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Ladies and gentlemen, good day, and welcome to Sadbhav Engineering and Sadbhav Infrastructure Project Limited Q1 FY '22 Earnings Conference Call hosted by Asian Markets Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amber Singhania from Asian Markets Securities. Thank you, and over to you, Mr. Singhania.
Thank you, Nirav. Good afternoon, everyone. On behalf of Asian Markets Securities, I welcome you all for Q1 FY '22 earnings conference call of Sadbhav Engineering Limited and Sadbhav Infrastructure Project Limited. We have with us today Mr. Nitin Patel, ED and Chief Financial Officer of Sadbhav Engineering Limited representing the company along with their team. We shall have a quick update on the -- from the management on the results and other updates, then we can proceed to a Q&A session. Over to you, Nitin bhai.
Thank you very much, Amber bhai. Good evening, everyone. On behalf of Sadbhav group, I welcome all of you for earnings call for the quarter ended 30th June 2021 of Sadbhav Engineering and Sadbhav Infrastructure. We apologize that due to the certain emergency exigencies, Mr. Vasistha Patel has to travel, so he will not be able to join for today's call. So just to start with basically the numbers and everything. So before that, I would like to go through basically the -- what is the -- how the asset monetization plan has taken place; number two, what's debt profile, how it has got changed, what is the current debt profile and what the company is basically planning and so far as the debt deleveraging of the balance sheet and also to basically ramp up the -- basically the working capital at the group level for the smooth and basically the incremental execution. So we all know that the -- since last 1.5, 2 years, the completed the deleveraging process and the monetization of the asset is already is going on. So as of first half, company had held off 8 BOT projects in March '20, out of which the company has realized roughly around INR 2,360 crores of the equity value in the -- apart from that, in the Q1 of the current year, the company had sold basically 70% of the units held in the -- of the -- by the group under the IndInfravit Trust and also raised the long-term funds in form of the NCD from the long-term investors, all put together some INR 991 crores. And the cash flow has been -- basically, the inflow has been made in the group level. So post that, actually, I would like to mention here that today, currently, we are sitting on the -- basically on a stand-alone debt of SEL of around INR 1,144 crores; and SIPL is INR 550 crores actually. So this is the debt position on a stand-alone basis in both the companies or as a group level. So now if I see that the -- how the plan and how it will span actually over the next, basically, 6 to 12 months. Yesterday, we all know that the announcement has been made by the company for the divestment of its largest asset of the group, that is the Maharashtra Border Check Post and which will fetch the net equity of INR 550 crores within next 4 to 6 weeks, actually. The company has also decided to basically monetize Ahmedabad Ring Road and 4 HAM assets, the 3 which we already completed and fourth one is Jodhpur Ring Road, so -- for which the affirmative steps has already been taken and which according to the rough assessment, we are expecting it to fetch around INR 550 crores to INR 600 crores of further basically equity in the group level within the time span, basically, what I have mentioned right now. So this monetization is predominantly for the purpose of deleveraging the balance sheet as well as to provide enough cushion to the working capital, so as to ramp up the execution works of the company level. Apart from this, the company has an outstanding equity investment of INR 780 crores, including Gadag project, which is held in Sadbhav Engineering. That equity investment has already been made. And so except for Gadag, the entire equity investment in all the hybrid annuity projects has been completed by the group actually. And also, company holds 2.5% of the units of the IndInfravit Trust, which, according to our assessment, may realize around INR 160 crores to INR 180 crores based on the transaction what we did recently. At Sadbhav Engineering, apart from this, the Sadbhav Engineering also held the arbitration awards in hand, which has already been received, to the tune of INR 350 crores. Okay? And so all put together, if we see that there is enough cushion what we have mentioned that is available within the group level so far as the deleveraging of balance sheet is concerned and also to infuse basically the cushion for the working capital. Okay? And so according to us, actually, and the company and management is committed and focused basically to complete this transaction, so as to address the concerns of the various stakeholders and build a strong base for the next growth phase of the business cycle actually. So that is what basically we are planning. Now basically, let me begin with the financial numbers at SEL and SIPL. First, we will go through the SEL numbers. Post that, we'll go for the SIPL. In SEL, the income from operations for the current quarter stood at INR 263 crores as compared to corresponding quarter of INR 230 crores. EBITDA for the current quarter stood at INR 24 crores as compared to INR 19 crores in the corresponding quarter of the previous year. The net loss for the current quarter stood at INR 16.86 crores as against a net loss of INR 26.58 crores in the corresponding quarter of the previous year. The segment-wise revenue breakup for the quarter is already mentioned in the media release. The gross stand-alone debt as on 31st March 2021 was INR 1,210 crores, which has came down to INR 1,144 crores as on 30th June '21, which shows the reduction of INR 65 crores. The order book as on 30th June '21 stands at around 900 -- INR 9,110 crores. The segment-wise order book has been provided in the media release. Now starting with the SIPL financials. The stand-alone