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KNR Constructions Ltd
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Ladies and gentlemen, good day and welcome to KNR Constructions Limited Q2 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.
Good evening, and Season's greetings, everyone. Thank you for joining us today on the call to discuss the financial results for Q2 and H1 financial year '23. Along with me, I have Mr. K. Jalandhar Reddy, Executive Director; and Mr. K. Venkatram Rao, General Manager, Finance and Accounts; and Strategic Growth Advisors, our Investor Relation Advisors.
We have uploaded results and investor presentation on the stock exchanges as well as on our company website. I hope everyone got an opportunity to go through it. We would like to touch upon a few key company updates and industry events, post which we will have a question-and-answer session.
In the month of October 2022, the company completed transfer of equity stakes in the following subsidiaries with Cube Highways and Infrastructure. One, KNR Tirumala Infra Private Limited. The company has invested INR 160.22 crores in the form of equity and sub debt, for which the company has received consideration of INR 136.81 crores against transfer of 49% of equity stake and repayment of entire sub debt on 31 December, 2021. And now, the company has received INR 68.13 crores against transfer of remaining 51% equity stake. In addition to the above, the company shall be eligible to receive an additional consideration up to an amount of INR 14.05 crores, subject to the receipt of certain approvals from NHAI, which is...
KNR Shankarampet Projects Private Limited. The company has invested INR 126 crores in the form of equity and sub debt, for which the company has received a consideration of INR 108.51 crores against transfer of 49% equity stake and repayment of entire sub debt on 31 December 2021. And now the company has received INR 46.09 crores against transfer of remaining 51% stake. In addition to the above, the company shall be eligible to receive an additional consideration up to an amount of INR 4.61 crores subject to the receipt of certain approval from NHAI. And totally, it accounts for 1.26 times.
KNR Srirangam Infra Private Limited. The company has invested INR 78.36 crores in the form of equity and sub debt, for which the company has received a consideration of INR 131.15 crores against transfer of 100% equity stake and repayment of entire sub debt through current transaction. In addition to the above, the company shall be eligible to receive an additional consideration up to an amount of INR 15.40 crores subject to a receipt of certain approvals from NHAI. So the total value worked out to INR 1.875 crores.
Now, I would like to take -- dwell more upon the current infrastructure and road construction sector in India, starting with the key development on toll collections. The government is planning to rollout GPS-based toll collection system as a replacement of the already existing FASTag toll collections system for seamless toll payments and vehicle movement on the National Highways.
The implementation of this system might take some time. Toll collections through the FASTag system continued with a strong momentum. There is an increased vehicular momentum on the highways led by ongoing festive season, as well as an improvement in the commercial vehicle traffic owing to increased economic activity. The toll collections are expected to increase on account of the hike in toll rates, which are linked to WPI. Honorable Union Road Transport and Highways Minister, Mr. Nitin Gadkari has recently set a target to construct 60 kilometers of highway per day.
The target of highway construction is 12,000 kilometers for the current financial year. The government has recently decided to foreclose road projects, where the contracts have become unviable or the contract was terminated due to default of contractors. Many banks had their money in this -- money frozen in these projects. These foreclosures would allow 100% debt repayment to bank in case of default by NHAI.
In these contracts, the contractors will get back 100% of the equity. We firmly believe that this move will open up the funding to the infrastructure banks. The Ministry has built national highways of 3,559 kilometers on a year-to-year basis of 2022-2023 as compared to 3,824 kilometer year-on-year basis. Similarly, the awarding for the same period stood at 4,092 kilometers compared to 4,609 kilometers year-on-year basis.
Now approaching -- now coming to the key updates of the company. The percentage progress as of September 20th 2022 for HAM projects is as follows; Magadi to Somwarpet 65.5%, Oddanchatram to Madathukulam is 81.9%, Ramanattukara to Valanchery is 9.4% and Valanchery to Kappirikkad is 11.5%. During the quarter, the execution has primarily been driven by HAM projects. Out of INR 732.86 crores revised equity requirements of all the 5 HAM projects, the company has already invested INR 172.61 crores as on September 30, 2022. The incremental equity requirement of INR 560.25 crores to be infused, that is to INR 295 crores, INR 160 crores and INR 105 crores for the remaining part of financial year 2023, 2024 and 2025, respectively. You can refer to the Slide# 27 of the investor presentation for detail on each HAM projects.
I will now take you through the key highlights of the company. KNR Tirumala Infra Private Limited, a subsidiary company, has received a bonus amount of INR 8.13 crores, inclusive of taxes for early completion of the project by simply 2 days and the same was passed on to the company, which was shown in the standalone statement of profit and loss account.
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 in Q2 FY '23 and H1 FY '23, has been INR 9.87 crores and INR 21.90 crores.
