PSP Projects Ltd
NSE:PSPPROJECT
Earnings Call Analysis
Summary
Q3-2024
The company's receivables include INR 46 crores in receivables, INR 53 crores in unbilled revenues, and INR 42 crores in retentions. Legal proceedings to recover funds are progressing, with key hearings concluded and further rulings expected by the end of February. The current order book stands at around INR 3,000 crores, with an expected inflow of INR 3,500 crores next year, and projection revenue of INR 3,000 crores. Margins are targeted between 9% and 12%, maintained through stringent tender bidding processes. There has been a slight increase in expenses, especially on projects in UP that are nearing completion, potentially affecting overall margins. The promoter shareholding has reduced due to personal circumstances but is expected to stabilize at the current level of 66.2% for at least a year.
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Ladies and gentlemen, good day, and welcome to PSP Projects Limited Q3 and 9 Months FY '24 Results Conference Call hosted by Dolat Capital. [Operator Instructions] Please note that the conference is being recorded.
I now hand the conference over to Shravan Shah, VP Research and Analyst from Dolat Capital. Thank you, and over to you, sir.
Thank you, Tushar. Good afternoon, ladies and gentlemen. On behalf of Dolat Capital, I'm pleased to welcome you all on the PSP Projects Q3 FY '24 Earnings Conference Call. We have with us Mr. P. S. Patel, Chairman, MD and CEO, along with Ms. Hetal Patel, CFO of the company. We will begin with the opening remarks from the management, followed by interactive Q&A session. I will hand over the floor to Mr. Kenan Patel, Company Secretary for disclaimer, and then management will have opening remarks. Over to you, sir. Thank you.
Thank you, Shravan. Good evening, everyone. On behalf of the management, I'm pleased to welcome you all to the PSP Projects earnings conference call to discuss Q3 and 9 months FY '24 financial results. The presentation, which we have uploaded on stock exchange and our website today, including the discussions that we will be having in this call contains or may contain certain forward-looking statements concerning our business prospects and success profitability, which are subject to several risks and uncertainties, and actual results could materially differ from those in such forward-looking statements. Please note, a copy of our disclosures is available on the Investors section of our website as well as on the stock exchanges.
Now I shall hand over the call to our Chairman sir for his opening remarks. Over to you, sir.
Thank you, Kenan. Good evening, everyone. A warm welcome to the earnings conference call of PSP Projects Limited to discuss the unaudited financial results for the third quarter and 9 months ended on 31st December 2023. We concluded the Board meeting this morning and uploaded details to investor presentation on stock exchange and website for your review. I hope you've got a chance to review the same.
I will begin sharing certain important highlights that took place during the quarter. During quarter 3 FY '24, the company completed 7 projects. The major projects completed are, residential projects for Adani Realty, industrial warehousing project of precast at various locations in Gujarat, precast box culverts for Reliance Jamnagar. During quarter 3 FY '24, the company was awarded 2 projects. The major project awarded are Kalamkhush Campus at Gandhi Ashram, one of the initial projects part of the massive development government plans to do for the Gandhi Ashram. And second is Gujarat Biotechnology Research Centre at GIFT City Gandhinagar.
Company has received an order inflow to the tune of INR 1,060 crores, excluding GST. And lowest bidder L1 in the total order of value of INR 1,222 crores till end of 9 months FY '24. As on today, post receipt of recent letters of acceptance, the order inflow to ease it to the tune of INR 1,995 crores and total L1 order value of INR 928 crores. We are fairly in line with the order inflow guidance provided for this fiscal financial year.
As on 9 months FY '24, the outstanding order book was to the tune of INR 4,443 crores, a decline of 12% on a year-on-year basis on account of faster execution of projects and higher number of completion of ongoing projects has completed to order inflow. Out of the outstanding order book, the private projects comprises of 49%, while government projects comprises of 51%. As on 31st December 2023, there are 49 on-wind projects, 87% of which are based in Gujarat and 13% in UP. Till date, the company has completed 219 projects in total since inception with 84% private projects and balance with government projects.
In October 2023, the company was bestowed with an award of Fastest Growing Construction Company in India below INR 2,000 crores turnover category, fourth year in a row at the 21st Construction World Global Awards 2023. Now I would like to share certain development that took place in the project side.
