Vascon Engineers Limited (NSE: VASCONEQ) Q3 2026 Earnings Call dated Feb. 11, 2026
Corporate Participants:
Akhilesh Gandhi — Investor Relations
Santosh Sundararajan — Group CEO
Somnath Biswas — Chief Financial Office
Analysts:
Himanshu Upadhyay — Analyst
Siddish — Analyst
Mihir Vyas — Analyst
Rushabh Dugad — Analyst
Kanish Shah — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Vascon Engineers Ltd. Q3 and 9 months FY26 earnings conference call. 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. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on a Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Akhilesh Gandhi from Stella Investor Relations. Thank you. And over to you, Mr. Gandhi.
Akhilesh Gandhi — Investor Relations
Thank you, Rudrav. Good morning everyone. I, Akhilesh Gandhi, on behalf of Stella Investor Relations welcome you all to the vascon engineers quarter three and nine month FY26 earnings conference call. We shall be sharing the key operating and financial highlights for the third quarter and the ninth month ended on December 31, 2025. We have with us today the senior management team of Vascon Engineers Limited. We have Mr. Dr. Santos Sundarajan. He is a Group CEO and with him we also have Mr. Somanath Biswas. He is a Chief Financial Officer. Before we begin, I would like to state that this call may contain some of the forward looking statements which are completely based upon the company’s beliefs, opinions and expectations as of today.
The statements made in today’s call are not a guarantee of future performance and also involve unforeseen risks and uncertainties. The company also undertakes no obligation to update any forward looking statements to reflect development that occur after the statement is made. Documents relating to company’s financial performance, including the investor presentation have already been uploaded on the stock exchange. Now I invite Dr. Santosh Sundarajan to state his opening remarks on the company’s performance for the third quarter and nine months ended on December 31, 2025. Post that, we will open the floor for the question answer session. Thank you. And over to you sir.
Santosh Sundararajan — Group CEO
Thank you. Good morning everyone. This year is especially meaningful for us at Bascom as we complete 40 years of our journey under the theme 40 Chali Sal Beni Sal. We are proud to celebrate four decades of trust, execution, excellence and enduring relationships with our clients, partners, lenders and stakeholders. This milestone reflects not just the scale and diversity of projects we have delivered over the years, but also the strong values, discipline and credibility that have guided our growth. I warmly welcome you all to the earnings conference call of Vascon engineers for the third quarter and nine months ended December 31, 2025.
Thank you for taking the time to join us. I hope you’ve had the opportunity to review our Q3 and 9 month results along with the investor presentation which is available on the Stock Exchange as well as the company’s website. During Q3 FY26, EPC revenues were lower primarily due to the impact of election in Bihar State and delays in receiving approvals in a couple of projects which has temporarily slowed execution. These are largely timing related issues and we expect execution to normalize as approvals are received and on ground activity resumes. On the real estate side, revenue during the quarter was impacted by revenue Recognition policy under which revenue is recognized only upon completion of projects.
As no real estate projects were completed during this quarter, no revenue has been recognized. In contrast, Q3 FY25 included revenue from the completion of Good Light project resulting in a higher base for comparison. On a cumulative basis, our 9 month FY26 revenue growth has been muted at around 1% primarily due to the lower execution in the EEPC segment during Q3 and the absence of any major project completions in real estate during the quarter. With the second half of the year typically being more conducive for on ground activity, we expect execution momentum to improve enabling teams to accelerate progress on ongoing projects and support more consistent revenue recognition in the coming quarters.
Building on our operational learnings and current execution trajectory, we have outlined clear strategic priorities for the remainder of the year. EPC continues to remain a core focus area with emphasis on improving execution efficiency and expanding our project pipeline to support sustainable medium term growth. We continue to actively pursue new order inflows and expect to secure meaningful EEPC orders during FY26 which will further strengthen our order book and enhance long term business visibility. In the real estate segment, we remain focused on optimizing our debt structure in a more cost efficient manner to improve liquidity and financial flexibility.
At the same time, we are prioritizing the timely completion of ongoing projects to enable revenue conversion and profitability while preparing the ground for upcoming project launches. Our growth framework is anchored by a simple principle of sustained growth powered by exit, execution, excellence and financial discipline. This is supported by a strong working capital position with total sanction limits of 745 crores including both fund based and non fund based. Of this, approximately 370 crores remains unutilized with an additional 60 crore currently under appraisal. This liquidity position provides us adequate headroom to execute our projects without disruption. With strengthened banking support and higher sanction limits, we are well positioned for rapid, rapid resource mobilization across projects.
