Om Infra Limited (NSE:OMINFRAL) Q4 FY23 Earnings Concall dated May. 03, 2023.
Corporate Participants:
Vikas Kothari — Managing Director & CEO
S.K. Jain — Chief Financial Officer
Analysts:
Tanmay Jagdale — Motilal Oswal Financial Services Ltd — Analyst
Pinaki Banerjee — AUM Capital Private Limited — Analyst
Rajnish Dahel — Individual Investor — Analyst
Guneet Singh — CCIPL — Analyst
Rishikesh Oza — RoboCapital — Analyst
Harsh Saraskal — Individual Investor — Analyst
Satish Monza — Individual Investor — Analyst
Unidentified Participant — — Analyst
Harsh Saraskar — Individual Investor — Analyst
Jitesh Jain — Shareholder — Analyst
Presentation:
Operator
Ladies and gentlemen. Good day, and welcome to the Om Infra Limited Q4 and FY 2023 Conference Call. As a reminder, all participant lines will be in listen-only mode. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Vikas Kothari. Thank you and over to you sir.
Vikas Kothari — Managing Director & CEO
Thank you, everyone, and a very good morning to all of you. I on behalf of Om Infra, welcome you all to this fourth quarter and full-year earnings conference call. We shall be sharing the key operating financial highlights from fourth quarter and full-year ending March 31st, ’23. And before we begin, I would like to state that some of the statements made in today’s discussion may be forward-looking in nature and may involve risks and uncertainties. Documents relating to Company’s financial performance have already been emailed to you. So please have a go-through on those documents.
So, thank you once again for everyone for joining and welcome to our Company’s conference call. It is looked to be back after such a long absence. We hope that we will not have such long gaps in between our next conference calls. I’m hoping everyone is doing well and staying safe. I’m in spoken in an extended period. Now I’d like to reconnect with all of you today. Since our last conference call organized back in 2017, looking back at the past five years, our company has achieved significant growth and success in the business. We have expanded our operations in new markets and have backed the hydro projects also that has resonated well it with our clients.
Let me give you a small recap of our business. We have remained focused on our hydro business, which is our core strength. In the last four, five years they building a strong order book in our core business, which has grown by more than four times since March 2018 to December 2023. We currently stand that over INR3,300 crores. The company has get well hydro business by providing Hydro mechanical equipment which is our monopoly business, which also includes the order book now of Jal Jeevan Mission. We add first ever order in 2022. The company holds a certain land parcel which is one time projects in Rajasthan. We have handed over the property also and to all the buyers and we’re expecting cash flow of INR400 crore, over INR400 crores in the near future. And apart from this, we will be receiving cash flow from Arbitration awards, which will be over INR600 crores also in the coming years.
Over the last three years, the revenue has grown substantially. Higher backed by the growth in the order book in the hydro business from INR817 crores in FY2018 to INR1,577 crores in FY’22. And in the nine month FY’23 it has grown from INR1,367 crores and by almost 1.5 times while adding JJM order book also, Jal Jeevan Mission order book also. And the revenue has grown more than four times the nine months FY’23.
Now coming to the present base scenario, we are well-placed in the hydro EPC business, which is our core business, waiting for this is like design engineering, supply, erection, testing, commissioning, building, transport, logistics, etc. From design to commissioning of Hydro mechanical equipments then we are also into O&M contracts long-term and short-term, on-site maintenance, a lot of these hydropower project which are decades old have now started coming into repair and refurbishment also. So we are receiving a lot of queries for the refurbishment over rolling which we are hoping will add good amount of revenue that is Government of India program on this which is called DRIP, D-R-I-P, Dam Rehabilitation and Improvement Project where the World Bank has funded a lot of projects both for the central government and state government and that brings a lot of opportunity. We have been fortunate to be successful in adding a couple of others there. So, as explain to you, there is a lot of action happening with hydropower irrigation and water industry including Jal Jeevan Mission.
Over the past few years, Om Infra has consistently been building order book across all these three segments. Since bagging our new order book, the exhibition run-rate has also improved over the course of past five years because had been generating higher revenue in the engineering division growing from around INR230 crores to over INR700 crores that is the phenomenal growth of over 250% from FY’21 to FY’23 in the engineering business which is our core business. Over the past few years, we have rectified the overview of our business and have established ourselves as a qualified bidder for major hydropower and water projects. Back in March ’22, Om Infra was qualified and backed the large project for Jal Jeevan Mission which was totaling to over INR3,000 crores which is backed by Government of India under the initiatives of Har Ghar Jal. Launched in 2019, they are on the trend and you started in FY’21, FY’22 with a total budget allocation of INR50,000 crores to provide functional household tap connections to every household in the rural India by 2024. Of course, there is a time overruns, etcetera. So these projects as expect — we are expecting that these projects and the Jal Jeevan Mission will take care of our continued growth in order book and revenue over the next — my best senses at least for the next 5 to 10 years.
Coming on the margin profile of Jal Jeevan Mission Projects and the EBITDA margin continue to be impacted by high input costs, which happened because of the Ukraine war and basically what happens is the price increase gets compensated because we already have cost variation and price variation in our order book, but there is a lag in getting compensated for the price variation. So there is an interim order, an initial [Indecipherable] drop in margin. But the drop in margin gets eventually compensated by way of escalation. The contribution from Jal Jeevan Mission project at the initial stages one the price variation will get factored in, we generate a healthy margin of 8% to 12% in the Jal Jeevan Mission projects also. The JJM projects which we have received so far should end in the next two years. So we will see a good order book, good revenue growth here, and of course, a good order book growth also because we are bidding for more-and-more projects going forward also.
