NIRLON LTD (NIRLON) Q2 FY23 Earnings Concall Transcript

NIRLON LTD (NSE:NIRLON) Q2 FY23 Earnings Concall dated Aug. 10, 2022

Corporate Participants:

Kunal Sagar — Director & Promoter

Analysts:

Anuj Sonpal — Valorem Advisors — Analyst

Lakhshya Jain — Enam Holdings — Analyst

Unidentified Speaker —

Ashok Jain — Ayush Capital — Analyst

Harshit Gulecha — Flair Investments — Analyst

Samarth Singh — TPF Capital — Analyst

Arunima Jain — The Chatterjee Group — Analyst

Presentation:

Operator

Good day, ladies and gentlemen, and welcome to the Q1 FY ’23 Earnings Conference Call of Nirlon Limited. 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 Instruction] Please note that this conference is being recorded.

I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, Mr. Sonpal.

Anuj Sonpal — Valorem Advisors — Analyst

Thank you. Good afternoon everyone and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Nirlon Limited.

On behalf of the company, I would like to thank you all for participating in the company’s earnings call for the first quarter of financial year 2023. Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s con call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management’s beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review.

Now let me introduce you to the management participating with us in today’s earnings call and hand it over to them for opening remarks. We have with us Mr. Rahul Sagar, Chief Executive Officer and Executive Director; Mr. Kunal Sagar, Promoter and Non-Executive Director; Mr. Manish Parikh, Chief Financial Officer and VP of Finance; Mr. Jasmin Bhavsar, Company Secretary and Vice President, Legal and Compliance Officer; and Mr. Ashish Bharadia, Vice President of Business Development and Investor Relations of Nirlon Management Services Private Limited.

Now, without any further delay, I request Mr. Kunal Sagar to start with his opening remarks. Thank you, and over to you, sir.

Kunal Sagar — Director & Promoter

Good afternoon, everyone, and welcome to our earnings conference call for the first quarter of the financial year 2023. We hope everyone is safe and well. Let us take you through the financial performance of the company.

For the first quarter of the financial year ’23, the company reported a total income of approximately INR139 crores, an increase of 1% from the previous quarter, with an EBITDA of INR108 crores, a decrease of 5% from the previous quarter. Profit after tax stood at INR14 crores, representing a PAT margin of 10.22%. We will now explain the significant variations in the financials of this quarter from the previous quarter. There were onetime expenses incurred in quarter one financial year ’23 of approximately INR25 crores on account of refinancing of the company’s loan, which were included in the finance cost, and an additional INR86 lakhs included in the other expenses. The other expenses also include CSR expenses of approximately INR3.4 crores for the full financial year ’23 provided in Q1 of financial year ’23 as per statutory requirements and marketing fees of INR3.5 crores for a 10-year renewal, which is entirely charged to the P&L in this quarter due to there being no lock-in period as against other renewals where marketing fees are amortized over the lock-in period of the license. Annualized margins are expected to even out such quarterly variations.

On the operational front, as you are aware, the company completed the development of Phase V at Nirlon Knowledge Park and licensed the entire Phase V development comprising of 1.16 million square feet of chargeable area with effect from December 15, 2021, to JPMorgan Services India Private Limited for a period of 10 years. JPMorgan has begun paying license fees as per the agreement from 15th May 2022 onwards as contracted. Income and expenses relating to Phase V are recognized in the profit and loss account with affect from December 15, 2021, as per Ind AS. This is the primary reason for increase in license fees and profitability in the first quarter of financial year ’23 versus the same period in the previous financial year.

