Nila Infrastructures Limited has informed the Exchange regarding Analysts/Institutional Investor Meet/Con. Call Updates - Nila Infrastructures Limited submits Transcript of Conference Call of held on ...
NILA INFRASTRUCTURES LIMITED
To, The Manager Listing Department National Stock·Exchange oflndia Ltd. Exchange Plaza, Bandra Kurla Compelx, Mumbai- 400051 Scrip Symbol: NILAINFRA
NILA/CS/2019/215 Date: May 29, 2019
To, The General Manager Department of Corporate Services BSE Limited Phirozee Jeejeebhoy Towers, Dalal Street, Fort, Mumbai- 400001 Scrip Code: 530377
Dear Sir,
Subject: Transcript of Conference Call held on May 22, 2019
A conference call was arranged on May 22, 2019 to provide the information about the financial and operational performance of the Company for the quarter/year ended on March 31,2019.
In this connection transcript of the call is enclosed herewith for the information of exchanges and dissemination. The same is also available at the website of the Company at www.nilainfra.com which may please be noted.
Thanking you, Yours faithfully For, ~~~·Ia
Infrastructures Limited.
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Dipen Y Pari Company Secretary
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Registered Office:
1st floor, Sambhaav House Opp. Chief Justice's Bungalow Bodakdev, Ahmedabad 380015 Tel.: +91 79 4003 6817 I 18,2687 0258 Fax: +91 79 3012 6371 e-mail: info@nilalnfra.com
CIN : L45201 GJ 1990PLC01341 7
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Nila Infrastructures Limited Q4-FY2019 & FY2019 Earnings Conference Call May 22, 2019
Moderator:
Good day, ladies and gentlemen. And welcome to the Q4 FY19 Earnings Conference Call of
Nila Infrastructures Limited. As a reminder, all participant lines will be in the listen-only
mode. And there will be an opportunity for you to ask questions after the presentation
concludes. Should you need assistance during the conference call, please signal the operator
by pressing ‘*’ and ‘0’ on your touchtone phone. Please note that this conference is being
recorded. I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank
you and over to you, sir.
Anuj Sonpal:
Good morning everyone and a warm welcome to you all. My name is Anuj Sonpal from
Valorem Advisors and we represent the investor relations of Nila Infrastructures Limited. On
behalf of the company I would like to thank you all for participating in the earnings
conference call for quarter four and financial year 2019. Before we begin I would like to
mention a short cautionary statement as always. Some of the statements made in today’s
earnings conference call maybe forward looking in nature. Such forward looking statements
are subject to risks and uncertainties which could cause actual results to differ from those
anticipated. Such statements are based on management beliefs as well as assumptions made
by and information currently available to management. Audiences are cautioned not to place
undue reliance on these forward looking statements in making any investment decisions. The
purpose of today’s earnings conference call is purely to educate and bring awareness about
the company’s fundamental business and financial quarter under review. Now I would like to
introduce you to the management participating in the earnings conference call with us. We
have with us Mr. Deep Vadodaria – Chief Operating Officer, Mr. Prashant Sarkhedi – Chief
Financial Officer and Mr. Himanshu Bavishi – Group President Finance. I request Mr. Deep
Vadodaria to give his opening remarks now. Thank you and over to you, sir.
Deep Vadodaria:
Hi, good morning friends. I welcome you all to earnings call for Quarter Four and FY 2019.
This has been the most phenomenal quarter with booking on the highest revenue in the
history of the company and it is also true for the financial year, too. The company has not
only made up for the lag it faced in the nine-month FY19, but has also grown considering
certain events namely applicability of inclusive of GST billing for the previously awarded
ongoing contract and the state elections in Rajasthan, we are glad to have achieved growth.
We have secured fresh orders worth net Rs.3376.8 million during FY19. While the confirmed
unexecuted order book stand at a strong Rs. 6476.5 million that provides us revenues
visibility of further three years. We are confident to escalate the growth momentum with
Page 1 of 14
sustainable profitable margins and are confidently assured about a very promising year
ahead.
