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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to the Ircon International Limited Q1 FY '23 Analyst Conference Call. [Operator Instructions] I now hand the conference over to Mamta Samat. Over to you, ma'am.
Thank you, Diksha. Good afternoon, everyone, and thank you for joining us on Ircon International Limited Q1 FY '23 Analyst Conference Call. Today, we have with us the senior management represented by Shrimati Ragini Advani, Director Finance; and Shri B. Mugunthan, Chief Financial Officer and Executive Director of Finance. Before we begin, I would like to say that some of the statements that will be made in today's discussion may be forward-looking in nature. We will begin the call with the opening remarks from the management, after which we will have the forum open for the interactive Q&A session. I would now request Shrimati Ragini Advani for the opening remarks. Over to you, ma'am.
Thank you. Thank you so much. Good afternoon, everyone. I'm Ragini Advani, Director of Finance, Ircon International Limited. And I have with me our CFO, Mr. Mugunthan and my finance team. On behalf of the team, I extend a warm welcome to all of you, and thank you for your presence today. This is essentially for the earnings call for Q1 FY '23. I would also like to express my heartfelt gratitude to each one of you for your continued patronage and confidence in our company over the years. We bet you've had a look at the detailed presentation that has already been both uploaded on the stock exchanges. As you are aware, we've had a good growth in our turnover in Q1 FY '23. Our order book as on 30th June 2022 stood at INR 42,066 crores, which again has a good mix of nomination and competition-based jobs that we have done. Ircon currently has 11 subsidiaries, 10 wholly-owned subsidiaries and 1 which is in renewables. Then we have, out of these subsidiaries, we have 9 road and highway SPVs. We also have joint venture companies, 5 in coal connectivity and 1 again in a highway project. In terms of our financial performance, the company has had steady performance, in fact, a significant growth in our turnover. Our PBT PAT margins are -- in terms of percentage, a slight marginal decline, but on the whole, they are robust and PAT was at INR 145 crores in Q1 FY '23, which is much higher than the corresponding quarter of the previous year. Our income in Q1 FY '23 stands at INR 2,068 crores. Again, a significant jump as compared to Q1 FY '21. Core EBITDA remained at INR 173 crores vis-a-vis INR 119 crore of the corresponding quarter of previous year. PBT stood at INR 187 crores as against INR 119 crores for the corresponding period. Earnings per share has also correspondingly gone up to INR 1.54 per equity share as against INR 0.95 per equity share for the corresponding comparable. Without taking much more time, I would now open the session for any Q&A. And let's take it question by question, please?
[Operator Instructions] We take the first question from the line of [ Saket Kapur from Kapur & Co ].
Firstly, if you could give us some color how is the execution cycle currently looking for our company for FY '23? What kind of growth are we anticipating in terms of the order book we have and the execution cycle?
So our order book, as I mentioned, is about INR 42,000 crores, and our typical execution cycle is about 4-year period, depending upon the kind of project it is, but that's the average. So going forward, that is how you can see. There could be slight delays because these are infrastructure projects. So one can take an average of 4 to 5 years on an execution front.
Okay. So on a top line of INR 6,900 crores, which we did for FY '22…
Yes, we should be going up and should be somewhere between INR 8,000 crores to INR 10,000 crores for FY '23.
And when we look at your quarter-over-quarter numbers, are the comparables, correct? Or since it is in like [ DPT type ] order book execution based, so how likely is -- correct is it to compare it on a Q-on-Q basis or Q4 versus Q1? In some metrics drastically changes over quarter-on-quarter, just like the EBITDA margin, the finance costs. So how to compare them like this?
Okay. So see, there are 2 elements to it. The first is that it really depends that when you are taking a project, the project over a 4-year or a 5-year period also has a particular cycle. So initial 1 year, you may be recording something like 5% to 10% of the turnover. Then going for next 2, 3 years, you might be recording cumulative another 60%, 70% turnover or maybe even 80%. And then probably the last year, the turnover would be again close to 5% to 10%. So depending upon the number of projects and in which phase are they, the turnover can drastically differ from quarter-to-quarter or even for that matter from year-to-year. So that fact, the very fact that we are in an EPC industry, that is true. It is not like a manufacturing line, where it's a capacity-based standard production or revenue coming from this. The second part is that there is a monsoon season. We are in a construction industry, and that monsoon season again tends to affect us, which normally starts depending upon different parts of the world and of India. It normally starts somewhere in May and June beginning, and it continues till about August-end, September. So again, if you were to look from a quarter-to-quarter basis, our Q1, Q2 results tends to be on a lower side vis-a-vis Q3 and Q4. Q4, which may be true for almost every company, there is this pressure to continue doing more work or to clock more turnover as well as execution pressures because of the very fact that most companies work till 31st March as being their final target for the year-end. So typically, what you've seen is that our Q3 and Q4 combined gives us 60%, 70% of our turnover as well as profits and Q1 and Q2 tends to be lesser.
