NCC Ltd
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NCC Ltd
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Ladies and gentlemen, good day, and welcome to the NCC Limited Q2 FY '25 Earnings Conference Call hosted by JM Financial. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Shah from JM Financial. Thank you, and over to you, sir.
Yes. Thank you, Darrin. On behalf of JM Financial, I welcome everybody to 2Q FY '25 Earnings Conference Call of NCC Limited. We have from the management today, Sri R.S. Raju, Director Projects; Sri Sanjay Pusarla, Executive Vice President, Finance and Accounts; and Sri Neerad Sharma, Head Strategy and Investor Relations. I will hand over the call to the management for opening remarks, and then we can have a Q&A session. Over to you, sir.
Thank you. Thank you very much, Vaibhav. Good evening, everyone. At the very outset, I thank each of you for taking out time to attend this interactive meeting. I have with me my colleagues, Mr. R.S. Raju, Director Projects; and our CFO, Mr. Sanjay Pusarla.
Today, we have declared our results for the second quarter of the current financial year. Hope you had an opportunity to download and study the results and the investor presentation that we have uploaded on our website and shared with the stock exchanges.
Before I begin the interactive meeting, I will read out the disclaimer. This presentation may contain forward-looking statements concerning NCC's future business prospects and business profitability, which are subject to a number of risks and uncertainties, and the actual results could materially differ from those in forward-looking statements. The risks and uncertainties related to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings; our ability to manage growth; competition, both domestic and international; economic growth in India; and ability to attract and retain highly skilled professionals; time and cost overruns on contracts; our ability to manage operations, government policies and actions with respect to investments, fiscal deficits, regulations, geopolitical risks, interest and other fiscal costs generally prevailing in the economy. The past performance of the company may not be indicative of the future performance of the company.
This interaction is broadly divided in three parts. In the first part, I will talk about the brief business environment and the prospects of our company. In the second part, I will request our CFO to give a detailed presentation on the financial performance of the company. In the third part, we will attempt to answer all your questions and clarifications.
We are seeing a very healthy pipeline of future prospects. As we speak, we have a prospective project pipeline of more than INR 2,10,000 crores. We are currently sitting an order book of INR 52,370 crores. I also take this opportunity to reiterate the guidance that we have shared with the market participants. The first guidance that we have shared with the Street is order inflow of INR 20,000 crores to INR 22,000 crores, revenue growth of 15% upwards, and EBITDA margin of 9.5% to 10% in the FY '25.
Now I will touch upon very briefly on our important divisions. In our Buildings & Transportation division, we continue to see good traction and healthy pipeline of projects. We are setting an order book of INR 19,480 crores -- INR 11,151 crores. That is about 21% of our total order book in the Transportation division. The third largest division that we have is our Electrical division. In this division, we have an order book of INR 10,931 crores as of September end, which is about 21% of our order book. The fourth large division that we have in our company is our Water division. It has an order book of INR 6,071 crores, which is about 12% of our total order book. The flagship scheme of Government of India, Jal Jeevan Mission that has been launched in partnership with the states, continues to be in full operation. This scheme has been planned with an outlay of INR 360,000 crores. And this scheme has been given a very healthy allocation of INR 70,163 crores for the current financial year by the government of India.
Now I will hand over to my CFO, Mr. Sanjay Pusarla to talk about the detailed financial performance of the company for the current financial year. Hand over to Mr. Pusarla.
Thanks, Neerad. Good evening to all of you. This is Sanjay Pusarla, CFO from NCC Limited. I am pleased to announce the financial results of Q2 of financial year '25. My announcement will be in the order of order book, revenue, profitability, debt movement and some of the important balance sheet metrics. To start with order book. Our order book stands at INR 52,370 crores as of the end of September '24. As you're aware the order book at the beginning of the year is at INR 57,536 crores and orders received during the H1 is INR 5,168 crores, of which Q1 includes INR 408 crores, and Q2 includes INR 4,760 crores. After execution of INR 10,334 crores of work during the first half of the year, the order book stands at INR 52,370 crores.
Coming to the revenue. So we will talk about the stand-alone. The budgeted turnover for the quarter is INR 4,857 crores. And against this we achieved a turnover of INR 4,445 crores, which is 92%. And against 6 months, that is period ending September, we achieved a turnover of INR 9,158 crores as against INR 9,362 crores, which is almost 98%. When it comes to consolidated, the budgeted turnover for the quarter is INR 5,425 crores. And against this, we achieved a turnover of INR 5,196 crores, which is 96%. And against 6 months, that is ending September '24, we achieved a turnover of INR 10,224 crores as against the budgeted turnover of INR 10,545, which is 102% of the budget.
