ITD Cementation India Limited (ITDCEM) Q3 FY23 Earnings Concall Transcript

ITD Cementation India Limited (NSE:ITDCEM) Q3 FY23 Earnings Concall dated Feb. 10, 2023.

Corporate Participants:

Prasad Patwardhan — Chief Financial Officer

Jayanta Basu — Managing Director

Analysts:

Ashwani Sharma — ICICI Securities — Analyst

Mohit Kumar — DAM Capital — Analyst

Parikshit Kandpal — HDFC Securities — Analyst

Bajrang Bafna — Sunidhi Securities — Analyst

Unidentified Participant — — Analyst

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Ramanan Venkateswaran — Emkay Ventures — Analyst

Prem Khurana — Anand Rathi Shares and Stocks — Analyst

Dhananjay Kumar Mishra — Sunidhi Securities — Analyst

Deepak Poddar — Sapphire Capital — Analyst

Vipul Shah — Sumangal Investments — Analyst

Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst

Vishal Periwal — IDBI Capital — Analyst

Nirvana Laha — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the ITD Cementation Q3 FY ’23 Post Results Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Ashwani Sharma. Thank you and over to you, sir.

Ashwani Sharma — ICICI Securities — Analyst

Good evening, everyone. On behalf of ICICI Securities, I welcome you all to the Q3 Post Results Conference Call of ITD Cementation India Limited. Today, we are pleased to host senior management of the company, which is represented by Mr. Jayanta Basu, Managing Director; and Mr. Prasad Patwardhan, CFO of the company. The meeting will start with a brief by Mr. Basu and Mr. Patwardhan, after which we will open the floor for Q&A. Thank you and over to you, sir.

Prasad Patwardhan — Chief Financial Officer

This is Prasad Patwardhan, and I would like to thank you for joining us on this Q3 FY ’23 earnings call. We’ll start with our financial performance during this quarter. Thereafter, I will hand over to Mr. Basu for his initial comments on the operational performance, and then we’ll be happy to answer any questions that I’m sure you would have to ask us.

We are very pleased with our operational performance in Q3, we have posted a robust performance, and we are hopeful that this will be a precursor to a better performance during the next quarter and in ’23, ’24 as well.

I will briefly touch upon the highlights of our performance in this quarter. We have posted the highest ever quarterly revenue of INR1,327 crores during the quarter as against INR998 crores a year back. So that represents a growth of about 33% revenue. Our EBITDA has come in at about INR118 crores as against INR87 crores a year back, again a growth of 36% and profit after tax of INR37 crores as against INR20 crores a year back, so a growth of 87% in our profit this quarter.

In terms of our performance for nine months as well, we have posted a robust performance this year. The nine month revenue has come in at INR3,459 crores and against INR2,625 crores, which represents a growth of about 31%. EBITDA has also grown by nearly 30% on a year-on-year basis and is coming at INR316 crores and our profit after tax is at INR87 crores as compared to INR53 crores a year back, again a growth of 65% on a year-on-year basis. Our new order booking in this year, in the nine months ending December ’22 has been nearly INR8,000 crores and our order book as of December stands at a little over INR21,000 crores.

So that is all from my side, I’ll hand over to Mr. Basu for his initial comments now.

Jayanta Basu — Managing Director

As you have seen that our performance in last quarter — that is Q3 was quite good. We have achieved close to INR1,400 crores of revenue. And all the segments, whatever we are working have done very well and I hope that the same tempo and run rate will be maintained the coming quarters as well.

To brief you about the few key jobs what we are doing, underground metro at Bengaluru Metro as usual going very well, we have done around 44% of progress so far. Chennai Metro is progressing well and hopefully by another 3, 4 months time, we’ll be able to start the tunnel job that is from May or June. Mumbai Metro, as you know is almost verge of completion.

Coming to the Marine, Udangudi, we have done substantial progress. Around 80% job has been done. It’s one of the iconic jobs we are doing in marine field. As you know, I’ve been telling it for many times. Apart from that, Sea Bird for Indian Navy at Karwar, BMCT for Port of Singapore at JNPT port, IOCL at Ennore Port and Breakwater at Vizhinjam, all the jobs are going very well.

Beyond that, we are doing few jobs in other segments like industrial projects and building like Sikkim University, CPWD Kasturba Nagar at Delhi, Guwahati Waterfront, Surat Metro, industrial projects for ArcelorMittal at Surat, Aerospace Museum at Delhi, Ganga Expressway and Ganga Bridge. All the jobs are going well and I hope that in this quarter also, it continues to be better, so operations are under control. A few jobs we are L1 to the extent of around INR2,700 crores.

We are expecting order maybe in a couple of months hopefully by end of this year and there are some big jobs under pipeline in Marine and Metro. So that is all about the operational performance and our job in hand.

We are opening for the questions now onwards, so kindly go ahead.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Mr. Mohit Kumar from DAM Capital.

Mohit Kumar — DAM Capital — Analyst

My first question is on the FSO. As we enter FY ’24, I think we are — how do you see the — and you are sitting on a very large order book, so how do you see FY ’24 panning out given that you may end up doing roughly around INR4,500 crores revenue for FY ’23. Can you expect INR6,000 crores kind of run rate in FY ’24?

Jayanta Basu — Managing Director

Yes, you can expect that.

Mohit Kumar — DAM Capital — Analyst

So how do you see the margins going forward as margins are slightly still on the weaker side. Of course, has improved Q-o-Q and it is better than I think last year? It is similar last year. So can you expect some improvement here given that it has some operating leverage?

Jayanta Basu — Managing Director

Yes. If you recall our last con calls, we expect that margin will improve from next year that is quarter one, quarter two of next year and we expect to touch close to double digit or double digit EBITDA.

Mohit Kumar — DAM Capital — Analyst

Sir, the legacy order book from Bangalore, is it over? Is there something still left?

Jayanta Basu — Managing Director

Bangalore is almost done. Physically, we’ll be able to complete the job by another two months time, which is by end of March or April.

