Capacit'e Infraprojects Limited has informed the Exchange regarding Analysts/Institutional Investor Meet/Con. Call UpdatesTranscript of the Analyst/ Investor conference call
E ED
: CIL/STEX 3O/Q4FY19 '. May 24,2019
Ref
Date
To
The Secretary, BSE Limited Corporate Relation Dept, P.J. Towers, Dalal Street. Fort. Mumbai-400 001
The Secretary, National Stock Exchange of India Limited Plot No. C/1, G Block, Bandra Kurla Complex Bandra (East) Mumbai-400 051
Scrip Code /Scrip ld: 540710/CAPACITE
Scrip Symbol: CAPACITE
Dear Sir/ Madam
Dear Sir
We refer to our letter dated May 9, 2019 regarding the Intimation for Earnings Conference Call with Analysts/lnvestors on the Audited Financial Results of the Company for the quarter and year ended March 31,2019, which was scheduled on Tuesday, May 14, 2019at 12:00 Noon (lST).
In this regard we attached herewith the transcript of the conference call as required under Regulation 30 read with Part A of Schedule lll of SEBI (Listing Obligations and Disclosure Requirements) Reoulations . 2015.
This is for your information and records.
Yours Truly For CAPACIT'E INFRAPROJECTS LIMITED
Sai Kedar Katkar Company Secretary and Compliance Officer
Mumbai (Head Office) : 605-607' Shrikant Chambers, Phase-|, 6th Floor, Adjacent to R. K. Studios, Sion-Trombay Road, Chembur, Mumbai- 400071. Maharashtra, India Tel: 022 7173'3717 . Fax.:022717g g7g3. Email: info@capacite.in '
NCR I Bangalore
Cf N : t45400M H 2Ol2P LC2343ta
www.capacite.in
CA, IT'H
" Capacit'e Infraproj ects Limited Q4 FY20l9 Earnings Conference Call"
May 14,2019
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() ap ac it' e Infr apr oj e c t s Limit e d Mqv 14,2019
Moderator:
Alok Deora:
l,adies and gentlemen. goocl day and welcome to the Q4 FY20l9 Earnings Conference Call oiCapacit'e lnfiapro.iects Limited, hosted by Yes Securities. This conference call may contain fbrwarci-looking statements about the company, which are based on belief, opinion and expectations ofthe company as on the date ofthis call. These statements are not guarantees ol'tuture perfbrmance and involve risks and unceftainties that are difficult to predict. 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 an
operatorbypressing..*''then..0,'onyourtouchtonephone.Pleasenotethatthis conference is being recordeci. I now hand the conference over to Mr' Alok Deora from Yes Securities. 'l hank you arrcl ove r to you Sir!
'|hankyouSteven'CoodafiernooneveryoneandwelcometotheQ4andFY20l9 earnings conl'erence oall o1'capacit'e lnfraprojects. we have with us today Mr' Rohit Katyat. Executive Director & CFO. Mr. Alok Mehrotra, Head of Corporate Finance and Mr. Nishith PLr.iarl'. I Ictrd o1'Accounts I now hand over the call to Mr' Katyal for hisopeningremarksandthenwewi|lhaveaQ&Asession.Thankyouandovertoyou
Sirl
Rohit Katyal:
Good afternoon everyone. A verY conference call. Along with me Finance and Mr. Nishith Pujary'
warm welcome to our Q4 and FY20l9 earnings I have Mr. Alok Mehrotrq President, Corporate Head Accounts and Taxation and our investor
relations team,
I hope cveryone has had
press relcasc have bcen
an opportunity to look at our results, uplondod on the stoek exchanges and on our company's
'l-he presentation and
website,
Second half of FY20l9 was challenging year for the industry as it faced headwinds in form of liquidity crisis in the NBFC sector. Despite these challenges capacit'e delivered a robust performance for the year. we have been able to maintain a healthy order book and have added some cxtremely strong clients to our clientele'
Now let me give you highlight on our operational performance during the quarter' our order book excluding MHADA at the end of March 3|'20|9 Stood at Rs.7,177 Crores. ourorderinflowfortheyearstoodatRs.3,62gCroresofwhich50%welerepeat orders. Residential segment contributes '76oh of the order book while commercial and institutional oontributes 24u6.
