Q Earnings Call - Kalpataru Power and Transmission

Transcription

1 Q Earnings Call - Kalpataru Power and Transmission Dt-9 Feb 12 Operator Ladies and gentlemen, good day and welcome to the Kalpataru Power and Transmission's Q3 FY12 Conference Call, hosted by IDFC Securities Limited. As a reminder for the duration of this conference, all participants' lines will be in the listen-only mode and there will be an opportunity for you to ask questions at the end of today's presentation. Please note that this conference is being recorded. At this time, I would like to hand the conference over to Ms. Bhoomika Nair, from IDFC Securities. Thank you and over to you ma'am. Bhoomika Nair Thanks, Inba. Good morning, everyone. Welcome to Q3 FY12 Results Call of Kalpataru Power and JMC Projects. The management is being represented today by Mr. ; Mr. Manish Mohnot, Executive Director and Mr. Kamal Jain, President and CFO. I would now like to hand over the call to the Mr. Pankaj Sachdeva for his initial remarks, post which we'll up the floor for Q&A. Over to you, sir. Before proceeding for the question and answer session, I would like to take you through the key highlights of results and recent development. On consolidated basis we have achieved a top line growth of 17% which is 85 JMC growth of 56%, however, in KPTL we could not achieve the desired execution due to several reasons beyond our control, such as write-off way clearance issues in domestic project and political destabilization in some of the few international project locations in Africa. Going forward, issues at international locations are temporary in nature and we would certainly cope up in the next few quarters. For the full year, we would certainly achieve about 15% plus growth on a consolidated basis. In JMC, we are on accelerated path and expect a very good growth in the next two years at least considering current order book and end up in pipeline. On the margin fronts, we have achieved our target of 11% plus EBITDA level, and 5% plus EBITDA at KPTL. It's been more than satisfactory performance of our team given the sluggish execution and steep increase in the interest cost. However, in JMC there is a reduction in margin due to steep increase in price of cement, steel and labor cost, mainly of fixed price contract. We have maintained our order book of 11,000 crores at consolidated level which breaks equally between KPTL and JMC. During the quarter, we have received 1,050 crore of orders in JMC and 260 crores of order in KPTL. For JMC, the quarter went through grid due to sizable orders one across the segment that is in infra, factories building, power and much more in pipeline. For KPTL, although we have emerged L1 in a good amount of international orders in the past three to four months. The contract awarding has been extended due to last mile documentation and process. We expect to get letter of reward of these projects in this month or next by which our order book would grow by leaps and bounds. As per our commitment, we have completed our first Transmission BOOT Project in this month in Haryana, of which revenue would start by next month onwards. As expected we would generate full year revenue of 54 crores for financial year 13 on annuity basis for next 25 years. The project is completed in a record time of 15 months time despite several execution challenges. On the road BOOT project we are also on schedule, the first project that is Rohtak-Bawal has achieved over 20% of completion and expected to achieve COD by quarter one financial year 14. For the second and third project that is Agra-Aligarh and Nagpur-Wainganga we have completed financial closures, PBT contract have been awarded and resource mobilization has been started and for the recently won Rewa to MP/UP Border, the LOI has been received in the last quarter, and concession agreement has been signed in the last month. With this update, I would like to open the floor for question-and-answer session. Questions And Answers Operator Thank you very much. We will now begin question-and-answer session.[operator Instructions]. Our first question is from the line of from Batlivala & Karani Securities. Please go ahead.

2 Good morning sir. Good morning Renu. Manish Mohnot, Executive Director Good morning. Sir good set of numbers, at least strong execution relatively than last couple of quarters. Sir my first on Kalpataru front, current quarter we have seen interest rate much higher than expected, so if you could just elaborate what could be the content of ForEx loss or M2M loss in this...? Sure, Renu....status of debt on books at KPTL? Okay, Renu there is a extent of 12 crores which is the losses or which is a notional losses on account of MTM which are inbuilt in the interest costs. This is primarily for all the PCFC loans which we have taken in the last two quarters which were revalued at Rs. 53 because that was the requirement of 31st December, It's notional to a get extent because now with dollar rupee again at 49, you will see the reversals coming this quarter. That is around 12 crores and without that our interest costs actually for the quarter is closer to 22 crores. Okay, and sir how is the debt composition between...? Our debt is closer to 700 crores at a Kalpataru level. Typically, debt is always higher than the quarter three if you would see numbers for Kalpataru as well as other companies, but what happens is lot of inflow happens a lot inflow happens in quarter four. Right.

