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Good morning, ladies and gentlemen. Welcome to the IRB Infrastructure Developers conference call for discussing the unaudited financial results for the quarter ended June 2021. We have with us on the call today Mr. Virendra Mhaiskar; Mr. Sudhir Hoshing, Mr. Anil Yadav; Mr. Mehul Patel; Ms. Poonam Nishal; and Mr. Tushar Kawedia. [Operator Instructions] Please note that this conference is being recorded.I now request Mr. Anil Yadav to give you an overview of the significant developments during the quarter. Thank you, and over to you, sir.
Good morning, everyone. I would like to welcome all the investors and analysts on the call. Trust you and your family are well and safe. Hope you all have able -- you all have been able to go through our detailed numbers as well as presentation release.We have completed US BOT project towards the end of May and got a tariff revision of 55%. We are expecting completion of CG BOT within this month and similar tariff revisions in the line of US BOT.We expect to complete the balance 2 projects of the Private InvIT, that is KG in Q3 and Hapur-Moradabad in Q4 of FY '22. VK1 will be completed in Q3 of FY '22.We are on advanced stage of financial closure of Palsit-Dankuni BOT project and Pathankot-Mandi HAM project. And financial closure will be achieved by end of September 2021.Considering the comparable land availability for the BOT project, we expect to start this project from October '21. With respect to VM7 project, all issues relating to the payment to landowners are sorted, and we are expecting to get appointed date in August itself.With respect to order book, bidding was very slow during the June quarter, especially in May -- April and May due to second wave of pandemic. Bidding activity has started from July '21. We had a total order book of INR 14,600 crores at the beginning of this year. Out of that, INR 7,800 crores pertains to EPC. This order book will be executed over the period of 2 years, and balance O&M of INR 6,800 crores will be executed over the period of 9 years. This provides a visibility for this year and coming years.We are eying for an order book of INR 7,000 crores to INR 9,000 crores consisting of HAM and BOT projects and -- in this financial year, which will further improve the revenue visibility for FY '23. NHAI has lined up a project of 4,500 kilometers to be awarded in FY '22 amounting to INR 1.2 trillion, out of which 15%, 20% is likely to be on BOT basis, while the balance will be bidded out on HAM and EPC model. This opens up large opportunity for IRB, and we will be keenly participating for BOT and HAM projects.We have received a favorable arbitration award for Amritsar-Pathankot project against the NHAI from the Honorable Arbitration Tribunal for an extension of concession period by 518 days and compensation of INR 252 crores plus interest.On operational front, as informed during last conference call, COVID wave 2-led restrictions are affecting the traffic and toll collection. Impact of wave 2 has started from the second fortnight of April and has led a further softening in the toll collection in May. We have seen improvement in toll collection from second week of June. Overall toll collection for this quarter has improved to the extent -- overall toll collection for the quarter was impacted to the extent of 20% to 25% as compared to toll revenue in the trailing quarter. Toll collection in July is encouraging in spite of the partial restriction imposed by various state government and heavy rainfall in the month of July.The impact of wave 2 pandemic was much lower as compared to wave 1. Average toll collection per day for the IRB and IRB InvIT -- Private InvIT portfolio of 12 tolling assets grew at 53% in Q1 of FY '22 compared with the Q1 of FY '21 to INR 6.33 crores per day, excluding the KR BOT project, where tolling is temporarily halted due to farmers' agitation; and Thane-Ghodbunder Road, which is -- which was successfully handed over to the authority on completion of the concession.Contribution from Thane-Ghodbunder was 1% in the group revenue. Our flagship project, Mumbai-Pune, reported a growth of 61% in Q1 of FY '22 compared to Q1 of FY '21 in average per day collection for the quarter.Execution momentum for construction continue. EPC witnessed 65% growth in Q1 FY '22 as compared to Q1 of FY '21. Further, various reported global agencies are continuing with their forecast for India GDP in high single digits for FY '22. RBI forecast for GDP growth is 9.5% as per their policy dated August 6, 2021, which would correspondingly reflect in the traffic growth of -- for our project. Effective from 1st April 2021, tariffs have been revised and increased by 3.9% across the NHAI project. Rising inflation could improve this number for subsequent years. We thus expect robust growth in collection for ensuing year.Wave 2 COVID had minimum impact on the construction. Execution was strong during this quarter. Total outstanding order book stood at INR 13,300 crores as on June 30, 2021.With this, I would request Tushar to take you through financial analysis before the Q&A section. Over to you, Tushar.