Coming to order book position. As of September 30, 2002, the company has an outstanding order book position of INR 8,041.5 crores. EPC road projects and HAM projects constitute 74% of the total order book, while irrigation projects constitute the remaining 26%. Client-wise, 57% of the order book is from third-party clients and balance 43% is from captive HAM projects.
The third-party order book or non-captive order book, which accounts for 57% of the total order book position, is skewed between the state government contracts worth 42%, whereas 11% is from central government and balance 4% order book is from other private players. The total order book position is INR 8,806.5 crores, including a new HAM project. With that, the irrigation project constitute 24%, roads constitute 28% and HAM constitute 48%.
Please refer page# 32 of the investor presentation for more details. The current order book position remains healthy and provides a clear visibility of execution over the period of the next 2.5 years to 3 years. A robust order pipeline and ready DPR, detailed project report under the Bharatmala project should accelerate the projects awarding activity going forward. The company is targeting a further order inflow of INR 5,000 crores for the next one year.
I will now request Mr. K. Venkatram Rao, our GM, to present the results for the quarter and half year ended September 30, 2022. Over to Venkatram.
Thank you, sir. Let me take you through the Q2 and H1 FY '23 standalone financial performance first, followed by the consolidated financial highlights. I will start with quarterly highlights first. The revenue for the quarter grew by 12% year-on-year to INR 847.4 crores. EBITDA for Q2 FY '23 witnessed a growth of 13% to INR 188.8 crores as compared to INR 167.5 crores in Q2 FY '22. EBITDA margin in Q2 FY '23 stood largely stable at 22.3%. Net profit for the quarter was INR 107.6 crores as compared to INR 95.2 crores in Q2 FY '22, a growth of 13%.
Now coming to H1 FY '23 highlights. The revenue of H1 FY '23 grew by 16% year-on-year to INR 1,738.0 crores. EBITDA for H1 FY '23 witnessed a growth of 14% to INR 353.7 crores as compared to INR 310.8 crores in H1 FY '22. EBITDA margin in H1 FY '23 stood at 20.4%. Net profit for H1 FY '23 was INR 208.4 crores as compared to INR 168.3 crores in H1 FY '22.
Now coming to consolidated financial performance. I will start with quarterly highlights first. The company recorded a 14% year-on-year growth in the revenue from INR 842 crores in Q2 FY '22 to INR 961.7 crores in Q2 FY '23. EBITDA came in at INR 263 crores in Q2 FY '23 as compared to INR 177.5 crores in the same period last year. EBITDA margin in current quarter stood at 27.4%. Profit after tax stood at INR 98.8 crores in Q2 FY '23.
Moving to H1 FY '23 highlights. The revenue for H1 FY '23 grew by 18% year-on-year to INR 1,942.1 crores. EBITDA for H1 FY '23 witnessed a growth of 25% to INR 474.6 crores as compared to INR 380.2 crores in H1 FY '22. EBITDA margin in H1 FY '23 stood at 24.4%. Net profit for H1 FY '23 was INR 189.4 crores as compared to INR 181.4 crores in H1 FY '22.
Now coming on the standalone balance sheet. The company continued to maintain a strong balance sheet. The working capital days stood at 24 days compared to 60 days in June '22. Standalone debt as of September 30, 2022 is around INR 200 crores as compared to INR 124.75 crores as of June 30, 2022. The consolidated debt as of September 30, 2022 is INR 1,864 crores as compared to INR 1,593 crores as of June 30, 2022. The debt to equity on consolidated basis as of September 30, 2022 stand at 0.74x as compared to 0.66x as of June 30, 2022.
With this, we can open the floor for questions and answers. Over to you.
[Operator Instructions] First question is from the line of Parikshit Kandpal from HDFC Securities.
Yes. Sir, congratulations on a decent quarter. Sir, my first question is on the irrigation receivables. So can you update us on the status of the same? What is the June quarter?
Irrigation receivables as of today? Because last year we told it -- last con call, we told it is INR 850 crores. But now as of date actually, it is around INR 900 crores. So now around every monthly actually, we are getting around INR 50 crores to INR 60 crores, especially in case of BOT/HAM, we have just checked with the authority. They told that every month we will get around INR 50 crores to INR 60 crores. So, we have got around INR 160 crores as of now from the BOT/HAM for the last 3 months. So as of now, our outstanding is INR 900 crores.
And sir, what is the execution for the first quarter -- the second quarter on irrigation, revenue from the irrigation segment?
Revenue from irrigation, it is around 16% actually. Around INR 120 crores -- INR 125 crores.
INR 125 crores. Sir, is there any path to visibility of reduction because whatever you are executing is getting paid and whatever is the backlog seems to be maintained at INR 850 crores or INR 900 crores and it's not reducing. So by this year end, how do you see the debtors outstanding? And on the execution, how this INR 125 crores run rate, so how much do you intend to execute in the second half?
