IRCON INTERNATIONAL LIMITED (IRCON) Q3 FY23 Earnings Concall Transcript

IRCON INTERNATIONAL LIMITED (NSE:IRCON) Q3 FY23 Earnings Concall dated Feb. 09, 2023.

Corporate Participants:

Ragini Advani — Director, Finance

Alin Roy Choudhary — Chief General Manager

Analysts:

Swechha Jain — ANS Wealth — Analyst

Abhishek Maheshwari — SkyRidge Wealth Management — Analyst

Unidentified Participant — — Analyst

Manish Ostwal — Nirmal Bang Securities — Analyst

Viraj Mithani — Jupiter Financial — Analyst

Hiten Boricha — Joindre Capital — Analyst

Shreyans Mehta — Equirus Capital — Analyst

Pranay Khandelwal — Alpha Invesco — Analyst

Shubham Shukla — Voyager Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q3 FY 2023 Earnings Conference Call of Ircon International Limited. [Operator Instructions]

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

Mamta Samat — Moderator

Thank you, Michelle. Good afternoon, everyone and thank you for joining us on Ircon International Limited Q3 FY 2023 Analyst Conference Call. Today we have with us the senior management represented by Shrimati Ragini Advani, Director, Finance; Shri B. Mugunthan, Chief Financial Officer and Executive Director of 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 opening remarks from the management after which we will have the forum open for interactive Q&A session.

I will now request Shrimati Ragini Advani for the opening remarks. Thank you and over to you, ma’am.

Ragini Advani — Director, Finance

Yeah, thank you, Mamta. Good afternoon, everyone. Hi, I’m Ragini Advani, Director Finance, Ircon and I thank for your presence today at the Ircon’s earning call for the Q3 FY 2023. I have with me, Shri B. Mugunthan, our Chief Finance Officer and ED Finance and Shri Alin Roy Choudhary, my CGM Finance in-charge of compilation and accounts. We hope you have had a look at our detailed presentation that has already been uploaded on the stock exchange. The company as you are aware has performed very well in this quarter as well and recorded highest turnover for the third quarter. Ircon has recorded 36% growth in Q3 FY 2023 in operating turnover on standalone basis and about 33% growth on consolidated basis, as compared to the same period of the last year.

Our order book as at 31st December 2022 stands at INR38,023 crores and it mainly consists of a fifty-fifty percentage between nomination and competitive bidding orders. The orders are spread across railways, highways, solar power etcetera. 92% of our order book comes from domestic orders and 8% is international. Railways has been the dominant sector for us and it continues to contribute more than 90% of our operating revenue, the balance is mainly from highways.

Ircon as you all are aware has 11 subsidiaries, 10 wholly-owned and this includes nine road and highway STDs. We also have joint-venture companies including five coal connectivity companies. As regards our financial performance, for Q3 FY 2023, the company has outperformed its previous fiscal year-on-year performance. We have delivered a revenue of INT2,347 crore, which is 33% higher as compared to Q3 of FY 2022. The PAT number stood at INR190 crore in Q3 FY 2023, again about 40% higher as compared to the same period last year. EBITDA of the company has increased to INR233 crore vis-a-vis INR221 crore for the corresponding quarter of the previous year.

PBT almost remained flat, this was on account of some one-time adjustment. Earnings per share has gone up to about INR2.02 per equity share as against INR1.44 per equity share for the quarter, corresponding period of the last — similar quarter for the last fiscal. And this is on a face value of INR2 per share. Board of Directors have also approved an interim dividend of INR1.80 per share on the face value of INR2 per share.

Without taking much time, I would like to open the floor for Q&A session now please. Please go ahead.

Questions and Answers:

Operator

Thank you very much, ma’am. Thank you. [Operator Instructions] The first question is from the line of Swechha Jain from ANS Wealth. Please go ahead.

Swechha Jain — ANS Wealth — Analyst

Hi, ma’am. Thank you for giving this opportunity.

Operator

Sorry to interrupt, Ms. Jain. Your volume or your audio is too low, ma’am. Could you please increase the volume little bit?

Swechha Jain — ANS Wealth — Analyst

Yeah, is it better now? I have increased the volume.

Operator

Yes, ma’am. Thank you.

Swechha Jain — ANS Wealth — Analyst

Okay. So, thanks for giving this opportunity. My first question is, ma’am, if you could help us understand how many new orders that we got in Q3 and in nine months?

Ragini Advani — Director, Finance

So in Q3, we’ve had an order of about — we’ve had one major order of INR122 crore. This is regarding an S&P project in Sri Lanka. And apart from that, in Q2, we had roughly about INR330 odd crores. So the total orders that we’ve secured in the nine month period is about INR453 crores. But that is as we had suggested earlier, we are focusing on execution and focusing less on securing new orders as of now.

Swechha Jain — ANS Wealth — Analyst

Right, right. So that’s what I wanted to understand, ma’am, because have an annual top line of around INR9,000 crores, right?

Ragini Advani — Director, Finance

Correct, yes.

Swechha Jain — ANS Wealth — Analyst

And the current order book is 38,000?

Ragini Advani — Director, Finance

Yes.

Swechha Jain — ANS Wealth — Analyst

And we are not focusing right now on getting new orders? So just want to understand, then how do we see the order book building up and why is it that we are not focusing on getting new orders?

Ragini Advani — Director, Finance

Yeah, okay, so let me just put it in a slightly different perspective. So what we are saying is that, as you all are aware, there is a lot of focus and infrastructure development. The budget has been fairly pampers when it comes to the target and the budgetary support that they’ve given for railways, as well as other infrastructure. So the opportunities in the market are immense. Currently, we have tried over the last two years to build a niche within Railways in certain areas. So it is like for example, we take pride in doing tunneling projects or fairly complex bridges. And also, we as you are aware, we’ve backed some significant contracts for National high-speed, the bullet train project, as well as certain other projects relating to NCRTC and your metros, as well as dedicated freight corridor.

So, those are projects, which will also be coming in near-future. And because these are niche projects, we would like to focus going forward in these kind of projects. We are continuing to also bid for the normal railway projects. But we do not want to pick them up against very squeezed profit margins because typically right now EPC projects are coming up. And those two are also — some of them are little low ticket projects and therefore you have many such players who have bid for the projects and have become L1, who probably I mean in terms of pricing, it’s too slow. So that’s a conscientious call we’ve taken right now and we will be cruising up our efforts in terms of getting more orders, but maybe towards the end of this financial year and mainly starting from the next financial year onwards.

Swechha Jain — ANS Wealth — Analyst

Okay, so just to reiterate, are — we are consciously not bidding for the orders and that is we’re not able to add new orders, it is not that we are losing out the competition, right, because our competitors are getting lot of orders.

Ragini Advani — Director, Finance

Yeah, so what I’m saying is that the niche project in which we are interested, we are bidding out. In the projects which are low ticket, small-scale or the standard EPC projects, we’ve been little choosy this year. And because we can afford to and then accordingly depending upon what is going to be the inflow of bid in the coming quarter, as well as in the quarter of April to June, we shall be repositioning our marketing efforts and start getting more orders.

