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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 Q4 FY '22 Earnings Conference Call of NCC Limited, hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Mohit Kumar. Thank you, and over to you, sir.
Thank you, Rituja. On behalf of DAM Capital, I welcome you to Q4 FY 2022 Earnings Conference Call of NCC Limited. Today, we have from the management, Mr. Y.D. Murthy, Executive Vice President, Finance; Mr. Krishna Rao, Executive Vice President, Finance & Accounts; Mr. P.V. Vijay Kumar, Vice President, Finance; Mr. K. Durga Prasad, Joint General Manager, Finance.
Without much delay, I'll hand over the call to the management for the opening remarks, which is followed by Q&A session. Over to you, sir.
Yes. Thank you, Mohit. I am Y.D. Murthy, Executive Vice Present of Finance, NCC. I welcome you all for this Q4 results conference call of our company. Our Board has met today and declared the audited annual numbers as well as the fourth quarter numbers, which have already -- have flashed on the screens in the stock exchanges. I hope you are all aware of that.
I will start the management discussion with a brief view of the macro environment followed by our fourth quarter results. See, the world was returning back to normalcy from COVID-19 and people have started breathing easy. But the problem is the Omicron has not completely gone. And particularly in Shanghai in China, they are reporting as much as 40,000 cases a day. And Shanghai is the biggest industrial and commercial hub of China having about 25 million people. That is about 2.5 crore people.
And because China has got a zero-COVID policy, all these people are being tested and the entire Shanghai city has been locked down for almost -- more than a month or so. Things had to improve there. And because of that, the supply chain disruption and availability for raw material for various companies in various countries across the globe is creating difficulties.
Added to that, the problem of the Russia-Ukraine war, which has erupted in the month of February. Now it's already 78 days old. This war is also creating tremendous difficulties for all concerned, mainly because of a lot of sanctions imposed on Russia and the Russian oil. Russia supplies more than 10% of the global crude oil. And a lot of edible oil is coming from Ukraine. All these have been put in difficulties. And also, the commodity prices have started increasing across the globe.
And petrol and diesel prices have gone up, very high, particularly in India, even elsewhere also. That is also creating difficulties for companies like us for our construction business. It is creating supply chain disruptions, nonavailability of material. And also, the cost of material has gone up. Steel prices have gone up. Diesel prices have gone up.
And now inflation is catching up. U.S. has reported inflation rate of 8.5%. Eurozone has reported inflation of 8%; U.K., 7%; India also 7%. Now the global central banks have started tightening the screws by increasing the policy rates. U.S. Fed has increased the policy rate by about 50 bps. And the Bank of England has increased the interest rates by about 4x during the last 12 months.
And back home in India, our reserve bank has increased the policy rate by about 40 bps, which is bound to increase the lending rate of banks. And also, they wanted to bring down the liquidity in the system. So the CRR rate has been increased by about 50 bps. That has settled out about INR 87,000 crores of liquidity from the market.
And now FIA in India, they started exiting the Indian equity markets because the U.S. Fed rates are going up. They have also taken away a lot of money during the month of May. And this is creating the difficulty, the [indiscernible] come down substantially. The rupee has depreciated beyond INR 77. It's reporting at INR 77.40 or so, which is a very high rate. So all these things put together are creating difficulties for most of the companies not only in construction but also in automobiles, particularly the chips amount available. The cost -- manufacturing has slowed down. Intake has slowed down. So these are all very difficult situations.
Added to that, our neighboring countries like Sri Lanka and Pakistan and Afghanistan having tremendous economic problems. Sri Lanka is burning. And Pakistan is almost bankrupt. Same is the case with Afghanistan. These are all very wrong signals that are coming from across the globe. And definitely, we also have to tighten our belts to see that we are able to cope up with the situation.
As far as India is concerned, things are more or less under control, though inflation has gone up and the interest rates are now going up because of the reserve bank actions. But going forward, we are looking at stable operations. And because India is a large country and we don't have the kind of economic problems that our neighboring countries are having.
We have a stable economy. We have a thriving economy. In fact, as the GDP growth rates are also looking so poor, there is a downward trend expected. Indian economy is also expected to grow only around 8.5% to 9% in FY '22. The numbers started to come in. And they are actually predicting deceleration in GDP growth rate of the entire world. So these are some of the macro headwinds that we have to face. But nevertheless, our company has been doing reasonably well in terms of top line and bottom line. Where the Indian economy is growing at less than 10%, we are reporting about 36% growth in the top line for the year as a whole, which is very commendable.