Regarding Surat Diamond Bourse, as per our release dated 7 December 2023, your company has filed a commercial civil miscellaneous application seeking an interim measures under Section 9 of the Arbitration and Conciliation Act before the honorable district court. Your company prayed to the honorable court to grant an interim relief in form of injection and to pass an order directing the respondees depositing an amount of INR 538.59 crores along with interest thereon amongst other reliefs. The thesis at the stage of arguments and pending before the honorable judge -- district judge, Surat, the matter is adjourned to February 12, 2024. Regarding UP projects, during the quarter, the revenue booked for all projects is through the tune of INR 250 crores. And on 9 months FY '24, the total revenue booked is INR 1,429 crores (sic) [ INR 1,433 crores]. Cumulatively, all the UP projects are at an advanced stage and nearing completion.
Regarding SMC Administrative Building, the project is moving as per planning and schedule. Rafts are completed during the quarter. The revenue booked with the tune of INR 49 crores, and as well -- assume 9 months FY '24, the total revenue booked is INR 171 crores.
Hetal ma'am will share the financial performance of the company in detail with you. I would like to highlight that now the company has entered into different league of building projects, we are getting prequalified and are building a large-sized projects across business states. Post completion of large size and certain marquee projects, our team at presently beaming with the confidence to enter projects and execute them with effective planning across the country.
In our journey of 15 years, we have, over time, made our mark and are recognized for delivering quality projects under planning systems as well regarded in the marketplace, which is helping us complete projects adhering to that project timeline. The endeavor to gradually move up the value chain and increase the projects of higher ticket size gradually over a period of time.
Our bid book now is spread across the projects in the states of Madhya Pradesh, Odisha, Delhi, UP, et cetera. The 2024 budget unfolds a visionary road map for Viksit Bharat with INR 11 lakh crores towards infrastructure allocation consisting of 3.4% of GDP. We look forward to participating in India's growth tail-by-tail for a positive role in the development process. We are confident on the fundamentals of the Indian economy and expect them to remain solid with focus on growth, development across the state -- across all states of the country.
With this, I conclude my remarks, and now I would like to hand over the call to Ms. Hetal Patel to take us through the financial in detail.
Thank you, sir. Good evening, everyone. The financial performance during the quarter ended on 31 December '23 is as below. Quarter 3 FY '24 versus quarter 3 FY '23. Revenue from operations for the quarter is INR 697 crores versus INR 497 crores, which has increased by 40% on a year-on-year basis. EBITDA for the quarter is at INR 71 crores versus INR 62 crores, which is higher by 15% on Y-o-Y basis. EBITDA margin is at 10.25% versus 12.39%. Net profit for the quarter is at INR 33 crores versus INR 35 crores, reduced by 8% on year-on-year basis.
PAT margin is 4.63 versus 7.01. The revenue generated from 7 UP projects put together was INR 250 crores during quarter 3 FY '24. Cumulative revenue till December 31 '23 is INR 1,429 crores. The other expenses increased from INR 5.2 crores in quarter 2 to INR 8.51 crores in quarter 3, which mainly includes ECL provision on trade receivables to the extent of INR 3 crores.
Employee costs increased from INR 29.56 crores in quarter 2 to INR 33.75 crores in quarter 3, mainly due to appraisal process during the quarter. The increase in finance cost from INR 12 crores in quarter 2 to INR 15 crores in quarter 3 is mainly on account of increasing short-term borrowings and bill discounting facilities used during the quarter. The increase in depreciation from INR 14 crores in quarter 2 to INR 18 crores in quarter 3 is on account of significant additions in fixed assets to the extent of INR 34 crores during the quarter. During the period of 9 months, company has incurred CapEx of INR 142 crores, out of which INR 74 crores is for precast facilities.
I would like to mention a few of the important balance sheet numbers as of December '23 -- December 31, '23. Long-term borrowings, INR 75 crores, including short-term maturities of INR 50 crores, short-term borrowing INR 403 crores, excluding short-term maturities of INR 50 crores. Gross block of assets INR 543 crores, net block INR 325 crores. Additions during the quarter is INR 34 crores. Net annual revenue INR 409 crores. Retention noncurrent INR 58 crores. Retention current INR 101 crores. Mobilization advance INR 221 crores. Inventories INR 269 crores, which comprises of INR 122 crores of construction materials, INR 123 crores of work in progress and INR 24 crores of finished goods. Working capital days are as follows: Debtor days are 63, creditor days 60, inventory days are 35 and total net working capital days are 38. Out of the total sanctioned credit facilities of INR 1,497 crores, company utilized INR 1,030 crores and INR 467 crores are available for further utilization. Fund-based utilization is INR 245 crores and nonfund-based utilization is INR 785 crores. As on December 31, 2023, the company has total fixed deposit of INR 257 crores, out of which lien free deposits are of INR 47 crores. And FDs with lien are INR 207 crores, with bank for credit facilities. Work on hand as on 31st December is INR 4,443 crores, and detailed bifurcation is available in our uploaded presentation.
