G R Infraprojects Ltd (GRINFRA) Q4 FY23 Earnings Concall Transcript

G R Infraprojects Ltd (NSE:GRINFRA) Q4 FY23 Earnings Concall dated May. 19, 2023.

Corporate Participants:

Ajendra Kumar Agarwal — Managing Director

Anand Rathi — Chief Financial Officer

Analysts:

Parikshit Kandpal — HDFC Securities — Analyst

Shravan Shah — Dolat Capital Market Pvt Ltd — Analyst

Alok Deora — Motilal Oswal Financial Services Ltd — Analyst

Bharanidhar Vijayakumar — Spark Capital — Analyst

Parvez Qazi — Nuvama Group — Analyst

Jiten Rushi — Axis Capital Ltd. — Analyst

Aakal Dhanuka — Individual Investor — Analyst

Prem Khurana — Anand Rathi Securities — Analyst

Ashish — JM Financial — Analyst

Aditya Bhartia — Investec — Analyst

Presentation:

Operator

Ladies and gentlemen, good morning and welcome to the G R Infraprojects Limited Results Conference Call for the Quarter and Financial Year Ended March 31, 2023, hosted by HDFC Securities.

This conference may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involves risk and uncertainties that are difficult to predict.

As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Parikshit Kandpal from HDFC Securities. Thank you, and over to you, sir.

Parikshit Kandpal — HDFC Securities — Analyst

Thank you, Lizan. First of all, I’d like to thank G R Infraprojects for giving us this opportunity to host this call.

Today on this call, we have Mr. Ajendra Kumar Agarwal, the Managing Director of G R Infraprojects; and Mr. Anand Rathi, the Group CFO.

So without taking further time, I would like to hand over the call to Ajendra Kumar Agarwal for his opening remarks. Over to you, sir. Thank you.

Ajendra Kumar Agarwal — Managing Director

Thank you, Parikshit. Good morning, everyone. [Foreign Speech]

Anand Rathi — Chief Financial Officer

Thank you, Ajendra saab. Yeah, good morning everyone. So let me take all of you through the financial analysis of the company for the financial year ended 2023.

Our standalone revenue from operation increased by almost INR228 crore from INR7,919 crore to INR8,147 crore for the year ended March 2023. On a consolidated basis, our revenue from operation also increased by INR1,023 crore approximately to INR9,481 crores as of March 2023. Standalone EBITDA margin has remained flat at almost 16.12% for the year. However, if we include other income of INR181 crores approximately, our standalone EBITDA margin is around 18%. Our EBITDA margin at consol level has increased to 27% in the year ended March 2023, from 20.5% in the year ended March 2022. This increase is largely on account of the increase in the finance income in the current period due to revision in the interest rate of bank rates. Our [Technical Issues] increased by approximately 12% to INR852 crores as compared to INR761 crores for the year ended March 2022. Our PAT margin at consol level has also increased by approximately 75% to the level of INR1,454 crores in the year ending March 2023, as compared to INR832 crores approximately in year ended March 2022. Again, this PAT margin increase was because of revision in the interest rate at SPV level, that is bank rate. Our standalone net worth is approximately — stood at INR5,215 crores approx. at the end of fiscal 2023 vis-a-vis INR4,364 crores at the end of fiscal 2022. Our net worth on consol level is around INR6,265 crore at the end of fiscal 2023, which was INR4,811 crores approximately at the end of fiscal 2022.

Our total standalone borrowings at the end of March ’23 is around INR1,076 crore, which includes short-term borrowing of around INR188 crores, with debt-to-equity ratio of 0.21 times. Our total consolidated borrowing outstanding at the end of March 2023 is around INR5,679 crores, which includes short-term borrowing of around INR188 crores with debt-to-equity ratio of 0.92. During the year, company has made addition to the fixed asset amounting INR237 crores approximately, and net block of property, plant, and equipment, including capital work in progress is around INR1,494 crores at the end of the financial year 2023. Investment in our subsidiary companies in form of loans and equities is around INR1,950 crores at the end of fiscal 2023. It was INR1,320 crores at the end of fiscal 2022. Balance promoter contribution which is required to be infused in next CSF period in various [Indecipherable] is around INR2,350 crores.