Swechha Jain — ANS Wealth — Analyst

Okay. So can you give some sense on what kind of pipeline bid we have in mind, like any number, if you can give us?

Ragini Advani — Director, Finance

Actually, see, again, there are lot of bids which are in pipeline by the government itself, but those projects have not yet been announced, so it will not be fair for me to give you a number from them. And similarly for international projects, again, we are looking at certain projects, but those are little sensitive projects. So number is something which I will be little difficult to say right now, but we assure you, we should be going-forward, we should be able to get our good orders, yeah.

Swechha Jain — ANS Wealth — Analyst

Okay, thanks. My next question is, ma’am, if I look at the presentation, our standalone core EBITDA margin for Q3 and even on a consolidated basis, our margins have reduced substantially. So if you could help us understand why these margins have reduced, while our topline, obviously, has grown, but the margins have reduced substantially and how do you see these margins in next coming quarters? Where do you see it settling down?

Ragini Advani — Director, Finance

Okay. So again, as I mentioned in my opening remarks, we’ve had some one-time adjustment in our JV company. So this is a company called CERL, it’s one of the coal connectivity project. They had some accounting adjustment entry in respect of depreciation which has taken care, I mean, which has been affected this year, but pertains to previous years as well. So that one-off entry has affected my consolidated results. And because of which I have had my EBITDA margins low as compared to the corresponding nine month FY 2022. But if you were to see from an annual basis, it’s about a 0.2% decline, 11.24 is what I had for FY 2022 my EBITDA margins and right now it’s 11.08, I’m talking on consolidated basis.

Swechha Jain — ANS Wealth — Analyst

Yeah, but even on a standalone, our margins have gone down by 150 basis points.

Ragini Advani — Director, Finance

I’m just coming to that.

Swechha Jain — ANS Wealth — Analyst

Yeah.

Ragini Advani — Director, Finance

So as far as this is concerned, this is a one-off entry and which we shall be taking care, I mean, which will obviously not get reflected from next quarter onwards, that would be a routine depreciation. As far as my standalone results are concerned, there are one or two again one-time increase that we’ve made on our projects in terms of certain expenses provisioning and those were again something which was required from an accounting perspective and they should not be carrying on into the next quarter.

So from that perspective, we do hope to continue maintaining our margins as we’ve been mentioning in our investor calls, as well as analyst meets. It should be — EBITDA should be in the region of about 11% and core EBITDA should be in the range of 8.5% to 9%.

Swechha Jain — ANS Wealth — Analyst

This is on console basis or standalone?

Ragini Advani — Director, Finance

This is on consolidated basis.

Swechha Jain — ANS Wealth — Analyst

Consol. Okay. Okay. Okay. And can I take one more question and I’ll join the follow-up queue.

Ragini Advani — Director, Finance

Yeah, please move ahead.

Swechha Jain — ANS Wealth — Analyst

Okay. So other thing I wanted to understand was, our profit before-tax on a standalone basis is close to INR212 crore, okay? But on a consol basis, this is substantially lower by INR25 crore to INR30 crore. I wanted to understand, is that the subsidiaries making losses?

Ragini Advani — Director, Finance

Yeah, yeah.

Swechha Jain — ANS Wealth — Analyst

And a quarterly run rate of INR25 crore to INR30 crore not is what our subsidiaries are making currently?

Ragini Advani — Director, Finance

No, no, we showed, this is not — see again as I — there are two things there. At a PBT level when you’re talking, we’ve also taken into account, are you talking on a standalone or on a consolidated basis?

Swechha Jain — ANS Wealth — Analyst

So if I compare the standalone and the consol profit, right?

Ragini Advani — Director, Finance

So what happens is, I have a negative share of the joint-venture which is sitting there, which is because of the reason I mentioned to you right now that there has been a change in depreciation policy. The second thing is that, there are certain entries which get north of between the standalone and consolidated. And so what happens is that on the revenue line, it gets knocked off, while from the other side it could be a item after PAT, if they’re paying dividend for example. So those are the issues because of which this ambiguities there if you were to look at quarter number. So it should I mean these are — this does not mean that my subsidiaries and my joint-ventures combined are giving me a loss, my joint ventures was a one-off entry, my subsidiaries on an overall basis will continue to be giving decent results as they have been giving till last quarter. So this is more of that one-off entry issue that has happened.

Swechha Jain — ANS Wealth — Analyst

Okay. So subsidiaries currently are EBITDA positive?

Ragini Advani — Director, Finance

Yeah, on an…

Swechha Jain — ANS Wealth — Analyst

And PBT positive. Okay and PBT positive also?

Ragini Advani — Director, Finance

Yeah, yeah.

Swechha Jain — ANS Wealth — Analyst

Okay. So I still — I still fail to understand that standalone PBT is INR212 crore and consol PBT is INR178 crores right, ma’am? So we have a difference of INR34 crores between the PBT at consol and standalone basis?

Ragini Advani — Director, Finance

Yeah, yeah, so out of INR178 crore if you will note, INR9 crores is on account share and loss of joint-ventures, yeah, so it makes it INR186 crores. As far as INR186 crores is concerned, the difference between INR186 crores and the standalone number is because the revenue gets knocked off between, yeah, yeah, so which is what I was trying to explain to you. So if there is a like my one of my joint-ventures, Ircon Soma tollway, they’ve given me a dividend this year this quarter. Now that dividend is getting knocked off my other income in the numerator and so it’s affecting my PBT in consol. But from a standalone perspective, that number was sitting in my other income.

Swechha Jain — ANS Wealth — Analyst

So that means not making a substantial loss from a quarterly basis that is what…

Ragini Advani — Director, Finance

No, no, that is what I’m telling you, that’s not the case. In fact, we’ve had good dividends because of which the figure is getting in consolidating negated.

Swechha Jain — ANS Wealth — Analyst

Understood. Understood. Okay. Ma’am. So, thank you so much. I have few more questions, I’ll rejoin the queue. Thanks.

Ragini Advani — Director, Finance

Sure.

Swechha Jain — ANS Wealth — Analyst

Yeah.

Operator

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

Abhishek Maheshwari — SkyRidge Wealth Management — Analyst

Yeah, thank you for taking my questions. Ma’am, my first question is regarding order bidding. Ma’am, if you could guide for FY 2024, what quantum of bidding the planning in both railways and highways?

Ragini Advani — Director, Finance

So we would be bidding, as I mentioned earlier, in both these areas. We are specifically focusing on railway projects going ahead as well. But it will be very difficult for me to give you a number. All we can say is that, yeah, we are hopeful that we’ll be able to continue having decent order books going forward and the kind of turnover that we maintain, we should be able to do it from a long-term perspective as well.

Abhishek Maheshwari — SkyRidge Wealth Management — Analyst

Okay, thank you. Ma’am, second question regarding the INR2.4 lakh crore budget allocation that the FM had given to railways. Ma’am how much if it falls under the services that we provide? What I mean is does INR2.4 lakh crore also include the Vande Bharat trains and train manufacturing, metro manufacturing, or is it only EPC work?

Ragini Advani — Director, Finance

No, no, no, it’s combined, but as obviously Vande Bharat trains also procurement also, but it does include doubling electrifications, setting up of new lines. So it’s a combined thing. I think my CFO will give more insight into it.