Available working capital can support execution of up to approximately 3,000 crore of incremental EPC orders, ensuring predictable growth, sustained execution momentum and healthy cash flow visibility during the current quarter. We also received a revised working capital assessment from SBI with improved commercial terms. This included better collateral leverage with collateral coverage reduced from 35 to 27%. SBI led collateral optimization has unlocked incremental working capital without the need for additional security, thereby enhancing liquidity and improving cash flow efficiency. Additionally, bank guarantee margins for BGs exceeding three years have been reduced to 15% from 25%. BG Commission rates have also improved further.
Crystal has reaffirmed our long term credit rating at A for the current year reflecting the strength of our balance sheet, our liquidity position and our banking relationships. Coming to our segmental performance, Our EPC business continues to be the cornerstone of our growth journey. Over the years we have built a strong track record having successfully completed more than 225 projects covering over 45 million square feet of construction across India. Our execution strength is backed by the team of over 500 skilled professionals across project management and engineering functions. In addition, our in house design and planning capabilities enable us to offer complete turnkey solutions covering architectural design, structural engineering and execution.
This integrated approach reduces dependence on external agencies and speeds up our decision making and helps maintain healthy margins. We continue to focus on large high value civil construction contracts especially from the government bodies and repeated private players. A strong track record of quality execution and timely delivery has helped us build long term relationships with marquee clients like Ames, NBCC, Citco, MMRDA, etc. And other leading institutions in healthcare, educational, industrial and residential sectors. In Q3FY26 our EPC revenue stood at 248 crore reflecting a moderation of around 9% year on year basis. On a cumulative basis EEPC revenue for nine months FY26 reached 676 crore registering approximately 4% growth on a year on year basis.
During the year so far we have secured new EPC orders aggregating to 646 crores. In April 2025 we received an order from Royal Rides Private Limited valued at about 225 crores. During Q2FY26 we secured an order of 161 crores from MSEB for Saudamini Building at Haji Ali Mumbai. Further in Q3FY26 we received an order of Navi Mumbai Municipal Corporation for a super specialty hospital at Bellapur valued at 220 crores. As a result of these additions, as of 12-31-2025 our total order book stands at 28.25crore which is approximately 2.8 times our FY25 EPC revenue providing strong visibility for the next 2 to 3 years.
The composition of the current order book is as follows. External EPC contracts account to about rupees 2470 crores while internal real estate projects contribute 355 crores. Approximately 77% of the total order book is from government backed projects which supports timely receivables and provides greater cash flow stability. In addition, the strategic engagement with Adani Infra India Ltd. As discussed earlier is expected to further support future order inflows and strengthen our EPC order book over the medium term. Now let me provide an update on the real estate segment in Q3 and 9 month FY26. We continue to see steady progress across our ongoing projects.
During the nine month period we achieved new sales booking of 77,315 square feet with a total booking value of 86 crore and collection of approximately 105 crore. While these sales will be reflected in the financial statements in line with revenue recognition norms, operational activity across the projects remains steady. We currently have four real estate projects under active development, the total saleable area of 0.78 million square feet of which 0.65 million square feet is attributed to Ascot. These projects include Tulips in Coimbatore, Woodlife in Teligao, Toa in Karadi and Orchids in Santa Cruz, Mumbai. To date we have sold 0.48 million square feet, booked cumulative sales of three hundred and three crore and collected 238 crore.
Revenue of 117 crores has already been recognized from Tulip and Good life. Looking ahead, our near term real estate pipeline remains strong and well defined. It includes a joint venture residential project in Povai, Mumbai, the Prakash Housing Society redevelopment for which all the approvals have been received and construction is expected to commence in Q1 FY27 Tower of Future which is a commercial project in Baner where the approvals are currently under process and the 4 acre high density housing Ajanta real estate development is also at a planning stage. Collectively these projects represent a total developmental potential of approximately 1.94 million square feet with an expected gross sales value of 2360 crore.
Of this 0.82 million square feet of saleable area and 1,110 crores of revenue would be attributable to VASCON. With steady progress across ongoing projects and the robust pipeline in place, we expect the real estate segment to contribute in a more consistent manner over the coming periods. Coming to the financial performance of the company in Q3FY26, the company reported a consolidated total income of 254 crore in Q3FY26 reflecting a year on year decline of approximately 15% compared to 298 crore in Q3FY28. This is in line with the factors which have been outlined earlier. EBITDA for the quarter stood at 17 crore compared to 24 crore in the corresponding period last year.
EPC EBITDA margins remained stable at around 10%. Overall, EBITDA was impacted by the lower revenues during the quarter along with higher marketing expenses incurred in connection with newest real estate launches. Profit after tax stood at 9 crore in Q3FY26 as compared to 76 crore in FY25 reflecting a decline of 88% on absolute basis. This higher profit in Q3FY25 was primarily on account of an exceptional gain of 75 crores arising from the sale of GMP. Excluding this exceptional item, the underlying profitability remains aligned with operational performance. Coming to 9 month performance, the company reported a consolidated total income of 725 crores for 9 month FY26 to as compared to 698 crores for the corresponding period last year.