3 Right. And quarter three execution really picks up after the monsoon season. So debt is at the level of around 700 crores at Kalpataru. And sir of this how much would be the ForEx loan component related to projects that we are executing? If you include the PCFC and all of that put together. Right. It is closer to 130 crores. And sir do we expect as in any, I think there were some ECBs which were taken on the interest cost in the subsequent quarter, should start easing off? Yes. It should because ECB, we actually had taken ECB for our Raipur plant. Right. Right. So as per accounting norms, we could have looked at capitalising it, but we have followed the conservative norm of having a MTM. So we should see some MTM upside coming up on that in this quarter. What would be the value of that ECB towards Raipur plant? ECB value for that was closer to... Okay and also within the domestic Kalpataru front, margins have been slightly lower sequentially coming back to 10.5%. So is this

4 because of higher share of I would say turnkey projects or structurally in terms of lower hit on the margins in the domestic business that we have taken? I think effectively we still maintain that our EBITDA margins would be in the range of 11%, right? Q-o-Q what happens is they are certain projects which pick up -- certain projects where bought out items have happen and all of that. Right. But we still believe that our order book today has EBITDA margins which are in the range of 11% plus, right? It's just a quarterly impact of some projects picking a lead versus some projects getting delayed. Correct. And sir my second question coming on the JMC front, very good set of numbers as well as strong order book and inflows there, and sir we have seen as in after Rewa, MP also coming through if you can just throw some light in terms of the equity contributions for that project, when are we expecting the financial closure to be done. And what would be our game plan in terms of ramping up the road segment portfolio for JMC over the next two years? Let me answer one-by-one. You asked me three, four questions. Let me start with the first one, Rewa MP. We expect the Rewa, MP project cost to be in the range of, we are still finalising it. But in the range of 650 crores to 700 crores. Right? We just got the LOA, so you have six months to do the financial closure, so we expect financial closures to happen sometimes in June, July. The concession agreement has been signed and we are working on the EPC contract right now. And sir, how are you planning to further build up the portfolio of assets, -- assets in the road sector, given that the opportunities look reasonably good in terms of pipeline of orders? See, we right now have four projects which are already in our -- we are working on four of them, the Kurukshetra, Rohtak-Bawal, the Agra-Aligarh, the Wainganga-Nagpur and the Rewa, MP. All these four projects require equity of closer to, all put together more in the range of 300 crore to 350 crores. Correct.

5 Out of which we have already deployed, we means when I say we as JMC, has already deployed an excess of 125 crores. The balance would happen majority to over the next couple of years. Now are we looking at more projects? The answer is if we get the attractive price, yes, right. But we will always keep in mind our overall debt equity as well as our leverage ratios. Right. Keeping that in mind, yes we will continue to look at attractive projects wherever we get some. And sir just final in terms of JMC order book break up if you could just share how does it look segment wise? The 5,500 crores if you divide it into the factories and buildings, then infrastructure which is primarily includes roads and water pipelines and power, right. So if you look at the factories and buildings is closer to 2,600 crores. And the infrastructure would be closer to 2,200 crores, and power more in the range of 700 crores. Just, on that ratio I would just like to share KPTL order book breakup as well, I think the other last question from my side. No, please go ahead. There is no -- KPTL 5,500, TL unit domestic, TL Domestic is around 2,700, TL International around 2,000. Infra which include pipeline, if we put together around 750 crores. And DMS 50 crore, 55 crores, DMS reduced our exposure and which was a clear strategy for the last five six quarters.

6 Right. Okay, sir. That's it. All the best for the year to come, if I have some more queries, I will definitely get back. Thank you, sir. Sure. Thank you. Operator Thank you very much. Our question is from the line of from JM Financials. Please go ahead. Yeah. Good morning, sir. Good morning, sir. Sir, firstly my question is on the Kalpataru front. First if you look at the raw material cost, they have been more or less constant. But if we look at two components of it, we have been seeing as the steady rise in the RM cost, while the ENC cost have been declined in to a similar extent which has kept it constant. So basically I just want to know is it because we are liquidating a higher a cost inventory that we had with us? Or is it just purely a function of the execution mix and one shouldn't read much into it? Okay, it has got nothing to do with higher inventory cost. Because remember for us keeping inventory as a cost, right, and it requires a lot of space our inventory is steel, right. It's got nothing to do with liquidation of inventory at a lower or higher price. Its got to do with the mix of projects right? Now let me articulate this if you look at the infrastructure segment right which is primarily pipeline and railways, they typically only have construction expenses because they don't have raw materials. Right, and if you their growth has been much lower than the growth of the other segments, right. So that's one reason why if you look at the construction expense, other expenses they look slightly stagnant. Raw material has gone up primarily because the prices have gone up, if you see steel prices as compared to Q-o-Q, I don't know whether you are looking Q-o-Q or previous year's Q-o-Q, the prices have gone up. And that's why percentage wise it looks high. All right. And going forward, do you think this is the mix that you are likely to maintain? It completely depends on what kind of projects. For example if it is a big international project which also has bought out, the mix would be very different, then an Indian project we does not have bought out. It depends on the mix of projects, it depends on which project you are executing, at what point of time.

