IRCON INTERNATIONAL LIMITED (IRCON) Q2 FY23 Earnings Concall Transcript

IRCON INTERNATIONAL LIMITED (NSE:IRCON) Q2 FY23 Earnings Concall dated Nov. 14, 2022

Corporate Participants:

Mamta Samat — Investor Relations

Yogesh Kumar Misra — Chairman and Managing Director

Ragini Advani — Director, Finance

Analysts:

Dixit Doshi — Whitestone Financial Advisors — Analyst

Balasubramanian — Arihant Capital — Analyst

Nalin Shah — NVS Brokerage — Analyst

Shreyans Mehta — Equirus Capital — Analyst

Jignesh Kothari — HDFC Securities — Analyst

Abhishek Maheshwari — SkyRidge Wealth Management — Analyst

Bajrang Bafna — Sunidhi Securities — Analyst

Pranay Khandelwal — Alpha Invesco — Analyst

Parimal Mithani — Private Investor — Analyst

Ajit Darda — Nirzar Securities — Analyst

Chiranjeev Desai — Hindsight International LLP — Analyst

Presentation:

Operator

Good day, ladies and gentlemen, and welcome to the Q2 FY ’23 Earnings Conference Call of Ircon International Limited, hosted by Perfect Relations Private Limited. [Operator Instructions]

I now hand the conference over to Ms. Mamta Samat from Perfect Relations. Thank you, and over to you Ms. Samat.

Mamta Samat — Investor Relations

Thank you, Michelle. Good afternoon, everyone, and thank you for joining us on Ircon International Limited’s Q2 FY ’23 analyst conference call.

Today, we have with us the senior management, represented by Shri. Yogesh Kumar Misra, Chairman and Managing Director; Smt. Ragini Advani, Director, Finance; and Shri. Mugunthan, Chief Financial Officer and Executive Director, Finance.

Before we begin, I would like to say that some of the statements that will be made in today’s discussion may be forward-looking in nature. We will begin the call with the opening remarks from the management, after which, we will have the forum open for interactive Q&A session.

I would now request Shri. Yogesh Kumar Misra for the opening remarks. Over to you, sir.

Yogesh Kumar Misra — Chairman and Managing Director

Yes, good afternoon. Thank you, Mamta. And good afternoon, everyone. I’m Yogesh Kumar Misra, Chairman and Managing Director at Ircon.

On behalf of my team, I extend a warm welcome to you, and thank you for your presence today at the Ircon International Limited earnings call for Q2 FY ’23. I would also like to express our heartfelt gratitude to each one of you for your continued patronage and confidence in us over these years.

I have with me Smt. Ragini Advani, Director, Finance; and Shri. — wait, Mugunthan is not there, and Mr. Alin Choudhury, our Finance — Chief Finance Officer.

We hope you had a look at our detailed presentation that is uploaded on our stock exchanges. As far as results go, we have had a good start this fiscal year. Let me just take you through the financial performance of Q2 FY ’23.

The Company has outperformed year-on-year basis and delivered operating revenue off INR2,239 crore, which is 47% higher compared to Q2 FY ’22. The profit after tax of INR174 crore in Q2 FY ’23 is 38% higher when compared to the same period last year. Core EBITDA increased to INR214 crores vis-a-vis INR149 crores for the corresponding quarter of previous year. Profit before tax stood at INR226 crore as against INR169 crores for the corresponding period. Earnings per share has gone up to INR1.85 per equity share as against INR1.34 per equity share as compared to previous quarter of last fiscal on a face value of INR2.00 per share.

Our order book as on September 30, 2022 stands at INR4,020 crore, comprising 51% orders which we have secured on nomination basis, and the rest 49% have been secured on competitive bidding. The orders are spread across the railway, highways, bridges and other segments. At present, 93% of our order books are — is domestic and the rest 7% is international.

Ircon currently has 11 subsidiaries, including 10 wholly-owned subsidiaries, comprising nine road and highway SPVs. Apart from 11 subsidiary companies, Ircon also has seven joint venture companies, including five coal connectivity companies, which are joint venture with coal companies.

So, without taking more time, I would like to open the floor for question-and-answer session.

I would just like to make one more statement that considering that the first two quarters are not the best quarters for any construction company, so our performance, if seen in that context, is even more satisfying. Thank you.

Questions and Answers:

Yogesh Kumar Misra — Chairman and Managing Director

Thank you very much, sir. [Operator Instructions] We have the first question from the line of Dixit Doshi from Whitestone Financial Advisors. Please go ahead. Sir, give me a moment. There is a problem that his application. I’ll just unmute the line. Give me a moment, sir. Mr. Doshi, I have unmuted your line. Kindly proceed.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Yes. Thanks for the opportunity, and congratulations on a good numbers. My first question is regarding this current order book of INR40,000 crore. How do you see the execution timeline? Over how many years it will be executed? Hello?

Yogesh Kumar Misra — Chairman and Managing Director

Yes. So, if you see our last year’s revenue and the projections that we have for this year, this order book should be sufficient for next three to four years.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. And considering the H2 is always the best quarter, we can easily cross INR9,000 crores this year?