Now I request Mr. Krishna Rao, my colleague, to talk about the fourth quarter results and also about the [indiscernible] business.
Yes. Thank you. Good evening. Welcome to the conference call. I wish to brief about the order book summary. Orders on hand at the beginning of the financial year, INR 37,928 crores. New orders received during the year INR 12,158 crores. Value of the works executed during the year, INR 10,725 crores. Closing order book at 31st March '22 was INR 39,361 crores.
We'll take you through division-wise. Buildings is a major vertical, at the beginning of the financial year, INR 21,157 crores, walks out to 56%. And the closing is INR 22,542 crores, 57% of the order book. Roads INR 1,954 crores at the beginning, represents 5% and closing INR 1,122 crores, 3%.
Water and railways at the beginning, INR 7,078 crores, walks to 19%. And at the closure INR 7,192 crores, it is 18%. Electrical, it was 6% at INR 2,438 crores, closing at INR 2,816 crores, 7%.
Irrigation stands at 6% to INR 2,442 crores, closing at INR 1,205 crores, 3%. Mining was 7% to INR 2,592 crores, closing at 11% of INR 1,240 crores. Others, INR 251 crores at the beginning, 1%, closing also 1% to INR 229 crores. And together, INR 39,361 at the closure.
We have that the state-wise when we analyze -- revenue stands at INR 3,174 crores as against stand-alone corresponding previous year quarter of INR 2,639 crores, a growth of 20%. And gross profit is INR 455 crores, represents 14.5% as against INR 442 crores, that was 16.9%. I'll brief about the reasons for the difference. EBITDA INR 267 crores, walks out to 8.5% as against the corresponding quarter to INR 90 crores. PBT INR 278 crores, 8.7%. And the PAT for the quarter is INR 243 crores, walks out to 7.6%.
The reasons for the gross profit, there is a dip compared to the corresponding quarter, 2.4%. There are 2 reasons. One is in the previous last year quarter, we have accounted for the claims. Claims are of 2. One is [ NCC DAC ] and [indiscernible] walks out to INR 121 crores, represents 1.40%. And current quarter, material prices have gone up substantially. That walks out to 1.1%. That is a main difference for the dip in gross profit as well as EBITDA.
And there is a reason for increase of the PBT. One of the companies, NCC Vizag Infrastructure Limited, where we have the equity of INR 50 crores that has been disposed of. And the company got INR 199.50 crores in total. Out of that, we have received INR 47.5 crores as of 31st March. Balance is going to be received by increased tranches by September, December and March '23. The loan is to the tune of INR 308 crores, will be realized 50% in '22, '23 and balance 50% in the next '23, '24, but carries interest rate 10%.
Now I will take up the stand-alone for the full year. Full year revenue is INR 10,038 crores as against the corresponding last year 2021, INR 7,372 crores. Revenue recorded a growth of 36%. Gross profit is for the year INR 1,658 crores. And EBITDA, INR 996 crores at 10%. PBT, INR 608 crores, 6.1%. PAT, INR 490 crores, 4.9% as against the last year, INR 261 crores, that is 3.5%. That growth for the current year is 87%.
I'll take up the consolidated numbers for Q4.
Revenue is INR 3,492 crores as against the corresponding year INR 2,442 crores, growth of 23%. Gross profit, INR 472 crores at 13.6%. EBITDA, INR 270 crores, walks out to 7.8%. PBT, INR 284 crores is 8.1%. PAT attributable to shareholders, INR 242 crores, 6.9%, a growth compared to the previous year of INR 117 crores, 107% is the growth.
A consolidated number for the full year, revenue, INR 11,209 crores as against the corresponding 2021 of INR 8,065 crores, a growth of 39%. Gross profit INR 1,733 crores, represents 15.6%. EBITDA, INR 1,024 crores, 9.2%. PBT, INR 636 crores, 5.7%. PAT attributable to shareholders INR 482 crores is 4.3%.
