Railtel Corporation Of India Limited has informed the Exchange about Transcript of Analysts/Institutional Investor Meet/Con. Call
Ref: RailTel/Sectt/ 21/SE/S-16
Date: August 18, 2022
Qtli•lf«nlPr iil"•tel mcli" C!cftlfa •~ QfJlts 'Q+tttia ~ , ~-1, Sifk;ft',
~ - iliii\ ••~iRI, ffl Cf),
~
iiiicil\c. ~ thnar, ~- - iftcz;a6 QfJlu, ~ r.~a,, 1ft' * ~, liffiJ $ , fiAT,
~-400001
~
A mini ra na enterprise
1[ilf-400051
~
Listing Department, National Stock Exchange of India Limited 'Exchange Plaza', C-1, Block G, Bandra - Kurla Complex, Bandra (E), Mumbai - 400051 Seri
mbol- RAIL TEL
Corporate Relationship Deparbnent, BSE Limited, Rotunda Building, P l Towers, Dalal Street, Fort, Mumbai - 400 001
Seri Code- 543265
SUb: Outcome of Analyst/Investor Conference calt held on Friday, 12th-August, 2022-.
Ref: Our Letter of Even no. dated ostti August, 2022 and 12th August, 2022.
Dear Sir/Madam,
In· reference to our previous communication dated 08th August, 2022 regarding Analyst/Investor Conference Call, we are forwarding herewith the transcript (duly signed by ORO) of the Analyst/Investor Conference Call held on Friday, 12th August, 2022, organised by M/s. IDBI Capital Markets & Securities Limited.
2. This is submitted for your information and record.
rertet .,q'ft,i..1 •~ QfJlts cli"firv
·'~·i\oti'V''"
~- lRI'. IU:(41$
ci;q;ft~Vq 31-jqltilirl 31~cfil.fl ttcH-4<ti ml- 1!'1fi" ~ l!'lr 8075
~ ct>)cif~!H 3l'ftJ> ~ ~µle~ (~ ffi<fITT" <J>T '3'Q'S!;lJ) Ra1iTel Corporation of India Ltd. (A Government of India Undertaking) CIN : L64202DL2000GOI107905 Registered & Corporate Office: Plate-A, 6th Floor, Office Block, Tower-2, East Kidwai Nagar, New Delhi - 110023 T: +9111 22900600, F +91 11 22900699 I Website: www.railtelindia.com
1.8648'3/~022/O/o AGM/FIN/CO/RCIL
"RailTel Corporation Q 1 FY2023 Earnings Conference Call"
August 12, 2022
C H O
ft
L LS:
ANALYST:
l\iR. VISHAL PERI\VAL - IDBI CAPITAL MARKETS & SECURITIES LIMITED
MANAGEMENT: MR. SANJAI KUMAR
- DIRECTOR - NETWORK PLANNING & MARKETING & DIRECTOR PROJECT OPERATION & MAINTENANCE RAILTEL CORPORATION OF INDIA LIMITED MR. ANAND KUMAR SINGH - DIRECTOR FINANCE - RAIL TEL CORPORATION OF INDIA LIMITED MR. VINEET SINGH - ENTERPRISES BUSINESS - RAIL TEL CORPORATION OF INDIA LIMITED
EXECUTIVE DIRECTOR -
r
Page 1 of 13
186483/202~GM/FIN/CO/RCIL
, ~ ' .. ~1Wi:
Moderator:
Rai!Tel Corporation of India Limited August 12, 2022 Ladies and gentlemen, good day and welcome to the RaiJTel Corporation QJ FY2023 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 the conference ec1.!I, please signal an operator by pressing ">t" then "O" on your
touchtone phone. Please note that this conference is being recorded. I now hand the conference
over to Mr. Vishal Periwal from IDBI Capital. Thank you and over to you Sir!
Vishal Periwal:
Good afternoon everyone. Welcome to the RaiJTel Corporation post result earnings call for this
quarter and I also would like to thank the management for giving us this opportunity to host the
call. From tlie management team today, we have with us Mr. Sanjai Kumar, <mr Directm,
Network Planning and Marketing and he has also additional charge of Director Project Operation
and Maintenance. The second person we have today is Mr. Anand Kumar Singh, Director
Finance, RailTcl Corporation and Mr. Vineet Singh, Executive Director Enterprises Business so
as usual we will have a brief overview from the management side and then we will have a
qucslion and answer session. Sanjay Sir over to you.
Sanjai Kumar:
Thank you Mr. Vishal. A very good aftemoon to all so at the outset I would like to congratulate
all of you on this last week of celebration of our Azadi Ka Amrit Mahotsav going on for past 75th
week and 75d• Independence Day in advance.
