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PSP Projects Ltd
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Ladies and gentlemen, good day, and welcome to Q3 and 9 Months FY '23 Earnings Conference Call of PSP Projects Limited hosted by Ambit Capital. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Amar Kedia from Ambit Capital. Thank you, and over to you.
Thanks, Yashasvi. Good afternoon, everyone, and a warm welcome to the Q3 FY '23 earnings concall of PSP Projects. We have the management today being represented by Mr. P.S. Patel, Chairman, MD and CEO; and Mrs. Hetal Patel, CFO of the company.I will now hand over the call to the management for the opening remarks, post which we will be open up the floor over to Q&A. Over to you, ma'am.
Actually, the call is not very clear. Can we reconnect it or should we connect from here? Because your voice is breaking too much.
Sir, when I'm speaking, are you able to hear this clearly?
It is -- sometimes it's clear, sometimes breaking. Yes. No, your voice is breaking, maybe because of the net issue.
You can disconnect, sir. I'll call you back.
Okay.
Ladies and gentlemen, please stay connected. We are reconnecting the management team. Ladies and gentlemen, we have the management team. Please proceed.
Yes. Thank you. Good evening, everyone. Thank you for joining our earnings call. Please note that a copy of our disclosures is available on the Investors section of our website as well as the stock exchanges. Please do note that anything said on this call which reflects our outlook towards future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks and that the company faces.With that, I would like to hand over the floor to our MD, Mr. Prahaladbhai Patel for his opening remarks. Thank you.
Thank you [ Hetalben ]. Good evening, everyone. A warm welcome to each one of you, and thank you for joining us on Quarter 3, 9 months earnings [ FY ] '23 earnings conference call. I trust everyone is doing well. I believe you have got a chance to go through the financial results and investor presentation uploaded on the stock exchange and website.The quarter has been decent in terms of execution and revenue after 2 subsequent quarters. During quarter 3, FY '23, revenue recorded from all 7 UP projects is to the tune of INR165 crores and INR268 crores as on 9 month '23. The execution is being streamlined and you will see a better execution going forward from here. During quarter 3, FY '23, revenue growth recorded was 2% year-on-year largely because of higher proportion of near completion projects during quarter 3, FY '22. The revenue during the quarter grew by 39% quarter-on-quarter, largely aided by our execution in 7 UP projects together. EBITDA margins have been in line with our guidance.On the order book front, PSP Projects has outstanding order book fill rate of INR5,075 crores. During 9 months FY '23, the company has received the highest share order inflow of INR1,950 crores, excluding [ DAC ] as compared to INR978 crores during the last 9 months FY '22, a 100% growth year-on-year basis. During the current financial year of FY '23, majority of the projects awarded are from the state of Gujarat. One major development that took place in the company was government project of Surat Municipal Corporation worth of INR1344.01 crores in January 2023, thereby taking our outstanding order book to INR6,418 crores and order inflow as on FY '23 to INR3,294 crores surpassing our order inflow guidance of INR [ 2,500 ] crores this year. The SMC project awarded is for construction of 227 story state-of-the art high rise office building with a built-up area of 2.20 lakh square meter. It is a turnkey project with 36-month completion. These company buildings will be one of the tallest administrative buildings in India and tallest in [ Surat ].We are happy to announce that the company has completed 200 projects so far since its inception in 2008, with 85% [ final ] projects consisting of institutional, industrial and residential projects and balance 15% with government projects. As on 9 months FY '23, we have 46 ongoing projects. In many of our existing products, the company has started supplying certain materials through our precast facility which will -- shall help [ us achieve execution ] and aid us in maintaining the quality and speed.I shall now inform certain key highlights that took place during the quarter and 9 months. Total 2 projects were completed during this quarter. We are the tallest residential project of Gujarat awarded by Nila Infra and our [indiscernible] project in Gift City of INR [ 122 ] crores, industrial project by leading chemicals company based out of Baroda. Further, we received a repeat industrial order to construct a separate factory and an additional order received from Adani Airport. This year the order inflow has been the highest as compared to the past 5 years. During the quarter, we completed 