KNR Constructions Limited (KNRCON) Q3 FY23 Earnings Concall Transcript

KNR Constructions Limited (NSE:KNRCON) Q3 FY23 Earnings Concall dated Feb. 10, 2023.

Corporate Participants:

S. Vaikuntanathan — Vice President, Finance

K. Venkata Ram Rao — General Manager, Finance and Accounts

K. Jalandhar Reddy — Promoter and Executive Director

Analysts:

Mohit Kumar — DAM Capital — Analyst

Shravan Shah — Dolat Capital — Analyst

Alok Deora — Motilal Oswal — Analyst

Parikshit Kandpal — HDFC Securities — Analyst

Faisal Hawa — H.G. Hawa and Company — Analyst

Shreyans Mehta — Equirus Securities — Analyst

Bharanidhar Vijayakumar — Spark Capital — Analyst

Vasudev Ganatra — Nuvama Wealth — Analyst

Nikhil Abhyankar — DAM Capital — Analyst

Jiten Rushi — Axis Capital — Analyst

Saket Kapoor — Kapoor and Company — Analyst

Vishal Periwal — IDBI Capital — Analyst

Ravi Naredi — Naredi Investments — Analyst

Presentation:

Operator

Good day and welcome to KNR Constructions Limited Q3 FY ’23 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks, and uncertainties that are difficult to predict.

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

I now hand the conference over to Mr. S. Vaikuntanathan, VP, Finance, KNR Constructions Limited. Thank you and over to you sir.

S. Vaikuntanathan — Vice President, Finance

Good morning everyone. Thank you for joining us today on the call to discuss the financial results for Q3 and nine months ended of financial year ’23 — 2023. Along with me, I have Mr. K. Jalandhar Reddy, Executive Director, Mr. K. Venkata Ram Rao, General Manager of Financial and Accounts and Strategic Growth Advisor, our Investor Relations Advisor.

We have uploaded results and investor presentation on the stock exchanges, as well as, on our company website. I hope everyone got an opportunity to go through it. We would like to touch upon a few industry events and key company updates, post which we will have a question-and-answer session.

Now I would like to share our thoughts from the recently announced union budget, another important industry development. Starting with the budget highlights. The government continue to focus on infrastructure development. The government announced increase in capital expenditure on infrastructure investment by 33% to INR10 lakh crore, and almost equivalent to 3.3% of the GDP.

The massive capex investment is expected to boost the GDP growth and create new job opportunities, especially in the heather lands of the country as the focus continued on roads, irrigation, and railways in the budget. As far as the allocation to highways is concerned, the government has allocated INR2.7 lakh crores, as against a revised allocation of INR2.17 crore [Phonetic] the previous year. Similarly, the allocation to NHAI is INR1.62 lakh crores, as against the previous allocation of INR1.42 lakh crores.

Coming to the irrigation sector, Jal Shakti Ministry has been allocated INR97,278 crores, which will further strengthen the activities in the irrigation sector, prominently for Jal Jeevan Mission. We strongly believe that the government’s trust for the infrastructure development, along with the various initiatives announced by NHAI have created multiple tailwinds to the roads and highway builder.

KNR Construction remains geared up in terms of its capabilities and financial position, to fully leverage these tailwinds to further create the value to the shareholders. As far as the overall tendering, awarding, and construction of highways is concerned, the overall activity has picked up in the phase — picked up in the phase, in the last three, four months, which was affected during half year ended financial year 2023, hoping to the [Indecipherable] monsoon in 2022.

Coming to the FASTag collections, the toll collections stood at INR50,855 crore for financial year 2022, a growth of around 46%, as compared to INR34,778 crores in financial year 2021. The average daily total collection through FASTag in December 2022 stood at INR134.44 crores. The single day highest collection touched INR144.19 crores on 24 December, 2022.

The implementation of FASTag system has improved the collection and has brought more efficiency in overall toll collection operation.

This has resulted in improved financial position, and has encouraged the private players to participate in the highway projects.

Now coming to the key updates to the company. In the quarter gone by, the company has completed transfer of equity shares, the following three subsidiaries to Cube Highways and Infrastructure. Number one, KNR Tirumala Infra Private Limited. The company has invested INR160.22 crores in the form of equity and sub debt for which the company has received INR136.81 crores against the transfer of 49% of equity stake, and the repayment of entire sub debt as on 31st December, 2021.

The company has now received INR68.13 crores, against the transfer of remaining 51% of equity stake. In addition to the — amount the company shall be eligible to receive an additional consideration up to INR14.05 crores, subject to receipt of certain approvals from NHAI.

Number two, KNR Shankarampet Projects Private Limited. The company has invested INR126.81 crores, in the form of equity and sub debt, for which the company has received INR1,851 [Indecipherable] crores, against transfer of 49% equity stake and repayment of entire sub debt on December 31st, 2021. And now the company has received INR46.09 crores, against the transfer of remaining 12% equity stake. In addition to the above the company shall be eligible to receive an additional consideration up to an amount of INR4.61 crores, subject to the receipt of an approval from NHAI.

Three, KNR Srirangam Infra Private Limited. The company has invested INR78.36 crores in the form of equity and sub debt, for which the company has received INR1.15 crores, against transfer of 100% of equity stake, and repayment of entire sub debt during the current transaction.

In addition to above, the company shall be eligible to receive an additional consideration up to an amount of INR15.40 crores, subject to receipt of certain approval from NHAI. With the sale of the above three companies, the company has accounted profit of INR137.97 crores, which was shown as an exceptional item and an amount of INR27.47 crores, has been shown under the provision of tax for the above properties.

With respect to the search operation conducted by the Income Tax Department, Under Section 172 of the Income Tax Act 1961 in March 2022, the assessing officer has initiated the proceeding for reassessment of income, as is relevant for each financial year from 2016, ’17 to 2021 to ’22.

Further, based on the deliberations with the assessing officer and an approved administer, the company has made a provision of INR24.75 crores, towards provision for income tax at INR9.45 [Phonetic] towards interest on income tax for the above said years. The percentage of physical progress as of December 31, 2022 for HAM project is as follows.

Magadi to Somwarpet at 68.9%. Oddanchatram to Madathukulam is 85.6%. Valanchery to Kappirikkad is 16.8%. And Ramanattukara to

Valanchery is 14.3%. The company has received the appointed date as on 25th January, 2023 for Chittor-Thatchur highway.

During the quarter, the execution has primarily been driven by HAM projects out of the INR772 crores is — are for revised equity requirements for all the HAM — five HAM projects. The company has already invested INR293.13 crore as on December 31st, 2022. The incremental equity requirement of INR77.98 crores to be infused, INR256.06 crores, and INR96.70 crores were remaining for the financial year FY ’23, FY ’24 and FY ’25 respectively.

You can prefer the slide number 24 of the investor representation for detail on each HAM project. The toll collection for the Bihar project that is, Muzaffarpur, Barauni. In Q3 FY ’23 and nine months ended FY ’23 has been INR11.6 crore and INR33.5 crores.

Now coming to the order book position. As of December 31st, 2022, the company has an outstanding order book position of INR8,100 crore. EPC road projects and HAM projects constitute 77% for the total order book, while irrigation project constitute remaining 23%. Clientwise, 51% of the order book is from third-party clients, and balance 49 is from captive HAM projects. The third-party order book or non-captive order book, which accounts for 51% of the total order book position is queued between state government contracts with 36%, whereas 11% is from central government and balance 4% of the order book is from other private players.

The current order book position remains healthy and provides a clear visibility of execution over a period of next two and half years. A robust project pipeline, and a ready DPR, detailed project reports under the Bharatmala project should accelerate the project awarding activity going forward. The company is targeting a further order inflow of INR4,000, to INR5,000 crore for the financial year 2023.

I will now request Mr. K. Venkata Ram Rao, our GM to present the results for the quarter, and the nine months ended December 31st, 2022. Over to Venkata Ram.

K. Venkata Ram Rao — General Manager, Finance and Accounts

Thank you, sir. Please note that Q3 and nine months FY ’23 standalone, as well as the consolidated number includes. And let me take through the Q3 and nine month FY ’23 standalone financial performance first, followed by the consolidated highlights.

I will start with quarterly highlight first. The revenue for the quarter grew by 8% year-on-year to INR830.2 crores. EBITDA for Q3 FY ’23 remained flat at INR156 crores, as compared to INR158.9 crores in Q3 FY ’22. EBITDA margin of Q3 FY ’23 stood at 18.8%. Net profit for the quarter was INR161.8 crores, as compared to INR100 crores in Q3 FY ’22, a growth of 61%.