See, BOT/HAM project is -- the payments are out of the budget. So they have said that at present, they are restricting to INR 50 crores to INR 60 crores per month and they may likely to, as per the availability of funds, they may likely to increase. That is one. And in the case of this Package 4 and other canal projects, we have not received any payments. And our payments are very, very little because it has to be released from the normal lenders. So lenders have delayed the release of payments.
So, we are also going very slow on executing those projects. So the major outstanding is from the Package 4. We have not received substantial payment. Now, they have promised that in the next 2 months, 3 months, they are making arrangement with their lenders and [ RUC ] is also going to release some funds, they are telling. We will wait and see how they are doing. But that's why we have slowed down the execution there.
Okay. And just the last question, sir. In the balance sheet, the other current liabilities have reduced from INR 594 crores to INR 204 crores. Why is there such a sharp reduction of almost INR 400 crores here?
Because what is happening -- it contains some mobilization advances actually. As of March, it is INR 130 crores. Now mobilization advances at reduced rates is INR 62 crores. So almost INR 70 crores has been reduced there. And other than this -- what are the billing because actually, as you know that we are now working in our Kaleshwaram package, those bills are not getting certified. So that's why -- what are the -- dues to customers, it is there, that is also reduced. So that's why due to these 2 reasons, the current liability has been reduced.
The next question is from the line of Shravan Shah from Dolat Capital.
Sir, I need a couple of balance sheet numbers. Retention money as on September, unbilled revenue and mobilization advance?
The mobilization advance figure is INR 62.71 crores. And retention, you are talking...
Retention money and unbilled revenue. So last June, we said around INR 178 crores retention money and unbilled was about INR 450 odd crores.
Yes. Now retention is INR 207 crores.
And unbilled revenue?
Unbilled revenue is around INR 470 crores.
INR 470 crores. Okay. What is the consol cash balance?
Cash and cash balance is around INR 62 crores and other bank balance is around INR 190 crores. So put together around INR 250 crores.
Okay, INR 250 odd crores. Okay. So now just to -- continuing the previous questions, when we say that current liabilities has reduced and you said the mobilization advance reduced. Sir, as on March, it was INR 145 crores and now INR 62 crores. So INR 80 odd crores is from that. But the reduction is on the INR 400 crores odd. So still not able to understand why the significant reduction?
That is also -- because as you know that execution exposure, we are working but their dues are not getting certified. But as you know, our accounting is based on expenditures. We are -- accounting based on expenditure, we are accounting the revenue. So due to this, our dues in customer has come down naturally. So as of March, it was INR 348 crores. Now it has reduced to INR 95 crores.
Okay. Got it. Sir, on the guidance front now. So what's the new guidance? Last time we said INR 3,500 crores revenue, 15%, 17% EBITDA margin, though the EBITDA margin is definitely on the higher side. So what's the new target for this year and maybe for the '24, we were looking at 10%, 15% growth. So what's the number now one can look at?
Actually, [indiscernible] there is a range in this. So it is quite [Technical Difficulty]
Mr. Shravan sir, may we request you to unmute your line?
Hello?
Yes, sir. Please go ahead.
Yes. Actually, it is quite difficult to predict what's happening because even 15th November, 14th November, we are receiving rain, which has become more dilemma thing for us. But however, we are trying our best to push to the commitment, which we have given. But there have been certain backlog as of now. We'll have to see how best we can cope up in the future because the rainy season -- the rainy season started in, I think it has started in the month of April actually. It was a little bit early. Generally, in May, we used to get -- April and May, we used to get as our working season, but this time partial -- 50% of the April month has been under rains. And again, complete -- May was under complete under rains.
So, this is somehow creating huge problems because whatever the structural works and whatever we have -- we were able to do, we have done it. But once it comes to the road works part, due to excess moisture conditions and all that and approachability into the by-passes and all, it was a bit tough for us. So that's way the November -- I think you said October, November was bit problematic this time because the rainy season was continuing in October also as well in the November also, that is completely out of our planning really. So definitely, sir, we'll try our best, but I expect plus, minus 5% in this case, sir. We have to struggle a lot to get into that zone.
So let's say, if this year if you are able to do only just a 5% growth, then the next year we should be then having a 20% plus growth to cope up delayed execution in this year?
Obviously, sir, the piled up things has to be completed in 2 years' time -- 2.5 years' time whatever the project timelines are given. We'll definitely try to shift towards the completion times or we'll stick to the completion time, sir.
So just to....
It may not be possible because right now we have lost lot of working season in each project. So maybe we will try our best to push on date.
So, just to touch base....
Sorry to interrupt you, Mr. Shah.
Okay. No issues. Okay.