Now we have only consolidated one exceptional item. That is Vizag -- NCC Vizag Urban Infra equity, that exceptionally is the capital gain, INR 176 crores. And we have also accounted for the interest, INR 16 crores. And there is some knockoff provisions are required to the tune of INR 18 crores. The net is INR 173.7 crores is the exceptional item in the current year on a consolidated basis. And there is one exception item in the previous year 2021, INR 12.6 crores, that is a provision for the [indiscernible] the case which was going on. These are only the exceptions.
We have the debt receivables, turnover is excluding other income, INR 9,930 crores. Debt outstanding as of 31st March '22, INR 2,492 crores. Debt collection period stands at 92 days as against last year 2021 134 days. That is a good improvement and sizeable amount of the world outstanding have been collected from AP. The AP during the year, '21, '22, INR 328 crores, we were able to collect. And the current quarter, 45 days, INR 56 crores, totaling to INR 384 crores.
Similarly in electrical and other divisions, INR 335 crores, [ INR 189 crores ], totaling to INR 908 crores, we were able to collect. When we have the bucket-wise analysis of -- debt fund movement -- debt at the beginning of the financial year is INR 2,036 crores. There is no new debt during the year. But we have discharged the total working capital and [indiscernible] to the tune of INR 975 crores. Machinery and other loans, INR 20 crores. Long-term loan of INR 37 crores, totaling to INR 852 crores. And now that the loan outstanding at 31st of March '22 was INR 1,184 crores, the reduction is 42%.
On a consolidated basis, same -- the debt is -- the NCC INR 1,184 crores. Only one company, NCC Urban, we have INR 113 crores. The totaling to INR 1,302 crores. The finance cost for the quarter is INR 123 crores. And for the year as a whole, the finance cost is about INR 459.60 crores, which is approximately [indiscernible] of the total of the company. Last year also, we had reported similar finance costs [indiscernible] for the year as a whole. But this year, the turnover has gone up substantially from INR 7,300 crores to INR 10,000 crores. So the cost finance as a percentage of turnover has come down to about 4.5%. It is also our aim to see that the finance cost is below 5% that we were able to achieve as far as the year as a whole is concerned.
And also if you look at the debt, my colleague has already covered, cash credit is about INR 1,007 crores. Machinery advance is INR 172 crores. Total debt on a stand-alone basis is INR 1,184 crores, which is a substantial reduction compared to the previous year. We are able to bring down the debt level substantially mainly because of the large payments that we have received, receivables payments from various government clients and we hope to continue the same in the current year also.
And loans and advances to group companies stand at about INR 401.08 crores. Investment in associates and subsidiary companies is at INR 893 crores. Our group exposure, exposure to group companies either by way of loans and advances or by way of investments in those companies has stood at INR 1,294 crores. There is a small reduction compared the previous year.
Mobilization advance stood at INR 2,055 crores. Retention money is about INR 2,006 crores. And the cash and bank balance is about INR 558 crores are there. So if you net of the cash and bank balances out of the loans that we have taken, the net debt is coming down further to the extent of about INR 600 crores or so, which is a remarkable achievement.
And also, I would like to bring to your notice, the Board has recommended 100% dividend payment to the shareholders. That is INR 2, per share of INR 2, as compared to 50% last year. That is a big jump in the dividend payment. Of course, the shareholders' approval, AGM, et cetera, will be required for getting that.
And finally, on a personal note, I would like to bring to the notice of all the participants that I am retiring from the company as Executive Vice President, Finance by the end of this month. This will be the last investor call that I'm attending. And I thank all the investors and all the brokerages who have supported, especially the DAM Capital who are very close to us. We know them for the past 20 years because they were earlier IDFC Securities Limited. And Mr. Shirish Rane is a good friend of mine. He used to conduct the proceedings. Nevertheless, we are getting good support from Mohit and his associates in DAM Capital Advisors.
Likewise, we got similar support from various brokerages, various investors, various mutual funds and also a lot of foreign institutional investors during the last 15 years. I thank them all for the support they have extended to this company and also to me in my personal capacity.
[Operator Instructions] And the number of questions that will be addressed will be around 20 or so. Thank you. Please start the question-and-answer session.
[Operator Instructions] The first question is from the line of Ankur Sharma from HDFC Standard Life Insurance.
