CEMPRONSEQ1 FY2023August 17, 2022

Cemindia Projects Limited

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Management on call

Anshuman Ashit

ICICI SECURITIES LIMITED

Jayanta Basu

MANAGING DIRECTOR - ITD CEMENTATION INDIA LIMITED

Prasad Patwardhan

CHIEF FINANCIAL OFFICER – ITD CEMENTATION INDIA LIMITED

Key numbers — 40 extracted

Rs 1000 Crore

e reported a strong financial performance in this quarter. Our total operating income has crossed Rs 1000 Crores once again. We are at nearly Rs 1100 Crores as compared to Rs 826 Crores, so this gives us an in

Rs 1100 Crore

this quarter. Our total operating income has crossed Rs 1000 Crores once again. We are at nearly Rs 1100 Crores as compared to Rs 826 Crores, so this gives us an increase of 33% on Y-o-Y basis. EBITDA is at

Rs 826 Crore

ting income has crossed Rs 1000 Crores once again. We are at nearly Rs 1100 Crores as compared to Rs 826 Crores, so this gives us an increase of 33% on Y-o-Y basis. EBITDA is at Rs 101 Crores in this quarter

33%

in. We are at nearly Rs 1100 Crores as compared to Rs 826 Crores, so this gives us an increase of 33% on Y-o-Y basis. EBITDA is at Rs 101 Crores in this quarter as compared to Rs 85 Crores a year bac

Rs 101 Crore

as compared to Rs 826 Crores, so this gives us an increase of 33% on Y-o-Y basis. EBITDA is at Rs 101 Crores in this quarter as compared to Rs 85 Crores a year back, which gives us a growth of over 19%. PA

Rs 85 Crore

s us an increase of 33% on Y-o-Y basis. EBITDA is at Rs 101 Crores in this quarter as compared to Rs 85 Crores a year back, which gives us a growth of over 19%. PAT of Rs 30 Crores in this quarter as compare

19%

1 Crores in this quarter as compared to Rs 85 Crores a year back, which gives us a growth of over 19%. PAT of Rs 30 Crores in this quarter as compared to Rs 18 Crores a year back, a rise of about 68%

Rs 30 Crore

this quarter as compared to Rs 85 Crores a year back, which gives us a growth of over 19%. PAT of Rs 30 Crores in this quarter as compared to Rs 18 Crores a year back, a rise of about 68%. Our balance sheet

Rs 18 Crore

ear back, which gives us a growth of over 19%. PAT of Rs 30 Crores in this quarter as compared to Rs 18 Crores a year back, a rise of about 68%. Our balance sheet continues to be deleveraged and debt equity

68%

19%. PAT of Rs 30 Crores in this quarter as compared to Rs 18 Crores a year back, a rise of about 68%. Our balance sheet continues to be deleveraged and debt equity ratio is at a very comfortable 0.3

Rs 6000 Crore

art is we have secured good orders in this quarter. Our order inflow in this quarter has exceeded Rs 6000 Crores. This includes one large greenfield road order of about Rs 4850 Crores and a few other orders as

Rs 4850 Crore

this quarter has exceeded Rs 6000 Crores. This includes one large greenfield road order of about Rs 4850 Crores and a few other orders as well. Our order book as of June end has crossed Rs 20000 Crores which

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Guidance — 20 items

Jayanta Basu

opening

“As you have seen that consistently our topline is growing and it is close to Rs 1100 Crores this last quarter and we are sitting on huge order book of around Rs 21000 Crores and I hope we wish that we will be able to maintain the same run rate in terms of topline, order book and bottomline as well.”

Jayanta Basu

opening

“Coming to the operational performance I would like to share with you the major project what we are doing now at various segments.”

Jayanta Basu

opening

“Metro job thereafter we have marine jobs Udangudi, Sea Bird project, Vizhinjam breakwater and Indian Oil Corporation at Ennore, all the jobs are going very well and I must say that in Udangudi we are doing a breakwater which is almost 9 km inside the sea probably first time in Asia and it was a very difficult job but today we can say with confident that we have almost achieved the required progress and the performance what we desired before.”

Jayanta Basu

opening

“Similarly at Vizhinjam also the deep sea port where the breakwater construction was very difficult and as you know that the customer Adani was struggling for last several years to do the job but we have started it last year and we have done successfully and now the job is hold because of monsoon but after monsoon we will be able to start hopefully by end of next monsoon, before next monsoon we will be able to complete the job.”