Thank you, sir. Now I'll present the financial analysis for Q1 FY '22 versus Q1 FY '21. The total consolidated income for Q1 FY '22 has increased to INR 1,670 crores from INR 1,073 crores, increased by 56% over Q1 FY '21. The consolidated total revenue for Q1 FY '22 has increased to INR 370 crores -- INR 374 crores from INR 262 crores for Q1 FY '21, increased by 43%.The consolidated construction revenue for Q1 FY '22 has increased to INR 1,252 crores from INR 760 crores for Q1 FY '21, increased by 65%. EBITDA for Q1 FY '22 has increased to INR 745 crores from INR 529 crores, increased by 41% over Q1 FY '21.Interest costs have increased by 28% to INR 468 crores in Q1 FY '22 from INR 366 crores in Q1 FY '21. Depreciation has increased by 62% to INR 136 crores in Q1 FY '22 from INR 84 crores in Q1 FY '21.PBT has increased to INR 141 crores in Q1 FY '22 from INR 79 crores, increased by 79% over Q1 FY '21. PAT including share of loss from JV, the profit for Q1 FY '22 has increased to INR 72 crores as against loss of INR 30 crores in Q1 FY '21, increased by 39%.Now I request moderator to open the session for question and answers.
[Operator Instructions] The first question is from the line of Pradeep Kumar from DAM Capital.
It's Mohit Kumar from DAM Capital. Sir, my -- congratulations on a good set of numbers. My first question is the -- I don't know if I missed it on earlier commentary on the toll revenues, but how the -- can you please comment again on the toll revenues for July, how it has panned out, how it is improving compared to last year? And is it back to normal? And especially Mumbai-Pune, how is it faring right now?And the related question is on the Kaithal-Rajasthan is I think still the -- we are not collecting the revenues. Just any thought process that I think the agreement allows you to return back the road if the toll collection is suspended for a very, very long time. These are 2 questions.
Yes, yes. So with respect to the toll collection, as we have basically covered in the -- our opening remark also, the growth in July is quite increasing in spite of the impact of the monsoon. And we are reaching to a level of pre-COVID level in terms of the toll collection.Now coming to the Kaithal-Rajasthan project, there, based on the NHAI circular, we will be getting paid 50% of the interest in final obligation, which translates to around 60% to 70% of the revenue. And there will -- through that action, there will be cash compensation and plus, there will be extension in the concession period for almost equivalent days to ensure the NPV neutral. So considering that, I think we will not go for the termination and we will accept the cash compensation for the project.
Okay, sir. Secondly or lastly on the bidding opportunities, especially for the toll roads, have you seen any more packages coming up? Or we will be bidding only for HAM for meanwhile?
Presently, there are a few state projects which have been announced on BOT. We are looking at those also. And we have told that at least 10% to 15% of the 4,500 kilometers that NHAI intends to bid out for this year would be coming up on BOT basis. So we will keep on looking at a mix of HAM and BOT as they come along. And as we said in the opening commentary, INR 7,000 crores to INR 10,000 crores worth of projects is what we would like to look in terms of bagging for the financial year.
And sir, by the state projects, I think you're referring to the UP BOT, UP [indiscernible], right?
Yes. There are a couple of states where these opportunities are showing up.
Okay. So how is the traffic projection? And are we confident given that it's a completely greenfield project? Is it -- why is it is to bid for these projects?
So too early to say because there are -- I mean, one is, right, the greenfield expressway, plus there is one another project which also has come up on BOT. So we will look at the opportunity. Definitely, only if the project is viable will we be bidding for it. So no undue risk for sure. But when you ask me what are the projects in markets, that's when we told you about these opportunities being available, which have been steady at this point in time.
The next question is from the line of Vibhor Singhal from PhillipCapital.
Congrats on a great execution in a very difficult quarter. Sir, since you touched upon on the expressway, I just wanted to understand what is the likely time lines that we are looking at. So what is the status of the project right now in terms of bidding activity, RFP, RFQ? And when do you think the bids -- they would be calling in for the financial bids for the projects?
See, as far as NHAI is concerned, if you go to their site, you will see a long list of HAM projects, which are already announced, which are up for bidding. So...