Now coming to nine months FY ’23 highlights. The revenue for nine months FY ’23 grew by 14% year-on-year to INR2,568.2 crores. EBITDA for nine months FY ’23 witnessed a growth of 9% to INR509.8 crores as compared to INR469.7 crores in nine months FY ’22. EBITDA margin in nine months FY ’23 stood at 19.9%. Net profit for nine months FY ’23 was INR370.2 crores, as compared to INR269 crores in nine months FY ’22.

Now coming to consolidated financial performance. I will start with the quarterly highlight first. The company recorded a 2% year-on-year growth in total revenue for INR854.6 crores in Q3 FY ’22 to INR874.9 crores, in Q3 FY ’23. EBITDA came in at INR196.8 crores in Q3 FY ’23, as compared to INR139.6 crores in the same-period last year. EBITDA margin in the current quarter stood at 22.5%. Profit after tax stood at INR108.3 crores in Q3 FY ’23.

Moving on nine month FY ’23 highlights. The revenue for nine months FY ’23 grew by 13% year-on year to INR2,817 crores. EBIDTA for nine months FY ’23 witnessed a growth of 29% to INR671.4 crores, as compared to INR519.8 crores in nine months FY ’22. EBITDA margin in nine-month FY ’23 stood at 23.8%. Net profit for nine month FY ’23 was INR297.7 crores, as compared to INR225.7 crores in nine months FY ’22.

Now, moving to the standalone balance sheet. The company continue to maintain a strong balance sheet. The working capital debt stood at 53 days compared to 54 days in September ’22. The standalone debt as of 31st December, ’22 is nil crores compared to around INR200 crores as of 30th September, 2022. The consolidated debt as of December 31st, 2022 is INR456 crores, as compared to INR1,864 crores as of September 30, 2022.

The net-debt-to equity as on consolidated basis as of December 31st, 2022 stand at 0.17 times as compared to 0.74 times as of September 30, 2022.

With this, we can open the floor for question-and-answer.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] First question is from the line of Mohit Kumar from DAM Capital. Please go ahead.

Mohit Kumar — DAM Capital — Analyst

Yeah. Good afternoon, sir.

S. Vaikuntanathan — Vice President, Finance

Yeah, good afternoon.

Mohit Kumar — DAM Capital — Analyst

Two questions from my side sir. First is on the irrigation project receivables, if I remember the number correct, it was INR9 billion at the end of September ’22. And we understand the lenders who released money for irrigation and it has come down. Can you just let us know the receivables at the end of Q3? And when do you expect the entire thing to get liquidated?

K. Venkata Ram Rao — General Manager, Finance and Accounts

So, but the receivables as of today is around INR650 crores, including receivables as of 31st December, work done, but not at 35. So out of INR650 crores, INR335 crores is receivables as of December and around INR315 crores is work done, but yet to be certified. So definitely from whatever these figures are there in September, it is INR900 crores, now reduced to INR650 crores actually by end of December.

Mohit Kumar — DAM Capital — Analyst

Understood, sir. And are we — have we started the work on irrigation project. I think this quarter was very muted, can we expect it to go up?

K. Venkata Ram Rao — General Manager, Finance and Accounts

Yeah, actually, definitely, there was issue in the Vattem project, now that clearance has come and now we have started with the work on this, our Vattem project. As far as our other irrigation sites are there,e that is packaged food. Now we are doing the work in very fast pace. Only now almost all civil structures work we have almost completed. Now we have to build that pump house work for that we have to bought the automatical equipment. For that we are already tying with the BHEL to get it and hope that in next year actually in ’24 actually FY ’24 we should be able to complete that work also.

Mohit Kumar — DAM Capital — Analyst

Got it. Happy with the money available with the government. Is the government regular in paying the money now? Are you seeing — are you comfortable with that?

K. Venkata Ram Rao — General Manager, Finance and Accounts

Sir, as far as package four is concerned, [Indecipherable] it is already funded by the bank. And almost in last quarter we got INR350 crores actually in that project itself only. So definitely money is there actually, as of now for the package four. So we are really not seeing any issue as far as package four is concerned.

But definitely this Vattem package and other package for like package three, it is budgetary support. So that we have to really see because almost government has promised that they will pay actually everyone INR50 crores. So only the last month we have not got, but before that we got all the money as you know from the department.

Mohit Kumar — DAM Capital — Analyst

Understood. Second question on the order inflow, sir. Of course, order inflow for the nine month was very, very muted. What is like pipeline looking for us? Apart from NHAI is there any order, is there any other pipeline which is available to us?

K. Venkata Ram Rao — General Manager, Finance and Accounts

Jalandhar sir, you want…

K. Jalandhar Reddy — Promoter and Executive Director

Yeah. Sir, actually average price is very poor, which I agree because market is very aggressive. Every busy tender is clocking below 30%, 32%, 35% has that been those levels. I think we’re going to understand how to do the project at that cost. Definitely there is some sort of aggression is there. And maybe we have seen many projects who have quoted less and they failed also. After having this experience, definitely, we don’t want to pitch into those levels and land into problems for the future.

But however, sir, we have targeted almost this coming month there are almost 22 tenders, which we are doing in March only. And this month we are not less than 10 to 12 bids we are submitting. So there — every effort is being done to take some orders. But we can only give a sensible price, but we cannot give you a price which is a winning bigger and later it’ll land us in problem. So that’s how the things are there. But I think sir, there are players which are — who are understanding, but by the time, there are new players who are also coming in and then they’re taking a bad price kind of that. So there is every example, who have quoted less they have suffered. But people still are traveling in the same route. So I think, if you target something in coming two, three months, it will be little bit tougher to get projects. Later stage things may become little normal, that’s what we are estimating here.

Mohit Kumar — DAM Capital — Analyst

Anything apart from NHAI sir is available?

K. Jalandhar Reddy — Promoter and Executive Director

Pardon, sir?

Mohit Kumar — DAM Capital — Analyst

Anything other than NHAI, road, is there anything else you’re targeting in Q4, something, irrigation, water? W

K. Jalandhar Reddy — Promoter and Executive Director

We will focus on — continues to focus on irrigation projects, but the pipeline is very limited here. Bidding scope is very limited. But anyhow we will put on the efforts there. And partially we are in line to discuss with the joint venture partner for our railway’s entry also. I think it is not yet successfully done. So I think sooner, once we get on to that clarity please, we’ll let you know on that, sir.

Mohit Kumar — DAM Capital — Analyst

Understood, sir. Thank you and best of luck, sir. Thank you.

K. Jalandhar Reddy — Promoter and Executive Director

Thank you.

Operator

Thank you. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.

Shravan Shah — Dolat Capital — Analyst

Thank you sir. Sir, just continuing the previous question. Reddy, sir, these 22 tenders that we are looking to bid next month, March and 10 to 12 bids that we are looking to submit this month, what is the value and how much is the HAM project’s index? And the number that we are targeting INR4,000 crore to INR5,000 crore inflow, so that entirely is from the HAM that we are looking at?

K. Jalandhar Reddy — Promoter and Executive Director

Sir, actually, the HAM proposition is more sir. But even some — most projects like — but the ticket sizes have become very small. As you are asking rightly that what is the overall size and all, but the projects are varying from INR500 crores to INR700 crores, INR900 crores, INR800 crores, even INR1,100 crores are there as a bigger ticket size. That’s it in this slots.

Shravan Shah — Dolat Capital — Analyst

Okay.

K. Jalandhar Reddy — Promoter and Executive Director

So, that is a major problem, sir. And the proposition between HAM and EPC, HAM are in more in number, sir.

Shravan Shah — Dolat Capital — Analyst

Okay. No, sir. Why I was asking, I was trying to understand is, as you are saying the ticket size is INR500 crore, INR700 crore, so if I just put 22 plus 10, 32, 34 tenders, so closer to INR17,000 crore, even if I average at INR500 crore. So I was just trying to understand the value, so, in terms of the success rate for us to bag the INR4,000 crore, INR5,000 crore. So in that sense I was trying to understand.

K. Jalandhar Reddy — Promoter and Executive Director

Sir, actually this year, I mean March, if I’m happily getting around INR2,000 crores, also, I’m very happy. Even if I don’t get also — if I don’t get a bad price, that is good, that is a major thing. So whatever I get there at good price, I should target for. I have no target that I should get before March only, but I will keep on putting on these bids, sir. But actually the bids are available in ’22 numbers, but whether the bidding is going happen for all these tenders, which I am really doubtful because, they’ve been getting postponed, postponed. I think it is now close to March. But another push up postpone event is not happening then it will definitely happen in the March, sir.