Okay. And how the cash conversion cycle plays out for us with the…
Cash conversion cycle for us is actually good. If you would see our receivables are close to 30 to 34 days. And if you see on our payables side also, it's very well managed. In fact, the reason why we have 30 to 34 days of our receivables is also by the fact that we do tend to take advances in the form of mobilization, et cetera. So if you see a cash turnaround cycle, it's very fast.
Okay. And what has been the cash on the books, ma'am, as on 30th June?
So as of 30 June, it is more than INR 5,000 crores, out of which bulk of it is either in advanced setting from client or specifically marked for projects. So our own funds are in the region of about INR 1,000 crores to INR 1,200 crores.
Okay. And out of the total cash generation, how much is the cash flow for sharing for CapEx and for shareholder income distribution?
So I mean, as I mentioned, our own funds are roughly to the tune of INR 1,000 crore to INR 1,200 crore. This is cumulative, as I said too soon. And based on the -- and as you are well aware that we've invested in our roadway-highway projects into a renewable project and also into coal JVs. Now all of them will be requiring equity in this year. And considering the equity requirement in these projects as well as the CapEx that I have on a routine basis in my own company, which is close to about INR 300 crores, I would say that we will stick to a dividend distribution as laid down by DPE guidelines.
Ma'am, I missed your point about coal, in which segment of the coal we have participated -- investment has been made?
So we have 5 JVs in coal, and this is essentially for laying down the railway track on a concession agreement for having a last-mile connectivity to the mines of Coal India or its subsidiaries, with the main rail lines so that ultimately, all these mines are connected and the traffic from the coal mines also can be taken up through railways rather than the slowed rail.
Okay. And how much have been our investment in this JV? And currently, how much we have invested? And how many projects are we doing for Coal India currently? And which days are we in terms of implementing?
We are doing 5. Out of 5, there are -- one is CERL, one is CEWRL, one is MCRL, JCRL and DBFOT. So CERL and CEWRL are in Chhattisgarh. We've had financial closures of these projects or we are in the advanced stage of their financial closures. In terms of our equity in all these 5 projects, we are investing equity of 26%. 64% comes from the coal company. and 10% comes from the corresponding state government or their land authority as the case maybe. So that is the typical mix. In terms of our -- where we are, all these projects are under construction stage. Some of them are in the financial closure. Some of them have gone ahead beyond financial closure. And in terms of our equity investment that we have made till now, we have invested close to about INR 470 crores till now in these coal projects.
Okay. And we have to make the entire commitment of 26% at INR 470 crores or it is…
There is some amount which is still to be made, which will be another INR 50 crores, INR 60 crores.
And this -- and we will be reaping dividends from the JV profitability share? How will we be adequately rewarded for our investment?
So I mean the moment you are doing a project in a SPV, irrespective of whether it is a JV or a subsidiary, obviously, you're doing it considering the IRR of the project, and you do expect to get profits from those projects. In terms of those profits getting shifted to Ircon International, obviously, it will happen through a dividend option. But we have also undertaken EPC projects for these JVs. So at the end of it, part of our funds are any way coming back to us through our EPC execution of these projects.
Correct. And about the completion time line for these 5 projects?
I mean typically, they'll be about a 4- to 5-year period. But there is one project which is CERL Phase 1, that should be getting completed in this year itself. In fact, most probably between September to December this year. The rest, I mean, depending upon which different stages that they are, again, MCRL is another project which should be getting over in this financial year itself, the main phase, which is the phase 1. But overall, you can say that the completion of all projects with everything on MCOBs, all being in place, it will be probably a matter of another 2 to 3 years.
You mentioned CERL. Can you give the full form, ma'am?
Chhattisgarh East Railway Limited.
Okay. And what would be the coal uptake from here? We will be handling the coal uptake also, or just laying down the rail line for it?
So this is a concession agreement for the rail line. So what we will be doing as Ircon is EPC, we would be doing the rail lines. But in terms of this company, they are going to have a revenue sharing model with the railways for the coal that goes on this line through, obviously, the rails.
Okay. And going forward, when can our management look for buyback going ahead? What metrics are there to be followed that may result in redistributing cash back to the investors?