It gives me great pleasure to interact with you on the company's performance in the backdrop of
Q! results that is FY2022-23 which was declared on August IO, 2022. The company achieved
consolidated operating revenue of Rs.377 Crores for Q l as against Rs.307 Crores in the
c-0n-esponding period of FY202.l-22 regisfe.ring a ye-Jr-on-year growth of 23%. RaifTel posted
profit before tax of Rs.35 Crores during Ql of financial year FY2D22-FY2023 with growth of
25% on year-on-year basis. Profll after tax for the QI also regislered the growth of24% on year
on-year basis at Rs.26 Crores. Telecom business contributed Rs.274 Crores to the turnover and
project business contributed Rs.103 Crores. Margin in project business has been under stress
during tlte quarter but the company is confident of achieving overall project margins in line with
the financial year FY202J-FY2022. Margins in the telecom business is also subdued due to
increase in operation and maintenance cost of fiber and equipment but the company is confident
that going forward with the flow of telecom business from new sections taken over !he profit margin in the tclecom sector wm reach the level seen in the past. Earnings per share for QI of FY2022-23 has also increased by 23% as compared lo Ql of last year. EBJTDA for Ql of
FY2022-23 is Rs.74 Crores and the EBITDA margin is 19.22%. During QJ FY2023, the
company received new orders totaling Rs.662 Crores and the current order book s!ands at
Rs.5800 Crores plus. 111e company has also finalized the VSS tender under Nirbhaya fund
project for providing video surveillance systems on impo11ant Indian Railways stations and
Letter of Acceptance issued which are wm1h about Rs.411 Crorcs. The project execution will
begin shortly and mitior par! of this project shall be completed during cmTcnt financial year. With
a robust order book position and continued pmticipation in high ticket tenders, we are confident
about conlinuing the momentum of profit and growth in future. We arc commiHed to provide
best services to nil our stakeholders and will continue to expand diversify and upgrade our
poiifolio of products. The management humbly acknowledges the trust reposed by the investors
Page 2 of 13
1,86483/20
GM/FIN/CO/RCIL
Rai!Tel Co1poration of India Limited August 12, 2022 in the company and would like to assure you all that in spite of different challenges still being
faced by the country in general and the economy in pai1icular, the company is and will continue
to strive to achieve new benchmarks in the current financial year and in the years to come. Thank
you all.
Moderator:
Thank you. We will now begin tlie question and answer session. 1be first question comes from
the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Sanjcsh Jain:
Good afternoon Sir. Thanks for taking my questions. Sir I have got a few questions. The first one
is on 1i1e telccom services revenue per se, it has declined sequentially wbile the perception of the
expectation was that as the railway ramps up and as the lockdown eases the things should
potentially move towards a better revenue trajectory? Can you help us explain what has led to
this sequential decline in the telccom services revenue and how should this would pan out for 1Jiis
year that is the number one question? Number two question is on the project revenue side? Now
that we have given LOA so this Rs.400 Crores of additional revenue from the VSS will c-0me so
what is the total project execution out oftllis Rs.5800 Crores oforder book is expected to happen
in FY2023 that is number two? Number three is on the tendering of COD. RDN and I think we
were also in the process to put towers and data centers so what is the outlook on these tendering
and how should one expect the revenue coming in from these things? So these are the three initial
questions? I have a few more let me come back on them after these questions thank you?
Sanjsi Kumar;
Regarding sequential decline in telccom revenue first we will answer that question so ac1ually in
the tekcom sector generally what is happening there is c-0ntinuous pressure on priCi'..s thm is one.
factor. That ts m,t 1J1e only factor but our billing pattern is such that gene.rally in QI tJ1c revenue
is not as much as in other quarters. The billing patterns in some cases is annual and in some is
quarterly so because of that I think you may be perceiving that.
Anand Kumar Singh:
Sanjesh 1 will just add to what Sanjai sir had said in the quarter ended March 31, 2022 we ha,•e
booked a onetime DRDO income of Rs.13 Crores which was against installation of lease lines
Pan India so if you add this Rs.13 Crores to Rs.273 Crorcs you will sec the revenue pattem
similar for the sequential quarter also.
Sanjesh Jain:
Okay so what you are telling and what Sanjai Sir is telling what I can conclude from it is that
despite Rs.13 Crores not being there and despite seasonally Ql being slightly slower on the
revenue recognition these numbers are good so thai establishes a base for a much better growth
coming in next three quarters of the nine months is that a fair assumption?
Sanjai Kumar:
Absolutely yes.
S11njcsb Jain:
Okay great and on the project revenue side with the VSS being awarded and large order book
what should be the project execution for this year?