Alin Roy Choudhary — Chief General Manager

Yeah, I think if you see the railway budget, about INR60,000 crores is towards doing the gauge conversion, doubling and other works. So there are other portions which are going towards Vande Bharat and other works. So about 60,000 to 70,000 is the figure which would be there for which we are eligible to compete.

Abhishek Maheshwari — SkyRidge Wealth Management — Analyst

Okay, thank you. And we are also competitively bidding now for highway projects, right, key, we are focusing more towards railways?

Ragini Advani — Director, Finance

So we are bidding for highway projects, but as you are aware, we have already taken in last year four highway projects, four new highway projects. And there was another one just few months before that. So we would be also — see at the end of it, it can’t be just procurement because there is also this focus on execution and you have to deliver it within the time as you’re well aware, especially in case of highway project. And therefore, we will be focusing more on railway projects. We will be focusing on highway, but maybe little less because we have these four new projects in which we need to start now. We’ve already done their financial closures and we need to now focus on their execution.

Abhishek Maheshwari — SkyRidge Wealth Management — Analyst

Okay, thank you, ma’am. And ma’am, two more questions, Ma’am, regarding steel and cement prices, any fall there, does it help or you have to pass on the the cost decreases to the customer?

Alin Roy Choudhary — Chief General Manager

Generally, we have a pass-through mechanism only. So if that is a variation, we have a price variation clause, so our price adjustment loss, both with the client and as with the our subcontractors. So generally, it’s a pass-through mechanism.

Abhishek Maheshwari — SkyRidge Wealth Management — Analyst

Okay, one last question. So ideally Q4 is the quarter where we book majority, a large component of our revenue. I mean, Q4 is generally much better relative to other quarters? You think we will be able to cross INR10,000 crore this year because we have already done around INR6600 crore?

Ragini Advani — Director, Finance

We estimate we should be in the range of INR9,000 crores to INR9,500 crores. We may, may not cross INR10,000 crores little bit, actually depend on the execution efforts which really happened. And as we are all aware, government is pushing all infrastructure product. So yeah, it could be true, but our own analysis is close to INR9,000 core to INR9,500 crores.

Abhishek Maheshwari — SkyRidge Wealth Management — Analyst

Okay, thank you ma’am. That’s it from me. All the best.

Ragini Advani — Director, Finance

Yeah. Thanks.

Operator

Thank you. The next question is from the line of Karen Mehta [Phonetic] from Nirzar Securities. Please go ahead.

Unidentified Participant — — Analyst

Hello?

Ragini Advani — Director, Finance

Hello.

Unidentified Participant — — Analyst

Yeah. Thank you, ma’am for the opportunity. I just have two questions. So first one is, will the closure of our JV company, that is Indian Railway Station Development Corporation, have any material impact on our financials? And have you already done some provisioning for this? And second is, we have got several subsidiaries and JV company. So can you please throw some light on their business model and also on their return ratios? And also, are we looking for any divestment of stake in these companies?

Ragini Advani — Director, Finance

Okay. So starting with your first question, as far as IRSDC is concerned, the railway ministry has asked for its closure and handing over of its business, as well as assets to RLDA. But the decision which was taken was it is cumulative, it has positive reserve in surplus. And whatever assets and liabilities are there, the decision has been taken that the value will not be less than the book value at which these assets will be taken over by RLDA. There are certain valuations which are involved, but they’re also on the positive side. So there’s been no provisioning requirement per se, but that number has not got finalized and as and when that number gets finalized, it should only give us an upside in our balance sheet. So that’s the first part.

Now as far as the second part is concerned regarding JVs and subsidiary, we basically have SPVs for our road highway projects. There are nine of these, there is one which is solar JV that we have or a subsidiary we can say, IRPL. And then we have five coal connectivity projects, which are again with one of the subsidiaries of Coal India, where we are a 26% equity holder and 64% is by that Coal India subsidiary and another 10% is by the local government, the state government or one of its entities. So there are five coal connectivity projects, nine roadway highway projects, one renewable project, one IRSDC, which is under closure. And there is another company called IISL, which is our 100% subsidiary and which mainly does a lot of maintenance and PMC-related work and this is again a profit-making entity of powers. So that’s the broad split in terms of our SPVs, subsidiaries and JVs.

As regards, our profitability, see, some of these projects are under construction, some of these are just begun and some of them have — are declared commercial, but probably it’s been a year or two. So for all these projects, the feasibility report gives us good returns. The actual returns will start flowing in. As regards one of our JV ISTPL which is in road or highways, that has been giving us profit as well as good dividends. And for coal connectivity projects again, most of them are right now under the construction stage or they’ve just begun their operations. So we do expect profit out of them in a year or two years’ time. There is this period where everyone needs to kind of stabilize. But we don’t foresee any of these having any kind of impairments.

Unidentified Participant — — Analyst

Okay. So in one or two years, we expect some projects from most of these companies?

Ragini Advani — Director, Finance

Yes, yes, the ones which will get operation, we will expect profit after one or two years. The ones which are in construction, obviously, they will only make profit after their CODs and plays and they’ve stabilized their operations. But we are pretty confident on this part. So yeah, let us go forward and see, it should turn out the way we are expecting.

Unidentified Participant — — Analyst

Okay. Okay. Yeah. Thanks a lot, ma’am. That was very helpful.

Ragini Advani — Director, Finance

Yeah. All right.

Operator

Thank you. The next question is from the line of Manish Ostwal from Nirmal Bang Securities Private Limited. Please go ahead. Mr. Ostwal, I have unmuted your line. Kindly proceed with your question.

Manish Ostwal — Nirmal Bang Securities — Analyst

Yeah, my question on this one-off thing on the stand-alone and the consolidated basis. So can you quantify the number for the same both the consolidated and the standalone, what is the total impact?

Ragini Advani — Director, Finance

In consolidated, it’s INR20 crores that has happened and in standalone also it’s roughly about INR20 crores.

Manish Ostwal — Nirmal Bang Securities — Analyst

INR20 crores? And secondly, how do you see the growth for the next financial year, given the pipeline and now we saw the union budget also where the capex for the railway and the overall capex requirement has gone up significantly. So how do you see the FY 2024 in terms of top line and order inflow? Any initial thoughts on that?

Ragini Advani — Director, Finance

Yeah, so as far as the top line is concerned, we’ve always maintained that we should be growing our top line for FY 2024. We have a good order book. There is also — I mean, most of our projects are going to be peaking in that year. And therefore, we do expect an improvement in our turnover. If we say, we would be doing this year between 9%, 9.5%, it should be about 5% to 10% increase next year.

As regards fresh order book is concerned, order secure is concerned, as I’ve mentioned earlier as well, we shall be refocusing on it from end of March or April onwards and we should be able to get orders going forward, which should sustain the kind of turnover that we are doing currently.

Manish Ostwal — Nirmal Bang Securities — Analyst

Okay, thank you.

Ragini Advani — Director, Finance

All right.

Operator

Thank you. The next question is from the line of Viraj from Jupiter Financial. Please go ahead.

Viraj Mithani — Jupiter Financial — Analyst

Yeah, good afternoon, ma’am, and congratulations for the good numbers.