EBITDA for the nine month period excluding profit from sale of Asian hotels stood at 53 crores as against 58 crores in the corresponding period last year, the EBITDA margin for the nine months stood at 9%. For the EPC segment, profit after tax for the nine months stood at 43 crores compared to 93 crores last year reflecting a decline of 55%. The higher profit margin in the previous year was primarily due to the sale of GMP Technical Solutions. To conclude, while revenue during the quarter was impacted by these timing related factors, our execution environment is improving.
With a strong EPC order book, a healthy project pipeline and a strengthened balance sheet, we are well positioned for the next phase of growth. As execution momentum builds across projects, we remain confident in delivering sustained progress and enhancing long term value for our stakeholders. With that, we now welcome your questions. Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the Line of Himanshu Padhyay from Steadfast. Please go ahead.
Himanshu Upadhyay
Yeah, hi, good morning. So my first question was on the real estate side. Okay. If we look at our orchids now the presentation or the Q1 it sold around 10%. Okay. Currently even after two quarters we have sold only 13%. And why the velocity is so slow in that project and what can we do about it? Because the markets seems to be good. So where are we stuck up there? Also where did we lack or is it in the project design feature, lack of focus or something else? What can we learn from it? Because I don’t think we would have expected or wish to do a slow sales in the project. So some thoughts of that will be helpful.
Somnath Biswas
The primary observation is correct as because this is our first redevelopment project in Bombay and you know the market size of the Bombay development project. Unless project comes to the ground level or ground level up the the sales velocity is very unlikely to increase. There is a standard phenomena is the most of the development project except that that the player who are playing the game for a long time. I’m talking. No, I’m not referring them but for any se. Any new start it is a. It is a mind psyche. So now we are at G plus 1 level.
The visibility is much better, the inquiry is much better and you have technically as per the registration and booking is concerned it is showing 10% to 13% but there are another 10 odd bookings has happened which has been token money and everything has been received. But the documentation process is on. Unless it is being done, we cannot reflect it. Once this will be reflected then 10 will be converted into 20, 25 kind of things. More than 25.
Santosh Sundararajan
More than 25. But yes, apparently as of cell velocity was low due to this visibility and the ground level movement and all this thing. But now since the movement is G +1 but G +2 good amount of inquiry is happening. The velocity of inquiries increased substantially and we are expected a good conversion. Honorable Gudi Parva and to answer your question on the design, no, I think all customers that have visited site have in fact expressed a lot of happiness on the features of the design. The you know, facilities that are being provided even with the limited space we have. So we are very confident of our design and quality of the product. That is not under question. Also we have strategized that you know as Somnath said we have about 1012 bookings which are not reflecting as we haven’t done the registrations. These cash flows are available to keep the project going so once we are about 25% sold, we do not even want to be slashing prices.
So since it’s a small project and our inventory is small, we are not unduly worried about the slower velocity. If we had more inventory and you know, slightly bigger projects. Yes, I agree with you. We would have to take certain measures including reducing the price a little bit if need be to ensure velocity is on at this point of time. We accept it slow but it’s known to us and it doesn’t worry us too much at this point of time.
Himanshu Upadhyay
Okay. And one more thing. I was going through a credit rating rational or which has got renewed in the month of January 26th. Okay. It states that the debt under real estate had risen to 147 crore as of FY25 and from 88 crores at the end of FY24 currently. What would be the debt on the real estate side of the business? And also it says the rating rational. Okay. Or it says that liquidation of long stuck inventory in real estate segment is a key monitorable. Okay. And it says that the value of unsold inventory is rupees 320 cr as of March 2025. Can you give some thoughts on that? And also, yeah. What is the debt level on the real estate side of the business? As of now.
Somnath Biswas
The real estate side. Business, the debt level is once again the range of 150 to 160 crore kind of things and which is very inevitable. It is likely to happen if you compare the debt level of 24 or 80 odd crores. So at a point of time everybody is aware that we are supposed to raise almost 100 crore through QIP, 125 crore from QIP out of which 100 crores earmark for the real estate. But due to certain market condition, all this thing, we don’t want to dilute our equity drastically. We drop the QIB program. But obviously the project cannot be stopped. The fund mitigation has to be done through other sources. So that’s why the date has been increased.
Santosh Sundararajan
And also a good chunk of this is not towards the 23 projects that are, you know, giving us sales and revenue at this point of time. We have poi, we have Baner and we have Prakash. All of which needed, you know, purchase of certain FSIs and approval costs to launch these projects. So you know, that is why the borrowing is also looking a bit high at this stage. And the second part, yes, the rating agency there is a very standard phenomena for rating agency for all real estate project that sales velocity and inventory dilution. Has to be monitored. That is fine. Our see whatever the complicated project, there is no such inventory is left out. But ongoing project.