Yogesh Kumar Misra — Chairman and Managing Director

Definitely we will — I think our margins will go up by 25% to 35%. We could make it about INR9,500 crores to INR10,000 crores. This is our expectation. Of course, subject to everything else remaining normal throughout rest of the year.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. My second question is regarding the order wins. So, how much order win we had in H1?

Yogesh Kumar Misra — Chairman and Managing Director

This year, see, our focus has been on basically kick-starting all our projects which we had acquired last year. Last year, we acquired about — projects worth about INR15,000 crores, and they were in new areas, very — like the high-speed rail, like the solar projects, like the Expressway. So, we are right now focusing on giving a good start to these projects. We have done financial closures for all our road SPV. In high-speed railway also, we have done the initial part designs. We have setup casting yards and factory for this lab. So, we are basically focusing more on that. And — so in orders, we have — and because there was a volatility in the market, so we have not gone aggressively for securing more orders. But still we have managed to get about INR331 crores worth of orders in the H1. So, as compared to last year, of course, it is not much, but we have focused more on EPC tenders, and we have not gone very aggressively, because the market has been very volatile.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Yes. And any target you have for H2 in terms of fresh order win? Or anything you mentioned that how many bids we would be tendering?

Yogesh Kumar Misra — Chairman and Managing Director

No, bids we have tendered in H1 also, but as I said, like we did not tender any bid for HAM projects. We did tenders some bids for EPC contract. So, in the next — I mean in the H2, we would definitely target submitting bids for at least INR10,000 crores. And — but then we would be a little conservative in the sense that the market is very volatile, the commodity prices are still fluctuating, and so we would not be going very aggressively.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. Now my second question is as you rightly mentioned that the commodity prices and also there must be competition also in the tendering, so how do you see the margins in the orders where we have won through bidding process? Because now our order book is like 50-50 on nomination and bidding projects. So, how is the margin, or do you see that this 9%, 9.5% margin is sustainable even in the projects where we have bidded?

Yogesh Kumar Misra — Chairman and Managing Director

Yes, I think I can assure you from what we have seen, like we have finalized our EPC contracts for the highways, so we are quite sure of maintaining that margin of 9%, 9.5% core EBITDA. And — so, we are quite confident of maintaining — sorry, core EBITDA about 8.5% to 9%, and on consolidated basis, the margin of 9.5% is what we expect to maintain even with the bid-out projects.

Even in cost-plus projects, see the cost-plus projects, there is a problem, there is a cap on the total margin that you can make. So, our projects were normally cost-plus 8%, cost-plus 9%. So, that way, the margins that we were actually able to achieve were in that range only. So, even in competitive bidding, we have quoted and won by that kind of margin, and we hope to maintain that.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. One last question and then I’ll join back in the queue. In terms of JVs and subsidiaries, can you just mention how much equity and debt we have invested in those JVs? And any further plans of investment in next one year?

Yogesh Kumar Misra — Chairman and Managing Director

Yes, we have already invested equity of INR1,166 crore, and interest and quasi equity off [Speech Overlap] we have — and we have also invested INR803 crores as quasi equity. And in this year, we still have about INR1,100 crores that we would be investing in our JV projects.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay, fine. I’ll join back in the queue. Thanks.

Operator

Thank you. We have the next question from the line of Balasubramanian from Arihant Capital. Please go ahead.

Balasubramanian — Arihant Capital — Analyst

Good afternoon, sir. Congratulations for good set of numbers. Sir, right now, Railways is expanding 500 railway stations, what kind of opportunity we have? And last time, one railway projects are cancelled. What is the update on that? These are my two questions.

Yogesh Kumar Misra — Chairman and Managing Director

So, Railways is going ahead with EPC tenders for their infrastructure projects, including station development. We have seen some of those projects, and we have also bid, like [Indecipherable] we have built. But then, the competition is immense. And the bid now, the bidders are quoting it very, very thin margins. So, we are working on other EPC contracts which are going to come up in the near future. I’m not sure about the contract that you are talking about which got canceled. Which one was that?

Balasubramanian — Arihant Capital — Analyst

Sir, I’ll come back in end. I’ll check it properly.

Yogesh Kumar Misra — Chairman and Managing Director

Okay. Because — yes.

Operator

Thank you. We have the next question from the line of Nalin Shah from NVS Brokerage. Please go ahead.

Nalin Shah — NVS Brokerage — Analyst

At the outset, I would like to congratulate the management and the MD and CEO for the excellent set of numbers turned out for Q1 and Q2 both, and once again, I would like to say that you performed exceedingly well. I have very two — small two questions. One, you already answered partly my question that current year guidance is INR9,500 to INR10,000 crores kind of topline. In the Q1, you had also guided that the net margins will be in the — over 7.5% to 8%. So, just wanted to check whether we are well on track to achieve that margins also. That was very first question.

And my second question is that, what is the kind of dividend distribution policy the Company will follow, if there is any policy which has been decided? So, you can throw some light on that. Thank you.

Yogesh Kumar Misra — Chairman and Managing Director

Yes. I think the margin guidance that I had given, we will be able to maintain that. So, our profit after tax is going to be in that range 7.5%, okay? So, I don’t think any further pressure on that.

And what was your second question?

Ragini Advani — Director, Finance

Dividend.