Next coming the profitability. .
At the stand-alone level. We achieved a gross margin of 15.15% for Q2 as against 11.7% of the corresponding quarter of the previous year. And for H1 '25, we assumed a gross margin of 14.96% as against 13.44% in H1 of the previous year. At the consolidated level, we achieved EBITDA of 9%, and EBITDA of 4.9% and PAT up 3.6% in the current quarter Q2 has against EBITDA of 6.5% and PBT of 2.3% and PAT of 1.6% of the corresponding quarter. The main reason for the reduction in the Q2 of FY '25 compared to Q2 of FY '24 is on account of lower turnover in our Water projects, UP, as explained by Mr. Neerad before due unprecedented rainfall, lower turnover in one of the project Malad project in Maharashtra due to the rains and also granting up approvals, and a delay in the granting of permissions for cutting the [indiscernible] there and also lower turnover in the smart metal projects.
So coming to the debt movement. So the debt at the beginning of the year stood at INR 1,005 crores, that is INR 1,005 crores, and net debt after cash and cash equivalent is INR 518.36 crores. As at end up Q1 we stood at INR 1,820 crores and net debt at INR 1,679.56 crores. And at the end of the Q2, the same is standing at INR 1,732.70 crores, and net debt is INR 1,624.36 crores. There is a reduction in debt levels by INR 87.03 crores compared to the earlier quarter. The debt-to-equity ratio stands at 0.25 at the end of Q2 as against 0.26 at the end of Q1.
Coming to working capital. Working capital at the end of Q2 stands at INR 4,987 crores, which is 27% of the turnover. And in terms of working capital days, it is 87 days, and it is calculated after excluding cash and margin money deposits.
Coming to the debtor. Outstanding at the end of Q2 has come down from INR 3,654 crores at the end of Q1 to INR 2,793 crores, and the number of days also has come down from 85 days to 65 days in the current quarter. The unbilled revenue stands at INR 5,220 crores, which is 29% of the revenue for Q2 as against INR 4,790 crores at Q1. The reason for increase in UP projects, where we have bill them about INR 400 crores in the next month, that is October and realizes the money also. The mobilization advances stood at INR 2,096 crores as against INR 2,417 crores in the previous quarter, showing a recovery of mobilization advanced by the by INR 321 crores. This is also another reason for increase in our debt levels. It is standing at 11% of turnover as against 13% of the previous quarter. Of these mobilization advances, 81% are interest-bearing, and average interest rate comes to around 9.5%.
Coming to the CapEx. We have incurred a CapEx of INR 143 crores in the current financial year, up to end of September '24. So next coming to the investor-related ratios. The ROCE stands at 13.61% as against 14.04% at FY '24 end. against PBT is 14.02 as a against 13.88. net worth against PAT is 10.44 as against 9.62%. EPS stands at INR 5.8 at the end of Q2 for March -- that is the year-end, it is INR 10.10. Book value per share is at INR 112 as against INR 108.50 at the financial year, '24. With this, I conclude my presentation on the financials for the quarter 2. Thank you. Back to Neerad.
Now we will take all -- any questions, clarifications that you might have.
[Operator Instructions] The first question is from the line of Shravan Shah from Dolat Capital.
Yes. Sir, just to recheck, you are maintaining the previous revenue and EBITDA margin guidance I understand. So just to recheck on that. So if I look at a 15% revenue growth, we need a 17% plus kind of revenue growth in the second half. And in terms of the margin level, we need at least 9.7% to 10% kind of EBITDA margin in the second half. So are we confident that we will be able to do that?
As now the guidance what we given in the beginning of the year, and we are still confident to achieve the guidance what we've given. As far as order book guidance is concerned, we have given about INR 20,000 crores to INR 22,000 crores. So though the order book in the first half year is lower than what we supported to do, but the kind of the pipeline of the giving a good confidence to us to achieve this INR 20,000 crores or INR 22,000 crores. Even there is a good visibility to surpass the limit what we've given for the order booking. As far as invoice booking is concerned as -- in the first half year, we achieved 13%. But you know already we explained in the -- particularly in the second quarter because of the rains and floods, we couldn't achieve because of the difficulties happened because of the heavy rains in the season. So in the second half -- so whatever second half -- 15% is there, we easily achieved, but the 2% whatever is there now the backlog, that also we are confident we achieved also. And ultimately, we are -- at this moment, we are confident to achieve 15% guidance what was given for the invoice looking. As far as EBITDA margins are concerned, as we've given 9.5% bottom lower band. And in the first half year, we achieved about 9.2% in EBITDA. So in the second half, we are sure to achieve 9.5% lower band. But what our backlog is there for the first half year, the 0.3 is now -- is to be seen that how far we are able to to achieve 9.8% or 9.9% to make it as 9.5%. But we are -- at this moment, we are at 9.5% in the second half year.