Now, coming to our operations.
As communicated in the previous earnings calls, that we have done in the past, we are
focusing on our objective of growing through the initiative of Lighter, Fitter and Faster model
in a granular and calibrated manner. We believe that our strong execution expertise is the
basis of our strategy and we have seen a healthy growth in our overall business. The
company’s order book is quite balanced with a focus on its core competence of “Affordable
Housing” constituting about 55% of it. And about 45% is coming in from the civic urban
infrastructure projects, for example medical colleges, commercial complexes, community
hall. Geographically the state of Gujarat accounts for 87% orders worth Rs.5603.8 million and
principal wise government entities account for 27% of worth Rs. 1726.6 million. The
government clientele comprise Engineering Projects India Limited, Ahmadabad Municipal
Corporation, Government of Rajasthan, while Adani Group is the major corporate client.
Overall, the company is executing construction of about 3.6 million square feet area including
7940 units of affordable housing. Meanwhile we continue to build resilient business to drive
growth in core operating profits in a calibrated manner and are maintaining to focus on
building the contract pipeline. We believe that the approach of granular exposures and focus
on high rated corporate and government client is standing us in a good stead in this
environment, and we will continue with this approach.
Now with respect to the sector and the economy.
According to prominent development sources Gujarat is likely to announce redevelopment
policy soon, the new policy’s primary focus will be encouraging high rise buildings along the
metro which is coming up in Ahmedabad and couple of other cities in Gujarat. BRTS corridors
and affordable housing zones across the major cities of Gujarat. This will provide great
impetus for the infrastructure activity going forward primarily much more related to the
contracts that we have been undertaking. The Mandal Becharaji Special Investment Region
and in the vicinity of Mandal Becharaji SIR where we are putting up two industrial and
logistics parks, is in making as one of the largest auto and auto ancillary hubs of the country
with Suzuki scaling up operations very quickly. With the existing plan, about 1 million cars are
to be produced every year. To cater to their needs, a lot of auto ancillaries will be required to
setup their facilities in the close proximity. This serves as the testament to the potential of
this region where we have about 300 acres of land in two distinct land parcels that are within
the vicinity of already operational Suzuki car plant and Honda two-wheeler plant.
Now with this I would like to invite Mr. Sarkhedi, our CFO, to discuss the key financial
highlights of quarter four and financial year 19.
Page 2 of 14
Prashant Sarkhedi:
Thank you Mr. Vadodaria. And good morning friends. I will quickly take you through the
standalone financial results for the quarter and the year.
In the terms of the quarterly performance standalone revenue for the quarter four 2019
increased to Rs. 760.2 million from Rs. 546 million in the corresponding previous quarter.
Certain projects have started contributed from the quarter four 2019, while certain others
have gathered the pace. On the profitability front, EBITDA for the quarter four 2019 increased
by 43% that is from Rs. 84.4 million to Rs. 121.1 million with EBITDA margin of 16.38%. The
profit after tax is Rs. 74 million.
In the terms of full year performance, standalone revenue for financial year 2019 has
increased by 6% to Rs.2340 million from 2216.4 million in the previous corresponding period.
As the company has evidently subdued the consequences of GST as well as state election in
Rajasthan. On the profitability front the EBITDA has witnessed a marginal reduction by 91
BPS, that is from Rs. 379.5 million to Rs. 379.3 million with an EBITDA margin of 16.8%. The
profit after tax is Rs. 221.7 million.
The Board of Directors has not recommended dividend for this year in order to retain the
resources for the future growth of the company.
Meanwhile, over past couple of years our overall Debt to Equity has hovered around 0.9x. For
the financial year 2019, Finance cost was 5.55% of the total revenue and 41% of the PBT.
While the finance cost would be an outcome of our utilization and the credit environment,
given our focus on the sustain profitability,we are planning to reduce it and bring this to the
comfortable level vis-à-vis our projected cash flow. We continue to be committed to achieved
an improved ROE and ROCE for the financial year 2020.