Sanjai Kumar:
So if we talk of project business VSS
in particular out of this Rs.400 plus Crores order we
expect that we can book about close to somewhere around Rs.300 Crores of revenue this year
and overall project business revenue we are expecting to book this year is around somewhere
around Rs.800 Crores to Rs.900 Crores.
Sanjesh Jain:
Including this Rs.300 Crores right?
Page 3 of 13
186483/202\1:~GM/FIN/CO/RCIL
, .. , ~ AAflsTfl.
Sanjai Kumar:
Yes.
Rai!Tel Cmporation of India Limited August I 2, 2022
Sanjesh Jain:
Ancl here we are not facing any challenges in lerms of equipment supply and all that?
Sanjai Kumar:
We are in fact taking tl1is into account so that if any other evenluality is there or other any other
incidental hurdle does not come into play, we are expecting that international semiconductor
shortage issue will continue to be basically subside and we will be able to deliver.
Sanjesh Jain:
So this is assuming that the easing of chipset happens and should there be no supply chain issue
so we should be able lo do Rs.800 Crores to Rs.900 Crores nom1alized basis?
Sanjai Kumar:
Yes.
Sanjesh Jain:
Where arc we in terms ortendering COD and RDL?
Sanjai Kumar:
RDN tender is under evaluation is under final stages and COD tender is also is likely to be
opened this month itself. It's last date is till I think August 22 for Ilic bid submission.
Sanjcsh Jain:
Okay and by when we should see this revenue?
Sanjai Kumar:
The third question was about towers and data centers so tl1ese two projects data center as well as
towers this year or maybe even next year first half we are likely to gel any revenue because these
are tlle long gestation period tenders. This will take some time to get executed and then only the
revenue will start.
Sanjesh Jain:
So it will only come in second hulfof fY2024?
Sanjai Kumar:
Yes.
Sanjesh Jain:
So we are at icast. i 8 montils away for tl1is right?
Sanjai Kumar:
Yes.
Sanjcsh Jain:
Okay thanks for these initial questions to get answered and I have a few more. Project business
EBIT margin has been under focus for two quarters so what is leading because earlier J think we
were doing like 9%, IO%, 11 % and 12% and in few quarters it was better than that because I
think there was a contribution of COD but even if I remove we have always been about 8% to
9% EBJT margin so what is causing this subdued EBIT margin in 1he project business.
Anand Kumar Singh:
Currently if you compare with the sequential quarter of March we have crossed 3.94% margin in
the projec1 business which is basically because of the execution of project which was a defense
related project which was taken at a margin of 4% so we are executing this project and this will
in fact be completed in this financial year but let me assure you from the managemen1 side that
going forward by the encl of this financial year, we will achieve !he profit margin in the project
around 8.37% to 8.5%.
Sanjcsh Jain:
Okay got it and the lower margins in the telecom which Sanjai told in his opening remark was
more to do with the equipment challenge and all how are we seeing that trend? Is that casing out?
Will the margins which we were doing earlier at 28% to 29% arc we on track to go there?
Anand Kumar Singh:
J will take this question. Here we need to understand one thing. We take sections OFC sections
from the railways okay. Now these sections need to be maintained. There are some sections
which are taken where the margin of revenue is VCI)' skeletal, but it provides me a ring for the
Page 4 of 13
1864d3/202~GM/FIN/CO/RCIL
, ... " ~ RAll.t~L
Rai!Tel Corporation of India Limited August 12, 2022 existing network so that the SLA penalty does not occur but yes when we take these sections, we
are looking for fresh businesses, new businesses and when the new businesses will be on boarded
the profit will be there for all to see.
Sanjesh Jain:
So what profit should we look on a normalized basis?
Anand Kumar Singh:
19% which we are showing it can go up. On these new sections ifwe are able to onboard new
business the revenues can go even higher. The margin can go even higher but 19.5% will be the
basic nonn going forward also.
Sanjesh Jain:
Sir 19.5% steady state at least we will do and if we were able to sweat the asset better then the
margins can only go up right?
Anand Kumar Singh:
Right yes absolutely right.
Sanjesh Jain:
Got it Sir. Just two last bookkeeping questions. Employee cost of this 50 Crores is a steady state
right? lt is after the revision of the wage?
Anand Kumar Singh:
Yes. It is due lo increasing the salary of outsourced staff where we need to maintain with the
minimum wages act. Then is a 10% escalation also, so this employee benefit this is a nonnal
increment.
Sanjesh Jain:
Okay and the access charges were also higher this quarter is it more to do 'Nith the supply chain
challenges is it?