Apart from our main business of hydropower business, there is an hydropower and litigation and water supply business. There has been a certain development in the real estate division also where we have been monetizing the existing Land Bank that the company has. So you have seen in the last two, three years, we have started monetizing the land parcels available in the company, we will do the symmetric projects in Rajasthan, PALACIA, and in Kota Om Green Meadows. We are expecting a total cash flow, cash inflow of approximately INR400-plus crores in the next two to three years in the financial of the company.
Coming onto our MHADA project in Mumbai. We have been holding this land since 2006, 2007 with an investment of about INR120 crores. And since the project is hugely reduced our holding and we reduce our financial exposure to this project by joint venture DB Realty, there are certain delays in the projects and the consortium has appealed this case against MHARA in arbitration in the matter with currently in the planning stages of getting and expected to — we are expecting to have the outcome of the arbitration very soon. The total realizable revenue within this project will be phenomenon as we already know when we took up this project the sellable area — the total sellable area in the project was roughly around 600,000 square feet, which is now increased to over 2.5 million square feet and our share in that waived about 17% stake, should bring us a realizable revenue of over INR700 corres as per current market rates. So which is going to be a phenomenon jump in the net profits of the company in the future.
Lastly, on the business front, we had few arbitration awards in our favor which will be directly added in our operational cash flow of the company over the next few years as and when they come. From Bhilwara Jaipur Toll Road project, we are expecting a INR580 crore windfall when it comes to the company’s revenue. And then we have a couple of other small arbitration awards which are in some stage of in High Court and various other future source. With this, for example, the NTPC Tapovan project we have INR50 crores arbitration award already won there which has been challenged by inhibiting the High Court NTPC has already deposited the full amount in the High Court under protest and to be a fighting that in the High Court of Delhi. Hoping for a clear judgment to come and we will get these proceeds in our cash flow.
So with the over 500 crore of award in Bhilwara, Jaipur and INR50 crores here so roughly we are expecting that the next few years the company should receive another somewhere between INR500 crores to INR600 crores in terms of the net profit from these — the net revenue and profit from this couple of privatization awards. One big success that we recently had was very old project called Kameng hydroelectric power project in Arunachal Pradesh, there we had a dispute with Government of India, something called NEEPCO and this we took this dispute into process defined by the Ministry of Power and the [Indecipherable] and we were one of the first cases to be settled by CCA and the outcome of that has been that we are expecting to receive about INR30 crores to INR40 crores from [Indecipherable] project, including — not including another above INR30 crores to INR35 crores of bank guarantees also from the clients. So along grown dispute in the project is now settled by the resolution committee and our expenses and costs have been agreed to be settled and the cash flows of back will expected to come in the next just maybe one or two months. So the good thing that has started happening with the government’s focus on resolution of all disputes is actually seeing the light of the date now. So I’m hoping that this will continue and these long-drawn disputes that are running in two years time period of settlement get shortened significantly.
So, overall, summing up on the cash flow estimation, we’re expecting about INR1,800 crores of cash flow from the above mentioned events which will be added to the core operational cash flow for the next two to seven years in our complete balance sheet. We compare this amount to the current revenues and current balance sheet of the company. This is a significant upside.
Now, let me take you through the hydropower industry updates. Over the last one decade Indian energy sector energy transition has result in a substantial shift in the placement of the biggest players and sources of fuel and the energy value chain. According to National Electricity Plan 2022, India would need that additional 17,000 MW of hydro capacity added between 2022 and 2031, an ideal balanced for any mission is to have a good fossil fuel and renewable which is hydro mix. Ideal mix for any country of 60%, 40%, where 60% should come from fossil fuels and 40% should come from hydro because hydro is the only source of energy, it can be added and stopped in the shortest possible time frame. So the ratio got severly skewed against hydropower and that has kind of risen alarming level which is why the government of India has suddenly increased their focus on development or adding additional hydropower capacities. So the 17,000 MW of hydropower capacity is expected to be added in the next few years alone. And we are already seeing — our focus on that by the announcement of new projects that have come up for bidding recently. Another 500 MW, 1,000 MW of renewable also expected to be added on the grid in the next few years. And we’re aiming for a 50% capacity from non-fossil fuel sources by 2030. The need for flexible resources in the electricity grid becomes — it has become extremely critical and therefore the focus by the Government of India.
Hydropower as the source has several advantages including flexibility, extended project life, technical maturity, keen power source, and Atlantic is mitigation, flight control, water security. We have seen a lot of border disputes also claim significant in the capacity addition in the border state of India. Given its outstanding scaling abilities, hydropower is a crucial source in Indian Power Grid. On an average, the project take about three to five years longer than expected, but once completed, they are a big source of [Indecipherable] including power at the cheapest cost. This has resulted in lack of information regarding ultimate project cost and limiting consciousness for the final tariff, but a lot of that is changing now the hydropower projects getting completed. If not getting that ended specified but I know the margin level increased, marginal increase in the time [Indecipherable] conditions.
The central power sector undertakings have been responsible for the majority of hydropower plant constructions in India, the private sector was involved and adding capacity in India that some of those projects which were stalled because of various reasons are now coming back in the CPSU basket and therefore will also start seeing the development happening. Most of these large private sector projects have been taken over by wither NHPC, NTPC, [Indecipherable] all the central government PSUs and that will also come up for bidding in will see the light of the date and so. Only about 811 MW of intact to 1,100 MW capacity expansion in the previous six years came into private sector which is now coming back to the central government PSUs.
Overall, the private sector contributes to just 8% of to total installed capacity. This hindered the sectors progress and lower its cost of competitiveness. The average price of hydro projects completed in the previous six years has been approximately 5.42 kWh, which is more than the highest fuel resource accessible on the Indian good. Over time, the government has brought in various enablers to assist the industry to recover. These include by recognizing hydro as a renewable energy source, establishing the hydropower obligation and an independent entity with a 2.82% objective by FY 2030. To increase the tariff discovery of hydro, recently if you see brought upon certain amendments, including increasing project tenure period to 40 years, increase in loan tenure here at 18 years, and decreasing the annual escalation rates. This enablers can help in decreasing the tariff to INR4.6 per unit.
