to say. With this, actually, as different people are uptake for upcoming because any order if I take it is taking almost a year to take commitment. So because of this, definitely, we are now focusing on these bids and if at early state as we have a clear earnings visibility for 2 years at least if you can consider, so that -- but still, we are now picking up the order because we don't want -- at one point of time, if I come into pressure, my order quality may reduce. Demand versus supply always make you somewhere -- give you some sort of negative impact, which we don't want on our books. So definitely, whenever there is an opportunity, we are jumping and picking up the orders and mobilizing it in the right way also.

But here, another situation, as I earlier said that we will be waiting for the new bid norms will come into place, as you know, that it's out in the market already more so. So if they impose the bid capacity issues and equity requirements and then if we go for 75-25, it may be a bit lucrative bidding. I mean to say, there is some sensible bidding that could happen than it may improve our order book, which we are hoping down. I think coming 1 month's time, all these should be in place.

[Niteen Dharmawat, analyst]

Got it. So will this change our revenue guidance? And what is the revenue guidance and operating margin for 2023?

[S. Vaikuntanathan, executive]

For 2023, we may not see a big jump beside. But of course, if I receive some orders in this year, definitely, the launching of these orders will take at least 7, 8 months. Normal course is only 7, 8 months. Again, we are talking a bit new -- most of the projects are now coming on the basis of the greenfield highways and all, they are coming in the entire bypasses. So the land acquisition is not that speedy. So definitely, it is taking almost 10 months to 12 months who are commencing all these projects. So definitely, next year, I mean, FY '24, we may be a bit of improvement that would be there. However, we have clear visibility for 2 years at least. I think INR 9,300 crores is order outstanding as of now. So this will cater our 2-year requirement. And again, as we are focusing on new orders, it may also improve our situation.

[Operator]

The next question is from the line of Jiten Rushi from Axis Capital.

[Jiten Rushi, analyst]

My question is on the bid pipeline. So you said you were targeting to bidding different geographies, UP and Bihar. As you said last time...

[Operator]

Mr. Rushi, sorry to interrupt. Could you be a bit louder.

[Jiten Rushi, analyst]

Yes. I'll just repeat my question again. On the bid, you targeted big pipeline, you said you are targeting to bid in different geography of North UP and Bihar. So do we see -- because so far, we are comfortable in South and as you said last time also, South India is potentially more bids coming in. So any reason for going in that geography this can dilute our margin also going forward. So any thought on that?

[S. Vaikuntanathan, executive]

Actually, yes, this is really, there's a situation now in Southern India, the projects are also reducing unless the new highway, the expressway, which they are planning around 22 members, which they come down. Until such time we may have to be focused on a few other areas also. So we are definitely continuing to go around. Okay. Once it comes to the question of diluting the thing, it can only be known after we succeed on the bid.

Right now, I have the visibility for 2 years. So I don't have to rush and hurry for picking up an order. In a very uncertain time like now there is war between Russia and -- this one is going on. There is certain expectations on Taiwan versus China. All these uncertainties is one should always think and do his own operations. So that will be we are keeping everything in mind and moving forward.

So then the success ratio also could be reduced in this pattern in which we are thinking, but we are fine because we have compared for 2 years. So definitely, at least 1, 1.5 years, we have comfort, we can say. But as of now, we are targeting a very better target like INR 3,000 crores only we put for ourselves because to make for our 1.5-year, 1-year upcoming requirement we would need.

[Jiten Rushi, analyst]

Is it fair to assume that we can expect the revenue growth of around 15% this year with a margin of 18% to 19% on the rate -- as of what we are receiving now and order inflow, which you are targeting INR 4,000 crores to INR 5,000 crores at the start of the year? Is this fair to assume the same rate for FY '23?

[S. Vaikuntanathan, executive]

Pardon?

[Jiten Rushi, analyst]

My question was, is it fair to assume a 15% revenue growth for FY '23 with a margin -- with a quarterly margin -- with margin of 18% to 19%, what we could do on the commodity price an the inflow of over INR 4,000 crores to INR 5,000 crores because at the start of the year, you were seeing a higher inflow. But now with INR 3,000 crores, it seems to be on the lower side of the guidance. So my question was, any bids you're targeting from the state, any state projects also, which can get you that INR 4,000 cores to INR 5,000 crores? And on the revenue and margin?

[S. Vaikuntanathan, executive]

So INR 5,000 crores is required after 1.5-year setup. So now we are talking about 1 year, I think upcoming year only, that means FY '23 only we are talking of, for which it's a lower size target, which I said. And there's no -- the thing that upper cap, we haven't spelled out also. We have the requirement about minimum requirements. That means minimum I need is around INR 3,000 crores. But it is not that we are restricting ourselves to be at INR 3,000 crores only and then settle down the minimum. We are going forward on it.