Sanjai Kumar;
Acct"'SS charg~s yes. t~c.cess chzrgcs arc generally related ,vith the tc1ecora business frorn projects
which we are. taking up so there we are going away from railway network. Basically our network
is in iwo pans. One is where we have nelwork along the railway track but we are now going
beyond railways to wherever customer needs are there and till now we have been able to build
around 20,000 plus kilometer of network which is not along tl1e railway track so we are earning
revenue from such network also. Hence our access network expenses are there.
Anand Kumar Singh:
And it is contributed by the O&M expenses also. TI1e access charges are going up due to the
O&M expenses also.
Sanjcsh Jain:
Got it and what is the capex expectation for the full year?
Sanjai Kumar:
Rs.ISO Crores.
Sanjcsh Jain:
Got it. 'J1rnnk you Sir. 1llank you for answering all my questions and best of luck for the coming
quarlers.
Moderator:
Thank you. The next question comes from the line of Dixit Doshi from Whitestone Financial.
Please go ahead.
Dixit Doshi:
Thanks for the opportunity. Sir my first question is related to this RDN project? You mentioned
that it is under evaluation so is my understanding right that 1 think the last date of bid submission
was somewhere in the first week of July or end of July so we must have received the bid and now
we are evaluating and as and when the evaluation finishes we will announce the final bidder is it
right?
Page 5 of 13
· GM/FIN/CO/RCIL
Sanjai Kumar:
RailTel Co11Joration of India Limited August 12, 2022 Yes. It is under final stage of evaluation so as and when it is decided the final winner will be
announced.
Dixit Doshi:
I understand you cannot mention the name of the bidder but if you can just give us a broad
understanding that how many bids we have received and just the kind of company?
Sanjai Kumar:
It is under the custody of tender committee whicl1 is a confidential matter so it is not disclosed
prior to final declaration of winners.
DbdtDoshi:
Okay even you cannot say how many bids we have received?
Sanjai Kumar:
No.
Dixit Doshi:
Okay and any broad sense of only the domestic or the international?
Sanjai Kumar:
i think let us avoid such questions in this quarter.
Dixit Doshi:
Okay and m)' second question is regarding this rail wire, our broadband business so how many
subscribers we have and how much was the ARPU this quarter?
Sanjai Kumar.
Subscribers 4.69 lakhs and the ARPU is around 560.
Di:xit Doshi:
Sanjai Kumar:
560?
Yes.
Dixit Doshi:
And how do you see this subscriber addition by 1his year end because I assume ihat in one of ihe
six n10-nths hack prese.ntatfon it \vas rncntioncd !hat vve ~were 1argcting 10 ]akh subsc.ribers by
year end so do you see of doing thal?
Sanjai Kumar:
See what is happening this industry there is always a volatility and new operators are coming in.
They are launching new models, OTT, lPTV and all that so there is a struggle and RaiJTel is
basically targeting urban, semi urban and rural segment. We have recently launched our OTT
plus IPTV in localized one or two circles and we are expecting good results from that so growth
over this during this financial year if not 10 at least we are expecting that it will be somewhere
around seven to eight lakhs.
Dixit Doshi:
Okay fine Sir. That is from my side. Timnk you.
Moderator:
Thank you. The next question comes from the line ofVenkatesh Subramanian from LogicTree.
Please go ahead.
Venkalcsh Subramanian: Good morning Sir. Sir I have two questions. Sir one is can you give us some update on how the
Kavach project is proceeding is there anything that we need to know any new developments and
the second question is for the full year Sir broadly for FY2023, I think in your las! concall we
guided for about 20% to 25% growth any sort of revenue guidance can you give us?
Sanjai Kunrnr:
So Kavach is basically under development state. In fact, Ministry of Railways has set up a center
of excellence for complete specification of Kavach. II is not yet developed completely but a few
tenders were floated by some zonal railways. RailTel did not participate in those lenders because
of this reason only that we would like to pm1ner with some OEM at least where the- product has
completely or to a large substantially matured. We will certainly be in this segment but we are
waiting and regarding FY2023 guidance 20% growth will be there.
Page 6 of 13
11'16483i20WGM/FIN/CO/RCIL
-I'\"'(, :
, t ' ~ R,M~C.
Venkatesh Subramanian: Broad top line growth Sir?
Sanjai Kumar:
Yes.
Rai!Tel Corporation of India Limited August 12, 2022
Vcnkatesh Subramanian:And is it safe lo assume EBITDA margins at 19% to 20% what would that number be'?
Sanjai Kumar:
Yes.
Venkatcsh Subramanian: Yes okay. Sir coming back to Kavach, so Kavach significant developments or p~rtnering who do
you want to tie up with will happen this financial year or next financial year Sir?
Sanjai Kumar:
This financial itself.
Venkatesh Subramanian: Okay Sir. I have one or two more questions Sir but I will come back and join the queue.