There is a two way to look. At as because in book certain of inventories always being getting piled up due to the revenue recognition policy. The books will has to continue some good amount of inventory with primer per se. It is one side, it is inventory, other side is advanced from customer and all these things are happening. So we are not too much or it as sales are happening. Yes. For what you are pointed for the home signal project. It was relatively slow. It was relatively slow but now it is picking up. And also we are tying up some channel partners who is in that area who are predominantly operating in that particular segment. So we are quite hopeful that sales velocity will improve very significantly in coming days.
Himanshu Upadhyay
Okay. Because in our strategic goals and objectives also, which is I think slide four. Okay. You stated that the goal is to optimize the real street debt. Okay.
Santosh Sundararajan
Yeah. I mean, see, so when we say optimize doesn’t mean we will not borrow. I mean, let me be very clear. On the real estate side, you know, there are various options available for us real estate, even though we are doing it on a joint venture basis. And I keep saying it’s glorified EPC the way we look at it. But even then today, given the FSIS available in most land parcels, premium FSIs and TDRs would have to be purchased. So even if we get the one FSI land coming from a landowner or a redevelopment from the society, the balance exploitability on the land has to be purchased by us.
So there is an investment always needed. In possible cases where we are able to get private equity in or you know, underwrite certain inventory in advance at a subsidized rate and get get equity in. We always explore that option. But in some cases, when we know that, you know, it’s a matter of four, five, six months by the time the approvals come and we are able to launch and if private equity is coming at an extremely high cost, then we don’t mind borrowing. Our current borrowings are well below 15, 13% and all of these borrowings are in our assessment not more than six to eight months, there’ll be a rollover.
These borrowings will remain as we continue to grow our ep, our real estate book. Because if one project gets launched and starts giving us cash flows and revenues, another project would want to be launched and we would need to. But we will keep a constant eye on the amount of Borrowing the serviceability of this borrowing and we will ensure that you know it is not going to create trouble for us internally.
Somnath Biswas
And if you look at that slide 4 of that our presentation we are talking about the optimization debt in the most cost effective manner. So the meaning is that there are a couple of debts initial level which has been taken at higher cost and we are gradually converting into the lower cost. So cost optimization is the first step to happen. And then obviously the date optimization the date as long as we want to. Grow the real estate that will keeps. Coming, keep going, that will keep on happening spending. But cost optimization is the priority to get it done. So it has to be cost effective in terms of the interest rate is concerned.
Himanshu Upadhyay
Okay, and one last question here on that side is westcon Good life now is nearly now eight years old. Okay. And we are at phase one. Any views on when can we complete that project and the sales and do we plan to launch phase two or. I think it will take more time for us to launch.
Somnath Biswas
As of now we don’t have any plan to launch phase two as because that segment, this typically affordable segment has its own challenge. At a point of time, 20, 15, 16, all these things there is some PMI scan, there is some kind of movement happen but that movement is not a very conclusive. A very very high energy movement is there. So for to making a sale off of this wall segment and all this thing the effort time energy is equal as compared to the mid segment and higher mid segment. So phase two is very unlikely to get launched. But obviously the land available in the phase two has to be managed in most effective manner that we are working. But not tourists may not be through the affordable segment.
Santosh Sundararajan
Yeah so we are looking at other options possible. You know hotels or commercial. I mean whatever option is possible on the balanced land we are open to it. Rather than sticking to our plan of doing affordable housing on the entire project.
Somnath Biswas
And whatever phase one it is it is almost. It is handed over majorly has been sold some some inventory. Strategically we kept on hold as because there is a. We need. There is some strategic issue also. One there is a lot of industries coming over there. So there is a good amount of rental demand. So some big amount of inventory has been rented out. And at the same time this same inventory has been act is acting as a collateral for our the EPC segment bank guarantee limit. So any any working capital limit needs some collateral. So that is being used as a collateral.
Himanshu Upadhyay
Thanks. I’ll join back in the queue for further queries.
Somnath Biswas
Yeah, thank you.
operator
Thank You. Our next question comes from the line of Siddish from PL Capital. Please go ahead.
Siddish
Hi sir. Thank you for the opportunity. Am I audible? Yes. Yes sir. You are. So mainly on a few projects like Kaushimbe Medical and Vedanta Farmer appear to be largely completed. Yet revenue of around 35 and 39 crore remains unrefinized. Could you clarify whether these pending amounts are due to any residual formulators or mainly because of delays in certification or payment from clients.
Somnath Biswas
There is still some work has to be done almost 30 or 30 odd course. What it has to be completed. So there are certain XYZ reason which we are discussing within the banana top management also. So certain thing has been slowed down and certain thing has deletion is there to be taken by them. But a couple of meeting has happened. So we are hopeful that by Q2 this Q Q2 of this particular financial error the project will get completed. It is most likely that hospital project is almost complete. Is the ending work process and final bill certification is there nothing is nothing as such is major left out.