India would be requiring a total additional 17,000 — more than 17,000 MW of hydro to meet the HPO obligation target of 2030, which is 38% addition from the present deployed capacity. In the current scheme should be a few that are the best place to develop hydro projects by looking at the storage percentage. The ability to absorb risk backed by high costs, high bargaining power which discoms and the ability to access low cost capital. Currently India has utilized 31% of total hydro potential which India has, which mainly comes from the hill view region and a few states which are still unexplored. Recently, India has authorized it’s largest hydropower project in the nation remote Northeastern 20 bought in the China as the country attempts to increase renewable energy to satisfy increase in electricity demand.
The government has sanctioned INR319 billion investment for 2,880 MW Dibang hydroelectric power project in Arunachal Pradesh. Stated owned hydropower company called NHPC which responsible for development of that project. The project is expected to complete in the next nine years. Hydropower is it estimated renewable energy in India and it is seen as critical in the countries moving away from calling order shift by intermittent solar and wind supply. The Indian government has also promised to support the development on non-fossil fuel energy in certain regions of the country and to sign a number of agreements for the construction of 13,000 MW of hydropower project in Arunachal Pradesh in the upcoming days. With the total investment infusion of 1.5 trillion copies.
We have 1,100 MW existing capacity Arunachal Pradesh has more than 40% of world’s hydropower potential, one of the four them in [Indecipherable] lower type of so project was finished FY’24, 2,000 MW of answering both of them belongs to NHPC, NHPC is also building 2,818 MW Dibang project which we will cost INR35,000 crores. And the districts of [Indecipherable] and the Northeastern states is engaged very ambitious hydropower project. The 10 gigawatt, which is 10,000 MW project now in the development stage, will be the biggest hydroelectric project innovation. The Chief Minister for Arunachal Pradesh and Union Minister [Indecipherable] 10,000 MW [Indecipherable] project and 13,000 MW new hydropower projects in upcoming the weeks. 17,880 MW of additional hydropower or 38% of India’s present hydropower capacity will be produced in Arunachal Pradesh as a result of ongoing projects and 13 MOUs that are scheduled to be signed in the following week. The nation now has an installed capacity of 4,16,000 MW with 46,850 MW of that capacity belong into hydropower, which is only 11% of the total power generating capacity that we have in the country. So we see a significant focus on hydro in the next few decades.
Coming on to company’s performance during the year. Company has achieved the LOA from BMC further work on design build operation maintenance of Bhandup waster waste, waste water treatment facility. And then, the Mumbai Sewage Disposal Project-Stage-II which is roughly around INR1100 crores of which Om Infra share is 30%. This project is expected to be completed in the next 48 months with that LOA and further 15 years of operation and maintenance. During this year, this financial year, the company’s proud to have recommended a final dividend of 50%, who is INR0.50 per equity share on face value of one each for the financial year ended 31st March 2023.
The company has additionally acquired 2% shareholding of Bhilwara Jaipur Toll Road through document of converting debt into equity. Now it has become shareholding — now it has shareholding of 51.28% in the subsidiary company. At the end of FY’23, company has an order book of over INR3,200 crores, which is more than three times of FY — or more than four times of FY’23 revenues out of which roughly around the I would say 50% order book is of Jal Jeevan Mission and the remaining is hydropower projects. Jal Jeevan Mission projects that we have bagged our states of UP and that fund what states are would states are very focused on fast execution of these projects. And likewise for hydropower projects also, our clients are central government PSUs and from state government which are very heavily focused on completion of these projects in a timebound manner. And therefore, we will foresee the growth of revenues have been in the same manner as we have done in this financial year.
Company has also bidding for new Jal Jeevan Mission projects across the nation and expect to receive new orders in the near future and Government of India is also allocated a budget of INR70,000 crores for the Jal Jeevan Mission projects effective implementation of Hat Ghar Jal which is now the original the Honorable Prime Minister. All in travel bit dedicated check record and leadership position in the hydropower and in for the infrastructure business is ideally positioned to capitalize on this potential, on the potential in this field. Also, the company has a growth opportunity in hydropower sector as the Government of India is pushing for a sustainable energy from reservoirs and various water bodies.
On the financial performance, coming on the financial performance for the quarter, the revenue for Q4 FY’23 has grown by 185% year-on-year to INR347 crores, which is thus far the highest we have ever done in the history of the last 50 years of the company as compared to INR1.22 crores in the previous financial year — previous quarter financial. Operating profit for the quarter stood at INR21 crores, up by 307%. EBITDA margin was reported at 6% which was largely impacted by the lag in the recognition of price variation from Jal Jeevan Mission projects. So the 6% EBITDA margins is not true reflection of the actual margin in the project bit it will just a reflects the lag in the recognition of the price variation from these projects.
The net profit for the quarter was recorded at INR8 crores up by 624% year-on-year. Coming for the full performance, the revenue for FY’23 has grown by 155% to INR799 crores as compared to FY’22, INR313 crores. Operating profit for FY’23 stood at 38 down by about 14%. EBITDA margin was recorded at 5%, which was largely impacted because of the lag in the Jal Jeevan Mission price variation. Net profit for FY’23 was recorded at INR13 crores. Gross debt-to-equity stood at 0.18 point. Net-debt to equity stood at 0.07. Current liabilities are INR414 crores, trade payables up above INR179 crores, inventories at INR544 crores. Cash and bank at about INR75 crores. The net working capital days stood at around 600 days.
So, with all this information, I think I can leave the stage open to any question-and-answers from all the shareholders.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Ladies and gentlemen, we will wait for a moment while the question queue assembles. [Operator Instructions] The first question is from the line of Tanmay from Motilal Oswal. Please go ahead.