7 Right. So it has got nothing to do with inventory. Right because you need to realize the fact that for us inventory means space. Yes. I really -- Just wanted to And cost. Unlike any other sector or any other company, where inventory would mean not much space, for us steel is a big inventory to keep. Right. All right. And sir regarding my second question, we have been seeing a very significant jump in the other income component of JMC Project, both sequentially and even on a Y-o-Y basis. Is there something worth highlighting over there? Nothing significant except that some portion of the income includes some creditors written-off which was a requirement of the law which have been outstanding for more than four years now. Right and that has been shown there. So because what happens is you can't can the creditors beyond a period of time in your books, right. So that's been some impact of closure to a few crores which have come in there, which we always had in our books and they will be written-off, around 1.7 crores something like that. 1.7 crores. Yes. Right. And sir regarding, one more question regarding Kalpataru's operating structure we have seen a very significant jump in the other expenditure so since you are booking the MTM losses in interest expense is there something one time over there? No, there is nothing like one time over other expenditure. Normal routine expenditure, it's gone up to that extent as compared to Q-o-Q in the previous year.

8 And sir can I get operating numbers for Shubham Logistics both for third quarter and for the nine months? Sure, if you look at Shubham numbers for nine months, the top-line is closer to 125 crores with the EBITDA 15% at 19 crores. And PBT of closer to range of 2.8 crore, around 3 crores. Okay, and sir for third quarter? Third quarter 52 crores is a top-line, EBITDA at around 11%, 12% which would be around 6 crore and PBT in the range of 0.4, 0.5 or 50 to 60 lakhs. Right, sir can I get a comparative number for third quarter last year, since I am not having it? Third quarter last year, I can give you comparative numbers, but they are not comparable because a lot of our assets and all of them came into play after that but the total income third quarter last year was 29 crores with EBITDA at same level of around 15% and PBT at 0.55%. All right. Sir just one last question from my side. Sir, other than the road BOOT project that we are having, what is the CapEx that we have done in the parent company in the first nine months and what would be your guidance for balance of the year and figure going ahead? Closer to 80 crores of CapEx on the parent company, right? And for the last quarter, we shouldn't be exceeding 20 crores, 25 crores. And sir any guidance for FY13? In terms of CapEx? Yes. FY13 CapEx should be of similar range, Kalpataru more at the level of 100 crores maximum.

9 Yeah. And JMC more in the range of again -- in the range of 100 crores. Similar amount? Yeah. Sir thank you very much. That's it from my side. Thank you. Operator Thank you very much. Our next question is from the line of Anubhav Gupta from Kim Eng Securities. Please go ahead. Anubhav Gupta Hi and good morning everybody. Morning, Anubhav. Anubhav Gupta My question is related to the power transmission business. If we look at M9 numbers, the execution has been flat Y-o-Y with new orders drying down, how do you see the execution in Q4, will it pick up or you will see numbers flat in Q4? You asked me two specific questions, one why quarter three has been sluggish and one quarter four would pick up or not, so let me answer both of them. Quarter three got sluggish primarily because of couple of projects, one of the projects in African Belt, where because of elections couple of months, we were not allowed to work on that project, plus one project on the pipeline which got slightly delayed because of planned approvals, now all that has at place so all the revenues should come in quarter four. On a quarter four basis, we definitely expect to do much better, except that, earlier what we used to say that we will --Kalpataru will grow at 10% to 12%, now we are saying the range of 10%. In the quarter four, we are expecting 1,100 crore plus as the revenue for Kalpataru and we are reasonably confident of that. All right, what was the size of the African order? That order is closer to $75 plus million. Anubhav Gupta And the pipeline contract.