business, the revenue from operations for the current quarter ending 30th June '21 stood at INR 32.65 crores as compared to corresponding quarter stood at INR 48.84 crores. The finance cost for the current quarter has remained at INR 40.93 crores as compared to the corresponding quarter, which remained at INR 26.69 crores. In the current quarter ending 30th June '21, we have booked the loss after tax of INR 64.35 crores, which includes the exceptional item loss of INR 62.21 crores against the profit after tax of INR 6.50 crores in the corresponding quarter. In the toll collection segment, for Ahmedabad Ring Road, we have seen the toll collection revenue in Q1 FY '22 was INR 23.62 crores as compared to Q1 FY '20 at INR 13.50 crores. This is because of the pandemic and closure of the toll for a certain period of time. And similarly, in the Maharashtra Border Check Post, the Q1 of the FY '22, it was INR 71.49 crores as compared to Q1 FY '21 at INR 22.82 crores. The toll collection for Rohtak-Panipat and Rohtak-Hisar projects have been stopped, suspended since December 25, 2020, due to the farmer's agitation in the state of Haryana and Punjab. Since toll suspensions remained for more than 180 days, this has triggered the force majeure event and final -- and because of this, the final termination notice has been issued to NHAI for Rohtak-Panipat project and intend to terminate notice has been issued for Rohtak-Hisar project. So SIPL has a current outstanding order book of around INR 3,900 crores, excluding GST, including orders of IndInfravit Trust for the 8 SPVs, which has already been hived off actually. The revenue has been started to flow from this now and the current quarter's revenue for INR 37.51 crores have been booked towards the O&M business. Apart from this, the 3 HAM projects, where we have already received the provisional completion certificate, we are expecting additional INR 21 crores basically of the revenue of the O&M in this current fiscal. The consolidated debt of operational SPVs as on 30th June 2021 is INR 3,042 crores, including Ahmedabad Ring Road, Maharashtra Border Check Post, Rohtak-Panipat and Rohtak-Hisar. The consolidated debt as on 30th June 2021 for HAM under construction SPVs is around INR 2,262 crores, and stand-alone debt is around INR 887 crores, which includes the loan from SEL of INR 337 crores. So making an external debt of INR 550 crores in SIPL stand-alone, which we have discussed earlier. So here, I would like to give the further brief and the details of the breakup of the debt. So actually, if you see the 4 operational SPVs, the debt outstanding, the Ahmedabad Ring Road outstanding debt is around INR 87 crores; Maharashtra Border Check Post is INR 1,130 crores; Rohtak-Panipat is INR 838 crores; and in Rohtak-Hisar, INR 988 crores. So this is the breakup of INR 3,042 crores. So post the completion of this Maharashtra Border Check Post and the termination of Rohtak-Panipat and Rohtak-Hisar and also the Ahmedabad Ring Road, which we are expecting to complete the transaction in near future. So we expect that the entire INR 3,042 crores of the debt will go out actually from the balance sheet of the company with -- in the near future because the transaction and basically the required action has already been taken so far as these 4 operational SPVs is concerned. So apart from the HAM assets, the debt of INR 2,262 crores, which I have just mentioned, out of that, INR 1,029 crores belongs to 3 HAM assets corresponding to Sadbhav Bhavnagar, INR 316 crores; Udaipur, INR 423 crores; and Rudrapur, INR 290 crores. So this INR 1,029 crores is supported with the annuity, which is flowing in the system from all the 3 basically projects from NHAI. So if we take out this INR 1,029 crores, the remaining debt for the HAM assets remains INR 1,233 crores. Out of these, 2 projects, Una and the BRT, for which the provisional completion certificate has already been recommended, and we are expecting to get basically the formal approval by the authority before end of this month. And also the annuity will also start flowing in both the projects. So the debt of INR 655 crores belongs to these 2 SPVs. So only the INR 578 crores of the debt will remain for the HAM projects which are under construction, which is supported by the project, basically, cost itself. So this is how the entire SIPL and the group level the debt profile will span. So that is what basically I'd like to mention here on the floor. Now coming to the under construction projects. The status of the major projects is as under. So Bhavnagar-Talaja, as updated earlier, we have received the PCOD for 34 kilometers out of the total length of 48 kilometers with effect from 28th February 2020. And also, we have received 2 proportionate annuity from NHAI and another annuity amount is getting due by the end of current month. So presently, the 86% of the work has been completed in the project. For Udaipur bypass, we have received the PCOD for 18 kilometers out of the total length of 23 kilometers with effect from 31th July '20. We have also received the first annuity in the project and also the second is also due basically in the current month. The 94% of the work has been completed in this project. The Rampur-Kathgodam Package 1, the provisional completion certificate has been issued by the authority with effect from October 2019 for 31 kilometers, and we have already received the 3 proportionate annuities in the project. 