Vascon Engineers Ltd
NSE:VASCONEQ
Vascon Engineers Ltd
NSE:VASCONEQ
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Ladies and gentlemen, good day, and welcome to Q1 FY '23 Earnings Conference Call of Vascon Engineers Limited. [Operator Instructions] Please note that this call is being recorded.
I now hand the conference over to Dr. Sundararajan, Group CEO of Vascon Engineers Limited, and over to you, sir.
Good morning, everyone. I welcome you all to the earnings conference call of Vascon Engineers for the quarter ended June 30, 2022. Today joining with me on this call is Mr. Somnath Biswas, our CFO; and our Investor Relations team, Stellar Investor Relations.
I believe you would have gone through the Q1 FY '23 financial results and the results presentation uploaded on the stock exchange and on the company's website.
Key developments in Q1 FY '23. We have been highlighting over the past few quarters that we are focused to improve our debt position. And in continuation to that, we are happy to report that over the past 15 months, we have been able to reduced our debt by INR 59 crores to INR 155 crores as of June 30, 2022, as against INR 214 crores as of March 31, 2021. This, along with improved cash flow generation, has led to net debt of only INR 48 crores as of June 30, 2022, as against INR 134 crores as of March 31, 2021.
More importantly, a significant part of the debt reduction has been on the high cost debt, which helps in bringing down our finance costs. During the aforementioned period, the total debt-to-equity ratio has improved to 0.19x from 0.30x.
Further, our credit rating profile has also improved. As mentioned in the last con call 2, our credit rating for long-term bank facilities has been upgraded from BBB- to BBB stable. And for short-term bank facilities have been updated from AAA stable to AAA plus stable. With improving business performance and cash flow generation, we are hopeful of further upgradation in our credit rating going forward. We continue to focus on liquidity management by monetizing the noncore assets.
The second key highlight is the improving run rate of the EPC execution. During the quarter, EPC revenue increased 78% on year-on-year basis and 4% on a quarter-on-quarter basis to INR 137 crores. While, of course, on a year-on-year basis, it may look high growth centric due to the base effect of the partial lockdown last year.
But when compared on a quarter-on-quarter basis too, a growth in EPC execution run rate is quite encouraging, given that typically in construction industry, Q1 of any fiscal year is lower than Q4 due to seasonal effects. We attribute new growth to the rigorous efforts by our team to resolve the challenges that we've been facing in the past.
Thirdly, our EPC order book has been robust. As of June 30, 2022, the total order book stands at INR 1,777 crores, of which external EPC orders are INR 1,638 crores and the balance INR 139 crores is from internal orders. Further, almost 76% of the order book is towards government projects, which provides visibility of faster execution and uninterrupted cash flows, helping us improve our execution run rate.
With that, we believe we are well placed across improved performance in the next couple of years as our order book forms 4.2x FY '22 EPC revenue, providing strong visibility of EPC revenue growth for the next 2, 3 years. The company is witnessing increased demand in real estate EPC segments as we are tying up the sale of [indiscernible] station in Pune, Mumbai and [indiscernible].
Lastly, on the real estate and GMP business, we are happy to report that there is meaningful progress in both the business segments. During the quarter, we launched new residential project, Tulips Phase III in Coimbatore, the first tower 6. And out of the 49 units, which is in Vascon share, 44 units were sold within 1 month of launch. We are planning to launch Tower 7 of the same project in August 22.
On the other project, Vascon Springs, we have fully sold the building consisting of an area of 33,387 square feet, out of which 70% is Vascon share. GMP business is also looking turnaround. The company generated a profit of INR 1.3 crores in the current quarter.
With that Vascon Engineers embarks to move towards growth trajectory. The company's proficient team and rigorous hard work has begun to show meaningful outcome in the performance. In the recent past, the company faced various headwinds, which were progressively resolved, just heading towards achieving new heights, our emphasis towards debt repayment and building a robust order book with reliable client types.
Coming to the industry sector, operating companies have revised the construction sector outlook to neutral in FY '23 from an improving FY '22. The stable sector outlook reflects the expectation of a continued uptick in business activities for EPC players. Order inflows have increased significantly in majority of the segments, and tendering activity is gaining momentum, owing to the financial assistance by the central government counted back in FY '22.