[Operator Instructions] The next question is from the line of Mohit Kumar from DAM Capital.
Congratulations on a good set of numbers. Sir, my first question is, how much is the executive order book out of INR 80 billion? Is the INR 21 billion from irrigation can be classified as non-moving at this point of time?
Actually, sir, what happened, irrigation part concerned, almost INR 2,000 crores worth of contracts, which are under execution, they are running in -- they used to regularly run in 3 shifts channel. Now it's going in 1 shift. And that too, we were little bit -- in the dilemma, we are running that. I think there is some positive signals that are coming up from the pump house projects. It is being considered under that loan passed. So the bank loans are getting realized in coming 10 months -- 10 days, sorry. Within 10 days we get realized, then we will try to move on with this project, as we have said.
Understood, sir. Secondly, sir, note# 5, where you are mentioning that 2 of company JV has sold their pending arbitration claims. This INR 24 crores has been recognized as part of the revenue in this quarter, right?
Yes. Correct. Correct.
INR 8 crores. So net impact is INR 16 crores on the profit in this quarter on this account. Is that correct?
Yes. Yes. Correct, correct. What you said is correct.
The next question is from the line of Vibhor Singhal from PhillipCapital.
Yes. Sir, just one small clarification regarding the last question that Mohit also asked. So in the point 5 that it is given in the notes, INR 24 crores is the number that has been booked in the revenue at a standalone level for second quarter?
Yes. Yes. Correct, sir. INR 25 crores has been added in the revenue from operation in the second quarter only. Yes.
And sir, for the first half, it is written INR 52 lakhs only.
No. No. It is not like that. It is for the 2 JVs, because we have 2 JVs; Patel KNR JV and KNR Patel JVs. So only for those JVs, you have to consider.
Got it, sir. INR 24 crores is the basically petty cash. INR 25 crores is from this number. And there is also a bonus of INR 7 crores -- INR 7.25 crores. That is point number 4.
Yes. Yes. Correct. Correct.
So totally, sir, INR 32 crores of revenue is exceptional item in this quarter in the revenue, right?
You can say. Yes, you can consider like that.
And sir, this INR 32 crores will not have any cost? This will flow straight to the EBITDA. So, this is INR 30 crores of additional EBITDA also?
EBITDA is -- directly INR 32 crores will come, but it will have the tax impacts. Tax impact is there. That's all.
Got it. So the revenue and EBITDA, both are higher by INR 32 crores because of these 2 line items.
Yes. Correct.
The next question is from the line of Faisal Hawa from H.G. Hawa and Company.
Sir, why is our tax higher this time and what is this deferred tax? And also our employee costs have also risen quite a bit. So what is the reason behind it? And sir, how do we see the order book panning out because we have won hardly any orders this whole year and we may be low on orders after the next FY?
Sir, as far as the tax is concerned, so tax is almost on the same base because if you see other -- the net tax that we have without [ deferred tax ], we are in the range of between around 26% to 27%. So tax is on that range only. As far as employee cost is concerned because this last year, actually, some of the variable pay actually we were supposed to pay to the directors, we have paid in this quarter actually. So, that's why employee cost has been increased.
So Directors' salary was pending?
Pardon me?
Directors' bonus was pending?
Variable pay actually, which is part of their salary package actually.
Okay. Okay.
So that way after our Board Meeting, it has been paid to the promoters itself. And as far as the order book is concerned, right now, we have INR 8,800 crores of order book and definitely last 1 and 1.5 years, we have not got the order, but we have [indiscernible].
Actually, as the bidding part is concerned, the market is very aggressive this time. Fortunately, I would like to quote one of my projects where I've quoted 17%, wherein I was expecting only the equipment higher as my written. The project is opened at 30% minus. So, you can understand the aggression in the market is very, very [ strong ]. At this point of time, sir, I am really -- actually, really scared to take an order from the market right now. But anyhow, sir, we are trying our best in different areas like Kerala.
Again, I'm striking because lot of bids are coming from Kerala as well. We were even thinking certain bids to be placed in Northeastern part of India. Even we are open to do north part of India also, even Maharashtra. Even -- there are certain projects. The Bangalore-Hyderabad highway has also started for tendering. And certain part of projects which are Vijayawada-Hyderabad highway is also coming up and Vijayawada-Amaravati to the Bangalore highway is again connecting.
So, there have been lots of greenfield highways, which are coming up right now. And I think they are on the tendering, but because of that Green Tribunal clearance is not there for these projects, I think the tendering process is getting delayed. I think you might have seen lot of tenders, which are there in the November month, but subsequently every day, they are getting postponed.