77% of the project work has been completed in the project. The BRT Tiger Reserve project, the PCOD has been recommended by NHAI. And as I have mentioned, we will be getting the formal communication before the end of this month. This PCOD is also recommended with effect from December 2020 for 75% of the project length, and we have already achieved 89% of the completion in the project. The Una-Kodinar, the PCOD has been recommended by NHAI with effect from December 2019 for 20.69 kilometers. The 69% work has been completed so far in the project. The Rampur-Kathgodam Package 2, we expect to receive PCOD by end of September 2021 and also the recommendations so far has been made by the authority with effect from October 2019 for 20 kilometers of the project length. Waranga-Mahagaon, 72% work has been completed; Jodhpur Ring Road, 32% work is completed; Kim Ankleshwar, 16% work is completed; Gadag-Honnali, 8% work is completed; Lucknow Ring Road, 47% work is completed; and Ahmedabad-Rajkot, 42% work is completed; Mumbai-Nagpur, 32% work has been completed so far. Ahmedabad-Dholera project, we are in the process of obtaining in the project. Now about -- from above, it can be seen that we have received the PCOD in 5 HAM projects, including recommendation from NHAI in 2 projects. And another 2 projects, we are expecting to receive PCOD in the current Q3 of the FY '22 and 3 more HAM projects, shall achieve the PCOD in the FY '23. On the bidding activity, NHAI has called the bid for 8 EPC projects as of now for INR 6,900 crores, for which the bids are to be submitted before end of August. And projects worth INR 5,900 crores, for which bids have already been submitted by the company, and we are awaiting the results for the same. Now I would like to provide the update about the arbitration awards basically, what is the status. So in Rohtak-Panipat, the outstanding amount of INR 115 crores, for which the award has already been received. This is including the interest thereon. The matter is pending at the Delhi High Court, and hearing of the court were basically has been shifted. But however, the NHAI has already initiated the process of consideration of this arbitration award, and we are expecting to settle these within 3 to 4 months actually. Apart from this, we have logged a claim of INR 1,706 crores, which we have also discussed during our previous calls, pertaining to the Rohtak-Panipat for alternate route, which is constructed by the Haryana State Government and NHAI. And this matter has also been now -- NHAI has decided to settle under the consideration process, and the process allows me to settle the award what we've already been resumed, that is under going on. So we are expecting that this should be completed within say, 3 to 4 months actually. So that is what we are planning to complete so far as Rohtak-Panipat is concerned. Apart from this, the Mumbai-Nasik, we have received a unanimous award of INR 192 crores in our favor. And the interest thereon till date is INR 60 crores, making it approximately INR 252 crores. Out of the same, the 72% belongs to Sadbhav Engineering. And this matter obviously is pending there in the high court level. However, we are in the process of reconciling the same or also we may basically opt for basically submission of the required bank guarantee as per the NITI Aayog policy. So this may basically -- we take decision within a couple of months. So this is what basically so far is the overall results, group and the debt profile, what we have mentioned. So with this, we complete our opening remarks. Thank you very much for listening to us. Now we may start the question-and-answer session. Thank you.
[Operator Instructions] The first question is from the line of Mohit Kumar from DAM Capital Advisors.
Yes. Two questions on my side. So first is on the deal with Adani. Where we have sold the Maharashtra Border Check Post. So is there any upside left in case there is some extension granted to us by the government for extension of the toll given that there was a lot of delay in getting the toll started for the Border Check Post? And then the related question is that are all the border check posts now being tolled or still there are some 4 or 5 remaining?
If I see, to give the answer to your first question, see, this is the value, which is currently we are going to get for the transfer of the ownership. So as per the terms, basically, we had a sharing mechanism so far as all the variation in claim is concerned. So whatever will come basically post basically government, either they may give in cash or they may give in terms of the increase in the concession period. So that will come in addition to the basically the consideration what we have stated here. So this is first point. And the second point with regard to the operationalization, out of the 23, the 18 are already operational. But 5 are basically under various stages, it is under approval from the government for issuance of the GR, basically gazette notification. So now we are expecting that this should be completed very soon.
Okay. Secondly, on the stand-alone debt, external debt, and SIPL external debt, if I get the number right, it's INR 1,150 crores and INR 550 crores. Is the number right?
The INR 1,144 crores is the debt outstanding as of 30th June in Sadbhav Engineering stand-alone and INR 550 crores is a stand-alone in Sadbhav Infrastructure.
Understood, sir. So how do we see this changing once we have all this liquidity, all this money coming from the let's say Ahmedabad Ring Road or let's say, after Adani transaction. How do you think this will end up let's say, by September or December '21?
See, as we are already seeing that we -- post the completion of these 8 assets, I can say that the as a consolidated and stand-alone -- see, on a stand-alone also the debt which was earlier around INR 2,800 crores that we have brought down to basically say INR 1,700 crores post the completion of the monetization of the 8 assets and also the recent -- basically the monetization of the IndInfravit units. So that is one part. So apart from that, there are the various projects. And as I mentioned, this Maharashtra Border Check Post, Ahmedabad Ring Road, 3 HAM, also the 2.5% of the IndInfravit Trust and also basically the proceeds of the arbitration and the other 7 HAM projects where we already invested INR 780 crores of the equity. So most -- ballpark, we can say that almost 50%, we can utilize to basically reduce the dues on the balance sheet and remaining will be available within the system for the purpose of the -- to build the cushion in working capital and also to bring the gross capital within the system.