Ragini Advani — Director, Finance

Thank you.

Viraj Mithani — Jupiter Financial — Analyst

Ma’am my question is, like, say for the next year, would we grew at the same level of sales growth of around 35% and the PAT margin of 8%, is it sustainable?

Ragini Advani — Director, Finance

See, the operating revenue number will grow, but obviously not at that kind of a percentage. We’re already at a INR9,000 crore, INR9,500 crore turnover is what we are seeing for this FY. So next year should be another 5% to 10% increase on that. In terms of our profitability margins, we should be sustaining our FY 2022 profitability margin numbers.

Viraj Mithani — Jupiter Financial — Analyst

So that 8% margin looks like sustainable, right?

Ragini Advani — Director, Finance

Yes, yes. 8% you’re referring to core EBITDA or what are you referring to?

Viraj Mithani — Jupiter Financial — Analyst

PAT margin, your presentation says that you have some…

Ragini Advani — Director, Finance

So PAT margins would be about 7.5% to 8%, yes.

Viraj Mithani — Jupiter Financial — Analyst

They are very sustainable. Okay. And means this railway budget is this 2.0 lakh such a huge budget, so we don’t see some great growth coming from that, is it — what you said?

Ragini Advani — Director, Finance

Yeah, so it gives us a lot of opportunity, but the budget is announced, then they’re going to have probably some detailed scheming under it. They will be taking out decisions in terms of what they’ll give under EPC and what under PPP. So there’s a lot of working which is continuously happening at railways and they keep coming out with tenders. We do expect some big-ticket niche tenders now coming out where our strength lies and those are the ones we will like picking up next year.

Viraj Mithani — Jupiter Financial — Analyst

Ma’am, in this highways speed corridor, what are we doing? Are these part of bullet train project or something like or Vande Bharat or what, if you can give some sense on that?

Ragini Advani — Director, Finance

So in high speed is the bullet train project and we are basically laying the tax for it, ours is the main work. We are quite a significant order book comes from there, yes. We will be one of the pioneers to do it in India with the Japanese technology on the basis of which should there be more bullet trains and all these kind of projects coming up, we’ll definitely have the experience to handle them.

Viraj Mithani — Jupiter Financial — Analyst

So like what is — can you give some color on this, like what would be the size of orders and the margins we would enjoy in this? I understand that will be a nomination basis, right, not on competition basis?

Ragini Advani — Director, Finance

No, no, no. We won this on a competition basis. This is a separate company, so national high speed and they took out a tender and we won it on a nomination basis. We have an order book of close to about INR5,000 plus INR1,200, about INR6,200 crores out of this project.

Viraj Mithani — Jupiter Financial — Analyst

And the margins would be higher for this kind of project, is that correct to think?

Ragini Advani — Director, Finance

No, the margins would be — see, actually, a lot because this is Japanese technology, things would be done for the first time. The margins at a overall level would be similar to what we are maintaining at a company level. But since this project is right now somewhere it has just started, so we’ll have to wait and watch and see how it proceeds. But yeah, overall, as we are maintaining with this project also, we should be able to get the margins that we are getting at a company level, there won’t be higher margins because this is a — it’s a competitive bidding project.

Viraj Mithani — Jupiter Financial — Analyst

Okay. Okay. Okay, ma’am, that’s it from my side. Thank you and all the best, ma’am.

Ragini Advani — Director, Finance

Yeah, thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Hiten Boricha from Joindre Capital. Please go ahead.

Hiten Boricha — Joindre Capital — Analyst

Hello?

Ragini Advani — Director, Finance

Hello.

Hiten Boricha — Joindre Capital — Analyst

Yeah. Thank you for the opportunity, ma’am. I have a couple of book keeping question as well as a clarification question. So ma’am, my first question is on the one off which you’ve mentioned INR20 crore. Can you help me to understand in which item — line item, you are provided this?

Ragini Advani — Director, Finance

So this is consolidated result, this would be affecting my project expenses, this is for the standalone and in the consolidated, it is anyway getting affected in my overall share of JV. There is a separate line, which appears, right, CBT out of JV companies?

Hiten Boricha — Joindre Capital — Analyst

Correct, correct.

Ragini Advani — Director, Finance

That is where it is getting affected.

Hiten Boricha — Joindre Capital — Analyst

Okay. Okay. Yeah. And my second question is, ma’am, you mentioned, we will do a margin of 8.5% — 11% that’s on EBITDA level or that’s on PAT level for FY 2023?

Ragini Advani — Director, Finance

7% is at EBITDA level.

Hiten Boricha — Joindre Capital — Analyst

11%.

Ragini Advani — Director, Finance

Yes, 11% and at PAT level, gentlemen, before you had asked, so we said we’ll be able to do about 7.5% to 8%.

Hiten Boricha — Joindre Capital — Analyst

Okay. So the reason I’m asking this question, ma’am, because suppose if we are doing INR9,000 crores top line and it will do a margin of around 11% that brings me to EBITDA of around roughly around INR1,000 crore or INR950 crores, INR1,000 crores, right? So suppose, if we want to do INR1,000 crore EBITDA in FY 2023, we’ll have to do around INR450 crores, INR470 kind of EBITDA in Q4. So just want to understand if Q4 our best quarter or how this is going to work?

Ragini Advani — Director, Finance

See, you already have an EBITDA for nine months of INR753 crores, I’m talking everything on consolidated basis. So you already have INR753 and we’re talking of INR990 crore.

Hiten Boricha — Joindre Capital — Analyst

INR753 crore, I mean ma’am, you are including other income in this?

Ragini Advani — Director, Finance

Yeah, yeah. So that is EBITDA [Indecipherable] EBITDA margins. We have a concept of core EBITDA if that’s what you’re getting confused with.

Hiten Boricha — Joindre Capital — Analyst

Okay. Okay. Okay. My bet ma’am.

Ragini Advani — Director, Finance

I had mentioned that the core EBITDA would be in the levels of about 8.5%.

Hiten Boricha — Joindre Capital — Analyst

Okay. Okay, ma’am, my bet, actually I was excluding the other income from this.

Ragini Advani — Director, Finance

All right. Okay.

Hiten Boricha — Joindre Capital — Analyst

Okay. Okay. Just to reconfirm, ma’am, we will do 8.5% PAT margin in FY 2023 as well as in FY 2024?

Ragini Advani — Director, Finance

No no, 7.5% to 8% PAT margin.

Hiten Boricha — Joindre Capital — Analyst

Yes.

Ragini Advani — Director, Finance

8.5% core EBITDA. 10% to 11% EBITDA.

Hiten Boricha — Joindre Capital — Analyst

Understood, understood, ma’am. Yeah. Thank you so much, ma’am.

Ragini Advani — Director, Finance

Yeah, all right.

Operator

Thank you. [Operator Instructions] The next question is from the line of Shreyans Mehta from Equirus Capital. Please go ahead.

Shreyans Mehta — Equirus Capital — Analyst

Yeah, thanks for the opportunity. I joined a bit late. So maybe my questions would be a bit repetitive. So ma’am, what has changed to a one quarter that we are revising our guidance as far as the revenue is concerned? That’s one. Second, even if I adjust for the INR20 odd crores one off, still my margins are below what we had guided for.