10 Pipeline contract, the contract is worth 350 crores but the impact of revenue was closer to 50 crores in the previous quarter. In fact from both this projects were closer to 100 crores in the previous quarter. Anubhav Gupta Okay alright. Which we have clarity, now we have at 99% surety that, that would happen in this quarter, actually a lot of it has already been done. Anubhav Gupta All right. Thanks. Operator Thank you very much. Before we could take next question, we would also like to remind participants that in order to ensure that the management is able to address questions from all participants' in the conference, please limit your questions to two per participant. We will take our next question from the line of Sanjeev Panda from ShareKhan. Please go ahead. Sanjeev Panda Good morning sir. Morning. Just you explained that international project were, it is completely bought out and compared to the domestic projects where it's not, could you please elaborate and help us to understand how does it differentiate in terms of margin perspective? Right. As long as -- it's not completely bought out, just to correct that, right? It's a mix of bought out also, so typically international projects would have a rule of thumb of one third erection, one third towers, one third bought out, whether it's domestic projects would have 60% towers and 40% erection, right? A rule of thumb, depends on project to project. Sanjeev Panda On a margin front, typically international projects are high risks projects because it's a new country and all of that and some of them are fixed priced. So typically international project margins are higher than domestic projects at the time of bidding, but eventually depending upon the price movements you could have a slightly higher variation on margins on international projects as compared to domestic projects. Sanjeev Panda And another thing on the JMC Projects, we have been saying over the last two three years period of time this, we have been

11 maintaining a EBITDA margin of below 10% kind of 7% 8% 6% which is compared to across the industry, if you look at most of the players which we can call it our peers are around 10 plus margin. So is there any play where we can improve or we are putting some efforts to bring it to the inline with the industry or there are some significant problem that we see which, because of which we are not able to improve that? No let me, let me answer your last question first. Is there a significant problem, the answer is no. Right. Are we aiming to improve it, yes. But given the current situation in terms of the volatility in prices, the labor rates have gone up, the delay on clearances all of that. We do not expect it to improve in the next couple of quarters definitely. In the next couple of quarters, we still believe it will be lucky if we are able to do 7.5 to 8. obviously there is an attempt to look at it to take it to a different lead in terms of trying to reach 9 over the next four to six quarter and then pertained. But it is not going to happen in the next two, three quarters definitely. Sanjeev Panda And sir, your last question is from my side. Please give us light, because the entire odd book scenario has turned very slow in this last couple of quarters. And how does it look considering the fact that we are approaching the 11, last year of the financial planning year, five year planning here. And then at the same time, the agencies like Power Grid and all, how they are shipping, where you see opportunities coming up in the size and the quantum that opportunity that you can look at in the next two-three years? Let me first start with the order book, yes we've not received many orders in quarter three, but we are favorably placed in our four or five orders as indicated by our NP in the initial speech. I expect, all of this orders to be done in the next four weeks, at least two of them should happened in the next one week and the balance two-three more in the next two-three week. Our internal target is to have an order book at Kalpataru project to the range of 6,500 crores by the year end, if not higher than that. Sanjeev Panda As per as Power Grid is concerned, we have seen a lot of traction, lot of tenders are out, tender we have bid for tenders exceeding 4,000 crore which are sell power. And few tenders at SEBs and private sector players also, we should hear from them over the next whatever couple of weeks if not a couple of months definitely. The third question you asked was, the margins and competitions. Competitions continues to be there on all transmission projects although my gut feel is that although what we are seeing is it's more realistic competition where as in idiotic competition which we saw in the past. Sanjeev Panda So there is competition it will continue to be there but there are enough orders which powered plants to award in the next three, four quarters so we should be well placed in terms of order book facility. Sanjeev Panda So the kind of margin that we are seeing currently would be sustainable one? On my current order book which I have today I believe we will be able to sustain this margin.

12 Sanjeev Panda As going forward is a question which we need to discuss at the end of every quarter. Right, I understand. Thank you, sir, thanks a lot from my side. Operator Thank you very much. Our next question is from the line of from Enam Asset Management. Please go ahead. Good morning, sir. Morning. Three questions from my side. First if you could give us color on working capital at our consolidated entity. Can I give it separately for Kalpataru and? Will do sir, will do. Right. It's at the level of number of days you need or it's more at the level of how do you want to look at that number? In terms of your Q-on-Q improvement, if you can give us, what is the current state like in terms of number of days also will do. If you look at the net working capital cycle which is there for Kalpataru, we are at the level of net working capital in the level of 135 days to 140 days. On our Y-o-Y basis, we are at 120 last year, it's gone up slightly.

13 But compared to Q2, it's at similar basis. And sir on our JMC front? JMC, if you look at the net, it is around 187 days. Manish Mohnot, Executive Director Which reduced from a Q-on-Q basis, it reduced by closer to 25 days, sorry on a Y-o-Y basis. On a Q-o-Q, similar number. And if you have some consolidated debt number sir? Debt number at Kalpataru is closer to 700 crores. Yeah and...? And JMC is closer to 300 crores. 300 crores. Sir second question, if you could give little bit outlook on your bidding pipeline in JMC as well as KPTL, segment wise would be better sir? Billing pipeline?