Our working capital in days at the end of the year is around 104 days as compared to 73 days at the end of fiscal year 2022. This increase in working capital days is primarily because of increase in the book debtors at SPV level. Our trade receivable at the standalone basis are around INR1,880 crores at the end of fiscal 2023 as compared to INR715.54 crores at the end of fiscal 2022. Our trade receivables at consolidated level are around INR461 crores at the end of fiscal 2023, as compared to INR555 crores at the end of fiscal 2022.

Our unbilled revenue at the standalone basis is around INR484 crores at the end of fiscal 2023, as compared to INR581 crores at the end of fiscal 2022. Our unbilled revenue at consol basis is INR234 [Phonetic] crores, which has come down from INR391 crores, which was the position at the end of fiscal 2022. Our inventory level also has come down to INR884 crores at the end of fiscal 2023, as compared INR1,022 crores at the end of fiscal 2022.

Our cash balances at the standalone basis is around INR242 crores at the end of fiscal 2023, as compared to INR445 crores at the end of fiscal 2022. Our cash balance at consol level is around INR779 crore at the end of fiscal 2023, as compared to INR1,095 crores at the end of fiscal 2022. Our mobilization advance from NHAI outstanding at the end of fiscal 2023 is around INR272 crores, as compared to INR70.5 crores at the end of fiscal 2022.

That’s all for the [Indecipherable] thanks all of our stakeholders, including employees, business partners, vendors, bankers and the auditors who have supported the company in its transformation journey. On behalf of G R Infraprojects Limited, I thank everybody whomsoever is attending the annual call.

May I request now to open the floor for question-and-answer session, please. Thanks.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, we will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Shravan Shah from Dolat Capital. Please go ahead.

Shravan Shah — Dolat Capital Market Pvt Ltd — Analyst

Thank you, sir. Sir, before asking any questions, sir it’s a humble request if you can upload the presentation at least three to four hours before the con call, it would be a great help. So it would be more of a constructive discussion we can have. So that’s a humble request from my side.

Ajendra Kumar Agarwal — Managing Director

Sure, Shravan. Yesterday it was our Board meeting and which actually was I mean late and which happened late in the evening. So we couldn’t actually — unless until we finalize the accounts. So next time we will certainly take care of that portion.

Shravan Shah — Dolat Capital Market Pvt Ltd — Analyst

Okay. Sir, just before asking the main operational inflow opportunity question, just a data point on the working capital. So HAM debtor is how much sir?

Ajendra Kumar Agarwal — Managing Director

So our SPV debtors, so total debtor at the standalone base is around INR1,880 crores and out of that INR1,880 crore, INR1,443 crore is SPV debtors.

Shravan Shah — Dolat Capital Market Pvt Ltd — Analyst

Okay. So do we expect this data to reduce going forward because that has increased significantly on standalone in terms of the — though I understand it is — ultimately we will receive, but to understand whether this will remain at these levels in terms of going forward, in terms of the days at standalone, significantly 84 days versus last year it was 33 days.

Anand Rathi — Chief Financial Officer

See, last year, most of the revenue which we recorded was from NHAI and most of the project were kind of EPC projects last year, which we executed, right. This time most of the projects are HAM projects. First thing. And second thing why these HAM debtors or SPV debtors are elevated, reason being that we have not got the disbursement. This was created intentionally by us because we just wanted to have that arbitration advantage, I mean, because it would be kind of arbitrage which we are receiving, right, arbitrage benefit which we are receiving because if we are, let’s say, getting the disbursement at SPV level that would be with higher interest and if we are getting interest at — I mean loan disbursed at BR level it would be of lower interest. So that’s the kind of arbitrage which we are enjoying and hence this provision has been maintained like this.

Shravan Shah — Dolat Capital Market Pvt Ltd — Analyst

Okay. Now coming to the main inflow execution. So just wanted further clarity in terms of whatever the orders we’ve received in terms of the EPC revenue for this year is how much? Now how are we looking at in terms of the revenue — so guidance on the revenue, margin front and the order inflow for this year?

Anand Rathi — Chief Financial Officer

See, order inflow, I think Ajendra sir has already mentioned in his opening remarks. It is around INR6,550 crores for road, right, and MMLP is ultimately multi-model logistic park is a kind of investment which we are supposed to do in next three years of time — not next three years, next 15 years of time, right. And the INR6,550 crores, if you talk about, it’s a EPC — I would say it’s EPC value. It’s not BPC value, it’s EPC value, which we are talking about, INR6,550 crores, right? And that INR4,224 crores, which was of tunnel, that is again EPC value. So only except for ropeways which is INR3,600 crore approximately where we have to — because so far we haven’t received the LOA for ropeways and hence what we are quoting over here is that the bid price, right? And probably once we receive the LOA, we will be again declaring that EPC value, what will be the EPC value of those ropeways. But otherwise except ropeways, every other value is EPC value only, right.