Ragini Advani — Director, Finance

Okay. So first thing is we are not reducing our overall revenue. I do not know how you get that impression, we’ve only outperformed whatever we have always expected as far as our total income or operating revenue goes. As regards…

Shreyans Mehta — Equirus Capital — Analyst

Ma’am because if what I recollect, we had given a guidance of INR9,500 crores to INR10,000-odd crores.

Ragini Advani — Director, Finance

Yeah, so again, I had said about INR9,000 crores to INR9,500 crore for this year and we’ll be happy if we cross INR10,000 crores. And that is exactly what I had maintained in this call also and we will be doing it.

Shreyans Mehta — Equirus Capital — Analyst

So but even if I have to achieve INR9,500 crore and if I see the quarter, I mean, we are talking about doing even to achieve INR9,500 crore we are talking to do around INR3200 crore, INR3300 odd crores for fourth quarter?

Ragini Advani — Director, Finance

We are already at INR6,700 crores and we will, yeah, we should be about INR3,000 crore plus in the fourth quarter.

Shreyans Mehta — Equirus Capital — Analyst

Because, I mean, historically, 3Q versus 4Q, it’s majorly a jump of say around 20%, 30%, whereas third quarter we’ve done around INR2,200 crore. So just trying to reconcile that?

Ragini Advani — Director, Finance

Yeah, so overall, as I maintain again, we will be in the range of INR9000 crores to INR9500 crores on a consol basis, whatever numbers I have been giving has always been on a consol basis. And as far as next year is concerned, it should be beyond that, of course. And for that, we continue to maintain our numbers and we are fairly confident about it. Now as regards to your profitability is concerned, we’ve had a one-off dip in this quarter because of two adjustments are made. There is a INR20 crores on the consolidated basis and there is a INR20 crore in a standalone basis. So the overall number impact is about INR40 crores to INR45 crores.

Now another INR5 crores is because of PRP and certain other expenses. So I am saying that I have made two one-off adjustments, both in stand-alone as well as in consolidated because of which the numbers have dipped, but we continue to maintain that for the year-end, for the annual figures. Our EBITDA’s will be in the range of 11% to 11.5%. Our core EBITDA will be about 8.5% and our PAT will be about 7.5% to 8%.

Shreyans Mehta — Equirus Capital — Analyst

Ma’am, so just to reconcile, even if I adjust INR20-odd crores…

Ragini Advani — Director, Finance

INR20 crores plus INR20 crores, INR40 crores.

Shreyans Mehta — Equirus Capital — Analyst

INR40 crores, okay, okay? Secondly, ma’am, in terms of if you could give us the cash and bank balance for our own funds? And also if you can help us with the revenues from our key projects?

Ragini Advani — Director, Finance

So as far as my cash in bank, own funds are concerned, they are in the range of INR1,100 crores.

Shreyans Mehta — Equirus Capital — Analyst

Both put together?

Ragini Advani — Director, Finance

Sorry?

Shreyans Mehta — Equirus Capital — Analyst

Cash plus bank both?

Ragini Advani — Director, Finance

Yeah, yeah cash and bank balance. Okay. So they are in the range of about INR1,100 crores. As regards my profitability is concerned on different projects, I told you that all my JVs and SPVs are at different stages. Some of them are in construction and some of them have become operational. Overall perspective, I have a turnover of about INR300 crore addition in my turnover from my JVs and subsidiaries. And I have my — if you were to exclude the INR20 crore one-off entry, then I have overall profits from my JVs and subsidiaries, which are operational.

Shreyans Mehta — Equirus Capital — Analyst

Ma’am, my question was the breakup of revenues project wise if you could highlight what has contributed during this quarter like Sivok-Rangpo, Katra…

Ragini Advani — Director, Finance

Are you talking about top five few projects which are contributing to…

Shreyans Mehta — Equirus Capital — Analyst

Yeah, top five or top ten, yes, yes.

Ragini Advani — Director, Finance

Okay. So I have my — the J&K project that is giving me — I’m telling you for a nine month number? Or do you want a Q3 number?

Shreyans Mehta — Equirus Capital — Analyst

Q3 would do.

Ragini Advani — Director, Finance

Okay. So Q3 number, I have some G&K project about INR620 crores, then I have Sivok-Rangpo project, this is in Sikkim, that’s about INR540 crores. Then I have another INR200 crores from DFCC project. And then I have a huge list of projects ranging from about INR80 crores to going all the way down to whatever, some decimal numbers in crores, these are company projects, yeah.

Shreyans Mehta — Equirus Capital — Analyst

And lastly, in terms of our capex for the year and how much investments have we done in nine months and third quarter for — if you could break it in roads and the other SPVs?

Ragini Advani — Director, Finance

So I have done a total of, yeah, I have done, invested about INR70 crores in this quarter in form of my equity quota equity. And I have invested in nine months period of roughly about INR260-odd crores.

Shreyans Mehta — Equirus Capital — Analyst

Okay. And for full year would be FY 2023 and 2024?

Ragini Advani — Director, Finance

FY 2023, I expect another INR50 crores maybe is what I’ll put in and FY 2024 should be big numbers, I would say about INR500 crores to INR600 crores.

Shreyans Mehta — Equirus Capital — Analyst

And any broad breakup between the SPV road SPVs, how much into that and how much into the rails?

Ragini Advani — Director, Finance

Okay. So when I’m saying as far as my highways are concerned, road SPVs, the INR500 crore may say, roughly about INR400, INR450 would be in highway projects only. And there would be about INR50 crores to INR100 crores in my JV projects.

Shreyans Mehta — Equirus Capital — Analyst

So this — the JV projects includes the solar power or that would be separate?

Ragini Advani — Director, Finance

That would be — I mean, I could say I could ask — we’ll update with renewable. This would be more of coal JVs that I’m talking about.

Shreyans Mehta — Equirus Capital — Analyst

So just to clarify, sir, the solar power capex, I mean that will be different, is not a part of INR500 crores, INR600 odd crores?

Ragini Advani — Director, Finance

No. So okay. So I have to overall put in an equity of about equity — quota equity of about INR900 crores going forward and it would be spread not just next year or part of it could be even next to next year. Out of that INR900 crores, I’m saying roughly between INR500 crores to INR550-odd crores is what I expect we’ll be spending next year and that would be mainly in highway projects and partially in my renewable, as well as coal JVs.

Shreyans Mehta — Equirus Capital — Analyst

And ma’am, in terms of the capex, if you’ve done any capex and guidance for this year?

Ragini Advani — Director, Finance

Capex and see this is capex, right, because these are my SPVs in which I’m putting in equity, I’m borrowing funds from the market and I’m setting up projects which are obviously larger from that perspective. If you’re talking about stand-alone capex in our company, that’s more of my routine assets and some plant initially that I have from my EPC projects. So if that number — we have already done about INR242 crores.

Shreyans Mehta — Equirus Capital — Analyst

INR242, okay. Sure. And lastly, if I can squeeze in, in terms of our project in Bandra and our projects in Delhi, what’s the status of this?

Ragini Advani — Director, Finance

Sorry?

Shreyans Mehta — Equirus Capital — Analyst

Our land assets of RLDA?

