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Va Tech Wabag Ltd
NSE:WABAG
Va Tech Wabag Ltd
NSE:WABAG
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Ladies and gentlemen, good day and welcome to 2022 earnings conference call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rajiv Mittal, MD and Group CEO. Thank you, and over to you, sir.
Thank you, VA Tech [ management ]. Let me first welcome you all to the earnings call post announcement of Q3 FY'22 results of VA Tech Wabag Limited. Joining me today for this earnings call is our Chief Financial Officer, Mr. Skandaprasad Seetharaman [indiscernible]. We regret to inform you that the untimely and sudden demise of Mr. Malay Mukherjee, our Chairman of Board of VA Tech Wabag on 29th January, 2022, [indiscernible] due to illness. Mr. Mukherjee Mittal aged 74 had over 30 -- had over 43, sorry, years of rich experience in technical, commercial and managerial rolls in the mining and steel industry and held directorship position in listed and unlisted entities in India and overseas. He was a nonexecutive independent director since 2015 in Wabag and was heading the Board of Wabag as nonexecutive chairman.As a Chairman and member of Board and of various other Board committees of the company, he was instrumental in bringing various policy changes, processes and business decisions which benefited the company at large. His dedication, support, guidance remains an inspiration to all of us in Wabag. Mr. Mukherjee's unexpected passing away will be a irreparable loss to the company. We all pray to Almighty to give this family the strength and courageto bear this unexpected and irreparable loss. Moving on to the performance of the quarter, revival of economic activities witnessed in the first half of this fiscal continued to improve during the third quarter. We are pleased to note that Wabag continues to enter new geographies and widen its [indiscernible] customer base. Following our recent USD 165 million breakthrough order in Russia, the company recently secured an order worth about USD 100 million in the city of Dubai, United Arab Emirates. Scope of this order covers engineering and procurement activities in relation to 120 [indiscernible], which is about 545 million liters per day , Hassyan Sea Water Reverse Osmosis plant in the UAE. The Desalination plant is to be commissioned in phases by March 2024, and shall be the largest IWP in Dubai, once completed. The project is in the direction of Dubai Clean Energy strategy 2050 initiatives and Wabag is proud to be part of the same. Now let's move on to some of our key project updates. Our Marafiq project in Kingdom of Saudi Arabia to build a -- to design and build a large-scale Sewage Treatment plant with a capacity of 120 MLD for Jubail Industrial City is nearing final stages. All engineering and equipment deliveries are complete and installation of major equipment is also complete. Pre-commissioning activities have started and plant is expected to be commissioned by H1 of next fiscal. At our 300 MLD independent Sewage treatment plant in new Jeddah Airport in Kingdom of Saudi Arabia, which is being built with the state-of-the-art technology, NEREDA, the project continues to progress well. Detailed engineering is complete and equipment delivery is currently underway. Through the latest order we received from Amur Gas Chemical Complex in Russia, detailed engineering is currently underway and ordering of major long lead items have been completed. Manufacturing of equipment at vendor sites have commenced for most of these items. [ Ordering ] activities has been picking up pace, both in India and internationally. We expect the ordering momentum to continue through the rest of the fiscal as well. Our recent order wins are important to our long-term strategic vision to grow the business through technology-focused international orders and enhancing our presence in the global industrial water treatment space, which we continue to deliver best-in-class [indiscernible] solutions. It's worth noting that Wabag is a front runner in the oil and gas segment recycle and reuse of water and desalination solutions with marquee references across the world. ESG and sustainability has now become the norm and the integral part of this is water security. With various regulatory and reporting framework, including business responsibility and sustainability reporting becoming mandatory from the next fiscal year, ESG compliance is more and more a choice for the industry. At Wabag, we have already commenced our assessment and benchmarking process with the help of subject matter experts in order to be ready for this transition. Wabag with its commitment to technology and sustainability is well poised to continue growing profitably and enhance the global leadership position. I'm extremely glad to inform you that Wabag completes 25 years of presence in India, and we are celebrating our silver jubilee year, this year. Wabag in India has grown from a start-up with 6 employees to an Indian multinational with presence in over 20 countries and ranked 4th globally. We take this opportunity to express our sincere [indiscernible] and gratitude to our customers, suppliers, banks, shareholders and all other stakeholders in this good journey. Our biggest thanks to our fellow [indiscernible] for their contribution and continued commitment. I would now request Skanda to take you through the financial highlights. Over to you, Skanda.