And in terms of order executions, see, what we believe is whatever projects so far we have received in current year, we will be able to start operation on those projects by the month of — so in next six months, maybe from October. And what we are further targeting is more EPC because at this time what we have seen is that the competition in EPC is going down, not much players are participating in the EPC project and which is even evident into the tunnel project which we got from railway or as well as hydro, right? So what we believe is that we’ll be able to take more EPC projects and we will be able to have growth of around — double-digit kind of growth, we target our EPC projects bidding and all that.

And in terms of margin, yes, of course, if we are — so far we have maintained our margin that if we are doing BOC projects, our margin would be in the range of 14%, 15%, and if we are executing EPC projects, it would be in the range of 12% to 13%, that kind of guidance or that kind of — with that kind of philosophy we are bidding. I hope I’ve answered your question.

Shravan Shah — Dolat Capital Market Pvt Ltd — Analyst

Sir, just to clarify on that. So for this year we are looking at kind of a 10% revenue growth. Margin you have already mentioned. And in terms of the order inflow, how much we are looking at and we are already saying more EPC. So broadly, how much are you looking at from the HAM? How much — if you can also break it up. And then whatever the — more projects, in terms of the bid pipeline also if you can help us to — will be more useful for us.

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech] So this year we are targeting north of INR20,000 crores of orders. [Foreign Speech] if we talk about road HAMs, it would be in the range of, again, INR10,000 crore, INR5,000 crore, INR6,000 would be kind of EPC, be it road or tunnel or other civil works, right? [Foreign Speech] those projects also we are targeting.

Shravan Shah — Dolat Capital Market Pvt Ltd — Analyst

Okay. And then lastly, the equity INR2,350 crores, so ’24, ’25, ’26 [Foreign Speech].

Anand Rathi — Chief Financial Officer

See, current year, our equity infusion target is around INR850 crore to INR900 crores, and going forward, it would be in the range of INR800 crores.

Shravan Shah — Dolat Capital Market Pvt Ltd — Analyst

Okay, thank you. Thank you and all the best.

Anand Rathi — Chief Financial Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Alok Deora from Motilal Oswal. Please go ahead.

Alok Deora — Motilal Oswal Financial Services Ltd — Analyst

Sir, good morning. Sir, just a couple of questions. So first on the ropeway project. So, L1 we had received in — we were L1 in February [Foreign Speech] So, what is the typical timeline for these projects?

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech]

Alok Deora — Motilal Oswal Financial Services Ltd — Analyst

[Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech]

Alok Deora — Motilal Oswal Financial Services Ltd — Analyst

[Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech] environmental conditions are more conducive during second half, I would say, because [Foreign Speech] maybe we may not be taking much of time [Foreign Speech] particularly for the ropeway segment, land acquisition is not a big issue. So I think we can start early. I mean, even if, let’s say, we get the LOA in the month of June, we can start — we can target for our execution to be started, let’s say, by the month of October end. [Foreign Speech] That’s our target, that’s how we think because it’s the first time. So it’s very difficult to say on confirmation basis, it’s very difficult.

Alok Deora — Motilal Oswal Financial Services Ltd — Analyst

[Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

See, no doubt competition has increased into particularly highway industry. So earlier we used to have 17%, 18% kind of EBITDA margin when we were targeting HAM projects. [Foreign Speech] That’s why we are down into 14% to 15% kind of EBITDA margin for HAM projects. EPC [Foreign Speech] again, depend on if we are, let’s say, enter into new sectors [Foreign Speech] so there the EPC margin would be higher, right? I mean, that’s how we believe. And ultimately margin would be — once we execute the project, then only it will be — whatever number which is from the — in terms of — after execution [Foreign Speech] but the target is that. Probably in road sector, we may end up kind of 12%, 13% kind of EPC margins or — and in any other sector we will be targeting more than — again, 13%, 14%, kind of, 1% or 2% here and there. But HAM projects we are still targeting 14% to 15% kind of EBITDA margin.

Alok Deora — Motilal Oswal Financial Services Ltd — Analyst

And what about this ropeway project, sir?