Shravan Shah — Dolat Capital — Analyst

Okay. And the other is in terms of the execution part, so for particularly the larger one I’m trying to just understand. So two Kerala HAM projects, so in nine months we have done close to INR431 crore revenue, and current outstanding order book is INR2,822 odd crore. And we were looking at to complete by next March. So, now 15 months to complete. So just trying to understand, what kind of revenue we are looking in the fourth quarter and are we able to complete by March 24th, this INR2,800 crore order for the two Kerala HAM project?

K. Jalandhar Reddy — Promoter and Executive Director

The Kerala HAM project as of now, there’s a lot of time loss due to heavy rain. That is the major problem we faced, rain from April to December. Even in December 10 days we had rain, sir. So after December, I think one, one and a half months only the progress has happened. And

However, there had been certain problems that [Technical Issues] on school hours we should not work, during school hours we should not work and then they say night working, they stopped, for us, all these. Now we have gone to CM. CM has promised us that to get the timing cleared for us, so we’ll get more working period. So if that is started out, sir, definitely we will go everything on target. That’s the major thing we are facing there. And yesterday, I think last Thursday — Tuesday I was there in NHAI, and I had a clear-cut discussion with Chairman sir. Chairman sir also has put his DO [Phonetic] letter to CM and things are being perceived at very higher level, sir.

Shravan Shah — Dolat Capital — Analyst

Okay, okay. Got it. And on the irrigation project, so whatever, we are having a balance. So package four, sir mentioned that, Venkat sir, that by March ’24, we will be able to complete. So out of that remaining Vattem INR290 odd crore, and, package three so how much revenue are we looking at in this fourth quarter, and when we can see this to be completed?

K. Jalandhar Reddy — Promoter and Executive Director

Sir actually, [Indecipherable] and sir, whatever the discussion we have done, at least we’ll try to achieve the last year figures that got together trying on this best is that. Because, rainy season was very heavy in this quarter, second and third quarter completely, we have affected with this. So little bit bullishness is not there in these top line numbers, but however, the next year concerned, I think may not be so much rainy season to be there. Definitely, we’ll do our best in this, sir.

Shravan Shah — Dolat Capital — Analyst

But broadly, sir, in terms of the Vattem INR290 crore remaining, when do we see to get complicated in fourth quarter? How much are we looking at? And the package three, which is INR871 crore. So how much are we — sorry, INR550 crore, how much are we looking to book any revenue in fourth quarter and in FY ’24, how much are we looking to book the revenue from this.

K. Jalandhar Reddy — Promoter and Executive Director

Sir, that main thing, sir, MD sir and me both have discussed about this, that, before election we would like to complete this. However, subjected to realization of the payments also is a big concern because, now that Kerala projects and all other projects are under running stage, wherein equities are likely to come out. So there, we do not want to take a chance by — for one project knocking effort should go on the other project. So we would go our limit — limited investments into these projects and try to balance the situation, sir.

So it depends on how state government cope ups to give up the payments. That is the major consent here, sir.

Shravan Shah — Dolat Capital — Analyst

Okay. Last Venkat, sir, two data points. What is the console cash and what was the irrigation revenue third quarter and nine month?

K. Venkata Ram Rao — General Manager, Finance and Accounts

That irrigation revenue in Q3 was — that is around 23%, comes to INR190 crores, and for nine months it is around 25%, comes to INR620 crores.

Shravan Shah — Dolat Capital — Analyst

Okay. And console cash balance?

K. Venkata Ram Rao — General Manager, Finance and Accounts

Because standalone cash is INR125 crore and console cash. Shravan that data I will send you separately.

Shravan Shah — Dolat Capital — Analyst

Okay. No, issues, no issues. Thank you and all the best, sir.

K. Venkata Ram Rao — General Manager, Finance and Accounts

Okay, thank you.

Operator

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

Alok Deora — Motilal Oswal — Analyst

Good afternoon, sir. Sir, some of the questions have been answered. Just wanted to understand like the order inflow again on the order inflow, so it’s been really muted. And out of the INR8,000 crore significant, decent chunk is of irrigation, which is moving slow. So what kind of growth now we are looking at for FY ’24? And also you mentioned that the intensity of bidding continues to be very aggressive. So how confident we are on getting these INR4,000 crore, INR5,000 crore of orders in the next almost only one and a half to two months are left.

S. Vaikuntanathan — Vice President, Finance

Jalandhar sir?

K. Jalandhar Reddy — Promoter and Executive Director

Yeah, yeah. Sir, actually probability of getting the INR4,000 crores is little bit as of now too seems to be little bit challenging. I can’t really say that. And see, sir, the main problem is that, the margins are at stress and all which — those calls we have never taken in our company side. Rather we are ready to little bit scale down ourselves for some time. And certain risky times, it is not wise that you go — you try to go for a qualitative top line, but decreased bottom lines are not acceptable to us.

So definitely — see, we are doing a business for making some good profits. It’s not that — and sir, nowadays all the highways are coming with lots of responsibility of maintenance also. So definitely we have to see that long-term benefit and then go forward only, otherwise we are likely to have lot of problems in future.

So this is the time where we should take right calls and do not come into pressure for — coming any of the — the market is also is going to realize in very short time about all this. Only newcomers who are coming they are only quoting with little bit lesser and they’re taking. Otherwise, where prominent players who are there, they have already come down to the normal levels for bidding. So only the newcomers and all their appetite also let it quit over.

I think it may take another couple of three, four months — to three, four months, I’m expecting the market to be little bit volatile like this. Then after that it would be normalized. That is what we are expecting, sir. However, we are also making our trials in irrigation plus railways, even we’ll try in some of the bids in metros. That’s what we are planning, sir.

Alok Deora — Motilal Oswal — Analyst

So have we bid for any of the other sectors or it’s still at the planning [Speech Overlap]

K. Jalandhar Reddy — Promoter and Executive Director

As early said sir, we are starting some joint venture for our railway’s entry. And we are even trying to sort — actually we have discussed quite a lot with two, three joint venture partners. As and when the things are materialized, then definitely we will come out and inform you, sir.

Alok Deora — Motilal Oswal — Analyst

Sure. Just the last thing. So sir, — so realistically speaking, you might end up winning INR2,000 odd crore of projects this year, as in, in the remaining part of this year. And then again, next year first half will be muted because, that’s a very slow time for order winning, order awarding. So your order book will be very at — very critical stage, right? I mean considering the execution, which we are doing by end of September ’24, FY ’24 I think it would be very — will be at a very critical stage.

K. Jalandhar Reddy — Promoter and Executive Director

Yes, sir. I think it seems like that, but definitely, it’s not that market is always going to be like this. Hopefully, things will become better and we’ll be able to take orders what we need. Second, that is a new area entry also may give us little bit doubt of this. Sure, sir. All the best. Thank you. Thank you.

Operator

Thank you. The next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.

Parikshit Kandpal — HDFC Securities — Analyst

Hi, Jalandhar, sir.

K. Jalandhar Reddy — Promoter and Executive Director

Hi.

Parikshit Kandpal — HDFC Securities — Analyst

Yeah. Hi. My first question is on the irrigational project. So when do you expect to complete these entire order book because, I think elections will be somewhere around the end of this year. So what kind of timeframe you’re looking to complete this project?

K. Jalandhar Reddy — Promoter and Executive Director

Sir, actually the target we made is that to complete all these before election because, after elections we do not know what set of calls will be taken by people and what sort of things we’ll have to address. So definitely it is better you finish everything before elections, for which we are gearing up and trying to finish the things. But, again, the concern is about having those in time, that is if I get payment on that, definitely I’ll [Indecipherable] That’s what the plan is, sir. Maybe some positive, I may go a little bit late but…

Operator

I am sorry to interrupt you, Mr. Reddy, but we are unable to hear you, your voice is sounding from a distance sir.

K. Jalandhar Reddy — Promoter and Executive Director

Yeah. Hello?

Operator

Yes.

Parikshit Kandpal — HDFC Securities — Analyst

Yeah, yeah please go ahead, sir.

K. Jalandhar Reddy — Promoter and Executive Director

Yeah, actually that’s what the scenarios are. If I get payments on time, definitely I’m going to do it.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. The second question is on the NHAI pipeline. So you did mention about some 10, 12 days, you’re submitting tender, in coming month some 22 tends are coming. So, if you can highlight these 32 or 30 or 32 bids, these are largely big geographies of South India. And also if you can highlight what is the overall pipeline for NHAI till March? So that would be helpful to understand whether it is going to reduce from last year or it will be similar.

K. Jalandhar Reddy — Promoter and Executive Director

I couldn’t get that question, sir actually.