Thank you, Mr. Mittal. Good evening, friends. First and foremost, on behalf of all [indiscernible] with deep regret, I express our deepest condolences on the parting away of the Chairman of our Board, Mr. Malay Mukherjee. Mr. Mukherjee was a constant pillar of guidance and support to all of us at WABAG, whose presence and valuable inputs will be deeply missed by all of us. We, at WABAG, will continue to work and take this vision forward in building the organization to greater heights. We pray to the Almighty to give his family, the strength and courage to endure this untimely and irreparable loss. I trust, you had an opportunity to look at the results update presentation had circulated and uploaded on our website. Let me take you through the key financial highlights for the 9 months ended 31st December 2021. Our revenue from operations on a consolidated basis has grown 14% year-over-year and stood at 2,087 crores. On a stand-alone basis, the revenue from operations for the period has grown 30% year-over-year and stood at INR 1,490 crores. The consolidated EBITDA for the period stood at INR 175 crores, which was up by 23% year-over-year and the stand-alone EBITDA for the period stood at INR 129 crores, up by 21% year-over-year. We continue to grow profitability -- profitably in this quarter as well with the profit after tax attributable to owners for the period at INR 86 crores on a consolidated basis, up by 35% year-over-year. On a stand-alone basis, the profit after tax stood at INR 60 crores, up by about 50% year-over-year. A quick look at our core metrics. Core EBITDA stood at 10% as compared to 9.5% for the same period previous year. Core PAT stood at 5.3% as compared to 4.7% for the same period previous year. Core return on capital employed, ROCE, has grown to 24.1% as compared to 20.5% for the same period of previous year. The core metrics confirms the strength of the business fundamentals and our endeavor has been to continually improve the sales and grow profitably. In line with our continued focus on cash and working capital management across the group, the working capital position has remained under control despite ramp-up of project activities. We continue to operate at levels similar to the previous quarter. The net debt position of the group has improved by about 35% compared to the previous quarter. As we step into our silver jubilee [indiscernible] in India, I, along with my fellow [indiscernible], look forward to create more growth stories and achieving higher milestones in the years to come. We express our heartfelt thanks to our bankers, vendors, investors, customers and all other stakeholders for their continued support extended to us. With this, we now open the floor for question and answers.
[Operator Instructions] The first question is from the line of Priyankar Biswas from Nomura.
Priyankar from Nomura. Sir, my first question is, it seems that the -- despite all these commodity headwinds that we have talked in the past, the margins have come out pretty strong, I mean, in this quarter. So can you elaborate on the reasons? And what can be the sustainable margin levels going forward in your view? I mean, let's say, in the fourth quarter or maybe in FY'23?
You're right, I think we had said this in the earlier what we call also that [indiscernible] yes, the commodity prices has gone up beyond anybody's expectation. And this time, it's not only steel, but it's all commodities, whether it is metal, nonmetal, fuels, shipping, everything has gone up very high. I think that's the reason our strategy has been to move into more into engineering and supply out key components. And where technology plays an important role, here, we don't have to really drop the margins to win the order, that's the reason you have seen that we are focusing on the customers where technology plays an important role, and especially in the international arena. This has definitely helped us to improve our margins and also take care of the commodity increase and still show growth, both at the top line and bottom line. And also [indiscernible] earning us handsome foreign exchange revenues. So these all factors has made us believe that we also have to strongly build our international order pipeline, especially in technology-oriented orders. If we continue to go the way we have done so far in this fiscal year, I'm sure this margins, whatever we are showing you, are definitely sustainable and can further improve.