Ragini Advani — Director, Finance

Okay. So as far as Bandra is concerned that MoU had expired and there are certain issues in terms of — I mean between the state government, railways and central government in terms of developing that plot, those issues are still not resolved at a government level or at a inter Ministry level because of which it is status quo the entire thing. So we have been pushing railways to give us a decision either ways, one way or the other and we should be hopefully getting it soon. But as of now, there is no movement, as far as the Bandra plot goes. Now when you were talking about Delhi, which project are you referring to?

Shreyans Mehta — Equirus Capital — Analyst

Both the projects ma’am, commercial, commercial one?

Ragini Advani — Director, Finance

Are you talking about our own land — or are you talking about an RLDA project?

Shreyans Mehta — Equirus Capital — Analyst

No, no, no, the mall business, which we were supposed to, yeah.

Ragini Advani — Director, Finance

That is working that we’ve already given to a company called RQ and we’ve started getting our rentals from there.

Shreyans Mehta — Equirus Capital — Analyst

So is it fully leased or if you could highlight?

Ragini Advani — Director, Finance

Yeah, yeah, it is fully leased.

Shreyans Mehta — Equirus Capital — Analyst

And what’s the potential of this?

Ragini Advani — Director, Finance

Sorry?

Shreyans Mehta — Equirus Capital — Analyst

How much are we earning from there?

Ragini Advani — Director, Finance

We’re earning about INR6 crores to INR7 crores per annum and we’ve got some upfront lease premium from there of about INR25 crores.

Shreyans Mehta — Equirus Capital — Analyst

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

Ragini Advani — Director, Finance

All right.

Operator

Thank you. The next question is from the line of Viraj from Jupiter Financial. Please go ahead.

Viraj Mithani — Jupiter Financial — Analyst

Yeah. Thank you, ma’am for giving the opportunity. again. Ma’am, I’ll reconfirm, so– are we– are you saying that next year will be — will have a top line of — say the FY 2024 top line of INR11,000 crore to INR12,000 crores, that will be the growth?

Ragini Advani — Director, Finance

I’m saying we’ll be having top line, assuming that this year it’s 9% to 9.5%. We’ll be having a top line of next year plus INR10,000 crores. But I am not saying whether it will reach 11, 12 that we’ll have to see because the — see ours is an infra project. So it really depends on the execution speed at which we will do the projects and also, of course, on certain other factors, which is at times beyond us. So that’s why I’m maintaining that it would be our INR10,000 crore plus number.

Viraj Mithani — Jupiter Financial — Analyst

So is it correct to think ma’am like on consolidated basis, 10% growth and on a little bit bullish basis, would be 15% growth, is that correct to think?

Ragini Advani — Director, Finance

You can say it will be 10% to 15%, yeah.

Viraj Mithani — Jupiter Financial — Analyst

Okay. Ma’am and this…

Ragini Advani — Director, Finance

For next year.

Viraj Mithani — Jupiter Financial — Analyst

Yeah, next year, yeah. And you will say next year, lot of our JV income will start coming in. So won’t be there increase of net margin, is it?

Ragini Advani — Director, Finance

No, no, no. What I said was that some of my SPVs have started commercial operations now. Once they stabilize, we do expect them to start giving us profit in a year or two. And many of my SPVs are under construction stage, including JVs. So as and when they get constructed, as and when they get stabilized after COD, then they should all add to my profits. This was regarding some one asking me what is going to be your profitability from these JVs. But it is not starting from next year, most of them are still under construction.

Viraj Mithani — Jupiter Financial — Analyst

So when we expect that to come in by the next two, three years, is it?

Ragini Advani — Director, Finance

Yeah, yeah so three to four years.

Viraj Mithani — Jupiter Financial — Analyst

Three to four years, okay, ma’am. That’s it from my side. Thank you.

Operator

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

Pranay Khandelwal — Alpha Invesco — Analyst

Hello. Thank you for the opportunity. Just trying to bookkeeping sort of question that in quarter three, we see that there is a charge of negative INR64 crores related to taxation from previous years. Just wanted to understand what that might be coming from?

Ragini Advani — Director, Finance

Yeah, so we actually won an income tax case for FY 2011, 2012 and we’ve actually got this in our favor and there is no further challenge. So we had provided for this amount and now we are reversing, so therefore my taxation number is at minus INR64-odd crores as a previous year tax benefit that I’m getting.

Pranay Khandelwal — Alpha Invesco — Analyst

So this is also a one-off sort of thing if we look at the PAT?

Ragini Advani — Director, Finance

Yes, yes.

Pranay Khandelwal — Alpha Invesco — Analyst

All right. That’s all. Thank you.

Ragini Advani — Director, Finance

All right.

Operator

Thank you. The next question is from the line of Steve Desai, a retail investor. Please go ahead.

Unidentified Participant — — Analyst

Hi, good afternoon. So, my first question is, there was news regarding proposed merger of Ircon and Rail Vikas Nigam Limited a few months back. So is there any progress regarding that news? And secondly…

Ragini Advani — Director, Finance

We’ve also only heard it in the news and we are also not aware of any other development.

Unidentified Participant — — Analyst

Okay. Secondly, is the board considering buyback of equity shares to where was the extremely depressed equity market valuation of the company?

Ragini Advani — Director, Finance

No, as of now, as I mentioned, we have — we are planning to claw back our profit for highway, coal railway connectivity projects, renewables and we are trying to diversify and establish ourselves as well-established players in these businesses. So currently, all my cash is going to go for all these investments, I need to grow.

Unidentified Participant — — Analyst

Okay, thank you.

Ragini Advani — Director, Finance

All right.

Operator

Thank you. The next question is from the line of Manoj Shah from Luxco Investments. Please go ahead.

Unidentified Participant — — Analyst

Yeah, good afternoon. Thank you for the opportunity. Just wanted to check, if you can comment on the — how is the EBITDA margin in your different segments like railway project, highways and others, and also the margins on the nomination and the bidding list?

Ragini Advani — Director, Finance

See, as far as my railway first, whatever I’m deriving be to 95% of revenue from railway projects. So effectively, the margins that you’re seeing or what I’m planning to say is going to be maintained is going to come essentially going forward also from a railway business. And therefore, the margins are in this level only. And as regards competition versus nomination, it’s a 50:50 order book that we have. In nomination, you do get cost plus, so you are obviously at a lesser risk of some unprecedented cost lowering your margin. But because of the experience and expertise that Ircon has, wherever we picked up competition, we’ve tried to maintain our margins. So at the most there may be about 0.5% difference between the two on an overall basis. And that is the reason we are confidently saying that we will continue to maintain our margins in the next FY as well.

In terms of our highway projects, most of them are right now under construction, one or two have started giving me dividend. But in terms of my IRRs, which I calculated at that time, obviously, they’ve all given me decent returns. And I do hope to continue getting those returns, but that will be spread over the O&M period. So from a perspective of next FY, I think railways would be a better bet to see from margin perspective. And as we maintain, we continue to maintain the margins of FY 2022 going forward.