Tanmay Jagdale — Motilal Oswal Financial Services Ltd — Analyst
Good afternoon, Mr. Kothari. Am I audible?
Vikas Kothari — Managing Director & CEO
Yeah. Yeah.
Tanmay Jagdale — Motilal Oswal Financial Services Ltd — Analyst
First of all, congratulations. I believe this is the highest inroads quarterly and yearly performance so I wish congratulations and I think the presentation is also very informative so thank you for both of these. If I can just start with — I have a couple of questions. I can just start with the first one pertaining to your gross margin. So based on what you said, so my understanding is that, historically your engineering business has been posting operating margins around our 20%, 22% odd. But now because of the Jal Jeevan Mission projects, your margin would come down to around 14% to 15% on a sustainable basis. Is that right, sir?
Vikas Kothari — Managing Director & CEO
So, see Jal Jeevan Mission projects are hydro mechanical used to be on his actually monopolistic kind of a business and therefore we enjoy double-digit margins there. Jal Jeevan Mission is certainly not as numerator in terms of gross margin and ordinary margin, but it’s certainly double-digit margins. The only problem that happened is that the price variation effects the initial execution of the project because there price variation is always lagging behind by at least one or two quarters because the bottom always is based on indices and bank, indices stake two quarters to come and therefore the lag in the recognition of price variation. Therefore, you see a bit of a dip in margins.
Tanmay Jagdale — Motilal Oswal Financial Services Ltd — Analyst
Thanks, sir. But in terms of absolute numbers, because if are increasing the top line, your overall profits will continue to grow. All we had a slightly lower margin per se.
Vikas Kothari — Managing Director & CEO
So all of these projects that we have bagged have been bagged with a healthy margin. We did have a bit of an impact because of the price in the cost over raw materials because of Ukraine was especially the DI price and increase in the MS, but we have as fast as the price rise happened, but price drop has also happened equally speed. So, we are seeing that the margins are getting back to the double digit.
Tanmay Jagdale — Motilal Oswal Financial Services Ltd — Analyst
Right, sir. And so if you can also throw some light on the you said that is almost if i got the number correct says around INR800 crores strong your various monetization that you put in your presentation. So what is the timelines expected for some of these [Indecipherable]? And how confident are you that that’ll happen?
Vikas Kothari — Managing Director & CEO
We cannot put any fixed timeline to this as of now, because any number given by me will be the best case estimate. But what I can tell you is that the breakup of this it is INR1800 crores is roughly about price INR600 from MHADA which is our real estate project in Mumbai, then about INR500 crores, INR600 crores from road and about INR300 crores, INR400 crores from PALACIA which is a real-estate project in Jaipur. And the INR500 crores, INR600 crores is at road asset, the arbitration that we have. And about INR100 crores from other arbitration. So that is how the cumulative figure of INR1800, INR1900 has come. Now MHADA may take about three to five years to come. A road may take — road is in litigation, so the challenge it in the High Court and how the court processes. So my best guess estimate would be anywhere between two to three years it should come.
PALACIA realization, the project is already completed. There is no further won’t be issue to be obviously also therefore the now the only thing that happened the same philosophy will increase and we realize these revenues here on INR350 crores to INR400 crores in the next two to three. So I have the highest amount of visibility, clear visibility on PALACIA on the arbitration claims in the next two to four years I would say.
Tanmay Jagdale — Motilal Oswal Financial Services Ltd — Analyst
Thank you. Thank you very much, sir, and all the best. I’ll probably join the queue again if I have anymore questions. So I’ll probably let someone else to talk now.
Operator
Thank you. The next question is from the line of Pinaki Banerjee from AUM Capital Private Limited. Please go ahead.
Pinaki Banerjee — AUM Capital Private Limited — Analyst
Good morning, sir. My first question is initially you have stated by the current order book with [Indecipherable] crores now and also the tenders was the INR4,000 crores also where we have bigger in the pipeline. So, sir, how confident are you to grab these tenders advisory excessive mergers L1 bidder in this INR4,000 crores?
Vikas Kothari — Managing Director & CEO
So, bidding is already in — they’re all in various stages of bidding and we are hoping to add within this financial year and other INR500 crores to INR1,000 crores at least, if not more.
Pinaki Banerjee — AUM Capital Private Limited — Analyst
Okay, sir.
Vikas Kothari — Managing Director & CEO
On a conservative basis, we should add about INR500 crores to INR1,000 crores at least in this financial year.
Pinaki Banerjee — AUM Capital Private Limited — Analyst
Okay, sir. Sir, and the next question is coming into our balance sheet actually the concept in that inventories have actually they fallen fro INR69 crores to INR544 crores. But while the [Indecipherable] increased by almost three times from efficacy INR42 crores. Can you post a light on this, please?
Vikas Kothari — Managing Director & CEO
On behalf of company I would like to thank [Indecipherable]. As a turnover view by threefold in this fiscal year correspondingly our receivables also believes the same proposal. So far we were if we’re rising there [Indecipherable] at cost, the agenda will conduct that work in progress which has been ready for billing to the police authorities have not been bid and approved by the authorities have been booked as unbilled revenue on the balance sheet. But revenue have receivables in the balance sheet as I’ll move any contact received, this has escalated there if you look at the balance sheet for two approvals for the growth a typical last year.
Pinaki Banerjee — AUM Capital Private Limited — Analyst
Okay. Okay, sir, fine. That’s helpful. That’s all from my end, sir. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Rajnish Dahel as an Individual Investor. Please go ahead.
Rajnish Dahel — Individual Investor — Analyst
Yeah, conclusions on good set of numbers. Actually, it sounds like there you said the hydroelectric projects they want to us whether you do bidding on EPC basis all the project and how are the payment timelines like milestone-based or monthly based. And do you have any like penalty or liquidity damages clauses on any of your projects or on all of your projects? And how much is the retention money being kept on these products?