Sir, just following up on that only. So in recent times, the orders like, for example, the Amur order and the Dubai order, all of this seems to be quite technology focused than in the past and in the past order book. So if we go by that trend, then broadly at 10% level should be achievable I mean [indiscernible]...
Yes.
Now my question is related to ordering outlook. Sir, like in the [indiscernible] budget, government has announced our [ Namami Gange 2 ] [indiscernible]. So what are your views on that? And about the potential CapEx that you see going forward in the water space based on your views on the budget? And anything on the Chennai desalination order that we were speaking of in the last con call.
I'll take one moment. See, Namami Gange 2 is clearly extension of Namami Gange 1, where it was mainly focused only on our holy river Ganga. Now [indiscernible] is also under Namami Gange or Jalshakti Ministry. So the model which they have applied for cleaning River Ganga, the same model is going to apply for all the other rivers in the country. So they will also follow a similar model of cleaning the other rivers as they are cleaning the holy river Ganga. So that is the reason I think the spend on cleaning of this river is going to be multifold compared to what they have done in the last decade. So this is a great opportunity for us because, again, it's a question of sustainability, a question of our neutral plants, question of recycled, reuse. This is all getting included in such initiatives, which directly fits into our technology focus. The potential CapEx you have seen, whether it's [indiscernible] smart cities, then Jalshakti, all this have a very handsome budget. So even if we pick up 10% to 15% of these projects which are technology oriented, I think we have enough to build and enough to fill up our order book, what is required to meet the expected growth at the top line to bottom line. Chennai [indiscernible] yes, it's on track. The bids are under preparation by all the four bidders. We are waiting for some of the clarifications, which client is expected to [ make ] very soon. And I believe the bids will be submitted in this financial year itself. So I hope next month, we will be able to submit the bid and after that, it can be a technical and a commercial evaluation. So we are very hopeful, keeping the fingers crossed because it's right in the backyard and it's just next to the plant we have built at Nemmeli, that's 110 MLD. So we are very hopeful, we are bullish, and we continue to work towards winning that project.
And sir, just if you can give me just one number. So what is the net debt at present? I mean I heard that 35% Q-o-Q reduction. So what is it right now?
Net debt is about INR 145 crores.
The next question is from the line of [ Arunba Chakravati ], an individual investor. Okay. The current participant has moved out of the queue. We move to the next question from the line of Harsh Shah from Dimensional Securities.
So when I look at your order book, it has remained pretty static since March '20, it was around INR 11,000 crores, and now we are at around INR 10,067 crores. So why we are seeing new projects coming in? And yes, some of them they are also executing, but the order book has remained pretty stable on increase in days of revenue. So what -- we used to be around 3.5 kinds of revenue, which has now come down to probably 2.5 kind of revenue.
I think our [indiscernible] are still more than 3x the revenue. But I think that's a decent size. As we've said, we are moving more towards technology orders, which are mainly in engineering and procurement. So even if order book is not moving up as you expect, say, 3.5x. As long as we are around 3x, we are happy because none of our projects have a execution cycle of more than 30, 36 months. So as long as we have about 3x [indiscernible] with the 30-month execution cycle prices, I think we are very comfortable with this order book. And less and less construction activity will take palce because we are moving towards technology orders, which are mainly engineering and key component supplies. So we are very comfortable because this will give us steady increase in our top line, but again healthy increase in the bottom line and cash flows.
Fair enough. And sir, when you stressed upon bidding more for technologically oriented projects, I mean what do you mean here by technology? Is this a process technology or cost saving technology? And how does it differ from our competitors?
I think that there are -- if you see and should do your net search, if you see some of the reports which indicated agencies have done. When we talk about technology, it's the capability to put the plan together, as you said, cost, or time. See, technology will only be beneficial when it is cost-effective and time-effective or space-effective. If technology can bring in this kind of factors, which is what is important today, you can do it in just land, you can have a lowest life cycle cost. You can have a clean environment by having a neutral power, that [indiscernible] no power we take from the grid or you can have a recycle and reuse in your plant. These are the technologies which we call it a sustainable technologies or future technologies. And that's what we mean when we say technologically advanced orders, which we take, which is very different from our competitors who would not have the technology. And if they want to bid, they will always have to tie in with the technology company or license the technology, whereas we don't have to do that, we have in-house all these technologies.