Parikshit Kandpal — HDFC Securities — Analyst

So you have said that about 30 — 22 tenders, you are coming in this month, upcoming month, and about 12 bids you are already submitting. So I wanted to understand, these bids are which you’re submitting largely in South India, right? Because of the geograhical focus in these four South states?

K. Jalandhar Reddy — Promoter and Executive Director

Yeah, that’s correct. The focus is on focused states only. Because…

Parikshit Kandpal — HDFC Securities — Analyst

Yes, sir, my question is… [Speech Overlap]

K. Jalandhar Reddy — Promoter and Executive Director

Pardon?

Parikshit Kandpal — HDFC Securities — Analyst

My question is, what is the total bid pipeline until March, if you can help us understand what is the total process… [Speech Overlap]

K. Jalandhar Reddy — Promoter and Executive Director

Pipeline is very big, sir. I think it’s around INR35,000 crore is there in pipeline. But I’m focusing the 22 bids in coming period.

Parikshit Kandpal — HDFC Securities — Analyst

And what will be the value of those 22 bids, sir, out this INR35,000 crores of pipeline?

K. Jalandhar Reddy — Promoter and Executive Director

I have not — fully calculated all that, but, the bids are varying from INR500 crores to INR1,100 crores, sir. Bid sizes. So roughly around say, I can say around I’m focusing about INR17,000 bids to be done, kind of that, rough figure.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. So out of INR35,000 Pan India based, you’re targeting about half of that, so largely focus will be South Indian market.

K. Jalandhar Reddy — Promoter and Executive Director

Currently, I’m continuing to resign from North India and Northeast part of India as the project — bid sizes are very small and competition is very heavy there. So if I get a bigger size — ticket size in North and Northeastern part of India, I’m likely to focus on that.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. And just one question on this income tax provision, sir. So we have generally seen that, the GST, this GST input credit triggering lot of income tax rate, and the entire supply chain, some of the vendors are not paying, and then ultimately results into income tax rate. So you have booked for provisioning for this. So any issue regarding these GST related dues, which may come on us on later dates?

K. Jalandhar Reddy — Promoter and Executive Director

No, no. As far as the income tax is concerned, sir, that assessing officer has initiated the processing. And when we have a discussion with that actually, so we assume we, as a prudent measure, we thought that this much provision is required to make that liability may arise. So that’s why as a prudent practice, we have made this.

As far as GST is concerned, there is no such issue on that. As far as GST is there, everything is in campaign and we are paying the GST, and what are the credits we are getting in the books, it is all — we are — it is — everything is regulated. There is nothing issue as far as GST is concerned, sir.

Parikshit Kandpal — HDFC Securities — Analyst

And lastly, sir any donations made during this quarter?

K. Jalandhar Reddy — Promoter and Executive Director

No, no, no, we have not made any donation.

Parikshit Kandpal — HDFC Securities — Analyst

Nine months?

K. Jalandhar Reddy — Promoter and Executive Director

Nothing, nothing. Might be small donation will be there to our this some trust like that small dimension, not a donation to any that political party or like that, nothing is there.

Parikshit Kandpal — HDFC Securities — Analyst

Okay, sir. And lastly just guidance for FY ’24, so how do you — I mean you said that FY ’23 largely is in line with FY ’22 revenues. So in FY ’24, what kind of growth you’re looking at on the current order book?

K. Jalandhar Reddy — Promoter and Executive Director

FY24 we are looking for around INR4,000 crores of top line as of now. In FY ’23 we expect that we could be able to close somewhere INR3,000 crore, INR3,500 crore actually. So FY ’24, we are looking around INR4,000 crores of top line.

Parikshit Kandpal — HDFC Securities — Analyst

INR3,500 crore in ’23 and INR4,000 in FY ’24, right?

K. Jalandhar Reddy — Promoter and Executive Director

Yeah, yeah.

Parikshit Kandpal — HDFC Securities — Analyst

Thank you and wish you all the best. And just sorry, sir, just one last on irrigation. So can we expect now that the worst of realization collection issues or the payment issues is now behind us and we do not see any major upswing in the debtors in the coming quarters?

K. Jalandhar Reddy — Promoter and Executive Director

Yeah. I think the payments are now streamlined and then we hope that the package four payment should — because all the banks have started releasing, and we also started establishing ALCs [Phonetic] in favor of BHEL. And work is now started moving fast.

And other payment, as per the budgeted payment, they have promised to release on monthly basis, which we expect the sale will continue, and we are also requesting them to increase the contribution. And as far as NHAI is concerned, there is no problem. We are getting payment in time. And having that all on standalone debt to equity — debt ratio is nil only, we don’t know any debt on standalone basis.

But we are — as our VP was telling, we are watching the situation so that at least we should bid project in a profitable manner. See taking the project is not the main criteria. And we should take the projects in a profitable manner that, I think these things may also work out because the NHAI also trying to change the standard and all, but it’s taking time, it’ll come.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. Okay, sir. Thank you and wish you all the best.

K. Jalandhar Reddy — Promoter and Executive Director

Thank you.

Operator

Thank you. The next question is from the line of Rahul Reddy [Phonetic] from Reddy Investment [Phonetic] Please go ahead. Mr. Reddy, please go ahead with your question, your line is unmuted. As there is no response from the participant, we’ll move to the next question, which is from the line of Faisal Hawa from H.G. Hawa and Company. Please go ahead.

Faisal Hawa — H.G. Hawa and Company — Analyst

Yeah, is it not time to move on to something which is much more complex as far as infrastructure is concerned? And maybe lot of smaller players are able to catch our hand in NHAI, where balance sheet was previously the only differential. So would it not be more feasible for us to go to — go for something like BOT projects, where the competition is much more limited or probably something which is more complex to do as far as engineering is concerned?

K. Jalandhar Reddy — Promoter and Executive Director

Yes, sir. You’re right. It’s a right time that we should start looking into some other areas, where like railways and irrigation still I’m looking at. And other parts concerned, toll projects are definitely — there is lot of [Indecipherable] cry there, and concession agreement is also not that favorable to the bidders. If it is compulsion, I’ll give a last choice to that if I’m unable to get any of the orders from any of these and readily I’ll look at those sector work also.

But, right now, I think my gut feeling is that, I think coming four, three — three to four months’ time or four to five months’ time, we shall be having a comfortable order book online, I think on hand, I would say.

Faisal Hawa — H.G. Hawa and Company — Analyst

Because see, one thing is appreciated that, we don’t want to work at lower margins and that is something which is so appreciable about any management. But they value their work and they value themselves. But here it’s now looking very clear that people will keep on creating — committing suicide by quoting lesser. And we must be able to upgrade ourselves to really keep company growth at a good level. Because from the last two to three years, our top line has not really grown appreciably. But to your credit, you have kept the balance sheet in absolute good order and in fact, we are now cash positive rather than even having any debt on our hand. So I mean, we are totally supportive of the management and — but I think it’s probably now time to really up our games to something which is much more complex.

K. Jalandhar Reddy — Promoter and Executive Director

Yes, that’s what. Actually management is also looking keenly in railways and what is happening in metros and all that places we are looking at. See irrigation concerned, it’s just having a little bit higher margins than, highways. But once we go to railways, I think still there is a healthy margin in railways. So definitely sir, we will, start out the joint venture issues and get into those sectors also, and it’s a complete engineering work, mechanical work, definitely we will be able to cope up and successfully go with that.

Faisal Hawa — H.G. Hawa and Company — Analyst

Okay. Thanks a lot.

K. Jalandhar Reddy — Promoter and Executive Director

Yeah, that means — I mean to say that we are really giving a thought for entering into other sectors, to make ourselves comfortable and to keep our growth to be on continuous.

Faisal Hawa — H.G. Hawa and Company — Analyst

Thank you, sir.

K. Jalandhar Reddy — Promoter and Executive Director

Yeah.

Operator

Thank you. The next question is from the line of Shreyans Mehta from Equirus. Please go ahead.

Shreyans Mehta — Equirus Securities — Analyst

Yeah, uh, thanks for the opportunity. Sir, what is our strategy for monetization of the balance HAM projects? Will it be similar to what we have done or are we targeting any other strategy? That’s one.

Second on, as far as railways is concerned, what kind of work are we looking at, and will we be open to taking projects from the railway PSUs or we’ll be directly dealing with the Indian Railways?

K. Jalandhar Reddy — Promoter and Executive Director

With regard to the future, whatever the HAM projects on hand, see the management view or the policy of the company is that, we don’t want to accumulate projects or keep it in hand. So we will take right decision at the time and, lot of inquiries are coming and we are also assessing those inquiries. And we will be working on some of these and some other things. As and when there is a progress we’ll definitely let you know.