[Jiten Rushi, analyst]

What Vaikuntanathan said in the opening, the INR 4,000 crores can be achievable?

[S. Vaikuntanathan, executive]

Yes. The market and all, everything is good kind of that. I think in coming, what I've been said by the NHAI results that they start the bidding on the expressways and greenfield highways, they will start from coming 2 months.

[Jiten Rushi, analyst]

On the Q3, any thought what rate can we expect the final closure and the balance payment? What is the remaining statement...

[S. Vaikuntanathan, executive]

Could you be a bit loud?

[Jiten Rushi, analyst]

New highway deal. When can we expect the final closure and the balance of proceeds?

[S. Vaikuntanathan, executive]

I think another 2 months, we are trying to finish this. By the end of -- if everything goes well, definitely, we should be closing by this quarter end.

[Jiten Rushi, analyst]

So what is the balance statement pending? What is the balance outstanding we'll receive now?

[S. Vaikuntanathan, executive]

Balance outstanding from Q2, it will be around -- we are working out that final around INR 200 crores to INR 220 crores we will receive actually for the transfer of 100% sales in the KNRCL and 51% each in center and Tirumala. So quantum will be between INR 200 crores to INR 220 crores.

[Operator]

The next question is from the line of Veenit Pasad from Investec.

[Veenit Pasad, analyst]

Just wanted to first ask on gross margins. If you look at first 9 months of the last year, we were hovering around 34%, 33%, and which is gone down over the last 2 quarters to 28% now. What is this on account of its only whether it's purely RM inflation? Or should we -- is there anything more to it?

[S. Vaikuntanathan, executive]

Yes, you're right. The inflation -- material prices have gone up like anything. And there is big uncertainty every now and then things are changing. I think because of the rainy reason things are under -- bit out of control, otherwise, they would run other part. Even GST has gone up now. Consider all that, I think things are not in the right shape. So the major reason is cement, steel and fuel, I mean, the diesel bitumen prices all that. They are ruling on the index.

[Veenit Pasad, analyst]

So with this moderation in commodity prices of late, where do you see this number settling in the next few quarters?

[S. Vaikuntanathan, executive]

It is quite difficult to weigh. But however, we are sticking on to that at least earlier guidelines like '16, '17 levels are quite possible. But we'll have to see -- even if things go beyond our control, definitely, things are not up to the mark, but we try all that.

[Veenit Pasad, analyst]

But would it be safe to assume that gross margins now would have bottomed out to a certain extent and it should only move northwards or remain as they are currently? Would that be the recent assumption?

[S. Vaikuntanathan, executive]

Actually, if you take forward ask this question, definitely, there are uncertainties. So scaling down is always a better option to consider and go forward. If things are better, definitely, things will come up in a better shade.

[Veenit Pasad, analyst]

Understood. Okay. Just the second question is on depreciation. We generally see a fair bit of volatility in our depreciation and that's been the case over the last, let's say, 2 years or so. Even in this quarter, if you look at it, depreciation was down 18%, 20% on a sequential basis. So one, what led to such decline in depreciation? And number 2, why is such volatility in the depreciation number, which we have?

[S. Vaikuntanathan, executive]

The depreciation number is based on our whatever assets we acquired. So far the road projects and irrigation projects. So as you know, our irrigation, we do depreciate in the previous life cycle and get approved for the old project, we depreciate in the [indiscernible]. So if really you're seeing in this quarter, they are not much different in the irrigation because irrigation is what are the project is doing, not almost -- what are the machineries required we already deployed. So there is no addition in that let's say this quarter depreciation was less. And we hope that at least further irrigation projects are not coming and that different what are the existing irrigation or machineries we have acquired. So now we hope that decision should be a bit lower always.

[Operator]

The next question is from the line of Vibhor Singhal from PhillipCapital. As there is no response, we'll be moving on to the next questioner. The next question is from the line of Parikshit Kandpal from HDFC Securities.

[Parikshit Kandpal, analyst]

Congratulations on a good quarter. My first question is on irrigation. So this quarter, we had about INR 300 crores of revenues from irrigation. So in the second quarter, how do you see this execution moving given that we have INR 800 crores to be received from the outstanding -- irrigation outstanding?

[S. Vaikuntanathan, executive]

Concerned the rainy season, considering the rainy season and most of the order is in the high rainfall zone, as you know, that Mangalore, the Periya Shanti to Bantwal project is in the area of Mangalore, which is in a hill station and has got high rainfall problems. And the rains are -- early monsoon has started for us, and we are really suffering on that account. So there have been certain scale down in this. And again, Kerala project also, there have been under rain zone, and the rains are also happening to the extent possible.