I just have 2 questions. One, when I look at your order inflows for Q4, 3 weeks, right? I mean so just trying to understand what's led to this? Because typically, Q4 is the strongest in terms of order finalization. I think we were also looking at upwards of INR 13,000 crores, INR 14,000 crores of orders for the full year. So what led to this weakness? Is it delays in finalization? Do you think that will pick up in the coming quarters? And also what kind of orders are you looking at in FY '23 and with sector, please?
[indiscernible] for FY '22 is about INR 9,900 of fresh orders. They're slightly less than what our expectation is, which is at INR 14,000 crores. You're right, in the fourth quarter, we could not get some orders which we were expecting. Mostly, this order award is like a game. Some, you win. Some, you lose. So we had a sort of a temporary setback as far as Q4 is concerned.
But as far as FY '23 is concerned, we are very confident the order attrition will be pretty strong. And some of the orders we missed out in the fourth quarter, they should be coming back to us in the first quarter of the current year as well as in the remaining quarters as well.
And also, as you know, we are focusing on Jal Jeevan Mission projects. We are focusing on metro projects. We are focusing on express ways. We have started bidding for hybrid annuity projects. Right now, we have an order book of INR 40,000 crores. Also all these are big positives as far as the company and its business is concerned.
Q4, we had a setback. I fully agree with you. You asked the right question. But I want to assure you, it is only temporary setback as far as Q4 is concerned and the order attrition is likely to pick up in the current financial year.
Okay. Okay. So is that -- is it just industry-wide deferral that you've seen that orders haven't been finalized? Or is it that we've lost some last-stage orders that we bid for?
No, we bid for the projects. Some, we win. Some, we lose. Some big orders we expected in the fourth quarter could not materialize because the other competitive construction companies have bid at better rates or lower rates than us.
And as you know, we always see that we maintain proper margins and we never bid aggressively. That also could be one of the reasons. But as I told you, it is only a temporary blip in our long journey and we will bounce back in the current financial year.
And just one more on -- any guidance on top line and margins for '23? Just on orders, I mean, I don't think you mentioned a number. But any numbers you can share, top line margins and order inflow for '23?
We have not yet decided -- the Board has not yet decided the top line -- talk about numbers and [indiscernible] order accretion. So at this stage, we will not be able to share with you anything on those lines. Maybe once the Board approval is there and management thinking is clear, we can share it with you. But give us some time. Right now, I cannot give you any top line number as far as FY '23 is concerned.
The next question is from the line of Shravan Shah from Dolat Capital Market.
Sir, just continuing the previous participant's question. I understand Board has not finalized. But last time, we were looking at the INR 36,000 crore order book at stand-alone. The broad range, what can be expected in terms of the top line? And in order inflow, as you mentioned, that we will bounce back. So can we expect INR 15,000 crore plus kind of inflow for FY '23?
That is very much possible. We'll definitely see. For example, if you go back a little in FY '21, for example, we bagged INR 18,000 crores of orders. FY '22, it is only about INR 10,000 crores. But I'm very sure -- but anyway, let the Board decide and communicate, we will be able to share it with you. Definitely, INR 14,000 crores, INR 15,000 crores in FY '23 should not be a problem according to me.
And on the revenue front, 15%, 20% growth. Given the kind of order book, that is feasible, though I understand the former guidance is not there.
Yes. That's very much possible. We have done INR 10,000 crores, 10% to 15% growth in the current financial year FY '23 is very much possible.
And sir, the main question is on the margin. So I understand given the kind of commodity pressure, so for this quarter, we have seen significant contracts earning the EBITDA margin to 8.5% because previously, we were looking at even 12%. So how do -- do you think that this pressure will continue at least for next couple of quarters? And broadly, how do you see the FY '23 broad range in terms of the EBITDA margin?
EBITDA margin, because of this exceptional price spiraling in Q4 as well '21, '22, there is a dip. Apart from that, last year, as I mentioned, there was a exceptional item. But we aim to have that around 10%, which is quite possible.
Okay. And on the -- lastly, on the debt front, so I wanted to congratulate that we have reduced our debt significantly to close to INR 1,200-odd crores. So how do you see this number by end of FY '23? So has this number also increased by April and May now? Or has that remained at the same level?
We see -- it is difficult to give you a number right now. What I can say is the FY '23 year-end numbers, if you are targeting, we are -- management is very keen to see that this number remains between, say, INR 1,200 crores to INR 1,500 crores.