Okay. Got it. Just to clarify, sir, in terms of the order inflow, including the October 1 is, I think, INR 8,660-odd, and L1 is how much sir, INR 8,700-odd crores?
The total L1 value would be as of September end would be -- let us say that they are close to more than INR 9,000 crores. Shravan. if I may add one point. You talked about the submissions that we have made for the month of October. If we really add these two numbers, we have already achieved about 41% of the lower band, the -- if you really include the announcement that we have made for the month of October, the total order book is INR 8,256 crores, which is about 41% of the lower band. So we are on the journey. And I think we don't see any reason to revise the order inflow guidance that we have shared with the Street.
Okay. Got it. Sir, just a couple of data points just to get it from you. One is how much is retention money and loans and advances and the investment in subsidiaries and associates? So exposure to associates and subsidiaries, is how much?
Investments, there is -- from the previous quarter, it is now standing at INR 1,034 crores against INR 1,033 crores of the previous quarter. And the loans now standing at INR 781 crores as against INR 361 crores of the previous quarter, about INR 20 crores increase. Inventories INR 1,469 crores against INR 1,304 crores.
Sorry, I have that. I need retention money.
Okay, retention money, we have INR 1,583 crores against INR 1,532 crores. .
In quarter 2 -- in quarter 1 and quarter 2.
And the base level previously we mentioned, by end of the year, we will be reaching to INR 500-odd crore versus INR 1,730-odd crores, so that stands remains the same.
At this moment, that stands. There's no change in that one
Net number. INR 500 crore. As you are aware, the collections are good in the fourth quarter. And this is what makes us believe that we should be able to hit that number.
The next question is from the line of Mehta from LKP Securities.
As there's no response from the current participant, we will move to the next question, which will be from the line of Parth Takkar from JM Financial.
My first question is what is the -- what are the outstanding receivables from AP? How much recoveries are we expecting in which projects?
As far as AP projects are concerned, there are two categories. One is Capital City projects and other category is running projects. So we have received nearly INR 220 crores in the last 2 months from the AP government towards the running projects. As far as Capital City projects are concerned, the outstanding is about approximately INR 150 crores is there. That also, we expect to receive, there is a good movement and the discussions going on with the client. And before March of this fiscal, we expect to receive that amount. As far as any other points, you have on the AP projects?
My other question is, can you help me understand what is the pending Real Estate planned that is sold in Vizag?
Can you repeat your question, please. You are not fully audible. If you could please repeat your questions, sir. I think you're talking about Vizag real estate deal.
Yes, yes, yes.
Yes. So what remains to be received from them, we have received most of the payment. What remains to be received is about INR 33 crores. This is what we had disclosed in the last quarter. But we have already received about INR 23 crores. What remains to be received from them is, let us say, the negligible amount of INR 10 crores. And with that receipt, it is also important to understand that we have received the full payment as far as the equity portion of that project is concerned. Another INR 15 crores from the loan given to them. And that loan is an interest-bearing loan. And they started paying the loan amount, since there is some process, some sales are happening, out of that, the contribution of what they receive, they started paying the loan. About INR 15 crores we received in the last month.
[Operator Instructions] We have the next question from the line of Prithvi Raj from Unifi Capital.
Could you give some color on in which geographies are you seeing higher projects that are being divided? Is this central government? Is it state government? Can you show us some color on what kind of projects are you getting?
Are we getting? Mr. Prithvi, are you asking about the projects we are getting or
That's right. The projects which are in the pipeline and which are being awarded now.
See, primarily, we are getting projects -- we have shared 1 slide. I would encourage you to download and see this slide. But we have -- we have received a few projects from the state of Maharashtra. We have also received a few Jal Jeevan Mission project. Going forward, we expect a very healthy pipeline of projects, more than INR 2 lakh crores to be exact, 2.1 lakh crore pipeline of projects to come up for bidding. Primarily, it will come from four divisions, Buildings, Transportation, Water and Electrical T&D. And we might get a few projects in the irrigation and mining as well.
Got it. And then one specific question on AP. Are you seeing any traction there, when you're having conversations with the state government?