That concludes the update on financials, and we are now open for the question-and-answer session. Thank you.
[Operator Instructions] The first question is from the line of Tushar from KamayaKya Wealth Management.
I just wanted to understand the receivable from the Diamond Bourse. And what is the update on that?
Receivables which are booked on the accounts, it is I think INR 65 crores is on the account of the bill, INR 40 crores is on the account of work in progress and INR 42 crores is under account of retention...
Yes, I'll repeat. It's INR 46 crores on receivables, INR 53 crores on unbilled and INR 42 crores as retention. So that is the outstanding as we have already mentioned in the notes.
Okay. And there was some -- getting on the same. What's the update on that, I just wanted to...
See, update, we've -- I've already discussed in my initial call, wherein we have stated that the matter is in the court. And presently, we have initiated only Section 9. So wherein just to safeguard our money before only we go to the arbitration. The first hearing has already happened on 7th and second hearing from our side is on 12th. So probably, by end of February, the Section 9 matter should get completed, and we should be in a position to get some order from the court regarding our money.
Fair enough, sir. Sir, I could see bidding of good others. Like I just wanted to understand your growth henceforth like for the next 2 years, how do you see your top line growing and also the order book, sir?
See, order book, as I already said that the present order book, we are -- this year which earnings is was about in the range of INR 3,000 crores. I think we are still in the line that we will be able to achieve that INR 3,000 crore order book. And next year also, when we think about the projection revenue of about INR 3,000 crores, then the order book inflow should be in the range of INR 3,500 crores. I think we both the things are -- which we have been doing till now and will be -- we are confident that next year also we'll be able to doing the same.
And sir, what sort of margins you're closing on that?
The margin, as I always said, it should be in the range of 9% and 12%, and we try to maintain that as far as process as we maintain our tender bidding criteria and will be in time to remain in the same rate.
And the next question is from the line of Amit Khetan from Laburnum Capital.
So a couple of questions. First, just wanted to get a better sense of institutionalization in the company. In that context, would it be possible to share how many employees in the company beyond the promoters -- promoter family, get a remuneration of, say, more than INR 50 lakhs?
I think I have to come back to you, but at least I think it should be more than 10 to 15 people.
Okay. More than 10 to 15 people?
10, maybe the maximum 10 people, yes. Yes. It must be in the range of 10 people, yes.
Got it. And secondly, over the last 2 to 3 years, the promoter shareholding has come down significantly from 74% to 66%. What is the reason for this? And how should we look at the promoter shareholding going forward?
So this reduction has been done past -- before March. And I think after that also in the first quarter and the second quarter, we already said that we don't go beyond this level. Hence there was some requirement from -- by custom side, wherein we have done that. Recently, it was 72, then we increased our share to 274. And literally lately by selling some of the [indiscernible] it has now been to 66.2. So probably this will remain the same as far as -- now 1 year is concerned.
Got it. So the reason was for some personnel requirement.
Yes, it was a personal requirement.
And the next question is from the line of Vishal Periwal from IDBI Capital.
I have 2 questions. First, in terms of margin in this quarter, we have seen a little bit of dip. So I know on a quarterly basis, things do move up and down. But is there any particular project that we have executed or started that led to this? Or how exactly you see this going ahead?
Actually, it is not related to any one project. But yes, we can say that there has been some more expense at the UP side because it is at the verge of completion also. And as we were moving a little bit fast to complete it by December, major projects. And by March, all the projects, there were some few expenses made because the labor which we are managing mostly on department labor. So I think INR 4 crores or INR 5 crores must have gone there in terms of speeding up the project.
Okay. So as you are saying that probably we are in a verge of conclusion by March. So probably March quarter we could have a similar sort of -- that will be a fair understanding?
Pardon me?
So -- no, you said like we are on the verge of completing those projects in UP, which is -- this margin. So which means like in the quarter 4, we can expect a similar sort of margin that what we have done in the December quarter?
There is difference certainly. Because as I said, we try to maintain at 11% and 12% by the project work -- which is left is about in the range of INR 60 crores to INR 63 crores. So probably there won't be any much impact, but the quarter which -- the work which we are dealing in the last quarter was the highest, the difference is INR 50 crores. So that was the reason that there was some more expenses than on the labor side.
