NCC Q Earnings Call 8 Nov 12

Transcription

1 NCC Q Earnings Call 8 Nov 12 Ladies and gentlemen, good day and welcome to the NCC Limited's Q2 FY13 Earnings Conference Call, hosted by Motilal Oswal Securities Limited. As a reminder, for the duration of this conference, all participants' lines are in the listen only mode, and there will be an opportunity for you to ask at the end of today's discussion. Please note that this conference is being recorded. At this time, I would like to hand the conference over to Mr. Satyam Agrawal of Motilal Oswal Securities. Thank you and over to you sir. Satyam Agarwal Thank you Inba. Good evening everyone, we thank you for joining us today evening, we have with us Mr. Y. D. Murthy, Executive Vice President, Finance; and Mr. R.S Raju, Senior Vice President Finance and Accounts from NCC. We would first have a briefing from the management and then open for Q&A. Over to you Mr. Murthy Yeah. Thank you Sachin and good evening all the participants. I am Y. D. Murthy, Executive Vise President of Finance of NCC Limited. My colleague Mr. R. S. Raju will join me in the next two to three minutes. In the meantime I will brief the participants about the company's performance in the second quarter. On a standalone basis, we have achieved a top line of 1,352.7 crores which a growth of 21% compared to the second quarter of the previous year. The net profit is 8.05 crores in the second quarter and the EBITDA is crores. On a consolidated basis, the company has reported a top line of 1,639 crores in the second quarter and EBITDA of crores and a net profit of crores. What is significant is, in the first quarter of the current year, we have reported a top line growth of 28%, so in the second quarter this top line growth of 21%, others well for us which means the execution is picking up and going forward the execution is likely to continue to be good. And also, the other important feature is, the EBITDA margin in the second quarter is about 8.24% at 111 crore and the net profit margin is at 8.06 crores, we have net profit margin about 0.6%. The net profit margin is less mainly because with the following reasons, mainly the continuing inflation trend underneath resulting high input cost and the recent increase in the service tax from 10% to 12% which is effecting the profitability of the company. High competition resulting in low profit margins and also the increase in the average cost of borrowing from 11.3% to 12.4%. On a consolidated basis, the EBITDA margin is 12.3% which is quite decent and the PAT margin is around 0.69%. The subsidiaries and jointly console entities particularly our main subsidiaries like NCC International at Muscat, NCC contracting company at Dubai, NCC Urban and NCC Infra and also our BOT road projects and other power projects. They have reported a consolidated top line of crores in the current year and a net profit of 3.26 crores. As far as the order book is concerned, the first six months of the current year resulted in an order accretion of 2,621 crores. The second quarter the order accretion was not up to the mark is about 600 crores or so. But nevertheless we are confident it will pick up as we go forward. As far as the order book distribution is concerned, and first giving the order execution division wise in the first six months of a current year, followed by the order book at the end of the second quarter. In the building, now with combined buildings, roads and oil and gas divisions into one division under one Director. So, these three divisions put together have executed orders of 1,289 crores in the first six months in the current year. Water and environment and railways put together executed 677 crore of orders, electrical executed 150 crores, irrigation 126 crores, metals 104 crores, power 405 crores, mining 35 crores, international 392 crore, total 3,177 crores. This is for the first six months of the current year.