We are hopeful. They have initiated the whole process. And we have been given to understand that the previous project, they are planning to close, and they will start the process of awards soon. So as per the information that has been made available to us, it should -- we should be able to see concrete action by Q3 or Q4 of the current financial year.
The next question is from the line of Parikshit Kandpal from HDFC Securities.
First question is on the prospect pipeline. So you said that INR 2 trillion, almost INR 2 lakh crores for the business, I understand for the next 6 months, right? .
Yes. But maybe a few states difficult to predict subject to the elections. You are aware that elections have been announced in 2 of the key states. But yes, overall, in the 6 months or this could also spill to 9 months also, depending on the new government that comes to the power, their priorities, their preferences.
So you said that you've already got the financial year till date about INR 8,256 crores, and you are sitting L1 in INR 19,200 crores. So approximately, you have INR 17,000 crores plus kind of projects already in the kitty, right?
That's right. yes. .
So balance INR 2 trillion, when you are bidding -- so typically, when you look at your historical bidding ratios, so what kind of conversion have you seen? For the rest of the year, when we are targeting, so INR 20,000 crores INR 22,000 crores, do you think there's a possibility of this number exceeding like INR 30,000 crores of inflows given that you're talking about a very large number of INR 2 trillion for the rest of the year?
Yes, two questions. The firstly, there is no fixed percentage. It really depends on the lumpiness of the contract. Generally, this number would vary for 10% to 15%, anywhere in that range. It really depends on the lumpiness of the contract. What I essentially mean by that is, let us say that there are a few very large projects, INR 25,000 crores, we have seen, very big projects like bullet train. So big packages. If we win or lose, this will change the percentage drastically. So this is the range that we have seen in the past.
So 10% itself will mean around INR 20,000 crores. So that means, I mean, are you targeting almost another INR 20,000 crores of free flows for the rest of the year?
But we are not very sure whether that will really get converted into contracts or not. You have seen that there is a delay. There is a timeline between L1 and the formal award of the contract receipt of the LOA. So it is really difficult to predict a timeline. This is not something that is really in our span of control. This is a call that our client has to take. We have seen in the past that the L1 announcement is made, and it takes a substantial amount of time to receive the LOA. So that is the reason we want to be a bit on the safer side.
Okay. So just on these advances, loans. Now a equity portion has come in from the AP project. Now how much is -- sorry, I could not get what is the total quantum of loans which were there and how much we have received? And what is the timeline for the balance, sir?
I think the loan is close to INR 477 crores, which is expected to be paid out in the next 2 years. We have just received the first
No, no, no. It is 330 plus 160, or 384 crores including the interest, that is outstanding. We said we have already received around INR 15 crores, and it is expected that we will receive the balance money also in the next couple of years. As Mr. Raju, as said before, there is a traction going on there. And now the sale is also happening, and we are expecting that the market will improve there because it is near to the airport, which is coming up in Visakhapatnam. So likely that the sales will happen. And we also have an understanding with them, whatever sale that happens that they have to share the money to us from...
Yes. Escrow mechanism in place. Whatever sales happens will go to the escrow account and we will get paid. The time frame is 2 years, 2 to 3 years.
INR 384 crores is right now the current outstanding, right, after you have received the INR 15 crores?
380.
Okay. After receiving the INR 15 crores, which you spoke about. .
After that we received INR 15 crores. That means it is INR 365 crores is the outstanding.
Okay. Sir, just on the Building segment. So just only in the Building segment, if you can help us understand how much is -- is it all the government projects or do you also have some private projects, private residential projects in that?
There is some projects from the private sector as well. There are some data centers from the 1 of the leading power producers. We have some contracts in the Building division from the private sector as well.
But you're not looking at adding more projects on the private sector because given that we have a strong presence in the Building segment and there is shortage of good quality contractors in the private real estate, which is now doing well. So do you think there is an opportunity for us to again look at that segment and add incremental orders?
We are always open to look at the private sector contracts in the Building space. It depends on the -- what kind of projects are coming, what is the value of the projects, what is the location of the project, who is the project proponent. Depending on that, we do a thorough risk assessment and then decide whether to bid or not.
Okay. But are you in talks with developers, leading developers like Tier 1 developers, I mean, are they considering you for their projects like, residential -- private residential?