As I mentioned to you earlier, whether it be buyback, dividend or any other form of repaying, currently, the company is right now earning well, but it is also flowing back the same into different businesses through SPVs. So whichever form it happens, we will have some money that we have committed to our highway SPV as well as coal projects or going forward, in fact, even in the renewable project. And therefore, while the capital restructuring guidelines of DIPAM will be followed in spirit, but we will have -- I mean, going forward, you can assume that we would like to give minimum dividend as per DPE guidelines. We would like to continue with -- compliant with those guidelines, but we would rather have most of our money going back into these projects, having these projects completed as fast as we can so that we can start earning profit out of these projects. These projects are fairly good. They have good traffic on these lines, and we do hope to make good profit out of these projects.
Okay. And are we ringfenced -- last point and I'll come in the queue. How are we ringfenced from the -- like these jobs…
The very fact that all our loans that we've tied up for these projects, they're all on project financing basis. And then the concession agreement is signed by these SPVs or these joint ventures with NHAI or railways as the case may be. So to that extent, it is completely a ring fence project that we've entered into. And as per the concession agreement, once the projects are commercial, then 90% of the debt shall be repaid by railways or NHAI as the case may be, should there be any kind of termination that should be happening subsequently. So to that extent, these are fairly safeguarded projects.
Okay. And what is our cost of fund, ma'am? Currently, we are borrowing at what rate?
So Ircon is not borrowing. These SPVs, as I mentioned, these are all on project financing basis. So these projects are borrowing and we've got good rate typically in the range of about 7.75% to 8.25%.
[Operator Instructions] We take the next question from the line of Viraj Mithani from Jupiter Financial.
I have a few questions. First is in the order book, which you said is INR 40,000 crores, what would be the high-margin orders content in that book would be?
Sorry?
What would be the high-margin orders remaining in that order book? I understand our margins are going lower, right, because of the change in government policy. And so you can give some color on that in terms of margins in the order book.
So we have INR 42,000 crores, INR 42,066 crores of order book as at 30th June. And now out of that, the mix between nomination and competition is broadly 53:47. So nomination-based projects, obviously, our margins tend to be little better than the ones that we have taken on competition. And as I mentioned in our previous call also as well as going forward, we will have more competition in our order book and less of nomination because that is how this industry is now. And there is a cut through competition in this area. So yes, while we have a robust order book and correspondingly good turnover is what we expect, we will also get good margins in terms of absolute numbers. But in terms of percentages, obviously, we will see a shrink going forward. And that is what has even happened for March to do. And we do continue seeing that shrink, and we should be able to -- I would say it will be a marginal shrink, but it will happen and we should be clogging our PAT in the region of about 7% to 7.5%.
That is the EBITDA margins or the gross margins you will be getting?
So this is what I'm talking about is my PAT to total turnover.
So ma'am, what are the margin percentage in nomination and competition would be like?
It's not strictly definable because it really depends from the project to project. But if you were to look at cost plus projects within nomination, they would probably be in the range of 8% to 10%. And if you were to look on the competition, then we would have probably taken job in the region of 5% to 8%.
Okay. So we try to assume the EBITDA margin of PAT minus 7.5% going forward, or bit high on for the current situation?
So our EBITDA, as I mentioned, PAT margins will be in the region of 7% to 7.5%. EBITDA you can assume in the region of 8% to 9%.
Okay. Second is, how are we dealing with the commodity inflation because it's a very competitive market? Anything that changes in commodity prices can affect us, right?
Yes. So as of now, I mean, I think this is something which we mentioned last time also that we -- in our contract itself, we do have variation clauses linked to wind indices, okay? So PVC clause as we call them. So we have that in all our contracts. So most of the extent we are safeguarded. However, should there be some one-off cost increase in certain products which we do not get because of the PVC formula itself, because at the end of it, with Russia-Ukrainian war and many other factors, if at all, there are certain projects or certain 1 or 2 elements where we may have to take this hit, but it will be very marginal.
Ma'am, the JV you talked about, I understand there's some write-off is spending on certain JVs, right? So are we going to give that effect in this year? Or is there some time go?
So there is no write-off which is pending. There is only one JV of ours, IRSDC. This is a JV between us, RITES, RLDA, which is an authority of railways. So in this JV, the government itself had decided to shut down the JV in December '21. That was an in principle decision. The company was doing well, but because of various extraneous reasons, Railways decided to bring back these projects under RLDA. So that is undergoing the liquidation, but there is no write-off even in that company.
Okay. And then any color on exports? Are we bidding for the exports markets?