4 projects, all the projects were completed in time, newer prominent projects completed at [ downstream ] project of Torrent, Reliance Jamnagar project for animal rehab and rescue, industrial project for [indiscernible] Group near Ahmedabad. As on 9 months, FY '23, out of outstanding order book, the government projects completed 52% institutional projects comprises 26%, industry -- 52%, institutional projects compared to 26% -- comprised of 26%. Industrial and residential project comprised of 11%. As on date, we have 46 ongoing projects. Of these, [ 53% ] are based in Gujarat, [ 32% ] in UP, 14% in Maharashtra.EPC and company projects constitutes 69% and [ CE ] projects constitute 31%. EPC projects, we'll be planning, designing, and [ second-hand, first-hand ], post construction activity that has opened the horizons of [indiscernible] companies since last few years. This pipeline, going forward, we have a pipeline of approximately INR4,500 crores [ of 60% fees ] from prior projects and around 25% from the state of Gujarat. [indiscernible], gems and jewelry park in Mumbai, INR1,200 crores; Central Vista MP Chambers at Delhi NCR, INR1,210 crores; private residential township in Delhi NCR, INR500 crores; IT park in Chennai, INR370 crores; development of [indiscernible], INR334 crores; industrial project in [ Hajira ], INR300 crores; Delhi metro MEP package, INR200 crores; one of the tallest residential in Ahmedabad, about INR120 crores.To summarize, this financial year, by far, has been the best year [Technical Difficulty], which will very well be reflected in our [ book ] going forward. A pickup in private capacity is adding to India's growth story. We are confident and positive for the growth in our business segment too.With this, I conclude my remarks, and now I would like to hand over the call to Mrs. Hetal Patel to take us through the financials.
Thank you, sir. The financial performance during the quarter ended December 2022 is as below.
Sorry, ma'am, can you repeat please? Sorry, it was not clear right now. Kindly repeat.
Yes. Thank you, sir. The financial performance during the quarter ended December 31st, 2022 is as below. Quarter 3 FY '23 versus quarter 3 FY '22, the revenue from operations for the quarter is at INR497 crores versus INR486 crores, which has increased by 2% on a Y-o-Y basis. EBITDA for quarter is at INR62 crores, versus INR74 crores, which is lower by 17% on Y-o-Y basis. EBITDA margin is at 12.39% versus 15.25% of quarter 3 FY '22. Net profit for the quarter is at INR35.32 crores versus INR46.94 crores, lower by 25% on Y-o-Y basis. PAT margin is at 7% versus 9.5%. During the quarter, the revenue generated from 7 UP projects put together was INR165 crores and cumulative revenue till 31 December '22 is INR417 crores.Decrease in other income is mainly attributable to reversal of impairment of loan of INR2 crores to subsidiary company, PSP Projects and Proactive Constructions Private Limited in quarter 2, which was not there in quarter 3 FY '23. Increase in employee expense is mainly due to increase in employee strength, annual appraisal and increase in [ monetary generation ] during 9 months of FY '22-'23. Increase in finance cost can be attributable to increasing utilization of fund-based limits, increase in interest rates and issuance of bank guarantees for newly awarded projects.We'd like to mention few of the important balance sheet numbers as on 31st December, '22. Our long-term borrowing stands at INR51 crores, which was INR46 crores in quarter 2; short-term borrowing, INR140 crores; gross block of assets, INR380 crores; net block is INR217 crores; and addition during the quarter is INR29 crores, which includes purchase of capital assets from insides; net amounts due to customers is INR15 crores; net unbilled revenue, INR150 crores; retention noncurrent, INR101 crores; retention current INR33 crores; mobilization advance is INR169 crores. Working capital days are as follows: debtor days at 79; creditor days at 60; and inventory days at 22. Total net working capital base at 41.Out of total credit facility of INR1,047 crores, utilized limit is INR858 crores, of which INR140 crores are fund-based utilization and INR718 crores is non-fund-based utilization. Increased fund-based utilization can be attributable to additional CapEx mobilized at new sites and significant payment of advances to suppliers and contractors for UP projects. Increasing non-fund-based limit also justified on account of bank guarantees issued for new sites. As on 31st December '22, the company had total fixed deposits of INR316 crores, out of which 3 deposits are of INR60 crores. FDs worth INR253 crores are under lien with bank for credit facility. And FDs given to clients' security deposit amounts to INR3 crores. Work on hand as on 31 December '22 is INR5,075 crores.That concludes the update on financials, and we are now open for Q&A session. Thank you.