You are right about our participation in the private sector, and we have internally taken not to participate in the private sector. Only in exceptional cases where the client is good, where the business relationship is there. So only in exceptional cases, after evaluating thoroughly about the clients, our private clients, performance and payments, then we are entering. That's why the order book is also not much. It is hardly 2% to 3% of the total
Okay. So just one more question. I mean, we have a very strong balance sheet. Now you've settled some claims, you received some money. We are receiving the real estate monetization money. So we're talking about INR 500 crores of debt by this year end. But when I look at the order inflows, I mean, you talked about very robust prospect pipeline of INR 2 trillion. You've already got INR 17,000 crores, and potentially if your conversion at the lower end happens, you are looking at another INR 20,000 crores for the rest of the year, even if it sits in L1. So in the past, we have had the best year in order inflow was about 27,000. We have been doing 25,000 to 27,000 for some time. But do you think now the time has come given the balance sheet is strong, now this can be really taken up because we are a very diversified player and can this number now start going up much higher like if you are able to convert this year, it could be potentially close to about INR 35,000 crores, INR 40,000 crores of Even if sits in L1, do you see you have that scale and capacity now to execute those that kind of scale?
Yes, you're right on the point of view. And in the same -- similar line, also the management is working to expand its business. So at the same time, already in the last 2, 3 years, the company increased its turnover, you will see in this average ratio, compounding average ratio of the last 3 years invoice of about 25% is there. So we have grown to a particular level. From here again, growing to that level, we have to consolidate the business and strengthen all the departments, the cost is going up. And also one way also the management looking to expand. And there is also a chance to even book beyond INR 20,000 crores, INR 25,000 crores, INR 30,000 crores market also opportunities is there. Both the ways, we are looking that one. So it's not that only we confine to 20,000 or 22,000.
So that is an area, and actually that guidance, we said we are strongly that we believe that we'll be able to achieve that, guidance.
And this I think Neerad earlier spoke about some bullet train projects, so which is this INR 25,000 crore project in that pipeline? And if you can name a few large projects in that 2 trillion pipeline, which you spoke about.
No, no, no, no. Parishit, I did not mean that. What I was trying to do was to explain to you that how this percentage could vary widely. There is no project line of the bullet train of INR 25,000 crores on the horizon. It was in the past.
yes, I was wondering you have to spoke about, but this INR 2 trillion, what are the large opportunities, like I mean, which are the larger projects which have come up for bid in your prospect?
The projects I couldn't identify, but I will talk about the sectors. For example, the metro projects in the -- all the length and breadth of the country, there are metro projects coming up. There are also plans to lay new railway lines. So these kind of projects. There are projects planned in the water space. a lot of projects are expected to come up for transmission and distribution. So these are the verticals that has most of the projects in the pipeline.
These are not identified projects...
We request you to please rejoin the queue, if you have follow-up questions.
The next question is from the line of Prem Khurana from Anand Rathi Shares and Stock Brokers.
Sir, I have two questions. So one was, I mean, would you be able to share some more on this the L1 pipeline that you have almost around 9,000 odd crores, which all segments -- what to include the Bharat Phase 3 awards as well as -- I have a
The first question, Mr. Khurana is, as a matter of policy, we do not really talk about the L1 project except to share the value, which if we do not know by what time these L1s are going to get converted into LOAs. So we just talked about because we were asking questions, so we have put it a number. But yes, these projects that you just talked about is Bharat and we also got to know about these L1 projects. So unless and until we receive a formal communication from the client, we do not really wish to announce that.
Sure. So does that mean you're saying in this 9,000 would not include any of these -- I mean, the news that has been there in the market, it's still -- because you're yet to receive any communication, and it is still not a part of this...
L1 I said we have not -- I mean, we don't share the detail of all the projects, but it's part of the total value that I just -- and I said this is upwards of INR 9,000 crores.
Okay. Sure. And so just to understand the thought...
To talk about this BharatNet, we understand that some packages have still not been opened. We don't think the client will decide which one to award, when to award. So it's -- this is something that is expected to take some time.
And just to understand the thought process, we recently bid for these smart metering orders wherein there will be a significant amount of bought out component and even assuming we will get to have this BharatNet order as Bharat Broadband. There again, I mean, be optical fiber that you would have to source from someone else. So I mean, has there been a change in the thought process wherein we are going for projects wherein there is a significant portion, which is in the form of bought-out components? Or is it that the size is so favorable that you can't ignore these sort of opportunities.
These are really the large opportunities, and otherwise also in a few of the projects that we executed, other than these two new areas, there is a significant part of the bought-out items. So we have been executing those kind of projects in the past. And we have the expertise and these are the emerging areas. So why not, whenever big opportunities comes, comes up in front of us, it is better to evaluate those opportunities and not to -- decide not to participate. So that is the reason we are always open to look at these kind of opportunities.