Meanwhile, Brickwork and CARE Rating have reaffirmed the BLR at BBB plus with a stable
outlook and A2 for the various bank credit facilities availed by the company. The company
has been also removed from the credit watch by the CARE Ranking.
I now open the floor for the question and answer that may be required for the further
clarification. Thank you.
Moderator:
Thank you very much. We will now begin the question and answer session. The first question
is from the line of Rushit Parekh from Capital Markets. Please go ahead.
Rushit Parekh:
Prashant sir if you can bifurcate the revenue for this financial year on a geographical basis in
between Gujarat and Rajasthan, just for better understanding as to the execution slow down
related to Rajasthan?
Page 3 of 14
Himanshu Bavishi:
Yes, I am Himanshu, President Finance of the company. The bifurcation of revenue amongst
Gujarat and Rajasthan is about 66% of our infra revenue we have derived from Gujarat while
33% is from Rajasthan.
Rushit Parekh:
Okay. And can you please help me in the comparable figures on an annualized bases year-on-
year that would help in terms of better understanding?
Himanshu Bavishi:
It was about 70% and 30% last year.
Rushit Parekh:
Okay, fair enough. And second question is regarding the order inflow. I think we have
somewhere around more than 330 crore of order inflow this year. So, I just want to
understand how is your bid pipeline for this year and what is the order inflow guidance which
management is looking for this coming year FY20?
Himanshu Bavishi:
Deep would you like to take this?
Deep Vadodaria:
So the order inflow has looked pretty good at least in the last quarter and financial year 19
and going forward yes the bid pipeline is much larger, we are L1 in a few bids then there are
about 14 to 16 bids which are yet to open and they will be opened in the due course of time
and once the election results are declared tomorrow and in general as I said the development
areas that we are working in Gujarat and Rajasthan and the cities that we are involved in,
specific bodies that we are involved in, the order pipeline does not seem to be an issue. In
fact whatever has happened in the last couple of months in terms of election code is just
government probably trying to think, put opportunities into place and they will see a huge
inflow of opportunities coming in as soon as the election code is over.
Rushit Parekh:
Will it be possible to quantify the EBIT in the pipeline here that is visible for the company?
Deep Vadodaria:
The project pipeline will be large however as our model we have never discussed with
numbers because it becomes a little speculative because it is not a certain bid that you are
going to be the bids that you bided for, but the order book looks pretty strong and about
three times and we have said in the past that we will try and push to a level where we think it
is not going to put a lot of pressure on our operational team. So it will be in line but we are
very comfortable at three times the order book right now and we will keep on exploring the
areas and rest has multiple number of bids which are to open and once they are opened in
the next few weeks you will get a much clearer situation off what is the pipeline that we are
dealing with and obviously that is going to decide the future course of action for the
company.
Rushit Parekh:
Fair enough. Next question is on the current interest rate. So what is the current average
interest rate for the company?
Page 4 of 14
Himanshu Bavishi:
It’s below 11%.
Rushit Parekh:
And in terms of funding given the anticipated execution and order book you have, will you be
raising any additional bid for this next year?
Himanshu Bavishi:
No. Prashant would you like to throw some light on debt ? Prashant already mentioned it
earlier, nonetheless he can repeat.
Prashant Sarkhedi:
Yes, we are not raising any further debt and we have very strong plan to reduce the debt
from our books by non-revenue generating assets like land. Definitely we would not generate
any further debt.
Rushit Parekh:
Fair enough. My last question, it’s a request if you can throw some light on the Nila Space I
know it’s already demerged but something on the real estate business of Nila Space that
would be of great help.
Deep Vadodaria:
So we Nila Space is obviously this is not the right platform to discuss this in detail but we have
already launched one project here for real estate affordable housing in the city of
Ahmedabad and that has got a phenomenal response from people. The consumption looks
pretty good and the model that we are observing there is a affordable housing model which is
a past turnaround in terms of execution also in terms of the overall sales turnover. So, we are
very confident that we will be able to maintain that in the first project and as of now there is
only one project and while we prepare the project pipeline and new team is taking place in
Nila Spaces. This is the only thing that can I support that one project is already floated out of
affordable housing, the construction is ongoing, we have finished more than 30% of the
construction by now and the teams have been very-very good. The appetite of affordable
housing we have absolutely no doubts in because we have been dealing very closely with
respect for the government side of thing to understand that private side of affordable
housing also is going to play equally important role in terms of housing for all.