Okay. And just one last question. It's on the receivables from the GENCO. So the total amount which now stand as receivable. How much of [ this is receivable ] from GENCO itself? And how much is receivable from the subcontract lease [indiscernible] Tecpro or any other bodies?
I think the total here from the two GENCO, whether it's TSGENCO, APGENCO, is close to 400, which includes about INR 69 crores from the [indiscernible] Tecpro, which is under [indiscernible], which we had explained to you earlier, which is that NCLT. So total is [ 400 ], which includes INR 69 crores of Tecpro, which is at NCLT. And before this resolve our thing, the company cannot go in for liquidation, they will have to solve our issue of INR 69 crores first.
And the remaining INR 330 crores is receivable directly from the GENCO?
Yes, directly from APGENCO and TSGENCO.
Okay. Before we can [indiscernible] this issue relating to INR 69 crores, which is not sorted out, we cannot go for the INR 330 crores?
No, no, no, please. You have to differentiate Tecpro to GENCO. We are telling Tecpro cannot go ahead with any of their liquidation process or somebody can take over until they resolve on INR 69 crores issue. So that's where Tecpro is stuck, whereas APGENCO and TSGENCO most of it -- substantial part of this is the retention money and the balance is the receivable, which slowly we are getting. Now we have restarted to work the APGENCO, they are paying us and that much work we are doing every quarter. So I think this will go on because they also have financial difficulties. So they pay us a amount and for that amount, we do the work.
You receive an advance before doing [indiscernible]?
Sorry?
You received moeny in advance from them before you...
No, no, no. We received the money for the work we do, then we do the next work. Again, we receive money then we do. So it's go and stop, go and stop. We go, stop till we get our money. Again, they pay us money, we do the next phase of the work.
Okay. And what is the working capital [indiscernible] in the GENCO business?
This will be the amount which will be stuck there, which we close to about INR 300-odd crores will be stuck there because it's mainly, as I said, it's mainly retention.
The next question is from the line of Kaushik Poddar from KB Capital Markets.
You just said that from Tecpro, the receivable is around INR 69 crores. Have you already provided a part of it in the [indiscernible]?
As per the ECL policies, I think we have a default and a delay. So we follow the retail policy, whatever is that gone by the retail policy, which is approved by the both, we go ahead and survive for it for all the [indiscernible].
In the instant case of Tecpro, how much have you already provided?
This is still under the NCLT, so that particular INR 69 crores, we have not because this is only a delay provision which we have done, and that must be -- I don't know how much it is. So maybe about INR 4 crores, INR 5 crores will be for delay. There's no default because it is still the court has not received a [ bailing ] like a trusted money, they have received it from the customers, but not paid us. So hence there is no default for provision, it's only a delay provisions we have made.
You're saying that the court already has that money. They're keeping in [indiscernible] [ trusteeship ] or something in the time it is [indiscernible]?
It is with company, but they are not allowed to liquidate the company, that money is with the company.
Okay. Okay. Okay. And my second question is on the fact that you had, I think, publicly stated somewhere that you plan to have, I think 55% to 60% of the order book from India and the rest from abroad. But right now, I see I think only 23% order book is from abroad. When do you plan to reach that 60-40 type of order book?
I think as this all takes time, if you see our revenue mix, we are already doing more international than in India. So because of the nature of jobs, we get [indiscernible] faster abroad. So in the revenue mix, we have already crossed that. But basically on the order book, probably you're right that this is where it will take some time.
Even in the revenue breakup also that you have given in Slide #15, your India is...
Yes. But you should realize that India is not India, India. India includes a lot of exports, which as you see our results, which we are also putting on our website and also on a [indiscernible] exchange segment-wise revenue.
Okay.