Other than that, in the meantime, because of our work pressure [indiscernible] working capital requirements, the working capital utilization may go up. That always happens. But that is nothing to be alarmed about. In our kind of business, these things happen. As my colleague was mentioning, in the month of March, we received nearly INR 375 crores of payment. So naturally, we park them in our cash [indiscernible] banks so that the debt at the end of the year is minimized. Later on, when the work is progressing and the requirement of funds is there, we will start drawing those funds. That should not be a cause for worry at all.
So accordingly, we can see the sizable reduction in finance cost as a full year basis FY '23?
Yes. Yes. Yes. That is a...
The next question is from the line of Parikshit Kandpal from HDFC Securities.
I'm sorry to interrupt you, sir, but we cannot hear you.
Is it better now?
Yes, sir. Please go ahead.
My question is on the AP receivable. If you can tell us what was the total AP opening net exposure? And what is the total AP closing exposure as of FY '22 ends?
AP, we have categories it in 2. One is that the world orders. World orders, we have at the beginning of INR 2,903 crores. And we have executed the [ INR 214 crores ]. There is a scope change to a tune of INR 1,584 crores. Closing order book with regard to the World project is INR 1,104 crores. And exclusive new projects at the beginning of the financial year, INR 1,268 crores. And we secured another INR 1,900 crores, executed INR 62 crores, closing order book INR 3,106 crores. Old and the new together AP as a whole at the end of the financial year, order book stands at INR 4,211 crores.
Okay. And what should be the receivable solution that led exposure in AP now in old and new orders?
Receivables stands if there is a sizable reduction as I was mentioning to you. Considering that the value of the orders executed to the tune of INR 250 crores, there a is reduction in the total receivables as well as the unbilled revenue, total INR 149 crores, there is reduction. Now the receivables stands at INR 510 crores.
And what is -- on the old capital, the APTIDCO projects, which we have removed from the order book? On that, if you can quantify on the [indiscernible] project where you had done some work. So start of the year, net position and moving [indiscernible] net position, if you can give that number also?
Those projects, we have not removed whatever we are doing. The government has given the permission one by one project and where we are able to complete. And there is a specific directions to go ahead to complete. And we have also received, as I mentioned, to the tune of, in the AP, INR 384 crores so far. So we are taking up as per the directions of the government like APTIDCO, MLA quarters. Those are in final stage of completion.
Okay. But the projects to the tune of think INR 12,000 crores, INR 13,000 crores, which you had canceled earlier, removed from the order book, including everything, I think, about [ INR 16,000 ] crores you have removed. So on that order, you have executed [indiscernible] so have you realized any payment on those projects especially the ones which were removed from the order book?
Nothing outstandings from these because there is no movement in these orders, only we canceled. They have not started and stalled. They are only -- without any movement, these projects, they have been removed.
The next question is from the line of Ashish Shah from Centrum Broking.
Sir, one is that on the -- if I look at the consol numbers and the stand-alone numbers in Q4, there is a negative difference of around INR 30 crores. So what could have been the reason why the consol profit was lower than the stand-alone profit?
You mean to say that the difference between consol PAT and stand-alone PAT?
Yes.
Where in stand-alone, we need to provide the provision for the investment if there is a loss in any company. Whereas in consol, it gets knocked off. Only in NCC Vizag Urban, as I was mentioning the equity disposal, this is -- our share is INR 199.50 crores. Whereas the same in stand-alone books, it is INR 149 crores. Whereas this was -- only INR 7 crores was knocked off in consolidated. That is the main difference.
But even if I'm looking at the pre-exceptional profit, pre-exceptional numbers, for stand-alone Q4 pre-exceptional and pretax profit was INR 143 crores. And if I look at the consol, I think it was about INR 111 crores or so. So even prior to considering any of the exceptional items that there is a negative [indiscernible].
We have other companies. Where some companies, there is a profit. And some companies, definitely, there will be a loss. That is a net.
So which entities you would have referred to the loss side in the subsidiaries?
Subsidiaries, it is only we are at the closure of the International and some of the companies which were required to make a provision for investment, only those 2 companies. Infrastructure Holdings with regard to the Tata interest, there is a provision. And PTTL, there is a provision. Only these 2 provisions have been made in the books of accounts.
Sure. Also, in terms of the interest cost, if you can just give us the breakup of the total interest cost that we have reported and the CapEx requirement for '23.