Moderator:
Thank you. The next question is from the line of Viral Shah from Emkay Global. Please go
ahead.
Viral Shah:
Couple of clarification. One of the presentations on slide #9 states that some projects are yet
to be initiated right? Like Vadaj SRA – Vivyan, Bopal 232 that means the project has not
started construction right, is the understanding correct?
Deep Vadodaria:
Yes, the understanding is correct. The different reasons for the different projects of course
but I think it will be done out pretty smoothly by now once the election is over. So Bopal has
the same problem with the election. Once the election code is gone obviously the execution
will start there on the ground because the execution is postponed now and the same thing
for Jodhpur Barli. I think we will be able to start execution in the next month for the same.
Page 5 of 14
Viral Shah:
Agreed. So out of the 650 crore of order book roughly, what percentage of the order book is
not executing as of now?
Deep Vadodaria:
You could say in value terms about 18 to 20%.
Viral Shah:
Fair enough sir because what I understand from the presentation it is higher than that
actually it is close to 30-35%.
Deep Vadodaria:
Yes, see in the absolute value terms I have no clue but different projects have different
reasons why they have not been executing right now or delivering to the revenues but we will
confidently start delivering on the revenues Vadaj Project is very complicated SRA project
which is one of the largest slum dwelling houses of the city.
Viral Shah:
Agreed. So do we expect all this project to start by 1Q FY20?
Deep Vadodaria:
Yes, absolutely.
Viral Shah:
Fair enough. Finally when you look at our order book we have around 650 crore and we did
mention that we are L1. So could you quantify what kind of L1 orders are there, they are from
government or private orders only and geography price by any chance if you quantify that or
absolute numbers for that.
Deep Vadodaria:
As a policy we do not quantify the value of the L1 orders but there are four orders and they
are all government in nature and they are all coming in from Gujarat largely and one of the
order is coming in from Rajasthan but at the same point of time Gujarat has more
opportunities of course because Rajasthan went in for two election in the last six, seven
months.
Viral Shah:
Alright. Secondly, sir what will be your average execution cycle of this 650 crore of order
book?
Deep Vadodaria:
About 24 months.
Viral Shah:
About 24 months?
Deep Vadodaria:
Yes, that’s the average timeline for most of the orders that we get.
Viral Shah:
Agreed. So if you split this order book into two half’s such 30% of the order book has not
started on ground and it is going to pick up in 1Q of FY20, probably second quarter being the
monsoon quarter and your net debt of, I believe when you look at it from a two year horizon
you still have a decent run rate for FY21 but 20 looks a bit challenging it all depends on the
new orders whether they pick up in terms of revision or not. So is the understanding correct,
or there is some disconnect there?
Page 6 of 14
Deep Vadodaria:
No, the understanding is correct largely. But, I have to add that FY20 looks very promising
because we are very confident of the revenues that we are going to be able to book from the
existing order book that is there and also on the orders which we are going to get pretty
shortly but, since they are government projects obviously the execution of that will be largely
limited to maybe two quarter but they will obviously be chipping to our top line so we are
very confident of FY20 and yes we have clearly stated that FY21 also looks pretty much in
place.
Viral Shah:
Yes, so can you give me the guidance of sales EBITDA, PAT for 20-21?
Deep Vadodaria:
We do not give revenue guidelines as per policy but we will get back on the growth rate that
we have been delivering through the past. This year of course was a challenging for everyone
and we have been able to outdo all the negatives that were there in the year and still register
the growth and our single point agenda is to grow on the top line and as well as on the
bottom line. And that is what we will continue to do.
Viral Shah:
Sir apart from Gujarat and Rajasthan are we looking at different geographies or any new
geographies to how to kick in or to start execution there or to back projects there or
something like that?