Moderator:
Thank you. The next question comes from the line of Amit Kumar from JJg·~-0.m"<l Investments. Please go ahead.
Amit Kumar:
Thank you so much for the opportunity Sir. I just wanted to gel a sense with the 5G on the
horizon what kind of growth visibility you are looking at in your towers business both in tem1s of
new lowers as well as tenancy in existing tower base for the second half of the year because in
fact my sense is 5G was supposed to be launched in August itself but got delayed a bit so can we
expect anylhing in the second half oftl!is year but the question is more of fiscal 24 perspective?
Sanjai Kumar:
5G per se I think you might be reading every day the telecom operators they are being given time
to deposit their spectrum fees basically and the momentum to basically install equipment ! do not
think that there wili be a sizable expimsion on this account. They wiil be launching it in few
select cities so this year or maybe next HI of the FY2024 also there is nol going to be much
movement due to this technology inclusion in these services but certainly 5G is going to play a
major role. As far as Rai!Tel is concerned, we are interested in private network rollout and we are
in fact exploring opportunities to tie up with some private investment and use our right of way so
that we offer our right of way to other telecos and industrial establishments which are along the
railway track, we arc exploring and we are consulting on this with experts also so we have this is
on the enterprise business side. As far as tower is concerned, we are likely to come out with RFP
wherein we will invite private investment again to install towers at least one at each station to
begin with so that because right now we have roughly around l 000 lowers and we have 6000
plus staiions. There is still space to have more towers and the 5G deployment we expect that average tower tenancy should be in the range of I _5 to 2 minimum it can be more also depending
upon on boarding of Idea, BSNL. TI1ere are some players where we cannot expect a lol but two
operators are there so we are still keeping our fingers crossed bul we see that this lower
infraslruclure will be a good opportunity for Rai!Tel because we are providing fiberized towers.
Whatever towers we will be offering those. All those will be tiberized.
Amif Kumar:
Thank you . In fact two small followup. One what is the current tenancy in your tower business
and the second is you mentioned BSNL? I forgo( BSNL also is planning for a 4G launch
apparently this monlh itself? Have they signed up with yon on 4G?
Sanjai Kumar:
BSNL 4G will also I think will take not less than a year because they are probably doing J>OC.
They have done POC and complete rollout will take time because it is indigenous product. This
Page 7 of 13
186483/202
·. GM/FIN/CO/RCIL
Rai!Tel Corporation of India Lirnited August 12, 2022 will take some time to be manufactured within the country and with 1l1e kind of semiconductor
chip sho11age and all that I am not the right person to comment on this but l cannot comment
much for BSNL opportunity.
Amit Kumar:
The initial point what is tl1e current tenf ency in your towers?
Sanjai Kumar:
Current ten~ency is around 1.25 to 1.5.
Amit Kumar:
All right that is it from me. Thimk you so much.
Moderator:
Thank you. The next question comes from the line of Viraj Milhani from Jupiter Financials.
Please go ahead.
Viraj Mithani:
Good afternoon Sir. Sir my question is only one. I read about this low orbit satellite being
launched in India sometime soon what kind of technological thing is this to our company would
be or is it an advantage or is it a threat that is question one?
Sanjai Kumar:
J. do not see any threat a1 least but I am not confident that it is going to play a major role in lndian
telecom industry. This is my personal opinion but nothing much is going to be basicall)~ be
affected in the indusll)', It may be of use in some remote areas that I can see but those remote
areas are very scanty populated such as Ladakh region.
Viraj Mithani.:
Sir railways have a lot of projects for army projects is there any way that RailTel is thinking to
monetize this in future for some private things or any government organization?
(:an. ycu ple!tsc repeat your question.
Viraj Mithani:
There was hospital management project done by Rai)Tel for I think railway hospital it was more
or less on a non-profit basis correct and is there anything? I understand we must have an
expertise from doing this kind of project so is there any thought in the management to monetize
this kind of capabilities?
Sanjai Kumar:
It was not on non-profit basis. It was on profit basis. Jt is with proper profit healthy profit margin
so yes.
Viraj Mithani:
ls there any further thing we are looking to monetize this?
Sanjai Kumar:
'I1Je digital transfonnation of health sector is a focus area for RailTel and we are working with
many bodies like AMTZ that is Andhra Medtech Zone where we have set up our data cenler. We
have already done a POC project of around Rs.9 Crores with Kamalaka Government ESIS and
we are executing POC kind of projects in few of the All India Institute of Medical Sciences also
In Indian health sectors there is a lot of requirements of digitization as al! of us know that there is
shortage of doctors and para medicals so this is our focus area.