Interest cost breakup for the fourth quarter, it is like this. Interest on term loans, INR 1.10 crores. Interest on cash credit and WCDL, INR 38.89 crores. Interest on mobilization advance, INR 27.31 crores. Interest on others, INR 16.37 crores. Total is INR 83.67 crores. BG commissioned INR 27.39 crores. LC commissioned INR 8.39 crores. And the bank and other finance charges in the fourth quarter, INR 3.68 crores. Total for the quarter, INR 123.13 crores. The numbers for the year as a whole is INR 459.6 crores, the total finance cost for FY '22.
Right, right. Just to confirm the number, sir, the outstanding net exposure from AP in terms of working capital is INR 510 crores, sir?
Yes.
The next question is from the line of Nikhil Abhyankar from DAM Capital.
I just had 2 questions. What will be -- how will we use the money from the sale of NCC Vizag? And do we have any more monetization planned ahead?
NCC Vizag Urban, as my colleague was explaining, as of now we've received only INR 47 crores. The balance equity is coming in 3 quarterly installments. So by FY '23, the balance amount of -- out of INR 199 crores, INR 47 crores is received and the balance will come. That will be used for our working capital and also a reduction in the debt in the stand-alone balance sheet.
Now the other thing is INR 308 crores of loan is there. That, about 50% is expected to come in FY '23 and the balance 50% in FY '24. These monies also, as and when they come, will be utilized for working capital purpose only. We have very little term debt on our books, which means we are moving towards the direction of becoming a debt-free company.
And also, we have told you that the cash on books is about INR 600 crores. And we are targeting and negotiating with the banks to reduce the cash margin on -- yes, INR 558 crores is the cash and bank balances. And if we succeed in convincing the banks and the cash balances lying with the banks on account of bank guarantee cash margin, that money will also come back into the system. So the company is moving towards a situation of becoming a debt-free company in the maybe next 2 to 3 years.
Understood. And one more question, sir. [indiscernible] in Mumbai sewage projects, and so how did we end up bidding for the same?
What are we -- come again?
[indiscernible] sewage projects, Malad, I guess.
Yes.
Sir, how did we end bidding for the same? Because earlier in the question, you also said that we are focusing on JJ and Metro and express way. So any -- what was the thought behind it?
No, no. We have submitted our bids, it's under process. Now we can't disclose any details. The stated project, sewage treatment plant project, we have submitted our bids, which is under process.
Water & Environment, [indiscernible] there's a lot of sewage treatment plants. Across the country, we have done a number of projects. And wherever opportunity [indiscernible], we start bidding for that.
The next question is from the line of Vibhor Singhal from PhillipCapital.
Murthy sir, congrats for retirement. Wish you a very happy life ahead. Sir, my question was basically 2 questions. One is on the margin front and the other on the debt, overall debt front. So on the margin front, I think you mentioned that around 1.1% was the impact of commodity prices and there was more impact on the other exceptional item in the last year in the same quarter. But if I look at it on a quarter-on-quarter basis, also on margins, sir, kind of by around 100 basis points. So on a quarter-on-quarter basis, if I compare it with the December quarter, is the entire impact due to the commodity price inflation?
And if that is the case, how much of do you expect to basically come in to our margins in the next 2 quarters? I know for the full year, you mentioned the margins you're expecting maybe around 10%. But do you expect this pressure to be there in the next 2 quarters also on the margin?
You're aware that in April and May compared to the peak of the prices of '21, '22 have come down. So thereby, we are confident we'll be able to maintain the 10% Q1, Q2 all the entire year.
Okay. And sir, specifically in this quarter, I asked specifically in this quarter, the margins came at 8.5% as compared to 10.8% in the last quarter. So this entire drop was all because of commodity price, is it?
I mentioned that the 2, the exceptional item of the previous corresponding quarter represents 1.4%, and only 1.2% is a material impact.
Okay. So that 1.4% you are mentioning is for the December quarter? For last year Q4?
Corresponding previous quarter of the previous year, I think.
Yes, sir. So I'm asking about Q3, December quarter.
Vibhor, Q4 FY '21, there was a claim of INR 121 crores considered, so which is equivalent to 1.4%. So yes, we do not have any claims accounted in this quarter Q4 FY '22. So that 1.4% and material cost impact of 1.2%. So all put together, about 2.6% has come down when compared to previous year of Q4.