Sure. And sir, given this kind of size that these sort of projects tend to have and give -- I mean assuming there will be the competition count -- in terms of the number of participants that we'll be able to quantify would be on a lower side, fair to assume we would try to enough get slightly margins, which would be slightly better than what we generally tend to do, the sort of time that these projects have on offer.
Mr. Khurana, could you repeat. Your voice is not very audible. There is a lot of Coso not able to hear you clearly.
So I was wondering, I mean, given the sort of size that we're targeting these days, right, in terms of the project sizes and given these are fairly, fairly large, wherein I mean you won't get to the sort of competition that you would get to have with smaller orders. Fair to assume you are targeting higher margins with these opportunities than what we generally tend to deliver in terms of average number?
It is difficult, Mr. Khurana, to really predict the margin at this point of time. As you rightly highlighted, these are the new areas and we have bagged these projects almost for the first time. So there is going to be a learning curve, and it is premature really to talk about the potential margin that we will really make on these projects. Let the projects move forward, let us execute 30%, 40% of the project. I think that would be the right time to talk about the margin. Otherwise, this would be a little premature to commit a number.
Sure, sir. And just one last, if I may, please. I mean would you be able to say a status on the GMLR project?
Yes. As far as the GMLR project is concerned, we have already placed the orders for the TBM machines, and both the partners. And for clearance? We are waiting for the clearance. There was a change in the location and there is likely that the tunnel length also will get increased. So that is the reason we are waiting for the permission from BMC. It is expected to come in maybe the third quarter end. So once it comes, then the project will completely take off.
The next question is from the line of Nikhil Abhyankar from UTI Mutual Fund.
I had a specific question regarding the smart meter project that we are doing, the two projects. So can you about the experience as in how is the execution going on? And when should we expect to complete? Have we completed a part of the project wherein you have already started receiving the
See, firstly, as you are aware, we have bagged 3 projects, 2 projects are from the state of Maharashtra. The order value of these 2 projects is close to INR 5,700 crores. And the third project that we have bagged is from the state of Bihar, the value would be about INR 2,300 crores order value. As we have shared in the last conversation with you, we have started the trials for the Bihar state. We have already installed some meters. A couple of million meters have already been installed in the state of the Bihar. Maharashtra, we have been asked to go a bit slow. The government has decided to defer these projects for a few months. And the -- as you are aware, the election has already been announced in the state of Maharashtra. So we will wait for a couple of months' time, let the new government come to the power, and then we are hopeful that the execution would start. But to answer your question specifically, this project, we have been asked to go slow, Maharashtra project. Bihar, we are making good progress.
So I wanted to ask about -- you mentioned that you have commissioned a couple of millions of smart meters. So have we started receiving annuities on those?
No, no, no. We have not received the annuity. As per the contract, we have to demonstrate the successful connectivity for the sample size of the project, which is about 5%, 5-odd percent. So once we install, it is not about the installation of the meters only. There is a network connectivity, these meters are expected to work like a mobilization phone, either on RF, radio frequency or mobile network. Then we have to connect this with the local server that is going to get connected to the billing server of the DISCOMs. So the annuity hasn't started. Once the sample testing is done, then we will receive the green signal from the client to start rolling out the project for the rest of the households, then this cycle would start. As we speak, this hasn't started.
One small correction, it was not 2 million, it was 2 lakhs.
Yes, 1 lakhs to 2 lakhs, it is not million. So that's the reason you are asking whether annuity has started, okay?
Right. Understood. And just a final question regarding -- sir, there is a lot of opportunities coming out in the renewable sector, especially in the segment and as well as solar EPCs. So are we looking to participate in those?
Currently, we are studying the sector. We are not participating currently in these but we will evaluate and decide an appropriate point of time.
The next question is from the line of Vishal Periwal from Antique Stock Broking.
First is on, I think you mentioned investments in subsidiary and loans totaling to roughly INR 1,400-odd crores. Is it possible that the broad headline subsidiary where the investment is?
The investments and loans together INR 3,500 crores. Out of that, urban is INR 229 crores, and NCC IHL is INR 559 crores. And NCC IHMPl that is INR 223 crores. And it is INR 457 crores, while Vizag urban is INR 416 crores. And rest are other things, yes.
Right. So in this smart metering one is how much?
Still, we have not invested anything. We have invested barely INR 10 crores in that. Once the financial closure is completed and projects takes up, it will be done. And as you know, that one smart meter project is within NCC itself and the 2 other projects are with the STBs.
So that's one may that one, which you mentioned? .
Sorry?
The 2 in subsidiaries are Maharashtra ones?
Both are in Maharashtra. That is the requirement as per the tender even.