14 Yeah. Sorry, it's was not very clear what you want, bidding pipeline is what? In terms of your new bids where you have gone for a new tender? Bidding pipeline, I heard billing pipeline, sorry for that. See if I divide it, if I look at Kalpataru, we today have bid for projects in excess of 6,000 crores across domestic and international. Out of which domestic is closer to 4,000, international is closer to 2,000 crores. The tender which we have bid, we are yet to be awarded or yet to be opened by the client. If I look at JMC, we are closer to 2,000 crores for which we have submitted tenders, which are yet to opened. On the infrastructure which is pipeline and railways, we have submitted tenders closer to 800 crores, which are yet to be opened and we should see some movements there over the next two to three years. So, we are very much aiming for that 6,500 crore for the KPTL side and probably for the JMC side, what kind of closing order book we expect? More in the range of 5,500. Even after showing the execution what we are showing that in a Q3? Yes. Sure. And sir the last question, your outlook on the next year in terms of your margin profile in individual segments and the growth where we see it?

15 In terms of margins profile, Kalpataru Power overall we still believe we should see be able to maintain margin in the range of 11% at the EBITDA level. And JMC more it is in a range of 7.5% to 8%. In terms of growth, we definitely see JMC again having a growth more than 30% over the next one year as given the visibility of order book. Sure. And Kalpataru, we definitely growth exceeding 15% next year given that we expect some big orders to came in over the next two to three weeks. It's 15% for Kalpataru, around 30% per JMC, consol we should be doing 22% to 25% growth next year also. But sir, our infra division especially, if I see the margins, they are not yet picking up which were earlier the case of 8% to 9%. Do we see that situation coming in the next year? Would it pick up? The answer might be, not significantly, because it also includes the railways division which are new projects, which we have taken over the last six to nine months. Sire And you are aware we set up this new division a year ago. Sure. So, the new division always has its own sets of challenges in terms of margins, capital employed, additional costs out of that. So, I believe it should continue more at the range of 8 to 9, if not 9 to 10 and nothing beyond that. But sir, for the first nine months, our margins in this particular division is around 5 odd percent, if I see it. So, do we see that, I mean 4.5% if I have to be specific?

16 We should be at the range of 8% to 9% over the long run. I am seeing on a Q-o-Q basis, may be it has just fallen because of some projects we did not pick up, which I indicated earlier. Sure. But we should be in the range of 8%. So by this year end we see the margins around say sir, 6%, 7%? Yeah you should. And probably for the next year as well, we'll see the similar rate? We should aim for 8 to 9 next year. So.. Gestation period should be over for some of the departments which are set up new right? We should see margin improvements coming. How much is the fixed price contract sir in a current order book? Closer to 24% right? If I'm not mistaken, 22 to 24% sorry I'm just trying to yeah around 22%. Both in KPT as well as consol put there. Consol around 25% KPT around 22. See, 75% is the price variation and 25% is fixed. Sure sir. Thank you very much and wish you good luck sir.

17 Operator Thank you very much. Our next question is from the line of Krishnakant Thakur from Espirito Santo. Please go ahead. Krishnakant Thakur Good afternoon sir. Afternoon. Krishnakant Thakur Sir I know you have answered the question on execution and not to hold on to your guidance, but if you look at on a consolidated revenue, if you are guiding for 15% growth and if you look at JMC Q4, if it is able to clock anywhere between around 25% to 30% growth. So in KPTL on the execution front, we are looking at closer to, I mean practically a flattish kind of a number in Q4 as well, 9,000 crores of revenues odd, so are we missing something in terms of there seems to be some disconnect on the execution side? No, you are not missing anything because I remember what our MD said he said 15% plus growth minimum at a consol basis. Krishnakant Thakur Krishnakant Thakur Right? And that's why it was indicated by our MD, a minimum of that. Krishnakant Thakur Got it sir. And what would be the closing unexecuted order book, we are looking at KPTL at the end of this year? Our target is to be at the range of closer to 6,500 crores. Opening order book as of 1 April. Krishnakant Thakur Sorry, sir. This is?