Yogesh Kumar Misra — Chairman and Managing Director

Dividend, right. So, dividend, we are going to follow the DPE guidelines, and we are going to give the maximum, which is — which can be paid, which is 55% of net worth or 30% of PAT. So, whichever is the higher figure, that much dividend we will be able to play. Last year, maybe we had paid quarterly. But this year, maybe we will be doing it certainly before — I think in the third quarter we should be able to give the interim dividend and then finally later the final dividend. But it will be — we will have no problems in giving the dividend that we have been giving historically.

Nalin Shah — NVS Brokerage — Analyst

Sir, my second questions is — another question is regarding this investments in JVs. So if I see our quarterly profit from associate, it’s hardly around INR15 crore. So, even if I go by this run rate, it will be like INR60 crores, INR65 crores annual profit, whereas we have invested almost INR2,000 crore-plus. So, how do you see the profitability improvement in the JVs?

Yogesh Kumar Misra — Chairman and Managing Director

See, our — most of the JVs are right now in construction phase. So, we are now gradually finishing some of them, like we finished that Chattisgarh East Railway almost 90%. We recently completed the Mahanadi Coal Railway Limited. Then our earlier JV of highways, which was ISTPL, that is performing — that is giving good profits, and that has been able to give us good dividends last year also, and this year, we hope to get the same.

So because there are — many of the JVs are still in construction phase and therefore the profits or the dividends are going to come in future. So, maybe [Speech Overlap] so ISTPL, like the dividend for half yearly dividend that we have already received is INR26 crores. So, but other coal companies, they will also start giving, like this Mahanadi Coal Railway, they should — although this will take maybe a year or two, but the traffic on this is going to be more than expected right from day one. We have just commissioned this line and the coal rates are moving on that, so maybe we will be able to achieve profits and then — these JVs can then start giving dividend to us.

Nalin Shah — NVS Brokerage — Analyst

Okay. And any plan of exiting any JV in road or any other project?

Yogesh Kumar Misra — Chairman and Managing Director

See, exiting a JV, we are exploring the options, because it’s not easy to do that. We are exploring invites [Phonetic] or we are also exploring other means. And we hope to take some kind of decision in near future. But right now, we do not have any concrete plan to disinvest from these JVs.

Nalin Shah — NVS Brokerage — Analyst

Okay. And one last question from my side. So, you mentioned that we have when — around INR330 crores orders in H1, can you just mention that how many bids we must have participated in terms of value?

Yogesh Kumar Misra — Chairman and Managing Director

No, both these projects are basically nomination projects. One is from Mahanadi Coal Limited. They have given us — because we were working on — in Odisha near that line, so because we finished this project in this month only, in November only, so they have given another project to us which is worth about INR250 crores. And the second one is also a siding project which the South Eastern Coalfields has given. So, although the Railway Ministry has stopped giving orders to us on nomination, but we are still able to get orders on nomination from the Ministry of External Affairs for some strategic projects, like we got for Myanmar. And in similar way, we are able to get from some coal companies or some other company, and these two are projects which are like that.

Nalin Shah — NVS Brokerage — Analyst

Okay. Just to understand on this nomination-based orders from Railway, so two things I want to understand that obviously you — as you have mentioned that many people are participating — aggressively bidding for the projects and led a very thin margins, and same way then that is the reason I feel that in H1 we have not gained any orders. So, how do you see future? Because private sector are now allowed to participate on the Railway tenders. So, how do you see — I mean like, let’s say, if we execute a INR10,000 crore order book in any given year, can we get the fresh orders of INR10,000 crore just to keep our order book at INR40,000 crores, INR45,000 crores?

Yogesh Kumar Misra — Chairman and Managing Director

Yes, I think — see, the projects that Indian Railways is right now tendering are in the range of INR600 crores to INR800 crores. And if you see our last year’s figure, the high-speed railway we got on competition only. So, we got — there were L&T also there in the same package, C-7 Package we got on — in competitive bidding. The highway projects Vadodara Mumbai, Delhi-Mumbai Expressway, those also we secured on competitive bidding. So, we don’t see any problem in continuing to do that.

See, earlier because we also had projects on nomination, so we used to — the largest share was for nomination projects. Now, it’s going to — a larger share is going to be for the bid-out projects, but we are now selectively going to bid, so that we are able to maintain our margins. So, we’ll go selectively for some projects, like we are bidding for some tunnel projects in Jammu and Kashmir, highway tunnel project, which are large-value projects. Normally our margins and our competitiveness is there in large-value projects. So, we will still continue to eye them and continue to secure them wherever we can.

As I said, right now, the market is very, very competitive. So, we are still submitting bids, but we are not going very aggressively.

Nalin Shah — NVS Brokerage — Analyst

Okay. And can you just mention the figure that, in H1, how much projects Railway must have opened the bid?

Yogesh Kumar Misra — Chairman and Managing Director

I don’t have that figure right now.

Nalin Shah — NVS Brokerage — Analyst

Approximate — broad range?

Yogesh Kumar Misra — Chairman and Managing Director

No, Railway, would have definitely bid-out maybe INR5,000 crore worth of contracts, including the station projects. Station development also is a project which we looked at and we tried, but then it’s — the — right now, the tenders that are coming up, the margins are very small, the timelines are very tight, and it’s — they are not Greenfield projects. They are going to be big problem, they will require huge manpower, and there will be huge risks to the contractor. So, we have decided to stay away from them. We have not participated in any of the station development projects, but in future, we will. And I hope that things will also change. Railways may also, from their experience, they will also start bidding with the more realistic estimate and more realistic timelines.