Shreyans Mehta — Equirus Securities — Analyst

Sure, sure. And on the railways?

K. Jalandhar Reddy — Promoter and Executive Director

WIth regard to the railways as our AD [Phonetic] was pointing out, they’re trying to find out some joint venture partners so that we can directly bid for the projects. So we have to have an entry-level so that we can bag more orders in the future. And a right partner is very essential at this stage. So that’s being worked out and that’s also in the progressing stage. It’ll be — we’ll definitely inform the development.

Shreyans Mehta — Equirus Securities — Analyst

Got it. And lastly, in terms of our capex, what’s the guidance for FY ’23 and ’24 and what we have done till date?

K. Jalandhar Reddy — Promoter and Executive Director

Till date actually we did capex of around INR110 crore, in FY ’23 we expect it’ll close somewhere between INR140 crore to INR150 crores. And next year definitely capex requirement will — because this will take care of entire whatever the existing projects are there. And next year capex requirement depend upon when we’ll receive this project actually. So if we receive some project then definitely in Q3, then next year will be capex I”m doing the same range of around INR150 crore. Otherwise, it may — depends upon when we receive that project.

Shreyans Mehta — Equirus Securities — Analyst

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

K. Jalandhar Reddy — Promoter and Executive Director

Thank you.

Operator

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

Bharanidhar Vijayakumar — Spark Capital — Analyst

Yeah. Good afternoon, sir. What is this progress on NHAI’s proposal to reduce their contribution from 40%…

Operator

I’m sorry to interrupt you Mr. Kumar. We are unable to hear you. Can you please check?

Bharanidhar Vijayakumar — Spark Capital — Analyst

Is it better now?

K. Jalandhar Reddy — Promoter and Executive Director

It is better, yeah.

Bharanidhar Vijayakumar — Spark Capital — Analyst

Yes, sir. I was, trying to understand what is the status of the NHAI’s proposal to reduce their contribution from 40% to 20% on the HAM project.

K. Venkata Ram Rao — General Manager, Finance and Accounts

It’s still in the discussion stage only. We have a lot of — the NHAI also is getting lot of pressure not to reduce. And they’re also taking some time. Generally, it was indicated that they will start the process. But going forward we have to wait for that because of the coming election year and all of that, they will take up this aspect and all. So we are also waiting for that. So far what are the dropped concession agreements are there, it is not modified as of now. So what are the bids is there till March actually, so we have seen that old classes is still coming actually. There is no change in the dropped DC as of now.

Bharanidhar Vijayakumar — Spark Capital — Analyst

Okay. Because, this would have resulted in competition reducing a little bit but since it’s not… [Speech Overlap]

K. Jalandhar Reddy — Promoter and Executive Director

We expect that it should come early, but so far it is not coming up.

Bharanidhar Vijayakumar — Spark Capital — Analyst

Okay. So in your discussions with NHAI what are the thinking process or what are you thinking to address this aggressive bidding, because just simply remember back in 2018, similar things happened when just to complete awarding their targets, lot of projects were awarded, inexperienced players took up projects, financial projects took time and then projects got terminated. I mean from what commentary I can hear from Jalandhar sir telling looks like we’re going down the same path, like, why would NHAI allow it to happen, what are they thinking in your view to address it?

K. Jalandhar Reddy — Promoter and Executive Director

Sir, actually really these concerns are not being taught by NHAI because they’re happy and they’re getting 30 low bids — 30% low bids, and they’re, really enjoying the situation of saving so much for NHAI. But as of now…

Bharanidhar Vijayakumar — Spark Capital — Analyst

Sorry, I think your voice got dropped.

S. Vaikuntanathan — Vice President, Finance

Your voice dropped.

K. Jalandhar Reddy — Promoter and Executive Director

Yeah, I really was pointing out the — yes, any practical steps have not been taken up by NHAI till now. And now I think going forward, the NHAI has got only five, six months time left before that they should complete their order book provision and afterward they cannot come out with the order. So we have to wait for that.

Bharanidhar Vijayakumar — Spark Capital — Analyst

You mean the entire 14,000 kilometer left in Bharatmala soon to be awarded in the next five to six months?

K. Jalandhar Reddy — Promoter and Executive Director

We have to think — we have to — it’s fully in task. But the statements coming from them is they’re going to do, they’re going — we have to wait for that.

Bharanidhar Vijayakumar — Spark Capital — Analyst

So does that mean March 2023 that is next month you’re going to see a very large amount of order — ordering activity and the order inflow for players, just like how we saw one year before election in 2018?

K. Jalandhar Reddy — Promoter and Executive Director

Yeah, that is being said like that only. So we are also waiting for that. And they’re also — name of the project is also announced, but we have to wait for that till the bidding is open or finally come out.

Bharanidhar Vijayakumar — Spark Capital — Analyst

Right, okay. My final question is on the lower margins company saw in the third quarter, any specific reason?

K. Venkata Ram Rao — General Manager, Finance and Accounts

Actually — for this year actually, we are already telling that due to this input price pressure actually, if you see last three quarters actually we, could able to do between 18% to 19% of our EBITDA, previously different it was than even 20%. So now we expect that now input price should be stabilized, then we can attain that our same EBITDA previously what we are telling. So there is some pressure in the input prices, that’s why that margin is slightly reduced, but we hope that once this price was stabilized, we could be able to achieve that.

Bharanidhar Vijayakumar — Spark Capital — Analyst

So maybe from fourth quarter or will it take more time?

K. Venkata Ram Rao — General Manager, Finance and Accounts

We have to see actually, because right now when that RBI increase the interest rate, so how it will impact in the inflation if inflation is still controlled. So definitely we could able to match it from the quarter four onwards.

Bharanidhar Vijayakumar — Spark Capital — Analyst

Sure sir. Thank you and all the best.

K. Venkata Ram Rao — General Manager, Finance and Accounts

Thank you, thank you.

Operator

Thank you. The next question is from the line of Vasudev from Nuvama. Please go ahead.

Vasudev Ganatra — Nuvama Wealth — Analyst

Yeah. Thank you for the opportunity, sir. So most of my questions are answered. Just one thing on, what is the status of payments with Telangana Government?

K. Jalandhar Reddy — Promoter and Executive Director

Sir, as I already informed around INR650 crores of both debtors as well as unbilled is pending. So last quarter we received around INR450 crores actually. And this quarter with the addition of work it has last — as of September, it was INR900 crores now reduced to INR450 crores — INR50 crores and further work done which is increased to INR650 crores. So definitely payments are there as far as package four is concerned, which is already funded by the bank.

There is no payment issue is there, as far other project is there, like Vattem and package three, which is budgetary support. So definitely based on the government, what they’ve promised that they will release quantum of money every month. So based on that, we expect that money should be realised actually by March. So what are the receivables out there, old receivables should be closed by March.

Vasudev Ganatra — Nuvama Wealth — Analyst

Okay, sure sir. Thank you.

Operator

Thank you. The next question is from the line of Nikhil Abhyankar from DAM Capital. Please go ahead.

Nikhil Abhyankar — DAM Capital — Analyst

Thanks for the opportunity, sir. Most of the questions are answered, but can you just give the inventory level versus payable retention money and all the [Indecipherable] bookings.

K. Venkata Ram Rao — General Manager, Finance and Accounts

Yeah. Inventory as of 31st December is INR187 crores, inventory is there. And residential is around INR241 crores as of December ’22. And actually Shravan asked about console, so console cash is as of 31st December is INR145 crores actually.

Nikhil Abhyankar — DAM Capital — Analyst

Okay. So receivables, unbilled revenue, payables and mobilization number?

K. Venkata Ram Rao — General Manager, Finance and Accounts

Receivables is total INR627 crore sir. So out of that INR335 crores is irrigation receivables and INR267 crore is in receivables. As far as mobilization advance is concerned, it is INR134 crores as of December. And what you asked also?

Nikhil Abhyankar — DAM Capital — Analyst

Sir, the unbilled revenue and trade payables,

K. Venkata Ram Rao — General Manager, Finance and Accounts

Unbilled revenue is INR490 crores and trade payables is INR211 crores.

Nikhil Abhyankar — DAM Capital — Analyst

Thank you. That’s all for me.

K. Venkata Ram Rao — General Manager, Finance and Accounts

Okay. Thank you.

Operator

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

Jiten Rushi — Axis Capital — Analyst

Yeah, good afternoon sir. Thank you for taking my question. Sir, on the railway side, what type of projects you are looking to build for?

Operator

Mr. Rushi sorry to interrupt. May we request you to speak a bit louder?.

Jiten Rushi — Axis Capital — Analyst

Yeah, can you hear me now?