Mohit Kumar — DAM Capital — Analyst

Understood, sir. Secondly, of course, if you can just throw some color on the order which you are chasing in Q4 or let’s say next 6 to 9 months, some large orders. You said that metro is one of the opportunity, which of the metros you’re looking at and anything else you can paint a color on?

Jayanta Basu — Managing Director

Well. Metro now we are focusing mostly on the underground metro. We have one tender due for Kolkata Metro, which is the end of this month. And then there are around 4 or 5, maybe 6 underground metro job at Chennai spreading over this month and next month to be submitted, so those are from metro and marine also, we have got two big jobs to be submitted by this quarter. I mean, by March.

Mohit Kumar — DAM Capital — Analyst

Anything else sir, on the port side that you see?

Jayanta Basu — Managing Director

Yes. Marine as I said, the port that is.

Mohit Kumar — DAM Capital — Analyst

And where are your L1, sir. L1? I think you spoke about the L1 in couple of orders, can you please detail it out?

Jayanta Basu — Managing Director

On marine job, which is basically river based job at Bangladesh, where we are L1 INR2,000 crore plus job, so we are expecting order by March or April.

Operator

We take the next question from the line of Parikshit Kandpal from HDFC Securities.

Parikshit Kandpal — HDFC Securities — Analyst

Congratulations on a strong quarter. So we have seen the revenue ramp up, I mean shaping up quite well. But margins still remain under pressure, so will the gross margin reduce this quarter? So by Q1 do you think we will be back to a little high single digit or early double digit margin, EBITDA margin?

Jayanta Basu — Managing Director

Yes. That’s what I have told, I mean, rightly said, high single digit or double digit margin you should get from Q1 onwards.

Parikshit Kandpal — HDFC Securities — Analyst

Is there any other legacy in the order book, which could be of a pain point for us for the next year?

Jayanta Basu — Managing Director

Legacy orders, see, Bangalore Metro is physically almost over, so by March or maybe up to April this year. The physical work will be completed. Of course, thereafter final bill submission, persuasion of our claims, arbitration will go. So I don’t think there are any other legacy orders which may affect our bottom line.

Parikshit Kandpal — HDFC Securities — Analyst

But this elevated, Bengaluru elevated, we have provided for all the cost over and office, right. So no negative surprise will come by the time we complete this project, right?

Jayanta Basu — Managing Director

No, I don’t think anything will come. And in top of that we are also pursuing some claims, which we feel genuine, so those will be in arbitration.

Parikshit Kandpal — HDFC Securities — Analyst

Just a question to Prasad. Prasad, what would be the gross debt and cash on the books? And also, as Jayanta said that, the Mumbai underground project is now almost complete, so what could be the residual profits to be recognized from that?

Prasad Patwardhan — Chief Financial Officer

Parikshit, to answer the first part of your question. The gross debt on the books as of December is about INR640 crores and there’s cash of roughly INR175 crores from the book. So the net debt is about INR460 crores, INR470 crores. We expect the debt to go up a bit in this quarter because of the CapEx that we have incurred and the machines are likely to be delivered. Some of them are likely to be delivered in this quarter, so there will be some marginal increase in our debt levels by March.

I could not get the second part of your question. Can you repeat that, please?

Parikshit Kandpal — HDFC Securities — Analyst

So all the JVs and which we consolidate, so what will be the — let’s say, Kolkata and Mumbai, so what will be the residual profits to be recognized? Because, the Mumbai underground is coming for closure now. It’s substantially completed, so what could be the upside on LD reversals or profits?

Prasad Patwardhan — Chief Financial Officer

Parikshit, we have been recognizing the margins on a percentage of completion basis, so I don’t have the exact numbers with me right now. But as the work progresses and it is nearing completion, we will see the residual margin getting recognized. But I won’t be able to share with you the number off hand.

Parikshit Kandpal — HDFC Securities — Analyst

And what is the net worth as of Q3 and consolidated net worth — what is the consolidated net worth as of Q3?

Prasad Patwardhan — Chief Financial Officer

As of Q3, the consolidated net worth is about INR1,100 plus crores.

Parikshit Kandpal — HDFC Securities — Analyst

And just last thing on Jayanta. So Jayanta, what would be the total prospect pipeline segment wise, if you can help us with?

Jayanta Basu — Managing Director

Total prospect — I can divide in two category, I mean, otherwise there are lot of prospects, but we are not pursuing all the jobs considering the work in hand. But we are definitely pursuing some jobs, which is underground. Underground job will be close to INR6,000 crores to INR7,000 crores from Kolkata and Chennai Metro and for marine, it will be INR5,000 crore plus. So these two definitely are pursuing — I mean, we are actively under consideration for tendering, [Speech Overlap] say around INR12,000 crores.

Parikshit Kandpal — HDFC Securities — Analyst

Just one last thing, you have completed project to a particular group. So are you taking any challenges there in terms of slowing our project, so? And also if you can quantify what is the total exposure in terms of order book to the group?

Jayanta Basu — Managing Director

Well, see. As we mentioned two big jobs, I mean under that group, which we have just started. One at UP and one at Colombo. So it is just our initial site mobilization has taken place and in fact, we have received the mobilization advance also. Last week also, we got paid, this week also, we got paid. So in terms of exposure, these two new job, we have practically nothing. The old jobs, those are very small jobs and are material free, so I don’t see have got much exposure on them and we have not had anything from that group to either slow down or to stop the job, so it is going as usual.

Parikshit Kandpal — HDFC Securities — Analyst

And what is the total order book of the Group in our order book?

Jayanta Basu — Managing Director

Yes. Total order book will be around INR6,800 crores, But out of that we might have executed hardly INR1,200 crores, because bulk of the order is from the one road job.

Parikshit Kandpal — HDFC Securities — Analyst

So out of INR6,800 crores, INR1,200 crores is executed. So net order book is — do you think net order book is 68 minus 12, so about INR5,600 crores is the current order book as of September — as of December and then?

Jayanta Basu — Managing Director

Yes, around something like that. Yes.

Operator

We take the next question from the line of Bajrang Bafna from Sunidhi Securities.