And lastly, sir, on the various under construction HAM projects, are we receiving disbursals from the banks, especially I'm talking about the Sadbhav Jodhpur, Sadbhav Kim, Sadbhav [ Karak ]
Yes. See ultimately, I can say that we -- see, Bhavnagar -- the Una, then this Waranga-Mahagaon and Rudrapur Package 1, 2. Where basically the progress is happening there, obviously, we are getting it. Except for Jodhpur Ring Road, as we have earlier mentioned that we basically -- we are in the process of basically getting it financially closed actually and also or otherwise, to make some alternate arrangement. So other than that, basically, rest of the SPV, it has been completely tied up. And there is no other issue.
There's no other issue in getting the money wherever the financial closures are happening, is that understanding right?
Yes, yes, yes. There is no issue at all. Right.
[Operator Instructions] The next question is from the line of Parikshit Kandpal from HDFC Securities.
Nitin bhai, congratulations on the deal closure. So my first question is, in all the 10 HAM assets, so what is the total equity requirement and how much is pending?
Can you -- you mean to say the HAM assets?
Yes, the total HAM assets [indiscernible] so how much is the total equity investment? And how much is pending? How much is the total equity, which you have taken and how much is pending?
In HAM, actually, all the HAM assets in SIPL, 100% of the equity infusion has been made so far. So there is no basically the outstanding equity infusion required in HAM assets in SIPL. Only in Gadag-Honnali, we have already -- out of the INR 108 crores, we have already infused some around INR 36 crores. So balance only there remaining in Gadag-Honnali, which is in Sadbhav Engineering.
Yes. So the total is how much? This 9 HAM assets, the total, how much is invested in SIPL?
See, all put together around INR 1,200-odd crores basically of the equity has been infused in all the HAM assets.
Including Gadag-Honnali, right?
No, 9 assets, excluding Gadag-Honnali, that is separate, it is [ INR 33 crores ].
So INR 1,200 crores has been invested, excluding the Gadag-Honnali. And against this, you have about INR 550 crores of external debt, which is basically the NCD from -- which we have raised, right?
Can you please repeat it, please?
I'm saying against this INR 1,200 crores of equity, which we have invested, we have about INR 550 crores of external debt lying in the SIPL stand-alone, right?
Yes, yes. The INR 550 crores is external debt in SIPL stand-alone, correct.
This NCD is having a secured -- in a sense that's secured early with the equity invested in the HAM assets?
Parikshit bhai, I am not able to listen. Can you please repeat it?
One second, sir, one second. I was saying that this INR 550 crores is basically the underlying security is the HAM assets with investments which you have done about INR 1,200 crores, right? So once you...
Yes, yes. Yes. The underlying securities, they're unencumbered basically their shares. So obviously, as and when -- as I have mentioned that as and when it will get monetized, so part will be utilized for the reduction of the debt and also the part will be available at -- for the working capital requirement and the incremental capital what is there.
Okay. And this ARRIL is -- you said ARRIL plus 3 HAM projects, you are looking to monetize, so that is going to the [ TTPLE ] platform only? Or like is there any other plans to monetize ARRIL because ARRIL being a state project, is there any change in thought process from the investor or from the -- that this can go to the platform?
No. See, ultimately -- see, obviously, as our view is that the wherever we can get the maximum number, that should be our priority and who can basically also complete basically the process within the time frame. So obviously, with the platform, we have already entered the SPA so far as ARRIL is concerned. According to our understanding, they will be also very faster. Now the process has already been started. So we expect that this will also be completed very soon.
So my second question is on the EPC business, sir. The EPC business has somehow not managed to scale up despite such a strong order book. So -- and we have earlier indicated that we could reach somewhere about INR 10 crores per day kind of execution, which would take about INR 900 crores of run rate on a quarterly basis. Now we have been lagging behind in terms of execution, and this could also trigger even from the client side, that there has been a delay. So potentially, there could be some adverse impact on the damages that the client might see. So if you can give some sense on how do you see this run rate now since you have liquidity on your side? How do you see the ramp-up in the execution in the next few months? When do we expect to reach that INR 10 crore number now on a more realistic basis given the liquidity and asset monetization plans have crystallized and we have inflows coming in? So when do you think that INR 10 crores number would be potentially possible per day kind of a number for us?
See first of all, I would like to mention here, obviously, these transactions, which we have concluded basically yesterday. So this will be have a very good decent basically uptick so far as the ramp-up of the execution is concerned. And back off the same, as I have mentioned, that the process for another monetization is already going on. So what our view is that from Q3 onwards, definitely, we will see the -- basically the decent growth so far as the actual execution is concerned, and this is being addressed appropriately. And also with regard to all the projects, see currently, whatever the -- basically the required essential and the required contractual, we are all -- basically, for all the projects, we are well within the contractual framework actually. So that is how it is being taken into the consideration. But from Q3, we are expecting, yes, that there will be a decent ramp-up so far as the execution is concerned.
So can you reach a single high-digit kind of a number, INR 7 crores to INR 10 crores in that range from third Q? I would understand that [indiscernible] crores at least having a duration of 2.5 to 3 years which we -- that implies almost INR 3,000 crores of annual run rate or maybe about INR 7 crores, INR 8 crores per day execution. So when do we see that number happening, sir? I mean, if you can give some realistic target there? So I'm not asking for the guidance for the full year, but I'm just asking when that number [indiscernible]...