Deep Vadodaria:
We have been actively looking at a few territories but as a short term strategy or a medium
term strategy right now as I said because we have already bided for a lot of project once the
bids open in the next few weeks that will decide a little bit of course of action in terms
operations because the order book which is very strong at this moment even get stronger
then we do not need to aggressively hunt for another opportunities in other states and to be
very honest in the states that we are operational in Gujarat and Rajasthan are serving with
ample opportunities to which we have.
Viral Shah:
Sir lastly in terms of technical qualification, what will be your technical qualification be for
projects and what is the bigger project which we can bag technical?
Deep Vadodaria:
Well it’s a very complex thing to answer because every different segment or the actual scope
of work of qualification criteria but it’s very safe to say at this point of time that with all the
hard work that we have been doing in the last two years we want the opened up doors to do
more and more segment than value of the bid that we can bid for has only gone higher
because of the execution that we have been doing on the existing projects. So it’s very safe to
assume that most of the building construction bid that come in our territory area and the
area of our interest we try to qualify basically on that.
Viral Shah:
Agreed. So what is your ticket size you would be looking at going forward, are you going to
have a ticket size of 100 plus?
Page 7 of 14
Deep Vadodaria:
Yes, we are comfortably qualifying for a ticket price of 100 plus.
Viral Shah:
100 plus?
Deep Vadodaria:
Yes, around 130-140.
Prashant Sarkhedi:
If we have to qualify, there are three bids of equal amount then we can qualify for 150 and if
they are qualifying two then more than 120 plus which I am qualifying easily with any.
Viral Shah:
Sir in terms of balance sheet when you look at. So, on your current balance sheet strength
without adding any new equipment’s or doing largely CAPEX what is the kind of drop line we
can easily achieve based on our current balance sheet strength asset?
Himanshu Bavishi:
We work on assets-light model wherein we normally try to empower our contractors rather
than purchasing asset on our books and construction equipment and assets are readily
available in the market. We deem it more prudent to follow this model rather than making
our balance sheet heavy and then stare at the position wherein we need to go and find out
work only to keep those assets in operating condition. So the kind of fixed assets that we
have or at our disposal, we believe that about Rs. 350 to Rs. 400 crore of annual execution is
not a challenge. No substantial fresh CAPEX that we look forward to in this financial year.
Viral Shah:
No, because sir why I am asking this question is because when you look at the current
scenario in terms of NBFC funding on terms of equipment’s and all, equipment financing and
all it is very stressed right they are not ready to put that kind of money.
Himanshu Bavishi:
We do not rely on NBFCs, as we have tied up our requirement with banks like SBI and other
nationalize and private banks and we do not stare at any situation where we need to run
from pillar to post for the need for tie up of funding for our projects. We are sufficiently tied
up and there is no fresh large CAPEX plan, routine CAPEX plan will go and there is no large
CAPEX plan that we need to be worried about.
Moderator:
Thank you. The next question is from the line of Jitendra Rushi from Bank of Baroda Capital
Markets. Please go ahead.
Jitendra Rushi:
Sir my question was your initial remark which you said about the upcoming redevelopment
projects in Gujarat. So, I see the government had passed this last year when buildings older
than 25 years they would come up for redevelopment. So sir can you quantify the size we are
looking for that, are we qualified for any larger size project as you said you are looking for a
ticket over 100 to 150 crore so this redevelopment projects would be in that range or bigger
or anything. Can you just throw a light on it and the competition for this?
Deep Vadodaria:
This is difficult to quantify but it is safe to assume that we will qualify for most if not all of
them, all the redevelopment projects that can be undertaken in the state of major cities in
Page 8 of 14
Gujarat where we are engaged in and you rightly said that there is a redevelopment policy in
place obviously this is core area of expertise because we are already doing slum rehabilitation
projects and we are actively involved in other redevelopment projects, redevelopment
obviously is a much earlier job compared to the slum rehabilitation model because they are
existing houses which need to be vacated which do not take as much time as the slum
projects in terms of doing social work there and convincing them to move out. So, we had
buoyant about this opportunity which is going to come about in the cities that we are
involved with Gujarat and if you look at the order pipeline that are there in terms of civic
bodies coming out with the redevelopment it seems quite large. So we are pretty excited
about this bid.