The overall occupancy rate of NKP stood at 97.1% in this quarter as compared to 98% in the previous quarter. Barclays renewed approximately 94,000 square feet of its space due for renewal and expiring in 2023. Anunta renewed approximately 13,000 square feet of space also due for renewal in 2023. Growth Source licensed an additional approximately 5,000 square feet and F&B operators renewed approximately 1,600 square feet at NKP. Two parties licensed approximately 4,300 square feet at Nirlon House, of which 75%, that is 3,200 square feet, is Nirlon’s share. As on 30th June 2022, approximately 90,000 square feet area was vacant. Of this vacant area, the company has signed an LOI for approximately 37,000 square feet. Cultfit, the gym operator, has given notice to vacate approximately 6,000 square feet in September 2022. Additionally, in a recent development, during the first week of August, Citibank has renewed approximately 150,000 square feet at NKP. Of this, 129,000 square feet was due for renewal in financial year ’23 and the balance was due for renewal in financial year 2024.

As on 30th June 2022, the total secured debt facility as sanctioned by HSBC was INR1,230 crores, which includes an overdraft facility, while the debt outstanding from HSBC was INR1,150 crores.

With this, we conclude our presentation and open the floor for questions

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instruction] The first question is from the line of Lakhshya Jain from Enam Holdings. Please go ahead.

Lakhshya Jain — Enam Holdings — Analyst

Am I audible sir?

Kunal Sagar — Director & Promoter

Yes.

Lakhshya Jain — Enam Holdings — Analyst

My first question, sir. We have paid INR3.4 crores as CSR for FY ’23. Statutory non-sales corpus must be 2% of net profit as CSR. Sir, this equates that we will be making net profit of around INR1,700 crores plus in FY ’23, sir. Am I right, sir? Is that really right?

Kunal Sagar — Director & Promoter

The CSR regulation say that 2% of net profit is to be spent based on the previous three years, the average of the previous three years. So that’s what this number is based on.

Lakhshya Jain — Enam Holdings — Analyst

Okay. My next question, sir. If I’m not wrong, there are two ways to get converted into REIT. Sir, this either SPV or through [Indecipherable] I have a doubt under SPV, sir. Say, for example, if GIC has 60% holding in XYZ REIT, then for Nirlon to be part of that REIT, should GIC reduce it’s holding in Nirlon to the same 60%? Or is it possible with the current 70% holding at it, sir?

Kunal Sagar — Director & Promoter

Sorry, I’m not sure we understand your question very well.

Lakhshya Jain — Enam Holdings — Analyst

Shall I repeat, sir?

Kunal Sagar — Director & Promoter

Yes, please. Yes, please. [Indecipherable] the specific question is in terms of –.

Lakhshya Jain — Enam Holdings — Analyst

Yes, definitely. I’ll do it. Say, for example, if GIC had 60% holding in XYZ REIT company, then for Nirlon to be part of that REIT, should GIC reduce it’s holding in Nirlon to the same 60%? Or is it possible with the current 70% holding through SPV?

Kunal Sagar — Director & Promoter

Frankly that’s not — at this point, that’s not an answer that we have available. We wouldn’t want to try and answer it while guessing. If you want to be in touch with us just specifically, we can try and understand a little better your question, so we don’t give you a wrong answer. Is that all right?

Lakhshya Jain — Enam Holdings — Analyst

Definitely. [Indecipherable]

Kunal Sagar — Director & Promoter

It’s a very specific situation you’re answering and we are not sure that we necessarily understand it correctly. So we’d rather understand it from you properly and then try and answer.

Unidentified Speaker —

Yes, better, better.

Kunal Sagar — Director & Promoter

No, no, you don’t have to repeat it. It’s just something that may be better answered offline, so we can understand that, in fact, we are understanding you correctly because we don’t want to give you a generic answer without specifically understanding your exact question.

Lakhshya Jain — Enam Holdings — Analyst

Yes sir. My last question, sir, then. In the recent BLS earning con call, they have very clear on the fact that they are REIT ready. GIC and DLF are just waiting for the right time to launch the DCCDL REIT. Are we also sailing on the same boat, sir?