t,arge parl of our order book is contributed by high rise and super high rise at 43%
tb||owedbygatedcommunitiesal35o/o,DuringQ4,wereceivedanorderfromthe Municipal corporation ol'creater Mumbai, Health Infrastructure cell for th redevelopment of hospital worth Rs.484 Crores'
Ktr
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Capacit' e Infraproj ects Limited Mav 14.2019
Perfbrmance highlights tbr Q4 and FY20l9 are as follows:
'l'otal income fbr FY20l9 grew by 34o/o lo Rs.l825 Crores as compared to Rs. 1360
Crores in FY20 I 8. LIBI'l'DA 1br FY20 l9 grew by 25% to Rs.285 Crores at compared to Rs.228 Crores in trY20ltt, Irtlll'DA margin for FY20l9 f'ull year stood at l5.6yo. Of rhe orders received fbr eight super high-rise buildings in late Q3, we have fully mobilized lbLrr buildings. The revenue build up forthese projects which enjoy ahigher UBI'IDA rnargin would start from Ql FY2020 onwards. This had atemporary impact on EBI'I'DA margins in Q4. which will normalize in the coming quafters'
I-'inance cost as a percentage of total income has declined to 2'7%o in FY20l9 from
2.9%o \n FY20l8.
Depreciation and amortization expense for FY2019 stood at Rs.89 Crores as compared to Rs.67 Crores in FY20l8. The capex spends towards core assets in FY20l9 stood at
Rs.89 Crores.
PA'I'fbr I--Y2019 grew by 2lo/o Io Rs.96 Crores as compared to Rs,79 Crores in FY20l8. Dilurcd EPS fbr FY20l9 stood at 14.08 per equity share vis-d-vis 13.71 for eouitv shale in FY20l8.
Cash PAI'Ibr FY20 19 was Rs,l98 Crores as compared to Rs. 16l Crores during t'Y20 I 8 growing by 23%.
The total collections during FY20 I 9 stood at Rs. I 745 Crores'
The networking capital days excluding retention stood at 68 days as on March 31,2019
vis-d-vis 58 days as on March 2018.
ln this context. it is clarified that material advance of Rs.6l Crores received from clients got netted off against debtOrs in April 2019 as against March 20l9 The material advance ofRs.6l crores resulted in l2 days increase in the debtor level. Therefore, if ad.justed fbr Rs.6l Crores our debtor levels of 144 days including retention would stand at l3l days and excluding retention at 106 days as against I l8 days'
'lhus after netting of'1'the Rs.6l Crores of material advance, the networking capital will stand at 55 clai's irr March 2019 vis-a-vis 58 days in March 2018'
The Board of Directors has recommended a final dividend of Rs.l on face value of Rs. I 0 subject to approval of shareholders. with this, I now the leave for the floor open
for questions. Thank You
Moderator:
Thank you ver)'7 much. We will now begin the question and answer session' Ladies and gentlemen. wc will wait 1br a moment while the question queue assembles. The question is from the linc o1'Kunal Bhandari from HDFC Securities. Please go ahead.
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Kunal Bhandari:
Rohit Katyal:
Kunal Bhandari:
Rohit Katyal:
1'hank you Sir lbr thc opportunitl ..lust wanted to understand so what sort of stress are you seeing in some of your pro.iects because I see your order book has reduced? when you try to net off the inflows with 4Q execution, so I think there have been a few cancelations so can you clarify on that and what sort of money is stuck there may be
your receivables or any advances pending?
opening order book as on.lanuary 1,20 19 was Rs.7520 Crores. We have added Rs.484 (lrttrcs in Q4 and lhe revenue fbr Q4 stood at Rs.498 Crores, Therefore. if you compare with l)ecember I l. 20 ltt the order book should have read as Rs.7506 Crores. we have dcclared an order backlog of Rs 7177 Crores so the difference is Rs.330 crores. of this, the company has fbreclosed two proiects one with Radius MMR of Rs. 106 Crores and one with EVOQ. Chennai of Rs.l19 Crores. After providing for the ad.justment of these trvo orclers and about Rs. l20 Crores for orders under final billing that is virtual cotnplction tho anlount has been given at Rs'7177 Crores' Therelbre' two orders. which were fbrecloscd in Q4, have been reduced from the order book, which will explain the difference of what you just mentioned. That is the first part of your question. Second pan of the question, the order for summer Radius, which was foreclosed, the agreement has been drawn, executed and cheque received, so there is no outstanding, which would be there at the end ofQl from the foreclosure ofone project' Purva EVOQ the proiect has been foreclosed. There is a retention outstanding' which would be receivable within Ql and Q2. so as lar as the reconciliation of the order book is concerned there is no withhelcl or amount, which is expected to get overly delayed.