So definitely, this time, we are only guiding about the second quarter, we are a little bit light and trying our best to push out, we'll see its upcoming 1.5 month time still is there. If the rains are coming down, definitely, we'll make and come up to the expectation as we have expected. Revised a little bit scale down INR 100 crores to INR 150 crores will be down with that stuff. And having the pace of irrigation, it is not wise that I can raise certain execution pattern there because that may not help me in financial thing because outstandings are heavy. And again, if I invest more getting back may be difficult.

[Parikshit Kandpal, analyst]

I was talking about irrigation on that irrigation, are we going to significantly shut down the execution given we are not getting payments? So because on your calls, you have said -- because earlier, you've been saying that you will have to maintain some level of execution because you have payments outstanding. So you have to keep executing the project at some reasonable level. So now this quarter, first quarter, we have recorded about INR 300 crores of revenues from irrigation and INR 800 crores is the total dues, which we have to collect from the government. So do you see INR 300 crores will get scaled down significantly in second quarter to like INR 100 crores or near or less than INR 100 crores? So how do you see the execution in irrigation already like 1.5 months have gone by? So have you already scaled down the irrigation in the segment?

[S. Vaikuntanathan, executive]

There is -- scale down is there in this. Except from that -- as well said in the -- all that we are not working on major concrete work and all because concrete works are involving a lot of investment also as you know that cement, steel and all that we put in. So those areas a little bit slowdown is there. We'll have to speak to that -- we have already spoken with them. They are assuring another 2 months, we'll pay you. You continue to do the work, which we wanted, please do confirm on the -- in writing so that we can take it granted and go ahead. They're able to pay us in 2 months, definitely, we'll get us the things done.

[Parikshit Kandpal, analyst]

But in first quarter, have we received any money from the government on irrigation?

[S. Vaikuntanathan, executive]

No. Actually, after March 16, we received the already consider we are conquered on 30%. At that time, it was INR 650 crores outstanding. That is after around INR 130 crores that we received after March actually. But from May onwards, we have not received anything. [indiscernible] as on date, it's become INR 850 crores.

[Parikshit Kandpal, analyst]

Sorry, can you repeat that sentence?

[S. Vaikuntanathan, executive]

This after March actually, it is because last exclusive figure we told as of 31st May. So after March, we received around INR 130 crores in the irrigation. But after May, we have not received anything.

[Parikshit Kandpal, analyst]

May, it was outstanding of INR 650 crores, which has now become INR 800 crores?

[S. Vaikuntanathan, executive]

INR 850 crores.

[Parikshit Kandpal, analyst]

INR 850 crores. The INR 200 crores, we have filed up on the letters.

[S. Vaikuntanathan, executive]

Yes. From May to July.

[Parikshit Kandpal, analyst]

And beyond that, any unbilled earnings? Is this pure debtors or it includes everything work in progress, unbilled and all?

[S. Vaikuntanathan, executive]

This is everything. This is for debtors as well as the unbilled as well.

[Parikshit Kandpal, analyst]

And my second question is on this debt. I just missed that debt number. Can you just tell us how the stand-alone debt and cash numbers?

[S. Vaikuntanathan, executive]

Well, stand-alone debt is INR 125 crores as of 30th June and cash is around INR 45 crores.

[Parikshit Kandpal, analyst]

INR 45 crores?

[S. Vaikuntanathan, executive]

Yes, 45 crores.

[Operator]

The next question is from the line of Nikhil Abhyankar from DAM Capital.

[Nikhil Abhyankar, analyst]

Contracts on a good set of numbers. I just wanted to know why the other expense is down Y-o-Y and other income has risen? Any specific reason for it?

[S. Vaikuntanathan, executive]

Can you repeat it?

[Nikhil Abhyankar, analyst]

Why is the other expense down? It was INR 62 crores earlier and now it is around INR 48 crores. And why is the other income risen from around INR 5 crores to INR 9 crores? Okay, that is not admitted. But why is the other expense down?

[S. Vaikuntanathan, executive]

Because basically -- because what has happened in the major is due to because this quarter actually what are our projects are now in execution phase, so in last quarter, there were some design expenses was there actually designs everything is approved. So we took that item this quarter, but specific detail actually, we will provide you.

[Nikhil Abhyankar, analyst]

Okay. And any update on the sale of TOT project?

[S. Vaikuntanathan, executive]

Still our BOT project.

[Nikhil Abhyankar, analyst]

Muzaffarpur Barauni.