Order inflows for FY '22 were also aided by resurgence in state government CapEx expenditure on economic activity, which had been limited in FY '20 and FY '21 due to the downturn in economy and the effects of the pandemic. According to the industry reports, order book visibility is likely to be strong in the medium term given the overall number of tenders declared increased by over 11% year-on-year in FY '22. And that significant central government budget expenditures are expected to continue in FY '23.
At Vascon too, the company is lifting robust ordering activity and continued strong execution across EPC projects. In Q1 FY '23, all the projects were operating at optimum levels, enabling faster project execution and resulted in better returns. We believe that the execution will continue to gather momentum going forward.
I would like to reiterate that the company is relentlessly focusing towards deleveraging its balance sheet by repayment of high-cost debt. Deleveraging will aid efficient working capital management. We are continuously working towards liquidating the assets to generate additional cash flow.
The EPC segment during the quarter witnessed a fast-track execution of the projects. EPC segment revenue stood at INR 140.7 crores, including those of internal orders for Q1 FY '23, with an EBITDA at INR 13.2 crores, major projects, namely the Maharashtra State [indiscernible] PWD [indiscernible] Hospital at Cosan and Bijnor are running smoothly.
With the order book of close to INR 1,777 crores, we envisaged that EPC segment will deliver strong performance going forward. We are witnessing orders from segments like Mombepolis, Rajan, Vedanta, Embanet, Amina projects, et cetera, in our EPC segment.
Real Estate segment, after various headwinds in the recent past, is gaining momentum. There's a gradual recovery in the demand as the economy moves towards normalcy. Our new sales booking in Q1 FY '23 stood at around 123,716 square feet, for a total sales value of INR 71 crores.
During Q1 FY '23, our real estate revenue stood at INR 7 crores for Q1 FY '23 and EBITDA of INR 1.73 crores. The gross margin came in at 66%, while EBITDA margin at 25% in Q1 FY '23. Due to the nature of accounting treatment given to revenue in [indiscernible] as per NDA, the recording of revenue happens on project completion basis, making it lumpy in nature, whereas administrative and other expenses are recorded as incurred.
Due to this timing difference of revenue and expense recognition, in certain quarters where revenue is not booked, the real estate business will show a loss as opposed to those quarters where revenue is booked. Currently, we are executing almost 67 projects. It is expected to generate a potential revenue of INR 352 crores on a completion basis, which is estimated to be within the next 6 to about 24 months. The project Indian pipeline include residential and commercial projects at Kumtor, Madurai, Powai, Mumbai with aggregate sales value of INR 1,760 crores, with Vascon share being INR 1,304 crores.
The GMP business continues to deliver a sustainable performance with revenue of INR 60.3 crores for Q1 FY '23 and a healthy margin -- gross margin of 28%. EBITDA stood at INR 4 crores, with a margin of 7% in Q1 FY '23.
On the overall financial performance, let me start with the stand-alone numbers. During Q1 FY '23, the company reported a total income of INR 143 crores as against INR 78 crores in Q1 FY '22, a growth of 83% year-on-year. In Q1 FY '23, EBITDA stood at INR 14.53 crores as against a loss of INR 0.17 crores in the corresponding period last year. EBITDA margin was at 10%.
Reported net profit of INR 10 crores in Q1 FY '23 as against a loss of INR 7.2 crores in Q1 FY '22. On a consolidated basis in Q1 FY '23, the company reported a total income of INR 203 crores as against INR 114 crores in Q1 FY '22, a growth of 78%. The EBITDA stood at INR 18 crores and a margin of 9% as against INR 2 crores in Q1 FY '22. And the net profit at INR 10.8 crores as against a loss of INR 7 crores in Q1 FY '22.
On the strategy, the company is focused towards building a strong order book, enabling the execution to continue at current levels. The EPC business will be the prime focus of the company going forward. However, we are also having emphasis on growing our real estate exposure in chosen markets.
With this, we can now open the floor for question and answers. Thank you.
[Operator Instructions] The first question is from the line of Vinika Sapur, an Individual Investor.
I just wanted to know how much real estate sales the company is expecting by the end of FY '23?
Just give me a second. INR 130 crores. So we will be finishing about 4 projects, which will get there mostly this year. So we will be able to recognize them progressively in Q2, Q3 and Q4. And the total sales would be about INR 130 crores.