Is there only the snag list completion and certification of the final bill which takes his own sweet time to get it done.
Siddish
Understood. And with around 370 crore of unutilized funds enabling execution capacity for orders around 3,000 crore. What factors are contributing to the current slowdown in order in place? Is this due to lower waiting activity?
Somnath Biswas
So this is based upon the all the recent tie up has happened with HDFC then IDVI and realignment of this SBI working capital limit. So that’s why 370 crore limit has now made available with us which can be utilized and that will be a good boost to back the order rest. Mr. Santos will.
Santosh Sundararajan
Yeah. I mean the. The things I agree with you, they’re not links. I mean we did have currently we have 370 crore untied. It’s not that six months ago we did not have any untied limits. So bank guarantee was a constraint for booking orders. I would say a year or two ago this entire year not booking orders is not attributable to you know lack of banking relations or bank guarantee. To be honest we have been trying. We have been filling a lot of tenders. We have even as I said in the quarter call last year that you know brought down our margin expectations by a basis point or so.
We are ready to you know bid in the range of 13 rather than 15 even at this point of time. But we haven’t. I mean most of it’s suddenly become a Very competitive market. In the space that we have been operating in UPBR and Maharashtra a lot of tenders were put on hold because of the municipal elections over here. Bihar also, a lot of things were put on hold because of the state elections which have only about now stabilized in. In terms of the government body there in up. Most of the tenders, I mean we’ve been for a lot of tenders in UP and all of them have been going at, you know, minus 30, minus 25 where we have not been able to build more than minus 10%.
So it looks like a crazy, you know, horizon over there. In terms of bidding now we’re trying in Tamil Nadu, we’re trying the private sector, we’re trying in Karnataka as well. We are currently now L1 for you know, couple of orders totaling to about 1300 to 1500 crores. We are hopeful that we will receive some good news in the short term. We are also talking to a couple, I mean we are also in talks with a couple of projects where we feel we will be able to back or be competitive on a design and build basis.
So the last year’s order target was 1500 crores which would have happened by March 2026. We are just a month away. We have done only 650 crores. So I’ll make it amply clear that you know, on that count it does look like we have failed in a big way. But we are not unduly perturbed. It has become very competitive. We are ready to compete. We are ready to reduce our margins and we are confident that, okay, whatever doesn’t happen by March end will probably happen, you know, in the first quarter of next year including. And so we’re not going to reduce our target cumulatively to next year.
If it was 1500 for this year and 1500 for next year, 3000 plus crores by April 2027, we shall take it head on. As Somnath pointed out, the BG limits are in place. So now it is a matter of. Matter of, you know, continuously bidding and with some luck by our side we are very confident we will get those orders in place and keep the growth story alive. But yes, it is not linear. It hasn’t happened quarter on quarter in a linear way like we would all love for it to happen.
Siddish
Understood sir. That’s it from my side. Wishing you all the very best. Thank you.
operator
Thank you. Our next question comes from the line of mihir Vyas from 9rays Equity Search. Please go ahead.
Mihir Vyas
Hello, I’m audible. Yes, yes sir, you are Just a clarification question. So we book revenue in real estate on the project completion. Is it a percentage completion basis or it’s complete project completion basis? Complete project completion. Okay. And any update or something on Adani tie up?
Santosh Sundararajan
Lot of discussions happening. You know, the modality, the Adani tie up is not a typical contract award that you will get from any client. They want a partnership for us to work on the medium to long term together. And so they are also coming up with a totally new kind of a contracting methodology itself which you know, they are working out.
So we’ve had a lot of technical discussions on that front with them that has sort of been frozen into in terms of responsibilities on their side, responsibilities on the project management consultant side and responsibilities on our side as well. They are contracting partners. They want us to be involved at a very early stage from design and planning itself. So at each stage the responsibility matrix has been carved out. We have negotiated, discussed and you know, accepted all of that at this stage parallel about four projects at site we have visited. We have started engaging with them on drawings, decisions or in terms of planning on these projects.
But it does, I mean having said that, it does look to me that you know, finally in terms of receiving a concrete order for a particular project and starting revenue, it still looks, you know, at least six months away. So I don’t see any revenue translating out of this in the next two quarters for us. Okay sir. But once it starts, you know, once, I mean we’re very positive on this because it’s a huge amount of work that they are talking about and once the ball starts rolling and you know, one or two projects get their approval and we start construction from there on it will be quarter on quarter, just incremental effect going to the next two, three years.
Mihir Vyas
Okay sir. And any update on the Thanil and parcel?