Okay. Sure. And then second is on the equity raising plan that we have put it in the BSE. So if I look at in terms of our limits and then borrowings, everything is probably quite benign and sort of buffer. So what is the reason of the -- I mean, Board taking an approval for the equity raising.
See, it is an enabling process, which we have initiated. So it will be decided later on because it is more majorly referred in terms of growth capital that doesn't requirement of enabling up to INR 300 crores. That's what we have thought of. No fixed idea of what exact amount we have been -- And as we have been facing this working capital issue in the company since March 2022. So it's not that we are very much inclined towards going clearly, but it's an enabling process which we have done. If we get a better approach, we will go ahead.
Okay. So if I can just get the number again, sir, what is the -- I think madam did mentioned, I missed, what's the gross debt as on date?
Yes. As of 31 December, long-term borrowing is INR 75 crores and short-term borrowing is INR 403 crores, which includes fund-based facility utilization also. That is around INR 60 crores. FD/OD -- sorry, FD/OD facility utilization is INR 60 crores.
Okay. And based on the current problem like the bandwidth that we have, what is the incremental debt that we can raise and then probably we can go for equity raising. Anything that you can provide a color?
Incremental debt in terms of short-term rates you are talking about?
Yes. I think that working capital.
We have around INR 30 crores of free limits, so that we'll be utilizing some consumption -- but we will not be going for further debt increase.
And the next question is from the line of Shravan Shah from Dolat Capital.
Sir, just to get a further clarity. So in 9 months, we have done a 15% revenue growth. So in the fourth quarter, how much are we planning? So for the full year, how much growth are we looking at? So last time, we said INR 2,600 crores revenue for this year, FY '24. So now how we are seeing that?
I think, Shravan, last time also, I said between INR 2,500 crores and INR 2,600 crores. So we've been in the range of INR 2,500 crores plus.
Okay. And for next year, you said the INR 3,000 crores revenue that we are looking at for FY '25?
Right. Right.
Okay, okay. And in terms of the margins, previously, we used to say 11% to 13%. But now it seems that we have reduced this range 11% to 12%. So are we seeing that going forward, our margin will not be -- there is no scope for it moving up?
See, it's an interest of 1% or 1.5% plus or minus. On the conservative side, I usually say [indiscernible] people always say [ 30 ], that's the only difference. And as I always say, it is very difficult contracting from when we are working more on an EPC project when -- which is the exact margin that we will have because we are assuming uncertainties in an EPC project, to sometimes to get a benefit of 1%, 1.5%, and sometimes you get a loss of 1%, 1.5% because we are not able to annotate the whole project within 20, 25 days of bidding. So this would plus or minus both side.
So for fourth quarter, this quarter, we had a lower EBITDA margin of 10.3%. So it should come back to the normal level of -- that's for 11 months also -- 9 months also, if you look at 11.5%, 11.6%, so that range will come back again in the fourth quarter.
Yes. I cannot assure you, but yes, the projects -- the major projects which were this quarter was because of UP. And now the UP projects are getting completed and only INR 65 crores -- INR 60-plus crores is left out, I think we should be in a position to come back to the original market what we have been expecting.
Okay. And just to get a clarity. So equity raising and the rate combined put together. So this INR 300 crores is just enabling resolution that we are taking. And if we get the opportunity, we will try to raise. But as such, we are not needing this capital right now on an urgent basis.
Yes, it is not an urgent basis. But as I already said, debt equity is required for the growth capital from here on [indiscernible] which we are assuming -- [ 3,000 ]. And most of the orders if you remember, are getting converted. L1 are getting converted to order in third quarter and maybe in the last quarter. So probably, all these projects will require margins bank guarantees, which will require margin also. So probably decision enabling process which we have initiated, we think of it as and when we get.
Okay. But sir, so how much is -- I think still we have a scope on the nonfund-based limit scope is there. So even if this INR 928 crores L1 is there, even if it gets converted, do we need the extra equity to get the bank guarantees?
Yes. Basically what I'm saying is the order book, which you see, the INR 900 crores, we have already declared INR 650 crores and further 2 orders are going to be -- getting it will receiving in few days. So probably adding on the INR 1,500 crores to INR 1,600 crores from here on, that will also require a bank guarantee of INR 350 crores to INR 400 crores, which will require a margin of minimum for the 20%, if we say, then also INR 80 crores to INR 100 crores -- sorry, INR 1,500 crores x 20%, INR 300 crores.
Okay. And just a clarification, in terms of the L1 order, INR 928 crores. So if I -- does this only include Science City INR 297 crores and Gati Shakti Vadodara order of INR 631 crores. There was one dairy plant Rajkot project of INR 441 crores. So is it also not part of L1 or got converted?