130, 1-3-0?
Yes.
Okay. And can you throw light on new order in coming quarters in the EPC segment? And are there any L1 orders for the company?
No. As it stands, we are not aware of any order where we have been declared as L1. Normally, I mean, when we open a tender and we are L1 in government sector, then we would receive the LOI usually. So -- but we are working on -- now as I said, there are quite a few orders that are coming up being posted on the portals of various departments.
So we're having a keen eye on it, and we are targeting a few. So hopefully, we were waiting for a little bit of BG limit augmentation, but that is also happening parallelly. We are in talks with the banks. It looks very promising that in another 3 months, we should have a lot more BG limits than we have today. But even with the current available limits, we are hoping to take at least a couple of orders in the next quarter or 2.
[Operator Instructions] The next question is from the line of Shrey Gandhi from Arihant Capital Markets.
We will move to the next question, which is from the line of Renuka Jabel, an Individual Investor.
So my first question is like what is the interest rate of the Aditya Birla Capital loan? And can you also help me like when the company will be debt-zero? By what time the company will fully pay off this high cost debt?
I anticipate interest rate in the range of 12.5%. And if you talk about the rate optimization, more or less, we are very close to rate optimization, some plus/minus. If you look at high cost debt only in miniscule high cost debt of quota is left out, which is in the tune of INR 10 crores as all the high cost debt has been extinguished.
So currently, full significant part is the [indiscernible] limit of SBI and UBI, which is about our B2C business and 1, 2 projects construction finance, which will, in some cases, will be extinguished and, in some cases, new request for currency will be raised. So more or less, we are a bit close to optimization of INR 320 crores for the financial full year. [indiscernible]
We are not when we I think the target plan was the last 2 years being on our high-cost debt to -- currently, we have a net debt of INR 48 crores. And for our EPC segment, it's growing or it is expecting to grow 18% year-on-year in the next 2, 3 years. There will be a little bit requirement of CT limits. Only that we will be living with that we do not intend to extinguish down to 0 or any such thing in the short term.
But all other high cost debts that were bothering us, that were not getting relevant cash flows to service them on time in the fashion, all that we have parked and so now we're very comfortable with our cash flow situation.
Okay. Okay. That was helpful. So my second question is on the other income side. Like there's a drop in the other income. So like if we look historically, it has always been in the range like INR 3 crores range. So is there any specific reason for that?
How much is it this time? [indiscernible]
Hello?
So there was -- see, there is always -- I think there are 2 aspects to other income, one is a steady interest that we gain on [indiscernible] that are part to the bank by way of margin money that we have to put up with the bank. That has gone up a little bit because our margin money has only continued to increase a little bit over the last few quarters.
But the other aspect of other income is one-off sales, which we hold as inventory in our books. So sometimes it's old house [indiscernible], debt which has not been sold, get sold or old real estate asset being held as inventory gets sold then we sell a spike. So I think normally, we do get one-off sales. In the next quarter, we have not had any other small apartment or something getting sold.
Okay. Okay. So I have another question. Like what is the status of the noncore assets? Like any sales happened in the noncore segment in this quarter?
Specifically in this quarter, nothing much. As of now, we step-by-step extinguished most of our noncore assets. Now we have the big ticket ones like the office in Kaledonia, then we have [ Tamil land ]. Of course, we have land in Aurangabad, which is not yet sold. And then, of course, GMP, the strategic investment, which, at some point, we could look at divesting.
But these are the bigger ticket ones, which will take their own time to exit from. But all other ones, low and medium hanging fruits, we have worked hard on and including inventory in Windermere project, which was a year ago was tearing at us because the interest was very high over there. All of that, we have extinguished over the last 12 to 15 months.
The next question is from Shrey Gandhi from Arihant Capital Markets.
My question was like, with regards to Tamil land. When will you expect the monetization to happen? And my second question would be on the margin outlook. Like what do you see on the margin outlook?
On the Tamil land, there is no answer that I would be able to provide as to when we will see monetization happening. It's still a little bit ahead of us. But day by day, what is indeed the boundary of the city is stretching Tamil land is coming to developable zone and the prices are only going up development only expanding.