Kunal Sagar — Director & Promoter

That’s a question that I think perhaps is — it’s not something that we are aware of. And the DLF GIC REIT, frankly, has nothing to do with Nirlon. So again, it’s not something that we would want to really comment on except to say that we have no connection with the DLF GIC REIT.

Lakhshya Jain — Enam Holdings — Analyst

No, sir, the meaning of my question is, sir, they are waiting for the right time to launch their REIT, sir. So are we also planning in a similar way?

Kunal Sagar — Director & Promoter

No. I think our situation as far as the REIT course is very different from what — they are REIT ready and they’re looking for an appropriate time to launch from what we understand. We are in a situation where we are — as we have said in our previous calls, we are in the process of evaluating what is the best option in terms of restructuring for Nirlon in terms of REIT, in terms of delisting and how that is to be done, right? And that is a discussion that continues to evolve at our end as we have projected in other calls and as we can again mention in this call. So I think the two circumstances are very different. One is the situation where the DLF GIC, in fact you say as per their call they are ready and they’re waiting for the right time to do the REIT. The other is a situation where we are still evaluating and the discussion is still evolving as to what is the best structure that Nirlon should evolve to going forward.

Lakhshya Jain — Enam Holdings — Analyst

Thank you so much sir.

Operator

Thank you. The next question is from the line of Ashok Jain from Ayush Capital. Please go ahead.

Ashok Jain — Ayush Capital — Analyst

Good afternoon. Am I audible sir?

Operator

Yes, please proceed.

Ashok Jain — Ayush Capital — Analyst

Okay, okay. Thanks for giving me the opportunity. Sir in your previous concall we have been discussing that Nirlon can become a REIT through an SPV route as one of the possibilities. The other possibility you told was the delisting, but that is not the right place to discuss, so I just want to concentrate on this SPV route sir. India has three REIT entities distributing quarterly dividend based on their net distributable cash flow, NDCF. Sir even we have travelled a lot and sacrificed a good amount of cash flow and paying taxes — corporate taxes in old regime and now in this quarter we have paid almost 2% penalty on the foreclosure of HDFC loan, sir. Sir I request you to share your knowledge, as per current P&L account and balance sheet, the NDCF that is the net distribution cash flow Nirlon could have if Nirlon were to be part of a listed REIT as an SPV. I want you to explain to us how depreciation is added back to cash flow, how amortization of debt is added back to cash flow, this is what I want from you sir.

Kunal Sagar — Director & Promoter

Mr. Jain, I’m again not very — we are not very clear what you are asking. Is it what is our cash flow, or what our cash flow would be under REIT or what exactly is what would you like us to explain? We can very clearly tell you about what our cash flow is. We do not want to speculate what our cash flow will or will not be under the REIT situation. We can tell you what our cash flow is just now if that is something that you would like to hear?

Ashok Jain — Ayush Capital — Analyst

No, the cash flow — as per the profit and loss account we do have net profit and depreciation. We are providing around INR36 crore per quarter. Sir in case if we were a REIT this INR36 crore will go to the cash flow for the distribution of dividend. Whether the government puts taxes after depreciation and that among those of the whole depreciation that is INR145 crore will go to the cash flow for distribution of dividend?

Kunal Sagar — Director & Promoter

Can you hold on just a second we will try and see if we can understand that little better? Just a minute. Mr. Jain. I hope this answers your questions, our understanding is that the depreciation in any case, in any situation is going to get added back to the cash flow. It is a non cash item regardless. So is that what you are asking?

Ashok Jain — Ayush Capital — Analyst

Yes, sir because in this current regime we do not pay taxes for depreciation amount and if you can add it back to cash flow for distribution of this dividend under REIT this whole amount of depreciation will be added to the new tax laws am I right?

Kunal Sagar — Director & Promoter

Again, we do not want to be speculative what we will be under REIT.

Ashok Jain — Ayush Capital — Analyst

It is not specific to Nirlon it is applicable to Embassy also; it is applicable to Mindspace, just because we have been telling for last three quarters that we are working very hard to understand the regulation, that is the reason why I am asking?