2 Now the order book at the end of the second quarter is 19,639 crores. Actually it has come down, because the orders received is 2,621 crores and the order execution is 3,177 crores. So, the order book at the beginning of the year is 20,195 crores and it has come down to 19,639 crores. Out of this, buildings, roads and oil and gas put together, 5,965 crores that is 30% of the order book. Water and environment and railways put together 2,696 crores, that is 15% of the order book. The electrical 464 crores, that is 2% of the order book. Irrigation, 1,939 crores, that is a 10% of the order book. Metals 274 crores that is 1% of the order book. Power 5,938 crores that is 30% of the order book. Mining 448 crores that is 2% of the order book and the international 1,642 crores that is 8% of the order book. So buildings, then water and power put together are nearly 75% of the order of the company. As far as the debt collection period is concerned slight improvement where the debt collection period is come down about 88 days as compared to 89 days in the previous quarter there is a good improvement and in fact in September 2011 the debt collection period was 120 days now it has come to our comfort level. The loans on the books of the company in the second quarter have gone up by about 54 crores. So the loan house planning is 2,625 crores at the end of second quarter. This is briefly on the management and now I request the participants to what we have posted and just now my colleague Mr. R. S. Raju also have joined us and both of us together will try to answer all your questions. Please see that you do not ask more than two questions per participants and the total question should not be more than 25. Now, people may ask your questions. Questions And Answers Sure sir. Thank you very much. Ladies and gentlemen we will now begin the question answer answer session. [ Instructions]. Our first question is from Devang Patel from Avendus. Please go ahead. Devang Patel Hi, sir can you update us on NCC Power what has been the execution in this quarter and what is the remaining backlog? Yeah NCC Power as we all know has declared for financial closures. The EPC is being done by the parent company in the first six months of the current year we have already booked top line of about 180 crores. 82 crores in the first quarter and the balance in the second quarter. So execution is also picking up. We have placed the order with the EPC contractor. We have payed in the advanced the are going to be opened shortly and the project is on track and by March 2015 the F structural phase that is 660 megawatts is likely to start declaring body. Devang Patel Alright sir. Sir and secondly on the order inflows you mentioned they've come down compared to the first quarter you also mentioned in the opening remarks, competition has been high. Is that one of the reasons why inflows have come down or is there any particular segment impacting the inflows if you can tell us what are the inflows in the building segment which has been strong for a few quarters for us? Yeah. See one thing is, the macro environment is not very conducive. We are not compromising on our EBITDA margins. That means we are maintaining lot of bidding discipline and conservatively bidding and we are not compromising on profits. As the one reason why we have not bagged some orders and as the thing is in the road sector, roads we are quite conservative and actually we are planning not to bid for some of the BOT projects but definitely we will participate in the gas contracts. So, as far as the other one is, as I was mentioning in the profitability comments, the competition is also severe. So, all these things

3 are to be taken into account. Nevertheless, we are still at 19,000 crores order book which is a fairly decent order book. And in the second half of the current year, we expect the order accretion to increase. Devang Patel Right, sir. Thank you for taking my questions. Thank you very much. Our next question is from Amit Sinha of Macquarie. Please go ahead. Inderjeet Singh Mr. Murthy, this is Inderjeet here from Macquarie. And my first question is on your plans to kind of reduce debt. Are you looking at some of you have definitely looking at selling assets, are you also looking at that and what all sectors these assets could be? Yeah. See, we have invested in our BOT assets and also in our real estate assets. Now the BOT, we got about five road projects, and fortunately for us all are operational. We have all generating revenues and we don't need further equity. Then we bought this power project, Himachal Sorang, 100 megawatts which is on the verge of declaring the commercial operation very shortly. Now we are looking at selling our stake in Himachal Sorang, and two road projects that is Western UP tollway and Bangalore Elevated Tollway. And also we are looking at monetizing some of our real estate assets together, the BOT assets sale and the real estate assets sale put together is likely to bring 500 crores to 600 crores to the table, and which will go primarily towards debt reduction in the parent company. Inderjeet Singh And in terms of working capital, is there a target that you are working with by the end of the year? And the reason why I'm asking on the working capital side, because the concern is that the working capital situation, because of the working capital and the high debt situation, some of the companies are actually working on very very tight situation, the kind of debt or the credit availability from the vendors or the subcontractor is fairly limited and which is also kind of leading to company not being able to bag too many new projects. So would you want to kind of give some comment on that and where NCC is place regarding the situation? So you're asking probably, you have covered all the aspects of what concern companies are facing and what suppose it to react now. In the same direction, our company is also moving as far as working capital management is concerned. So we have taken each and every step wherever possible is there to bring down working capital so in this tough liquidity position. So thereby if our working front also showing that our working capital days have come down from nearly 158 days from two years back to now 118/119 days. Our net collection also improved in the current six months period, so earlier our net collection sometime run 110/115 days. Now, in the last March 2012, our net collection days are 91. Now come down to again 88 days. So, some improvement happened in the working capital management, and still also all the divisions are focusing only to optimize the working capital. So as to some save costs towards the interest and also to reduce the net provisions. Inderjeet Singh If I will squeeze one more, all the NIMs that you talked of regarding the assets that you are looking to sell which you talked about 400 crores to 500 crores potentially inflow. What has been the total equity deployed in all these projects put together?