Actually, sir, I was asking for the [ lines ] per se.
Which one?
On the expressway, the UP BOT.
On the expressway, it is still -- the date has got postponed, which last -- when we last checked. So there is a lot of discussion happening with the authorities with regard to the viability of the project, how the thing can be made viable and things like that. So it might take a couple more months in my guess.
Sure, sir. Okay, sir. Sir, I just also wanted to pick your brain on the EPC revenues. So we saw a very strong execution in this quarter. Typically, sir, even if there is no COVID, we tend to see 4Q as a peak quarter and tends to -- typically, the first quarter of every financial year tends to be slightly lower than 4Q because 4Q being the peak execution quarter. This time, you've actually done even better than what we did 4Q despite the fact that in 1Q, we also had -- we were also impacted by the second wave of COVID. So could you just maybe highlight as to what exactly led us to such strong execution? And was there a higher component of O&M revenue in this quarter as well?
No. I think we have given you the breakup of Private InvIT, Public InvIT and the IRB concession. So it was a mix of both. And there was some element of change of scope works also which we were executed. So based on that, the execution has remained strong, is what I would like to say.
And we can expect a similar kind of run rate for the remaining part of the year also?
Yes, it's right.
Sure, sir. Sir, in terms of the order book, just wanted to basically get some bookkeeping question. Sir, out of INR 6,600 crores of the EPC order book, which is excluding the O&M, could you give us a breakup of the 2 HAM projects which have not yet started execution and the BOT? So basically a broad breakup of how much of the INR 6,600 crores of project -- of the order book is made up of different projects.
Basically, Palsit-Dankuni will be around INR 22 million to INR 23 million, and the Pathankot-Mandi is around INR 8 billion and VM7 is around INR 17 billion.
INR 17 billion.
INR 17 billion.
Yes.
INR 17 billion? Right. And this is the EPC cost that is there in the order book, right, sir?
Yes.
So sir, out of the -- if I look at these numbers, out of the INR 6,600 crores of the order book, around INR 4,800 crores are these projects. We expect VM7 to start execution maybe by the end of August is when we are expecting the appointed date. Is that right, sir?
Yes.
Right. So taking that into account, what is the likely EPC revenue that we would be doing for this year? Any broad range that you could provide us?
I think broad revenue, as we have talked along with the yearly result, this year, we will be concluding a year with around -- close to INR 4,200 crores to INR 4,500 crores of revenue on EPC side, including the O&M revenue and [indiscernible].
Okay. And that's including on [indiscernible] everything put together?
Yes.
[Operator Instructions]
I think there is no more questions.
Sir, we have questions in the queue now. The next question is from the line of Teena Virmani from Kotak Institutional Equities.
Congratulations for a good set of numbers. Sir, my question is regarding the equity requirement, which will be required for these 3 new projects. So how will it be spread over the next 2, 2.5 years? Like in '22, I believe it will be lower. Then how is it spread if you can give some idea on that?
Yes. So equity requirement for these 3 new projects for this year would be around INR 300 crores; next year, INR 200 crores; and balance in the third year. Or maybe you can say INR 300 crores this year; INR 200 crores thereafter; and next year, INR 200 crores. So this includes the Private InvIT INR 125 crores of balance equity also, Teena.
Okay. Okay. This includes that?
Yes. Roughly, if I will exclude the prior table, it will be close to INR 200 crores of equity, which will be required for the [ new 3 projects ].
Okay. And so will GIC partnership be there for Pathankot and VM7 project also? Are they looking to partner into these 2 remaining projects also?
No, no. They would be participating in the Bengal BOT, not in the HAM project.
Okay. And sir, on this Amritsar-Pathankot project where you have -- where the award is in your favor for a compensation of INR 2.5 billion, by when do you plan -- by when do you expect to receive this amount from NHAI?
See, right now, the award has been pronounced. Now they have a set process where they will first decide whether they want to challenge or continue it and close. In case they decide to continue it and close, we will go by that matter. If that happens, then we can expect the compensation in this financial year itself.
Okay. So there is a possibility that they may also go for challenging this amount?
You will have the clarity maybe in a month or 2 as to how it's going because it's a very strong award. So I would not like to comment much right now. But as soon as we have more clarity, we will be more than keen to share that.