Kunal Sagar — Director & Promoter

I think in our understanding in any case is that depreciation is always a non cash item, and whatever the amount of depreciation is, will form part of the cash flow. I do not know that it specifically answers your question, but that is our understanding of what you are trying to ask. Are we right. So your question is — with respect to — to understand your question, you are saying for example for Q1 FY23 your question is will we add back this 369 million to the 142 billion of Profit After Tax for calculation?

Ashok Jain — Ayush Capital — Analyst

Exactly. Yes sir, yes sir.

Kunal Sagar — Director & Promoter

I mean, of course the dividend is paid based on the availability and the — based on the eligibility that the company is eligible for, a, and b, after we — after we analyze what the company is eligible for, the dividend, is also based on the availability of the cash flow along with the eligibility that the company is eligible to pay in an particular financial year. So, theoretically or practically the 369 million of the dividends can be added back to the — depreciation can be added back to the Profit After Tax, provided the company is eligible to pay that amount in that particular Financial Year.

Ashok Jain — Ayush Capital — Analyst

Shall we be adding INR36 crores or we will be adding INR20 crores, that is paying taxes on depreciation also? This is what I am asking?

Kunal Sagar — Director & Promoter

I think Mr. Jain we will have to — we will have to try and rather than just speculate, we will have to have a discussion with you to understand exactly what you are saying. Again we do not want to give a wrong answer. We are not able to exactly understand.

Unidentified Speaker —

Mr. Jain, depreciation is a tax deductible expense, so to that extent the tax will not be payable on that amount which is charged to P&L account.

Kunal Sagar — Director & Promoter

Which is not anything different from what we have always been doing it is just a normal situation.

Ashok Jain — Ayush Capital — Analyst

So under REIT also depreciation is not taxable, it is tax deductible itself?

Kunal Sagar — Director & Promoter

Again we don’t want to — that is our understanding as far as SPVs under the REIT goes, because SPVs are also under the Companies Act., Again, for specific REIT regulations may be we are not the right people.

Ashok Jain — Ayush Capital — Analyst

Okay. I’ll get back you to you offline. And the second is regarding this, we have taken, I think, a moratorium of five years for the new loan from HSBC. And we are going to repay 75% in the 10 years. So just want to have the color, what shall be the amortization of SPV in our debt in case Nirlon takes REIT offer through SPV? Any idea on this, sir?

Kunal Sagar — Director & Promoter

I’m sorry, I think there’s a lot — a lot of your questions are making an assumption that we are going to become a REIT. And it’s not really something that we would like to — we’re not sure that that is — we’re going to be able to answer that in any meaningful manner for you because we can certainly answer the question in terms of insofar as our structure today is concerned. But the questions that you are mentioning in terms of what we might do if and when we are a REIT is not something we would want to get into at all because it’s very speculative in terms of what kind of structure there may or may not be at that point. So do excuse us on not answering something that is related to what might happen if Nirlon becomes a REIT.

Ashok Jain — Ayush Capital — Analyst

Sir, basically my intention is not to go for speculative statements. I just want to know where does Nirlon stand because these two options you have mentioned in our previous con calls many times that we can go — we can make a REIT through — either through a delisting or through an SVP. In case we have gone through SVP, I just wanted to understand the legalities of that. That’s only — that is the only point.