I got that, sir. Sir I was comparing Q3 FY '22 with Q4 FY '22..
No, no, no.
Sir, there the 200 basis points dropped, that is because of commodity price, right?
Yes, right.
Because in Q3, obviously, there was also no exceptional item.
Yes, yes, yes.
Got it. Sir, my second question was on the debt front. So could you take us through that in some -- we've reduced debt by more than INR 600 crores, I mean, compared to last quarter itself. So what is the kind of reduction in the overall interest expense that we can expect for next year? So as you rightly mentioned that this year, we have kept our interest expense at the same number. But as a percentage of [indiscernible] it has come down. So this INR 450 crore number that we are looking at this year, I mean, what could be the ballpark number that we could expect this to come down next year?
[indiscernible] now banks are increasing the interest rates. As you know, reserve bank has increased the policy rate by 40 bps. The MCLR rates are going up. So the interest cost is likely to go up. And I don't think the BG commission costs will come down. So I think the finance cost for FY '23 could remain at, say, 4.5% of the turnover of the company. We have a band, as I was mentioning, 4.5% to 5%. But we are confident we will close it at the lower end of the band for FY '23 also.
The next question is from the line of Prem Khurana from Anand Rathi.
Two questions. So [indiscernible] item to begin with. I mean just want to get your sense o Jal Jeevan Mission orders because if I remember correctly, last quarter when you spoke, I think Jal Jeevan Mission orders were a key contributors to the top line, right? So is it the same situation again in this quarter as well where, I mean, these orders would have contributed? And lastly, also if you could share your thoughts. And I mean how has a payment side still being with these orders of Uttar Pradesh Government.
There was a delay in finalization of the DPR, and consequently, the contract agreements. Now for all the projects, the DPRs and the necessary approvals have been in place. Contracts agreements have been entered. The execution has started. The last year financial year, there was a turnover to the tune of INR 205 crores. This year, we have done about INR 1,217 crores. And for the payment, there is no delay absolutely, we are able to realize well in time.
Sure. And sir, what proportion of the total Jal Jeevan Mission orders would be kind of, eventually, under construction as of now? Because you take up these orders in phases. You decide on the number of where is that you want to start with, go and get the DPRs approved. So how much or what proportion of the total order backlog would be operational or under construction as of now?
I mentioned that the [indiscernible] it should be completed and which we are planning to complete as per the contract agreement.
Sure, sure. And sir, second question was -- I mean, so I'm sure in the way your commodity prices moved up, I mean, you would have already engaging with the client, right, I mean, wherever you have this price escalation clauses in place with these orders. So how are the clients kind of responding to your request to seek adjustment in the project cost?
It is ongoing now for -- wherever we have the escalation, price escalation clause in the contract. And as per the contract returns, we are raising our PV bills, be it on a monthly or quarterly, which the client is certifying, and we are realizing it is a continuous process.
So they're not facing any issues, I mean, in terms of getting these escalations approved...
No, no, no. No issues. No problems.
Sure. And just one last, sir. I mean the kind of reduction that we've seen in the debt, I think the large part of this is also because of higher trade payables. If I remember my numbers correctly, trade payables at the end of this year around INR 4,300-odd crore. And last quarter these were at around INR 3,800. So would you be able to say, I mean, why is this large jump on a sequential basis in payables and if it [indiscernible] this is temporary and it'll go down next quarter or the quarter after that?
Now the prime reason is you are aware that the material prices are increasing. And in order to curtail the price increase, the conscious decision was taken for some of the projects, wherein we have procured steel and pipes more. And compared to the previous year, it is around INR 260 crores inventory has increased. So as a result of this trade payable also has gone up.
The next question is from the line of Parikshit Kandpal from HDFC Securities.
Sir, what is total -- can you [indiscernible] what was the total JJM revenue?
Sir, your voice is not clear.
Before FY '22, what was the total JJM revenue, Jal Jeevan Mission revenue?
Jal Jeevan Mission Revenue for '22, INR 1,218 crores.
Because, sir, in the last call, in the third quarter call, you had said that, in JJ alone, about INR 800 crores of revenue had happened. So why there is a drop in Q4? What is the Q4 revenue in JJM?
We are not able to get really, please repeat.