4 Approximately about 200 crores in our BOT assets. Road is again real estate assets substantial money have gone in maybe something like 600 crores to 700 crores. Inderjeet Singh We are targeting only these three BOT assets that I've mentioned. Inderjeet Singh So these three BOT projects have 200 crores equity. Yes. Inderjeet Singh Thank you. Thank you very much. Our next question is from Sujit Jain of Asian Market Securities. Please go ahead. Sujit Jain Good evening, gentlemen. I have a question on NCC Power. In the power SPV, what is the total equity that both the partners have invested and what is the total debt drawn? See, to declare financial closure, the lenders have stipulated condition that 35% of the equity must be brought in by the promoter companies. The total project equity is about 1,900 crores and the NCC has brought in about 400 crores and the similar amount has brought in by your partner that is Dharti projects. So the total equities that is gong in to projects is something like 750 crores to 800 crores and the project company has drawn loans already second round of disbursal also have taken place approximately about 800 crores to 850 crores. Sujit Jain And in our last conference call we mention that if there are if there are PPS signed for at least 75% then post March 2013 further disbursement will be difficult from banks can you clarify our position on that? Yeah see to 75% is the converting about 990 megawatts because the total installed capacity is going to be 13, 14 megawatts of out 990 megawatts, 500 megawatts we have shortlisted by government of AP we are waiting for the invitation to sign the PPS. The balance 440 megawatts will participate in the case one biding in the states like Karnataka and Tamil Nadu and tie them up. In fact in Karnataka we were shortlisted for the 400 megawatts. But for their own reasons, the government of Karnataka canceled their entire biding process. So we believe we are in target and we will be able to achieve the requirement of the lenders very stipulated time which is the March And in fact we recently submitted our bid for new peak for case one biding.

5 Sujit Jain And sir one last question is on Dubai project. Could you give us some details regarding the total capital employed in the project? And can we split it in the equity that we have invested and the debt and the customer advances? The total work has been done is including land cost in the order of 400 crores to 420 crores. out of which our equity is of in the order of about now about 100 crores is there and another 120 crores of debt raised in rise with the corporate entities and the customer advantages are in the region of about 150 crores to 160 crores. All these money have gone towards acquiring the land 4 acres, now the land is fully paid first and we have done the foundation works and also the basement works and also nine floors of Tower I in the Harmony project as of now. Sujit Jain And just last question on what is the current rate that is going on in Dubai? Current rate? Sujit Jain Rate as in rate per square feet? Yeah, yeah, the see Dubai market corrected substantial as far as the real estate is concerned the corrected rate were 40% to 50%. But what we understand is the bottoming out, now we are going direct in that area is about 700 dirhams per square foot, whereas when we sold it was around 800 dirhams per square foot. Sujit Jain Okay sir. That's it from my side. Thanks. Thank you very much. Our next question is from Deepal Delivala of Citi. Please go ahead. Deepal Delivala Good afternoon sir. Sir, I wanted to ask you, the last two quarters we will on boarding that you've got very high other income. So in the first quarter it was between 23 crores to 25 crores. Could you explain what the other income is? And whether it's a sustained? Other income, there is not much difference but on quarter to quarter, our income mainly of first income receipts. Deepal Delivala Sorry? What sir?