Vikas Kothari — Managing Director & CEO
So the bid for hydropower projects is whichever of two kinds. One is central government PSUs and the other one is state government corporation. We have — I think your question was milestone-driven payments, yes, we have milestone-driven payments and yes we have progressive image also, so we get to pick and mitigate 5% to 10% advance from these clients against bank guarantee. Then we get milestone-driven payments, which is after approval of design trying, after mobilization interface, and at every stage of progressing the works we get containment. So these are all stage payments. In the last 5% to 10% is the retention amount which retained against a typical liability period, typical liability period is roughly around 12 months. And in what cases we get release that effect that 10% or so against the bank guarantee. So therefore there is a lot of requirement of non-fund-based limits, which is basically bank guarantee and bank guarantee pretty much around material. But the cash flows and payments are very healthy because the hydropower projects funding is already in place. So the moment we place our bills we get paid within 30 to 40 days. So that’s never a problem.
As regards penalties, yes, we do have penalties. Penalties can range from anywhere between 5% to 10% of the total project value depending on the delay that happened, most of the time the delays are not attributable to us, but it is that attributable to I would say, circumstances because we delays in site availability, or land acquisition etcetera. So, if the delays are not at a pivotal to us, they are well compensated by the client to us. If the delays are attributable to us, then we have to incur penalty. We have been fortunate, they might have incurred penalties in pre match I would say most of our projects.
Rajnish Dahel — Individual Investor — Analyst
Thats’ good to know. And is there any price variation clause on hydroelectric projects also, because this involves lot of [Indecipherable] and is there any chance of improvement of working capital cycle?
Vikas Kothari — Managing Director & CEO
All the hydropower projects that we have in our order book, including the ones which we are bidding for also have faced variation clause built in them. We don’t sign any contract without price variation built in them. So that’s to answer your first question. Your second question was the working capital cycle is there is a significant improvement, including state typically government PSUs are very healthy and payment on them is very healthy based on the payment six states also sometimes there are delay but most of the time we get paid within 30 to 60 days. So usually not a problem. The only problem that happens is that typical milestones working capital cycle would get stretched because milestone maybe have unless you achieve all the 10 or 20 items in the milestone the payments have held up.
Rajnish Dahel — Individual Investor — Analyst
Understood. That’s helpful. And second is on Jal Jeevan Mission projects, what is the current progress and timeline for the completion of project? And you are talking about the price variation clause. So is it like only purely on the index basis or you have some tagging ratio like steel material that you paid it was under during the bidding has become 120 will get full amount of duration or only to based on the index?
Vikas Kothari — Managing Director & CEO
Our price variation formula is already in the written in the contract and they are based on some formula and index. So, in most cases, they don’t fully compensate. I wouldn’t say 100% of the price increases compensated but especially when the rise is almost high like what happened in past, but I would say above 90% is discovered. We get price variation on account of rise in steel, on account of rise in cement on account of rise in labor and fuel also.
Rajnish Dahel — Individual Investor — Analyst
Okay. And second question were regarding what is the progress on current Jal Jeevan Mission mission projects and what is the timeline for completion of these projects?
Vikas Kothari — Managing Director & CEO
Jal Jeevan Mission has a lot of focus both by the central government also and by the state government also. See what happens in Jal Jeevan Mission project is that 50% of the funding is coming from the central government and the central government is very strict about the timelines of the project. So therefore and the fund especially then the utilization by the state government has also strictly monitored. So this results in expeditious implementation of this Jal Jeevan Mission project. We are working in two — we have two large orders from two large state government, which is UP and Rajasthan and both governments are very focused on the early completion of these projects. So the current order book that we already have, my expectation is in the next 12 to 24 months while these orders should get completed without any delay beyond that.
Rajnish Dahel — Individual Investor — Analyst
That’s very good to know, that is quite fast. And the third question is regarding your monetization. You said that road arbitration when it take to two to three years of time, so during this two, three years whether you will get further interest cost on base is a;ready awarded?
Vikas Kothari — Managing Director & CEO
So that award is already covering the interest and till the time payment is made to us. But what happens typically in that first we have proven in the court then after winning in the High Court, we have state government will obviously appeal in the Supreme Court also. When we’ve taken the bills in the Supreme Court, [Indecipherable] then the state government will invite us for negotiation. So in that process I’m not very confident weather we will get the entire amount and whether we will get the entire interest also, which has been already awarded. Award already covered being just also and then first time that the payment will be made, but when it comes to settlement we may have to forego some interest amount. We may have to forego the rate of interest, etcetera. So therefore [Indecipherable], bit of a week, you put out the idea behind the amount, the final amount.
Rajnish Dahel — Individual Investor — Analyst
Unbderstood. And so real estate project for the Jaipur you say another two, three years time will be taken, so any stage wise realization like in this financial year, next financial year. How much will be the realization if you consider two to three years of time timeframe?
Tanmay Jagdale — Motilal Oswal Financial Services Ltd — Analyst
So since the project is already completed and since the OC has also been received for our Jaipur projects, so therefore in terms of realization there is no — nothing holding it back. Now with the realization revenue recognition will particularly will simply depend on the field. So as soon as the sale happens the registry of that sale can be done immediately and therefore the 100% recognition affect sale can be done also.
Rajnish Dahel — Individual Investor — Analyst
Okay. So is there any — are you expecting any revenue in this year?
Vikas Kothari — Managing Director & CEO
In this financial year based on the number of units that we sell in this financial year, the entire field will be recognized for those units sold. It’s just a guesstimate mix. The project is completed I think the sale should be quit healthy.
Rajnish Dahel — Individual Investor — Analyst
Okay. Is there any terms in value terms you can quantify? How much maybe that values?