Kunal Sagar — Director & Promoter

That is the point we had made quite clearly last time, Mr. Jain. We had said that in theories, if I remember the discussion correctly and we will check, there were two options. One is the traditional option where we would do a delisting and then one could be listing and then move forward with the process of the delisted company forming part of a REIT. The other question which we had said if I remember, that is theoretically something that is also being looked at to see whether it’s possible or not was whether Nirlon as a listed entity could be held by a REIT which is also a listed entity. That was what we had said and that was why we had said there was no precedent yet for any such situation, and that was Nirlon situation specifically where a listed entity would hold Nirlon as a listed entity. I think that is the circumstance that we had discussed last time. So if we are on the same page, then that is — and again, we had said on that situation that we don’t know if such a scenario is, in fact, possible a lot and that was one of the discussions that was being undertaken to understand whether that was an option or not. [Speech Overlap]

Ashok Jain — Ayush Capital — Analyst

In last three months, what is the new development that happen on this REIT?

Kunal Sagar — Director & Promoter

Sorry, could you repeat?

Ashok Jain — Ayush Capital — Analyst

No, what’s the current situation now? What’s the new development happened in this last one quarter? Any progress you have made?

Kunal Sagar — Director & Promoter

Discussions are continuing to evolve based on where we were last time. We continue to evaluate what has to be done and we are moving forward. There is no conclusion to those discussions yet. And we will continue to evaluate and we’ll continue to evolve this discussion until it reaches a level where we are sure that the direction we want to go is the right one from the company’s point of view for the long term, and those discussions continue, as we said. There’s no conclusion on those again.

Ashok Jain — Ayush Capital — Analyst

Okay, sir. All the best sir. All the best from the side sir. Thank you so much.

Kunal Sagar — Director & Promoter

Thank you.

Operator

Thank you. The next question is from the line of Harshit Gulecha from Flair Investments. Please go ahead.

Harshit Gulecha — Flair Investments — Analyst

Hello?

Kunal Sagar — Director & Promoter

Hi.

Harshit Gulecha — Flair Investments — Analyst

Hi sir, good afternoon. Yeah, so like my questions might not be comfortable for you to answer as other shareholders were also not been answered. I would request you kindly get time for our questions offline, sir.

Kunal Sagar — Director & Promoter

You’re always welcome to ask us any questions offline and we’ll, of course, do our best to try and answer them also.

Harshit Gulecha — Flair Investments — Analyst

Thanks a lot sir. But if I ask a question, I don’t think you’ll be comfortable. I’d like to wait for the offline discussion, sir.

Kunal Sagar — Director & Promoter

Entirely your –.

Harshit Gulecha — Flair Investments — Analyst

Thank you. Yes, sir please go ahead.

Operator

Thank you. [Operator Instructions] The next question is from the line of Samarth Singh from TPF Capital. Please go ahead.

Samarth Singh — TPF Capital — Analyst

Yeah, good afternoon, thanks for the opportunity.

Kunal Sagar — Director & Promoter

Hi, how are you?

Samarth Singh — TPF Capital — Analyst

Good, good. How are you guys?

Kunal Sagar — Director & Promoter

Fine, fine thank you.

Samarth Singh — TPF Capital — Analyst

On the — this one agreement that we’ve done without the lock-in, is that sort of reflective of a weaker rental environment?

Kunal Sagar — Director & Promoter

Samarth, I think an agreement without a lock-in is basically happening after nine years of being within the campus and it’s not really there’s no lock-in. There is lock-in of approximately 12 months. There’s a notice period of approximately 12 months. So these are not fresh agreements. These are renewals. So licensing fees that have been here for nine years, they are not obligated to be obtained further. It’s not a reflective of anything to do with the market or post COVID or anything of that nature to the best of our understanding. I think it’s purely the fact that the licensing fees that has already given us a lock-in of 36 months or 60 months or whatever it is in the initial time. That would be our understanding.

Unidentified Speaker —

And in fact, some of the agreements that we are — either have completed or are in the process of discussing has lock-ins that are, again, approximately three years and in some cases, even longer than three years. So it’s not — we don’t believe it’s any reflective of anything that is a weakening of the sentiment post COVID or anything along those lines, just to specifically answer your thoughts.