No. No. It is not now a part of L1 because we have deducted that from our L1 order as such the project is canceled because of the budget. Dairy was expecting and all the prices to come in the range of INR 400 crores to INR 450 crores, but both the bids has gone beyond INR 500 crores, which was not their budget. So now they are revising the whole budget and reducing the scope of work, and they will come up with a tender of INR 350 crores to INR 400 crores again by end of March or maybe in the 1st week of April.
Okay. And so now in terms of the bid pipeline, so what's the bid pipeline and particularly a couple of projects from there and the Delhi Railway Station INR 4,800 crores project. So what's the status there?
I think it is already there in the news, the INR 4,800 crores Delhi Railway Station tender has been canceled. But still, we have an order bid pipeline of about INR 6,000 crores, which I would give you in detail: Residential building in Delhi is about INR 1,000 crores. Commercial building in Delhi NCR is about INR 1,000 crores. There is one mall in Surat, which is about INR 200 crores. Commercial building in GIFT City which we are bidding is INR 400 crores. Airport at Varanasi, which we already bidded is INR 1,000 crores. And Industrial project at [indiscernible] INR 50 crores and commercial building at GIFT City INR 150 crores. And there are a few tenders which are just coming during this last week about 5 to 6 projects in UP of court building, which is in the range of INR 2,000 crores. So this totals INR 6,000 crores. So presently, we can see that the bid pipeline is in the range of INR 6,000 crores, excluding the Delhi.
Okay. Got it. And sir, if -- let's say this SDB, as you are saying, correct me if I'm wrong, that we have put a claim of INR 539-odd crores, that's what you mentioned, I think, in your remarks. And broadly, we are expecting by end of this February, the outcome. And if, let's say, we even if settling middle of this INR 300 crores, INR 400 crores also, if we receive this and plus the -- whatever we were supposed to get INR 141 crores, then do we think that we need to go for our equity raising.
See, first and the foremost think, Shravan, you should understand that we are not getting the cash money out of the hearing of Section 9. Section 9 allows the provision of protecting my money. It is not that they will be paying me that money. So when -- when there is a private organization, you have to protect before go to the court. Because in private organizations, when the project is over, and there is no one in the association who can bear this money or the association may not have that much money at the last -- later stage when -- you get an award of an arbitration.
So by law, before going to arbitration, in private organization, you have to file in Section 9. Thereby they can protect your -- in the -- suppose, we have made a claim of INR 530 crores, how can they -- after understanding the claims, if they find some dubious in the claim, they will protect our money by -- in a way of bank guarantee to be placed by the client or maybe in terms of putting link on the sales part of the offices, which are yet to be sold, such types of provisions, they make or they make -- can create an escrow account also -- escrow account also wherein this money, which is coming as a part of revenue in that organization is put in escrow.
So such types of provisions are there in Section 9. Otherwise, if we -- after hearing of Section 9, if they come to a conciliation at the personal level. And if there is a result, before going to arbitration, and we get something out of this in the range of INR 300 crores, INR 350 crores. I think then we will always think that whether we want to go for QIB or not. Then probably, let us wait for 1, 1.5 months.
Okay. Got it. Got it. And the current debt level, which is going up, so INR 478 crores, combined short term and long term. So how do we see this for this year and for next year, considering if we are reaching a INR 3,000 crore revenue next year? So how one can look at this date and at the same time, the finance cost, which is going up quarter-on-quarter. So how one can look at this thing?
Yes, actually, if you clearly see the overall from March '22 business started. The basic money which we got stuck up is majorly because of Surat Diamond Bourse. And lately, still the projects of UP, still we have some money receivables to be -- received from UP projects also. So probably, this is majorly because of the money getting stuck up in these large -- 2 large projects, that's the issue related to that. But both the moneys are in place. I think there won't be any much requirement of debt going up from here. So that's the way the -- at least we can get INR 300 crores out of Surat within this 1 month before March. And then I think the debt level will come to less than a normal.
Okay. But if we don't get, then this INR 400 crores to INR 500 crores is a normal level that...
That was the reason for enabling this QIB. So that was the further option of going with this, case goes on for arbitration for further 1 year, then we need some money to ease out our process and getting the working capital smoothly -- smoothness. So that is the reason I'm reducing our interest cost. That was the reason to enable this query.
Okay. Got it. And last, Hetal ma'am, the unbilled revenue is how much? And the CapEx for the full year is how much? So 9-month number we have. For the full year, how much we are looking at?