Bajrang Bafna — Sunidhi Securities — Analyst

Congratulations for a great set of numbers. Sir, my first question is pertaining to again, to that Group only. If you could just say that both of the orders which we just talked about UP and Columbo. They are financially closed, so could you sense that what sort of — in the financial closure, the amount which is going to come from the Group level and what is tied up with the banks? So if you could just give us some clarity on that will be really helpful. And as you pointed out that you have not heard anything to slow down, because UP is a prestigious project, which needs to be completed in a record time. So just enlighten us your current ongoing and sense on that will be really helpful.

Operator

One moment, sir. Management, sir? Participants, the line for the management is disconnected, please stay connected while we join them. Ladies gentlemen, we have the line for the management connected.

Bajrang Bafna — Sunidhi Securities — Analyst

Was my question was audible to you sir? Or should I repeat it?

Prasad Patwardhan — Chief Financial Officer

I think, it’s better if you repeat the question.

Bajrang Bafna — Sunidhi Securities — Analyst

Sir, the first question pertains to the Group again. The financial closure of the UP project and the Colombo project has already happened, as per my understanding. And can we share the breakup, the amount which is going to come from the banking channels and the amount which needs to come from? If you could just guide us in that sense, it will be really helpful. And your sense in terms of — since UP is a prestigious project and it needs to be completed in time, so just some — your ballpark judgment on that?

Prasad Patwardhan — Chief Financial Officer

Bajrang, we don’t have the details of the financial closure, while we are aware that the financial closure has more or less been completed. The details of the financial closure as far as the group is concerned, we are not aware of that.

Bajrang Bafna — Sunidhi Securities — Analyst

Okay. And till date I think, since this is a nascent episodes which has happened. So there is no negative surprises as such as of now, right?

Jayanta Basu — Managing Director

No, no negative surprise. In fact, we have been paid also during last one week, against Colombo and some other job in marine sector.

Bajrang Bafna — Sunidhi Securities — Analyst

Even in the UP side, right? The UP, the Ganga Expressway project which we have just started?

Jayanta Basu — Managing Director

Yes.

Bajrang Bafna — Sunidhi Securities — Analyst

So can we expect the revenue booking of this Ganga Expressway project from this quarter onwards?

Jayanta Basu — Managing Director

We have a system of achieving a certain threshold limit of this thing. But definitely, we expect that there will be no disruption and progress will definitely happen.

Bajrang Bafna — Sunidhi Securities — Analyst

Okay. So either this quarter or maybe next quarter, if the threshold is not achieved, right?

Jayanta Basu — Managing Director

Yes.

Bajrang Bafna — Sunidhi Securities — Analyst

Okay. And what about Chennai Metro projects? When can we expect the — a revenue recognition to happen beyond that threshold of, let’s say, 10%?

Jayanta Basu — Managing Director

Chennai Metro, this quarter I think, we’ll be able to achieve the threshold limit that is Q4. So we should be able to recognize the margin from this quarter.

Bajrang Bafna — Sunidhi Securities — Analyst

Okay. So sir, you in some media appearance guided that this year, probably the run rate will be closer to INR1,400 crore, maybe in Q4 and will be growing 20%, 25% next year. So will that assessment holds true or you want to revise it slightly upwards? Because, you anyway pointed out INR6,000 crore. So can you just pinpoint in terms of growth that you are going to experience in the FY ’24? Some clear guidance on that will be really helpful.

Jayanta Basu — Managing Director

Well, INR1,500 crore per quarter is the — we are winning and which should happen and we may expect a little bit more than that. But I think, whatever I have told last time, I will maintain the same.

Bajrang Bafna — Sunidhi Securities — Analyst

Okay. So roughly that you are guiding that close to maybe INR6,000 crores kind of number, which you just talked about in your first question-and-answer session?

Jayanta Basu — Managing Director

Yes.

Bajrang Bafna — Sunidhi Securities — Analyst

Okay. And sir, because if I rightly pointed out, you are already at INR21,000 crore and the execution period is roughly around on the higher side 3 years. And then we are also going into order intake of, let’s say, last time you talked about the pipeline is around INR17,000 crores. So can you sense that maybe in 2 or 3 years time, can we expect the run rate to go to closer to INR9,000 crore to INR10,000 crore on a yearly basis, if you will talk about, maybe let’s say, FY’26?

Jayanta Basu — Managing Director

I mean that is too far from now, we are discussing this quarter. But as I’ve told last time, we should grow for another 2, 3 years at the rate of 25% net on that.

Bajrang Bafna — Sunidhi Securities — Analyst

Okay. And this pipeline, has it got revised to any number? This INR17,000 crores which you talked about last quarter?

Jayanta Basu — Managing Director

Rightly, it will be around INR12,000 crores now, because some of the job which was there in our pipeline, we have decided not to beat for. Because we already have got substantial quantity of job now, so it is INR12,000 crore to INR13,000 crore which are tendered again.

Bajrang Bafna — Sunidhi Securities — Analyst

Yes. Okay. Those are predominantly in the metro and the tunneling side, that you just talked about marine side.

Jayanta Basu — Managing Director

Marine side, yes.

Operator

[Technical Issues]

Jayanta Basu — Managing Director

Hello, Seema? Seema, your voice is breaking a bit. Hello, Mr. Pushan?

Unidentified Participant — — Analyst

So my first question would be, how much ordered or tendered we have done for this quarter specific? And what are the winning ratio we have been accepting though?

Jayanta Basu — Managing Director

Tender for this quarter?

Unidentified Participant — — Analyst

Yes.

Jayanta Basu — Managing Director

We have — do you have this number with you? Because, our percentage of success is around 20%. That much I can tell you, YTD ’22, ’23.

Unidentified Participant — — Analyst

Yes, sir. But I just want that number because, the order book, the new order book and the total order book, if you see that is around INR21,000 crore. It is hovering, I think from like two quarters also. So I just wanted to know, how much order book wins we have been expecting to on a yearly — on the next quarter — on a yearly basis, so that we can get a true judgment on the growth of the book?