See realistically, I can say that in Q3, we should be obviously closer to around, say, between INR 7 crores to INR 8 crores, obviously. Q4, it will be further incremental. Because as we know that the 3 of the projects, Surat Metro already been started. So now we have started getting the revenue from the same this quarter itself and even Q3, we will have the full-fledged revenue from that project. Another 2, Dholera, basically, once we are awaiting the appointed date once it is through, so definitely this will have a incremental addition. So -- but our view is that we should be there within the range of, say, between INR 7 crores to INR 8 crores in the Q3 and almost around, say, INR 8 crores to INR 9 crores in the Q4.
[Operator Instructions] The next question is from the line of Jiten Rushi from Axis Capital.
Congratulations on the deal. Sir, I have got a few bookkeeping questions initially. So can you give us the cash balance as in June, debtors balance, and breakup of debtors, creditors mobilization advance with outstanding and retention money?
See, so far as cash balance in the system is concerned, we are lying there almost around, say, INR 28 or INR 30 crores, they're in the system as of June actually, right? And with regard to the debtors, the breakup is like this, the total is -- outstanding is say booked debt was around INR 400 crores, okay? And all basically put together, the work in progress as well as the various -- the claim amount, which we have already discussed during the last quarter, the numbers which we have shared in detail actually, okay, so that all put together is somewhere around INR 1,340 crores actually. So this is largely the number what I can share right now. And apart from that, the outstanding payment in the -- basically the creditors is to the tune almost around INR 482 crores to INR 490 crores. That is what we can say. And the outstanding mobilization advance basically in the current ongoing HAM and the other projects, basically, we see to the tune of around INR 375 crores to INR 380 crores.
And retention money, sir?
Number upfront is not available, but just if I can just can -- I will send you the off-line. No problem.
So on these debtors of INR 1,740 crores, you said INR 1,340 crores for the claims. How much is realizable this year from the [indiscernible] GST related or change of scope for escalation? So what are we targeting? How are we targeting to realize and bring it down for this year and by the end of this year, sir?
See, actually, the -- see the first is obviously the payment related to the change of scope, certain GST payment, which is now under the NHAI is in the process of issuing the final circular, okay? And that put together, I think we are expecting that, that should be completed before end of this year -- before December itself I can say, okay, because that has been now the -- we are chasing also with the authority on a regular basis. Apart from the realization of the awards that as we have mentioned that this will also to further additions. So in this year, we are expecting that we should be in a position to realize almost around say INR 250 crores to INR 300 crore or so actually out of the same apart from the other, basically. The remaining which will be the ongoing and it will continue to churn.
Sir, on the guidance part, so now what -- how are you seeing the next 9 months? So first 9 months, I understand because of COVID and lock and restriction, labor unavailability, we ended up making PAT loss. But Q2 also, we are looking for a PAT loss? And H2, are we looking for a significant profit? How are we looking the next 9 months, any guidance? And also for the FY '23 in terms of revenue and...
See Q2 we are not seeing because basically, the impact of -- see, overall, the execution ramp-up will be -- we are seeing from the Q3 itself, okay? So Q3 and Q4, we will see that there will be some decent jump actually. And we will be again back. As have I mentioned, the focus actually is to basically complete the balance that is the monetization basically of the assets and also to mitigate the -- basically to strengthen the balance sheet and also to basically augment basically the cushion in the working capital. That is what we are planning. And that we will be able to now complete as of now because Ahmedabad Ring Road and 3 HAM, we are almost at a certain stage of the discussion and closing. So we are expecting we should also complete at earliest.
So we can say safely that next 9 months, you can get a similar revenue of around INR 1,400 crores what we achieved last year, something like that we can achieve? And again, for FY '23, we are looking for any big number of around [indiscernible]?
See H2 really basically has the decent growth actually as compared to H2 of the previous year because the certain steps at site level has also been taken. And now basically, as I have mentioned, basically, the completion of these transactions will also help to basically further kick start basically the work actually, even though to improve the execution within the H2 itself.
Order inflow, how much we're targeting? Any number? Like INR 2,000 crores, INR 3,000 crores, INR 4,000 crores or still we are looking to...
See the competitive intensity is very steep, I can say that in EPC. As of now, as I have mentioned, the bid for INR 5,900 crores has already been submitted. So we are awaiting the opening of the thing, but we will continue to put the bid. Obviously, how basically it spans and how the nature of projects are coming going forward, that is also very important. And as I have mentioned, that the around INR 6,900-odd crores basically are yet to be bidded before the end of this month. That is what the current status is.
Sir, one last question. As you said that you are looking to get INR 550 crores through monetization of Maharashtra Border Check Post and another INR 550 crores, INR 600 crores through monetization of 4 HAM plus Ahmedabad Ring Road and you are also looking to divest your 2.5% stake in the IndInfravit give you almost INR 160 crores to INR 180 crores. So almost all put together, we are looking for a cash inflow of around INR 1,200 crores, INR 1,300 crores this year. So the utilization is to [indiscernible] what will -- how you will bring down -- certainly will use for your working capital because working capital has been a pain point. Even Jodhpur Ring Road still it is almost 1.5 years, we are not able to financially close the project. So what is stopping us for these things like?