Operator

Yes, please go ahead.

Jiten Rushi — Axis Capital — Analyst

So, yeah, so Reddy sir good afternoon, sir. Just my question was on the railway project. So we are looking to partner with — we are looking to partner. So what kind of work we are applying to do with the JV partners?

K. Venkata Ram Rao — General Manager, Finance and Accounts

Jalandhar sir is — I think Jalandhar sir line is…

K. Jalandhar Reddy — Promoter and Executive Director

Yeah, see [Technical Issue] see normally we have all the strength in building of bridges and also the track construction. So, yeah, composite qualification of, uh, bridges and then station and track construction, we are looking at it. So that joint venture is — management is looking for different — discussing with different people. So once it is successful we’ll let you know,

Jiten Rushi — Axis Capital — Analyst

The station — would be what station building work or what…

K. Jalandhar Reddy — Promoter and Executive Director

Station building work.

Jiten Rushi — Axis Capital — Analyst

And sir, metro would be the elevated metros, we shall be talking.

K. Jalandhar Reddy — Promoter and Executive Director

We are doing say number of flyovers, which are almost equivalent to metro only. Say like, in Coimbatore we have done two big projects. Second project is going on, Salem will be completed. See metro, we are looking at — see, suppose we cannot — suppose if we work directly if the work alloted to us, and if the payments are not problem then we are looking those type of work also. And…

Jiten Rushi — Axis Capital — Analyst

So metro going independent, right?

K. Jalandhar Reddy — Promoter and Executive Director

Yeah, yeah. Independent.

Jiten Rushi — Axis Capital — Analyst

And sir, on the inflows, as was cited, we might target for INR4,000 crore to INR5,000 crore until the end of March, but these 10 bids be lower because of the competitive intent of INR82,000 crore.

So even — so my question was if we are not able to win inflows in next three to six months, so, when are we in a position to compromise on the margin and bid aggressive or we shall stick to our…

S. Vaikuntanathan — Vice President, Finance

The compromise on margin is not at all our scope of things because by compromising on margins, finally, the project will end up in NPA. That we don’t want to do that. In fact, we are having two, two and a half years’ order book position on hand. And things will improve because if you see the earlier cycle also, it was like that. The order book was — people have been quoting and we never quoted at the competitive price. We are made to wait for one, one and half years. But finally, the things have happened. So we’re waiting for things to come so that at least we can bid at a profitable level. At least, whatever — our internal working suggests that — through that action, we should work at a profitable level.

Jiten Rushi — Axis Capital — Analyst

So what kind of ticket size you’re looking for railways and metros, where competition is less? So what..

K. Jalandhar Reddy — Promoter and Executive Director

There are two things as VP was telling. Even at the INR2,000 crore order level book if we get before March, at least at a profitable level that is nothing like that.

Jiten Rushi — Axis Capital — Analyst

I’m just saying what kind of value come — in terms of value you are looking for projects in railways and metro?

K. Jalandhar Reddy — Promoter and Executive Director

So normally, sir, we are looking projects above INR700 crore and above, INR750 crores and above in HAM projects. So that will make a sense, or else we don’t want to go in these projects. And some projects are coming at INR1,500 crore, INR1,000 crore, INR2,000 crore also. If those projects are also being slated before March, we will try to bid those projects and then [Speech Overlap]

Jiten Rushi — Axis Capital — Analyst

Got it. Sir, one last question on the bookkeeping side. Sir as we have discussed the employee cost was high last year, last quarter and this quarter, so we had some payments, bonus payment. So can you just break it down, like what is the recurring employee costs and what would be the bonus for Q2 FY ’23 and Q3 FY ’23?

K. Venkata Ram Rao — General Manager, Finance and Accounts

Jiten, I will check that number and let you know. You asked me…

Jiten Rushi — Axis Capital — Analyst

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

Operator

Thank you. The next question is from the line of Saket Kapoor [Phonetic] from Kapoor and Company [Phonetic] Please go ahead.

Saket Kapoor — Kapoor and Company — Analyst

Yes, sir. Thank you for this opportunity. Sir, firstly you were articulating to the fact of higher input cost sir. So off-late sir, we have seen moderation in input cost, so could you please dwell more into it? Howe have the pricing of cost of material shaped up over the last two quarters?

K. Venkata Ram Rao — General Manager, Finance and Accounts

Jalandhar sir?

K. Jalandhar Reddy — Promoter and Executive Director

Yeah, hello? Can I get the question again, sir, please?

Saket Kapoor — Kapoor and Company — Analyst

Hello?

K. Jalandhar Reddy — Promoter and Executive Director

Hello. Yes, sir. Repeat the question, sir.

Saket Kapoor — Kapoor and Company — Analyst

Sir, you mentioned about margins being lower because of higher raw material cost which could not be passed on. So I would like to understand how the pricing of the key raw material shaped up over the last two quarters. And going ahead, how is this basket shaping up?

K. Jalandhar Reddy — Promoter and Executive Director

The major problem is with the steel and cement. First of all, we could take it today I think INR70,000, INR72,000 which is going about steel. As it was only INR57,000, INR56,000 in the last back months. I mean to say in the December and November also. But see the levels are going up in a very steep way.

Second, the fuel prices, I don’t blame much about fuel prices, because they were standing almost, INR100, INR102, INR105 all these levels certainly that is happening. So the major is with the steel and cement. As of now the cement and steel what you know, if you take the pump house work which has got lot of steel, cement component only. The major is that.

Once you go to the Kerala project, almost 55% is about steel and cement work only. I mean structures, there is a lot of flyovers and wide ducts and all are there in that. Returning wall even the drain almost I think INR600 crore worth of drain is there in that project. So all are like coming up in this shape.

So definitely there is a cost inflation that is happening over the steel and cement, and WPI is unable to support because of the — you know the problem earlier we have explained about it. And sir, if going ahead, when we are comparing, if a likewise comparison can be done with your peer, we have also said, I may be incorrect. We have found that other construction companies showing improvement in margins and, therefore, with the increased top-line the PBT levels have also improved. But in our case, even on a Q-on-Q basis also the numbers have been down.

Saket Kapoor — Kapoor and Company — Analyst

So other than that this raw material part, is it our product mix altogether that wherein we are posting lower margins and hence the lower profit?

K. Jalandhar Reddy — Promoter and Executive Director

No, actually due to last rainy season also, we suffered some late rainy season between April and up to December. As you know that almost the Kerala order book is about INR4,000 odd crores is from Kerala, which is high rainfall area. And again, INR1,100 crore was of Mangloor which is in the Karnataka so that project. So, almost around INR5,000 crore worth of contract is incomplete under rainfall zone. So as such, there is a little bit lesser progresses are also reported than expected so due to which the overhead component has gone up.

S. Vaikuntanathan — Vice President, Finance

Sir, other than this irrigation contribution also, if you see in Q1 irrigation has contributed almost 35%. In Q2 irrigation contributed at 15% in this Q3, they contributed 23%. Even last year Q3 also year-to-year, they have contributed 35%. So if you see irrigation contribution is also reduced actually for the last two years, one of this year. So that’s why when — as you know, irrigation projects have good margins actually. So ones their contribution is going to reduce in the turnover, so that’s why there is some impact in our EBITDA level, that is also one of the reason actually.

Saket Kapoor — Kapoor and Company — Analyst

Okay. And sir, going forward, sir, what portion of our order book is attributed to the irrigation segment out of the total… [Speech Overlap]

K. Venkata Ram Rao — General Manager, Finance and Accounts

Irrigation is almost INR1,800 crores irrigation projects are there. So it may not give much actually contribution to overall if suppose in overall turnover of this year also, next year also INR4,000 crores we’ll do. So irrigation may contribute maybe, around 20% only, not more than that. So that’s why that — our EBITDA what we are giving today is that, that is sustainable EBITDA, because the contribution will be — irrigation will be to that extent of between 20% to 25% max only.

Saket Kapoor — Kapoor and Company — Analyst

Okay, sir. Ad two — one more point if I…

Operator

[Speech Overlap] Mr. Kapoor, may we request you to please rejoin the queue. We have… [Speech Overlap]

Saket Kapoor — Kapoor and Company — Analyst

Yes ma’am. I’ll do that.

Operator

Thank you. The next question is from the line of Shravan Shah from Dolat Capital. Please go-ahead.

Shravan Shah — Dolat Capital — Analyst

Yeah, thank you. Sir, two points in terms of two projects. So firstly is the KC [Phonetic] project. So when we are going to complete this project? And also the Oddanchatram. So in first quarter are we able to complete this Oddanchatram HAM project?