Jayanta Basu — Managing Director

Well, as I said that around INR12,000 crore to INR13,000 crore of tenders we are pursuing now, in addition to close to INR3,000 crore order which were L1.

Unidentified Participant — — Analyst

Okay. And sir, my second question would be on the Ganga Express project, which is the Adani project. So are we seeing any stress on the — for the specific Adani thing or all the order book and the execution is on time? And we are seeing the recurring revenue from the Adani, exactly what we have been thought of?

Jayanta Basu — Managing Director

Ganga Expressway, I don’t expect any problem. So for whatever interaction I have with the customers and we have got payment also recently. And they have asked us to go in full swing, so there is no indication from the customer side to otherwise.

Operator

The next question is from the line of Kaushik Poddar from KB Capital Markets Private Limited.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Yes. See, we see — I’m from Kolkata, so we read some problem with the Kolkata Metro and you people are one of the contractor. So can there be any liability on you with all the problems that are there?

Jayanta Basu — Managing Director

No liability, it is the matter of time. As you know the metro line which we are supposed to go from Sealdah to directly to Mahakaran that has been rerouted through Esplanade. And so as you know, you are from Kolkata, so you have faced some problem. It is the problem we have encountered and that was quite challenging, but I’m very happy that we could overcome them. It took some time, because in a public area we cannot do hara-kiri and there are some delay in the project. So apart from that, I don’t see any liability we have now.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

And whatever rerouting you have done, that should take care of the problem you are facing or you had faced so far?

Jayanta Basu — Managing Director

Well, rerouting was not in our hands, so we had to do the job in the rerouting. So basically between the two tunnel, that is one is up, one is down. There needs to be some passage for the ventilation and the safety purpose.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Evacuation in purpose.

Jayanta Basu — Managing Director

And those passage are done by normal tunneling method, not by any sealed method. So it is very difficult to do given the town condition, so that is the problem we have been facing now. So there are technical solutions we have found out and hopefully that will be resolved. Either reducing those numbers and then whatever number left out with the un-proper manner.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Okay. But there is no liability on the contract or whatever happens. That’s what I wanted to know.

Jayanta Basu — Managing Director

No. There is no liability and so there is no issues that are…

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Okay. See, a lot of the contracts you are getting mostly are in the metro as well as marine. So these I guess are your strong points? Other than metro and marine, are there any other things that you — that are the strong points of the company?

Jayanta Basu — Managing Director

Airport. As you are from Kolkata, you have seen Kolkata airport.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Okay. Was it constructed by ITD?

Jayanta Basu — Managing Director

Yes. Very much. And then we are now doing at Trichy. Trichy Airport, Pune Airport, Ahmedabad Airport, the airport is another strong point. And special buildings, like Sikkim University, Ropar IIT and Bose Institutions at Salt Lake, Sector 5, all are done by us. So that is also we are getting stronger in that sector.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Okay. And recently you were saying that you have got a contract from Bangladesh, right?

Jayanta Basu — Managing Director

Bangladesh transmission line, yes, we got it. We have not got, we are L1, so we are expecting order any time by end of March or so.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Okay, so now you are parent company, the high company. So are you restricted from getting into any of the country, I mean which are the countries that are in your remit?

Jayanta Basu — Managing Director

So there is no line like that. We are allowed to go anywhere if the business — we see there is a business and prospects. But mostly, we are restricting ourselves to the neighboring countries, number one. Number two, mostly we are restricting ourselves where we find that funding is by Government of India, like [Indecipherable] by the Bank.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Okay, in both Bangladesh and Sri Lanka projects, the funds is from Government of India is it?

Jayanta Basu — Managing Director

Yes. Bangladesh of course funded by Government of India and Colombia is a port job by Adani Group.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

So that is also by Adani Group okay. So as of now in your INR21,000 crores order book, how much is connected with Adani or how much of the order book is connected with Adani’s? The other one of course is the UP highway?

Jayanta Basu — Managing Director

Well, if you see that the UP highway, if we remove that, then our order book from Adani will be around INR1,500 crores.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

INR1,500 plus INR4,000 crores, right?

Jayanta Basu — Managing Director

INR1,500 crores.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Plus the INR4,000 crores of UP?

Jayanta Basu — Managing Director

INR4,800 crores precise.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

INR4,800 plus one, that is almost INR6,300 crores. So nearly one-third of the order book is from the Adani’s as of now?

Jayanta Basu — Managing Director

Yeah.

Kaushik Poddar — KB Capital Markets Private Limited — Analyst

Okay, thank you.

Operator

We take the next question from the line of Mr. Ramanan Venkateswaran from Emkay Ventures.

Ramanan Venkateswaran — Emkay Ventures — Analyst

Congratulations on a wonderful performance. I have just basically one question, two questions, but one main. Last quarter we discussed that about approximately INR200 crores worth of revenues. Projects did not reach margin recognition stage, okay. This quarter, what would that number be?

Prasad Patwardhan — Chief Financial Officer

It’s a similar number, about INR230 crores, INR240 crores is the number.

Ramanan Venkateswaran — Emkay Ventures — Analyst

Okay. And which would be the major projects on which this number would be?

Prasad Patwardhan — Chief Financial Officer

These are the projects that were awarded to us in the last year or so. There is Chennai Metro, there is Ganga Expressway, there are a couple of other projects as well. We could form part of this number.

Ramanan Venkateswaran — Emkay Ventures — Analyst

Okay. And the second question following from this is, in the coming quarter, would some of these reach the revenue recognition — I mean the margin recognition stage?

Prasad Patwardhan — Chief Financial Officer

Yes. Some of them will reach that threshold in this quarter or there may be some slippage into the following quarter. But we are hopeful that, we’ll be able to reach that threshold in the March quarter.

Operator

We take the next question from the line of Mr. Prem Khurana from Anand Rathi Shares and Stocks.

Prem Khurana — Anand Rathi Shares and Stocks — Analyst

Congratulations on good quarter. So sir, I think in your opening remarks you detailed us about some of these key projects for us. If you could also help us understand how the progress has been on the tunneling jobs that we had managed from IRCON sometime back in West Bengal. Where are we in terms of construction? Are these going good or we were facing any terrain related issues there?