S.K. Jain — Chief Financial Officer
Yes, I would like to interfere. In terms of sales of the PALACIA project, we have only recognized so far INR120 crore out of sale of INR292 crores bills as we continue from. The balance INR170 crores will be recognized displayed in this financial year as soon as we get the convenience durable goods buyer sale is a project. Let me have been realized by us early convinced die to you’d spending and as soon as that gets we will regonize the revenue in all the residents following there. We are expecting the INR100 crores, INR120 will be revenue revolution in PALACIA this year. Even if you don’t sell any project or any unit.
Operator
Thank you. Mr. Dehel requested to join the queue for any follow up. The next question is from the Guneet Singh from CCIPL. Please proceed.
Guneet Singh — CCIPL — Analyst
Hi, sir. I just have one question. So looking at the current run rate, the debt to revenues of around INR350 crores and I just wanted to know whether this number is sustainable or not? So can we expect to do revenues of about INR40,000 crores in financial year 2024. And as for the margin profile, as we said, there is a price variation clause. So can we expect the margins to be in double digits in FY’24?
Vikas Kothari — Managing Director & CEO
The revenue condition when it comes to lease kind of projects is not a linear recognition, especially in [Indecipherable] recognition from infrastructure EPC and close down and it also truly depends on how much of supplies we do. So the I would suggest that you should not look at the revenue recognition on a quarter-to-quarter basis. But, certainly, on an annual basis, we will certainly have a significant growth in not annual revenues from the engineering business from the current existing order book itself because you see the INR3,200 crore of order book where we are at the peak of the infusion anyways. So in all of these projects are already there 20%, 30%, 40% of execution. Now, obviously, the work doesn’t stop, nor does it slow down, it just keeps on growing from here. So therefore INR3,200 crores to be integrated over the next two to three years maximum even if I nearly divide in result in at least INR1,000 crores in revenue and engineering business alone, what are expectation is for this current financial year.
Added to that will be revenue growth from real estate and from other sources. As far as margin is concerned, the margin is already logged in the project bid. So margin will continue to improve impacting keep on adding the escalation revenue in the price variation then we also which will further improve the margin going forward.
Guneet Singh — CCIPL — Analyst
All right, great. Thank you very much. So is there any internal number that you’re looking at the kind of growth for financial year 2024?
Vikas Kothari — Managing Director & CEO
I want to say at least from INR700 crores, the engineering revenue should jump to INR1000-plus in this current financial year.
Guneet Singh — CCIPL — Analyst
All right. Great. That is very encouraging. That’s all from my side. Thank you.
Operator
Thank you. The next question is from the line of Hrishikesh Oza from RoboCapital. Please go ahead.
Rishikesh Oza — RoboCapital — Analyst
Hi, sir. Thank you for the opportunity. Sir, my first question is regarding the real estate. So what operating margins have been looking for Mumbai projects and for projects excluding Mumbai?
Vikas Kothari — Managing Director & CEO
I won’t like to comment much on the Mumbai project because unless and until the revenues and taking tax margins anyway are already frozen because on this expected revenue of INR600 crores to INR700 crores from the Mumbai projects are cost towards the project will be very minimal. We may have to just contribute the premium that you have to pay to MHADA and the construction cost. So in terms of our profit margin in that expected revenue of INR600 crores to INR700 crores is phenomenon. So, that is to answer one part of your question. The other part regarding Jaipur project, [Indecipherable]?
S.K. Jain — Chief Financial Officer
Yeah, we would be closing operating revenue of 20% after the sales are entirely booked. We are hoping that INR600-plus crores will be booked in the revenue in total and we will have a profit of 20% that is.
Rishikesh Oza — RoboCapital — Analyst
It wasn’t is the profit back margins you are talking about?
S.K. Jain — Chief Financial Officer
Pretax.
Rishikesh Oza — RoboCapital — Analyst
Pre-tax, okay. Okay. And also one more question on the MHADA, so could you share any timeline like how — when can we start with the project or anything?
Vikas Kothari — Managing Director & CEO
As of now we are waiting for the arbitration award to come, once arbitration gets concluded then all the other things are going to start to moving in the sense that then we’ll know what are the timelines, what about process to start implementation on the project.
Rishikesh Oza — RoboCapital — Analyst
Okay, and when say next hearing?
Vikas Kothari — Managing Director & CEO
I’m hoping that by July or August we should receive the arbitration award in our hand, arbitration decision not award the arbitration decision in our hand.
Rishikesh Oza — RoboCapital — Analyst
Okay. Okay, that’s good. Thank you. Thank you very much.
Operator
Thank you. The next question is from the line of Harsh Saraskal as an Individual Investor. Please go ahead.
Harsh Saraskal — Individual Investor — Analyst
Good afternoon, Vikas Ji. Thanks for the con-call. I hope this will be a continuing factor going forward.
Vikas Kothari — Managing Director & CEO
Absolutely. It will be. Yes.
Harsh Saraskal — Individual Investor — Analyst
SO I have a three questions on Bhilwara toll. As the order being challenged and mainly among the positive indicators by the government? Hello?
Vikas Kothari — Managing Director & CEO
Yeah, the order has been, Jain Saab.
S.K. Jain — Chief Financial Officer
Yeah.
Vikas Kothari — Managing Director & CEO
There is no deposited in the cohort by the state government. But the order has been challenged by them in the High Court.
S.K. Jain — Chief Financial Officer
So would they lead to deposit any amount and therefore for sale in the orders?
Vikas Kothari — Managing Director & CEO
Jain Saab, can you throw some light on it?
S.K. Jain — Chief Financial Officer
I would like to add here that — the arbitration award was given in two phases. One is an interim award for the debt and second is the final award for equity that award has been received and the amount has been deposited in the bank and our loan has been almost fully liquidated by there [Indecipherable] by depositing the money into the bank. So that I would is almost be over and equity award has been received recently in February for INR529 crores that ward is in the process of tenant by the PWD in commercial court, High Court and we don’t think that they will be able to challenge this award without depositing any initial deposits in the board, maybe 10% to 20% but they will show the deposit some amount of money in court before going to sell into this award.