Viraj Mithani:
So if you can give some color like how big ii could be next say four to five years not
immediately but some management vision on this thing?
s~rnjai Kumar:
Four to five years right now maybe I may 1101 be in position but before the beginni11g of FY2024
we may be able to arrive at some number but we are continuously working with the partner to
develop like there is requirement of application for health management information system,
hospital management information system is one which is from the management point of view.
Page 8 of 13
RailTel Corporation of India Limited August I 2, 2022 There is learning management system also and college management systems also but from
patient and doctor point of view the interaction can be digital and it can be in the local languages
right A patient may be from Tamil Nadu so for them the development has to take place so we
are working with some partners and application service providers who are developing application
there we can really we see really a good number to come but right now I am not sure. We have
already integrated with NDHM and we are in touch with NHA also how can we take medical
facilities to the rural areas and remote areas which is the strength of Rai!Tel.
Viraj Mithani:
Okay that is it from my side and all the best.
Moderator:
Titank you. llre next question comes from the tine of j)J~ft~ from Investec. Please go ahead.
Questionnaire:
Thank you for giving me this opportunity. I actually just needed lo break up of the telecom
revenue between NLD, ISP and JP?
Sanjai Kumar:
NLD revenue this year this quarter is Rs.127 Cron~s, ISP is Rs.93 Crnres, IP-1 is Rs.54 Crores
and this is from telecom and revenue from railway project is Rs.36 Crores and other projects is
Rs.67 Crores.
Questionnaire:
Thank you.
Moderator:
Thank you. TI1e next question comes from the line of Vishal Periwal from IDBI Capital. Please
go ahead.
Vishal Periwa!:
Yes sir before the question queue build up, I just thought probably ask a few of the questions so
in the range of 20% odd but Sir I think in this quarter we have done 20% odd at EBITDA level
and g.oing ahead I mean the thought process is like probably we will do project business &% to
8.5% and then telecom will further move so will it be possible for you to now comment like for
the full year this is how at a console level we are seeing the margin EBITDA?
Sanjai Kumar:
I think Director Finance has already commented that we are going to maintain this because we
are doing two kinds of projects. One is wherein we have a top line as well as a bottom line so
then the margin is around 8% to 9% in such projects but we are doing some projects which arc
consultancy kind of projects where we are consultants to the project and we arc basically master
system integrators. We float the tender on behalf of the purchasers, fix the agencies, get that,
work executed for them and in such cases we have hardly any expenditure so such project
business will ce11ainly help us in maintaining the margin or even maybe improving the margin.
Anand Kunrnr Singh:
Vishal if I can add what I said regarding the EBITDA m.irgin of being 19% we tend to be a bit
conse.rvative in this regard but yes the company's endeavor will always be to see that it exceeds
19% for which as sir just said we can have some contracts which will straight away add to tl1e
bottom line without any expenditme or commensurate expenditure being incurred for that.
Vislrnl Pcriwal:
Okay Sir and then probably segmental wise if the numbers in the project you mentioned probably
will do 8% to 8.5% for a full year basis and for telecom at a PBT level margins and for telecom
how exactly do you see things because I think historically we have done prelty strong numbers in
Page 9 of 13
186483/20
RailTel Corporation of India Limited August 12, 2022 tenns of PBT margin for telecom in the range of like 20% odd plus or minus so how do you see
this for FY2023 anything 1hat you have seen or probably worked out?
Anand Kumar Singh:
Yes I have said this to an investor on the call earlier. You see the margin of 19%, was maintained
but simply maintaining the sections will not help us so we are in the process of taking over more
section from the railways and there are sections where the earnings from those sections compared
to the cost which wil1 be incun-ed to maintain it the earnings are negligible so yes that impacts
the margin but the potential of getting higher business newer business from taking over those
sections by creating a ring we save on the SLA that benefit will translate going forward.
Vishal Periwal:
Okay so but then from business point of view we are expanding so then will it that expense will
be it be more like a capex on balance sheet or probably it will impact on P&L?
Anand Kumar Singh:
It is the revenue expenditure. Now sec if we have a section where we l1ave a linear section in
case (here is any cut or disruption the services are impacted which results in Joss of revenue.
Now if I am getting a section from the railways which help me to create a ring I am able to
continue giving uninterrupted services my revenue is maintained and further on the new sections
taken over we explore new businesses one of them onboarding new customers other il helps us
to increase the revenue so it not only matches the cost but exceeds the cost so we look at it in this
way that we have new section. Initial stages we may need to incur expenditure but going forward
it will be a revenue generating action from our side.
Vishal Periwal:
Okay sure Sir and second thing I think on Kavach you mentioned coupic of 1.onal railway they
have come out with ihe tenders but i think any reason ihat RailTel has not participated be.cause
couple of other capex which is like tower look related capex links and that so I just wanted to
understand I mean like no one thing is like the reason for not participating and how big?