Jayanta Basu — Managing Director

We faced some issue regarding the terrain or geological related issue, but those things are now mostly overcome. Because with time we have improved our technology, have adopted something new technologies, methods and client has also realized that they have to do some changes. So with those things, the things are much better now. And one good thing is that, tunnels are all concrete lines, so concrete lining has also started, it has progressed a lot. So the situations are much better in these three contracting [Technical Issues] IRCON.

Prem Khurana — Anand Rathi Shares and Stocks — Analyst

Possible to share how much will be the cumulative progress on these together, the three packages?

Jayanta Basu — Managing Director

Cumulative progress will be — just a moment, around 62.5%, say 62% so far.

Prem Khurana — Anand Rathi Shares and Stocks — Analyst

Sure. And sir when I look at our order backlog over the last couple of years. I mean, the way we’ve been able to have new orders come to us. Our transportation segment has gone up substantially and we seem to have done fairly good on building or industry side as well. I mean, we know, we are one of the best as far as marine is concerned, we’ve been doing exceedingly well in MRTS as well.

But these are fairly — these used to be small for us till some time back and have become large now and at least in terms of order backlog. I am assuming contribution would rise only from these segments. How is the margin profile based on the experience that you’ve had with these orders till this time? And then in working capital cycle different from, let’s say, MRTS or marine with — let’s say, industrial or buildings or transportation?

Jayanta Basu — Managing Director

Transportation sector, we have two jobs. One is the Ganga Expressway, another is Bridge Over Ganga. So Bridge Over Ganga, we are doing the foundation job together with Bridge and Roof, being a superstructure work and that is progressing very well and we have almost finished the job. At Ganga Expressway, we have just started, so hopefully that will also go well.

Prem Khurana — Anand Rathi Shares and Stocks — Analyst

Sure. And how about the building segment, how is our experience there in terms of working capital cycles or margins?

Jayanta Basu — Managing Director

Building segments, you see basically, we had a few jobs under metro where we had got the session buildings. So that included Bangalore Metro and Nagpur Metro where we didn’t do good. But now whatever building we have, like Sikkim and CPWD at Delhi and Circuit House at Jalpaiguri. Those are quite under control and doing well.

Prem Khurana — Anand Rathi Shares and Stocks — Analyst

And just one last one from my side, if I may please. In terms of order addition it’s been a very good year for us. I mean, we’ve already had INR8,000 odd crore. So I mean, given the fact that we had seriously good additions for the single year, how does it change the way you approach the balance pipeline? Would that make you kind of raise your margin expectation, because you have fairly good visibility with the order additions that we have had or you would continue to bid at this margin that you used to be at earlier even before we had these INR8,000 odd crores come to us?

Jayanta Basu — Managing Director

First of all, we’ll be quite selective now going for the submission of bid and that is number one. Number two, we’ll definitely not target small jobs anymore going forward. That is number two. And number three, we’ll focus more on niche area of marine and underground metro and some overseas jobs where we’ve seen that margin will be better.

Prem Khurana — Anand Rathi Shares and Stocks — Analyst

Sure sir, thank you. That’s it from my end, and all the very best for future.

Jayanta Basu — Managing Director

Thank you.

Operator

We take the next question from the line of Dhananjay Kumar Mishra from Sunidhi Securities.

Dhananjay Kumar Mishra — Sunidhi Securities — Analyst

So my question is with effect to this Bangalore Elevated, so what was the revenue contribution in this quarter and what was the loss we would have booked in this quarter from the Bangalore Elevated and what is remaining to be booked in Q4?

Prasad Patwardhan — Chief Financial Officer

The revenue in this quarter, Bangalore Metro is about INR50 odd crores. We have not recognized any loss on this project during the quarter.

Dhananjay Kumar Mishra — Sunidhi Securities — Analyst

Okay, and what will be the revenue part to be booked or maybe when will be the upturn because already it is on completion stage, but you will billing and then bookings revenue in Q4 and Q1 always, so what will be the revenue part?

Prasad Patwardhan — Chief Financial Officer

It will be a negligible amount. It is it is not a very significant amount. It’s not a very big number, it’s not a very significant number at all.

Dhananjay Kumar Mishra — Sunidhi Securities — Analyst

This quarter there was no any negative impact on EBITDA you are saying?

Prasad Patwardhan — Chief Financial Officer

No until we have not recognized the loss in this quarter. So there is no impact on the operating margin during the quarter.

Dhananjay Kumar Mishra — Sunidhi Securities — Analyst

Okay. And Q4 we will be recognizing some losses?

Prasad Patwardhan — Chief Financial Officer

No, Q4 as of now, I think we have recognized all the losses that we expect on that project. So we are not expecting any further losses.

Dhananjay Kumar Mishra — Sunidhi Securities — Analyst

Okay. And this Ganga express project, what is the timeline to complete the project and what is your annual contribution target for next year from this project in terms of revenue booking?

Jayanta Basu — Managing Director

Total completion time is 27 months starting from December. And so in this year, I think our revenue should be close to INR2000 crores from April print to March 2024.

Dhananjay Kumar Mishra — Sunidhi Securities — Analyst

Or anything you have not anything in Q3, right, on this project?

Prasad Patwardhan — Chief Financial Officer

Revenue is bigger, no margin recognition.

Dhananjay Kumar Mishra — Sunidhi Securities — Analyst

Sorry, but Q4 you will be hitting your threshold limit?

Prasad Patwardhan — Chief Financial Officer

Yes, then maybe in the March quarter or in the subsequent quarter. We need to see how the work progresses in the remaining two months of this year and that will decide on the margin rate, it shall either in this quarter the next quarter.

Prem Khurana — Anand Rathi Shares and Stocks — Analyst

So in your fixed guidance you are taking INR2000 crores contribution from this project in for FY24, right?

Prasad Patwardhan — Chief Financial Officer

Yeah, that’s correct.

Dhananjay Kumar Mishra — Sunidhi Securities — Analyst

Okay, that’s all from my side. Thank you.