Unidentified Participant — — Analyst

So what you’re trying to say is that if I’m that the railway will have a — projects will have a higher margin…

Operator

I’m sorry to interrupt, sir, your voice is not clear. We are not able to understand what you’re speaking, sir. Can you please use your handset to ask a question.

Unidentified Participant — — Analyst

Yeah. I am saying that on railway project, you’ll have a better margin that compared to the highway projects?

Ragini Advani — Director, Finance

No. One cannot say that, because see, as of now, our highway projects have PPP mode and our railway projects that we do are more on cost plus or a EPC mode. So that comparison is difficult to make. So what I’m trying to say is that IRRs are more relevant in case of PPP projects. Our IRRs are good on the basis of which we bid, but once the construction is done and once the operation phase starts, specially in case of your toll projects, the toll that you get in, we will have to wait and watch. Based on our own understanding, we should be able to get decent margins out of it, but that would be an IRR concept.

Unidentified Participant — — Analyst

Okay. So in case of higher projects, you are limited to only tell the constructions?

Ragini Advani — Director, Finance

No, we are a PPP player, right? So we continue for the concession period.

Unidentified Participant — — Analyst

Okay. Okay. Okay. Fine, fine. Thank you.

Operator

Thank you. The next question is from the line of Shubham Shukla from Voyager Capital. Please go ahead.

Shubham Shukla — Voyager Capital — Analyst

Yeah, hi, good afternoon, everyone. I’m just trying to understand our position in market when it comes to tunneling. Like you said, we take pride in tunneling project. So we are like the best in the market when it comes to tunneling or we are like trying to build up moat here, like, if we do have a strong position in tunneling and as we have seen the government is pushing more infra projects, development in J&K, Ladakh, overall border area, which is like majorly in Himalayas and requires like more tunneling. And as we have seen like 50% of order book comes from nominations. So if there are any new projects leading to tunnel and have good position and expertise internally, we can anticipate orders coming to us directly based on nomination?

Ragini Advani — Director, Finance

So there are two things. To begin with the nomination business has stopped in the Ministries or in government. So going forward be on competition. When I say that we have expertise or we gained expertise because of our J&K project in tunneling, some difficult terrains, etcetera. This will help us in being more confident in executing similar projects going forward and it will give us more strength in terms of qualifying for such projects going forward because you would have these kind of criteria going forward. So we are building our past track record or PTR as it’s called. So from that perspective, I stand a better chance to win a job. Going forward, jobs would come on competition only.

Shubham Shukla — Voyager Capital — Analyst

Okay, thank you so much.

Operator

Thank you. The next question is from the line of Jainam Shah from Equirus Securities Private Limited. Please go ahead. Mr Shah. I have unmuted your line. Kindly proceed with your question. As the current participant is not answering, we move onto the next question, which is from the line of Swechha Jain from ANS Wealth. Please go ahead.

Swechha Jain — ANS Wealth — Analyst

Hi. ma’am, thanks for giving this opportunity, again. Ma’am, I have few clarification. I think as you said to an earlier participant is for one-off, write-off about the INR20 crores in standalone, right?

Ragini Advani — Director, Finance

Yeah, there is a one-off, write-off of INR20 crores in consolidated and there is a onetime one-off expense provision of INR20 crores in stand-alone.

Swechha Jain — ANS Wealth — Analyst

So if I look at the standalone, so if I even add back this one-off to core EBITDA of INR128 crores, still our EBITDA margins are lower than previous quarter. So just want to understand, even after the — if I don’t consider the one-off, why we have a lower EBITDA margin in this quarter?

Ragini Advani — Director, Finance

You are saying for the stand alone?

Swechha Jain — ANS Wealth — Analyst

Yes.

Ragini Advani — Director, Finance

The 626.57 nine months number?

Swechha Jain — ANS Wealth — Analyst

No, Q3, if I look at this quarter.

Ragini Advani — Director, Finance

Okay. If you’re looking at this quarter, if you add to my EBITDA of INR221 million another INR20 crore, it’s INR241 crore.

Swechha Jain — ANS Wealth — Analyst

No our stand-alone core EBITDA is INR128 crores, if I add INR20 crores to that, it is INR148 crores, right? So the core EBITDA margin comes to 6.5%?

Ragini Advani — Director, Finance

Yeah, see, I — again, the point is, this is — ours is an execution project, which has a different — there would be projects where I would be probably booking lesser margins now and going forward because there would be lot of provision entries at one dull and then one guides them back or vice versa. So that 0.5% margin here and there on a core EBITDA levels will be difficult to explain. And especially if you compare it to my — if you compare it to my Q3 FY 2022 it’s fine, but if you compare to Q2 FY 2023, then there again had some extraordinary one-off profit numbers sitting for some time, yeah, because these are execution projects. That is the reason I’m saying on an overall perspective, you could compare it to my annual numbers.

Swechha Jain — ANS Wealth — Analyst

And other thing, ma’am, like so far during the call, lot of people have asked about FY 2024 guidance for revenue numbers. So I think what I heard is once we mentioned 5% to 6% growth, then we also mentioned 10% to 15% growth.

Ragini Advani — Director, Finance

See, actually, what is happening is, I’m assuming a number of INR9,000 crore to INR9,500 crore this year, it really depends on what we’ll clock this year. If you’re talking of a INR9,000 crore number this year, then 10% would be about INR10,000 crore next year. Yeah, so that is why I’ve been again and again saying that let’s not get into the percentage. I am 9 to 9.5 this year and I’m a 10,000 plus next year. Now it could really vary from the stand dependence on what the…

Swechha Jain — ANS Wealth — Analyst

So my last question is now you said that you are not constantly bidding for lot of projects right now that we were not able to add new orders, right because that is not…

Ragini Advani — Director, Finance

[Indecipherable] main projects, we were consciously not bidding.

Swechha Jain — ANS Wealth — Analyst

So just hypothetically, if I were to assume that we are going to bid for new orders, so if you could give some sense as to how is this competition, if you were to bid today for new projects, how tough is the competition now?

Ragini Advani — Director, Finance

So again, it really depends on the category while railways itself may sound as a one category, there would be station development contracts. There would be normal tracking contracts and there would be smaller size contracts, which may be taken out at zonal railway and there could be bigger contracts, which could be connecting more — it could be distance wise more or it could be geologically more challenging area. So for me or even for that matter, even outside of India, you could have EXIM Bank and MEA finance projects or otherwise also.

So what I’m trying to say is that there are certain areas where I stand a lesser chance of competition because either the product size is big or it has some niche requirements, which not very many players will have. Ircon’s had that execution experience over the years and we’ve tried to increase the diversification of our experience in the last few years by taking on bullet train, by doing that J&K project, etcetera.

So in those areas, I think I should be comfortable. There should be lesser number of competitors and I should be able to maintain good margins. But where I have to compete in small ticket and kind of jobs, there may be many small time players. And probably it may not give us the kind of — I mean either I’ll have to squeeze on to my margins to get that kind of jobs or I will have to let go of those jobs.

However, having said that, overall, the targets are huge in terms of the infrastructure spend. So the area where we need to focus and get our jobs and continue to get our maintainable margins, we feel those jobs will be coming out soon. And that is where we will try to win and get those jobs with lesser competition.

Swechha Jain — ANS Wealth — Analyst

So we are confident to add this order book as and when these kind of projects come?