Nalin Shah — NVS Brokerage — Analyst

Okay. Understood, sir. Thank you. Thanks for the opportunity.

Operator

Thank you. We have the next question from the line of Shreyans Mehta from Equirus Capital. Please go ahead.

Shreyans Mehta — Equirus Capital — Analyst

Congratulations on a very strong set of numbers. Sir, a couple of questions from my side. One is, in terms of guidance, we are guiding firstly around INR9,500 crores to INR10,000-odd crores for this year. So, how do you foresee the FY ’24?

Yogesh Kumar Misra — Chairman and Managing Director

FY ’23-’24, we should be able to be — maybe we will not achieve this kind of an increase of 25% to 30%, but we would still be able to achieve this kind of a revenue figures.

Shreyans Mehta — Equirus Capital — Analyst

So, sir, anywhere between 15% to 20% growth?

Yogesh Kumar Misra — Chairman and Managing Director

I cannot say right now, because we have to see how the projects that we have taken, it has to come from the projects which are now in the initiation stages, like the high-speed railway project. There are issues there, like from — you have to purchase material from Japan, the companies are — there are — they are delaying supply. So, it will depend on how those projects go, our new projects, how do they go. And that’s why I’m saying, I cannot give a guidance right now. But I think we can — we should be able to achieve at least the — I would say the numbers that we have for this year.

Shreyans Mehta — Equirus Capital — Analyst

Got it. Sure. Sir, the second question in terms of these solar power project which we had taken, so does the INR1,100-odd crores which we need to invest has been considered in that?

Ragini Advani — Director, Finance

Yes.

Yogesh Kumar Misra — Chairman and Managing Director

Yes, it has been considered.

Shreyans Mehta — Equirus Capital — Analyst

Sure. And sir, I mean, if I consider — look at our cash levels and the investments which we need to do, sir, currently, I’m sure the dividend amount which is left is roughly around INR500-odd crores. Is it the right way to look at?

Yogesh Kumar Misra — Chairman and Managing Director

No, the dividend amount required as — maybe — I don’t think it’s going to be INR500 crores. Our PAT would be in that range, right?

Ragini Advani — Director, Finance

Yes.

Yogesh Kumar Misra — Chairman and Managing Director

Our PAT would be in that range. So we will still have some cash left for us after paying the dividend.

Shreyans Mehta — Equirus Capital — Analyst

Okay. No, sir, I’m just trying to arrive at the dividend amount which you can pay? Because, I mean, we have roughly around INR1,500 crores, INR1,600 crores of cash which is available as of now.

Yogesh Kumar Misra — Chairman and Managing Director

No, it gets — as I said, it gets calculated from the net worth and the 30% of PAT or 5% of net worth. So, in there, we — I think we hope to arrive at a figure of close to INR250 crores.

Shreyans Mehta — Equirus Capital — Analyst

Got it. Sure, sir. And sir, lastly, on the operating margins we — the core operating margin stand at 7.2%. So, just wanted to understand what led to such an improvement, and is this sustainable for at least the next one to two years?

Yogesh Kumar Misra — Chairman and Managing Director

The 7.2%, where did you get that figure?

Shreyans Mehta — Equirus Capital — Analyst

Excluding the other income.

Yogesh Kumar Misra — Chairman and Managing Director

Okay. Yes. As I said, that is the kind of margin we are looking at, and that is the kind of margin we are left with even in a cost-plus project. So, even in — so competition bid-out contracts also, we have seen — because we are now working on that we have prepared our estimates, we have gone ahead with appointing our vendors everything, so now we think we are pretty sure that we’ll be able to maintain those margins.

Shreyans Mehta — Equirus Capital — Analyst

Got it. Thank you, and all the best, sir. That’s it from my side, sir. Thank you.

Yogesh Kumar Misra — Chairman and Managing Director

Thank you.

Operator

Thank you. We have the next question from the line of Jignesh Kothari from HDFC Securities. Please go ahead.

Jignesh Kothari — HDFC Securities — Analyst

Hello? Am I audible?

Operator

Yes. Please proceed.

Jignesh Kothari — HDFC Securities — Analyst

Good evening, and congratulations for having a good quarter and excellent set of numbers. And I had a couple of questions regarding our international projects. So, as far as I can see that international projects haven’t contributed much to our revenue in the first half of the year. So, how are we looking at the second half revenues from the international projects?

Yogesh Kumar Misra — Chairman and Managing Director

See, our projects in international — on the international side are right now in Sri Lanka where there was an economic crisis, so we were not able to — although we are ready, our team is there, our plant and machinery everything is there, but we were not able to take up, because the economic conditions did not permit, even we could not get diesel there. So, that’s why the revenue did not come from there.

From Myanmar also, there is a problem. The area that we are going to work is insurgency-prone, and right now the situation, at least in the H1 quarter, the situation was not very conducive for us to go deep inside the territory and start working. We have tried to mobilize and we hope I think within this month we should be able to mobilize at least towards the end of — both ends of the project, one on the Indian side of the border and other side. So, some revenue we should be able to get from their.