6 First income what we given some loans and advances to group companies our lenders so the interest what we collected from most of contractors, that interest income mainly in the other income is there. Deepal Delivala Okay Deepali, earlier what used to happen is whatever interest we pay to the lender is to subtract the interest that we received and we used net figure but as for the recent accounting policy, by the Institute of Chartered Accounts, the both the things the interest received as well as interest paid has to be before separately and so interest received is shown under other income. Deepal Delivala Sir my question is going forward on the order inflow number you said that second half you expect the pick up. Is it any specific segment that you expect a pick up from? Pick up in execution you mean? Deepal Delivala Order inflow, you said that order inflow has been weak but it will pick up in the second half. Okay okay. See buildings is definitely going to pick up and also electrical division will pick up, international is also expected to pick up some orders and whatever numbers we meant is actually the water and environment is, they actually they are ahead of the budget, but some more orders are expected. Irrigation is also expected. Roads we are not very bullish, but if any EPC road projects come, we are definitely going to participate. Deepal Delivala And sir, my last question is you mentioned that your working capital has improved. Now if you see the working capital has improved from March onwards and this is when you started executing your own subsidiary power project, so have we seen a general improvement in the working capital or is it just looking better because you have a slightly more control over whatever subsidiary pays you? This is now, our main focus is the correction from the clients. Deepal Delivala There then the focus on execution main deals main persons, throughout all the clients were moving and where our pending are there with the clients. So the focusing on the correction thereby some improvement happen from the corrections front. And also wherever in the metal procurement credit period wherever possibility is there and focusing on availing the credit periods.

7 Deepal Delivala So and also we are selecting projects where mobilized advance facilities are there and where positive cash flows projects are there. Where then the good profit margins are selected in our profit margin, but with a positive cash flows. So in such a manner, some selective steps taken to improve our working capital. Deepal Delivala And sir, my last question is on the NCC Power project. How much of revenues are we going to book this year? 180 crores, so we have booked in the six months period roughly. Deepal Delivala What do we expect for the full year? About same turnover we expect in the second six months also. Deepal Delivala Okay, sir. Thank you so much. Thank you. Our next question is from Abhinav Bhandari of Elara Capital. Please go ahead. Abhinav Bhandari Yeah. Hi, gentlemen. I had a couple of questions on the subsidiaries you generally gave the revenues as well as profits for the major subs, so can you give that for the first half? Yeah. In May, in our corporate presentation what we are giving is the second quarter overall numbers, that is 286 crores of our top line and a PAT of 3.2 crores. Now for the first six months, my colleague, Mr. Subba Raju will give the detail. R. Subba Raju, Senior Vice President Finance and Accounts For the six months period, all the group companies reported a turnover of 607 crores, and a PAT of 7 crores. You want company wise details of six months period? Abhinav Bhandari Yes, sir. If it is possible for some of the major subsidiaries if you could just give.