Sure, sir. And lastly, on the expected amount, which is around INR 3,000 crores to INR 3,100 crores, which you are supposed to receive for Private InvIT-related projects, any idea on the time line of -- or what are the developments on that front for receiving this amount?
The second tranche of rights has just happened. So we will now be first deploying that capital. So you can expect the balance to come in close to end of this financial year.
No, no, sir. The pending receivables which you had from the Private InvIT.
So the claim amount you mean?
Yes, yes, yes.
Okay. So they are -- the claims are in various periods and as -- it will go through an arbitration process. So in a year or 2 is what we can say that we will have much brighter visibility on this because it's -- like what we have seen in the [indiscernible] project also because it was [indiscernible] took a little longer of almost 2, 3 years, but now with the smaller arbitration process, maybe in a year or 2, we should be able to see much larger visibility coming on this.
Okay. Sir, is there an overall general positive sentiment from NHAI to carry out this arbitration process faster? Or I mean, there might have been certain disruptions because of COVID in quarter 1 and to some extent in last year also. But is there any change in the mindset from NHAI to put this process on fast track so that things become more clear for NHAI and even for the companies to bid for new projects?
Yes, that's correct. There is a clear mindset to run the arbitration process in an accelerated manner. Even they are also now forming a DRB kind of a process, which is a Dispute Resolution Board. So what will happen in the upcoming projects, there will be a DRB member who will be appointed. And during the execution of the project itself, if there are any disputes, the Board will have the power to settle those then and there so that these claims don't accumulate and hit the project at a later date. So they are proactively trying to ensure that there are at least possible disputes and the project runs in a harmonious manner.
[Operator Instructions] The next question is from the line of Vibhor Singhal from PhillipCapital.
Sir, I just wanted to ask on the Amritsar-Pathankot arbitration that you mentioned, even if NHAI decides to appeal in the higher court or any other judicial body, we can still utilize that [ VPI ] circular, which came 3 years back, and avail 75% of that claim amount against bank guarantees, right?
That's correct.
So we've -- I mean, I know it's speculation right now, but in case they decide to, we would be availing that, I'm assuming?
Yes.
Sure, sir. And also, sir, in this case, the cash comes in whenever that's a different thing, but since we have won this arbitration, will we be booking this as part of our revenues in the coming quarters in our financials?
I think, Vibhor, as we will receive the certainty, at that time, we will be booking it as a revenue.
Sure, sir. Also, sir, just last bookkeeping question. If you could just let me know the stand-alone debt at the end of the quarter.
Yes. So stand-alone debt remained at the same level what it was last quarter. In fact, there was a reduction of INR 50 crores in the stand-alone debt. And net debt will be close to INR 4,000 crores, and gross debt will be close to INR 6,000 crores.
The next question is from the line of Ramesh Raizada from Apical Capital Advisors.
Congratulations on your results. I wanted to ask about the EPC business. Are we centric only for EPC on the road side? Or are we looking for opportunities of EPC contracts on other -- like airports, other infrastructure projects?
Sir, we are focused in the road sector also. And going forward also, our focus will be road sector only. We will be bidding HAM and BOT project in the road sector.
No more -- I mean you won't be looking at other EPC opportunities in India, right, besides roads and this thing?
No.
I think there is actual visibility on the highway contracting. So we would not like to divest away from highway contracting and we'll look at opportunities across TOT, BOT and HAM in that manner as far as road sector is concerned. We wouldn't be interested in divesting outside the road space.
Right. The second follow-up question is what kind of -- although the balance sheet says that you have construction equipment worth about INR 500 crores, right? Is that right, what I'm asking?
Yes, that's correct.
What will be the market value of these instruments if -- I mean replacement value?
Replacement value will be similar because it's not a written down value what we have...
See, INR 500 crores is the gross value, written down value will be lower. The replacement cost will be INR 500 crores only.
And normally, how fast you replenish them in terms of their depreciation?
Sir, depends -- asset-wise it depends. It ranges from 7 to 10 years.
As there are no further questions from the participants, I now hand the conference over to Mr. Anil Yadav for closing comments.
I would like to thank all the investors and analysts on this call, and we expect you -- to host you soon. Thank you.
Thank you, sir. Ladies and gentlemen, this concludes your conference for today. We thank you for your participation and for using Researchbytes Conferencing Services. You may please disconnect your lines now. Thank you, and have a great day.