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech] of course, this is the first kind of project we are targeting would be higher, right? But [Foreign Speech] we have to have tie-up with foreign partner also and that process is also on. So once we close on that, then only we’ll be able to. But yes, of course, our target is higher than 15%. [Foreign Speech]

Alok Deora — Motilal Oswal Financial Services Ltd — Analyst

Sure. Just last question, sir. [Foreign Speech] order book, within presentation you have provided, this includes all the projects [Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech] where L1 is pending. That is excluded.

Alok Deora — Motilal Oswal Financial Services Ltd — Analyst

[Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech]

Alok Deora — Motilal Oswal Financial Services Ltd — Analyst

[Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

Right. Exactly.

Alok Deora — Motilal Oswal Financial Services Ltd — Analyst

Sure. If I have more questions, I’ll come back in the queue. Thank you and all the best.

Operator

Thank you. The next question is from the line of Bharani Vijayakumar from Spark Capital. Please go ahead.

Bharanidhar Vijayakumar — Spark Capital — Analyst

Good morning, sir. Am I audible?

Ajendra Kumar Agarwal — Managing Director

Yeah.

Bharanidhar Vijayakumar — Spark Capital — Analyst

Yeah. So my question is on the MSA industry data. So we don’t seem to have the exact data on FY ’23’s projects awarded by NHAI. So, any color on the amount of projects awarded, say, by kilometers in ’23, whether the target was met? And what would be FY ’24 target by NHAI?

Anand Rathi — Chief Financial Officer

See, in FY ’23, NHAI target was around 6,500 kilometers and awarded almost 6,000 kilometers, right? It’s almost INR1.25 lakh crores, I think they awarded. And for the current year also the target for NHAI is in the same range, maybe they might be doing some extra work to take up, I mean, whatever last year target which we’ve fulfilled, right? So this year it will be again in the same range, INR1.25 lakh crore to INR1.5 lakh crore for the current year.

Bharanidhar Vijayakumar — Spark Capital — Analyst

Okay. So it will be flattish, say, from a year-on-year basis?

Anand Rathi — Chief Financial Officer

Yeah. This would be flattish, because, see, this time they have to award probably in first nine months because last three months would be kind of code of conduct scheme coming into picture because of election year, right. So this time this activity would be done in nine months instead of 12 months.

Bharanidhar Vijayakumar — Spark Capital — Analyst

Sure. What is the visibility in road projects post FY ’24 once the Bharatmala phase 1 is over, sir?

Anand Rathi — Chief Financial Officer

I think, Bharatmala phase 2 has also been declared, right? So what we believe is that for next three to four years, I think, roads would be having the same kind of order awards.

Bharanidhar Vijayakumar — Spark Capital — Analyst

Around INR1.3 lakh crores per year?

Anand Rathi — Chief Financial Officer

Right. And, in fact, what has happened, government is also supporting the state governments. Now various state government has come up with their own state highway development program and all that. And probably not only from NHAI side. See, what has happened in last three, four years is that not all the states were participating into kind of road development programs. Now more state would be coming in to participate in the road development program, and where government has even specifically allocated kind of budget of approximately INR1.3 lakh crores as incentive to state governments for their internal development programs.

Bharanidhar Vijayakumar — Spark Capital — Analyst

Okay. My final question is on the competition in NHAI project awards. So what do you think is NHAI is going to do or is doing to address the competition from small and medium-sized players who started participating in the bids post relaxation of these bidding eligibility norms, because that would help in the competition coming down, margins probably coming back to earlier levels?

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech] In BOT projects, I don’t think that kind of competition is sustainable, where we have to also — concerned has to bring in equity also. So somebody who’s bidding into HAM projects, they have to contribute almost 15% to 16% kind of a project value in form of equity while the margin would be in the range of 10%, 12%, 13%, 14%, whatever, right. So it’s very difficult to grow on that particular model, and that competition is not sustainable at least. So probably in my view, maybe six months down the line or one year down the line, that competition will certainly go off.

Bharanidhar Vijayakumar — Spark Capital — Analyst

Okay. One more thing, NHAI was planning to reduce their equity commitment from 40% to a lower number. So where is that initiative, sir? Is it going to happen or is it shelved?

Anand Rathi — Chief Financial Officer

I think last year, NHAI was quite active on this particular front, but I don’t think that activity is still going on. Maybe at some point of time, the NHAI realizes that the competition is going, non-serious players are coming in, and the project progress which is even visible also. But once they probably acknowledge that fact, then only they will be started, I think so. I mean, so far I don’t think that file is in movement.