Santosh Sundararajan
No, nothing. The strategy remains the same. We are working on accumulating 25 acres road touch so that we can try and monetize it. And the corridor from the government will take away another 40 acres. I mean we’ve said this over the last two calls as well. I think it remains, the status remains there.
Mihir Vyas
So sir, what you were suggesting before in the earlier call that you’re trying to procure more land from the other individuals involved in the area. Is it improving? I mean are you able to procure.
Somnath Biswas
Takes its own sweet time. I said the first target is to make 25 acres contiguous which is road touch, out of which almost 1718 acres. Away with us another 6, 7 acre tie up is Going on. So it is happening at the different level of negotiation and to crack the bill and to get everything converted to verify all the document, it takes his own sweet time. But our team is very much on to make it contiguous to 25 acres. So. But no, no as such remarkable. Mindu said there is no as such a moment has happened which can. Which is in proportion to be announced. The movement is going on significantly, but still it is to be converted something to get to make some announcements.
Mihir Vyas
Thank you, sir. Thank you for your time.
operator
Thank you. Our next question comes from the line of Rishabh Dugard from Finnovet Financial. Please go ahead.
Rushabh Dugad
Thanks for the opportunity. First of all, congratulations on completing 40 years for the company. Thank you. Since a large majority of your business, you know, usually comes from EPC and government clients, could you just explain to me how do you select the projects to bid for and what are the factors you evaluate before taking up the project?
Santosh Sundararajan
Yeah, so firstly, I think we want to be a bit more exposed to good quality private clients as well. So we have set up a business development team to be aggressively working on the private sector as well. At this point of time we are only about 20% on the private sector. We would like it to be about 60, 40, at least 40 private 60 government. We do not want to be 80% exposed to government. Although having said that, at this point of time, you know, government projects seem to be the most preferred projects. When we evaluate, you know, where we want to put our resources. Our bank guarantees our staff and our bandwidth. We’ve had a good run with the government to tell you how do we select these projects? It depends on state where, you know, the. For example, firstly we. Our sweet spot currently is in the range of 300 to, you know, 700, 800 crores.
So the projects which land up in this kind of a ticket size, most of them seem to be hospitals. That’s why you would see a skew towards hospitals in our order book. It is not because we just like hospitals, but it is because projects where we seem to be competitive on a design and build basis ranging from 300 to 600, 700 crores mostly. Our hospitals, other institutional, smaller buildings, schools, etc. Seem to be of smaller size and then a lot of bigger airports and you know, bigger infrastructure projects are in over 1000 crores. So one is the sweet spot, 300 to 800 where we qualify and where the competition is in line for us to be able to bag these orders.
Second is we evaluate, you know, which department from the government is Going to be funding this because we stay away from politically sensitive, potentially politically sensitive buildings which you could land up in trouble if there is a change in government in the state during the tenure of the project. So we like to look for projects which are well funded which will not be in the scanner of politicians once elections are closed by or elections are over. You know, so these are mostly in second tier, third tire cities, villages where you know, there is not much eyeballs.
Yeah. So I mean these are criterias we look at. But having said that, as I said, you know, I mean at the end we also have to win this year. We haven’t won enough orders. So we cannot be extremely choosy on, you know, more than many criteria that we want to put from our side.
Rushabh Dugad
Got it, Got it. So my next question is in line of the EPs and government projects only. I just wanted to understand how the, you know, payment terms work for these projects and are there any delayed receivables in these following projects and the trajectory of those receivables.
Santosh Sundararajan
So receivables generally contractually, you know, the payment terms are monthly. So we bill every month. The mode of billing could be different, different depending on the mode of the contract. It could be an EPC contract or it could be, sorry, item rate contract or a design and build EPC contract. But the billing will happen every month and the payment is supposed to happen every month. Now out of the, you know, 10, 15 big projects currently we are working on so far last three years we have not had any major issues of delay. Except now in the last 23 months a big project in Bihar support where we’ve been doing more than 30 crore per month kind of work that due to be our election.
From before BR elections till now, you know, our payments have been stuck and we only received a small portion of what we should have received. And therefore, you know, a couple of months ago we had to take the hard call of stopping or slowing down work at site. The labor has reduced and we were not in a position to keep pumping money or we are not as a strategy beyond the point. You know, we’ve always maintained that we will not pump money into someone else’s project. So between the devil and the deep sea we had no choice but to choose the devil and you know, stop or slow down site.
And that has, you know, significantly affected our revenue for last quarter as well. And our targeted revenue for the year also is going to be affected because of this. Even now as we speak we haven’t received the receivables from the project. But we are in constant touch with the department and the government. Things have stabilized, funds have been allocated. We expect the money to come in this week or maximum by next week. And once the money is in, we will remobilize and re speed up the project. And so as we said in our this, there is no loss of overall revenue.