Yes. I already mentioned this amount in my earlier speech, but I'll repeat it. Unbilled revenue is -- net unbilled revenue is INR 409 crores, right? And the CapEx we have incurred during the 9 months is INR 142 crores.
Yes. So for fourth quarter, how much more are we looking to do CapEx?
Okay. See, that depends on the initiation of the project, and we may require around 2% to 3% of additional CapEx for new projects.
So basically, we are in the process of starting 2 or 3 large projects. One is the Gati Shakti equity of INR 630 crores, INR 450 crores or INR 400-plus crores on Riverfront and INR 400-plus crores with Dharoi Dam. I think all these -- the 2 projects of Dharoi and Sabarmati Riverfront, that will not require much of the CapEx. But yes, at the site of Gati Shakti initially we may require. But probably that will be also in the initial stage of foundation doing the [indiscernible] and excavation and going to the basement. So I don't see much investment on the CapEx for this last quarter.
And the next question is from the line of Parikshit from HDFC Securities.
Congratulations on a deeper number. My question is why Surat -- with holding the money payment, why are they not paying you? So what is the issue? What are they telling you on to?
Sorry, can you please repeat. Your voice is...
Your voice is very low, Parikshit.
[Foreign Language] why is that SDB not paying you money, what is their contention? Why is they blocking or withholding the money?
You are talking about SDB?
Yes, yes, yes.
See, there are -- basically to understand is we have completed the project in March '22 when we got virtual completion in June 30, '22. So probably till that time the overall, the scenario was good. They completed and also they have certified and approved some of the bills which we have already claimed in our books also. So when they saw the claim in detail and by going through some of the legal process they must have understood that they are not eligible to pay such a large claim. So then they started -- started putting on hold the existing money, so that we come to a conclusion very easily with them so that because my INR 150 crores will be on hold.
So they are trying to push me in a way that I come to compromise easily for the INR 500 crores claim, that must be the reason. Otherwise, there is no point because in our claims also, we are very clear, and it is being approved and only the certification is not done about INR 150 crores. Rest everything is on claim side. That is a dispute. They can always say that, that is a dispute, which can go to arbitration.
But again, there is a close of price escalation after post measure. So they understand that our point of view is very clear since they have initiated to fight. Now they are understanding day by day on the hearing -- when the hearing are going on in -- they are able to understand that we are not able to save because we are very clear on our terms and condition of the content.
Okay. And on the UP projects, so here in SDB we have INR 141 crores, which we have to receive when we have claims. What would the UP projects, like how much is the pending which is withheld there?
It's INR 129 crores, and which is in the process only. It's not concluded, which has been...
We have received that amount in January month. The December auctions, INR 129 crores that -- so December invoices has been paid in January and February initial cost.
But do you have in this -- okay. So in this -- against the full year of revenues, you have executed around INR 129 crores spending here, you are saying?
Yes, right. As on December...
Okay. Okay, sir. And the last thing, sir, you said that because of UP projects now getting over about INR 60 crores, INR 65 crores is left. So once that is done, you will come back to your historical margins, I mean, which I think you're guiding in the range of 11% to 12%, right? Is the understanding right that from first quarter of next year, you should be back to 11% to 12% EBITDA margin?
We should expect that.
And the next question is from the line of Adnan from Bastian Research.
Sir, first one was on debt. So I think a couple of quarters back in the conference call, we discussed that once the UP projects gets over, there will be substantial -- a substantial reduction, which will take place as far as debt is concerned. Now that the UP project is on the verge of getting completed, can we expect a INR 150 crores odd despite in debt in the coming 2 quarters? Is that a fair understanding to go forward with?
See, debt level you are talking about, right?
Right.
Yes. So as sir has already mentioned in a reply for earlier question, see, the debt level increase is mainly due to the amount stuck up with SDB and the routine UP bills are being paid in around 1, 1.5 months or so. So that type of working capital is required in a couple of -- till the UP projects are over and SDB matter is sorted out.
Yes, that's what I'm asking. So -- once the UP project is over, can we see a substantial reduction in debt taking place? Maybe in the next couple of quarters, if that's going to get over?
Yes, of course, we can expect that.
Okay. That's helpful. Sir, second one was on the Surat Diamond Bourse only. So sir, there are 2 amounts. One is this INR 140 crores amount. And one is this around INR 500 crores is some other demand. So can you just help me understand what is this INR 140 crores pertaining to? And what is the INR 500 crores pertaining to? I'm a little confused there.