Bharanidhar Vijayakumar — Spark Capital — Analyst

Okay, thank you so much. All the best, sir.

Anand Rathi — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Parvez Qazi from Nuvama Group. Please go ahead.

Parvez Qazi — Nuvama Group — Analyst

Yeah. Good afternoon and thanks for taking my question. Sir, my first question is on the capex front. What is the kind of capex that we expect in FY ’24?

Anand Rathi — Chief Financial Officer

See, the capex would be in the same range, kind of, INR200 crores to INR300 crores kind of we are targeting, depending on the number of projects. If let’s say, we are getting more EPC, then certainly it will be near to INR300 crores, but if we are getting more HAM, again, it would be kind of replacement value. I mean, depreciation probably which we are incurring on a yearly basis, there is kind of replacement value you see.

Parvez Qazi — Nuvama Group — Analyst

Sure. And second question is in continuation with the previous participant. In FY ’23, we saw that while the number of bidders did come down for road project, competition was kind of pretty high and we saw a decline in the value of HAM projects awarded also. So what do we feel in FY ’24? Will we see more HAM projects getting awarded this year? Just wanted to get your views on that.

Anand Rathi — Chief Financial Officer

Yeah. This year being the election year, probably government would be — what we believe is that kind of ramping up their awarding activity in first nine months. And going by the direction of that allocation of the budget for the highway program, right, what we believe is that more awarding would be — that’s the guidance given by the government, right. And I think that there will be more traction in terms of road award and all that for the current year.

Parvez Qazi — Nuvama Group — Analyst

Sure. Thanks. All the best for future.

Anand Rathi — Chief Financial Officer

Thanks.

Operator

Thank you. The next question is from the line of Jiten Rushi from Axis Capital. Please go ahead.

Jiten Rushi — Axis Capital Ltd. — Analyst

Yeah. Good morning, sir, and congratulations on a good set of numbers. Sir, my first question is on your JV with lndigrid. So you said that you will be identifying few projects and you will be bidding in JV. So how is this JV shaping up? Any update on that, sir?

Anand Rathi — Chief Financial Officer

That JV is live and we are working on those projects, I would say, whatever projects being identified by JV and we are participating in the transmission projects, right. So, JV [Speech Overlap].

Jiten Rushi — Axis Capital Ltd. — Analyst

So in this JV, sir, lndigrid will also participate in the form of equity or it will be initial equity from your side, and then you’ll be flipping the asset to lndigrid?

Anand Rathi — Chief Financial Officer

Both kind of models are there, right, where lndigrid is also equally interested, they would be putting their own equity also during the construction and where we believe that we would be able to execute those projects efficiently and probably then we can put in our equity and then it can be ultimately get transferred to lndigrid.

Jiten Rushi — Axis Capital Ltd. — Analyst

Sir, any outstanding bids in the JV right now which is yet to open?

Anand Rathi — Chief Financial Officer

No, not yet.

Jiten Rushi — Axis Capital Ltd. — Analyst

Okay. And sir, on the outstanding bid pipeline, so obviously you have — in the opening remarks you said out of INR7,300 crore, one project has opened. So what would be the existing NHAI bid pipeline and BOT bid pipeline which is outstanding? Not what you have bidded but in general, what is the bid pipeline from both the authorities?

And anything on the railways or later bid pipeline, upcoming bid pipeline, if you can highlight a policy in the — which you are targeting to understand what is the pipeline and how we target and you also given the breakup of the inflows which you are targeting of INR20,000 crores, just to understand the dynamics, because you have shown like nine months in terms of bidding award in this year, probably nine to 10 months.

Anand Rathi — Chief Financial Officer

See, this time I mean, railway also is coming with kind of big EPC projects, I would say. I mean, generally, historically railway has been awarding smaller kind of EPC projects, but this time what we have been given understanding is that railway is also coming with a big size. I would say, big size means in the range of INR800 crore, INR900 crore, INR1,000 crore kind of EPC projects that probably will be bidded out by the railway projects. And of course, that railway budget has got good increase, it’s almost 10% kind of budget allocation that has been increased for Railway Ministry. And highway also, they have got decent increase, so these are.

Jiten Rushi — Axis Capital Ltd. — Analyst

That is true. But I’m just saying any current NHAI outstanding bid pipeline from the MOT, because we have seen MOT also allocation has gone up in the budget significantly and we are looking for MOT projects. You have got one MOT project, right?