Jitendra Rushi:
We can further taking a way perspective of what kind of opportunities you have there, can
you just quantify the opportunities?
Himanshu Bavishi:
There are already about 100 societies in Ahmedabad itself which are proposing for
redevelopment and even if you take about 25, 30 or 40 units per society, then you can readily
workout that the number is quite promising and we are very bullish about this opportunity
and we look forward to it.
Jitendra Rushi:
Sir this projects would be like 10 story project, 10 story building or it would be higher or how
it is?
Deep Vadodaria:
It depends on the specific location of the plot because the FSI is permissible in the various
civic bodies guidelines are as per the width of the road where this project is located in and as
per the civic transportation, obviously because metro PRTR coming up these are large
corridors in which they are allowing large size building. So if the society is lying right there in
terms of direct access to the road where metro or BRT is then you are allowed to build higher
FSI and also in terms of higher FSI you have to also look at in the redevelopment project it’s
not only in terms of FSI because there are lot of situations which come into perspective
because these are voluntary people who are looking at redevelopment of their projects so
their comfort also needs to be taken into place but at the same point of time you can say
that, that will vary largely from these locations of the project that has been taken under
redevelopment, but anything in the zone which is very close to or direct access to the high
transportation network like BRT and Metro will tend to get higher FSI.
Moderator:
Thank you. The next question is from the line of Madhu Chandade from MC Research. Please
go ahead.
Madhu Chandade:
First some housekeeping question. If you could give me a breakup of what was the actual
quantum of PPP booked in the revenue for the fourth quarter and for the full year?
Himanshu Bavishi:
Sorry ma’am if you can please repeat the last part?
Page 9 of 14
Madhu Chandade:
PPP projects, what was the quantum of that booked in the revenue for the fourth quarter and
for the full year?
Himanshu Bavishi:
For the fourth quarter it is about 7% and for the full year it is about 3%.
Madhu Chandade:
7% for fourth quarter?
Himanshu Bavishi:
Yes, and 3% for the full year.
Madhu Chandade:
Okay. And what was it in the third quarter?
Himanshu Bavishi:
I will just get back to this particular number meanwhile you may proceed with your next
question.
Madhu Chandade:
Yes, and another thing is what was the total fresh order inflow for Q4 and FY19?
Himanshu Bavishi:
For FY19 it is Rs. 337 crore and for Q4 it is about Rs. 65 crore.
Madhu Chandade:
Okay. My next question is rather qualitative question. We are seeing, we are actually hearing
about lot of stress in the market which is getting worse because of the liquidity issues with
NBFC, specially lot of problem has been reported on the small housing finance companies
since affordable housing is definitely a focus area for your company don’t you feel that this
could lead to a slow down because your client getting impacted in some or the other ways,
either I am not saying liquidity is unavailable but liquidity, I mean money is coming at a price
so what is your take on this whole situation, should it aggravate further in the coming
months?
Deep Vadodaria:
I don’t think it is going to slow down in one week. There are two, three reasons why I feel
that, All the government projects that we are undertaking largely NBFCs exposure is very
limited we have to agree that there has been a paralysis of that sort in the last few months
because of government that is into election mode and lot of things has happened in terms of
liquidity showing action in terms of aggressively landing. That could be an issue for NBFCs I
am pretty sure but in terms of demand and liquidity coming into this segment, I do not think
there can be any question mark because we are down there on the ground and the demand
and the appetite even the banks are showing, even see we are also engaged with spaces on
the affordable housing segment on the private side and obviously NBFCs have encounter
problems but we are still working with NBFCs as well as banks who are looking very
aggressive to lend it to people who were buying their first houses or the affordable housing.