[S. Vaikuntanathan, executive]

We are completed some -- Muzaffarpur Barauni sales, it will take time. Because now the NHAI is signing for a 4-lane and all. At that time, there is an option for write-up reduce -- by that time, we can get back our EPC and [indiscernible]. So since that 4-lane is being planned, they have yet to decide whether it is from --by HAM or by BOT they have to decide. Most of them to decide it HAM. So in that case, there may be a write-up in this case also. So we are waiting for that. But right now, the project is being serviced by us.

[Nikhil Abhyankar, analyst]

Okay. And earlier you had mentioned that we were also looking at railway orders. So do you see any opportunities in this year?

[S. Vaikuntanathan, executive]

Railway orders, as of now, we are not -- we have stopped focusing on that right now because there was huge tendering that was done in highways and urban infrastructure like flyovers and all other. And there have been a lot of bids in pipeline for coming also. So a bit of occupancy is there and hopeful that we will be getting that INR 3,000 crores, INR 4,000 crores, other than which we are targeting. If it is easily achievable why enter into a new zone. Or otherwise, if the order intake is becoming difficult here, definitely, we'll focus on that.

[Nikhil Abhyankar, analyst]

Understood. And just one last question. You also mentioned that NHAI contribution might come down to 20%. So how do you see the competition being affected by it? Do you see any increased margins because of it?

[S. Vaikuntanathan, executive]

Yes. Actually, sir, what is happening right now, you might have seen the bidding pattern. I think very, very unhealthy bidding that is happening in the HAM as well in the EPC contractors with the places. Because earlier, there was no banker only. I think last 3 months there, they put on the banker in the issues. With that, I think there is pattern scale down and bidding numbers. I think bidding -- number of bidders participation has reduced, but still the aggression is not there. And now they are now capping with the big capacity.

And equity also they're putting the clause for scaling down the bidders at preventing the non-period business also. So with this, I think there should be a number of players also will reduce. And I think only serious players who are likely to participate are okay to invest into the equity. They only will participate into the bidding. I think this process will start in another couple of months, maybe for the next month, I've been told but, okay, a couple of months is the right choice to take it because we always take -- if it is bad in that way, definitely, we are happy and healthy bidding may happen.

[Nikhil Abhyankar, analyst]

Just one last question, if I may. The margins on irrigation projects are somewhere around 24%. So is it -- and given -- you have just mentioned that maybe you won't be executing any irrigation orders and so revenues won't also accrue to it. So is it fair to assume that the margins will be hit in the -- at least in the next quarter because of it because that is almost contributing 30% of our quarterly revenue?

[S. Vaikuntanathan, executive]

On execution, completely, we cannot start the project because if you log on to the projects only, you may hope to get payments. If you completely fit out of the project, definitely, the Telangana government is -- they may not pay us also. And we have quite a good kind of outstanding for which definitely will be there in that. And again, considering such delays that are happening, so however, the irrigation is not that better this time because if you see that working capital interest and everything is target to that, definitely, EBITDA has already come down to 17% and 18% of late. And the same -- one better thing in this is that we have an exploration clause in a better way in this Telangana region.

So that for this irrigation project because directly the 3 -- there is a committee who will decide the ruling price on the bitumen, steel, cement and all that. Definitely, it's going to be a bit of good prospects which is nonpayment again, things are under gold garment. I think, yes, they have also come down, even now earlier, it was having a good margin, but now because of the delays that they are doing on the payments and all it is coming down to the same levels. And moreover, we were guiding only '15, '16 levels and all. But every time it is happening in a big way, everybody is tipping us to be at '18, '19 levels. But really, it is not possible that every time we can deliver that. See any analytic thing like some claims, something which is coming up, then it will keep us in a very good shape. But otherwise, normal operating margins are likely '14, '15, '16 levels only.

[Operator]

The next question is from the line of Parvez Qazi from Edelweiss.

[Parvez Qazi, analyst]

I'm sorry if this question has been answered earlier. But when do we expect the appointed date for the Chittoor-Thatchur project?

[S. Vaikuntanathan, executive]

Actually, there is around 50% lane addition, which is done. Now I think my site staff and even the Project Director of NHAI, he is also saying another 30 to 40 days, he will take to complete that 80% proportion because now the disbursement has started, so things are in a little speedy way. We can hope for this to happen in coming 40 days, 30 days.

[Parvez Qazi, analyst]

So we can expect an appoint date probably towards the end of this year?

[S. Vaikuntanathan, executive]

Yes.

[Parvez Qazi, analyst]

Sure. And a couple of questions for Venkat. What was the CapEx that we did this quarter?