18 Kalpataru, KPTL 6,500 crores. Krishnakant Thakur Our closing order book, right? Closing order book. Krishnakant Thakur As of March 12, right? I would be happy to call it a opening order book as of April. Krishnakant Thakur Got it. And sir if you look at some of the competitors who were like a newer entry in terms of business, on the execution front they have done like sub 5% kind of a margin in this quarter. So in terms of competition going forward, are we looking at easing of number of bidders, specifically for the projects going ahead? In terms of for the last compared to six, nine months or a one year. Have the number of bidders reduced significantly or are they at the same level, if you can just highlight that? Number of bidders have definitely reduced as compared to what it used to be nine months or 12 months or 18 months ago, right. But does it imply improved profitability, the answer might not be yes directly. Because while, as I said earlier, while earnings list which have reduced but given the cost increase, given the competitive nature of also the serious players were there on the market, margins might not improve significantly. Krishnakant Thakur Right sir, sir not exactly in terms of margin even if they don't improve at least they should translate into better order inflows? Yes, I think better order inflow should happen. But realistically carrying a 18 to 24 month order book is a decent order book as far as Kalpataru strategy is concerned, right because it's not only about order book it's also our ability to deliver on that order book. Krishnakant Thakur Correct. And given the constraints on labor, constraints on ROW, constraints on all of that, right, it's not only about getting an order book. It's about ensuring that you make money out that order. Krishnakant Thakur True sir. And sir my final question on the existing order book of 5,500 crore, the execution challenges what we are facing are they normal challenges or some of them are slow moving orders or have kind of government to a back burner. So is that kind of a situation or it's a normal execution challenges? Krishnakant Thakur

19 Got it. I think sir, that's it from my side. Thank you. Thank you. Operator Thank you very much. Our next question is from the line of Sachin Trivedi from UTI Mutual Fund. Sachin Trivedi Hello? Hi, Sachin. Sachin Trivedi Yeah. Hi, sir. Morning. Sir, one question on the BOT projects that we have completed and we said that revenue, expected revenue is 54 crore on that. Can you share some more details in terms of what was the total project cost finally and what is the expected PBT or PAT on this project? Just to refresh everyone. Although I've discussed in all calls which you have had for the last four quarters, but the SPV at Kalpataru has 51 and Techno 49% stake. This was a BOT at Haryana which has to be done in the record time and which we have completed. Line should get commissioned as early as few days from now, not even beyond that. The annuity in this is 4.5 crores per month, which translates to 54 crores, increase per WPI index whatever happens on the annualized basis. The total project cost including IDC was more at the range 450 odd crores. If it was closer to 400 crores. There is also a grant on this project of closer to 80 crores. So effectively if you look at the project, we have a debt of closer to 280 crores. We have a grant which has already come into our books and we have equity of closer to 90 crores between both the partners put together. Our partner is Techno on this project with 49% stake. So on 54 crores we should be, we are expecting our equity return in the range of 16% to 18% definitely on this front. Sachin Trivedi A good question which I do not have a direct answer. But logically it should get into a dividend more as early as next quarter itself. Sachin Trivedi Manish Mohnot, Executive Director Or at the end of year, but a significant portion, we will see only next year. This year you will see only for two months. Sachin Trivedi And sir my next question is on the real estate, when can we expect a revenue from that area?

20 We call it the developmental projects because we did for that to qualify for all the BOTs. Sachin Trivedi Yes. And that's how we call it not a real estate but anyway. The Thane IT Park with the project is nearly done, we expect the project to be done in quarter two or closer to June of the current year. Right? And we should see revenue coming in from quarter two financial year '13, it's nearly done, I have seen the project just a few weeks ago, all the structures are completed and finishing work is underway. That project should give us closer to 3 lakh square feet of salable or not salable, I would say leaseable area, right? And we should have revenues closer to 15 crores to 16 crores starting from next year per annum. Sachin Trivedi Indore one which we are doing, we still are on the drawing board because there are some norms which have changed, so that's something which is still going to take time and it's not definitely happening in '12, '13, looks like more '13, '14 that will be 4, 4.5 lakh square feet of development. And this developmental project in Thane, this is in a form of subsidiary for us. Yes. Sachin Trivedi Energy Link. Perfect. Sachin Trivedi So here, will the dividends take time to come or how do you think? Should not, mean I'm seeing at the end of the year, the dividend should start coming. Sachin Trivedi And just one follow-up question, what will be the debt level on Energy Link in that case? Energy link, the debt level, we expect once the commencement happens should be closer to 80 crore levels.

21 Sachin Trivedi Okay, sir. Thank you. Operator Thank you very much. Our next question is from the line of Madan Gopal from Sundaram Mutual Fund. Please go ahead. Good morning sir. Morning, Madan. Sir, if you can explain the remaining BOT projects when probably they will get commissioned and you explained the total CapEx and if you can split between what will be next and year after that in terms of investment? Sure, so are there two questions let me answer the first one. If you look at the four projects which we have Rohtak-Bawal, Agra-Aligarh, Wainganga-Nagpur and Rewa, MP. Rohtak-Bawal, we expect the commissioning to be in quarter one of financial year '14, right? So not '12, '13 but '13, '14. Agra-Aligarh quarter two financial year '14. Nagpur-Wainganga, quarter one financial year '15. And Rewa, MP should be quarter three of financial year '14. Effectively, all the three majority, the large project should get into the revenue more in '13, '14.