Harsh Saraskal — Individual Investor — Analyst
Got it. So that means the first INR199 crores we have received and the debt has been paid?
S.K. Jain — Chief Financial Officer
Although 90% of debt has been paid of, yes.
Harsh Saraskal — Individual Investor — Analyst
Okay. And who holds the remaining stake in the company [Indecipherable]?
S.K. Jain — Chief Financial Officer
51% is hold by us and 49% is hold by SPML Infra Limited started a base company.
Harsh Saraskal — Individual Investor — Analyst
Okay, got it. On the real-estate projector for Jaipur PALACIA, what is the average selling price we has reliazing back now and has it increase in last 2, 3 years?
S.K. Jain — Chief Financial Officer
Right now we are selling at roughly 12000 and 2500 per square feet and last three, four years we’ll spend among the same wallboard. And in the initial state when we launched the project in 2011, ’12 that time will be 8,000 plus target.
Harsh Saraskal — Individual Investor — Analyst
Okay. Okay. And on the Jal Jeevan Mission I wanted to ask. What are the receivable days in the Jal Jeevan Mission?
S.K. Jain — Chief Financial Officer
45 days.
Harsh Saraskal — Individual Investor — Analyst
45 days, okay. So bringing forward if I turnover that working capital need and that will be going up in the company, is it right to presume that?
S.K. Jain — Chief Financial Officer
No, working capital cycle will be used and date will not increase because these projects are not on date basis, all about cash content basis. The date will not be must but looking at we’ve improved much as against current cycle.
Harsh Saraskal — Individual Investor — Analyst
Okay. And last question on the MHADA project. So DB realty would be constructing this project going forward or you will be looking for another partner in the project?
Vikas Kothari — Managing Director & CEO
We are still contemplating that. We are still working on that. So there’s nothing frozen on that as yet.
Harsh Saraskal — Individual Investor — Analyst
Okay. Are the stake won’t reduce the 17% which we hold that will be there, no?
Vikas Kothari — Managing Director & CEO
Yes, that will be there.
Harsh Saraskal — Individual Investor — Analyst
Great. Thank you so much for your time and all the best for the future.
Vikas Kothari — Managing Director & CEO
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Satish Monza as an Individual Investor. Please go ahead.
Satish Monza — Individual Investor — Analyst
Hello? [Foreign Speech]
Vikas Kothari — Managing Director & CEO
[Foreign Speech]
Satish Monza — Individual Investor — Analyst
[Foreign Speech]
Vikas Kothari — Managing Director & CEO
[Foreign Speech]
Satish Monza — Individual Investor — Analyst
[Foreign Speech]
Vikas Kothari — Managing Director & CEO
[Foreign Speech]
Operator
Thank you. The next question is from the line of [Indecipherable] as an Individual Investor. Please proceed.
Unidentified Participant — — Analyst
Yes. I have some two follow up questions. In your previous presentation, you mentioned something about silo projects, so what are — you targeting any progress in foodservice for the silos?
S.K. Jain — Chief Financial Officer
Yeah, I would like to answer this question. Silo project we have taken the year 2017 from FCI and the aggregation of land was the big challenge on the where the station is nearby. So the time taken by us in land aggregation 20 acre land has been aggregated both location Bihar and Gujarat for many small sets of land has been trending for government approval or local administrative approval. So, without those approvals we are not able to launch integrate the project and you apply to FCI for the time extension also. So as soon as the small piece of land is aggregated we will start execution of the project and going-forward in two to three years we hope that we will be completing the budget for the 30-year concession with FCI. We distributed have now. So we have not covered it because those approval they are not able to comment on anything.
Unidentified Participant — — Analyst
And if you get all these projects under aggrigation, so what will be the revenue recognition roughly acquisition year or like 30 years?
S.K. Jain — Chief Financial Officer
The concern agreement it’s about INR50 lakh each location as a rental for every month. The budget combined dividends come to INR12 crores this per year as a revenue. And again, good interest expenses and administration expences can be INR9 crores to INR10 crores this per year. The INR2 crores maybe roughly revenues — sorry, profit in this for 30 year.
Unidentified Participant — — Analyst
Understood. And what is your —
S.K. Jain — Chief Financial Officer
12 year the debt will be over but after 12 year there profit will be high.
Unidentified Participant — — Analyst
Understood. And what is your bid-win ratio for the projects which we are bidding for hydro-mechanical works and for the Jal Jeevan works?
Vikas Kothari — Managing Director & CEO
Sorry, what was your question?
Unidentified Participant — — Analyst
What is your bid-win ratio like tender win ratio?
Vikas Kothari — Managing Director & CEO
Bid-win, I would say whatever projects we have bid for so far, our success ratio has been quite strong. We have maybe lost out of 10 bids I think I would say about 50%.
Unidentified Participant — — Analyst
That’s very good. And my last question is regarding the MHADA present because this project is being delayed and it will take another five, six year to sell and would have realization of the amount. And when we have the DB realty which is also like going up times and they are also selling their projects. So do you have in mind that you may diversify or like diverse this business like real estate business and just focus on your core business of like EPC and [Indecipherable]?
Vikas Kothari — Managing Director & CEO
The real estate is anyway not our core business, whatever projects we are right now having our own historic land-bank that we have had so real estate is not our focus this and we will be just monetizing the current existing land bank and that’s it. After this, there will be no addition of new land bank.
Unidentified Participant — — Analyst
Okay. And in this hydro-mechanical business, what I understand, when you do that turnkey projects after that there’ll be repair and maintenance were also like AMC kind of business. Do you also get that business or we are not in that business?