So at an appropriate time, down the road, we need -- if you want to do it today, we need a lot of capital, which we do not have and we are not focusing on returning that capital on our balance sheet to solve the Tamil battle. So we'll wait for a while and we'll find a partner who will then come in and we solve this together. So it is a gold mine. It is only gaining in value as we sit on it. When we will be able to monetize it? I do not really have an answer, definitely not in the next couple of years.
Having said that, there is also a corridor that is being proposed by the government, a highway or something, that is going to be constructed, which does require a good portion of our Tamil land -- about 20%, 25% of our Tamil land comes under that corridor that is being proposed. That is not yet officially declared by the government, but the preliminary plans show that.
And if that acquisition does happen from the government side, then a portion of Tamil would have to be liquidated at -- by sales to the government. And the rates are normally good. They are -- if that does happen, that will also be good for us.
And to do with the expected margin, I think the EPC division is sort of stabilizing at about -- it used to be about 17%, 18% [indiscernible] down to about 15%. We hope this remains. We should be in line to remain at 14% to 15% level.
But here, we do have a little bit of effect of the steel and all escalations that have happened in the last 6, 8 months although most of them are covered, but some are not. So those aspects have also brought down the gross profit a little bit.
But I think going forward, we hope to stabilize EPC gross profits in this range of 14% to 15%. Real estate will be spiked quarter-on-quarter. It's very difficult to put a number to it. But on a general basis, real estate margin, the gross profit margins would be about 20%.
[Operator Instructions] The next question is from the line of Milan Shah from Urmil Research Consultancy.
Okay. First of all, congratulations for a good set of numbers. I want to understand the employee benefits I understand is decreasing every quarter. Is it replacement of employees or efficiency of productivity?
So there is the combination of both. [indiscernible] On our employee costs a little bit last year. We did have certain decisions that we did take to bring down our overheads a little bit. But also, there is an effect of the ESOP that gets loaded quarter-on-quarter. So in the initial quarters, when we had an ESOP that was declared last year, so that the way to hit your balance sheet at cost is a bit lopsided in the initial quarter, there is a higher loading that comes to our P&L. And as the days pass by, every quarter-on-quarter, the loading decreases. So that is also a reason why the employee cost looks lower.
Okay. So it may be also [indiscernible] to incur next time and we are going to years, right?
No. So ESOPs for the next 4 years, so what has happened is we have already taken an approval from AGM and Board and allotted ESOPs to all staff all the way to 2026.
So upward to basis is not going to come, right?
2026, we will not be coming up -- I mean, we do not expect to be coming up with any new ESOP schemes. There's no such plan in the short term. So the new ESOP cost won't be hitting our balance sheet for at least 3, 4 years. What is there existing will continue.
Okay. Then this is the excellent move by the company for productivity. And you see the start for growth.
[Operator Instructions] The next question is from the line of Dipesh Sancheti from Manya Finance.
I joined a bit late, but this one -- so if there are any repeat questions just, I apologize for that. I want to know what is the percentage of sales in terms of self-development and developing for other than are in contractual development?
So in contracting, I think it will not even be 5%, 7%, less than 10% accrues currently from our self-development projects. More than 90% is from third party.
And going ahead, it's going to be this way only? We are going to develop [indiscernible] business?
I hope not. I'll tell you, I mean, honestly speaking, my best client is obviously our own real estate division. As an EPC player, our preferred client, our best client is obviously our own real estate division, where we do not have to worry about collections. We do not have to worry about risk of payments. We do not have to have man-to-man marking monthly basis to satisfy client requirements on various -- so our overheads come down.
We can focus on engineering. We can focus on quality delivery. So I would very happy as an EPC player if this percentage comes below 90% to 80% and 75%. But for that, the real estate division should see opportunity and should be able to launch and sell enough projects to bring us there.
Real estate division is also working very hard now to sign up new projects in both Pune and possibly 2 places to there. So as we go down, there is -- I hope that this percentage can come down to at least 80, 20 over the next year or so.
So 20% should be our own development, right?
I hope so. Yes. This high percent target those which would mean again see that we're putting extra pressure on the real estate side because EPC from third party will continue to grow. There is no intention to not take projects. As we take more projects from third-party, the growth of our own development would have to be even higher than that. So that this ratio comes down to 80-20.
And because of the price increase in steel and cement, is there any pressure on our gross margins or it doesn't matter?