See, as I mentioned, out of the proceeds, what you have mentioned that the 50% will be basically planned for the infusion in the working capital and at least 50% will be utilized for the monetizing the assets. That is how the planning is being made.
And on the Jodhpur Ring Road, sir, when do we see the financial closure because it's been long now.
Ultimately, we have made a very separate arrangement. And I think very soon, we will be able to communicate that, that he problem of the price has been largely sorted out. Once the agreement is through, we will be able to give basically the comfort of the same. But I can say here that the Jodhpur Ring Road has been now the -- no longer a challenge now, so far as our group is concerned. And we will see the good execution even for the going forward HAM 4 in the Jodhpur Ring Road without basically affecting this. So that arrangement has been almost -- once it is documented, we'll be able to come in the communication.
[Operator Instructions] The next question is from the line of Prem Khurana from Anand Rathi.
Yes. Congratulations on the transaction. Sir, first question was on the hybrid annuity portfolio. Just, correct me if I'm wrong, I think initially, the equity that we were supposed to infuse in these 9 hybrids used to be -- I mean, the number used to be around INR 1,070 crores. And you spoke about INR 1,200-odd crores, which is already invested. So does it mean, I mean, the equity numbers have changed? And if you were to link it to the fact that, I mean, when I look at the CODs that you've been able to manage is not for the full length. So this INR 1,200 crore is essentially -- I mean, if I were to kind of do it on proportion but ideally it should have been even lower than INR 1,070 crores, but then we've put in more than that. If you could clarify on this, please?
See, ultimately, originally, it was basically, as you mentioned, the number was somewhere around INR 1,070-odd crores actually. Post that, when we go for the reworking of the Sadbhav Kim projects and because of that, and that project, the additional incremental equity requirement has been increased by, say, almost around INR 85 crores. So that has already been infused now. One for Jodhpur Ring Road, we have also infused because the arrangement, as I have mentioned, something -- because what we are planning. So some additional incremental equity has already been agreed by the company over and above, which was already infused. So that has already been now completed. The commitment -- that matter has already been completed so far as the investment is concerned. So all put together has become now INR 1,200 crores.
Got it. And then any clarity on descoping or delinking? Because when I look at the COD or PCOD that you have been able to manage or recommend it, it is lower than the total length. So what are the plans on the balance potential in terms of whether you will like to get these delinked or I mean, find the base this? I mean you're going to get descoped?
See, actually, in 3 of the projects, in these it is Nainital, Una and the BRT, there is a different, different descoping is already there, okay? And, say, maybe Una or the NHAI has already now recommended the PCOD. And we will officially get the communication before end of this month actually. So in these the descoping, it has already been agreed into the settlement agreement itself. Similarly, in case of Nainital, the recommendation has been made accordingly, and that has also been considered. And this is the reason, you can say that the PCOD for the Una has been approved by authority with effect from December 2019. See earlier the land which was made available, we already completed the because there are a certain land, which means not be made available after so many effort by them. So that's why they have agreed. And also, they have issued the PCOD with the past date and also they are going to make the payment of the annuity, basically for the previous period itself. And in BRT sir, it is almost out of 17, we are expecting some around 14-odd kilometers will be under the descoping.
Okay. And do you see any change in our order backlog because of the descoping with 3 of these projects? And also, I mean, I think in your opening remarks, you spoke about the 4 assets hybrid annuity assets that you intend to monetize and you'll get to have around INR 550 crores. So 3 I can fairly understand I mean these would be the projects wherein you already have PCOD in place. So which one would be the fourth, Una or Bangalore in that list?
[Foreign Language ] that we will basically update. This is mainly the growth Jodhpur actually. So as we have mentioned that, once the -- it is through, we will be able to come convey how basically it has been worked out. So that is what we have planned it actually. And what you have mentioned that the -- because of the descoping, yes, in Nainital, there will be some reduction in the basically the overall requirement and to some extent, debt will be reduced in that SPV. And particularly in BRT and Una, it is there, but in a couple of projects, there is also positive variation. So that has also been added. So all put together, we don't see the much reduction in the basically the order book.
And just last from high end, if you could help us with the NCLT status and on the merger, when are we likely to have the merger go through? And then have it combined entity with a stronger balance sheet related?
See, the process is already on. So we have already submitted the requisite approval we already received. Just the last -- basically, we have received the small request from the consortium lenders. And just to honor that, so we have provided the relevant documents, and we are awaiting their final go. Once we will get it through, we will be able to complete the process. And in next hearing, we'll be able to take up for the final merger process.
The next question is from the line of Vibhor Singhal from PhillipCapital (India) Private Limited.
Nitin bhai, just wanted to confirm, you mentioned the debtor outstanding is INR 1,740 crores, right?
Correct.
So at the end of March, it was, I think, something like INR 680 crores, right, sir?
It was, how much?