Jayanta Basu

opening

“Fourth one of course will go up to end of this year so I think that things are quite going okay and we have also secured a big job in UP that is Ganga Expressway as you all know with that recently we have secured around Rs 6000 Crores of order in last quarter which is also significant achievement so that is all from my side and I will be happy to answer any questions from your side.”

Mohit Kumar

“Sir my first question is on the margins I think you guided for a double digit margins for FY2024 given that the inflation pressure is easing now how do you see the margins for FY2023 can you expect improvement in the margin compared to Q1 I think it is around 8.1%?”

Jayanta Basu

“If we eliminate that, the margin goes close to 9% a little more than 9% and going forward once the Bangalore metro is over I think the margin should improve and definitely next year it should be double digit for FY2023-2024.”

Jayanta Basu

“With that I do not see much issue on that coming next quarter or going forward from there.”

Mohit Kumar

“When do you expect the Bangalore elevated to be completely out of our books?”

Mohit Kumar

“A very, very good order booking in the quarter my question is on the Adani and the BMCT both the orders are they fixed price contract or they are variable contract when do you expect the work to start in these two projects?”

Risks & concerns — 7 flagged

Then coming to Mumbai metro it is almost on verge of completion, Tunnel we have completed long time back and another important aspect of Mumbai metro if you remember that we have been talking about the critical activity that is drilling and blasting tunnel to connect two shaft which is very critical for underground work, that has been completed now so the risk what we had now before is now overcome.

— Jayanta Basu

Metro job thereafter we have marine jobs Udangudi, Sea Bird project, Vizhinjam breakwater and Indian Oil Corporation at Ennore, all the jobs are going very well and I must say that in Udangudi we are doing a breakwater which is almost 9 km inside the sea probably first time in Asia and it was a very difficult job but today we can say with confident that we have almost achieved the required progress and the performance what we desired before.

— Jayanta Basu

Similarly at Vizhinjam also the deep sea port where the breakwater construction was very difficult and as you know that the customer Adani was struggling for last several years to do the job but we have started it last year and we have done successfully and now the job is hold because of monsoon but after monsoon we will be able to start hopefully by end of next monsoon, before next monsoon we will be able to complete the job.

— Jayanta Basu

Sir my first question is on the margins I think you guided for a double digit margins for FY2024 given that the inflation pressure is easing now how do you see the margins for FY2023 can you expect improvement in the margin compared to Q1 I think it is around 8.1%?

— Mohit Kumar

Star price means we have agreed for certain basic price of material based on which our contract value has been finalized if those basic price changes either upward or downward accordingly either will be compensated or we have to give them back so the risk of escalation is not there as far as road is concerned and BMCT that is JNPT work it is a fixed price contract and the estimate we have considered is in the probable escalation cost in our price.

— Jayanta Basu

Number two certain sector like elevated metro and difficult jobs also we will be now very selective going forward but underground metro and marine job which is our bread and butter and we do well we will definitely keep on pursuing for further order book.

— Jayanta Basu

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Q&A — 10 exchanges

Good morning Sir and thanks for the opportunity. Sir my first question is on the margins I think you guided for a double digit margins for FY2024 given that the inflation pressure is easing now how do you see the margins for FY2023 can you expect improvement in the margin compared to Q1 I think it is around 8.1%?

Jayanta Basu

There are few aspects which is bothering this margin one is inflation as you rightly said but you have to also consider that as I mentioned last time that the Bangalore elevated metro is still continuing and the revenue of Rs 1,100 Crores out of that around 70 to 80 Crores has come from Bangalore elevated metro for which we never draw any margin. If we eliminate that, the margin goes close to 9% a little more than 9% and going forward once the Bangalore metro is over I think the margin should improve and definitely next year it should be double digit for FY2023-2024. Another one aspect also, t

Good morning Sir thanks for taking my questions and congrats on great order inflow in this quarter and a strong execution as well. Sir my question again I come back to the order inflow. Sir I think this is a second conservative quarter in which we have more than Rs 5000 Crores of order inflow. Last quarter also I think we have very strong inflow and this time of course it was invested by the Ganga Expressway project, so now Sir that we are at more than Rs 20000 Crores of order book which kind of gives us more than five year kind of revenue visibility so going forward what is going to be our bi