[Operator Instructions] We have our first question from the line of Mr. Shravan Shah from Dolat Capital.
First of all, congratulations for a significant order win. But on the execution front, sir, this quarter seems to be a much, much lower versus expected.
Sorry to interrupt. Can you use your handset, please?
I'm using my handset. Am I audible clearly, sir?
There's an echo when you're speaking.
Is it better now?
Yes, please go ahead.
Yes. Sir, I was saying that in terms of the execution, this quarter seems to be a much, much lower versus what we were expecting. So last quarter, we said, particularly in UP projects, we were expecting INR250-odd crores kind of execution and now we have only INR165 crores, so INR85 crores less. So total for FY '23, we guided close to INR2,200 crores revenue. So now till now for 9 months, we have done close to INR1,200-odd crores. So we need INR1,000-odd crores in the fourth quarter. So how do we see the fourth quarter and the full year? How much now a lower number are we looking at? And continuing to that, for a couple of years, we were looking at 25% kind of a growth. So will the lower execution for this year will be compensated in FY '24 by having a much higher revenue growth in FY '24?
Shravan, you're absolutely right, the total revenue which everybody expected and even I expected is little bit less than what we targeted and what we envisioned throughout the year. But the point here was little bit for the UP projects, now we are at the stage of finishing an MEP and each and everything else to be approved through [ PMC ] and again through the government. So things are getting little bit late at the approval level. But yes, you're absolutely right that we are falling short by about INR100 crores in this quarter and maybe in the current next quarter. But probably going ahead from here, now we've already started booking some of the revenues of MEP. Projects are in line except the hospital buildings, which are little bit late, which will be completed next year. But major other projects are going on track. And now we are also tracking a little bit more closely. So I feel that we may fall short of about INR100 crores overall, but let us still believe that probably we will be able to reach to INR2,100 crores by this year. This year -- this quarter actually what I expected was about INR600 crores and we have landed INR500 crores, so I'm still saying that maybe that we may fall short of INR100 crores.Talking about next year revenue and compensating on what we have been doing today, [indiscernible] you are true that probably that can be considered that even if we fall short of INR100 crores, [ going from ] INR2,200 crores going for 20% or 25% growth, we should be able to -- in the position to go for INR2,700 crores. That's something which we will be tracking after March, but probably you are right, that our targets for next year should be somewhere in the range of INR2,600 crores. INR2,700 crores, so that this year's revenue, which we have made fall short of INR100 crores can be compensated.
Mr. Shah?
Yes. And hope we should be able to compensate whatever the loss we have done on the execution front going forward. So now coming on the inflow front. So definitely we have already done close to INR3,300 crores. And so what's the status of INR350 crores L1 for the Gujarat Tourism project? And what more -- how much more orders we can still get by end of March? And how much now can we look at for FY '24, INR4,000 crores kind of order inflow to sustain the 25% growth, so that's the number we are looking at?
See, you are right that, that INR350 crores order of government of Gujarat [Technical Difficulty] and we are waiting for the approval, it is in the process [Technical Difficulty].
Sorry, sir, the last line is not audible. Sorry to interrupt. Can you repeat again?
That order is already been through from the department and now it is in the process with the government. So probably, we are expecting that order to come soon. So expecting on that order and further expectation of 1 or 2 orders which we have already bid and with one of the clients we are working, you may expect further INR200 crores, INR250 crores order. So probably, we will in the range of near to INR3,900 crores or INR4,000 crores. But you're saying is, do we expect the same next year? Again, I would like to say, it's an opportunity which you get. This year also we were expecting only INR2,500 crores and it was luck by chance that we get an opportunity to do large projects like Surat Municipal Corporation, and we get that opportunity through. So things are moving economically faster. Projects from government and the private books are coming very well and all the CapEx from institutions like [indiscernible], Reliance and ArcelorMittal are still in line. So probably we'll be having a good order inflow next year also. But requirement from our side, even if we go and target for next year, INR2,600 crores, requirement for a 25% growth will be somewhere in the range of INR3,000 crores. If we reach to INR4,000 crores, it will be better luck for next year also.
Okay. Okay. Lastly, so on the margin front, the guidance remains the same, 12% to 13%, that should not be an issue in terms of the margin front -- EBITDA margin?