Bangladesh and Algeria, our projects are nearing completion, so not — the revenue will come, but not too much. So, basically, we’re looking for more foreign projects and based on which our foreign income can go up. But maybe in H2, if we are able to manage the Sri Lanka and Myanmar projects well, we should be able to get a decent revenue from our foreign project also.

Jignesh Kothari — HDFC Securities — Analyst

Okay, sir. And my second question was regarding the debt numbers. So we have raised project finance debt last year. So, are we looking at any monetization of these projects and reducing the debt on consolidated numbers?

Yogesh Kumar Misra — Chairman and Managing Director

My Director Finance will answer this question.

Ragini Advani — Director, Finance

Yes, good afternoon. So, as far as debt is concerned, yes, we have registered on the SPV balance sheets, as well as the joint ventures. They are purely on project financing basis. There is no liability whatsoever on our standalone Ircon balance sheet. As regards monetization is concerned, we have started the baby steps where we are trying to see what would be the best model for us and which all projects can be go-ahead in terms of monetizing immediately and what — over a long period of time. So, we will be doing it over a period of time, but maybe not immediately. It will not be done in FY ’23, but we started looking at that direction.

Jignesh Kothari — HDFC Securities — Analyst

Okay, ma’am. [Indecipherable]. Thank you.

Ragini Advani — Director, Finance

Yes, thanks.

Operator

Thank you. We have the next question from the line of Abhishek Maheshwari from SkyRidge Wealth Management. Please go ahead.

Abhishek Maheshwari — SkyRidge Wealth Management — Analyst

Yes. So, my first question is regarding the order book. So, just in terms of scalability, because we have put on three years’ worth of revenue predictability, right, with the current order book, so do you have any internal targets to maybe, say, — around 1, 1.5 hours ago RVNL came on television, they said that they have an internal target of INR1 lakh crores order book. So, even — do you even have a target like a INR50,000 crore order book something like that?

Yogesh Kumar Misra — Chairman and Managing Director

No. I think INR1 lakh crore order book, I don’t think you talking about RVNL. Even I don’t think they will be able to achieve. They already have a large order book of nomination project, which they still have in their books. So, maybe they are able to do that. We secured about INR15,000 crore worth of projects last year, which was the highest-ever secured in any year in our history. So, the order book of INR1 lakh crore is not what we are looking at. But yes, we will look at order book increase of at least a 10% to 20% every year. And — but then, we are not going to compromise on margins. That is what we have decided. And — so, we will look at selectively add projects to see that where wherever we are able to secure those minimum margins that we are looking at, there only we are going to go out and get.

Abhishek Maheshwari — SkyRidge Wealth Management — Analyst

But sir in terms of competition, because competition…

Operator

Mr. Maheshwari, I’m sorry to interrupt, sir. We are not able to hear you properly. There is an airy disturbance from your line.

Abhishek Maheshwari — SkyRidge Wealth Management — Analyst

Okay, I’ll get back in the queue.

Operator

Thank you. We have the next question from the line of Bajrang Bafna from Sunidhi Securities. Please go ahead.

Bajrang Bafna — Sunidhi Securities — Analyst

Congratulations for great set of numbers. Sir, we were predominantly working on a nomination basis, now we have started outright bidding. So, in terms of resource mobilization, in terms of workforce, in terms of different departments that we need to execute this critical projects like bullet train and the newer areas that you just talked about, so can you guide us how we are prepared for executing the projects on our own rather than the nomination businesses that we were doing some time back? That will be really helpful, sir.

Yogesh Kumar Misra — Chairman and Managing Director

Yes, I’m happy you asked this question, because yes, that is why we are — we have taken a pause and we are in the process of doing that. So, like one project of dedicated freight corridor, which we are doing, there we imported — we have mobilized almost machinery worth INR100 crores of our own, and we have our own manpower, trained them to do the track work. And so, we are doing that now. And we will be able to do that in any project in future. And that will give us a competitive edge also.

The same thing we are going to do in the high-speed railway, where the contract for track laying of INR5,000 crore — INR5,100 crore is with us. So, we are importing plant and machinery from Japan wherever required, wherever we are — we have to develop local vendors, we are doing that. And we are going to — we have mobilized a large number of engineers as per the requirement, who will be trained by the Japanese people, so only they can work on the project. So, in fact, we will be — we will have that first-mover advantage in the sense that we will have manpower trained by the Japanese who are allowed to work on such projects and that is how we’re going to take-up the high-speed track project.

Similar way, we are now thinking of — earlier our tunneling projects were — where it was cost-plus, we were only getting a fee for the project management, but then now we are going to do joint operation. We are trying to have strategic joint ventures. And we will try to joint ventures, maybe own some more plant and machinery and have technical manpower who will be actually doing the job. So, once we have those people with us, those kind of resources with us, we will also be able to — will become more competitive and maybe our margins also we can improve.

So, we are working in that direction, because the earlier model, when we were given a work on nomination, we were not allowed to do anything on our own. Because we had to work — we had to get our fee on a market-determined price. So, we had to tender out for everything that we did. We could not do anything on our own. Now we have changed our approach and now we are gradually going ahead and trying to do a lot of activities on our own. So, we will have those kind of resources ready within a year or two for taking up more such projects.