So, I think they may happen in the month of Jan, Feb, I think. I'm even doubtful in the December because that Nagari project must be knowing that Nagari to the TN border, which Chittoor-Thatchur Package-3. That is there with us, which -- because of the -- the land acquisition is done now. I think around 70% land acquisition is there. But because of the Green Tribunal clearance is not there, so they stopped to issue the appointed date. Otherwise, this would have been added into the execution, would have given me a little bit -- little more comfort in achieving my targets. Yes, sir.
Sir, do you feel that the interest cost will go down from the next quarter onwards because now the Cube money has come and we have almost reduced all our loans? And on a consol basis, we may be now even debt-free in the next quarter. So the interest cost will go down in next quarter?
Yes. We expect that by this quarter, it will go down, but we are definitely waiting for the receivables from the Telangana. So if receivables are coming, then definitely we have more control on that. But as far as this quarter is concerned, it is definitely going to be reduced.
We have 3 projects. INR 1,200 crores loan will almost go out of our business.
Okay. So consolidated we may be debt-free on 31 March, 2023?
Yes. Almost. We will have data for Muzaffarpur, Barauni and [indiscernible].
And is there any progress on selling of that Muzaffarpur-Barauni project also?
Sir, actually, the selling may not be possible, sir. I don't want to keep anyone in any dilemma. Because you know, soon after the things are that the documentation is coming, it is only our bad luck that separates, which is connecting the Patna and this section has been under repair for a long time, I think, almost 2 years, 2.5 years the revenues are down because of that.
I think earlier it was clocking almost near -- INR 30 lakhs per day it was touching, which has now come down to INR 9 lakhs to INR 10 lakhs, which is above our expectations and we are now in control also. Another 1 year, 1.5 year, they are saying that we have to wait for to the update to -- for the heavy -- I think it's opened for the small moving vehicles, but it is not for the goods vehicles.
Sir, how many claims are totally pending now? Totally....
[ 100 ] from the commercial vehicles only.
Sir, how many claims are pending now sir, totally? How many claims are pending totally now? Towards NHAI, what is the total amount of claims pending and with arbitration as on date?
INR 500 crores almost.
Plus interest?
Including interest.
The next question is from the line of Veenit Pasad from Investec.
Sir, sorry to harp back again on the current liabilities bit. Just wanted to understand a bit better whether the dues to customers' line items, which we report, is it akin to the trade payables or how does the accounting really work?
[indiscernible] the customer is accounting like that actually, because you know, our accounting systems is based on expenditures. So what are the expenditure we are doing, plus whatever our expected margin for the project, that we will recognize in the revenue actually. Suppose some certification is not happening, in case, sir, whatever the difference is there, it reflects into due to customer and due from customer. So based on that -- because last March actually, it was actually more due to customers were there, but now a lot of work we did actually in the irrigation project basically. Even Q1, we did good work, around 35%. Definitely Q2 is only 16%, but there is not much certification of the bill. So that's why our due from customer as -- due to customer has been reduced actually. And it has gone to due from customer. So, this is our accounting policy. And if required, we will have a separate discussion on this actually.
Sure. Sure. Sir, I'll touch base with you separately on this.
Yes.
Sir, secondly, if you can spell out, you mentioned about bidding being aggressive. But is that the case even for HAM projects or it is predominantly for equity ones?
Pardon, your question? Your voice is little bit not clear actually.
Sir, I was asking about the bidding and the competitive intensity. You answered to one of the participants stating that bids continue to be aggressive. Is that the case even for HAM projects, or it is predominantly EPC and....
It's on the same. And HAM projects, I think we are expecting some modification of the bidding criteria to come anyway. But the competition is for both. [indiscernible] is on both.
The next question is from the line of Alok Deora from Motilal Oswal.
Sir, just a follow-up question on the aggression in the bidding. So, sir, what order inflows you're targeting now for this year considering the bidding environment, which you yourself mentioned is very aggressive? So what's -- and even from the road side, we have not seen any major orders being awarded. So what's the outlook, sir, on the order inflows for this year?
Sir, actually, looking at our programs, internal programs, our growth strategies, we would be targeting to get around INR 3,000 crores to INR 4,000 crores order inflow in coming year, full year. This is our target, sir. And more or less, we are placing bids. Definitely, as I earlier told you that market is very aggressive and they are taking at a wrong price. For me it is wrong, but I don't know they might be feeling that it is workable for them. We will have to see, sir, because time will tell. Nobody will be able to gauge it as of now. And as of now the -- even in structure, that new quoting in place, where the cost of structure -- each structure is going up by 30% and sometimes 20%, sometimes 30% than the normal quoted provisions. So with all these difficulties, definitely, the cost of the projects should go up. There is no doubt. But going down to 30%, 25%, 20% levels, which is not a healthy sign, that is happening in the industry.