Ragini Advani — Director, Finance

As and when these kind of jobs come. So I don’t want to just pick up job for the sake of announcing that instead of 30,000 now it’s 40,000 or 50,000 knowing very well that those jobs will not result into profits or very, very low margins. Just what we are trying to do right now, but of course, it’s a ever-evolving mark, it’s a dynamic market. So we’ll have to see, otherwise, we’ll have to play the volumes game, pick up lot of such jobs and continue to maintain our margins from a volume prospect.

Swechha Jain — ANS Wealth — Analyst

And that INR6,200 crores order of Bullet Train which you were mentioning, that is included in INR30,000 crores of order book right?

Ragini Advani — Director, Finance

Yes, yes.

Swechha Jain — ANS Wealth — Analyst

Okay. And this is existed with over how many years?

Ragini Advani — Director, Finance

About four to five years.

Swechha Jain — ANS Wealth — Analyst

Four to five years, the bullet train right?

Ragini Advani — Director, Finance

Yeah, so this is a fairly complicated project, yeah.

Swechha Jain — ANS Wealth — Analyst

Understood. Understood. Okay, ma’am. Thank you so much. Really appreciate it.

Ragini Advani — Director, Finance

All right. Okay.

Operator

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

Pranay Khandelwal — Alpha Invesco — Analyst

Hello. Yeah, thank you for taking my question, again. I just wanted to understand when this bidding process happens and — just what are the criteria on which this is decided at who gets the award? Is it just on the cost basis as in the amount you have bid for or there are other criteria involved as well?

Ragini Advani — Director, Finance

Are you asking the bids that we take for having our contractors? Or are you asking from a revenue perspective the bids that we participate in?

Pranay Khandelwal — Alpha Invesco — Analyst

From you — from what you participate in?

Ragini Advani — Director, Finance

So what happens is there are certain criteria’s which are built in terms of saying that this is being offered or a bit is being invited to players who have had this much kind of turnover, this kind of balance sheet size, net worth, profit. Then it is — it may say that you’ve had experience of doing these many kilometers of rail line, tunneling in case is required or a bridge, all that gets covered in a BQC or a PTR.

And then after that, in such who so ever qualifies with such kind of potentials, only they are called in for a L1 kind of a bidding. That’s one way. The second is where there are — especially internationally, when we look at projects, there could also be a QCBS kind of an arrangement where there’s a weightage given to your technical specs all that.

And third could be run of the mill products where everyone with very basic criteria, everyone can bid and the L1 gets it. So there are all these categories.

Pranay Khandelwal — Alpha Invesco — Analyst

And we are looking to majorly go for the first two, one, get…

Ragini Advani — Director, Finance

First two category yeah. Now what is also good as long as I mean larger scale project and something which involves bridges, tunnels, etcetera. We’ve had L1 wins out of our order book of INR30,000 crore, 50% is from competition and we’ve had those wins from L1 concept only.

Pranay Khandelwal — Alpha Invesco — Analyst

I just want to kind understand not just anyone can come in and just throw in a very ridiculous bid and get the order. There are some criteria which…

Ragini Advani — Director, Finance

For very run-of-the-mill, small-size projects even that can happen here and that is our competition. And yeah, you may be right, I mean, those people may eventually not be able to execute or not execute it properly or may fail midway. But I mean that really depends on what kind of project and who’s actually taking out the tender. For Ircon being a government company, obviously, when we take up a project, we make sure that it’s executed properly, I think that’s where we take a pride in. So that’s something we’ll never ever compromise on.

Pranay Khandelwal — Alpha Invesco — Analyst

All right, thank you.

Ragini Advani — Director, Finance

All right.

Operator

The next question is from the line of Manoj Shah from Luxco Investments. Please go ahead.

Unidentified Participant — — Analyst

Yeah. Thank you, again, for the opportunity ma’am. Just wanted to get little clarity on like the highway projects, like we have got 9 SPVs. Can you give a sense that how much equity you have put in these SPVs which are like strong position so that 25, 30-year kind of it they have in the sole concession period, so on kind of it, for how much equity of your total [Technical Issues].

Ragini Advani — Director, Finance

So for my highway projects, I have a total committed equity of about INR600 crores, out of which, not INR600 crore, it is INR600 plus INR1,900 [Foreign Speech]. So about INR2,500 crores — INR2,000 crores, out of INR2,000 crores, I have put in about INR500 — about INR1,100 crores to INR1,200 crores, INR800 crores, INR900 odd crore actually I have to put know?

Unidentified Participant — — Analyst

And since you will get basically toll collection over a period like 25, 30-year kind of it, so are you — what is the thought process of getting into these kind of rather than just constructing and then moving on kind of a builder go highways rather than getting into projects that we have over a period of 25 years, 30 years collect the toll revenue and that’s how you will take money over the period.

Ragini Advani — Director, Finance

Sorry, I didn’t get your question, can you repeat it was — your voice was muffled.

Operator

Si,r I would request you to use your handset sir, your voice is really muffled.

Unidentified Participant — — Analyst

Okay. I’m saying that since these are long gestation period where you get a concession of 25, 30 years, you will collect money through the toll revenues, okay? And so what’s the rationale of getting into these kind of projects rather than just construct the highway and then move on, use the capital for the — to bid for the new projects and enter a new highway project kind of it, instead of getting into these kind of concession projects?

Ragini Advani — Director, Finance

There are two things. The first thing is that these are not just toll projects, these are toll as well as annuity-based projects, okay? So and it really depends on how NHAI wants these projects to be. So per se, these are the two active models with music toll and AM, it is not for us to decide what we want to do. It is for the highway projects, the way they come out is how we go. That returns are attractive. The construction period still remains two to three years, after which you get a proper annuity or a toll as the case maybe.

In terms of whether we would like to continue in these projects or after a particular point, monetize them, so that we can get out our money and start using for other projects, yes. We are preliminarily started looking into those aspects and let’s see, we would be hiring some specialists to guide us to take this forward.

Unidentified Participant — — Analyst

Yeah, because some of the toll construction companies they have monetized, so the — in this kind of structure.

Ragini Advani — Director, Finance

We are also preparing ourselves to take those steps.

Unidentified Participant — — Analyst

And what are the target IRR that you keep for these projects?

Ragini Advani — Director, Finance

13% to 14%.

Unidentified Participant — — Analyst

Okay, thank you.

Operator

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Shrimati Ragini Advani, Director Finance, Ircon International Limited for closing comments. Over to you, ma’am.

Ragini Advani — Director, Finance

Thank you, Ms. Mamta for moderating the call and thanks to the Perfect Relations for organizing this call. I would also like to thank all our shareholders, business partners, analysts and investor friends, who have shown continued faith on us and supported us throughout our journey. We would also be happy to connect with you on a one-to-one basis if required for any further queries and take it forward. As to conclude, we are fairly confident of our results and we do continue to maintain our revenue lines, as well as margins. I request everyone now to as a concluding measure to free to discuss anything with us if required for greater clarity. And here’s wishing everyone healthy and safe day to day and always. Thank you once again. And I think by this, I would like to call off from here.

Operator

[Operator Closing Remarks]