Right. right. And on this order book, sir, the consol minus stand-alone order book that if we do, then the difference is coming from the Pachwara, or is there anything else also?
Majority of the cost is from Pachwara, from this smart meters.
Okay, okay. Got it. Got it. Got it. And one maybe last question...
We request you to please rejoin the queue for follow-up questions. The next question is from the line of Prayesh Babaria from Mahindra Mutual Fund.
Just a similar question to what Prem was asking. Let's say, if you look at the pipeline of around INR 2.1 lakh crores that you have mentioned. Assuming this sort of projects could be a large project, and also we are looking out for to bid for the large projects and especially the projects wherein the bought out components will be kind of higher. So what sort of margin profile are we actually looking at? Or what sort of trajectory do you see, let's say, in the next 2 to 3 years that after the execution of these kinds of projects where a value addition for us will be less?
This question has already been answered. I have offered a detailed answer to this question. So anyway, so to reiterate, as you highlighted, some of these segments are new segments, and it is really premature to talk about the possible margins. In these pipelines, the projects would come up for bidding. A lot of people would bid. We would be successful in some days. Some days, we will not be successful. Then we will then -- that would be -- then we will start the execution of the projects. Then that would be the realistic time to talk about the margin that we will really end up with. It is premature to talk about the margin that we will make -- that we'll make on these new segments, new projects.
And another thing is that, would it be really difficult to actually to achieve the margin beyond 10% or so considering these projects will be very large?
See, we have already shared the margin guidance with you, and we don't wish to revise that. The guideline -- the margin that we have shared with the street is EBITDA margin of 9.5% to 10%, and we continue to stick with the same number. Maybe we might get at the lower end of the band as things stand today, but we have to wait and watch.
The next question is from the line of Vaibhav Shah from JM Financial.
Sir, out of our current stand-alone order book as of September, what would be the executable portion, a ballpark number would do.
The order book standing far stand-alone as of end of September is INR 48,027 crores, okay? And out of this, generally, what happens is that 20% to 30% of this is executable generally. So if you take 30% also, INR 12,000 is executable in the current year.
No, what I meant was key, how much is currently under execution, what is the value for which the execution is yet to start?
Yet to start, there is nothing right now because the projects regarding only the smart meters where the EPC contract was there. There, there was a hold a little bit in the case of Maharashtra, but Bihar, we are going ahead. As far as the Malad is concerned, I have explained to you that there is a Supreme Court order to restart the project and we have restarted the project. And the landfilling, everything is over. The tree cutting is happening. We are waiting for some permissions, when that comes. And due to the rains also in Mumbai region, the progress was also not as expected. But the coming quarter, we are expecting a good progress. And as far as the other projects like the GMLR, we said very clearly, explained before, that because of change in the alignment or change in the location, they are -- we are waiting for the approvals from the BMC. Once that comes in, then that project also will take up. Otherwise, all other projects are going on, running projects.
Okay. And sir, secondly, what would be our order book of JJM projects from UP as of September?
As of September month -- so as at the end of September, it was INR 5,467 crores.
Also we had earlier indicated that you were targeting to complete the entire book by March '25. So what would be a revised target for these now?
Like this, as we explained the shortfall in the turnover in the current quarter is also because of the unprecedented rains in UP and also the elections and all. Now we are expecting that majority of the work will be completed by March '25, and maybe a fraction of work will be left over, which will be done before June '25. That is the timeline.
Okay. And sir, lastly, when do we expect to receive the LOA for the MSRDC 2 packages?
We are waiting for the government to come in. And because of the election code, they are not able to do that. Once the elections are over, it's likely can happen.
Okay. And sir, in the previous call, we had mentioned that the outstanding receivables from AP, overall, the total number is somewhere close to INR 550 crores. So is the number still similar?
We received around INR 200 crores in AP. We received the money from AP in respect of AIIB projects and ATB projects and also APSMIDC projects. projects which are running, other than Capital City project, we have received the money now. The money flows started.
So only 150 is pending from the Capital City and entire running projects has been received?
One second, I'll let you know that. See, there are two parts, as my colleague, Mr. Raju has already explained. From the old project that is AP Capital City, we have to receive about INR 150 crores. Other than that, there are running projects in which we have already received about INR 220 crores. So it's a running project. What it may essentially means is every month, we will raise the bill, we will do the work and the clients will pay. It's a cycle.
Okay. So what was the current outstanding for the running projects?
Total outstanding, including the running projects and the AP Capital City is INR 450 crores.
The next question is from the line of Ankita Shah from Elara Capital.
Sir, out of the total inflow that is received in this year, including the L1, how much portion of projects would be from the state of Maharashtra?