Yes. Yes. [Technical Difficulty] so I always say 11% to 13% and you always say 12% to 14%. See, this is -- again, I would like to say that EBITDA for a construction company to justify each and every project may vary from 1% to 2%. But yes, the confidence with which we tender and confidence with which we execute the project, I think we should remain in that range only.
Okay. Lastly, Hetal ma'am, I need the data points on the balance sheet front, the absolute number on inventory trade receivable and trade payable.
Yes. Trade receivables are ending at around INR400 crores and the inventory is INR [ 113 ] crores around, which includes INR40 crores of WIP, which are for new sites.
And trade payable?
Yes, that is around INR300 crores.
So this INR400 crores are trade receivable, you mentioned, so last September, it was INR280-odd crores. So does this including the retention money you are saying or the...
No.
That is because of the pace of the construction has gone a little bit ahead than the last quarter. So the revenue which we booked in the last month of December, that outstanding is adding on to that total of INR280 crores, which was there in September. So that's the reason [Technical Difficulty].
And further to clarify, now, if you see, whatever outstanding was there as on 31 December, we have already collected around INR130 crores from those outstanding. Major execution was in [ October] and December months. So that amount we have received till now, around INR150 crores.
Okay. So on a yearly basis, the number should not be -- the data days should not be more than 60 days though. That's a normal drag that we have. So though it has increased as on December, but you mentioned we have received in January.
Yes, right.
We have our next question from the line of Nikhil Kanodia from HDFC Securities.
Am I audible?
Yes.
Sir, firstly, congratulations on the very strong order inflow for this 9 month FY '23. My first question was on the execution front which you have already answered. So my next question would be on the order book. So what is the order book under execution as on date?
The order?
The order book under execution.
It is INR5,075 crores.
From here on, it is INR5,075 crores.
Okay. And the -- what is the share of Bhiwandi and Pandharpur projects in the order book?
Yes. That is around INR150 crores -- sorry, INR850 crores.
So other than that INR850 crores, rest every project would be under execution, right?
Yes, yes. It is not INR850 crores, it is INR750 crores. It is INR750 crores, but INR700 crores only, not even INR750 crores, it is INR700 only, little bit projects are [Technical Difficulty].
Okay. And sir, do we have any update on the hearing on this [ EWS ] Bhiwandi project?
Any hearing on?
Am I audible, sir? Sir, any update on the hearing on the EWS project?
Yes. Yes. Yes. That process has gone little bit to the end now. They have accepted the person's name which we've initiated as an arbitrator from our side. So probably next hearing, the arbitration should be over and both the arbitrators should be appointed. That's [ when we expect that ].
Okay. And sir, what is your bid pipeline as on date?
Bid pipeline, as already declared, INR4,500 crores.
Sir, can you please repeat that?
INR4,500 crores.
Okay, INR4,500 crores. And of this, the private orders would constitute around?
Which?
Of this INR4,500 crores that you are saying, the private orders would be?
Private orders would be 60%.
And majority of this would be from the state of Gujarat?
Yes. Only except 2 projects which is in [Technical Difficulty] the last project we cited about the -- for the gem and jewelry and the second project is IT park in Chennai. There is one more project of Central Vista. It is not 60%, it is about 70% is out of Gujarat, so INR1,200 crores from Mumbai, INR1,200 crores from NCR, Delhi, and INR [ 1.8 ] crores again from Delhi.
Okay. So INR1,200 crores from Mumbai, INR1,700 from NCR and the balance would be from Gujarat itself, right, which is around 70%?
Yes. Yes. Yes.
We have our next question from the line of Alok Deora from [ Motilal ] Oswal.
Congratulations on good numbers.
Thank you.
Sir, just wanted to understand, we have comfortably surpassed the order inflow which we were targeting. So how much order -- further order inflows we are looking at because we have a full kind of a 3-month basic period for order inflows coming up? So just your thoughts on that as in if there's an opportunity and if we are getting, say, cumulative orders of INR1,500 crores, INR2,000 crores further, so are we open to that? Or how is your thought process, sir?