In this segment-wise revenue, our rest of world is almost 70-odd percent, 70, 75 -- more than 70% is from rest of world and about 30-odd percent is from India.
Okay. So the mix you want is more 60-40 in favor of the rest of the world, is it? Or am I getting it [ wrong ]?
Definitely -- at the revenue, we want to increase our share from rest of the world and rest in India as we grow. But 60-40 will be the [ mix ] of that.
60 in [indiscernible], for the rest of the world. That's what you are saying?
Yes.
[Operator Instructions] The next question is from the line of Saransh Mehta from [indiscernible].
This is pertaining to an [indiscernible] receivables. And I went back to the balance sheet, I could see that the amount outstanding of about [ INR 437.7 crores ] Now my question is that how well exactly does it reflect in the balance sheet. I have communicated with the company. They have mentioned in their [indiscernible] very clearly that it is a part of the trade receivable. And in trade receivable, I had subsequently asked as to what part is in current receivables and what is noncurrent receivables? They take that -- I think this information will be available in the con call, if we would want to tell something. So can you throw some light on that, please?
It's just 50-50 you can take, which is current and noncurrent. Noncurrent will be mainly the retention money. Current will be the receivable for the work we have done. So you can take, at a broad level 50-50. Out of 400, 50% will be current, 50% will be non-current.
And the current receivables by [indiscernible] anticipate to process to be recovered?
Generally between 6 to 12 months.
So does it mean or can you please give us some understanding based on the inflows of the [indiscernible] we received towards this particular thing. At the end of this current financial year, will this amount possibly come down to about say INR 250 crores or something?
No it won't, because it all depends how -- because some of them are into a year thing, as I just explained, One was [indiscernible] at the INR 15 crores that they have put to [indiscernible] now. So we expect that it will not be by end of this fiscal year, but definitely by middle of next year to the end of next year, it will substantially come down.
But sorry, I really don't think that we still have enough clarity. Will it be possible that offline, someone can give some elaborate understanding on this matte because communication -- but our communication with your team got stuck wherein they mentioned that if...
I tell my team, I think, please communicate with the people you are communicating and whatever best we can do to ensure that everbody receive the same level of information, which we have.
[Operator Instructions] The next question is from the line Omkar, an individual investor.
Congratulations for good margin in quarter 3. Just wanted to ask regarding [indiscernible] will be submitted by March 2022. From that is, [indiscernible] 2 quarters as I mean what is your time frame. I understand but just wanted to ask you how much time it takes one to submit the [indiscernible] whether that will happen in quarter 1 or that will happen in quarter 2.
So in quarter 2, these are multilaterally [ contracted ] [indiscernible] Japanese Government evaluation is a little longer and approval has to come from Tokyo, Japan. So it does take minimum about 5 to 6 months.
After submitting [indiscernible] right?
Correct.
The next question is from the line of [indiscernible].
I would like to know there is -- on the P&L, there is one line written called bank charges [ 128 ], can you throw some light on that thing?
This is -- it is basically guarantee charges for our advanced and performance guarantees towards implication of projects. That's nominated as bank charges in our P&L.
INR 128 croes, you are paying towards guarantee charges?
I mean our main business is contracting [indiscernible]...
[indiscernible].
It is not INR 128 crores, it's million, it's all in million, which we [indiscernible].
My mistake. [indiscernible] INR 12.8 crores.
The next question is from the line of Rishikesh Oza from RoboCapital.
Could you give any revenue guidance for next year?
Only we say we will continue to grow as we have demonstrated in the last 2 tough years the COVID years, in which we have grown, and I'm sure, going forward, things will improve. Our order book is good. Our execution, traction has really picked up -- so I'm sure we'll continue to grow. As you have seen this year also in the first 9 months, we have grown over the last year and the subsequent years also, you can expect definitely growth.
Okay. But sir, regarding the order execution, what level of executions are we expecting over here?
In what terms you want our level of execution?
Like INR 10,000 crores order book that we have, whether we will be executing within 2 years, 2.5 years, 3 years. Like earlier, we used to give some -- that kind of indication.