At the end of March, March 2021?
What number you have mentioned?
INR 680 crores, INR 690 crores.
No, no. See, actually, it was a INR 1,753 crores.
At the end of March?
Yes.
Okay. So you are saying that the debtor number has remained stable on a quarter-on-quarter basis?
Yes. Some deduction is there, actually, just...
Okay. I think there would be some classification things that have been going in the balance sheet because of, I think, the retention money because of it. But otherwise, you're saying the debtor days -- the debtor number is correct, and there is no change in that number, right sir?
Correct, correct.
And no delay in payment from any government bodies?
No. See, except certain basically, as we have mentioned, the [indiscernible] scope and [indiscernible] for this, particularly the awards we have already been issued, only to that extent, it has got delayed actually. Rest of the thing is under coming now.
Okay. Right. Sir, in terms of execution, if I were to ask you, I mean, it's a very broad level question, but in this quarter, of course, this was impacted by COVID, and so we could do only INR 260 crores to INR 263 crores of turnover. But sir, even though in the past 3, 4 quarters, even when the industry has completely recovered from COVID, the maximum that we could touch in third quarter was around INR 550 crores, INR 560 crores of turnover. So what is actually preventing us from doing better execution? We have the order book. Is it liquidity crunch? Are the funded or nonfunded limits from our bankers are they kind of basically fully exhausted because of which we are not able to execute work? In Mumbai-Nagpur expressway sir I think most of the other developers are talking about an early completion bonus. And we are executing only 30%, 55% right now. So just wanted to understand where is the execution stuck for us? And it's not just this quarter, for many quarters, we have been basically reporting very good level of execution in terms of our order book. So where exactly is the problem? And how are we looking to get rid of it in the next few quarters, as you mentioned, from Q3 it should ramp up?
See, actually, there are 2, 3 main reasons actually, I can say that. The first, say, 3-odd projects, as I have mentioned, is Surat Metro and this particularly this Dholera, the actually appointed date got delayed. And in Dholera, year, we are yet to get the appointed date for this almost INR 1,600 crore project. So this is one reason. Second thing, obviously, in the various HAM projects, and we are discussing in almost every quarter, that the -- because of the various reasons, the land, which has not been available, so it had got delayed, the finally [ EOD ] has been extended by the authority. And you can see the reason that because of that, the authority is also now issuing the provisional completion certificate with at least 1.5 year back date actually, almost. In the majority of the 3 of the projects, they have given like this actually. So this is also one of the major reasons that we -- by the basically, it has also got down actually. So this is mainly -- and apart from that, obviously, and because of that, when this has not -- because the land is not made available, so definitely, the -- basically, the working capital also got stuck to a larger step in many of the projects because all other steps have been taken by the company. Companies have basically procured the material stock is being like at their site. So this is also being not moving as per the required manner. So this is the reason. Now the certain extent basically because certain descoping has been finalized, PCOD has been closed, the matter has been worked out. And also, we have made the arrangement in such a way in a number of projects, 3 or 4 projects in such a way that we, so we can focus more and more on the execution. So that's why we have told that we will be able to get -- from Q3 onwards, there will be a decent -- basically, we are expecting that it will come basically on a little faster pace as compared to the -- what we have seen in Q3 and Q4 last year, actually. That is what we are seeing.
Okay, sir. Great to hear that. Sir, lastly, on the mining project.
[Operator Instructions] The next question is from the line of [ Ritwik from Manav Financial Consultants ]. [ Ritwik ], sorry to interrupt you. Can I request you to speak a little louder?
Yes. Hello, can you hear me?
Yes, yes, please.
Yes. Sir, any time line you would like to give on the merger? You mentioned that we are in the last leg, but any time lines that you would like to give?
Just actually, the process has been, so far, everything has been completed. The small request because since it is a consortium lenders, and so we also want to basically go by their request. This is the main reason. Legally, it is not required. But obviously, when the request has came, so we understood that let us take their -- basically them on the board also. So I think maximum within say, 3 to 4 months, we should be through so far as is all the approval and the decision from the NCLT is concerned actually.
Okay. Sure. Okay. Sir, second question is on the claim status on Rohtak-Panipat and also the termination status for Rohtak-Panipat and Rohtak-Hisar. So have the NHAI accepted our termination letter? And what is the procedure? And what could be the best outcome for us from both these 2 projects? And also what could be the best claim that we could receive on a realistic basis?
See, there are 2 things. In the Rohtak-Panipat from this force majeure, this is a force majeure event, which generally happens very rare actually because more than 180 days, toll has been suspended. And so the NHAI obviously has to pay the -- as per the concession agreement, 100% of the debt due and 110% of the adjusted equity. That is what concession agreement tells.Apart from that, the award that we have already received in our favor that is a unanimous award and also the claim pertaining to the previous period of the alternate route. So these all are under settlement as of now. So we are expecting that there should be decent settlement so far as Rohtak-Panipat is concerned. In Rohtak-Hisar, there is not such claims, except for this, the toll suspension period from 25th December. Because we have in SIPL consolidated, we have seen that the numbers are not -- revenue numbers are not there. Only the interest and the cost is being already booked actually. So this entire loss, we are going to claim from the NHAI, apart from the termination payment as per the concession agreement.