K. Jalandhar Reddy — Promoter and Executive Director

Yeah, I’m going with it. Yes, actually the Karnataka project concerned Magadi-Somwarpet, that is almost 115 kilometers we have completed out of 164 kilometers. As of — there is no land on that. I think, whatever the land they’ve given, we are trying to complete the entire portion and we are going for PCOD that is provisional completion by this March 8. So after that, whatever the land they are giving, we would like to continue to work on that project as the margins are in line with whatever the projections we are making.

So definitely we will continue to do the work. The land part concerned, I think another one month they take to give us around 15 kilometer land which is in the forest and it is very advanced stage of granting permission to work on that project. So hopefully, we get that and there are some bypass areas where 3D is done. And I think the payment handing over to the — payment of the landowners which is happening. So that is also in bit of advanced stage.

So I think another say eight, nine months, we will be able to complete that project but PCOD we are targeting by this March end for that project, sir. Second, if you talk on that Palani project, Palani project I think in the September, October — September and we have submitted the provisional completion with 32 days of bonus also. According to original project completion date. If you take the extended days it is up to March, March end we have. So the PCOD submitted and I think it is the NHAI to get the COD for us. I think all the recommendations and everything there is some additional settlement agreement, which has been asked by NHAI, which is getting concluded in coming 10, 15 days. So after that argument, we were likely to get the PCOD on that and that is around 18.5 kilometers, which is late — recently they have given for — they have cleared the land acquisition they gave us, which is now going on. The project is going on, on about 18.5 kilometer scratch. So I think we will complete everything by May and…

Shravan Shah — Dolat Capital — Analyst

Okay, okay, got it. Sir, apart from this, let’s say if we get the bonus, is there any other project where we can — are expecting bonus in next two quarters?

K. Jalandhar Reddy — Promoter and Executive Director

No, sir, as of now there is no other bonuses we share likely to come up. But I think expecting first second quarters we may get some claims over.

Shravan Shah — Dolat Capital — Analyst

Any specific amount that you want to mention the claim?

K. Jalandhar Reddy — Promoter and Executive Director

Around INR72 crores out of our Orissa project is out from the court decisions. But we’ll have to see whether NHAI is going to challenge further or they’re just going to [Indecipherable] Okay, okay, got it. And the last thing our Bangalore, Mangalore project, Periya Shanth project. So anything you want to mention in terms of how the execution is going on and then we’d like to complete this project? The Bangalore Mangalore project I think around 20% progress is achieved by now. And that also we have suffered high rainfall there. And there had been some issues with the worrying also. The quarry permission we updated very late because environmental clearance committee was not there. Since most of the time the committee was not there. And later they appointed and they gave us the permission. Now things are in line. So the project is under execution, sir. Every month we are able to make around INR70 crore of revenue out of that project. So definitely I think, we may need around five, six month additional time to complete this project because we are unable to do these projects in time, which I’m expecting as because rainy season and the worrying problems accumulating.

Shravan Shah — Dolat Capital — Analyst

Okay, okay. Got it, got it. Thank you sir. All the best.

Operator

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

Vishal Periwal — IDBI Capital — Analyst

Yes, sir. Thanks a lot for the opportunity. One thing, I think in your commentary you’ve mentioned that you don’t want to compromise on the margins. So what typically — I mean typical margin that we bid at?

And then on related to that is, like, because when we are moving into opportunities of metro railway, so margin itself will be lower than what we get in irrigation and road HAM isn’t it? So that will be a compromise one way or another?

S. Vaikuntanathan — Vice President, Finance

Yeah, I think [Indecipherable] The company doesn’t want to sacrifice the margins and then accommodate the order, number one. Number two is, we have stated earlier also the highway projects EBITDA level up to 15%, 16%, should be a reasonable margin that is being expected. Maybe if there is [Indecipherable] projects or fine-tuning for the quarter some availability is there, maybe 1% or 2% less, maybe also be there.

But later than that, it will be very — you cannot predict because the prices of…

Operator

I’m sorry to interrupt, sir. We are unable to hear you. This is the operator, sir, we are unable to hear you. Hello? Ladies and gentlemen, please stay connected while we reconnect the management. Ladies and gentlemen, thank you for patiently holding. The management line is reconnected. Over to you sir.

S. Vaikuntanathan — Vice President, Finance

Just I’m explaining that because as initially in the irrigation sector, actually, we thought we could not able to get the good margin, but after entering the irrigation sector with our execution capability and the skillset we could able to get better margins. So same way in the new — if any new sector is, we are entering, definitely we can say some fine-tuning in our margins, but that is through our expected level only.

And after entering into that sector with our skills, we could able to make more actually profit. Definitely in the new sector is there, then we may look into some fine-tuning in our margins.

Vishal Periwal — IDBI Capital — Analyst

Okay sure, sir, thanks for the clarification. Second, will it be possible to give some commentary on this taxes provision that we have done any assessment because in that press release, you’ve mentioned I mean, you’ve taken it from a particular year so FY ’17 till now. So what is some band around which has gone into it. And sir the final assessment.

S. Vaikuntanathan — Vice President, Finance

Yeah, continue, please continue.

Vishal Periwal — IDBI Capital — Analyst

Yes, sir. So since the final assessment is spending so, I mean, are we getting certainty like probably this could be that number which translate orders from [Indecipherable]

S. Vaikuntanathan — Vice President, Finance

Sir, as you know the income tax practice also when department will come further any search actually, so they will do actually, they will open the books for the almost last five to six years. That is a procedure within the income tax when search is there under 132. So same thing is carried out in our case also.

And after — during search operation, lot of the information is asked for. And after that, what are the — we have all the information provided actually during the search and even after that. And deliberation and discussion with the assessing officer actually. So we as a prudent measure actually, we thought that this much liability may arise actually. So as a prudent practice actually, we have accounted that liability, and we expect that there would be any further liability on this account actually, as far as income tax is concerned.

Vishal Periwal — IDBI Capital — Analyst

Okay, okay. Sure sir, thanks a lot sir, and all the very best, sir.

Operator

Thank you.

S. Vaikuntanathan — Vice President, Finance

Thank you.

Operator

The next question is from Ravi Naredi from Naredi Investments. Please go ahead.

Ravi Naredi — Naredi Investments — Analyst

Thank you very much, sir to giving the opportunity. Sir, so many railway stations are developing. So you must be think for that. Many metro projects are also alloted. So a lot of work is there, but what is the management’s cup of tea. We do not want to have intention [Indecipherable]

So since in road project too much competition is there, what is our further planning for next three to five years?

S. Vaikuntanathan — Vice President, Finance

Sir, as far as the roads are concerned, see with Bharatmala itself, it will take another four to five years, lot of highway networks have to be completed. So you should come. Now this is Bharatmala juncture, it is about allowing so many new entrants, who can compete at a very lesser price than even the cost of our project that is creating problem. It’s not that the work is not there.

So but that this trend may not continue this — even in the past also, these were — whenever this happened the trend may not happen. So, highway sector is definitely available for the next five to six years, number-one. Number two is the irrigation sector. We have already built-up our irrigation, construction capacity in this irrigation, and also the lift irrigation program and other things. So we are having future is that, even if the liver linking program is at any cost it has to come on one day as well. We will have an ordering on ourselves, individually we can bid for the project to the extent of INR1,500, crore to INR1,000 crore, those will grow. That is no question. And coming to the flyovers, we have done number of flyovers. To start with, we have done — taken-up in Tamil Nadu, the Salem, Coimbatore, and now we are doing connecting flyover to Coimbatore airport, which is around 12 kilometers. Well 12 kilometers’ flyover is very big, so that we are doing it and the project is going as per that.

And there are number of flyovers that are being planned under the urban developed infrastructure, which is yet to come. Because somebody — see mainly is the state governments are not having fun. So that’s why the project is getting delayed. But with this new infrastructure at large banks and other thing and then funding to the state governments and all that things may look up, that is true. And in the case of railways, yes, we are now looking similarly we should have — the inventory level, we should have a good partner so at least we can have a bidding capacity. So we can go at a later-stage, very bigger projects and all.

So that is being explored by the management and we will communicate, as and when it is being worked out. But this is the latest question, sir.

Ravi Naredi — Naredi Investments — Analyst

Sir, my second question, is NHAI able to raise money through InvIT recently. So what is seen after this? How much more kilometer road may be awarded in 12 months’ timeframe?

K. Jalandhar Reddy — Promoter and Executive Director

See, they are planning to award 14,000 kilometers. But the time lag, we cannot say because of so many [Indecipherable] availability of land whether if there 90% land is available in all projects and other things, that we have to wait. But the 14,000 kilometer has to be bid in the next one year, without any pain. So that they have — complete there whatever they have planned.