Really, if any company picks up a project there, okay, sometimes it is viable, but sometimes it is -- most of the times it is not. Earlier cases we have taken some projects at 25% and we have completed successfully with profit. But it is not the case for every project to be like that. So proper estimates and proper ideology, proper designing should go in to each bid, then only things will be clear for us. And the bidding pattern, how people are taking up because maybe I think -- because of that eligibility norms, which have been -- the Government of India has liberalized, I can say the word liberalized is right, because any irrigation projects people they can bid -- any person who is coming from building project sites, they can come and bid on to roads.
But whereas if I want to go and bid in an irrigation project, they will ask me a similar work you have, then only you're eligible. So the industry is heading in a wrong kind of stage. So that's how many number of players are coming to this place and they really don't know what is the rule. And they are placing the bids, which is creating to me havoc in this market, sir. This is my opinion. I don't have any sort of -- I think I'm not trying to say someone is doing wrong or something, but it is -- to me, it is my opinion.
Sure. And, sir, so people have been talking about the aggression coming down and especially in the road projects. So in your opinion, you have not really seen any sort of a aggression slowdown?
Actually, I think I was the one -- which I have told you in the last meeting.
Yes. Correct.
Last same con call, I told you that aggression is coming down because I have seen very few bids, which have come down when I was attending before I think in the meeting. I think 1 week ago, I have seen 2, 3 projects, which have gone at a very reasonable price and they were even near equal to my workings also. But then I was thinking market was going up. But recently whatever the bids are opened, and -- I'm not even alone. I mean in somewhere in the lodge. So where I'm now thinking -- and I recalculated. See, sir, once I fail in a bid, definitely what I do, I come and do a home work where I have done something mistake.
Really, am I going somewhere wrong? Am I not catching up the market because of the new conceptual designs? Or am I not trying to take the latest concepts of construction methodologies, by which I am not cutting costs and everybody is cutting the costs. So, we have really engaged the consultants and top notch consultants and we are seeing. Everything we made a trial. Then after that, the conclusion is my conclusion. I'm not saying the market conclusion or someone's conclusion. According to me, market is at now -- strong aggression is going in the market now.
Sure. Just last question, sir. So, sir, irrigation projects, you mentioned about INR 50 crores, INR 60 crores you're receiving every month. So how we'll see the execution now here? Are we looking to execute nearly a similar run rate in the coming months? Or because -- just some outlook on how the execution in the irrigation will proceed from here?
Sir, that is happening. If the pump house projects, as I earlier told you that around -- the pump house projects outstanding is about, say, INR 350 crores is there. Now, I think INR 300 crores is under consideration. If we get this payment within 10 days, definitely, things are going to be streamlined. And I am bit confident of achieving the targets also. But here the thing is, my gut feeling is everything should go well actually because the department is -- I think that 4, 5 days back, they've been informing us that, yes, you can go ahead with the project because the project is getting admissible into the bank loans.
So one of the good news, which we are thinking, but unless we realize the payment, we cannot believe these guys. If the department, they say everything, but nothing was coming through all these days. So definitely, we were going in the same phase of -- out of 3 shifts, we are working on 1 shift and trying to keep. And whatever the payments they are giving us, the same thing we are putting back also. It's not that we are utilizing for some equity investors or somewhere, nowhere we are investing. We are again investing back to the same old projects. So that also we have highlighted to the department. You give money, same thing we will put back.
BOT/HAM project, I think INR 60 crores we are getting. Every month we are getting. I think it will get closed maybe in other month, 2 months, 3 months' time at least.
The next question is from the line of Parvez Qazi from Edelweiss Securities.
Yes. So first is, for the Chittoor-Thatchur project, by when do we expect to get the appointed date?
Pardon, sir? Chittoor-Thatchur, sir, actually the land acquisition is concerned, the achievement is about 72% that we've achieved as of now. But we were ready to take it also because we have continuity for 50% of the road highways. I think there has been certain -- actually land payments were given, but there is some crop cutting payments are not given. So there -- those things also we are considering for 80% thing, where crop payments and that can be -- if they have not given, at least we can proactively pay them and get that things done. So with that gut feeling, we have approached the department that, okay, we will take the appointment date. But department, now they say that they don't have the NGT clearance. So now, I think NGT clearance is awaited in, say, by month end. We will have to see, sir.
Got it.
Another thing is now the rainy season is started, Chennai and everywhere, it is completely rainy. So the complete greenfield highway is where complete efforts are in place. So initially, I need a dry time also. So even if December passes away, it doesn't matter. But if they give us in first week of -- very early weeks of January also, we will be completely doing it for 3 months to catch up into this last quarter.
The next question is from the line of Nikhil Abhyankar from DAM Capital.
Sir, in continuation to the question earlier regarding the irrigation segment. Sir, are the payments going to come only if the lenders approve the loan to the government SPV or the government is also willing to put in its money to the payments?