[K. Venkatram Rao, executive]

This quarter, we did around INR 50 crores of CapEx.

[Parvez Qazi, analyst]

INR 50 crores. And what was the contribution from irrigation projects to revenue this quarter?

[K. Venkatram Rao, executive]

Irrigation is 35%, around INR 300 crores.

[Operator]

The next question is from the line of Alok Deora from Motilal Oswal.

[Alok Deora, analyst]

Congratulations on decent numbers. Just wanted to get a sense on the execution side because you are mentioning that this quarter, we paid around INR 300 crores or so from irrigation and in second quarter, we will be, because of the monsoon, it will be coming down to nearly of INR 150 crores. And so just wanted to get a sense what kind of growth we are looking at realistically for this year, because irrigation might not be at INR 300 crore run rate for almost in the next 3 quarters? And even second, third quarter for the road sector also would be kind of muted. So just any indication on the growth we are targeting for this year?

[S. Vaikuntanathan, executive]

Yes. Actually that concern definitely irrigation may be fourth quarter, it could be reduced by 50% or so. So INR 150 crores, we will be getting back, I think, 40% of execution, which we are expecting on the 3 new projects. And Chittoor-Thatchur also, we are expecting around 20% to 25% this year only. With all that and balancing the projects, which are now ongoing, with all that, I think we'll be achieving around INR 3,500 crores plus, which we are estimating. In the second quarter, we are a little bit down, but third, fourth quarter, we can do a better, better job. There's no doubt.

[Alok Deora, analyst]

Sure. And you mentioned that while the revenue in irrigation, you have around INR 300 crores, but order book has not reduced. So that's because its figures are not authenticated and so just wanted to understand what's the realistic -- I mean, what's the order book now if we adjust for all these numbers, which have not reduced from the order book?

[S. Vaikuntanathan, executive]

So well, in that case you can reduce around INR 400 crores you can reduce from order book.

[Alok Deora, analyst]

Okay. So rest all the projects are where we have not started the execution? So INR 8,600 crores is the order book, excluding the Chittoor project. And then this INR 400 crores, we need to further reduce from this?

[S. Vaikuntanathan, executive]

Yes, correct.

[Alok Deora, analyst]

Sure. And just last question. This depreciation, you mentioned it reduced because of the segmental mix change. So what this depreciation run rate will continue ahead? Or how are we looking at depreciation expense going forward?

[S. Vaikuntanathan, executive]

It will be the same because now we are not adding anything in the irrigation sector. So we expect that depreciation should be on this lower number. INR 32 crores to INR 33 crores year around.

[Operator]

The next question is from the line of Shouvik Chakraborty from Dolat Capital.

[Shouvik Chakraborty, analyst]

Like you said, for the revenue guidance, like for FY '23, around INR 3,500 crores plus. So can you also guide for FY '24? That will be my first question.

[S. Vaikuntanathan, executive]

See, targets for '24 are about 10% to 15% growth we can expect. It is between 10% to 15%. But because of lots of uncertainties that are happening, margin line, it is quite difficult to spell out. But we have to complete entire order book which is outstanding in coming 2 years. So definitely, we have to cross.

[Shouvik Chakraborty, analyst]

And like for the EBITDA margin for FY '23, can we expect a margin of 15% to 17-odd-percent.

[S. Vaikuntanathan, executive]

Actually right now, you can take it like that, but because after the season start, then only we'll know how the steel, cement will behave. And most of the projects are carrying structural work only. That is a major, major one.

[Shouvik Chakraborty, analyst]

Okay. On one bookkeeping question. Can you give us a number for the consolidated cash?

[S. Vaikuntanathan, executive]

It will be around INR 200 crores actually, in full cash.

[Shouvik Chakraborty, analyst]

INR 200 crores, right?

[S. Vaikuntanathan, executive]

Yes, including our [indiscernible] put together.

[Shouvik Chakraborty, analyst]

Okay. And just one last thing. So by the end of this year, can we expect like 0 debt?

[S. Vaikuntanathan, executive]

Actually March '21 and March '22, we've given [indiscernible], but definitely, these receivables are filing a bad way we have taken debt into this quarter. But definitely, we expect that this receivable will come down. We will receive all the receivables and definitely, we'll be again [indiscernible].

[Operator]

Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.

[S. Vaikuntanathan, executive]

Thanks. So thank you all for joining us on this call. Please reach out to our IR consultant, Strategic Growth Advisors, or us directly, should you have any further queries. Thank you. Now we close the call.

[Operator]

Thank you. On behalf of KNR Constructions Limited that concludes this conference. Thank you for joining us. You may now disconnect your lines.