See, actually, we have reached to INR3,300 crores order inflow for this year. And as I already said, that one order is in the process of approval, that is [indiscernible] from the state of Gujarat. And the second order is what we have bid, we're expecting that we should get that opportunity from private sector. But probably I'm trying to -- I feel like that we should be able to reach to about INR3,800 crores to INR4,000 crores in this year. And about the opportunities which you are saying, yes, we are bidding for some of the projects. These projects -- most projects are in process, which takes minimum 2 to 3 months like gem and jewelry park is on since last 6 months, Central Vista, MP office, it is only at the [ PQ ] stage, so probably that may not come before March. So presently, the bidding pipe -- bid pipeline, what we have seen, we may get converted into final order or maybe as an opportunity to bid for a final order will be somewhere in the month of April, March.
Sure. And this INR350 crores order, which you highlighted in the previous question as well, this we have already received or, I mean, we've got some indication or?
No, no. That's the government tender where we stood lowest and it was during the just recently elections that came up in Gujarat. So the process from government has already been done but just after the election and just after the forming of new government, that some order has gone in the approval stage at the government stage. But we stood lowest [ when we deployed it ]. Okay
. Okay. So we're already L1 in that.
Yes, yes, yes.
Okay. Okay. And just sir, so you mentioned that there is some execution which was expected this quarter and fourth quarter, which would likely now happen in FY '24. So what's the growth we are looking at now in FY '24 or FY '23? Or just some guidance on the revenue?
The type of project which we have received from March to till now that all projects which are new for this year has already been started and the inclusion of new staff, which has already been reflected to our operating expenses also. So we would like to expect the same growth of 20% to 25% [Technical Difficulty]. Even if we get a reduction of INR100 crores this year, we would expect the same.
Just last question, sir. How is the precast execution happening? And any expansion plans there or any progress there on that?
Yes, we are now getting the inquiries from the market. These inquiries are on with the clients and decisions are all still on. Rest of the things which we -- the order which we've already [Technical Difficulty] L&T and one of [indiscernible] for which we are making warehousing, those projects are on, and certain production facilities for L&T bullet train materials which we have to supply on dock side is getting ready also. So I see a better future that inquiry should come and as and when we execute 1 or 2 buildings, then we should get good inquiry on that part also.
We have our next question from the line of Nikhil Abhyankar from DAM Capital.
Can you hear me?
Yes, but can you use your handset, please?
Yes, I'm using the handset.
Okay. Please go ahead.
Sure. So just to clarify, you have given a revenue guidance of around 21 billion for FY '23 and around 26 billion to 27 billion for FY '24, right?
Yes.
Okay. Okay. And sir, also working capital, can you also specify the unbilled revenue, the mobilization advance and retention money please?
Sorry, your voice is not clear. Can you please repeat what exactly you require?
Can you give us the unbilled revenue, the retention money and mobilization advance?
Yes. I have already mentioned, but we'll repeat it again. See net unbilled revenue is INR150 crores and the mobilization advance is INR169 crores and retention money, noncurrent and current, I'll say. Noncurrent is INR101 crores and current retention money is INR33 crores.
INR33 crores, okay. And sir, you earlier mentioned that -- I just wanted a clarification, you mentioned the execution of the Surat Municipal Project of 3 years, right?
Yes, 36 months.
33 months. So what can be the run rate of revenue accrual over, say, FY '24 for this project?
We all -- we should expect because the first part will be doing the basement and the foundation, so we should expect about INR300 crores to INR350 crores first year as we will be [indiscernible] the structural part. Later 2 years [ will be partly structure and partly finishing and energy and furniture ]. So first year, you should expect about INR300 crores to INR350 crores minimum from that project.
INR300 crores to INR350 crores, then equal for the remaining 2 years?
Yes.
We have our next question from the line of Jiten Rushi from Axis Capital.
Sir, my first question is on the revenue guidance. So you have given a guidance of INR2,100 crores. So sir, should we assume a run rate -- a strong run rate in Q4? So what kind of contribution you can expect from UP project? Because, as you said, INR900 crores revenue in Q4 to achieve a target of INR2,100 crores and UP projects are still more than INR1,000 crores left...
Probably combined both Civil and MEP and other execution which we have to do in these UP projects, now we are targeting about INR100 crores each month from UP for all the projects.
Okay. So in all 7 projects, combined you will receive -- you are targeting INR300 crores revenue in Q4.
Yes, we are planning to execute that, and that's what our target is.