Yes. So on international business, we are -- we have active projects in Algeria, Sri Lanka, Nepal, Myanmar and Bangladesh. We also have some small business in Malaysia as well. And going forward, we are focusing on international business. In fact, some of our proposals currently that we are working on are all on the international domain.
Sri Lanka, is there a problem because of people there or we are safe in there?
For Sri Lanka, while we got the jobs, the execution in the last few months has been a problem, but not in terms of the money that we have of that project. All that is safe. The only thing is that the project is undergoing delays because of the problem that the country is facing right now.
And ma'am, I understand -- my last question is going to competition, competitive bidding. So how will our order book plan going forward, like any sense on that? How are we trying to reduce competition in the business we are in -- so what are our -- what steps we are taking to be ahead of the line or curve, something like that?
Yes. So I mean, at the end of it, if you see, Ircon is a well-established flare in EPC business over a period of time, especially in the railway sector. Even in the roads and highways, we have done well in terms of the projects that we took up, some of them have already reached the commercial operation. And going forward, I mean, in terms of our strength, these are given. And going forward, we will be looking at some previous tie-ups and some JVs to ensure that the parties are all well known to us before we pick up a project, and it's a faster execution, which is more important as of today. That also, as I said, submitting a bid, this is more competitive. So that is one area we are looking at. The second is that, yes, I mean, apart from EPC business because of our core strengths that we have, we would be -- I mean we've any way got into asset ownership models and PPP models of various projects. We will also be looking at some TMC projects going forward. And as you mentioned, the focus, now that we have a good order book, domestic order book spend, we shall be focusing more on international business through multilateral agencies or Axiom Bank lines of credit, et cetera.
We take the next question from the line of Vishal Periwal from IDBI Capital.
First question is, for this quarter, can you share what is our order inflow?
Yes. So this quarter, order inflow has been marginal, okay? And that was because of 2 reasons. One, our focus right now in domestic markets is execution because I mean, we have a very, very rich order book. So it is important for us to convert it into turnover and profit as fast as we can. And that has been our conscientious objective, if I may say so for the first quarter and going forward also for another quarter maybe. And we are in the pipeline of bidding for some jobs, both domestic as well as international, more on international front. But those are at proposal phases, and it should take about 3 to 6 months for them to fructify. So I see an increase in our order book somewhere towards third quarter.
Okay, sure. And in terms of pipeline, would it be possible to give some color in terms of number like what exactly the bids that we have submitted till now or the pipeline maybe domestically or internationally?
So actually, it is really very, very broad, but we can say that we are looking at proposals of both domestic and international combined in the region of about another, let's say, INR 500 crores to INR 700 crores.
Okay. Sure. And then another is in terms of revenue, do we have a breakup between how much of this [ INR 1,897 crore ] is accrued that you have done in revenue, which is from nomination and how much is from competitive bidding? The reason I'm asking is because our growth rates in terms of the quarterly number that we have done, it is pretty good even on a high base. But our margins, I think it has -- I mean, that is fallen quite a much even on a Y-on-Y basis.
Yes, yes. That I think I have mentioned it today as well as in our previous call that the margins will be on a swing. And we will be working on very, very stringent margins going forward. Surely, as we mentioned time and again, that 1 is, we have won these jobs in a highly competitive basis. And 2, I mean, given the fact that these are all infrastructure projects, the efficiency and the time delays as well as cost governance also makes a difference. So given all these factors, the margins will be fine. In terms of the split that you're talking, we've had about a 30:70 mix. 30% is from competition.
30% is from competition. And the same thing, the same number for Q1 FY '22 or maybe FY '22, may be a range if you have it there with you?
In fact, honestly, I mean those are similar numbers. I mean, it's not like the bidding nomination split in the turnover has gone drastically changed. But even within the nomination jobs that we bought lately, the margins over a period of time, I mean, once you also have competition. So the same job you're getting on nominations, the margins have been on a swing because Railways had someone to offer to them to do it at a lesser margin. So overall, this industry will see a squeeze in margins also.
Okay. So is there any change in the nomination margin also by the way?
Yes. So you can say -- I mean, again, it really depends from a job to a job or a project to project. But what I'm saying is that, as I mentioned earlier, it's anywhere between 8% to 10%. So there are jobs which could be a 8%, while earlier they were at 10% or 11%. For every project, I mean there is a negotiation or discussion with Railways, and it is fixed for that project. So there are projects where we've got it a cost plus 7.5%, 8%, there are jobs where we've got it as cost plus 10% as well. So those were earlier jobs, yes.