Anand Rathi — Chief Financial Officer

Right. So we are bidding for both, MOT or NHAI. So it’s almost — outstanding pipeline for NHAI would be 26 —

Ajendra Kumar Agarwal — Managing Director

INR88,000 crores to come.

Anand Rathi — Chief Financial Officer

INR88,000 crores. Right.

Jiten Rushi — Axis Capital Ltd. — Analyst

[Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

MOT or NHAI, maximum is being awarded by NHAI only. So that’s — I mean, see [Foreign Speech] we don’t represent as what we are getting from MOT or what we are getting — and if we are bidding for even MOT or NHAI, it doesn’t make any difference.

Jiten Rushi — Axis Capital Ltd. — Analyst

Right. Sir, just one bookkeeping. Sir, you said equity requirement is around INR2,350 crores. So what was it in Q4 and FY ’23?

Ajendra Kumar Agarwal — Managing Director

So my investment as of March 20 —

Jiten Rushi — Axis Capital Ltd. — Analyst

Sir, in FY ’23, not as on March.

Ajendra Kumar Agarwal — Managing Director

So March ’22, it was around INR1,300 crores, now it is INR650 crores, right? So almost INR500 crores which we invested during the year FY ’23.

Jiten Rushi — Axis Capital Ltd. — Analyst

Okay, INR500 crore. Got it. And sir, on this long gestation or long cycle projects, so now you said that based on the current order backlogs, obviously, they have got two projects value is pending, but assuming INR20,000 crores of backlog, you are expecting a 10% revenue growth this year. So in this INR20,000 crores, sir, what could be the contribution from the newer projects, which you have won in Q4 or whether they will be contributing or it will be like in FY ’25? So can you just highlight that, sir?

Anand Rathi — Chief Financial Officer

Yeah. So what we are targeting is that probably from EPC segment and why we are targeting, it is that what we believe is that more states will be participating in the infra development and probably so far we are not that much active in terms of state infra, but because more projects are being financed by — they are getting central government aid, and where we believe that financing would sound at state level also and we will be able to participate on the EPC, because not much BOT projects which we are anticipating from the state, yes, but more EPC projects we are anticipating at the state level, and we will be participating on those projects. That’s our target. And going by that probably we will be able to execute around INR2,000 crore or INR2,500 crore on EPC projects at the current year. That’s how our target is.

Jiten Rushi — Axis Capital Ltd. — Analyst

In the revenue mix, probably 2,000 —

Operator

Sorry, to interrupt Mr. Rushi.

Jiten Rushi — Axis Capital Ltd. — Analyst

I’ll come back.

Operator

Thank you. [Operator Instructions] We’ll move onto the next question. That is from the line of Aakal Dhanuka, an Individual Investor. Please go ahead.

Aakal Dhanuka — Individual Investor — Analyst

Good morning, sir. And congratulations on a good set of numbers. [Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech] it’s more because of interest rate movement. Let’s say if interest rate is moving in the upward direction [Foreign Speech] right. So rather I would say my interest income at consol level, what I will be getting from NHAI is [Foreign Speech] 9.75%. So whatever amount which I have advanced to NHAI in form [Foreign Speech] 40% NHAI is making upfront payment and 60% is basically getting accumulated at NHAI level. [Foreign Speech] 9.75% from the date of COD, NHAI will start giving the interest on that particular amount. [Foreign Speech] I am not getting any interest. Only after that once I receive the COD [Foreign Speech] I have to basically pay interest also to the lender. [Foreign Speech] So rather than [Foreign Speech] rather than looking at the consolidated margin because [Foreign Speech] What we are getting at consol level additional margins that the interest, which I mean, net interest, which actually after making payments to the lenders, what interest remains over there in SPV [Foreign Speech]. This is the picture.

Aakal Dhanuka — Individual Investor — Analyst

[Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech] It is not that this margin is realized [Foreign Speech]. It’s because of IndAS accounting [Foreign Speech] and whatever cash flow which is accruing to me in next 15 years from NHAI. [Foreign Speech] probably my interest cost is, let’s say, 8%, in general, and my interest revenue is 9.75% [Foreign Speech] which I am getting at consol level for whatever amount which I have kept invested at consol level. [Foreign Speech] That is my interest income at consol level. [Foreign Speech]

Aakal Dhanuka — Individual Investor — Analyst

[Foreign Speech]

Operator

Mr. Dhanuka, may we request that you return to the question queue, sir, there are participants waiting for their turn.