So balance INR600 crores will be from your existing ongoing. So basically, sir, what I can understand is out of INR5,075 crores order book, your executable order backlog could be around INR3,500 crores because [ since INR1,350 ] crores is Surat and some projects which you have won in Q2 might not be contributing big way in Q3 -- Q4. So you can assume INR4,000 crore is executable, of which around INR1,000 crores is from this project UP. So balance that you're expecting INR600 crores from other projects, right, sir?
Yes.
So this would be the highest execution we see in the history of the company for the quarter.
Yes, it is always the highest quarter each year. If you compare with quarter 1, 2, 3, and the fourth quarter is always the highest because that's the peak period where construction companies can execute the projects very smoothly without any interference from the uncertainties of labor and all that. So that has been the history. So let us -- we expect the same this year also.
No, I was just [ of the view ] that you had guided for INR2,000 crores in Q3 in terms of revenue. So I think even after not meeting the target for Q3, you are targeting a higher -- you're giving a higher guidance for FY '23. That is what my concern was.
Yes. No, we have already given a guidance of about INR600 crores in quarter [Technical Difficulty] which we are expecting in next week or next quarter only. But here we're falling by INR100 crores, so we are trying to see that, overall, we may get a reduction of INR100 crores.
Okay. Okay. Okay. And sir, on the Surat project, it is -- you have to build 2 towers of 27 floors, right, sir?
Yes.
Okay. Okay. And sir, if you -- Hetal ma'am, can you give me the cash and bank balance and what is the precast revenue in Q3 and precast outstanding order backlog?
See, precast backlog will not be separately mentioned because now even for our current projects also, we are manufacturing some of the precast elements. But yes, you can say our earlier order of [ NNP ] has been almost executed and the balance of that was around INR60 crores. And the balance, we can say, INR153 crores, the new orders, which will be under execution.
So, understood. So you said INR60 crore revenue is booked in Q3 from precast and INR153 crores is the order backlog.
Cumulatively. You can say cumulatively, but see, it will be like now a backward integration for us because we will not be segregating the revenue for our existing sites.
Okay. So INR60 crores cumulative revenue booked so far in precast in 9 months. So basically, Q3 is low because in first quarter, you will get INR30 crores and INR25 crores in Q2. So Q3, there has been not much revenue booking from precast, right?
See, that we cannot say exactly because, as I said, we need to send the precast elements to our other projects also.
Some of the things of Civil is converted into precast. So the precast plant is being utilized as a company's asset, not as an individual [ call center ].
For a particular client, okay. So sir, what kind of contribution we can expect from precast from FY '24 onwards? As you said, we are integrating with our ongoing projects. So what kind of benefit we will get now in terms of execution, timeline, the margin? Or if -- and any bonus you can earn because of this precast advantage we have? Any thought on this from next year onwards?
Usually in building sector, there is [Technical Difficulty].
Sir, your voice is not audible, sir.
Sorry to interrupt, sir, you're not clear. Sir, can you please repeat?
As far as bonus is concerned...
I'm sorry, sir, your voice is still not clear.
So then -- I'm hearing you very clearly. I think my...
No, sir, now it is clear.
So bonus clause are never there in the private sector, the government sector in the building sector. But yes, the execution speed may give temptation to the client to give us a better margin because that way they are saving some time on the project side. So that can be a reason to add on more profits in future.
Because, if you said -- if you just precast, your order value will go up because of that, obviously saving on time is an advantage to the client.
Yes.
Okay. And sir, cash -- ma'am, cash in bank balance as on December, is it...
Yes. I have already mentioned the amount of fixed deposits, so that contributes to our cash in bank balance, so it's INR316 crores.
We have our next question from the line of [ Sameer Gupta ] from Sameeksha Capital.
Am I audible?
Yes.
Yes. Actually, I wanted to know about your CapEx plan, like what will be the CapEx going forward as a percentage of sales, if you can say?
See, CapEx, if you see throughout, I think, every year, it'll be in between 3% to 4%, so probably that will be the standard criteria on which the work is going on and the [Technical Difficulty] which we have been growing at 20% to 25%. That will be still in the range of 3% to 4%, provided some extra orders also come up suddenly, then that can be an impact of 1%. Otherwise, it should be within the range of 3% to 4% of revenue.
Okay. Okay. Got it. And sir, for the Surat high rise building, what are the margins that you are expecting in that?
It is based on the same guideline what we have been quoting till now. So that will be acquiring the same margin.
We have our next question from the line of Uttam Kumar Srimal from Axis Securities.