Kunal Sagar — Director & Promoter

And also the — I think the agreement you’re referring to the period of the agreement is almost nine years. And of course, the lock-in is on the — the notice period may be 12 months, but the lock-in is in fact — but the agreement period is, in fact, nine years. So it’s not that they’re trying to come down to three or two to five or some such thing. So yes, that would be an accurate understanding we feel.

Samarth Singh — TPF Capital — Analyst

Okay. And just for a better understanding of just in general as far as our contracts are concerned, do they all work similarly where after the initial contract is over in renewals, most clients do not give a lock-in? Is that understanding correct in that?

Kunal Sagar — Director & Promoter

It’s not entirely the case. There are renewals now which we have recently signed where this lock-in is approximately 24 plus six months, so 24 months of lock-ins plus six months of notice. So it may not be 60 months or it may not be 36 months, but it’s something which we think varies and, of course, to some extent, the commercials are linked to some extent to a longer lock-in as well. So it’s a combination of these factors. But yes, I mean, you will have the case where it may be 12 months of notice period. But you may have a case where it’s 24 and six months and you can have a case where — we do have cases where it’s the regular 36 months as well.

Samarth Singh — TPF Capital — Analyst

Got you. And anything happening on Nirlon House? Do you think there’s a possibility of some sort of value unlocking happening there in the near future?

Kunal Sagar — Director & Promoter

That’s a good question. Samarth is asking whether what we are doing for — what are our plans for Nirlon House and any value unlocking fees. Some of the issues because of our historical — because of the historical issues with the company, the company owns about 55% of Nirlon House along with nine other owners. Of the 55%, about 75% is owned by NL and 25% is an undivided share from with Nirlon Foundation Trust. But the real fact is because there are nine other owners, and these are not institutional owners. These are private owners. And as you may understand, private owners all have completely different views and completely different priorities. So the issue really is how we unlock our value in a building which is [Indecipherable] owned, which is not the easiest thing to do under any circumstances because, of course, we don’t want to give away value for no reason. So yes, we are looking at this very seriously. Right now, the space that we have is almost is rented except for maybe one space of 1,500 square feet. The rest of the space is completely rented, is completely licensed. Yes, is complete license, excluding the basement. When I said 1,500 square feet, it’s excluding the basement. So yes, I mean, we have had some preliminary discussions. And as and when we form up something as to which way we want to go with NH, we would be happy to let you know. But we do agree with you that because of the location of the asset, it is — we would be very interested to unlock value, yes.

Samarth Singh — TPF Capital — Analyst

Got you. I just — you’ve done this wonderful job with Phase V and I think it’s more or less done now. So I guess your investors are just wondering what’s next, right? Whether it’s Nirlon House or whether it’s a REIT or something, we are hoping that management comes up with a plan soon.

Kunal Sagar — Director & Promoter

Yes. Yes, on the REIT part in any case, I think we’ve been repeatedly mentioning that, obviously, that’s a significant — let’s not call it the REIT, we’ll just call it in terms of what future structure one would want to do going forward. That’s something that we’ve been trying to explain on every call that that’s something that is the highest priority to see what might be an appropriate structure to transition to or to evolve to. Similarly, Nirlon House is something that we understand needs to be addressed. And as Rahul said, we just want to make sure that we do that in a way that doesn’t leave any — it doesn’t leave any value on the people for no reason. We just want to make sure we do it right. Again, it’s one of those legacy situations that we’ve untangled to a very large extent. And I think the last — hopefully, we can get the last aspect of this done sooner rather than later.

Samarth Singh — TPF Capital — Analyst

Great, thanks about then.

Kunal Sagar — Director & Promoter

Thank you.

Operator

Thank you. The next question is from the line of Arunima Jain from The Chatterjee Group. Please go ahead.

Arunima Jain — The Chatterjee Group — Analyst

Hey, hi, thank you. Good afternoon everyone. Apologies, I missed a few minutes of — initial minutes of the call. So it may be a repetitive question, but — and I hear a bit of it in the last question. My question is mainly on Phase V. Where are we in terms of getting it to operational and when can we expect some revenues in flow, if not already. In case it is operational, what would be the breakup between Phase V and rest of the –?