Aakal Dhanuka — Individual Investor — Analyst

Sure. Okay.

Operator

Thank you. [Operator Instructions] The next question is from the line of Prem Khurana from Anand Rathi Shares. Please go ahead.

Prem Khurana — Anand Rathi Securities — Analyst

Hello. Yeah, thank you for taking my question. Sir, I mean, just to understand our ropeway and multi-modal Logistics Park foray a little better, and given the fact that these are somewhat new segments for us and we don’t have much in terms of experience, indeed, [Technical Issues] I mean the idea would be you’re carrying value is extra, right, because these are somewhat new projects for us. So is it fair to assume that, I mean, when you bid for these, our IRR expectation compared to, let’s say, road, hybrid would be higher? Would you be able to quantify, I mean, how much would be the difference between, let’s say, if you go and bid for road hybrid and what the number would be for, let’s say, ropeway or Multi Modal Logistics Park?

Anand Rathi — Chief Financial Officer

So if I could understand your question exactly, I mean, correctly, what you’re asking is what is the IRR which we are targeting for different — I mean, road sector or ropeway sector, or I mean — is that your question is?

Prem Khurana — Anand Rathi Securities — Analyst

Yes. And how does it compare to, let’s say, road hybrids, because we’ve been doing roads for some time now. So we understand all the risks very, very well and which is why I mean you’re able to price it better, but ropeway, I mean, essentially, these will be the first project that we would be able to do and which is where I mean there could be some risk. I mean, obviously, you would have considered all the risks possible, but then obviously I mean there could still be some risks which are not visible at this point in time. So have we built significant cushion to kind of cover for these unforeseen events?

Anand Rathi — Chief Financial Officer

So if we talk about ropeway, right, ropeway, execution is kind of we are very well aware of. It’s only a different terrain we have to — and terrain also, I won’t say that this kind of terrain we have worked extensively so far. But yes, of course, I mean we have got good experience in terms of our past history, right, while working in those kind of terrains. And while we have entered into ropeway is, of course, that we are not able to get good margin because of the competition which exists in the roadway highway sector. And we are just diversifying our portfolio — we just want to diversify our operation from highway to ropeway. Probably it will be with the target of getting higher IRR or higher margin if we are entering into. And, of course [Foreign Speech] there may be some unforeseen risk, right, but still what we believe is that while we will be having after meeting — even if we encounter that kind of unforeseen risk, then also ultimately we will end up by having more margin compared to road, because see, road is, I believe that because of the competition, it’s very difficult to increase IRR in road sector as of now. Once competition goes away then probably we will be able to increase the IRR again. And it’s not that that kind of engineering is required in this kind of competitive environment. So that’s why we enter into ropeway.

MMLP is, again, because we have got a good sense in terms of geography, it’s MP, Madhya Pradesh, that in Indore we have targeted our first MMLP, and where we have got good presence in terms of our operation, because most of the projects in last four, five years, we have executed in MP and we are very well aware of the statistic of that Indore city or around the city and then we’ve understood that what MMLPs probably or what kind of activities will be done or what kind of revenue we will be getting over the next 45 — that concession is for 45 years. And hence we are a firm believer that we’ll be able to deliver good kind of return even while entering. It’s a long gestation again. It’s small ticket. I would say, it’s a — investment would be in the range of INR800 crores, but yes, of course, that return would be for longer duration, for next 45 years, and where we believe that we will be getting good return, good IRR while entering into — and of course geography was quite understood by us, because we were there.

Prem Khurana — Anand Rathi Securities — Analyst

Sure. And sir just to continue on the ropeway part, so I mean, from our channel checks what we gather or what we’ve been made to believe is eventually in these kind of projects, the O&M part is slightly trickier because there are multiple mechanical portions as well, right. I mean when you are operating these projects, so would you concur with this thought process wherein I mean the initial EPC is, I mean, you still would be able to win a project in bid, but then O&M could still be trickier depending on the number of passengers that you carry and if there are any mechanical failures at a later date. And how does O&M work in the case of ropeway? For hybrid now it’s fairly clear, it’s 0.5% of bid project cost, but how does it work for ropeways?

Anand Rathi — Chief Financial Officer

So see, we have two parts; O&M revenue and O&M execution, right? So O&M revenue in ropeway, one part is fixed, which we will be getting over the period of next 15 years and one part is variable, which again depend on the passenger using that ropeway system. If the passenger number goes up, we will be getting more revenue. So it’s got some — little bit flavor of [Technical Issues]. And what we believe is that going forward that passenger would be — and the number of users using ropeway would be increasing. So that is one aspect.