Sanjai Kumar:
Presently Kavach industry is close to monopolistic. There are I think two or three OEMs only are
there and they are trying to play monopoly in such environment and in such circumstances it is
very difficult to get competitive rate number one. Number two the technology itself is not yet
foolproof. It has been tested in the present form but it is still being tested with LTER features and
those arc being still tested by the railways and related R&D bodies. I told you we have recently
set up a center of excellence in Sccundcrabad for the same so we arc waiting for that moment to
come. We are waiting for the right moment to come which in but I can assure you that there is no
other system integrator in the induslly who is betler suited than Rai!Tcl to do such projects.
There is huge opportunity for Kavach and there are around Rs.30,000 Crores fonds basically
sanctioned projects are there.
Vishal Periwal:
Okay and then so I think you mentioned on a couple of players who are l mean like the structure
which you mentioned so is it possible to name like who all are the players probably they are
probably a monopolistic cutting?
Sanjai Kumar:
I will not name but they can still find from Google search. 111ere is nothing to hide in that.
Vishal Pcriwal:
Okay sure and maybe last thing and then come back in the queue l think our order book conlinue
to remain strong? I think execution again you are guiding it will be 8% to 9% so in terms of
Page 10 of 13
186483/202~GM/FIN/CO/RCIL
, ·. , -.. iA1tr"
Rai/Tel Corporation of India Limited August 12, 2022 inflows can you guide like what has been tl1e order influence in this quarter or have you done any
working because in BSE we keep on seeing announcements so what is the influence of this?
Sanjai Kumar:
This quarter we have received orders more than Rs.660 Crores.
Vishal Periwal:
They are in terms of margin trajecto1y will be possible to guide like the incremental order that we
are getting it is on 8% to 90/4 or margin or it is more like a low margin project?
Sanjai Kumar:
There are some projects which are 8% and 9% margin. There are projects which are related to
telecom also which are mix of telecom and project part also so of course margin will go up
because there are telecom services being provided by RailTel in that so margins ce11ainly is more
than 8% because there are some bandwidth kind of elements included in those projects like one
order which we are executing for Delhi Safecity which is around Rs.220 Crores which l1as an
element of bandwidth also telecom bandwidth also and such projects will help us in actually
growing our Rai!Wire business also because we will be laying a lot of fiber within the city which
will give us an opportunity in growing our last mile ba<;ically we will be going close to the
customer.
Vishal Periwal:
Right and will it be fair to say that incremental orders that we are getting Rs.600 Crores to
Rs.700 Crores that you mentioned for this quarter it is on competitive bidding there is no
nomination as well?
Sanjai Kumar:
Yes these all are competitive bidding.
Vishal Periwal:
Okay sure thank a lot. f will come back in the queue. Thank you.
Moderstor:
Please go ahead.
Parimal Mithani:
Thanks for the opportunity. Sir ljust wanted to know the update in tenns of the railway network
as well as content on demand when you expect them to pick up in terms of revenue Sir for which
quarter or may be a year can you give the guidance in terms of projects finalization?
Sanjai Kumar:
This tender is yet to be bidded so we- cannot forecast right now may be by the next quarter v.•e
may be able to say something about COD.
Parimal Mithani:
Sir for railway display network Sir?
Sanjai Kumar:
Railway display network is under the final stages.
Parimal Mithani:
Sir for RailWire business I just wanted to know do we provide service for common service centre
also of govemment?
Sanjai Kumar:
No not yet. The Common service centre is not government The Common service centre is an
SPV of government. We are providing certain services directly to them.
Parimal Mithani:
But there are no outstanding dues pending from them right Sir ifl understand?
Sanjai Kumar:
No not pertaining to ll1is. We have not yet sta11ed any relationship with CSC in this regard. There
are other projects going on with CSC but not lhis.
Pa rim al Mithani:
Okay Sir thank you.
Page 11 of 13
186483/202~GM/FIN/CO/RCIL
~ @rtre<,;
Moderator:
Rai!Tel Corporation of India Limited August 12, 2022 Thank you. The next question comes from the line ofVenkatesh Subramanian from LogicTree.
Please go ahead.
Venkatesh Subramanian:Two questions follow-up Sir. One is we were talking about Kavach and the center of excellence
in Secunderabad and you said something like we are probably the most competent one of the best
in the class in terms of bringing in system integration into this? Can you elaborate a little bit
more on it and if this the order size of our execution is going to be in Rs.3 0,000 Crores range
plus you mentioned value added projects? ls this a project where the entire thing will go to one
bidder or would it be split into two to three parties and would this be like an annuity kind of .
project over the next five to 10 years? Can you give us some color on it what do you think of this
Sir?