8 R. Subba Raju, Senior Vice President Finance and Accounts For major companies, I will. This NCC Urban Infra Limited reported a 109 crores turnover for the six months period, and a PAT of 1.3 crores. And our Brindavan Infrastructure Company which is NCC project reported turnover of 10 crores and a PAT of 2.8 crores. Bangalore Elevated Tollway Limited reported a crores turnover. This is our part of the SPV turnover and a loss of 5.8 crores, and there is a cash profit of 1.7 crores in this project. Western UP Tollway reported a PAT 1.5 crores top line and cash profit of 6.3 crores. OB Infrastructure Limited, there is road project which come out of 45.2 crores and the cash profit of 19.1 crores. Abhinav Bhandari So turnover was how much? R. Subba Raju, Senior Vice President Finance and Accounts Turnover 45.2 crores. This is in general of a major companies. Abhinav Bhandari On the construction side, the twelve companies, Dubai and the... R. Subba Raju, Senior Vice President Finance and Accounts I will tell you those companies also. This is Oman and the Dubai, now Dubai current year there is no operations almost all the projects exceptional final deals so in the moment the company want to reported the turnover of crores for the second quarter for a six months period 403 crores and the profit of 14.7 crores. Abhinav Bhandari Right. And on the Dubai subsidiary you said there is no orders pending No order book pending Abhinav Bhandari Any prospects there of some new orders Yeah we have now concentrating on Abu Dhabi and recently formed a separate company locally registered and we have participating in the bidding process today there and also hopefully we may get some orders and recently we got in order in Qatar from Qatar Petroleum and also we are looking Saudi Arbia and Kenya and other markets in the Gulf region Abhinav Bhandari Right. And you said you have something about 600 crores in the second quarter. Could you name some major orders in that? No, no. You please understand, we said it should not be more than two questions per participant. You already asked more than five questions. If you have any further queries send s, we'll reply you by .

9 Abhinav Bhandari Sure sir. That's it from my side. Thanks and all. Thank you very much. Our next question is from Kalpesh Gothi of Wallfort Financial Services. Please go ahead. Kalpesh Gothi Yeah. Good evening sir. Good evening. Kalpesh Gothi Sir, can you give us a debt level of console and standalone basis? Debt level of? Kalpesh Gothi Console and standalone basis? In the company in the standalone basis, as of 30 September, 2012 a net of 5,300 crores. Kalpesh Gothi You want any console wise? Kalpesh Gothi Yes sir. R. Subba Raju, Senior Vice President Finance and Accounts Standalone bids, I already told you this is 2,600 crores. Kalpesh Gothi And sir are we also looking for a dilute amount of stake in NCC Power project?

10 There are no such plans as of now. But what we are looking at is, may be a strategic investor who can do the and also. And the valuation is the important thing here. May be we will look at it at a later date. Kalpesh Gothi And sir the last question. This two project, Himachal Sorang and UP, Bangalore Elevated Tollway. Are we looking to exist the project or you want to dilute the stake? In Himachal Sorang, we want to exit. I mean in all the three projects, we are planning to sell our stake. Kalpesh Gothi Thank you sir. Thank you. Thank you very much. Our next question is from Vibhor Singhal of Philip Capital. Please go ahead. Vibhor Singhal Good evening sir. I had two questions. One is can you share with us the toll collection per day that we are doing on the three of our toll projects. In Western U.P. we are collecting till recently about 22 lakhs per day but there was a Supreme Court order banning mining in that area that has impacted the toll collection, now it is come down to around 20 lakhs per day. In Bangalore elevated toll way we are collecting about 22 to 23 lakhs per day. If Pondicherry and Kanjivarum where we arecollecting about lakhs per day. Vibhor Singhal Okay fair enough sir. And sir you also mentioned in the beginning of the call that the average cost of debt for us has gone up from 11.3% to 12.4%. What would be the reason behind it sir because as we are seeing lot of the other company in the segment and all, they are actually showing a decrease in their borrowing rate. So any specific reason that we've got this 100 basis point increase in the cost of debt? Yeah, see actually macro environment have not improved fully. The Reserve Bank has increased CRR by about 0.25 basis points twice. The lenders here has to pass on that to two three borrowers like us and in some cases already about 25 bids reduction has taken place but actually what is happening is the cost of short term borrowings is going up. And that is impacting our average cost of borrowings mainly this is our fair initiative directive to public sector banks to not to give short term loans unless securities are provided. So but going forward because Reserve Bank action on the macro environment improving the interest rates are likely to come down. Vibhor Singhal Okay, sir. Sir lastly what is the status of the Himachal Sorang power project when do we expect it to be commissioned?