Pardon. Pardon, sir?
Sir, the payments are going to come only if the lenders approve loans to the SPV government, SPV or....
Yes, sir. If lenders are -- I think lenders are accepting what -- that's what is informed to us by the department because, definitely, we don't have an access to these bankers also. So, we'll have to rely upon these guys. I think within 10 days, if we are getting paid, then definitely, sir, we'll inform you that we are getting paid, then this will become okay.
And sir, any specific reason why it is delayed, the approval?
Sir, actually what happened, earlier the dilemma was that whatever the pump house we are doing, this is coming under additional provisions, additional capacity. But the irrigation department says that, no, this is not an additional capacity, this is well within the schematic project earlier planned. So that's where the department needs to give some technical explanation to bankers and everybody and convince them to get the loan. As it is -- earlier it is approved. Only the Central Government intervention, they've stopped it. Now everything -- if they convince them, then things are getting okay. So once they inform that it is being considered by the banks, so we can hope something on it. But unless we receive, we will not believe anything out of it. There is no doubt in this, sir.
Understood. Sir, can you just mention the order pipeline for H2 FY '23 and the quantum of bids, which we have already bid for?
Sir, actually, we have bided almost -- INR 3,000 crores is now bided in the Kerala state itself, which is yet to open. They have not opened the tender. I think another one is there in this -- in Telangana, they've opened all the tenders. No. We didn't get any money. So only one is there. Bangalore-Vijayawada. So, I think INR 4,000 crores is under -- yet to open kind of thing.
Sorry to interrupt. May we request Mr. Abhyankar to please rejoin the queue. We have participants waiting for their return.
The next question is from the line of [ Ash Shah ] from Elara Capital.
So could you just provide some update on the IT department raids that were -- so in the last -- department will submit some appraisal report, and then probably they might come for -- they might clear out the matter. So if you could just provide some update?
See, we are yet to receive any notice from the department. We understand that whatever the initial investigation was done, they have submitted the report to the respective assessment division and the assessment division is yet to -- they are studying and the notice has not yet come. Unless otherwise the notice comes, there is no obligation on our part. Then we will act accordingly.
Okay. And there was one more thing. So if I see your opening order book for this quarter -- under closing order book, the execution amount comes out to INR 544 crores, whereas the revenue that we have booked is around INR 820 crores without the additional one-offs. So could you just provide the difference? I mean why such a huge difference?
Because, sir, as I told you, because our turnover is based on our expenditure actually. It is not based on the difference of order book. So what has happened in this quarter actually, we did actually work for other projects actually where bill has not certified. Especially in the irrigation, we did around 16% of work, but there is no certification in the irrigation. So that's why the difference is due to that reason.
The next question is from the line of Prem Khurana from Anand Rathi.
Yes. So again on irrigation only. So, I understand, I mean Kaleshwaram 4 is kind of funded project and there is a lender in place. But I think Kaleshwaram 3 -- so the payments were supposed to be released by the government from the budget. So any commitments from the government authority on Kaleshwaram 3 because it is not that they need to rely on lenders to be able to fund the project? I mean, essentially, it was supposed to rely on the budget only. And we used to have some issue in terms of work front with this package, right, earlier. So has that been resolved?
Definitely, Package 3 is through budgetary support. But as I already, we told you, we are following the department and department has promised every month at least INR 50 crores, they will release. Right now, actually they are considering the BOT/HAM actually and they are releasing that payment. And once BOT/HAM liability will clear, definitely we'll push for this Package 3 also with them actually. So definitely because we have to also see how department is working through. So, definitely we are expecting that after this BOT/HAM will close, we will start working on Package 3 also and try to receive the money like that. That is one.
Sir, land time if it either...
3 actually. Because Package 3 is most of the canal work. So out of almost -- around 50% land is there. So on that we are doing the work actually.
Sure. And sir, possible to share, I mean the order backlog that you gave in your presentation, is it possible to kind of break it down project-wise in the irrigation projects?
Yes. You can ask. We can provide it.
Sure, sir. I will take it offline.
The next question is from the line of Uttam Kumar Srimal from Axis Securities.
Yes. Sir, what is our CapEx guidance for FY '23 and FY '24?
Actually, as far as CapEx is concerned, this year we did around INR 75 crores of the CapEx, up to 6 months. So in this quarter, we did around INR 15 crores of the CapEx. And we expect that there may not be much requirement for the CapEx. If any project is also coming, it will take at least next year to start. So this year guidelines will be somewhere around INR 100 crores to INR 120 crores is the maximum CapEx that we are going to.
And sir, for next year?
Pardon, sir? For next year? So next year definitely, based on this -- how the project is coming, we have to just work. Because we know that already 6 months is over. If any project is coming also, definitely that is not going to take off in this year. So it will take off from next year only. So next year capacity based on the -- when we will receive a project, we will work out and we will inform accordingly.