Sir, for the fourth quarter, what was the JJM revenues from the fourth quarter because I remember in the last earnings call you had said that in the third quarter, we had almost INR 800 crores of revenue from JJM.
No, no, no. That INR 800-odd crores was for 9 months.
That may be similar to [indiscernible]
When we -- In last call, we told that we have done about INR 850 crore revenue in first 9 months. Now for entire year, it is INR 1,218 crore.
And you have guided for FY '23 revenues of about INR 5,000 crores from JJM. So [indiscernible] about INR 5,000 crores [indiscernible].
This is in line with the contract agreement, absolutely.
Okay. And just last question, sir. If you can update us on Sembcorp [indiscernible] when the credit submission on both these litigations.
Sembcorp, the arbitration got delayed because of COVID. And now the arbitration hearing is almost completed. They are likely to do the verdict. I think by June, the final hearing will be done. And by September, we are expecting the final verdict by the arbitration panel.
And sir, any capital gains on the Vizag booked in the stand-alone revenues -- stand-alone P&L, sorry?
Pardon me? Come again, please?
Capital gains from the Vizag land sale and is anything booked in the stand-alone P&L?
Yes. So capital gain of INR 68 crores is on account of sale of Vizag Urban.
And it is end of the cycle, so is it...
[indiscernible] attract any tax outflow on account of this capital gain.
No. Is it in the stand-alone? Or it will be part of a subsidiary? It's not [indiscernible] in the stand-alone numbers.
Stand-alone. Stand-alone.
Because the tax rate is 22%. So I was just wondering if [indiscernible] INR 68 crores is the total tax, so is there any tax? Credit or deferred tax which we have taken in this quarter?
We have the carryforward loss, which we were able to set up cash outflow. These things, we cannot discuss in a open discussion like this. If you have any queries like this, you can send us an e-mail or talk to our colleagues like Mr. Vijay Kumar, or Durga Prasad, whom emails are available with you. Because honestly a lot of time is wasted going deeper and deeper into it in a general discussion about the company's business and its performance. I will take just one more question and then close it.
The next question is from the line of Parvez Akhtar Qazi from Edelweiss Securities.
Now this will be the last question.
Sure. Couple of questions from my side. So first, I think in our press release, we have said that the stand-alone order book is about INR 36,300 crores. And there's some INR 3,058 crores orders in the subsidiary. So which subsidiary order does it pertain to?
[Operator Instructions] Ladies and gentlemen, thank you for patiently holding the line. The management line is reconnected. Thank you, and over to you, sir.
A couple of questions from my side. The first one is, I think in the press release, you have mentioned that the stand-alone order book at the end of the year was about INR 36,300 crores. And there's INR 3,058 crore order in the subsidiaries. So which subsidiary order does it pertain to?
This is pertaining to the mining subsidiary. [indiscernible]
Okay. The second question is, have you made any provision for the [indiscernible] And are there any incremental provision that might be [indiscernible] in future?
[indiscernible] we already made a provision of about INR 117 crores. There's no further incremental provision required for that. On the other hand, we are talking with the clients for an out-of-court settlement, because of COVID it got delayed. But we will hope to close it maybe in the next 6 months or so.
So was this entire INR 117 crores made in this quarter or was it made throughout the [indiscernible]
No, it was made about 1 year back in the books of NCC Infra Holdings, provision has been paid. Because NCC Infra is holding the shares in that company, that is Himachal Sorang, they are the investors. The provision was made long time back.
And lastly, I think with regard to the BMC sewerage project, I think the Supreme Court has already asked BMC to award it. So I mean, while you might not want to comment on the order side, but is it fair to assume that maybe if everything goes, well, maybe sometime this quarter, we can get that order?
It is too early to comment. So let us wait. Once we get official communication, we'll communicate it to you.
Thank you, ladies and gentlemen, as this was the last question for today. I would now like to hand the conference over to the management for closing comments.
We thank all the participants for the enthusiastic participation. If we are unable to take up any of your questions, kindly send us an e-mail or talk to my colleagues here, Mr. [indiscernible] who is already in touch with you, with most of you, and also Mr. Vijay Kumar, our Vice President, Finance. And we thank to DAM Capital for hosting this conference call. And we'll hand over to the organizers. Thank you.
Thank you.
Thank you all.
Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.