Yes, right. So when you say earlier, it means like in the last maybe 12-odd months, there has been change in this 7.5%, I mean, some 10% to 7.5%, they have changed the norms or.
No. It again depends on the kind of work that is [indiscernible] in that project, the difficulty levels, the geological terrains. So there are many factors. So I mean, generalization would be difficult. But yes, on the whole margins for our company will be on a squeeze going forward, and they have shown a declining trend and they'll continue to show so for some time.
Okay. And then just -- I mean not be dealing with Ircon, but just an industry perspective, in nomination because our understanding was like is the margin which railway gave, it is a cost plus and the margin has been fixed from about sometime.
Yes, it is fixed. But that percentage fixation also varies from project to project, which is costless.
We take the next question from the line of Dikshit Doshi from Whitestone Financial.
2 questions. One, you mentioned that in Q1, we received a very low new order inflow. And we are evaluating currently INR 500 crores to INR 700 crores projects. So what kind of order inflow we are targeting for the full year this year?
Again, I'll answer this question in 2 parts. The first part is that we are looking at execution more in this particular year then in terms of target inflows because the existing order book expense is very healthy and consider that we will take about 4 to 5 years to execute these projects. This will -- this is going to be our focus for the year. In terms of our focusing on the jobs of new proposals, obviously, we are wanting to venture into certain new areas or certain areas where we feel could be the potential going forward in and take way. And those projects we started focusing in terms of our proposals. And by the time they turn around, because these are all on competition or bidding basis, it should take easy 6 months to 9 months for these to happen. And in terms of the close of order book for the year, we would say but we would like to maintain a status [ core ] number, which means what we execute during the year is what we should be adding probably till the end of the year.
Okay. So we are still targeting INR 8,000 crores to INR 10,000 crores kind of ordering.
Yes, yes, yes.
Okay. Okay. And my second question is regarding this margin. So is my understanding right that in the nomination, we were having a cost-plus margin and now that we are into a bidding process. So whatever margin we have bided -- any cost escalation we have to bear, right?
There is a price variation clause in those contracts as well.
Yes. But sometimes it doesn't... [Technical Difficulty] EBITDA and everything so.
Yes, I may not cover entirely, yes.
Okay. Okay. And one clarification in this competitive bidding, even the private sector is now bidding, right? It is still only among the PSU.
So going forward, it will be all on private sector also bidding, as we understand. But as of now, the order book that we have, there are certain projects where the competition was amongst PSUs only.
Okay. And so whatever now new projects, railway and [indiscernible], all the projects go into the bidding only? Or there still there are a few difficult projects where railway wants to give on a nomination basis?
So as a principle, they want to go on competition, and they want to go more on EPC mode of proposals. But I mean, it will really depend, again, if there is a particular proposal where they feel it would be better to go on a nomination basis, I mean I'm sure they can take the necessary approvals and they can put it up to a company. But as a general philosophy, they have announced that it will be on a competition basis open to all and mostly in EPC mode.
Okay. And my last question is considering all the JV and SPVs we have, how much equity total we have invested and how much debt we have given to [ them ]?
[indiscernible]. So we have invested in equity of about INR 1,153 crores, INR 1,200 crores, you can say -- and then we also have some amount of -- I mean some amount of loan element as well that we've given temporarily to them or in the form of quota equity. So combined, you can say we've given about INR 1,800 crores.
INR 1,800 crores combined.
Yes. And going forward, we still have a commitment of about INR 800 crores to INR 1,000 crores.
Okay.
We take the next question from the line of Shreyans Mehta from Equirus.
Congratulations on a strong top line. Ma'am, if you could just highlight key projects which have contributed during the quarter?
Yes. So the top 10 projects that have contributed in the quarter, the first is [indiscernible] projects or as we call as Jammu and Kashmir rail project, Banihal, that is first, the second is [indiscernible] Sikkim.
Ma'am, can you just quantify the amount as well?
Yes. So the total amount is about -- the top 10 projects have contributed more than INR 1,500 crores to the turnover of the company in the first quarter.
Of the INR 1,900-odd crores?
Out of the INR 1,897 crores.
Right.
Yes. So more than INR 1,500 crores is from projects.
Got it. And ma'am in terms of our guidance if [ we may be ] looking at the first quarter, will it be fair to assume that we are at somewhere around INR 7,800 to INR 8,000-odd crores?
Yes. So that is what I mentioned that at year-end, we should be looking at anywhere between INR 8,000 to -- I mean if it's a good year, I would say, close to INR 9,000 to INR 10,000, otherwise, definitely between INR 8,000 to INR 9,000.