Okay. And sir, what is our current tax rate?
Current tax rate, we are in 25% tax regime. We have opted the new tax regime.
The next question is from the line of [ Devansh Goenka from Fusion Clothing ].
I just wanted to understand the Bharatmala project of the government. Do you foresee more project wins coming through Bharatmala?
Yes. The government is planning to add more projects under Bharatmala. They have done the project report also and the minister also has given a statement that they are planning some 12,000 kilometers. The only thing is that we have to wait for them. They have to arrange for the clearance of all this, ROWs and other things and also the funds by NHAI. And we hope that it should come forward before the next November, because the November is the set up line. Before the election, they have to release all the orders. So it should come definitely.
And just 1 more question. I just wanted to understand your margin -- operating margin outlook for the next quarter -- the next financial year, if you can give some guidance on margins?
Sir, margins will be -- this half year, we did achieve around -- if you take out this extraordinary item, we are at somewhere around 18.5% to 19%. So, we expect that we should be able to maintain that between 18% to 19% margin for this year. And next year also, we will try to maintain the same.
The next question is from the line of Shravan Shah from Dolat Capital.
Sir, just wanted to understand a bit more in terms of the individual specific projects. So 2 Kerala HAM projects, the big one, close to INR 2,992 crores. So INR 3,000 crores order book is pending. In the first half, we have done close to INR 261 crores execution. So how do we see our execution in the second half? And previously, we are looking at around 40% execution in this year. And the next year, how do we see the execution from this particular 2 HAM projects?
Sir, definitely, initially we told that around 40% we'll do, but you know that this year due to these incessant rains, we could not able to achieve that. And as of now also, Kerala, till October end actually it was raining only. But definitely, we have now rest almost 4.5 months. So, we will try. If there is no rain, definitely we will try to achieve that and we are expecting in the second half, we will do definitely most of the turnover from these 2 Kerala projects. So, we are targeting towards that only. And definitely next year, we will be used -- actually, next year we will be almost...
Backlog whatever is there.
So mostly by next year, we will be completing these, both the HAM projects?
Yes. We have time till January actually, '24. July 2024, we have time. So definitely we will try to -- March '24, we will try to -- definitely we will try to do that. Because we have to see -- yes, we cannot say as of now because of rains. Provided it's not rainy -- unseasonal rains also.
True. True. Second is on Avinashi Elevated Highway. There also we have a INR 758 crores order book. In the first half, we have done only INR 50 odd crores. So how do we see? And what's the completion deadline for this?
Avinashi Elevated Highway? Deadline?
Avinashi Elevated Highway.
Yes, sir. Actually, another 2 years is there. I think we will complete it.
Okay. So this first half we have done only INR 50 odd crores. In the second half, we will -- how much we are expecting to do?
Sir, actually every month, it is clocking around INR 35 crores to INR 45 crores, sir, little in between. Recently we have added one more launching system. Due to that another INR 10 crores to INR 15 crores is likely to go up. But, however, this will be from December only, not from February. [Technical Difficulty]
Sorry to interrupt you, sir.
[indiscernible], we have added in the November. I think -- so those will come into operation will be in December.
Okay. Okay. Okay. Got it.
I think because it is not regular schedule timing, sir. We are achieving every milestone [ which are fixed ] by the department. In fact, actually there have been certain hurdles in the department side also. There have been some obligatory foundation places, they are not able to provide us because there is a thick traffic that is moving around. So they are making some alternate arrangements. They say they will need time. They need arrangements. They never gave us that position around -- those foundations are still pending. And they are coming on the way. So you know that launching system, once it is hurdled, at least it will take 25 days to 30 days to ship the launching facility to the other locations. So, that's where we are losing the time, which we were highlighting them also. It's completely departmental [indiscernible] bailing us.
The next question is from the line of Bharani Vijayakumar from Spark Capital.
Yes. So, this reduction in these liabilities to the tune of INR 300 crores, INR 400 crores, due to the delays in certifying bills. So when would it be reflected in the P&L? That is when would the revenue corresponding would be recognized?
The revenue is recognized already. It will, again, the balance sheet entry. Once this certification will come, so accordingly, this is due to customer and it will at the same time due to us. Revenue is already booked. Based on expenditure, revenue is booked. And now if certification is happening, based on that, our due to customer or due from customer will be accordingly adjusted.
So now what will be the adjustment that will happen, it will be due from customers?
It will be around -- in irrigation around INR 450 crores will be there. So that certification is pending to that INR 450 crores. So INR 450 crores will be released in our order book exchange.
Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
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. We can now close the call. Thank you.
Thank you.
Thank you. On behalf of KNR Constructions Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.