11 By March Vibhor Singhal March 2013, we expect commercial operation or we would get into trail operations and probably... No no COD in March Vibhor Singhal Fine. Thank you so much, sir. If I have more questions, I'll come back. Thanks. Thank you very much. Our next question is from of Quest Investment Advisors. Please go ahead. Yeah. Thank you sir. Thanks for taking the question. I just wanted to get your feel on these road projects that you talked about where you could be looking at cash contracts. What is your sense of what could be out for bidder because the first half has been very very poor in terms of awarding contracts? By NHA share? Yes sir. Yeah. You see National Highway Authority has done a very pretty decent job during the last year. They have awarded 7,300 kilometers which is nearly Rs. 60,000 crores of orders. There was excellent job and good work done by them. In the current year, for six months there were some slippage. But in the recent paper I was reading, I think in the second half they are likely to improve. And also the participation by the bidders have come down mainly because the road price are having lot of problems and they do not look very attractive. Perhaps the cash contracts that they are planning on some of these major corridors will again due in bidders to road construction in the country. So, could you give me some, would it be possible to get a sense from you as to what could be the possibility this time, will be it be like last year it was 7,300, this time the target is even higher. So what is your own set, sir, whereas we where in likely to at? Is there anything you are setting a target of 8,800 if I remember correctly for FY?

12 You're right. And it slip very rarely in the first six months but now the pick up is expected may be they may do about 5,000/6,000 kilometers for the year even that could be a toll order. Right. But I think next two years, they are targeting in terms of nearly 17,000 kilometers of roads being awarded. So the pick up is going to be there. And the planning commission and the Government of India, they are supporting. Because the road construction will give a tremendous boost to the economy. And they are very much aware of it and for those construction you don't need any policy reforms. What you need is the will to build the road and the money to build the road. And I think it will definitely pick up. Sir, one last question if I may ask with permission is, in terms of you mentioned something about the competition is coming down. How would you rate in terms of the competition level today especially the cash contracts. Because as I think you've mentioned that cash contracts are likely to be more in number this time. So how do you see the competition? So, you are talking about the roads sector or...? Yes sir. Road sector, mainly the road sector. Not more. But what they are telling is, see if you recall, nearly about four five years back, most of the impact we the first phase of the NXEB, the quarter as well was given entirely on cash contracts. Right. It is companies like us participated and then the bidding was also intense, in fact the bidding was 20% to 25% compared to the estimated project cost but the projects were completed and the contracts also has a decent profit.

13 Now to speed up road construction because BOT is becoming a burden because you have to raise lot of equity, invest on the equity side, arrange for debt capital and then declare financial closure, all these things are rare. So I think the planning commission is the providing the NHA and NHA is also looking at a portion of the loss being given as cash contracts, not predominantly. Because really there are different money to pay the contractors. Right, right. Okay, sir. Right. Thanks, sir. I'll come back. Thank you, sir. Thank you very much. Our next question is from Chhavi Agarwal of Ambit Capital. Please go ahead. Chhavi Agarwal Good evening sir. Sir, my first question is that other than roads, which are the other sectors from which you expect order flow to become into edge? That is already answered. In the second half, we are expecting orders pick up in buildings, we are expecting orders pick up in electrical projects, international projects and also water and the environment projects. Chhavi Agarwal And sir, when you mentioned that 500 crores to 600 crores is somewhere you are looking at monetizing from these assets? Are these only related to the toll road projects or including the real estate? Both put together. Chhavi Agarwal So, we have invested about 200 crores in real estate in BOT and about 600 crores in real estate. No, no. BOT we also invested. Again the three projects fo selling our stake. So in all these three projects put together we invested 200 crores. Where actually our BOT investment is of the order of 750 crores to 800 crores but out of that only three projects where investment is 200 crores. We are likely to exit.