Congratulations on good order inflow. My question is basically related to your debt position currently. So this year -- this quarter, our interest cost has gone up. So this run rate will continue in the fourth quarter also?
See, currently, what we have utilized is like our working capital is INR140 crores. So because of that, that has increased. But it may not continue. This is -- like currently, UP project, we need to pay advance [Technical Difficulty] to some of the contractors and all. So when it realizes into sales means it will be reimbursed, so major MEP items. So that will be reimbursed and will not be continuing with the same level of utilization.
Okay. And ma'am, your long-term debt has also increased compared to last year.
Yes, around INR5 crores or -- we have taken the advance -- loans from banks.
Okay. Okay. So currently, it is standing around INR15 crores.
Yes, right. So if you compare with last year, yes, it will be -- it has increased, but compared to September, additional INR5 crores we have done.
We have our next question from the line of Prem Khurana from Anand Rathi.
Congratulations on strong order inflows during the year. Sir, just want to understand on the cash flow part a little better. So when I look at Q3 because we saw a ramp-up in execution, I mean, at UP project, we saw the debt go up and even the FD balance seems to have come off on a sequential basis. Given the fact that in Q4, we are targeting a significant jump in revenues, right, from INR500-odd crores, we plan to go to almost around INR900 crores. So is it fair to assume that the debt would go up even further in Q4? Or you think the cash flow from operations...
Yes. You're right. But as Hetalben has clarified that about INR140 crores has been given to subcontractors for MEP and most of the MEP materials has [ always carry an ] advance before placing the order to the suppliers. So that's the only reason that debt has gone up. Otherwise, probably, this should not be a fact every time. And for this quarter also, cash flow is disrupted because some of the overhead expenses has gone little bit high compared to last quarter, about INR6 crores to INR7 crores. That is impacting our net profit clearly. And that is because we start the execution from March onwards to cope up with the new requirements of the project, which we have started after March. And that's the reason that cash flow is little bit disrupted.
Sure. And just one small clarification. So the INR3,300-odd crores with the orders that we have managed during the year, including SMC or Surat Municipal Corporation project, how many of these orders are -- I mean, the orders wherein we are yet to avail mobilization advances, how much will be the quantum that you would be in a position to kind of avail whenever you decide to kind of go and draw these mobilization advances?
Your voice is breaking and the question was not clear. Can you repeat it?
So I want to understand the new projects that have come to you during the year, right, I mean, INR3,300-odd crores including Surat Municipal Corporation, right? Most of these would carry mobilization advances. Am I right?
Yes.
How much of these mobilization would have been kind of drawn till this time? And how much more would you be able to draw, I mean, if you decide to draw these mobilization advances?
I think Hetalben has already given the figure of INR160 crores of mobilization advance, it's still outstanding on the goods which we have got from the different, different clients.
No, no, no. I want to understand the new projects, say, how much would you be able to draw, I mean, essentially, wherein -- so Surat Municipal Corporation would have some number, right? I mean you would be able to use that money whenever you decide to use it.
See, from SMC, that mobilization advance is yet to be received. So that effect will come in this current quarter.
Sure. So only SMC is wherein we are yet to draw, otherwise, all the...
Yes.
We have our next question from the line of Vishal Periwal from IDBI Capital.
Just one clarification. The order book breakup that we provide between industrial and institutional, so the government-related orders, they are in 2 categories right: government and government-residential, and rest are private? Is that fair understanding?
Yes, there are 2 categories.
Yes. So the government orders are only in government and then government-residential, rest are private, right?
Your voice is breaking, but I think you're asking a question that the government projects are distributed in two heads, that is one is government institution and one is government-residential. I think that's the right thing that you are saying. Yes, it is divided into two. Government-residential means when we get an order related to the EWS and all the such type of -- which comes out from the government side.
Okay. So I think then the further breakup is like the private side, which is institutional, in particular, it has seen a jump in the order book. So any particular segment in institutional that is driving it or overall the private CapEx that you talked in the initial commentary. So can you give little color like which segment is driving this private CapEx?
No. The overall projects which we get from other private corporates and their internal CapEx, only -- sometime it is industry, sometimes it is more related to their office infrastructure. But mostly, it is -- from the private sector, it comes as in [Technical Difficulty] all the residential facility has to be created for any group, such types of projects comes under private sector.