So, I do not feel this liquidity squeeze is going to effect the affordable housing space in any
way if you look at private as well as the government part of it. Because the government banks
are also looking very buoyant to aggressively land to affordable housing. There could be a
sort of pause that they have taken in the last few months but we are not encountering any
Page 10 of 14
operational issues on the ground in terms of processing the loan for the specific member
even if it’s governments responsibility or our responsibility we have not come across alarming
cases in which we should be worried about this situation.
Madhu Chandade:
Okay. I had just one that housing keeping on the share of PPP revenue.
Himanshu Bavishi:
It was 1% in the third quarter.
Madhu Chandade:
Okay, that takes me to this question you have mentioned in the presentation that margin dip
that we have witnessed in this quarter is because of the change in the revenue mix, so how
do you explain that really when the share of PPP has actually gone up in the quarter?
Himanshu Bavishi:
Share of PPP has gone up then there are certain four projects that we have initiated in this
quarter.
Madhu Chandade:
Can you name the projects?
Deep Vadodaria:
Sorry to intervene but it’s more of a quarter four comparison in which quarter four in a
subsequent in the previous year we had large execution coming in from PPP in terms of that
the execution is much lesser and just to elaborate what the breakup that he gave in are two
projects only started very late into quarter three and we have put some revenues on four but
they are down there executing at full strength at this moment and we are going to see large
revenues coming in from those four PPP projects four or five PPP projects that we are
undertaking at this moment. So the revenue share coming in from PPP project is going to be
larger in the financial year 20.
Madhu Chandade:
If you could give us some sense you mentioned that it was 3% in FY19 right, so what is your
ball park estimate of this number in FY20?
Deep Vadodaria:
See the ball park estimate could be a speculative figure in a way but I will tell you one thing
very clearly it has a PPP execution numbers are usually largely muted compared to EPC
because we are only awarded orders from the government for the construction of the parts
that we are to construct for the government just to give you a larger example on a
redevelopment project if we are constructing 240 houses for the government and 400 houses
or some square feet in terms of captive consumption of selling it out then that is not
considered in the work order but when we actually go through the chain of execution there is
obviously the opportunity which needs to be looked at which is on our component but just to
answer your question pretty straight you can definitely see it inching close to 10% or more
execution coming in from PPP projects.
Madhu Chandade:
In FY20?
Deep Vadodaria:
Yes.
Page 11 of 14
Madhu Chandade:
So where do you see your in light of this whatever you have mentioned and expect where do
you see your margin settling basically?
Deep Vadodaria:
The margins looks pretty settled at this point I think it will be around the same region of 16-
17% on the EBITDA I think we are very comfortable with that and we are very comfortable to
achieve that sort of EBITDA going forward.
Madhu Chandade:
Okay. One last question, what are the challenges or risks that you see to your growth journey
in FY20 and beyond?
Deep Vadodaria:
Well the government coming in and saying that we no longer want to build houses for poor
that seems very unlikely so I do not see any scenario in which the space that we are involved
in is going to get bigger or is going to lose any of the strengthen that it has in terms of driving
the infrastructure growth of the company.
Madhu Chandade:
Okay. So basically you are not really highlighting or you are not sensing any over challenge?
Deep Vadodaria:
Not at all.
Moderator:
Thank you. The next question is from the line of Amish Chandarana from Tata Capital
Financial Services. Please go ahead.
Amish Chandarana:
Most of the questions have been answered by you but I would like to ask you couple of
questions, if we go by the exit polls and if it hold to we will come to know by tomorrow so it’s
seems more likely that the present government will come into power. So your risk basically to
some extent will get eliminated for building the affordable houses for poor because they have
a good focus for building affordable houses for poor because Prime Minister itself has said till
2022 they wanted to build as much as of number of affordable houses. So probably that
could give you some kind of breather in terms of your increasing the book size from current
650 crore to maybe can increase to some more levels.