Total, it is INR 532 crores, which includes this INR 140 crores. So INR 140 crores already booked in the books and the rest of the things, which are at disputed claims, which is a part of this INR 532 crores.
And the next question is from the line of Devang Patel from Sameeksha Capital.
Sir, firstly, you mentioned in the bid pipeline a few thousand crores of projects having Delhi including the airport project. So on these INR 1,000 crores projects, are we bidding on our own 100%?
Yes, yes, yes. All the projects we have, which is of the largest size, we are qualifying and we are bidding of our own. There is no JV in this.
Okay. And the airport project also, we will be qualified on our own?
Yes, of course, we are qualifying, so we have bidded.
Okay. Sir, and secondly, on this Surat Diamond Bourse, could you give some time line on how things are progressing. At one point, you mentioned by March, we might be getting some amount back.
No, no. It is not like that. See there are 2 things going on. One is the Section 9, which is related to safeguarding our money when we go to arbitration. So even if the Section 9 needs to be concluded before 5th of March as per the court's understanding. So before March, before 5th of March, they have to give us a decision that how much money they are pushing the clients to withheld or they will ask the client to put us on guarantee. So once they understand about this INR 532 cr claims, they may ask Surat Diamond Bourse to put INR 100 crores, INR 200 crores -- around like INR 300 crores. That will be in the form of bank guarantee or a link to a property which is not sold. So that's first part.
Second part is after hearing this hearing, the client may consider that when the facts are a little bit true, if they come to conciliation part, then the whole story can be concluded, and we are ready to accept -- if they are ready to accept then we are ready to negotiate, then that can end up in March. But this thing does not happen on the calculation part. We will have to go to arbitration and that arbitration process is going to take minimum 1 year.
Understood, sir. Sir, and secondly, on the debt reduction earlier. I think last call, we were looking at INR 300 crores, debt coming down to INR 300 crores by March. How does it look now with what had happened in the last quarter?
Yes. I've already mentioned the debt level is around INR 400 crores, short-term data, I'm talking about.
Okay. Are we expecting some reduction by the end -- in the next quarter because you said -- you mentioned INR 129 crores has come...
Yes. See, it depends on the moment of money receivables from UP projects. So if that cycle goes fast then we'll be utilizing less as compared to this quarter.
Okay. Sir, and lastly, because the UP project will get completed. And I think you indicated earlier in the closing stages, we will book higher margins. Is that still possible that the UP project getting overview will have higher margins from that project booked?
No, no, it's not about higher margin. It will be in the range of what we are focusing on. We have been understanding from the bid -- generic bidding which we do. We should be in the range of 11% and 12% or maybe 11% and 13%, that new people always see. So in my view, it will be in the range of 11% and 12%.
[Operator Instructions] The next question is from the line of Rushabh Shah from RBSA Investment Manager.
Sir, there is this Lulu Mall is going to come up in Ahmedabad with a project cost of around INR 4,000 crores. So sir, are we bidding for that? Or is the bidding completed? Sir, any status around this project?
You're talking about this sports complex?
Lulu Mall projects, sir, India's largest mall project in Ahmedabad.
Lulu Mall, okay, okay. No, no. Yes, there is a project, but it's not -- it cannot be of a size of INR 4,000 crores. But that can be a rumor. But yes, there will be a process wherein we will participate. But as of now, nothing has come from the client side. We have not heard about the tender yet now. But yes, the Lulu Mall is announced and the place is already defined. So probably that may come in the later stage, after March.
After March, okay. Okay. And that will be around 30%, 40% of the total cost that we may be able to bid for?
Pardon me?
What is the total size of the project that we may be able to bid for or the total project?
So, I think that's the INR 4,000 crores, maybe the total investment, which Lulu Mall people have announced. So that includes land and the total fit-out and everything. So probably the size of the project should be in the range of INR 500 crores to INR 1,000 crores as far as civil part is concerned.
Okay. And sir, regarding this SDB, is there anything -- have you provisioned so far? Or everything is just currently standing in the books in terms of reversal of debtors or anything, has it any entry been done in the books so far?
No, it is standing in the book. There is no provision. We have already mentioned in our note that we are hopeful of recovering this amount.
Okay. And sir, you mentioned that post March, there will be -- the things may go forward with an arbitration or conciliation. And if you choose to go for arbitration, then things can stand, go for 1 year also. So what stand will we take or will we be interested more in settling the matter? Or will be keen to delay the matter wait for 1 year for the money to be received?