There is, as I said, I mean, I would be wrong to say that nothing matters because although good -- in most of our contracts, a good amount of these escalations are passed through to the client and that is a saving grace.
But still, everything has gone up. And everything is not a pass-through. So if diesel goes up, what happens with transportation of small things to site, small things that we purchase including up to sand and metal in some contracts are not covered. So there's a price increase in every aspect, not only steel and cement.
And so it is definitely affecting our margins in a small way. That's why I said our gross profit, which used to be at 17%, 18%, now we're looking at it now 14%, 15% level percentage growth is definitely being seen as an effect of these escalations.
Okay. So going ahead, what is the margin estimate you can give us?
So I would like to stick to 14% to 15%. I mean we do try to target projects that are on a design-and-build basis. We can make higher gross profit. But as we are looking for growth, we cannot continue to remain extremely sparing when it comes to take projects.
So far, we've been very choosy. We've done up a lot of projects where we feel the margin is 1 or 2 basis points lower than what we want. But if we want to now do an order booking and grow from these levels of EPC to 30%, 35% year-on-year, then we might not have the luxury of being so choosy. So we might have to take up on an average bring down our gross profit level percentage to 2. So that 17%, 18% is coming down to 15% [indiscernible].
But going forward, [indiscernible]
[Technical Difficulty]
[indiscernible]
I said, we were operating at 17%, 18% level, which has come down to about 15% currently because of escalations. But going forward, we will expect to make in the same region of 14% to 15% gross profit because as we want to grow, we will not have the luxury of being choosy onto that level on the gross profit we expect from projects.
So if you want to compete and grab a few more projects, we might have to take them at 1 or 2 basis points lower in terms of margins. So 14% to 15% is kind of a prediction we would make and hope to recoup.
And now what is the status of payment from customers? Are the builders and these real estate players paying properly right now, no longer the situation which used to be happening in 2, 3 years back? Are things better?
So we have 80% of our exposure to government sector. We have only 1, 2 players paying on in the government sector and their 2 clients who we know their clients. So yes, we are not facing that kind of problem in the last few quarters.
The weather in general real estate sector has revived at the same time for us to say that. But I do think there is an improvement because of RERA coming in and because of ancillary and escrow accounts, which RERA mandates and some financial tie-ups happen with financial partners automatically. Discipline comes in on the real estate side, where they do have open escrow accounts. So I think it is improving, and we are hoping to increase our exposure to private sector also going forward.
Okay. And just the last question. I heard somebody talking about the Tamil land. And you said that it's a gold mine, which you are sitting on. Is there -- can you quantify as of now, what is the size or what is the price, which -- what is the value of the land? And is there any other gold mine which you're sitting on?
See we are sitting on GMP, which is also a gold mine. GMP has now started doing -- going to do more than INR 200 crores this year. They will give decent gross profit, EBITDA this year, and if that continues for a year or 2, which it will, then we will be able to plot price time -- earning times multiple and accordingly look for a decent valuation.
And so that is also a gold mine we are sitting on. But Tamil land, the reason I called it a gold mine is because even as it stands, we are having -- in that company, there's about 150 acres of land. 45% of that company belongs to Vascon. So you can say about 70 acres of land belongs to Vascon.
It is not contiguous and it is not entirely salable at that price today. But the [indiscernible] value or the going rate in Tamil around our parcel is always upwards of INR 4 crores to INR 5 crores an acre. So even by doing nothing, and this is being held in our books like INR 50 crores, INR 60 crores kind of valuation, whereas this is already just at market value of sales, this is worth more than INR 350 crores. And if you look at the kind of FSI that is committed there and the building that is possible in that location because it's next to a main road is crazy. So those real estate numbers look extremely crazy. I wouldn't want to forget here.
Right. I understand. This is good enough to build our confidence. Just -- and one more thing about the GMP. That land, for how many years can we project the sales? As in what is the project lifecycle?
The project lifecycle, likely GMP, is not more than 6 months to 8 months, generally. So they had -- currently, they are sitting on about INR 250 crores of order backlog -- so which is very healthy from their perspective because they do extinguish it very fast.
And that kind of sales will be seen in the next 2 quarters. That is what they are saying?