Kunal Sagar — Director & Promoter

So essentially, the license fee free period started on December 15, 2021. The license fee started five months after that on the 15th of May. So as of 15th of May 2022, license fees have commenced in Phase V for approximately 11.6 lakh square feet. This 11.6 lakh square feet is part of the total, we say, approximately 33%, 34% of the total area in KP, which is approximately 3 million square feet of chargeable area at 80%, except for one building in B3 — except for the B3 building, which is approximately 300,000 square feet, which is at 75% location fees. So that’s where it is. And yeah, we are happy to tell you that license fee free period started in December 15 and license fee started on May 15 for 11.6 lakhs square feet. And Phase V — the license fees from Phase V are approximately 35% of the total license fee income approximately.

Arunima Jain — The Chatterjee Group — Analyst

And of the INR1,380 crores of top line, what percentage would that be?

Kunal Sagar — Director & Promoter

It’s about INR17 crores to INR18 crores per month roughly is the license fee from Phase V, let’s say INR17 crores. So maybe INR54 crores for the quarter, roughly.

Arunima Jain — The Chatterjee Group — Analyst

Understood. Understood. That’s helpful. And also, I could see little bit on the leverage. Have we increased the leverage in the last quarter, if you could throw some light on that?

Kunal Sagar — Director & Promoter

Not at all. In fact, we refinanced. We’ve written in our IR report. And as we mentioned, we have refinanced a loan in the last quarter, in the Q1 of financial year ’23. So we take — so we paid back INR1,180 crores to HDFC and the HSBC refinanced that facilities for INR1,230 crores, of which INR80 crores is an OD facility and INR1,150 crores is a term loan facility. So that has remained unchanged. That’s an LRD that we have with HSBC now.

Arunima Jain — The Chatterjee Group — Analyst

Okay, that’s helpful. Thank you.

Kunal Sagar — Director & Promoter

Thank you.

Lakhshya Jain — Enam Holdings — Analyst

Thank you. The next question is from the line of Lakshya Jain from Enam Holdings. Please go ahead. Hi, am I audible?

Kunal Sagar — Director & Promoter

Yes.

Lakhshya Jain — Enam Holdings — Analyst

Yes, just on one correction, but I’m not from Enam Holdings, I am from[Indecipherable]. And yes, just to clarify that, so that there’s no any issues in the future. Kindly take the correction.

Kunal Sagar — Director & Promoter

Sure.

Lakhshya Jain — Enam Holdings — Analyst

Yeah, thank you. My questions has been answered. Thank you so much.

Operator

Thank you. The next question is from the line of Ashok Jain from Ayush Capital. Please go ahead.

Ashok Jain — Ayush Capital — Analyst

Am I audible sir?

Kunal Sagar — Director & Promoter

Yes, Mr. Jain. Okay, thank you.

Ashok Jain — Ayush Capital — Analyst

I have only one question. On our HSBC outstanding debt of INR1,150 crores, is our interest rate of 6.1% fixed rate or floating rate, sir? That’s it.

Kunal Sagar — Director & Promoter

So our interest rate is a floating rate, and we have it from 2nd of May when we refinanced. We have a six-month period where it will not change and it will be floating after that, linked to three months stable [Phonetic].

Ashok Jain — Ayush Capital — Analyst

Thank you sir. Thank you.

Operator

Thank you. As there are no further questions, I now hand the conference over to Mr. Kunal Sagar from Nirlon Limited for closing comments.

Kunal Sagar — Director & Promoter

Thank you all very much for participating on the call. As always, we appreciate your interest. And the couple of questions that we had said might be better addressed off line, please do feel free to be in touch with us, and we’ll do our best to help you answer those questions.

Operator

[Operator Closing Remarks]