INR 8,000 to INR 9,000. Sure. Sure. Ma'am, in terms of margins, as you said, that probably there are season margin. And currently, if you see -- you just mentioned that 30% is coming from the competition and 70% is from the nomination. So going forward, as the share of combination increases, do you foresee further squeeze in the margins?
Yes, we do. And that is what I've been telling. There will be a squeeze going forward in this financial year, this will be marginal. But going forward in future years, I mean, of course, it will also depend on what new orders that we clock, but there should be a further downward shift in the margins.
Got it. Any range where I mean, probably what are we targeting in terms of operating margins?
Yes. So EBITDA margin, we said will be close to about 8.5% to 9%.
That is including the [indiscernible], right?
That's right. And PAT we said will be close to about 7% to 7.5%. And going forward, for the -- if we were to say 2 years down the line or 3 years down the line, I would say that our EBITDA margin should fall down by another percent or so.
A percent or so. All right. Sure. Sure. Secondly, in terms of our -- the order for the solar power, I just wanted to understand how much more equity needs to be put in number one? And number 2, in terms of the revenue model, will we be the operating or weather the EPC contractor for the project?
No. So we are in a joint venture with a player called Ayana -- and so in terms of our equity in renewables, we have committed an equity of INR 108 crores. Okay. So you can say almost INR 110 crores, and it is a [ 74:26 ] journey -- and 74% is raised by Ircon. Ayana is very well equipped in renewable sector to run such kind of projects. So going forward, I mean, while we will do the EPC part, but we -- this joint venture is going to run. And since we are the majority partner, we do plan to continue operating it. And if this model works well, we may try to take it forward for other rail jobs.
So in terms of our revenue. So I mean, will it be an open market or probably we have back-to-back arrangements from the railway to procure power from us?
Yes. So we've already entered into a PPA with railways for a 25-year period.
Okay. Okay. And what's the rate at which you have entered?
The tariff rate at which we -- so this is [ INR 2.45 ] per unit as per the IRDA guidelines.
INR 2.45 -- and if you could just give us gross -- sorry?
There is an [ VGF ] also in this, viability gap funding of INR 224 crores in this project. This is as per the MNRE guidelines and as [ NREGA ] took it out for these projects.
Got it. Got it. Got it. And in terms of IRR, there are any ballpark number which you would like to write?
For this renewable project?
Yes.
Yes. So it's about a 14% equity IRR.
14%. Sure, sure. Ma'am, a couple of questions from my side. The other is in terms of the equity investments, which we've made till date can you just put it in 3 buckets. One is roads, number one. Number 2, in the renewals and third in the railway.
Yes. So okay. So if I was to look into these buckets, broadly, you can say that roughly the amount that we've already invested in roads is close to INR 1,100 crores…
Out of the INR 1,200?
No, out of the INR 1,800 crores.
Okay.
So INR 1,100 crores is in roads and about INR 550-odd crores is in [indiscernible], and the balance, [Technical Difficulty] yes so INR 1,100 crores is in road projects, [indiscernible] is about INR 550 crores. And as far as other JVs are concerned, the bucket actually has renewable, where we put a marginal amount of INR 5 cores -- but apart from that, I also have a company which does my PMC work [indiscernible], which is called IrconISL. Yes. So I already have an investment of [ INR 65 crores ] there. It's a profitable company, but I put in an equity of [ INR 65 crores ] there. And then in IRSDC, which I told you is in the process of winding up based on [indiscernible] from railways, again, we have -- we put an equity of INR 52 crores there, which depending upon the valuation and how it will be taken over by R&D over a period of time, that's something which should settle soon -- maybe in this financial year itself, yes.
Sure, sure. And in terms of future investments, if you could put it in the same buckets?
Future investments. As far as they are concerned, again, we have something like INR 800 crores to be paid in road projects.
INR 800 crores in roads.
Yes. And -- and then about INR 100-odd crores in full.
Okay. And this INR 800 crores-odd would be divided in next 2 years?
Yes, yes. In road projects, it should be next 2 years, yes.
Sure ma'am. And in terms of monetization, so I mean if I'm not missing probably you have one or 2 road assets, which are almost our leader operation or would be operational. So any plans to monetize them?
Yes. So monetization, there are 2 things. One, of course, there are certain clarity that we are awaiting from Government of India based on the recent guidelines that they took out for sale of [ each ] monetization via PSU of their assets. Now that is something that we're looking at. And 2, as you said, we started taking baby steps in terms of understanding that process and in terms of seeing what all alternatives we have. Let's see, going forward, how do we monetize and when do we monetize?