Generally, as I said to somebody earlier, generally, we take about 3 years because slowly our revenues will also pick up. So the present order we have is, I could say, on the contract average execution period will be about [ 13 ] months. But some of the orders will get [indiscernible] so we provide for anything between 30 to 36 months.
The next question is from the line of [indiscernible] from [indiscernible] .
Sir, can you share your thoughts on the revenue growth for Q4, if that is possible. Why I'm asking is, basically, if I look at your 9 month numbers, probably revenue growth hasn't been too much on a relative basis, except for the Q1 quarter, wherein the jump was probably more because of the base effect. So how should one look at the revenue growth, if that's possible? Secondly, on the order book, if you can share what percentage of the order book would be more about that technical order or the engineering order or the key component supply, which would be a higher margin business, if you can share that? And lastly, on the Russian order, what is the execution status out there?
One thing you have to see that in the 9 months, even in the half year, we have shown you a decent order top line growth, bottom line growth. Even in this 9 months, we have shown almost 14% growth in [ Consol ] and about 30% growth in the top line and the bottom line at stand-alone 50% and 35% on Consol. I think whatever you say because of the lower base or anything, but even the margins have grown. It cannot be a lower base just giving us the top line. But also, we are growing the margin [indiscernible] shows where the commodity prices and all commodities have gone up Still, we are able to show that kind of margin. So naturally, some of the orders are definitely giving us a better margin. Even if you see the growth in the first 9 months, take even pre-COVID '19, '20 financial year. We have still growing more than 10% on the pre-COVID level. So it's not necessary what we are saying that because of low base, we have grown. We have grown continuously, and we will grow continuously. So that's your #1, I want to say, which is very clear. The quality of orders, I think, I have said enough, and we have clearly taken a conscious decision to go for quality rather than quantity. So when we say quality of orders, it is technological focused orders. It's orders where the cash flows are guaranteed like central government funded orders, the multilateral agencies or where we get a letter of the Credit for these orders. So those are the orders which we are focusing on to improve the cash flow and also the margins. So the first thing you talked about the Russian order, as I told in my con call speech Russian order is progressing well, the 6 months, which we have completed. Our teams have been in Russia in various cities. Our engineering is progressing very well. Ordering, almost 60% of ordering is completed. Now the balance [indiscernible] in the next 2 months, we expect to come to 90% ordering and then we have to focus on manufacturing and delivery of key components. That will be the focus for the rest of the year to focus in '22, of delivery of most of the equipment. With that, I think almost 80% to 85% of the revenues we'll be able to bill and only then the balance will remain in installation and commissioning, which will go over to the next fiscal year.
And sir, just to follow up on this Russian order, how are the payment terms in terms of [indiscernible] days or something if you can share? Is it much -- I understand it would be much better than what it would be for the Indian orders, but if you can share the number of days in which you can expect the payment out there in the Russian order?
One would expect because of the Russian Federation, if some people have worked, they know the documentation is very elaborate, but generally, we would expect the payment will come anything between 90 to 120 days.
Okay. And sir, on the quality of order from -- in the current order book, can you share what percentage of orders would be [ growth ] higher-margin orders for the engineering and technical-oriented orders?
I think we just started about a year back. So you've seen and followed our new orders whether it's Petronas, whether it's Dubai order, whether Russian order, things like that, they have been all high technology and high engineering content orders. And going forward, we'll see more and more such orders we focus on less and less construction orders will focus on because that's not our core capability. Our core capability lies in our engineering and technology, and that's what we want to leverage.
So if I understand you correctly, you might be fine having a flattish or a 5% kind of or say 10% kind of a top line growth, but probably a better margin growth over the next 2 to 3 years. Is that the right understanding?
Yes, you can say that we also will focus on growth because geographies are increasing, the size of each order is increasing. But you're right, our main focus will be on the margin and especially cash flow.
Okay. But any growth number on top line that you would be working with at this point of time?
We have given already some numbers.
[Operator Instructions] The next question is from the line of [indiscernible] from [indiscernible].