We have to wait for that, how they are planning and other things.

Ravi Naredi — Naredi Investments — Analyst

But the management is optimist to get INR4,000 crore to INR5,000 crore in next three months, right?

K. Jalandhar Reddy — Promoter and Executive Director

In any business you should have optimism. But… [Speech Overlap]

Ravi Naredi — Naredi Investments — Analyst

No, definitely, definitely. You are [Indecipherable] the tender that you do.

K. Jalandhar Reddy — Promoter and Executive Director

INR4,000 crore to INR5,000 crore which we are looking in upcoming year sir, full year, not every three months.

Ravi Naredi — Naredi Investments — Analyst

Okay, thank you. Thank you sir. All the best.

Operator

Thank you. The next question is from the line of Saket Kapoor from Kapoor and Company. Please.

Saket Kapoor — Kapoor and Company — Analyst

Yeah, sir. Thank you sir for giving me another opportunity. Sir, firstly sir, as you were speaking about the margin contraction because of the raw material and input costs being at elevated level. So going ahead also, sir, what would be the normal margins we should expect since the order booking is mainly towards the road and the highway segment. Majority of the same. So what kind of numbers and what should be the way forward in terms of how should the revenue growth currently looking for the next financial year? And also, how things are shaping up for this quarter.

K. Venkata Ram Rao — General Manager, Finance and Accounts

Sir, as I explained earlier also that EBITDA is definitely actually, initially we told that our EBITDA will be somewhere 15% to 16% annually. But when this is irrigation project has come actually in our kitty, then our EBITDA has always done to between 19% to 20. But again if you see as of now, again now irrigation project is only just 22% in our order book. And we expect that the next two years from now onwards, their contribution is definitely going to be reduced actually if we are not getting any irrigation project.

So because once the irrigation project contribution is reduced, so definitely EBITDA is also — accordingly it will also be — there will be some decline in EBDITA. So what is happened during the last three quarter, this is the reason. Because if you see last year, [Indecipherable] has contribution almost 30%, 35% irrigation and [Indecipherable] is also the same position. But now they are contributing in between 15% to 20% actually in last quarter it’s 23%.

So definitely in future also, what we have expected, what are the EBITDA, what we are seeing between 18% to 18.5%, so that is the only sustainable level as of now. And in future also now this NHAI, there is a lot of bidding is there under throat competition is there. And HAM project — to get HAM project with that EBITDA has really become very challenging. So what we are giving that EBDITA, I think this is only going to be the sustainable EBDITA.

As far as. turnover is concerned, and this year actually we are expecting that we could be able to close between 3,500 and next year is our target to achieve around INR4,000 crores.

Saket Kapoor — Kapoor and Company — Analyst

And the EBITDA margin is in the band of 15%?

K. Venkata Ram Rao — General Manager, Finance and Accounts

We will — we are turning around 16% to 17%, but we could able to give between 18% to 19%, that is — so our margin, our guidance is between always 16% to 17%, but we could able to achieve between 18% to 19%.

Saket Kapoor — Kapoor and Company — Analyst

Sir, what is the nine months’ number for us, I have not calculated, the EBITDA margins for the nine months?

K. Venkata Ram Rao — General Manager, Finance and Accounts

For nine months actually. For nine months it is 18%, 19.85% actually.

Saket Kapoor — Kapoor and Company — Analyst

19.85%. And this is likelihood for — it will be lower when we take the blend number for the entire year.

K. Venkata Ram Rao — General Manager, Finance and Accounts

Because this nine months include as we used to see in Q2 actually.

K. Jalandhar Reddy — Promoter and Executive Director

Yeah, irrigation project was there.

K. Venkata Ram Rao — General Manager, Finance and Accounts

Yes, exceptional — not excess… We have, one is bonus is there INR7 crores seven crores and one-one of the JV. Actually, we have signed the assignment deed due to that, it is higher than the Q2.

If you take-out that between 18.5% range only.

Saket Kapoor — Kapoor and Company — Analyst

One small point with respect to that income tax department such under section 132, sir, what are the key findings in their primary report where have the — if I may call, where had been the error on the part of the company, they were — they have been able to raise demand. And what kept the management is, have taken R&D annual set, these are not repeated. And also, sir. This also includes — there is also one, the thing about the GST part where are some input credit issue is also there in the system, pertaining to the construction sector and lot of. Inquiries are happening in that aspect also.

So, where are we in terms of this input credit from vendor issue that the vendors are going forward. Bogus claims have not submitted GST and hence the input credit by these payments companies, final company the company like us, won’t be receiving the same. So, any update on these two aspects that you would like to share?

K. Venkata Ram Rao — General Manager, Finance and Accounts

Number one is with regards to the income tax department. Now this is — just now the assessment has — there is no demand as on-date. Let us be very clear. And they have just taken out the assessment for the last, for six years, but that’s procedure. And there are lot of six years at ones so they may want to know some — so they may come across some expenditure to be allowed or disallowed so many things may crop up.

So in such a case, we have taken for the entire six years or may be a possibility so this, this provision has to be made, so it has been made. But we cannot comment until their assessment is completed, that is one thing. But we have prudent policy, it’s better to provide both the income tax and the interest for the past year, that’s what has happened. As far as the GST is concerned, we have regular payments of GST and yearly approximately, we are paying around INR275 crore — around INR275 crore to INR300 crores in GST we’re paying. And our returns on those are up-to-date. So there is no such issue as of date.

Saket Kapoor — Kapoor and Company — Analyst

No, sir. I was particularly speaking about the input credit issue that has cropped up for the construction sector, wherein there are set of companies which are facing this issue. So we are not in that bracket that is what you are confirming?

K. Venkata Ram Rao — General Manager, Finance and Accounts

As far as GST input is there so, there were some issue in this sector. Definitely, we agreed that actually, and it is occurred in this sector. But as far as KNR is concerned in GST actually we are getting almost 99% of our input and definitely because when GST department will go to the subcontractors’ accounts actually, and he will say that he could not able to properly explain actually that is the input. So definitely in this sector there were some issues as far as subcontractor concerned.

But as far as KNR is concerned, we do not face any issue as such.

Saket Kapoor — Kapoor and Company — Analyst

Okay. And income tax officer you are mentioning that there is no demand as such since the assessment is not over?

K. Venkata Ram Rao — General Manager, Finance and Accounts

It is just — they have started proceeding as far as there is no such demand actually.

Saket Kapoor — Kapoor and Company — Analyst

Okay. So on the basis of the preliminary understanding?

K. Venkata Ram Rao — General Manager, Finance and Accounts

Yeah, yeah. At the basis of prudent measure actually that company has provided that actually.

Saket Kapoor — Kapoor and Company — Analyst

But you must have made the — on the basis of some finding you came to a conclusion that these are the set of corrections that needs to be done for this period and hence this provision.

K. Venkata Ram Rao — General Manager, Finance and Accounts

We expect the — company expect that there may be some income tax demand may come actually based on that. Any way this matter is pending with the assessing officer, actually as of now, so.

Saket Kapoor — Kapoor and Company — Analyst

When can we hear the final word on it, sir? They must have the date by which they will conclude it?

K. Venkata Ram Rao — General Manager, Finance and Accounts

It will take almost six to one year actually, to complete the entire assessment proceeding. We will inform when it is completed.

Saket Kapoor — Kapoor and Company — Analyst

Right, sir. And lot of sir, value erosion has happened for your investor sir, post some selling by promoters, last year, if I’m — correct me there also. So what is the thought process currently that this was — our company was one of the pioneers for wealth creation for the equity investor. But that has not been the case over the last one and half years. And the sentiments have remained subdued. So what’s the message from promoter category?

And I think, so there were some market sales also that did happen from promoters’ part. So, what should investors take home, sir?

K. Jalandhar Reddy — Promoter and Executive Director

Yeah, the wealth creation has happened because the company even in spite of corona they have declared bonus. And the company is continuously paying dividend. And yes, definitely, whenever the opportunities are there, management will not fail their duty. Now we’ll hope for the best there.

Saket Kapoor — Kapoor and Company — Analyst

Thank you, sir, for the elaborated answer, and thank you for this extended call, sir. And all the best to the team. Thank you very much.

Operator

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

S. Vaikuntanathan — Vice President, Finance

Hello. Yeah. Thank you for joining us on this call. Please reach out to our Investor Relations Consultant, and Strategic Growth Advisor or us directly should you have any further queries.

K. Jalandhar Reddy — Promoter and Executive Director

Thank you.

K. Venkata Ram Rao — General Manager, Finance and Accounts

Thank you very much.

Operator

[Operator Closing Remarks]