Got it. Got it. Got it. And one last question. We've seen a lot of redevelopment projects, which are being tendered by Ircon. So I just wanted to understand, are we just acting as a [ PNG ] for those projects? Or what exactly is the role which Ircon is playing?
Which exact project are you talking about in terms of the...
Station redevelopment resets.
Okay. So [ station re -- ] the ones which always has right now advertised?
Right.
Yes. Okay. So the station redevelopment projects are open on EPC mode as well as for PMC. These are the new many stations that they've announced. We shall be carefully looking at them to see which mode we may like to go into. But the existing growth that we have in terms of redevelopment of station, I think we only have one which is a [ Safdarjung ] railway station.
[indiscernible] on the net side, I see wherein we had invited this for 2 or 3 projects from the parent Ircon itself.
So we are again looking at a pre-bid tie up, as I mentioned -- for some of the works that we may like to do going forward.
Got it. So [Technical Difficulty] primarily as an EPC contractor.
Yes, yes.
And would there be any equity component which needs to be put in? Or is that pure EPC contract?
No, this will be pure EPC.
Got it. Got it.
We take the next question from the line of [ Parimal Mithani, ] an individual investor.
I have just 2 questions. First is regarding the dividend policy, are you going to pursue the same dividend policy that you are doing [Technical Difficulty] -- the dividend policy for dividend payout ratio.
Yes. So we will be, as I mentioned earlier as well, we continue to -- we are a profit-making company, and we continue to give you the dividend like we've been giving in previous years as per the [indiscernible] guidelines.
Okay. And ma'am second thing I wanted to know the execution [Technical Difficulty] call speaking -- it will be focusing on [Technical Difficulty]. Is it right to say that going ahead we right now have more revenue growth in terms of [ execution-wise ] ones going on?
Yes, yes. That is the reason I'm saying that we should be hopefully clogging INR 8,000 crores to INR 10,000 crores by the end of this year.
Okay. And then what is the bidding amount that you went currently in the Q1 or Q2 currently which is going on the project in [Technical Difficulty]
For you it is a very, very ballpark general figure. That's a question which previous gentleman also asked and I told him that while our focus is on execution, I have taken up some proposals in the range of INR 500 crores to INR 700 crores currently. We are looking at some very initial steps for certain tie ups to look at some projects which are outside of India, which should get some particular direction as well as more classification in terms of amounts or maybe in another 3 to 6 months period. So we should be able to answer this better in third quarter of this financial year.
And last 2 questions if I can ask, in previous con call you have mentioned of monetizing [indiscernible] highways which are already functioning and you were able to increase bids for that. We -- based on that are seeing the entire [Technical Difficulty].
Sorry, I'm not able to understand what you're saying.
Ma'am in your previous con calls, you have projects such as [indiscernible] is supposed to be monetized. And any headway in terms of them or it's going to take time?
It is going to take time. Asset monetization is a very long [ drawn ] process, especially in a public sector where we are dependent on certain guidelines and clarifications from Government of India. We are awaiting those guidelines. We have started with the baby steps right now in order to be very careful in what way and how should we go about monetizing. Our is not a day in day out business of highways or roadways unlike an NHAI or a transmission pipeline business like a power grid, where we know exactly the product which will keep coming in and out of those businesses. So that it is going to be very project -- specific strategy that we will have to make. So we've started -- I mean the initial brainstorming on it, but it is taken time, yes. And it is -- because you have to be very, very judicious about it.
Okay. And ma'am last question, any guidance from DIPAM in terms of OSS, going ahead of them?
No. As of now the last [indiscernible] is what you also heard. Beyond that, I don't think we've got any other information on it.
We take the next question from the line of [ Neha ].
So what are the order perspectives pipelined for the remaining 9 months, both domestic and international?
See, we essentially continue to focus on our main areas, which will be obviously rail to some extent, roads and highways. And within railways, maybe some more specific works like tunneling, et cetera. In fact, both for rails and highways, we would be looking at some high-end tunneling work that we may be looking at or even given the government's initiative on infrastructure development, we may be looking at one or 2 other modes of transportation as well. But it is all too preliminary to discuss and announce right now.
We take the next question from the line of [ Sadanand Shetty from Truequity Advisors ].
Pardon my ignorance, what is the nature of work or the contract falls on the nomination contract?