Deep Vadodaria:
Sir I would answer that very correctly yes exit polls show that they are going to come back in
power and obviously that means it just continues in the same velocity or even increase in
velocity as far as execution is concerned which is the best case scenario for us and even
though the government changes or the composition of the government changes in certain
way I still believe that the execution velocity of affordable housing only needs to improve
because even if the new government comes in and when I say new government I am saying a
new composition of the government which is obviously going to happen because there is
going to be change in numbers compared to 2014 o 2019, they will have to look at the space
more aggressively. I do not think so this is the space in the country where anybody can afford
to deliver lesser than what has been delivered the last five years.
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Amish Chandarana:
Okay. And sir one more question, sir you have answered that you are looking at the same
growth rate as what you were looking out in previous financial year but probably is there any
from your existing 250 crore turnover is there any possibility of increasing to growth rate
what it was befor3 because now the pace is going to pick up and even the demonetization
effect has gone too much…..
Deep Vadodaria:
Yes, we definitely as I said very buoyant about 2020 and 2021 very evident from the numbers
that we have presented on the unexecuted order book and the orders that we are going to
execute. However, since execution is largely a very relative measure and we need to go into
details of how this radiation could come in but we are very-very confident to login the sort of
growth numbers that we have seen in the past coming in from past anywhere close to 25-
30% on the growth side.
Amish Chandarana:
Okay. And any ball park figure for 20 or 21?
Deep Vadodaria:
We do not have that policy we do not give out guidance’s.
Amish Chandarana:
Okay. And one more question, what would be your order book one year down the line if you
have some kind of PBT on that?
Deep Vadodaria:
We will be very happy with anything above three that is what we are targeting.
Amish Chandarana:
Anything above sir sorry?
Deep Vadodaria:
Anything around 3x of billing which it is at right now.
Amish Chandarana:
So 1800 crore roughly?
Deep Vadodaria:
How many crore?
Amish Chandarana:
650 crore is your current order book correct sir?
Deep Vadodaria:
Yes, then 3x of existing billing, so we want to be around 3x.
Moderator:
Thank you. The next question is from the line of Anurag Sharma an Individual Investor. Please
go ahead.
Anurag Sharma:
Sir I would like to know any update on the Becharaji and other industrial park and also what
kind of revenue visibility this can provide over the next financial year.
Deep Vadodaria:
So Anurag there is good news coming in from that part of the business we have one land
parcel which was inside Mandal Becharaji SIR which was looking something like we could not
monetize for a very long time because the government was taking too much time in coming
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out with a final plan of the SIR but in the last quarter it has happened and they have been on
the ground and the basic execution of road and services is going to start very soon and the TB
schemes have been finalized so we are looking at that space very buoyantly going forward on
both the parcels. On the other parcel which is Romanovia Industrial Park as we stated on the
previous calls as well the developed is already on in swing there and we are close to
completed the phase one of the industrial park we already have about 3 lakh square feet of
leased out area and we have potential to build more than 1-1.2 million square feet more in
the same park, but these are bid suit spaces so we are not engaging into any risk of creating
spaces to be leased out later and putting in the CAPEX so we have been serving as per bid suit
basis so it will be difficult for me to quantify the numbers but just to be clear the demand
looks pretty robust there and specially with Suzuki’s production chain growing very strongly it
seems like the demand is only going so higher as we move forward.
Moderator:
Thank you. As there are no further questions from the participants. I now hand the
conference over to Mr. Deep Vadodaria for closing comments. Sir you may go ahead with the
closing comments.
Deep Vadodaria:
Thank you friends for joining us today. Looking ahead we will continue to maintain our focus
on building scalable and resistant plot base civic urban infrastructure business to drive the
growth. We will further strengthen our capabilities and peruse growth in elide and ancillary
civic urban infrastructure. We will align our offerings to provide the full range of civic urban
infrastructure development and capture the opportunities concentrated around changing
needs of the customers. We look forward to enhancing the shareholder value with support
from our stakeholders. We will look forward to having you all in the next quarters call and in
meanwhile our team and our IR team will be more than happy to assist you with anything
that you need. Thank you again.
Moderator:
Thank you on behalf of Nila Infrastructure that concludes this conference call. Thank you for
joining us and you may now disconnect your lines.
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