There is no reduction in contract value or any such thing or even in the profitability in the long run. I mean a very small hit because of the overheads over the last two, three months. But it’s a delayed recognition that is going to affect our targets for this year.
Rushabh Dugad
Understood, Understood. So I think your goal is to, you know, increase your private client segment from probably 20 to 40. Right. So like just wanted to understand is there any difference between the project selection like based on EPC and government projects? And if you have any private client segments, are there any repeat customers for any new project for these private clients?
Santosh Sundararajan
Yes, we have done repeat work for people like Godrej. We are now in talks with Mahindra, we are doing for Vedanta, we’re doing for Capgemini. We are in talks with couple of other IT clients who are coming up with their campuses. There are differences between government and private. Also the kind of private clients that we want to engage with, our terms of negotiation would also differ. We of course have Adani going on in a different direction altogether. So yeah, I mean private is a big, big universe out there. With each private client we set our own terms of guarantees that we would want to put up or you know, payment terms or advances or capital investment on their projects. All of these would be discussed case to case basis.
Rushabh Dugad
Understood. So I just have one last question regarding the outsourcing. If you do any, and you know, is there any way you do any outsourcing for that your efficiency has increased?
Santosh Sundararajan
See, we do not As I mean what we bring to the table is the civil side of construction is only governed by us. Of course in our contracts the labor is generally outsourced to labor contractors. Every now and then we do rent out certain assets. If we feel purchase of an asset for a short term is not the viable option, then we go with short term rental of, you know, maybe shutterings or some equipment set site. But for the civil works other than this, you know, we control the entire process. We will not outsource it as a subcontract to someone. But when it comes to finishing and when it comes to mep, some of those things come into our scope and we are not experts. We will Be part we do partner and engage other experts to whom we outsource work.
Rushabh Dugad
Got it? Got it. Thank you so much and I’ll join back the queue.
operator
Thank you. Participants who wish to ask a question may press star and one on the Touchstone telephone. Our next question comes from the line of Kanishk Shah from SK Capital. Please go ahead, Mr. Kanishk. As there’s no response, we move to the next question. Our next question comes from the line of Himanshu Padhyay from Steadfast. Please go ahead.
Himanshu Upadhyay
Yeah. Hi. I had one or two more questions. The first one is related to Royal Rite Scova. We have not seen much progress. Means if we look at the Q1 release, the size of the order, what was there and what is currently pending also at the end of Q3. So what is the progress on that and are we going full fledged or it will take some more time to go full fledged on that project?
Santosh Sundararajan
Yes, it has not started at all at site and we do not see it starting for the next quarter as well. In fact almost six months. Because we are dependent, our part of the contract is dependent on certain approvals that our client and has to obtain from the government. It’s a ropeway project. We only have a small proportion of the overall project which the client is handling and he hasn’t yet managed to get certain approvals to start the construction at site. So I do not know at this point of time when it will start. But it doesn’t look like this quarter.I n the next three months we will be getting revenues from that project as well.
Himanshu Upadhyay
And secondly, related to this Adani project or not project. But when the initial press release came it was strategic tie up or five year strategic alliance for three land parcels or three projects nearing 13 million square feet in Mumbai. So the discussions and the things which are happening are now happening beyond those also or for those this 13 million square feet which was initially thought of, that has been finalized. So can you give some thoughts on that? Means what is the progress on that initial 13 million square feet which was identified in Mumbai and where are we?
Santosh Sundararajan
So see initially they did, you’re right, they did speak to us about three big parcels in Mumbai that they have which, you know, I mean the parcels that they have and the CAPEX plan and the execution including something like Dharavi. So the, I mean they are looking at lakhs of crores of investment into construction on these parcels in Mumbai itself. And that is why they have been talking, you know, with partners like us because they do see that they would need partners to execute that volume going forward. Now, initially at the MOU stage, you know, they had to put in some number and they did talk about what you did mention about three projects and, you know, so many million square feet or.
But before those. See, these are massive projects. These would have. We have seen all these parcels they have taken us, you know, they have shown the intent of the master plan in these projects. Each of them is at a different stage of approval, some of them very nascent. Actually, there are a lot of trees in some of these parcels. Tara V, you know, is a complicated, you know, parcel by itself. So while Adani works on getting these approvals and launching these massive projects, in the meantime they have started engaging with us on other reasonably smaller, I mean, smaller by their scale, quite big by our scale projects in Mumbai, in Ghatkopar and also, you know, in some other cities.
They are talking to us. They have lot of airport site developments happening in other cities by the airports that they have got awarded to manage. So yes, every time we do meet them, they do have various other projects they talk about. We are engaging on 4, 5 at a very design stage at this point of time. And these four are not the bigger ones that are to come which were originally discussed. So these are beyond that
Himanshu Upadhyay
And the originally discussed one. Do you expect we can have some progress in FY27 or means first half of FY27 now at least, or it may take more time in those initial three.