Thanks for this follow-up question. I have two things, something which is very, very vague. Just in case if there is a geopolitical disabilities, especially in [indiscernible], do you anticipate the effect of the countries projects anywhere in the [indiscernible] geographies. That is one.
Okay. You want to ask the second question also? Or you want me to answer the first one?
I think if you can answer this first one, we'll go to the second later please.
Whenever we do international projects, we are well aware of the risks, and we have a very strong system here of risk evaluation before we are allowed to bid even any project. So we have a risk committed here, which evaluates all the projects we are bidding and ensure that all these kind of risks, which you are asking are evaluated and a mitigation strategy is very well in place. So we -- wherever we see a risk, we ensure that our payments are coming to us [indiscernible]. If there is any risk which is happening, like cases like we either get the down payment immediately or we get a payment through letter of credit, which is, again, confirmed by a top class bank or a first-class bank. So we do not see the risk. And if we don't have this kind of payment terms, then we go and take a [indiscernible] cover, which also powers us against such [indiscernible] risks.
I think that's helpful. Secondly, when do you expect the company to be able to pay dividends regularly? Is there a likelihood from this financial year or...
We are paying dividend from day of our listing. But in between, two reasons why we stopped paying dividend because no more dividend was very [indiscernible] from a tax rate point of view and finally, what lands with every investor. And also second reason was, we started investing in HAM projects. We are [indiscernible] at a much better return as an investor, your return will be much better because we are investing in a HAM project, which has a central government guarantee. It is all being guaranteed by Namami Gange. So this investment which we are making also is helping the investors ultimately. So we believe that these are the two reasons why we have slowed down on dividend and if things improve and we don't invest in HAM projects and tax structure becomes better to have the dividend at the hand of the investors. We will start again, there's no problem. Cash flow will improve over a period of time. And as cash flow is improving, we can also think of paying dividend.
Okay. So it possibly means that in the current business, have you -- you feel that company will be better off not to pay out the dividend and invest capital back into the business. And that's how the dividend policy should be read into. Is that correct? I was under impression that because of APGENCO, TSGENCO [indiscernible] for last couple of years and I think it was around that time that companies stopped paying dividends. And hence, it was possibly related to that.
APGENCO, TSGENCO is going on for almost last 8 to 10 years. So we have been always paying dividends, except the last 2, 3 years, we have not paid dividend. Our core business is always very strong, and we have always shown the return on capital employed, EBITDA and all that. So all the core ratios are strong. It's just, as you rightly said, as any business person has to make a decision, what is the better return on investment? So up to FY'18, we have paid dividends. So it's only in the last 3 years, you have seen that we have skipped the dividend because last 3 years is where we are investing in Namami Gange projects.
The next question is from the line of [indiscernible] from [indiscernible].
Sir, on the UP order, are we seeing any slowdown because of the current election thing out there, on the UP order execution?
No, not at all. [indiscernible] elections. In fact, they push us even harder to ensure that they can commission some plants and get it inaugurated by the ministers and [ CMs ]. So it's always good to have election where there will be a lot of money flowing in to expedite the project and ensure completion before the election.
So I'm trying to understand that in the current quarter, if there is any slowdown? Q3, I'm sure there would be a good execution. But Q4, are we seeing any slowdown?
Not at all.
The next question is from the line of [indiscernible].
Most of my questions have been answered. I just want to take one update on the former MLD [indiscernible] projects, I think we are one of the [indiscernible] when the project is likely to be awarded? Any update on that?
I think we just said we expect towards the end of second quarter next fiscal.
[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Mr. Mittal for his closing comments. Over to you.
Thank you, everyone, for your active participation in our Q3 FY'22 earnings call. We have uploaded the analyst presentation in our website. In case you have further queries, you may get in touch with our Stellar IR Advisors, our Investor Relation adviser based in Mumbai or feel free to get in touch with us directly. Thank you.
Thank you very much, members of the management. Ladies and gentlemen, on behalf of the VA Tech WABAG Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.