And second aspect about it is O&M execution, right? There I think, what we have done is that, see, this ropeway technology, worldwide there are three or four players who are into this ropeway technologies. And so we have to enter into sort of MAU or on back to back kind of arrangement for those player — with those players who are pioneering this technology. And, I mean, we’ll have to — so we are in touch with two or three people, right, who are active in this particular space worldwide and we have got quotation also, we have got kind of their estimate for O&M basis that we have bidded for. And then technology remains with them. Of course, yes, as we move on into this ropeway segment, probably the government vision is very much clear, Make in India kind of concept, probably will be — once that more ropeway would be awarded, we will be able to — and we will be targeting even kind of manufacturing in India also, and the technological part also, probably we will be doing. I mean, I can’t say right now, probably could be the outcome of the future how ropeway — how Bharatmala program goes from right now.

Prem Khurana — Anand Rathi Securities — Analyst

Sure sir. Thank you. I have a few more, I’ll come back to the queue. Thank you.

Operator

Thank you. The next question is from Ashish [Phonetic] from JM Financial. Please go ahead.

Ashish — JM Financial — Analyst

Yeah, thank you for the opportunity. Sir first question, what is the EPC value ex of GST of the orders which you have still not taken in the order book, what would be that number?

Anand Rathi — Chief Financial Officer

You mean to say L1 status?

Ashish — JM Financial — Analyst

[Foreign Speech]

Anand Rathi — Chief Financial Officer

See, that tunnel project, it is INR3,600 crores, that is including of GST, 18%, to be excluded from that. And ropeway is excluding GST but that is BPC, right? So once we receive the LOI, then we’ll work around and then probably we will be able to declare that BPC value.

Ashish — JM Financial — Analyst

Right. But sir, broadly, HAM, it tends to be right 85% or so of the BPC, this would be more than that?

Anand Rathi — Chief Financial Officer

You can take that kind of number, yes, of course, but so far we have not worked on.

Ashish — JM Financial — Analyst

Sure. But broadly [Foreign Speech]?

Anand Rathi — Chief Financial Officer

Yeah.

Ashish — JM Financial — Analyst

Right, sir. Sure. Secondly, sir, [Foreign Speech] that includes the equity requirement for the L1 projects also, two ropeway projects?

Anand Rathi — Chief Financial Officer

No.

Ashish — JM Financial — Analyst

[Foreign Speech] requirement would be over and above that?

Anand Rathi — Chief Financial Officer

That would be in the range of INR250 crores to INR300 crores. Because see, in ropeway, it is 40%, which we have to mobilize as a concessional, 60% is upfront payment.

Ashish — JM Financial — Analyst

Right. Sure. And there is one project in the order book, which is older HAM which is still awaiting appointed date Mamni 1 – MH Telangana border. So appointed date [Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech]

Anand Rathi — Chief Financial Officer

June-end, we target.

Ashish — JM Financial — Analyst

Okay. But given that monsoon will we take, or will it get pushed to September?

Ajendra Kumar Agarwal — Managing Director

Depending on the site situation [Foreign Speech]

Ashish — JM Financial — Analyst

Yeah, that’s all sir. Thank you. I’ll come back.

Ajendra Kumar Agarwal — Managing Director

Thank you.

Operator

Thank you. Ladies and gentlemen, we will be taking the last question, that is from the line of Aditya Bhartia from Investec. Please go ahead.

Aditya Bhartia — Investec — Analyst

Hi, good morning, sir. [Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech]

Aditya Bhartia — Investec — Analyst

[Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech] that’s how we are targeting, INR5,000 crore to INR7,000 crore.

Aditya Bhartia — Investec — Analyst

Understood. And railways, sir [Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech]

Aditya Bhartia — Investec — Analyst

Understood. And lastly sir, [Foreign Speech]

Ajendra Kumar Agarwal — Managing Director

[Foreign Speech]

Aditya Bhartia — Investec — Analyst

[Foreign Speech] Perfect. Thank you so much, sir. Wish you all the best.

Ajendra Kumar Agarwal — Managing Director

Thank you.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments.

Ajendra Kumar Agarwal — Managing Director

Thank you. [Foreign Speech]

Operator

[Operator Closing Remarks]