22 The balance equity should go at around 125 crores next year and around 100 crores the year after that. Approximately, right? It depends completely on the speed of the work and at what speed, means that if can finish earlier, our equity will go earlier but revenue will also start early. And when you said, when you were talking about the revenue expectations from the first project that is likely to be commissioned in few days, Haryana, you said 16% PBT, if I am right? 16% to 18% ROE. ROE? ROE, that's what I said and that's what the numbers would show you. That's a annuity project, it's very easy for you to just put down the numbers on a spreadsheet and... Can you help us with what will be the total annuity on a full year basis for the remaining four projects, when they get commissioned? And ROEs is of similar nature? ROE is ranging, no roads would not be similar nature. ROE is ranging from 14% to 16% levels. Thank you, sir. Thanks for taking my question. Operator Thank you very much. Our next question is from the line of Harshad Shukla from Emkay Global. Please go ahead.

23 Harshad Shukla Good morning, sir. Morning. Harshad Shukla Sir my first question pertains to your order book. Will it be possible to share with us your total exposure to SEBs out of your total order book? Sure. Our SEB exposure out of total order book is closer to 40%. And majority of them are funded from PFC REC. That's why we have a big order. Sorry? Maharashtra is the biggest. And Tamil Nadu is the second one. Actually we are working only in three SEBs today. Maharashtra, Chattisgarh and Tamil Nadu. Okay, sir. And sir coming to your BOT projects, are we looking at any other BOT project in the transmission segment? We are bidding for some. We are bidding for some, EPC competitor as well as on some projects as small equity partners. And in some of them smaller projects as larger partners also. We are bidding for a lot of them. So let's what happens.

24 Harshad Shukla But what could be the size given our and the balance sheet? More in the range of 500 crores projects from a EPC prospective. Harshad Shukla Is where we would like to focus on. Harshad Shukla If you go for larger projects our equity stake will be much lower. Harshad Shukla EPC product to 500 crores, okay. And sir lastly on the railways and pipelines segment, what kind of traction that you were seeing in this segment in over next two years to three years and the margins that you are expecting over there? Margins I think we have discussed also earlier, I would be happy if the margins continue to be in the range of 8% to 9%, slightly increase but realistically 8% to 9%. In terms of traction we are seeing a lot of tenders coming on railways and pipelines both, right. In the next two quarter you should see some railways already as a very decent order book. If you see pipeline also increasing their order book size, but there is enough competition in both the sectors and because of that margins would continue to stress as far the entire division. Harshad Shukla And sir, about order book or maybe on industry wise basis, what kind of orders that we are now receiving. Is it a product based order we are receiving now or is it the complete EPC kind of orders? It's a mix of both to give you can answer in the last six months we have won orders of closer to 300 crores, which are only product based. Harshad Shukla Right, more than 300 crores, actually closer to 350 crores to 400 crores, where we only be supplying towers. Harshad Shukla

25 Right. And the balance that continues to, out of our order book 8% to 10% is only for supply of towers and the balance continues to be big. Harshad Shukla And what could be the margin differential between both the type of orders? Typically towers would be slightly higher on margins. Harshad Shukla Right, because it's only a product base, right. But eventually it all gets mixed onto the overall margins of 11% plus at the EBITDA level. Harshad Shukla Okay, okay sir. Thank you, that's all from my side. Thank you. Operator Thank you very much. Our next is from the line of Rabindra Nath Nayak from SBICAP Security. Please go ahead. Rabindra Nath Nayak Thank you, sir. Good morning. Sir, actually you just explained that your working capital days in Kalpataru has actually expanded and JMC is contracted. Can you please give some explanation for as why this sort of things happened? Explanation, I can give at a level of why this has happened, but it reflectively depends on the kind of orders which you book, if you look at Kalpataru given the current change within payment terms which have happened with a lot of Rabindra Nath Nayak So it that this would further grow because they made a slightly stringent where even for your suppliers you will get paid once the election happens. Rabindra Nath Nayak