Sanjai Kumar:
Number one this is a project on Pan India basis and zonal railways will be inviting tenders for
fixing agencies so there will be multiple sections and they will invite tenders for section by
section so this is not going to be going to be one, two or three. Number two you talked about
center of excellence. The center of excellence has been set up by Government of India to
basically fine tune these specifications and that too more in the line to basically align it with LTE
technology because right now it is not developed for L TE. It is future technology so that would
be second and if you talk about value added Kavach firstly it will not bring any value added
because this is en1irely for in-house usage for Indian Railways but yes there are many tllird world
countries where once we establish ourselves as a player we can take this lechnology and it is
indigenous technology so tvc can expert this a!sc once VlC develop ourselves as a player vie can
take this technology aud i! is indigenous technology so we can export this also once we develop a
domestic manufacturing ecosystem?
Venkatesh Subramanian:My question was like once you implcmen! the Kavach order Sir once it is place then is there like
a maintenance angles to it every year? For example if you talk of other public sector companies
or DRDO or anything there is an agency that develops tl1c whole thing? Then there is somebody
who implements it and then there is an annual maintenance that goes in that is what I was
basically looking al?
Sanjai Kumar:
The practice whatsoever is basically deploying it they have the annual maintenance contract also
generally.
Venkatesh Subramanian: We will be bidding or we will be going for it once we are ready with what we want to bid we will
be joining hands with somebody else and then bidding for this project is that right Sir?
Sanjai Kumar:
Of course we need to join hands with some OEM who is developing or who has developed.
There are two to three at least two to three OEMs which we know they are under the
development stage.
Vcnkatesh Subramanian:Arc we already talking to them Sir?
Sanjai Kumar:
Yes.
Vcnkatcsh Subramanian:Okay wonderful and Sir what is this Rs.30,000 Crores project ifil comes to light would that be
split between two to 1hree bidders or how does it work?
Sanjai Kumar:
I told you there will be multiple. There will be N number of bids separately coming out.
Page 12 of 13
186483/20WGM/FIN/CO/RCIL
x-
:'\,
&B-wt.
Rai/Tel Corporation oflndia Limited August 12, 2022 Venkatesh Subramanian: Sorry I think my question was a lictle bit ii needs more clarity? Will this order be split into three
or four orders Rs. I 0,000 Crores and Rs. l 0,000 Crores would that be l11e way?
Sanjai Kumar:
No. There will be Rs.200 Crores to Rs.300 Crores kind oforders.
Venkatcsh Subramanian: Okay right depending on the zone?
Sanjai Kumar:
Yes depending upon the wnes and importance of the sections and busy sections. There are tier
two section so first they will concenlrate on Ille high density traffic sections. The sections depend
basically on distance, they are basically part of different zonal railways.
Venkatesh Subramanian: Right okay so wouid it be fair to assume in an open bidding system with multiple bidders and if
we join hands witl1 the right OEM can we aspire for getting say 20% to 25% share of the entire
project?
Sanjai Kumar:
Yes conservatively yes. That is clear.
Moderator:
Thank you. The line bas been disconnected. We will take the last question now. ·me last question
comes from the line ofViraj Mithani from Jupiter Financials. Please go ahead.
Viraj Mithani:
Sir three questions? One from what you are saying tllis quarter was a subdued qua11er but coming
quarters it will be a good quarter is it fair to assume right?
Sanjai Kumar:
Yes.
Viraj Mithani:
Sir what is our cash in !he balance sheet cash?
Sanjai Kumar:
Cash is Rs.557 Crores.
Viraj Mithani:
Okay lllld Sir there was a talk of IR.C-rc merger sometimes from media report any updates by the
government on that?
Sanjai Kumar:
We are the wrong person to comment on iliis because it is for the government to decide ~o I
tbink we are not tile right person.
Viraj Mithani:
Okay Sir and Sir the last question is broadly you are guiding double digit growth that is a 20%
growth top and 20% EBITDA margin is that the correct way to assume right?
Anand Kumar Singh:
Yes. Viraj J stand corrected. My own cash fond is Rs.522 Crores and not Rs.572 Crores. I
apologize for that Rs.522 Crores and yes revenue guidance of20% top line and EBITDA of 19%
lo 20% is yes which the mrurngement is looking forward to.
Viraj Mithani:
Okay thank you and all the best to you Sir. Thank you and have a great day. ,
Moderator:
TI1ank you. This was the las! question. We have reached to Ille end of question and answer
session. Now on behalf of IDBI Capital that concludes the conference. Thank you for joining us.
You may now disconnect your lines.
Page 13 of 13