Okay. So on a reasonable basis, is it fair to assume that over the next 1 year, the debt from both these projects would go out and you would receive some cash from the claims that we have put in, like INR 1,800 crores of debt is there cumulatively for both these projects? So how long would it take for us to terminate these projects and get a complete exit from these projects?
See, now as per the concession agreement, once we issue the final termination notice, as we have issued in Rohtak-Panipat and Rohtak-Hisar, we are expecting to submit on 25th of this month actually. So it is the fourth week. So it is -- as per the concession agreement, fourth week, authority has to take over the possession of the road. Since the toll collection is not there, so we have already written them to please take over the position and pay us basically as per the concession agreement. So obligation has already been started on the authority. So what the -- your first question is that regarding the debt profile. Yes, both the debt of both the SPVs will go out from the balance sheet of SIPL basically in this year itself, actually. And also the claim proceeds and the awards, whatever will be settled finally, that will come to us in addition to the date what -- in the company. In Rohtak-Hisar, think that it should be -- that should not be a surplus actually in Rohtak-Hisar because there is no any such claim or awards in our favor.
The next question is from the line of Deepak Poddar from Sapphire Capital.
Yes. Sir, you mentioned 50% of your inflows will be used for deleveraging the balance sheet. Now so if I take SEL stand-alone and SIPL stand-alone together about INR 1,700 crores of debt, so with the inflows, you expect at least INR 1,000 crores of the debt repayment over the next maybe 9 months with arbitration cash inflow also to join in?
Yes. See, if we see the total, the INR 550 crores is from this Maharashtra Border Check Post; again, INR 550 crores to INR 600 crores say from this Ahmedabad Ring Road and these HAM assets, though, which is already in there. So almost it makes almost around INR 1,100 crores. Apart from that, the -- as we have mentioned the INR 780 crores, INR 790 crores of the equity has already been infused in the remaining HAM assets. So that will also generate basically the value in the company, plus the INR 350 crores of the award, which is already in our favor. So all put together, the amount itself is very sufficient to cover actually. So according to us, even 50%, we utilize will be able to reduce it by almost around, say, INR 800 crores, INR 900 crores, basically, to almost INR 1,000 crores, closer to that.
Closer to INR 900 crores. So maybe if the debt amount is about INR 1,700 crores right now together, so we are looking at maybe INR 800 crores to INR 900 crores of debt level by year-end, right, by FY...
Yes. And whatever the amount we will basically use for the working capital, that money will also be available within the system as a capital, working capital. So this will also be used for the churn up and for the -- any growth basically, this money will be available within the group. So in a nutshell, what we would like to say is that the complete plan of the -- managing the balance sheet that has already been taken off. It is in place. This one transaction has already been completed now. Another basically on the path. And also basically to focus on the EPC, how basically we will be able to come back actually and how we are planning to take basically the growth phase actually so far as the real execution is concerned, so that is also being planned along with this, the way the structure is. That's why we have described all the things in detail, including the debt at SIPL and SEL.
Okay. Understood. Understood. And yes -- I understood this point. So you expect your interest cost at least to decline because your debt levels are expected to go down?
Obviously, from H2 -- so basically, in the Q3, every quarter, there will be -- we are expecting a significant reduction in the finance cost actually in the group level actually.
From third quarter. Sir, say, maybe INR 40 crores, INR 45 crores, we are doing right now, maybe INR 30 crores is what from third quarter onwards is what that levels we are looking at?
Obviously, see it will be gradually. But see, on a yearly basis, where we are planning that we are expecting to get it reduced by post completion of these 2 or 3 transactions, which has been lined up. So almost we are expecting to get it reduced by almost INR 100 crores in a year at a group level, on a stand-alone basis, 900 -- INR 90 crores to INR 100 crores.
Fair enough. Understood. And my last question is on EBITDA margin. So how do you -- like we have spoken earlier about 12% EBITDA margin on an average. So we continue to hold that?
Yes, we continue to hold that, from Q3 onwards, definitely because the top line, we could not achieve because of the various reasons actually, right? So once it will be again coming back to the, say, INR 500 crores, INR 600 crores, INR 700 crores run rate basically in the quarter, definitely -- and this we have also seen that in Q3, Q4 last year, it was already there actually within the same range.
Ladies and gentlemen, due to time constraint, that will be the last question for today. I will now hand the conference over to the management for closing comments.
So on behalf of Sadbhav Engineering and Sadbhav Infrastructure, we are very much thankful to all the participants for taking valued time. Obviously, the challenging phase basically what we have observed. But so far as the decision-making process and the basically implementation of the various basically thoughts and make it reality, that is already going on. And going forward, the focus, obviously, is that we are in a process to complete the current obligation as fast as possible. And also we'll be planning in such a way that -- again, we will come back to the growth level what was basically the company's original strength. That is what we are basically planning to come back. So that is from our side. Thank you very much. Thank you to Asian Markets Securities again for the hosting this conference call.
Thank you very much. On behalf of Asian Markets Securities Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.