That depends. You can see it is more about the basis what we have gazed and what are the best things which can be negotiated. So that depends on clients' intention then only we can say. If the client is concerned -- and say that let us negotiate at INR 50 crores, we are not ready. So it depends on what type of a conciliation client would like to do and what are the strong claims which are positive as far the terms and condition in the contract. So we will stick to that. But probably, we are inclined towards conciliation but not at the sake of any...
And the next question is from the line of Shravan Shah from Dolat Capital.
Hetal ma'am, what's the total debtor sales in December and trade payables?
Yes. As on December, the debtors are INR 481 crores, and trade payables are INR 462 crores.
INR 462 crores. And inventory, you mentioned, INR 269 crores?
Yes, right.
The next question is from the line of Vaibhav Shah from JM Financial Limited.
Sir, what is our precast revenue in the first 9 months?
See, exactly, we have a figure which is related to precast because it is under both levels. Some of the orders are from a different client and some of the orders we executed from our existing orders, which are related to field work. So exactly we cannot be clear as of now or we are not getting the right figure for the exact even we generate to the precast still now. But overall, we were expecting that this year, we should be able to generate even over INR 180 crores on the total facility after the end of the year.
So ballpark, what margins are we expecting for the whole year from precast? It will be similar to...
At the initial stage, we were just trying to push it into the new market and let the people understand now, if you have heard some of the figures. Lastly, we were able to do 10 lakhs square feet of warehousing facility in the last 12 months. We have done so many compound works which was also at the speed of 1 kilometer per month. So things are now getting materialized and now people are accepting this technology. So on the longer run, we'll be trying to stick on the margins of 11% and 12%. And on the later stage, again, when the technology is universally accepted and there is a shortfall and people requiring the work to be completed before time or on time, they will be paying us more. So at that time, we can increase our margins of 12% to 3% or 4% higher.
So currently, we are EBITDA positive, right, on the precast...
Yes. Yes. Presently, we are at EBITDA positive, but not to that level that we are saying that 11% and 12%.
Okay. And sir, out of the INR 142 crores CapEx we have done in the first 9 months, what has been done for precast?
INR 74 crores.
INR 74 crores.
And I missed the number for CapEx on fourth quarter?
That is INR 34 crores.
Okay. And next year, what are we expecting in terms of CapEx?
Again, every year, if you see the total future cities in the range of 3% to 4% of the total revenue, so we are considering next year at INR 3,000 crores, it will be in the range of say INR 100 crores to INR 100-plus crores.
Okay. And that NAV includes anything on precast for FY '25?
In precast, again, now presently, we have full pledge facility of doing the work for infrastructure and for the buildings. So as of now, we are not seeing any possibilities to invest. But if there is a large order in terms of infrastructure which modes we are not having. So we may go for such type of order if the order is large. But as of now, we are not seeing any large CapEx to come in with us.
And lastly, what is the capital utilization of precast plant currently? And what is the exact capacity...
Presently, we can say, as I said, that we did 10 lakh square feet of warehousing facility in a year. So our total plant capacity is about 30 lakh square feet per year. So presently, our utilization is in the range of 40% to 50%.
So maybe 80% utilization, we can clock 11%, 12% margin?
Yes.
And the next question is from the line of Uttam Kumar Srimal from Axis Securities Limited.
Sir, my question has been answered.
The next question is from the line of Dinesh Kulkarni from RDST.
Sir, just one question. Like we see most of our projects are being executed in Gujarat and largely in UP. I just want to understand what's our thought process? Why are you not looking at other states which are coming up or even Maharashtra for that matter, like are they not good enough projects...
The region which we are not quoting or it is not over the region which we are keen to quote. It is more about the opportunity and type of project we bid. So presently, what order book, which I have said that we are going bid for Delhi. We are going to again UP. And there are a few projects which we are going to work -- bid for Odisha also. So it depends on the type of project and the size of the project and the qualification criteria of the project we always think about the state of the project.
I now hand the conference over to Mr. Shravan Shah.
I thank management for giving us the opportunity to host the call. And thank you all the participants. P. S. sir, do you have any closing comments?
Yes, I'll close by my statement. Thank you, Shravan, for give us -- for organizing this call. So on behalf of the management of PSP Projects, thank you for joining us on the earnings call today. Thank you for your support and trust in us. We hope that we have been able to address most of your queries. In case of further queries, you may reach out our Investor Relations team -- relation adviser, Ernst & Young, and they will connect with you off-line. Thank you Shravan from Dolat capital for hosting our call. Thank you, all of you, and God bless you.
Thank you, all.
On behalf of Dolat Capital Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.