Jayanta Basu

Yes our strategy will be little different now but you cannot stop the growth. The growth has to be there and if we bid today the work will start after several months, maybe 7 to 8 months or even a year. If you remember the BMCT JNPT job we have started bidding two years back the order has just come so it is like that but definitely our strategy will be little different. I do not think we will be interested to do further road work unless we complete this big job at Ganga Expressway that is number one. Number two certain sector like elevated metro and difficult jobs also we will be now very sele

Hi Jayanta congratulations on a decent set of numbers and strong order inflow. Sir my first question is that for last three quarters we have been in ballpark range of Rs 900 to Rs 1050 kind of turnover so order book has almost jumped 50% so by when do we see this run rate hitting Rs 1500 Crores so is it by third quarter or fourth quarter we will start seeing that happening?

Jayanta Basu

The second quarter also we will be almost close to first quarter because there is some effect of monsoon which is obvious but in third and fourth quarter if not Rs 1,500 Crores it will be close to that. So next year we are definitely well placed to cross that Rs 6000 Crores of turnover mark if that run rate sustains for the next year it should ideally be because at the Rs 20,000 Crores order book typically company report Rs 6,000 Crores to Rs 7000 Crores of turnover taking three years time to completion of the order book and largely you have EPC project there is no HAM, there is no BOT so the

Good morning Sir. Congratulations for good set of numbers. Sir I have got two questions we have got the total order backlog of Rs 21000 Crores approximately as on June 30, 2022, now I just wanted to know how much value of the tender we have already participated and which is pending and how much amount of contracts where we are L1?

Jayanta Basu

First participation, I think it is around close to Rs 8000 Crores which consist of two overseas job one in Bangladesh, one in Sri Lanka and few jobs in Adani in private sector and some jobs in Tamil, so around Rs 8000 Crores job we have participated and none of the results is out so there is no job which is we are at L1 but definitely few jobs which we are discussing with private client like Adani where we are expecting the order very soon which will be around Rs 500 to Rs 600 Crores. So to summarize Rs 8000 Crores job we have tendered for and Rs 500 to 600 Crores order we are expecting from t

Congratulations on good set of numbers Sir. I have two questions one is regarding the interest cost that we are paying. It seems pretty high given the kind of debt and cash we are holding on books, can you explain in detail what are other elements in the interest cost apart from the core interest cost so if I can understand there is a bank guarantee and other costs also involves so if you can just split the interest cost that will be great and secondly just coming to Bangalore metro how much is the residual tender that is to be booked in the current year and have we raised basically the portio

Jayanta Basu

Okay regarding bank interest I think Prasad will address it but before that let me address the Bangalore metro. I think Bangalore metro we are still around Rs 80 to Rs 90 Crores of job we have to do which should be over by this year December, January and regarding claim yes as we have maintained on the concall that we have got several claims which we are pursuing with the client and those things are under discussion and some will be settled amicably and if not amicably it will go for arbitration and proceedings as per the contract. The breakup of our interest cost is roughly it includes intere

Just some book keeping questions for Prasad. Prasad you just highlighted this interest breakup if you can also quantify the amount that you have already told Rs 500 Crores so now what is the customer advances and what is the total letter of acceptances?

Prasad Patwardhan

LC and guarantees are varying it will not be possible for me to quantify the LCs and guarantees that we have, but out of about Rs 33 to 34 Crores of interest cost nearly Rs 11 Crores is the interest on the bank debt and the term loans that we have. About Rs 11 Crores is the interest on customer advances. Our advances outstanding as of June 30, 2022 are about Rs 600 plus Crores and the rest is cost of LCs and bank guarantees that we have issued for our customers and to our vendors for supply of material. What is the total acceptance outstanding as of June quarter? I do not have the exact number

Hello Sir thanks for taking my question again. Sir just one small question. Sir we have historically also taken projects overseas and right now also we are working as you mentioned in the pipeline we have two projects in Bangladesh and Sri Lanka so generally Adani group has always been a very important client for us and we have also been all across so recently Adani group has acquired a port in Israel that is of course an operational port already but if there is any marine job that comes up in that part of the world will you be comfortable or will you be willing to consider that also or is the

Jayanta Basu

Well it depends upon few factors first and foremost will be only interested if it is the marine job that is number one. Number two we want to concentrate on the neighboring countries like Bangladesh, Sri Lanka, Myanmar, Maldives maximum up to Mauritius and then we do not want to have too many jobs overseas at a time so maximum two at a time and then we will see maybe another two to three years time what we do based on this strategy whatever comes we will decide our bidding strategy on that. Got it Sir. Thanks for answering that and wish you all the best again.