Santosh Sundararajan
Actually, see, I find it very difficult to answer this, to be honest, because one, I mean, you know, what is the priority at Adani and when are they wanting to get the approvals and launch these projects? Because the horizon that they have and what we’ve seen is massive. So which ones do they want to launch first? How do they want to move about? What is their internal strategy? Quarter on quarter, you know, is something which we are not privy to. And it will be second guessing ourselves to say when these projects will start. As I said, there are trees on these parcels, which means from a real estate angle, from our experience, we know that if the trees are still there and then you have to get tree cutting approval and then environmental approval and then plan approval and start.
Even if you’re an Adani, I mean, six to eight months is a minimum timeline, you know, to start any of these. But whether they are actively working on it to start in six to eight months or whether it will go to 12, 14 months, I would not be able to second guess. But having said that, there are other Projects. That’s why I said the good part is that they’re talking to us on so many other projects that I do foresee revenue definitely starting on this or that in the next financial year for sure.
Himanshu Upadhyay
Okay, thanks. And I appreciate your frankness and clear communication which you do with us as shareholders. Thanks. I really appreciate that.
Santosh Sundararajan
Thank you.
operator
Thank you. Anyone who wishes to ask a question may press star and one on the Touchstone telephone. Our next question comes from the line of Kanishk Shah from SK Capital. Please go ahead.
Kanish Shah
Yeah, thank you for this opportunity. In the previous call the management said that an FY26 EPC revenue target around 1200 crore along with an EBITDA margin of aspiration of 10% to 12%. Right. And also they guided for FY27 EPC revenues of around 1400 crore plus. So as of Q3 the company has executed about 720 crore of EPC revenue compared to roughly 1080 crore approximately achieved in the previous year. So that indicates around 300 crore is required to reach the last year’s revenue level and an additional, you know, 150, 200 crores to meet the FY26 growth target.
So in this context, can you please share the management’s current perspective, the achievability of the revenue and margin targets. You know, considering the execution process so far and prevailing competitive bidding environment.
Santosh Sundararajan
Yes, you’re right. It does look like we will not achieve what we projected up to last quarter in terms of 1200 plus crores. It was a target. We were on track till Q2. Although you know Q1 and Q2 revenues are normally less. We, when we assessed our projects we were very confident in Q3 and Q4 we will be able to achieve those executions to reach 1200 crore.
However, as I said, one of our top projects which was which was giving us 30 crore revenue per month which by itself in a quarter could have given us 100 crores has slowed down for since September and in the last two to three months we have done no work over there which is a direct loss of about 100 crores of revenue. Also Capgemini project, they’ve had some internal processes within their company. Certain decisions they wanted to relook at in terms of they are capex and so they slowed down the project for a bit in Chennai.
So What? Again about 30, 40 to 50 crores of revenue for the year is easily not going to be achieved in Capgemini which we should have achieved thanks to our clients delayed decision making. And the last 1/3 project which again is not giving us the throughput that we thought we will get is at Sindhu Durg, you know, the hospital that we are doing at Sindhudur. That also due to certain decisions from the government side, client side, our bill approval process that also got stuck. So these three projects which were, you know, supposed to give us.
So we do see a lag, we will not be able to catch up in one quarter now from 750 to 1200. So that’s empty, clear. So we will probably, you know, end up hopefully at same levels as last year or slightly better is what our current target is. But as I said, none of this is a reduction in our scope or reduction in contract value or loss of revenue in the overall picture. It’s a delayed revenue. So we then hope to be more aggressive in catching up on all of this in the next year and achieve that 1400, you know, that we had set.
So while 1200 might drop, will drop, let me be. And this year 1200 doesn’t look achievable. I would be, you know, not right to project those numbers standing where we are standing now. But next year we hope to then catch that back and put the growth trajectory back to that 1350, 1400 crore target that we would take.
Kanish Shah
Okay, got it. Thank you. That’s all from my side. Yeah.
operator
Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Dr. Santosh Sundararajan for closing comments.
Santosh Sundararajan
Yeah, thank all the participants for the continued interest. I do realize that, you know, while we take a lot of pride in projecting and achieving our projections, this is this quarter we have fallen short of what we would have wanted to achieve. And our, you know, revenue is also going to reduce. Our order booking is also not up to what we have projected. I’m aware. The company is aware and but we are very actively working on it. There’s nothing fundamentally or structurally wrong. And you know, all of this is a temporary blip which will be overcome in the next few quarters.
So I appreciate your trust in the company and looking forward to see you all again next quarter. Thank you.
operator
Thank you. On behalf of Vascon Engineers limited. That concludes this conference. Thank you for joining us and you may now disconnect your lines.