So the nomination contracts we've got from railways. These are all EPC projects, which could include one lane of a railway track. It could mean doubling of a railway track. It could have some electrical works because at the end of it, the entire railway network in India is getting electrified or it could involve some signaling and telecom [ book ]. It could involve some civil work like road over bridges or [ underpass ] bridges, passes, et cetera. And it could involve in case of difficult areas like hilly terrain, it could involve tunneling and ensuring that the rails and the systems are in place inside the tunnels for the rails to pass through such kind of projects or areas?
All right. What was the origination or logic behind organization? We know -- you know this in [indiscernible] but in railways, what was it? Because private sector was not at the capacity of bringing it earlier?
See, the Railway has been there for eternity as we all know. At the time when I mean, I'm just speaking loud, my thoughts as this is something which probably has nothing to do per se with Ircon, but if I would say so at the time when these PSUs were created by railways, they were created for some very specific work. For example, RITES must have been created for a consultancy-based work. And Ircon must have been created to execute those works in terms of EPC mode. And they -- so I mean, in a way, there were extended arm of railways, looking at some focused business approach for railways to grow their railway lines and maintain them in a more better and efficient manner. Because railways by itself has too much focus on other aspects, which would be the general the running of the traffic on trains, the freight element, the passenger element. And at the end of it, it is an extended arm of government, it is not a corporate. So given all these factors, they must have thought that it would have been easier to run these things through a corporate system where you have a professional team and a management to look into these aspects. And therefore, we could have -- and since they held the equity in these companies, therefore, it made a lot of sense that since they had the right team with the right expertise sitting there who have that kind of an experience of railways so, they would have thought that let these work automatically go on depending upon the nature of work to those respected PSUs, so that the work is done efficiently and they in turn can focus on the regularities and within the ministry or the Government of India.
Right. By very nature of this contract, it might not be hugely profitable or reasonably profitable isn't it?
Sorry?
The very nature of extended arm of railway earlier, so it would not be hugely or decently profitable or [ marginally like they said. ]
[Technical Difficulty] other way around. What I told you is that the time we were getting jobs or nomination -- our margins are better. Yes. So that is not the case.
Fair enough. Fair enough. My next question is on the railway [ privatization ] and station development. Is it under public-private partnership? Or is it the modalities of it?
So railways has recently decided that they will do most of works under EPC modes. So they will be taking out EPC tenders [ for all ] railway development, but they would like to keep these projects within the ambit of railways or railway authorities as the case may be.
So there isn't a private sector participation in the [indiscernible] development?
Yes. So on the EPC they will be coming out with tenders, which will be open to both PSUs as well as private players. But there is no public private equity participation if that's what you're asking.
Right. And how does prebid [indiscernible] works here?
In the railway stage development?
Yes.
Yes. But then since they're not doing a EPC, I mean, is this question both from a railway perspective or is it from Ircon perspective?
Ircon Perspective.
So from an Ircon perspective, we would be basically going for an EPC mode of execution of these jobs. Since you get a very limited time frame how to do these jobs, and you would also want to give a better and a firmer core, a more competitive core because this is open to everyone in terms of tendering. So you would rather go with certain pre-bid tieups with the parties with whom you need to engage going forward for the EPC work. So we would be doing a pre-bid tie up in that case. I will prefer to do it. Let's put it that way.
Yes. We take the last question from the line of [ Kajal Agrawal, ] an individual investor.
There is just one question. So is there any update on the merger between RVNL and Ircon?
No, again, we are as aware as you all are. There has been no separate news or any kind of sharing of the documentation with us -- nothing at all.
But do you think that this will be beneficial for the both companies? It will really depend if and as and when it happens and in what modality are they thinking. So the beneficial part would also be best known at that stage once we have more clarity on to it. So I think I will not like to comment on it just now.
As there are no further questions, I now hand it over to the management for closing comments.
Yes. So it was a very nice interactive session with you all. And I do hope that I've been able to answer most of your questions. We at the company level are dedicated and trying stringently hard, as I mentioned, one, to execute the projects and 2, to slowly pick up our business proposals. But now that we are at a good healthy order book in an area and in a direction which will be useful to the company from a long-term perspective, including some pre-bid tie ups. We shall obviously keep our shareholders and our investors informed as and when those things rectify. But meanwhile, I would like to thank all our shareholders, business partners, analyst, investor friends, who have continued to show faith on us and will continue to support throughout this journey. We shall also be happy to connect with you all on a one-to-one basis should you feel the need to do so and discuss more queries. Once again, I thank everyone for this investor call. Stay safe. Stay healthy. Thank you. Bye-bye.
On behalf of Ircon International Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.