Operator

Thank you. The next question is from the line of Mr. Deepak Poddar from Sapphire Capital. Please go ahead, sir.

Deepak Poddar — Sapphire Capital — Analyst

Hello. Thank you very much sir for the opportunity, sir. First off, I wanted to understand now you mentioned double-digit margins, right. Does that include the profit from JV or does that exclude that?

Prasad Patwardhan — Chief Financial Officer

That includes profit from JV as well.

Deepak Poddar — Sapphire Capital — Analyst

So, currently in this quarter, including the profit from JV, we are at about 8.8% of EBITDA margin, right?

Prasad Patwardhan — Chief Financial Officer

Yes.

Deepak Poddar — Sapphire Capital — Analyst

So that we are targeting to reach 10% by first quarter. So that’s what we have mentioned, right?

Prasad Patwardhan — Chief Financial Officer

Yes.

Deepak Poddar — Sapphire Capital — Analyst

Okay. And in the second half, this fourth quarter, I think in one of the interviews we did mention that we are looking at maybe INR1,400 crores to INR1,500 crores a revenue run rate. This quarter was about IINR1,300 crores, now with some of the projects that you mentioned is going into threshold, so one can expect that run rate to hold on as we look into fourth quarter that INR1,500 crores?

Prasad Patwardhan — Chief Financial Officer

Well, historically we have seen that Q4, the performance tends to be better. We have seen that over the years since we have already done INR1,300 crores in Q3, INR1,400 crores or INR1,500 crores in this quarter is certainly possible.

Deepak Poddar — Sapphire Capital — Analyst

Is certainly possible, right. And that would be a increasing margins intake. We won’t reach 8.8% to 10% instantly, right. So there would be increasing margin go into fourth quarter, right, on a quarter-on-quarter basis?

Prasad Patwardhan — Chief Financial Officer

What happened at one go, we have said this in the past and you will see a gradual improvement in margins as we as we enter ’23, ’24.

Dhananjay Kumar Mishra — Sunidhi Securities — Analyst

Fair enough. I understood. And just to this last point and this INR2,000 crores target from this Ganga Expressway that we have built-in next year out of that INR6,000 crores, right. So do we see any risk on that INR2,000 crores or this number can reduce. So any flavor that you can provide on that?

Jayanta Basu — Managing Director

So, so far, we haven’t seen because our experience during last two months that the greenfield project and right of way are quite available and government also pushing very hard to complete the job. So there is no doubt from material. So we don’t see that twice definitely this progress.

Deepak Poddar — Sapphire Capital — Analyst

So we don’t see any reason. And you mentioned that we got payment also, right. So, can you quantify the payment that we received or is it private information?

Prasad Patwardhan — Chief Financial Officer

So it’s not a question private information, whatever bill we have raised on the client, they have certified and paid that amount, I would have the exact amount right now, but we have received the advance also for that project in the running account bill obviously is being paid.

Deepak Poddar — Sapphire Capital — Analyst

Okay. And in the fourth quarter any amount of revenue we can expect from this project?

Prasad Patwardhan — Chief Financial Officer

Yes, certainly. The execution is ongoing, we’ll certainly be even bookings revenue on this project during the quarter.

Deepak Poddar — Sapphire Capital — Analyst

And what would the quantum be?

Prasad Patwardhan — Chief Financial Officer

Difficult to comment at this…

Deepak Poddar — Sapphire Capital — Analyst

Yeah, it’s difficult to quantify. No problem sir, that’s it from my side. All the very best. Thank you so much.

Prasad Patwardhan — Chief Financial Officer

Thank you.

Operator

Thank you. We take the next question from the line of Mr. Vipul Shah from Sumangal Investments. Please go ahead, sir.

Vipul Shah — Sumangal Investments — Analyst

Thank you. So my question is what is the cumulative loss and cumulative revenue for Bangalore Metro?

Prasad Patwardhan — Chief Financial Officer

Since we haven’t recorded any loss on Bangalore Metro, this quarter, I am not in a position to share with you the total amount of loss, but the revenue on that project when the projects were awarded to us, the value was in excess of INR2,000 crores and probably more than 95% or 97% has already been accounted for accounted for so far.

Vipul Shah — Sumangal Investments — Analyst

No, but you must have rough idea knowhow, what should be our cumulative loss, because we have lost quite a bit of money on that?

Prasad Patwardhan — Chief Financial Officer

That’s correct. Maybe we can share that number with you offline. It is not readily available with us right now.

Vipul Shah — Sumangal Investments — Analyst

Okay, so should I call you or should I write to you?

Prasad Patwardhan — Chief Financial Officer

Either way whatever suits you.

Vipul Shah — Sumangal Investments — Analyst

Okay, sir. And second question relates to this INR6,000 crores of orders, which we have from Adani Group, one is that Ganga Expressway another — so for that in this particular circumstances, may I ask what type of advance we are having for this INIR6,000 crore worth of projects?

Jayanta Basu — Managing Director

We already have the advance received from Ganga Expressway, part of the advance not entire advance. So, they still have submitted our bill and for Colombo also we have received part of the advance.

Vipul Shah — Sumangal Investments — Analyst

So can you quantify it sir?

Prasad Patwardhan — Chief Financial Officer

See, both of the projects have provision for payment of advance ready from 5% to 10%, so in these projects, we have not taken the full advance so far. Depending on our requirements, the progressive manner we will be taking the headwinds. So first part of the advance that we have claimed for Colombo or for the Ganga Expressway has already been paid to us. For example, on Ganga Expressway we had claim 1% and we have received 1% of the advance. Same is the case with Colombo, we had claimed certain amount of advance which has already been paid to us.

Vipul Shah — Sumangal Investments — Analyst

So don’t you think sir that in this type of circumstances, you should be more prudent, more careful, going ahead with the project of this size with just 1% of advance, so doesn’t it carry significant risk and we have lost quite a bit of money on doubtful advances in past if I remember correctly. So your thoughts please?