Bajrang Bafna — Sunidhi Securities — Analyst

Got it. And just sir one statement that you made that we want to grow our order book 15%, 20% every year, but now you see that this year perhaps we have not got much in the first half and second half, though we are trying. But how we will be securing, let’s say. INR10,000 crores, INR15,000 crores worth of orders every year where everything is going to be more and more on competitive bidding and we are not fully prepared right now in terms of those departments, whether it is a procurement department or it is execution department and all those things which normally an EPC companies having at this point of time? So, if you could just guide on that would be really helpful.

Yogesh Kumar Misra — Chairman and Managing Director

See, I think, from the first question itself and my answer to that, you would probably be able to get that. See, we are in a transition phase. We were not geared to take up, although we were — Ircon was always working on projects on competitive bidding, like in Malaysia, our project closed on [Phonetic] bidding, in other countries, in Bangladesh, and there we are working like any other EPC contractor, but that portfolio was much smaller. Most of our projects were nomination, where we could not develop those kinds of resources which we need when we have to do the work on our own. So, we are in a transition phase, that’s why I said my guidance for the order book would be lower initially, but as we are able to develop confidence and have more resources available with us, more trained people, more machineries, we would go for more projects, and I think then we can think of increasing our order book in a big way.

Bajrang Bafna — Sunidhi Securities — Analyst

Got it, sir. Thank you very much, sir, and all the very best.

Yogesh Kumar Misra — Chairman and Managing Director

Thank you.

Operator

Thank you. We have the next question from the line of Pranay Khandelwal from Alpha Invesco. Please go ahead.

Pranay Khandelwal — Alpha Invesco — Analyst

Hello, sir. Congratulations on great set of number. I just wanted to know like do we have — can you elaborate on the opportunity around the railway station redevelopment program, the adarsh station scheme?

Yogesh Kumar Misra — Chairman and Managing Director

Yes, see, the railway station development, of course, there has been change in the approach of the railways. Like earlier they were doing on PPP for most of the station projects. They even tried to do bidding on the Swiss Challenge Method. And then they started doing the EPC tenders, and now again it has been announced that some of the bigger projects will come up on PPP. So, it’s going on. We are watching and we are also — like we have studied some of the projects which are going to come up or which are in the pipeline, and we will take a call when those projects are bid and how they are bid, at what — as I said. Right now, the timelines that they are expecting are too tight. And their estimates or their budgets are much on the lower side, and they are all, as I said, they are not greenfield projects. Most of the stations are going to be brownfield projects.

And we were doing like — we are doing — working on Shalimar and Santragachi project in Kolkata. So, we know the kind of problems that we face where the trains are running, the passengers are moving. Working there is a totally different ballgame. So, we will be entering this sector, but then at a suitable time when we think that all those things have been taken care of.

Pranay Khandelwal — Alpha Invesco — Analyst

Okay. Thank you for answering that. Another questions would be that do we have any idea how many tenders, like similar tenders, of railway development — station development will be — the railway will be giving out for their peers?

Yogesh Kumar Misra — Chairman and Managing Director

No, I — as far as I know maybe they would go from — between INR5,000 crores to INR10,000 crores worth of projects they bidding out, other than the PPP. PPP, I still have — I’m not sure, because that policy was suspended for some time and all projects have coming only on EPC. But it has been announced again that some of the bigger stations, they’re going to take up in PPP. So, there, they are going to be large projects like the new Delhi station, Bijwasan station, Mumbai and all. So there, it’s not — we will have to go for strategic joint ventures. And — so as I said, we will take a call when these tenders are at the stage at which we really know how they are getting a bid out, what kind of margins, what kind of timelines, what kind of numbers are going to be there to bid for that.

Pranay Khandelwal — Alpha Invesco — Analyst

Okay. Sir, one last question. Considering the current scenario that we’re moving from nominations to outright bidding, what can you guide us regarding the margins as such?

Yogesh Kumar Misra — Chairman and Managing Director

I think I’ve said earlier — in response to earlier questions, we will be able to maintain the margins of 7.5%, 8% in future also for bid-out contracts. And these were the margins which were getting in any case on cost-plus contracts also.

Pranay Khandelwal — Alpha Invesco — Analyst

Okay. And can you just give us any insight regarding the competitiveness in the industry right now on the bidding side?

Yogesh Kumar Misra — Chairman and Managing Director

See, I can only tell you like we have recently bid out for a project of EPC tender of railways which is Chandigarh-Bundi. And there were 16 bidders in that project, okay? So, you can imagine the kind of competition which is happening. And because it is being done by the railways for the first time, so there are lot of newcomers who would come and then they would burn their hand and then probably later on they will start bidding sensibly. So, we don’t want to join the bandwagon of the companies who we work or who bid with halfwit kind of knowledge and then end up in losses or end up in serious problems later on.

So, we — as I said, we will be bidding sensibly and with keeping our margins intact, and we are sure, we have seen that in the past, we are able to still get projects. There are projects which we are still able to get at our price at — with our margins and taking care of most of the risks. So, it’s not that it is impossible to do that. But I think my — the number that I gave you of 16 bidders in a INR600 crore or INR800 crore worth of contracts, that would give you the — kind of the competition which is happening.