14 Chhavi Agarwal And sir, in Bangalore, are we doing some real estate development because we have land there. So building any projects there currently? Absolutely, about five, six projects are going up in Bangalore is actually they are doing very well and the model is also working well. And we have got a good reputation in the market and our projects are well received in the markets. Chhavi Agarwal So how much money would we have invested in Bangalore projects? That is done through our subsidiary called NCC Urban which has got a capital of about 150 crores, out of that about 120 crores is invested by NCC and the balance 30 crores is invested by the promoters. Chhavi Agarwal Okay sir. That's it from my side. Thank you very much. Our next question is from Parvez Akhtar of Edelweiss. Please go ahead. Parvez Akhtar Qazi Hi, good afternoon sir. Sir, just one question from my side, what would be our total loans and advances to the subsidiaries at the end of H1 FY13? Yeah. We will answer. Mr. Subba Raju will answer that. R. Subba Raju, Senior Vice President Finance and Accounts Loans and advances including the share application money in the about 1,100 crores. Parvez Akhtar Qazi 1,100 crores? R. Subba Raju, Senior Vice President Finance and Accounts Just a minute. Any other question? Parvez Akhtar Qazi

15 No, just one question from my side. R. Subba Raju, Senior Vice President Finance and Accounts Loans and advances to the total group company about 720 crores are there. Okay sir. Thank you. Thank you. Our next question is from Ashish Shah of IDFC Securities. Please go ahead. Ashish Shah Good evening sir. Sir, two questions, one, I missed your number on consolidated debts, so you can help me with that? It is around 5,300 crores. Ashish Shah 5,300. Sir, secondly in you console balance sheet, one sees that the non current investments have increased from 340 crore as on March to about 627 crores in September, so what could that be on account of? The equity investment in our power project. Ashish Shah So but from March from March to September, we have I mean this first half we have invested the incremental. Because I thought that we had invested almost 300, 350 as on March itself. And the total is only 375 as of now. So the incremental should have been like may be 57 odd crores. Other investment has taken place. Ashish Shah From I mean if you can highlight any particular investment sir? Yeah. Let me see. That we will send to you.

16 Ashish Shah Sure. Okay, sir. No problem. Thank you very much. Thank you. Our next question is from Anupam Gupta from IIFL. Please go ahead. Anupam Gupta Yes. Hello? Yes. Anupam Gupta Yeah. Given the strong growth in the first half. What is your outlook on the overall revenue growth for FY13 for the standalone entity? It should be in the region of 15% to 20%. Anupam Gupta That will be in a subdued growth in the second half compared to 1H. So why any specific reason for that or? Quarter is 28% growth we have recorded. Anupam Gupta Right. Second quarter is 21%. Anupam Gupta Right. Again macro environment is very slippery and Anupam Gupta

17 And also the interest rates are very high and also the inflation is very high. Considering all these factors, I cannot stick my neck out and say I would like 25% top line growth, having grown only 3% last year but this year, 15% growth is definitely possible for the year as a whole. Anupam Gupta Okay, okay. Fine. Thanks a lot, sir. Thank you. Our next question is from Ankita Bohra of B&K Securities. Please go ahead. Hi, sir. This is. Most of my questions have been answered. Just one small book keeping kind of question. In your consolidated balance sheet, you have as on 31 March, 2012, you had fixed assets of around Rs. 40 billion, it's come up to around 36 billion. So any specific reason for that? And I was under the impression that you are executing your projects so it should go up slightly because your project, power project is under construction, so that should have gone up by some amount I think. Fixed assets on from developments. 40 billion to 36 billion. Yes sir. It's come off by some Rs. 4 billion. So when I think about 400 crores. Yeah. See there is a depreciation also being applied. You are telling the gross block or... Depreciation is only around 100 it's only around Rs. 1.8 billion in first half. So even if you were to adjust for it, the number comes out to around Rs. 2.2 billion of reduction over last six months and since you have your projects under construction. So... Yeah, just a second. We will tell you.