Prasad Patwardhan — Chief Financial Officer

No, I’m sorry, we have not lost any money on doubtful advances in the past. We have claimed 1% advance from — on the Ganga Expressway project and we have been paid. Had we claimed more advances that amount would have been paid to us, but we have not claimed amount so far, so there is no question of the client paying that amount as of now. We claim it as time goes by and I’m sure the client will pay us the advance.

Vipul Shah — Sumangal Investments — Analyst

So as of today, you don’t see that as a concern?

Prasad Patwardhan — Chief Financial Officer

No, as Mr. Basu mentioned on one of the earlier calls, we are getting our payments regularly from the client. Last week, and even in this week, we have received the payments on some of the projects that are under execution.

Vipul Shah — Sumangal Investments — Analyst

Okay sir. Thank you and all the best.

Prasad Patwardhan — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Santanu Chatterjee from Mount Intra Finance Private Limited. Please go ahead, sir.

Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst

Thanks for this opportunity. Sir, my first question is how much faced external we have to raise to execute our large order book?

Prasad Patwardhan — Chief Financial Officer

Well, our requirement is largely on working capital debt and we are available lines with our consortium of banks to meet the requirement. There is an additional requirement in terms of term debt on construction plant and equipment that we will require for execution of some of these projects. And we already have lines of credit available with our existing banks and that is why you are seeing an increase in the level of debt in this quarter as compared to earlier and we are expecting some more — the increase in debt in this Q4 as well. So, it will be difficult for me to quantify the exact amount of debt because the assets that we are acquiring or the equipment that we are acquiring is funded partly from our internal resources and partly from term date. So we are well-capitalized and we have the resources and the lines available to invest in the construction plant and equipment that will require for the execution of these orders.

Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst

Okay. My second question is on in our order book, how much belongs from central government and state government vis a vie from private segment?

Prasad Patwardhan — Chief Financial Officer

About 60% is central and state government and 40% would be would be private sector.

Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst

And within that 60%, can you, sir differentiate how much belongs to Central and how much from state itself?

Jayanta Basu — Managing Director

Very less from state, very less. Mostly central.

Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst

Okay. And last bookkeeping question sir, what is our CapEx target for FY24?

Prasad Patwardhan — Chief Financial Officer

Well, we are still working on the CapEx number for FY24. So it will be a bit premature for me to share with you the CapEx requirements. For this year, we expect the CapEx to be in the range of INR250 crores to INR300 crores, but we still need to work out the numbers for next year. We can come back to you maybe in the subsequent calls on that number.

Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst

Thanks a lot sir. That’s it from my side.

Operator

Thank you. The next question is from the line of Mr. Ramanan Venkateswaran from MK Ventures. Please go ahead, sir.

Ramanan Venkateswaran — Emkay Ventures — Analyst

Yeah, good afternoon. Sorry, just a follow-up on my earlier one, so I was just doing the numbers. So if we have about close to INR230 crores as revenues where margins have not been recognized then our actual margin works out almost about 9.5%. And if you also subtract the INR50 odd crores from Bangalore Metro, then we almost there close to 10%, 9.9% or so. And even if we assume that in normal situation, you would have always have some portion of revenue margin recognition threshold has not happened, it’s about INR50 crores to INR70 crores, then also we are close to about 9.3%, so as we move forward and when we are saying that our revenue levels will start to go up quite significantly over the next couple of years, then I think we’re almost there in terms of double-digit margins?

Prasad Patwardhan — Chief Financial Officer

Absolutely, Mr. Ramanan you are spot on in your assessment.

Ramanan Venkateswaran — Emkay Ventures — Analyst

Okay, thank you.

Operator

Thank you, sir. The next question is from the line of Mr. Vishal Periwal from IDBI Capital. Please go ahead, sir.

Vishal Periwal — IDBI Capital — Analyst

Yes, sir, thanks a lot for the opportunity. I’m sorry I’m going to hop in on the same question again and that is on the growth order look that is there, but just from a industry perspective, since a lot has been written on that on the flip side. Is it possible like probably in the middle of contract, we can change the terms asking for more advance or looking for a weekly payment or 10 days payment in a contract, can this happen?

Jayanta Basu — Managing Director

See, that contracts what we have from this group. Three major contracts, those are concession of nature like they have almost special purpose vehicle if the government state government, like Colombo, like Ganga Expressway. So definitely we are guided by certain norms because we have already agreed and bankers as agreed based on that for the financial closure. So I don’t see that there is much room now for us to change the contract conditions. There are some small jobs also we are doing to JTS, that probably, yes, we can do, whatever you are saying.

Vishal Periwal — IDBI Capital — Analyst

Okay, sir. And that’s all from my side. Thank you.

Operator

Thank you, sir. The next question is from the line of Mr. Bajrang Bafna from Sunidhi Securities. Please go ahead, sir.

Bajrang Bafna — Sunidhi Securities — Analyst

Thank you for the follow-up question. So can you guide us the interest cost going into FY24 because we have asking there layer structures where we pay some interest cost on the advances that we carry on our balance sheet and then the regular interest cost. And so if you could just guide us, what could be that number going into FY24 and some color around the debt that is just talked about INR600 crores, will our internal accruals be sufficient to fund this 25% additional growth or do we need additional working capital to go to that level, any number will be really helpful?

Prasad Patwardhan — Chief Financial Officer

This quarter, our interest cost has been about INR30 crores and next year we expect the interest on the quarterly run rate has been about 30 crores — next year, we expect the interest cost to be a bit higher, because our working capital do debt as well as the term debt for acquisition of construction, plant and equipment is likely to go up as would the customer advances only. The good part is nearly 50% or thereabouts of our customer advances are interest-free. So they will not burden our P&L to that extent, but we expect our interest cost to move up in the next financial year. Now, how much would be the actual impact remains to be seen, but this was made to go by anywhere between 10% to 15% on where they are currently.

Bajrang Bafna — Sunidhi Securities — Analyst

Okay, and in the similar way the depreciation on this INR300 crores additional will come up the CapEx that we have done this year?

Prasad Patwardhan — Chief Financial Officer

That’s right.

Bajrang Bafna — Sunidhi Securities — Analyst

Okay, got it. And any color on the tax rate going into next year?