The share of projects in Maharashtra, out of the total order book, somewhere around...
Not order book, sir, inflows?
Ankita, hold for a moment, 42% of this total number.
And if we include the total order book, about 38 per is from the state of Maharashtra.
That I have seen in the presentation. 42% of the inflows that had already announced in the first half of the year, is 42% is from Maharashtra?
Yes...
Over the above this, we will...
More than INR 150 crores -- that amounts to INR 2,150 crores.
INR 2,150, plus L1 also, there will be some orders from Maharashtra?
That is a different location that is Nagpur.
We have not included. We don't really -- madam, we really don't talk about the L1 till the time we receive the LOA. So we really don't take that into account until that gets converted into LOA.
Got it. So this INR 2,150 crores, doesn't include any L1 orders on the order inflow.
Yes, yes.
That's right.
And sir, you're talking about a reduction in debt in the second half of the year to INR 500 crores. So with this, how much would the interest outgo in P&L will reduce from last year, we reported INR 595 crores as interest expenses. How much will this reduce to for FY '25?
As it stands today, madam, if you see that the debt levels are almost like similar for quarter 1 end and quarter 2 end. So the problem is on the collections. So the expected collections are there, okay? Then definitely, the debt level will come down. Maybe by about INR 500 crores, it may come down. So it will be in the same range as of the end of the last year.
So you are saying interest expense will be same as last year?
Interest expense, if you ask me if the percentage, in fact, if we compare with the last year and current year for the half year, it was exactly the same number. It was coming to 3.12 -- in fact, it is a reduction, 3.12% in the last year and 2.99% in the current year, that entire finance cost of netting of the interest income. If you talk about only -- on the loans, that is also like 0.88% last year, and that has come down to 0.86% on the.
For the main reduction will happen in the second half of the year only, what is the expectation of interest cost reduction in the second half of the year?
It will be on the same line, madam. Yes. So it is expected that we'll have the same line of maybe a few points here and there. Yes. .
The next question is from the line of Saket Kapoor from Kapoor Company.
Yes. Sir, just to take the point forward regarding this finance -- sir, when we look at our employee cost and the finance cost, on Q-on-Q basis, that has gone up. So what explains this increase in employee benefit expenses from INR 182 crores to INR 196 crores?
Two things in this. The increase is on account of one is on the salary increase, which is about 8%. And on account of the count of employees increase, the number of employees also increased. That is about 2.5%. So considering that, that increase is there.
And about the finance cost also, sir, although you mentioned that as a percentage of turnover, it has reduced. But on an absolute number, it has gone up Q-on-Q, although the turnover on consol level is lower.
So if you see the immediate quarter, immediate quarter, it was INR 155 crores. In the current quarter, at a consolidated level is INR 166 crores.
Yes, sir. Yes, sir. That is why question. What extent this increase, sir.
This is increase on account of -- excess utilization or more utilization of bank guarantees and letters of credit.
Okay. So for year as a whole, sir...
We request you to please rejoin the queue for follow-up question.
The next question is from the line of Shouvik Chakrabarti from Dolat Capital.
Sir, can you just mention the revenue booked for the JJM projects in quarter 2, I missed that number.
The revenue for the JJM project in the Q2 is about INR 1,100 crores.
And the pending execution, how much does it stand at like...
INR 5,460 crores.
Ladies and gentlemen, we will take that at our last question for today. I would now like to hand the conference over to Mr. Vaibhav Shah for closing comments. Over to you, sir.
Just one question from my end. Sir, we had mentioned that the order book for JJM was around INR 6,000 crores as of March '24. Now it is 5,500. So how do we expect the execution of INR 1,100 crores in 2Q?
Just to give you a clarification, the order book, which was received by us is around INR 17,000 crores. And work executed till date, that is end of 30th September is INR 1,137 crores, and the balance order book as at the end of September is INR 5,467 crores. So if there are some other numbers which we have told earlier, please they stand corrected now.
Sir, what was the turnover in the first half?
In the first half, it is INR 2,332 crores. The quarter 1 it is INR 1,212 crores, and the quarter 2, it is INR 1,120 crores.
And then what was the order book as of March '24?
As at the end of March '24, I need to do a -- 13,000 -- it was INR 7,700 crores.
So thanks a lot for giving us the opportunity to host the call. So any closing remarks from your end?
Thank you very much for participating in the interactive meeting that we have had. Should you have any more questions, you are free to get in touch with us. We would be very happy to answer any questions that you might have subsequently. Goodbye. Thank you very much.
On behalf of JM Financial, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.