We are already seeing it. See, this quarter, they have done INR 60 crores of sales. So even if that goes 4x, you're looking at INR 240 crores, INR 250 crores of top line from GMP this year. I'm just linearly projecting. It might even do better.
And what would be the reasonable expectation of margins over there?
So the -- we're looking at -- currently, we're looking at single-digit PBT, maybe 7%, 8% is what we are looking at over this year and next year. And then with some operational efficiencies of -- will catch up, then hopefully that will reach towards 10%.
Okay. And on a bad debtor side, is there any payments which have been received? Or is there any fresh new additions?
No, there's no new addition. Payment is also represented by a quarter, but we keep on pursuing and we're expecting something to happen in the next quarter.
And what is the payment cycle from the government? And since you work basically with the government only in the EPC, what is the payment cycle?
They are paying us every month. So we raise the bill every month, and we do receive payments every month.
That's really fast for procurement.
No. So these departments are paying after we raise a bill not more than 40, 45 days, we do receive the payments. So far.
And you're able to pass on all the increase in raw material costs, especially steel and cement and everything you're usually able to pass it on?
So in most of the projects, steel, cement and tiles and most best-rated items. So about 90% of our exploration costs are passed on. In a couple of projects, we do have a clause in the contract, which doesn't help us pass on entire APB's costs. But we are in talks and negotiations with the government because in both these projects, what has happened is that [indiscernible] as well as in Bangalore.
There were delays from the government side in terms of obtaining their [indiscernible] certificate or tree cutting permission, and then the project got delayed by more than a year. And when the project started, COVID happened. And post-COVID, we are seeing these escalations.
So these projects we particularly should have been out of it had the government given us the clearances on time. So there is a very strong case for us to put it back to them that these delays have been initiated from your side. And currently, we are facing the loss of the escalated prices.
So they're amenable to listening to these arguments. They have a committee, which is listening, some places, they are giving us benefits. And otherwise, once, I mean if it doesn't work out through negotiations, then we will be doing it to address to recover any more than escalations that we are facing on these couple of projects.
But in other projects, 90% is covered and the small 8%, 10%, which is non-covered, we are basing that on our [indiscernible].
Okay. And just one more question about the Tamil Land. Who is the 55% land owner, if you can mention it?
So there are a couple of HNIs. I don't think I want to mention the name...
Not the HNI names. I just want to know if there was a single entity?
So the company -- there's a single entity that would be the entire amount of acres and the shares of the company are held in 45%, 10%, 45%. So 45% is another HNI from Mumbai. 10 is another HNI and 45% is with Vascon.
So there aren't too many players?
No.
[Operator Instructions] The next question is from the line of Shrey Gandhi from Arihant Capital Markets.
[Technical Difficulty]
Your voice is breaking up.
In the meanwhile, we'll move to the next question, which is from the line of Vinita Kapur, an Individual Investor.
A follow-up question. Since all the segments are doing well, any EPC guidance can you give us on the EPC segment? And how is the real estate panning out there?
So the -- we are looking -- EPC has done INR 137 crores in the first quarter. So we had set ourselves a target of INR 600 crores. I think we are very much in line to achieve that. I think only a COVID Phase 4 impact could pull us back otherwise, everything looks promising.
Q2 will always be lesser than Q1 -- Q2 is the worst quarter because the rains. We are already seeing that over 15 days continuous rains in July, and Bombay could not do the projects or do the targets for the month. That is normal and expected, but Q3 and Q4 are our best quarters. So I would still project that achieving INR 600 crores as we projected for the year is well on track for EPC.
So real estate, we said we will get out 3, 4 projects will be getting their OCs this year. And those sales will total about INR 130 crores. So unless we have one-off sales other than this, otherwise, we should stabilize at about INR 130 crores from real estate this year.
And they all are, I'm assuming these 4? The 4 projects, which you mentioned?
One is in Bangalore and 3 are in Puri.
Okay. What is your overall guidance for this year and next year?
So as I said, on a consolidated basis, if you add up the EPC INR 600 crores, the INR 130 crores from real estate, that takes you INR 730 crores, plus GMP is looking to do around 200, 250. We target that we touched before [indiscernible]. Hopefully, we will or we might just land up a bit short. Hopefully, we will -- and on the profit side, as I said, [indiscernible] gross profit, it will translate to about single-digit PBT at the end of the day.