And EPC tenders of highways also you will know, there are many bidders and the quotes are below the estimates. So, those kind of things we are not going to do. But we still hope. We have got projects on bidding in the past and we have secured margins on that. Like Vadodara-Mumbai project expressway we finished this year, and we earned a good margin on that. That was on a competitive bidding from National Highway Authority of India. So, similar way, I think — so we have this year also — last year also we secured four more highway projects on hand, and there also we expect to earn a decent margin.

So, we will be — continuing to do that, but we will not join the bandwagon of these smaller players coming and quoting at unreasonable prices unrealistic prices.

Pranay Khandelwal — Alpha Invesco — Analyst

Okay. And we just also wanted to understand just one thing that RLDA the only sole authority that is looking after the bidding process or like different zone also take part in this, like south zone and western zone?

Yogesh Kumar Misra — Chairman and Managing Director

No, RLDA, most of the station development programs have been given to the zonal railways. So, there are only some larger projects which are being done by RLDA. So — but then the zonal railways also have a fair number of EPC contracts which they are tendering out.

Pranay Khandelwal — Alpha Invesco — Analyst

Okay. Thank you for the information. That’s all.

Operator

Thank you. [Operator Instructions] The next question is from the line of Parimal Mithani from — an individual investor. Please go ahead.

Parimal Mithani — Private Investor — Analyst

Yes, hello? Can you hear me?

Operator

Yes, please proceed.

Parimal Mithani — Private Investor — Analyst

Thanks for the opportunity, sir. I just had a question. In terms of your margin, it has improved quarter-on-quarter. Will you be able to maintain this margin profile, sir, going ahead from here?

Yogesh Kumar Misra — Chairman and Managing Director

Yes, I’m pretty sure we will be able to maintain our margins going ahead. I don’t see any major issue on that.

Parimal Mithani — Private Investor — Analyst

Even in terms of commodity costs and all that [Indecipherable]?

Yogesh Kumar Misra — Chairman and Managing Director

Yes, that’s why I said we are not going into high-risk contracts and that is the reason we have not secured many projects in the first half of this year. Because we are not going into very high risk contracts or contracts where there are — there is competition which is unreasonable, but then we have seen we get opportunities — enough opportunities to get projects, typically larger projects, where the competition is with the big companies who also have similar kind of overheads as we do, and there we are able to compete with them. So, we will continue to explore such contracts, and so that our margins don’t get affected.

Parimal Mithani — Private Investor — Analyst

And sir, this will be across railway, highways and all the other projects or is this railway only?

Yogesh Kumar Misra — Chairman and Managing Director

Yes, this is going to be across all the projects, the highways, railways, and the foreign projects also.

Parimal Mithani — Private Investor — Analyst

Okay. Sir, is it safe to say you will be protecting margin going ahead?

Yogesh Kumar Misra — Chairman and Managing Director

Yes.

Parimal Mithani — Private Investor — Analyst

And sir, secondly, in terms of dividend, last year, you already tuned a dividend payout of 40% close to. Are you going to reinstate that 30% also? Because last year, I think you gave up 17% [Phonetic] payout to the shareholders…

Yogesh Kumar Misra — Chairman and Managing Director

See, the dividend that we pay is the higher of 30% of PAT or 5% of net worth. So, normally 30% of PAT is lower, so the 5% net worth is what the dividend payout, which last year was about 40%, right?

Ragini Advani — Director, Finance

Yes.

Yogesh Kumar Misra — Chairman and Managing Director

So, we are going to I think maintain the same. These are the guidelines of the Department of Public Enterprises. So, we will be able to meet that, if not, exceed that.

Parimal Mithani — Private Investor — Analyst

Okay. And sir, we think you have an article in one of the business journals in terms of dedicated stakeholder, which you are consortium with Tata Projects as well as Mitsui. And it has been — the project has been, what do you call, taken away from Tata Projects, which — you are a consortium there. Can you update on the status? What is our stake is there in — are you going to be affected by [Indecipherable]?

Yogesh Kumar Misra — Chairman and Managing Director

See, we have three packages which we had won from dedicated freight corridor, CTP 11, 12 and 13. So, internally we decided to do some of these packages individually, with others providing some minimum support. So, like CTP 12, we are in advanced stage and we would be completing it maybe early next year. And CTP 13 also, Tata Projects — of course, the Mitsui is the lead partner, so the Japanese company is the lead partner, that also is going reasonably well.

There were some disputes in the third package, which is CTP 11, which is mainly falling in the urban areas of Mumbai. There is a package which is connecting JNPT to Vaitarna. And here, there are lot of land issues, there were a lot of encumbrance issues. And that were not — even now, even on date after award the contract, I think more than three, four years have past, DFC has not been able to give the entire land encumbrance free, many issues. So there are disputes in that and the consortium has received some notices, but then we are — I think that matter is sub-judice. It is not finally decided that they’re going to terminate or do anything on that part. Right now it is sub-judice. I can only say that.

Operator

Mr. Mithani, does that answer your question? Mr. Mithani? As the current participant is not answering, we move on to the next participant. And the question is from the line of Ajit Darda from Nirzar Securities. Please go ahead.