Prasad Patwardhan — Chief Financial Officer

There has been no tweaking of the tax rates in the budget this year. So we don’t expect any change in the tax payout in ’23, ’24.

Bajrang Bafna — Sunidhi Securities — Analyst

So that will be close to 25%, 26%, right?

Prasad Patwardhan — Chief Financial Officer

That’s correct.

Bajrang Bafna — Sunidhi Securities — Analyst

Yeah, thank you.

Operator

Thank you. We take the next question from the line of Nirvana Laha, an Individual Investor. Please go ahead, sir.

Nirvana Laha — Individual Investor — Analyst

Hi sir, thank you so much for giving me the opportunity. So I see that Q-o-Q our revenues have increased by 28%, but cost of goods sold has increased by 41%, so this is a little counterintuitive for me because all the infra companies which have reported this quarter already, they’re all talking about either an expanded margin or at least consistent margin because RM price decreases are flowing through. So why is it different for us and this is quite a steep increase?

Jayanta Basu — Managing Director

Well, we execute two kind of jobs, in some of the jobs, the materials are supplied free, clients supply material. And some of those jobs, material is in our scope. We have to see the proportion of the job we have executed in last quarter and probably the job, which has having material in scope has been executed more. So that could be one of the reason.

Prasad Patwardhan — Chief Financial Officer

Just to add further. It also depends on whether we are executing the project on our own or we are subcontracting any part of the work to any of the subcontractors. So a better way to look at the number would be to pull-up the cost of material consumed at the subcontracting expenses, if you add these two numbers, I think the percentage to revenue is more or less the same, there is not much difference.

Nirvana Laha — Individual Investor — Analyst

Sir I don’t have the exact number, but I also did that, I think it’s still significantly higher than the Q-o-Q revenue increase, but since I’m not sure I’ll get back to you with the number difference. So on the next question so for Ganga Expressway anger Sri Lanka project, can you tell us the percentage of physical completion till date?

Prasad Patwardhan — Chief Financial Officer

Well, these projects have just commenced either in the last quarter or early this quarter. So there is nothing much — we’ve just mobilized and started executing these projects. So there is not much work that has been done on those projects, maybe Ganga Expressway has started a month or two earlier so there is some progress on the work-over there, but the Sri Lanka project is just commencing now.

Nirvana Laha — Individual Investor — Analyst

Okay, and what is the payment schedule with the incumbent in these projects like and what milestones are there, what percentage milestones are there?

Jayanta Basu — Managing Director

These are all monthly running account bill payment, whatever work we do, they measure it by quantity and accordingly that is at 50 degrees below quantities and they pay within the timeline, which is 80% by 15 days balance remaining by another 15 days, that is what is the normal timeline we have.

Nirvana Laha — Individual Investor — Analyst

Okay, so it’s not work done basis and not on a milestone basis?

Jayanta Basu — Managing Director

This is based on the work done.

Nirvana Laha — Individual Investor — Analyst

Work done. Thanks. And one of the other players who has part of the Ganga Expressway project another listed player, they said that there was some escrow system in place for payments regarding work done. Can you comment on that because that would presumably add some more security to these payments. Any comments from your side on that?

Prasad Patwardhan — Chief Financial Officer

No, we have a designated bank account for this project as we do for all the other projects that we have under the execution, and the money into that account, whatever the client is paying is getting deposited into that account. So as far as we are concerned, there noise escrow mechanism in place for receiving payments from the client.

Nirvana Laha — Individual Investor — Analyst

Okay, so just from a sentiment point of view sir, I asked this question because you can see from the number of questions you’re getting regarding this and also the market reaction after negative news started coming in about the particular group. So from last quarter to this quarter, as management, how do you view your risk exposure to this group, has your stance significantly changed or are you reassured and your stance remains the same from last quarter to now, with regards to 30% order book?

Jayanta Basu — Managing Director

Well, I think this have to phase-out in two things. One is that existing jobs what we’re doing with them and then about the future. So existing of what we’re doing with them is the two major jobs deal that process have just hardly started and we have got no signal from them to go slow or stop. In fact, they’re encouraging us to go ahead. About the future job, we have to strategically have to think that how much will expose further them.

Prasad Patwardhan — Chief Financial Officer

So we will evaluate any future jobs that come up and then take a call. So we are right now focusing on the jobs on hand, not just for this group but all the projects that we have on hand and we are continuing to execute the projects.

Nirvana Laha — Individual Investor — Analyst

And there you are fairly comfortable as you’ve reiterated?

Jayanta Basu — Managing Director

Yes. If you truly see the exposure part, it is only one month job. And if you do one month, if you’re paid good proceed.

Nirvana Laha — Individual Investor — Analyst

Right. Got it, final question from my side. So you mentioned in the last con-call that you were not very keen on pursuing NHAI road projects because of high competition, but all the road infra players are actually reporting less competition in especially in HAM projects. So what would your view be on pursuing NHAI HAM projects because all these road players seem to have standalone margins which are double the current margins that we report around 14% 15%, so any thoughts on going aggressively on road projects because budget allocation have also been very strong there?

Jayanta Basu — Managing Director

We haven’t thought — we do not have any strategy to go out to the HAM projects. As we said that double-digit margin, I agree but there are many players including L&T those who used to be very bullish on HAM projects, they are not there in the market in this. So there are two kind of story in this. So we are not there in HAM project so far.

Nirvana Laha — Individual Investor — Analyst

Okay. And there is no intention on your part to evaluate this pace of fresh in the near-term?

Jayanta Basu — Managing Director

No, no.

Nirvana Laha — Individual Investor — Analyst

Okay, all right. Wish you all the best for the next quarter. Thank you.

Jayanta Basu — Managing Director

Thank you.

Operator

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

Prasad Patwardhan — Chief Financial Officer

Thank you. I would like to thank you all for your participation in this Q3 FY23 earnings con-call. We truly appreciate the questions that you have asked and we are hopeful of your continued support going forward. Thank you so much.

Operator

Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us and you may now disconnect your lines.