18 And this according to us so there is no other reasons for the decline except to the depreciation. And in parent company also some of the normal assets would have sold but again new assets are there but there is no any good change in the parent company. As far as BOT assets are concerned, there is no any sales happen for the BOT assets. So we will again check and tell you the company wise. Sure, sir. No issues. And sir, on our I mean in standalone entity on our debt profile in March, it was just kind of the total debt around 15% was long term, it's come up to around 10%. The debt profile has now skewed to a short term and current maturity, does it concern us? It's come up from 20% long term to 10% long term? Yeah, yeah. Long term what has happened is we worked to this non convertible as a five year paper and now some priorities on what repayment has started and so far we have paid about 105 crores. So the share of long term that has come down. Short term debt includes working capital also given to us by the consortium lenders that is called loan payable on demand actually, not even exceeded use of 90 days or 100 days given. But usually based on the performance as a company year after year, those our short term working capital loans are renewed by the lending consortium and they increase it also. There is enhancement in the working capital limits based on the performance of the company. So the balance is, again we have got missionary loans about 150 crores or so. The short term loans which are appealing in the books of the company which were in the nature of 90 days, 180days or in some cases up to 1 year. They are under control and we are confident we will be able to bring them down. And our asset sales strategy is also primarily to see that the short term loans are brought down. Sure. Sir, when do you see this asset sales to start to, I mean start rectifying for us as in we have been in talks with various players but I mean nothing seems to have materialized still as yet so. Do we have any time lines in place?

19 The March 2013 we expect the money to come into the company and part of it is likely to come by December You are also well aware the macro environment is not very conducive. So we have to go very carefully and the valuations is an issue. The sellers are more than the buyers. So all these factors we have to keep in mind and take the thing forward. We also do not want to create an impression that we want to sell our assets in a hurry at whatever value that the market is giving. So that's why it took some time, but there is definitely progress in some of these assets. Sure. And just one last question if I may, I mean will you able to share the L1 I mean orders where you're L1 as of now? See L1 what happens is, we've got a recent structure and we have got nearly 11 divisions and they keep bidding for the projects. And wven when the client is declaring the successful bidder saying that we are L1. We don't take it into the order book unless we get the letter of intents on the client. And to give the letter of intent usually it takes them a month or so. So that is the order book pipeline. That is where we know that we are L1, but we are not back here to drop the letters from the client. That at any point of time is something like 500 crores to 600 crores. Sure. That will be it from my side. Thank you. Thank you. Our next question is from Pramod Amthe of CIMB. Please go ahead. Analyst Sir, this is with regard to the macro environment. Even though the government policy level have improved. Do you see in the month of October or November any improvement in the ground level either in terms of improved payment is coming through from the government agencies or the orders to be issued or any of those sense or you feel that will take some more time? Absolutely. No, it will definitely, macro environment is already improving, because as I told you the debt collection period has improved, clients have started paying and also they realized the importance of completing the projects. And in fact we are aware the pricing is there from the committee to see that the outstanding payments of various infra and construction company, some government agencies have speed it up faster and quicker. And also they want to kick start the economy, and to kick start the

20 economy one area where they can do things is, the infrastructure. So the finance ministry, the planning commission, they are all on the job and order attrition is definitely going to pick up and macro environment in term of payments of to the clients has already picked up as we already discussed the debt collection period and all that. The only thing that requires to be improved is the interest rates and also the comparatively high interest. If these two things are also come down reasonably well if not immediately may be in the next one year, we are on course. Analyst Sure. Thanks, and all the best. Thank you very much. Ladies and gentlemen, due to time constraint that was the last question. I would now like to hand the conference to Mr. Satyam Agarwal for closing comments. Satyam Agarwal Thanks the participants for joining in. We also thank the management for giving us the opportunity to host. Thank you everyone. Thank you, sir. Thank you Satyam. Thank you Satyam. Thank you very much. On behalf of Motilal Oswal Securities Limited, that concludes this conference call. Thank you for joining us. And you may now disconnect your lines.