Thank you for this opportunity. What is currently the work in progress, how much amount is there as on June 30, 2022?

Jayanta Basu

Work in progress is about Rs 950 Crores. How much is the customer advance for the various projects? The outstanding balance is about Rs 650 Crores as of today. The claims part Sir what is the claim figure? We will not be able to share with you the claim figure because these are under various stages of discussion with the client so it will not be possible for us to share the claim figure with you. Sir about the execution cycle if you could give you us some more colour since now this would be the monsoon affected quarter and what I heard our MD said that we would be scaling up to Rs 1200 to Rs 1

I think we are mentioning in every concall that both the projects Bangalore and Delhi we have our claim. We are discussing with the clients and some claims are in discussion stage, some are in arbitration stage it will take time but definitely have got claims on both the job. Venkatasubramanian: You would expect this to be coming to light what in about 12 to 18 months what kind of timeframe do you have in mind to get to know which way it goes?

Jayanta Basu

See it is pretty standard in Indian context because if you have arbitration it goes to one-and- a-half year and thereafter the customer can challenge it through the court so cycle would be something around two to three years time not before that. Venkatasubramanian: There is a lengthy discussion today about margins and margins improving beginning next year, etc., we added something like about 2.75% of PAT margin so given both levers one margin improving and higher execution what kind of PAT margins do you think will be realistic? I cannot comment about next year but this year it will be the sa

Thank you Jayanta Basu Sir and Prasad Sir for giving us this opportunity to host the call and I thank all the participants as well for making this call very interactive. Sir any closing comments that you would like to make.

Prasad Patwardhan

I would like to thank everyone for taking time out in joining us in this call and we value your continued support and interest in the company and we look forward to interacting with you again next quarter. Thank you. Thank you.

Speaking time

Jayanta Basu

Prasad Patwardhan

Parikshit Kandpal

Moderator

Vibhor Singhal

Saket Kapoor

Mohit Kumar

Anshuman Ashit

Abhay Lodha

Vijay Sarda

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Opening remarks

Anshuman Ashit

Thank you Lizaan. Good morning everyone and welcome to the Q1 FY2023 post results conference call of ITD Cementation India Limited. Today we are pleased to host the management of ITD Cementation which is represented by Mr. Jayanta Basu - Managing Director and Mr. Prasad Patwardhan – CFO. I would like to hand over the call to Mr. Jayanta Basu for his initial remarks after which we will open the session for Q&A. Thank you sir and over to you!

Prasad Patwardhan

Thank you Anshuman. Good morning everyone and welcome to our Q1 FY2023 results concall. This is Prasad Patwardhan – CFO. I will take you through the highlights of our financial performance in this quarter and then hand over to Mr. Basu for his initial comments. We are pleased to share with you that we have started this financial year on a very positive note and have reported a strong financial performance in this quarter. Our total operating income has crossed Rs 1000 Crores once again. We are at nearly Rs 1100 Crores as compared to Rs 826 Crores, so this gives us an increase of 33% on Y-o-Y basis. EBITDA is at Rs 101 Crores in this quarter as compared to Rs 85 Crores a year back, which gives us a growth of over 19%. PAT of Rs 30 Crores in this quarter as compared to Rs 18 Crores a year back, a rise of about 68%. Our balance sheet continues to be deleveraged and debt equity ratio is at a very comfortable 0.3 times. The good part is we have secured good orders in this quarter. Our order

Jayanta Basu

Thank you Prasad and thank you all for joining this concall. Good morning to all of you. Prasad has just briefed about our Q1 performance for first quarter that is FY2022-2023. As you have seen that consistently our topline is growing and it is close to Rs 1100 Crores this last quarter and we are sitting on huge order book of around Rs 21000 Crores and I hope we wish that we will be able to maintain the same run rate in terms of topline, order book and bottomline as well. Coming to the operational performance I would like to share with you the major project what we are doing now at various segments. For MRTS, as you know that we are executing three underground contracts actually four but three underground contracts which is ongoing. Chennai metro 2 and Bangalore one and of course Kolkata Metro is on verge of completion. Chennai metro we have started. We have briefed last quarter but now the development that we have mobilized trench cutter machine which is a very sophisticated machine f

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