26 Even the kind of project which are coming in transmission, the kind of projects which are coming in transmission that they are going to be, t is going to be very difficult to reduce this, may be a plus, minus five ten days. As far as JMC is concerned given that the mix of order book contains of orders which are our own BOT orders as well as overseas as well as external client orders. Rabindra Nath Nayak Manish Mohnot, Executive Director The mix side has helped us to reduce the working capital cycle. Rabindra Nath Nayak So that means it will continue, JMC will see some sort of lowest, it will continue that whether you will get the networking capital in JMC. And from this levels, where we don't see Kalpataru is working to expand further. No, we don't see it expanding, but we don't see it reducing also, plus, minus five ten days is what it should be. Rabindra Nath Nayak Okay, okay. Sir, one thing I want to know that you are working with Rajasthan and so the Shubham Logistic has started its operation and also have a significant places in Rajasthan. How comfortable you are working with this, particularly in Rajasthan utility and particular Rajasthan SEB? Very comfortable. Rabindra Nath Nayak So you are comfortable in this in terms of financials, everything and your comfortable with? Everything. Rabindra Nath Nayak Okay, sir. Thank you. Operator Thank you very much. Our next question is from the line of Sanjeev Panda from Sharekhan. Please go ahead. Sanjeev Panda Yes. There has been a follow-up question sir. We saw that effective interest cost that has gone up in this quarter and obviously the interest rate would have played the role, still just to confirm is it only interest rate or is there any other projects which was back ended or some any other issue because of which we have been seeing. And currently what is the interest rate that we are paying effectively?

27 The answer to your first question is only interest rates. Because if you look at the interest, right and if you remove the 12 crore hit which we had because of MTN right, the provisioning, right? Our interest continues to be at very similar levels of previous year, right? And previous year I don't know how many of you all would have the data but previous year we also had a profit in this of MTM of around 2 crores. So in terms of interest, the interest cost has gone up only because of the interest rate hikes right and our average interest rates are more in the range of 9.5 crores to 10.5 crores. Sanjeev Panda Thanks sir. That's it. Operator Thank you very much. [Operator Instructions]. Our next question is from the line of from ENAM Asset Management. Please go ahead. Sir couple of follow-up questions. You mentioned that 700 crores would be the debt on KPTL and 300 on JMC's side but we must be having some debt on our real estate as well as the Shubham Logistics, so on a console basis what could be our debt currently. Closer to 1,250 to 1,300. 1,250 to 1,300. Gross. Yeah, yeah gross. And we don't see any increment happening to this by year end? Year end, normally the quarter four it always improves. Debt will go up marginally? Will come down. Will come down. Yeah.

28 Yeah. What could be that quantum? The total value would be, around 1,800 crores. For the balance... Unexecuted value is around 1,800. From Agra, Nagpur and Rewa MP? Yeah. Not Rewa Mp... Agra-Aligarh, Nagpur-Wainganga and Rewa MP And these are all 100% owned. Yeah. Agra-Nagpur... Agra, Nagpur and Rewa is 100%. Yeah okay. And what do you see in Shubham Logistics sir next year? Outlook?

29 In terms of top-line, in terms of...? Yeah. Top-line as well as the margins sir. I think we expect Shubham Logistics to be closer to 225 plus crores next year. This year, they should end at the range of 175 to 180 and next year 225 plus. EBITDA should continue at 15% plus levels. And PBT more in the range of 3% to 3.5% level. 3% to 3.5%? Yeah. And if we can save our interest cost which we are hoping for because of some of our government policies where this gets classified into a different nature of lending, the EBITDA could go up further based on those. And you did mention sir the real estate venture, we will start getting in Q4 of FY13? No the Thane one, the development project in Thane should happen Q2 of '13? Q2.

30 And Indore should go to '13, '14. That will go to FY14? Yeah. Fair enough, sir. And last question, what could be your average tax rate? More in the range of 28% to 29%. For the KPTL? Yeah. And JMC will be the same, 33%? JMC is also at 26%, 27%. So on a consol level, will be around 28 odd percent. 28 odd. Fair enough sir, thanks a lot. Operator Thank you very much. Bhoomika Nair Sir I had one question.

31 Yeah. Bhoomika Nair Bhoomika here sir. Sir you said that in a 40% of our domestic transmission line order from SEBs which include Maharashtra, Tamil Nadu et cetera, are we having any issues in terms of payments or delayed payments from any of No, we still in the cycle of plus, minus 5, 10 days from the due date. Bhoomika Nair Inba are there any further questions? Operator No, there are no more further questions. Bhoomika Nair Okay, sir, thank you very much for taking time out, I think we have answered most of the queries on the call. Thank you very much for taking time out, sir. Thank you very much. Thank you. Operator Thank you. On behalf of IDFC Securities Limited, that concludes this conference call. Thank you for joining us. And you may now disconnect your lines.