Okay. So probably, it's a mix of things. Won't be fair to pinpoint one particular segment for the...
No, no, no. It will be a mix of anything which is related to building.
We have our next question from the line of [ E Vijay Kumar ] from Spark Capital.
I logged in little late. Just wanted to understand, for the Surat Municipal Corporation project, do we have land and funding in place?
Can you repeat the question? Again, the voice is...
Sir, I would request you to disconnect. I'll reconnect you. The voice is very clear for me. Mr. Vijay Kumar, please stay connected. I'll reconnect the management team. Sir, kindly disconnect. Thank you. Ladies and gentlemen, I request you all to stay connected.We have reconnected the management team. Mr. Vijay Kumar, can you repeat your question again, please?
[Technical Difficulty] Surat Municipal project and the funding, is it in place?
You are asking about the funds, it's been placed -- in place or not?
[Technical Difficulty] in your plan, are they in place? And when do we start? What is the time line for completion of...
The project has been already announced. The land is very clear because it was previously a jail, now the jail has been shifted from that location and it is grounded also. So project approval is clear. Finance is still -- we are not having any clarity from the government side, but which we basically can bring the marquee project in the first initiation for any project from a government going for 27 story as a vertical tower for government offices, I think either the state government and the municipal corporation, both will be taking initiatives to complete this project.
Okay. What about the approvals for land acquisition?
I said it was a jail and the jail has been vacated, it is a total ground at site. And as they have said us that the approvals are also on track because this project was awarded since last 6 months in terms of paperwork and tendering and other processes. So as far as these 2 processes, I think there should not be any hurdle in terms of approval and land as of now.
So when do we expect this to start? And is it a 2-year completion period?
No, it is 3 years. We have declared 36 months, we have to carry out INR1,344 crores and it should start maybe by maximum by 1, 1.5 month.
We have our next question from the line of Nikhil Kanodia from HDFC Securities.
Hetal ma'am, Just wanted to confirm the debt numbers. So you mentioned that INR51 crores is the long-term debt and INR140 crores is the short-term debt, right?
Yes, right.
And what is the cash bank balance that you would be having?
Cash in bank balance is around INR5 crores, but our FD will be INR316 crores, as I've already mentioned.
INR316 crores, right?
Yes, 3-1-6.
I think we should now conclude on the call because the time is over, and I have to also leave at 5 PM. So if you want anybody to like take the last question, it is fine. Otherwise, I will leave and you can continue on any questions related to finance.
Should we take the last question, sir?
No problem.
Yes. We'll take a question from Mr. Akshay Kothari from Envision Capital.
Sir, I wanted to know the reason for slower execution. One of them could be Gujarat election?
No, no, no. It has nothing to do with Gujarat election. Slower execution is majorly in UP side, which we are expecting better than we have done. And that is mostly because of the -- finishing stage, you have to get each and every material approved and at [indiscernible] stage, each and every brand has to be approved, and that is approval comes from [ 3 ] sides: architect, [ P&C ] and the client. So there it took a little bit of time, and that's the only reason for the slower execution.
Sir, there are some articles and talks about bigger players like Tata, Adani, Reliance and like of other bigger EPC players getting aggressive on the EPC front as well, which they were not earlier. So what are your views regarding it?
See, I don't have knowledge about Adani getting absolutely wrong in -- they are more into infrastructure. Tata, on the building side, they're maybe having 10% to 20% of their order book extra [Technical Difficulty]. So EPC side, most of the contracts -- largely the contractor, which we are bidding since last 3, 4 months, we see only the L&T, Shapoorji and [ C3 ] and sometimes Tata on the building side.
Okay. Sir, I have a last question. Sir, generally, what is the trend? So budget is due in next 400 -- sorry, elections are due in next 400 days. So there is very much likely that it would be a populous budget. So what is general trend 1 year before elections? Do we see a slowdown in some order inflow or the order inflow actually increases? What are the trends as per your experience?
I don't understand the trend about election and [Technical Difficulty] issues in terms of execution of order or gearing of order. But the situation, what we see since last 6 months, the economy is growing so fast on the private side as well as the government side and the government order which has already been announced, even if that comes to in execution in next 2 years, I think there is [Technical Difficulty] for next 3 years.
I now hand over the call to the management team for closing comments. Over to you, sir.
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