Ajit Darda — Nirzar Securities — Analyst

Hi, sir. Good afternoon. I have two, three questions, sir. The first one is, can we expect more JVs and partnerships with local, regional companies going ahead, and be more efficient for competitive bidding, sir?

Yogesh Kumar Misra — Chairman and Managing Director

Yes, of course. We have very good experience of working with all, even big and small companies within the country and even in foreign countries. So — and we have successfully done projects, in Bangladesh, in Algeria, and many other places. So, right now, now for bigger size projects and with the kind of risks that each project brings, it is always good to go with a good partner, and that increases the efficiency that takes care of the risks involved, because you’re not single — one who’s taking the risk. So, we will definitely look at more projects in joint ventures or strategic partnerships with other companies.

Ajit Darda — Nirzar Securities — Analyst

Both local and international projects, sir?

Yogesh Kumar Misra — Chairman and Managing Director

Yes. Because — see, like an dedicated freight corridor, the requirement was that the lead partner has to be a Japanese company. So, we joined with Mitsui & Company, who is our lead partner. In the high-speed railway, there is no such requirement, but there are lot of things which have to be done by — only by Japanese companies or companies having experience in high-speed rail. So, we have to go ahead and join with them. Of course — yes, so that way project-to-project we see where we can go out and bid alone or where we need to get joint venture partner before bidding or we need to get a partner after the bidding, that way. So, we have to see what is the most efficient way of doing it, and that’s what we hope to do in the future.

Ajit Darda — Nirzar Securities — Analyst

Understood. Sir, one more question on — like, sir, how much loan or advance have been given to subsidiaries or JVs? And any sort of concern regarding recoverability of that amount or any provisioning required?

Ragini Advani — Director, Finance

So, what we have given is essentially a loan in the form of quasi equity. So, equity or quasi equity is well within the overall project financing norms of 70-30, 75-25, or 80-20. The only loan which we have given extra risk temporary to certain SPVs. That is a marginal number of about INR130 crores. And that is an interest-bearing loan, which should come back over a period of time, so there is no provisioning requirements.

Ajit Darda — Nirzar Securities — Analyst

Okay. Thank you, sir. And last one, sir, any land assets that you are planning to monetize?

Yogesh Kumar Misra — Chairman and Managing Director

Right now, no. We had been given one land parcel in Mumbai which we expected to monetize, but then right now now most of such work is being done by RLDA, and that was for a period of three years and that involved signing of MOU or agreement between the railways and the state government and then the MMRDA. So, that has not fructified and, therefore, we — that was the only big land parcel that was passed on to us. It was — and the money that we paid to the railways was — had come as a pass-through entity from the Indian Railway Finance Corporation. And that has been repaid and most likely this will go back to the railways to be developed by RLDA. So, other than that we have some assets on which we have constructed buildings, like in Noida and Gurgaon. So those assets we have leased out long-term and we will be earning revenue out of that. Right now we have no plans to dispose it.

Ajit Darda — Nirzar Securities — Analyst

Okay. And what is — any amount for the lease rent, sir?

Yogesh Kumar Misra — Chairman and Managing Director

Like one — I don’t have all of them, but I can tell you there’s one mall in Noida, which we have given with a INR25 crore upfront payment and INR8 crore per year lease rent. Similarly, there is another building which we have given to GST, and that also the lease rent would be in this range. So, there are other buildings as well, some — we’re still trying to lease out or rent out to earn regular revenue from there. But there are two buildings at least big one which we have rented out already, and that is long-term, and they’re going to give us good revenue.

Ajit Darda — Nirzar Securities — Analyst

Okay, sir. Thank you so much. That’s it from my side, and all the best.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Chiranjeev Desai from Hindsight International LLP. Please go ahead.

Chiranjeev Desai — Hindsight International LLP — Analyst

Good evening. My question is with — regarding our equity market valuation of the Company, which is a languishing at single-digit multiples and the share prices mostly trading at par or below the book value. So, is there any plan to correct it through means such as [Indecipherable] inviting sovereign wealth funds or high-profile investments?

Ragini Advani — Director, Finance

So, I mean, our share price was in the range of INR39 to INR40 for quite a long-time. But if you see, it has picked up over the last few days, and today, it is in the range of INR53 per share. In terms of performance, as you all are aware, we are doing our level best and I think we are exceeding the market expectation. In terms of the actual share price movement, as we all know in case a public sector companies, many other factors play a role in terms of actually increasing or decreasing the share.

Per se 73% shares are still held with Government of India, and primarily the decisions are taken by them in terms of any significant movements in terms of investments, disinvestments or anything that they have in mind for the shares. But nevertheless, as management of the Company, we are trying to outperform as much as we can, and get the value addition to the share as well as the market capitalization of the Company.

Yogesh Kumar Misra — Chairman and Managing Director

Right now, we are trading above our issue price. We had been trading at below the issue price for some time. Right now, we are more than that and if the market remains bullish, maybe we will see good price in the next few weeks or months.

Operator

Thank you. As that was the last question for today, with that, we conclude today’s conference call. Thank you for joining the conference call of Ircon International Limited. You may now disconnect your lines. Thank you.

Yogesh Kumar Misra — Chairman and Managing Director

Thank you, Mamta.