Operator
So ladies and gentlemen, it seems we have lost the line from Mr. Vikas Kothari, we request participants to please remain connected while we reconnect them. We have Mr. Kothari reconnected.
S.K. Jain — Chief Financial Officer
I would like to answer this system that in some projects we do O&M for next two to five years after the completion of the project and in some project government awarded for O&M or repair maintain. So right now we have projects like [Indecipherable] where they have or will 10 years. This kind of and when it will go, because if you look depending upon the project and project repair.
Operator
Thank you. We have a next question from the line of Pinaki Banerjee from AUM Capital Private Limited. Please go ahead.
Pinaki Banerjee — AUM Capital Private Limited — Analyst
Thank for adding the opportunities again. So just a hypothetical questions. So since your real estate is not your mainstay business, do you have any plans to demerge it for copper value unlocking of the company in future? Any plans for that?
S.K. Jain — Chief Financial Officer
No, we have only two is going on in real estate, one in Kota and one in Jaopur and both the projects have been completed. No there is no need of any demerge. We will get the revenue added in our consolidated balance sheet going forward. And just one or two years over and we don’t need anything emerging process right now. It is better that we get the revenue of INR300 crores to INR400 crores, INR500 crores EBITDA in our revenue coupled with the main core business revenue.
Pinaki Banerjee — AUM Capital Private Limited — Analyst
Okay, sir. Thanks.
Operator
Thank you. The next question is from the line of Harsh Saraskar as an Individual Investor. Please go ahead.
Harsh Saraskar — Individual Investor — Analyst
Hi. I wanted to ask on the auditor’s qualification reported on the Gurha Thermal Power Company Limited. Can you throw some light on that?
S.K. Jain — Chief Financial Officer
Yes, this project of lignite this thermal project taken by 10 years back in Rajasthan and government couldn’t provide us access to the lignite. So we terminated the contract with government and filed an arbitration in the court and I didn’t potently you still hearing and they have claimed INR30 crores as a competition from the government for not supply of except to state of lignite. This is going and we are expecting that invest two to three years this will be sorted out with the government.
Harsh Saraskar — Individual Investor — Analyst
So, why has auditor qualified his opening on this and not on other arbitration for this?
S.K. Jain — Chief Financial Officer
Because the investment in reassembling is roughly INR8 crore qualify that this amount will be recoverable or not it’s not sure. So, last year they had also qualified Bhilwara Jaipur Toll Private Limited but since the final; award has been received we remove the qualification, this qualification continuing because that award has not been received till now.
Harsh Saraskar — Individual Investor — Analyst
Got it. And other qualifications that for some like there are I think three, four qualification in the arbitral report?
S.K. Jain — Chief Financial Officer
Yeah, one qualification is on Rwanda project where we had booked a small in waste in the late ’22 for approximately INR5 crore rupees. But the Rwanda authority change the parameter of that invoice and told that this kind of engine is not to be applied, this kind of engine is to be suppled. For the invoice which we raised for INR6 crore got partially rejected in March 2023, so we reversed those wise [Indecipherable].
Harsh Saraskar — Individual Investor — Analyst
This is the one that you related services?
S.K. Jain — Chief Financial Officer
For Rwanda authority in Africa. Yes.
Harsh Saraskar — Individual Investor — Analyst
But this is the product — this qualification has been reported first time?
S.K. Jain — Chief Financial Officer
First time, yeah.
Harsh Saraskar — Individual Investor — Analyst
Okay. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Jitesh Jain as a shareholder. Please go ahead.
Jitesh Jain — Shareholder — Analyst
Good afternoon, everyone. I have been a shareholder for the last many years of Om Infra and in fact very happy the way from a revenue of INR100 crores the company made to about INR700 crores and I have seen the company management getting quite ambition. Can we totally expect order book of around INR5,000 crore-plus very soon?
S.K. Jain — Chief Financial Officer
We are hoping that Jitesh Ji — we are bidding for new projects in [Indecipherable], Arunachal Pradesh, Jal Jeevan Mission project in MP and UP. We are hopeful that we will get addition of INR1,000 crore order book in this year. The margins are good, we will definitely break the order.
Jitesh Jain — Shareholder — Analyst
Okay, all the best for that, sir.
S.K. Jain — Chief Financial Officer
Both the project we have the competition is ver higher. We are not bidding on those project.
Jitesh Jain — Shareholder — Analyst
Okay. And also the new projects, I saw there something called FVD systsem. Is this a new area of business that the company is looking to get into?
S.K. Jain — Chief Financial Officer
Yes, we are floating with in joint venture with some party, but we cannot — right now on this kind of project we will be very opportunistic to they had on these projects, whether we bid or not.
Jitesh Jain — Shareholder — Analyst
Okay. Okay. [Indecipherable] all other points I covered by most of them. So that’s it from my side and all the best to the management.
S.K. Jain — Chief Financial Officer
Thank you, Jitesh Ji.
Jitesh Jain — Shareholder — Analyst
Thank you. Thank you.
Operator
Thank you. [Operator Instructions] Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Mr. Vikas Kothari for closing comments. Thank you and over to you sir.
Vikas Kothari — Managing Director & CEO
Thank you very much for everyone’s participation. We hope that we have been able to answer each and every question of all our valuable shareholders and can they dial in my initial feeds earlier or we are very positive signs of we have had damage to astounding growth in our revenues and we hope that we will continue the same going forward. Yeah, and also we assure you that we can continue to have such conference calls without any break. Feel free to reach out to us for any further queries and I’ll hand it over to Stellar.
Operator
Thank you very much. Ladies and gentlemen, on behalf of Om Infra Limited that concludes this conference. Thank you all for joining us and you may now disconnect your lines.
S.K. Jain — Chief Financial Officer
Thank you very much.
Operator
Thank you.