Because real estate -- if real estate does much more than INR 130 crores and we have one-off sales coming from there, then we would look at higher PBTs. Otherwise, PBT will be single digits, 6%, 7%, 8% is what we might end up with.
Okay. That's great. The last question, what is the interest rate of Aditya Birla Capital loan? And if you can just help me when the company will be debt free, by what time the company will be able to pay off its high cost debt?
So the Aditya Birla Capital loan is at 12.5%. It's also a short-term project related to the loan. So as it gets executed, this will get extinguished in the next 18 months or so. The only high cost debt that remains is the last amount of the Kotak debt that we have taken for our [indiscernible] project.
The Kotak debt was INR 110 crores. We have brought it all the way to only INR 10 crores as it stands. And this INR 10 crores were waiting for one sale of Windermere, which is globally type will be extinguished in the next couple of months. If that doesn't happen, then we will extinguish it from other sources. So this way or that way in the next quarter or 2 this INR 10 crores will disappear, but it's the only high cost debt that remains with us.
The third debt, which we do not intend to extinguish, is a little bit of city limit that we have with SBI. We would avoid that EPC is growing in a significant way. We did only INR 300 crores the year before, then we have done INR 400 crores last year. And we are looking to INR 600 crores this year and hopefully carry on for a year or 2 at least with the same percentage of year-on-year growth.
So at these level, INR 40 crores, INR 50 crores, INR 60 crores of CC from a bank did not -- always and it is the way needed to keep pushing the business. So we do not intend to extinguish. And that's a low cost, that only 9% or so. So we do not intend to extinguish that last piece of debt that would remain with us.
[Operator Instructions] The next question is from the line of Shrey Gandhi from Arihant Capital Markets.
[indiscernible]
[Technical Difficulty]
No, sir, your audio is still not clear.
Hello?
I think this is better. Can you say, [indiscernible].
Just wanted to have an outlook on Goa land when we will get monetized, the Goa land? And with regards to the real estate [indiscernible] handover to the real estate? And if you can give some guidance on the overall margin going [indiscernible]? Like segment as you have already given over console margin, how it would be?
So we do not have any land in Goa. We had a [indiscernible] Hotel in Goa which we've already sold a couple of quarters ago. So as of now, we do not hold any asset in Goa that is up for liquidation. We're only executing, as an EPC player, the Goa Airport project. Other than that, we do not have anything in Goa.
Your second question was real estate?
[indiscernible] realized. When we hand over, we can be [indiscernible]?
Handover of what exactly?
Real estate projects.
So we -- that's an ongoing process. We have Windermere which is 98% completed. So that is almost handed over. We've got OCs for both the buildings and the project. And we have a project going on in Talegaon. But with the Phase I, we expect to get the OC and handover in this financial year. So we have a project going on in Kharadi, Forest Edge, which again, the Phase I is handed over to people currently with the purpose of handing over the last stage of handover to customers.
We've already got the OC and recognized that last year. This year, the Phase II, the second building, we are expecting to get the OC and start the handover process in the fourth quarter -- third quarter and fourth quarter. And one again one project in [indiscernible] , which we have sold fully, and we intend to hand over in the fourth quarter of this year.
Other than these, there will be new projects, we will be launching. We've just launched an eventual project. As we said, we've sold a good percentage in the first building. This handover will now happen 2.5 years from now.
And some view on overall consolidated margins going ahead?
So if everything goes to plan, we expect GMP will also stabilize at high single-digit 7%, 8%, 9% kind of margins are stable at closer to 10% of PBT. And the real estate will give a little bit higher. So on an average, because the weightage of real estate in our total top line even for this year is going to be only 10%, 12%, 15%.
So I think on an average, we will still put our read out and say we will be in the high single digits as a consolidated PBT.
[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Santosh Sundararajan for closing comments.
Thank you, everyone, for their participation and interest. I missed pointing out that I'm sure you would have observed, but for this time, we have a profit in this quarter, which is entirely completely operational, no one-offs.
In fact, given the other income did not even get INR 1 or INR 2 crores from sales of old inventories. So we are back on track to getting operational profits, and this will only continue to improve going forward. Thanks for your interest, and I'll see you all again next quarter. Thank you.
Thank you. On behalf of Vascon Engineers Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.