l lope I anstvurcd your qtle stion'?
Sir I just neecl to ask you. Sir you have pending projects from Purvankara and Radius croup and even you know some other developers, do you see any stress on these pro.jects as well as sonre of the non-gracled developers as you know we would like to
classify them. so what stress do you see building up?
See number one if you look at our clientele and we have actually given in our presentation, the top l0 clients, I am sure you have been looking at those clients very closely I do not see any of them in any stress and otherwise you would not have collected 1745 Crores. So, the top l0 clients include oberoi Group, Piramal Group, MCGM. Kalpataru Croup. Purvankara. Purvankara we have foreclosed the project for commercial issue, While it is a continuing client, and we will continue to do two pro.jects lbr thcm. Sinrilarly, Brigacie ciroup ancl BSNL So. we do not see stress in the top l2 clients. As far as clients. like you.iust mentioned Radius or anyone else for that matter ws are clear ano we have explained in our commentary during the previouS quarters also, given NBFC issue, if see stress and no payment received for more than two nronths fiom any,of thc clients. we will suspend the project and we have done that successlully anrJ lbrecloscd two pro.lects. So as far as capacit'e is concerned, the generalization of the industry shoLrld not be taken into account, our client qualify should be considered while accessing Capacit'e
K,
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Kunal Bhandari:
Onc thing. any lrBIT'DA hit that you would have to take because of foreclosing these two pro.jects, any receivable that you have written otf or something like that?
Rohit Katyal:
Apart fiom the normal EC[. provision of Rs 6.5 Crores or thereabouts for the full financial year. there is no hit taken on the books. We.iust explained the temporary reduction in the EBIDTA because we received orders worth 1300 Crores in late Q3 last flnancial year notably fiom Oberoi and Piramal. Now, super high-rise building requires substantial rlobilization, fbur of these towers have been mobilized in totality, revenue built up will happen from Ql on the current financial year. Since super high rises enjoy the maximum EBIDTA level since there was a lower revenue in those projects because of reasons explained, the EDITDA margin temporary lower in Q4; however, the guidance of I 5.7 to 16.3 will stand in current flnancial year also'
Kunal Bhandari:
'l'hank you so much. I will .ioin Lhc ques[ion the queue again if I have any further questlorls.
Moderator:
'l'hank you.
-fhe
next question is tiom the line of Ayushi Mohta from cD Equisearch.
Please go ahead.
Ayushi Mohta:
Good afternoon Sir What kind of order infl ows we expect to see in coming quarters?
Rohit Katyal:
we would like to maintain an order book of 2.8 to 3 times of our projected tumover for the next financial year, which means we will necessarily have to take orders for approximately 2000 crores in the current hnancial year; however, the bid pipeline is much stronger than that, so we do not see any challenge in achieving the 3x of the pro.jected rtrpline lirr FY2020-2021 in the currcnt tinancial year. l{aving said that' the last year's target was 1800 C--rores as against which the company has achieved an order inflow of 3600 Crores. So. wc believe that the momentum accordingly should continue'
Ayushi Mohta:
Do we expect headwinds due t0 the NBFC crisis to continue?
Rohit Katyal:
You would be able to guicle better As I .iust explained the NBFC was as much as the shock to me or t0 our organization as was to the entire banking fratemity or the investing fiaternit),so obviously it does leave us with certain answers which means that sanction letters of NBFC can no longer be a basis for quoting a project. The financial closures with bank will have to be compulsory or the ctient pedigree quality has to be as what you see in our presentation, so therefore it is time for abundant caution and like everyone is learnt a thing or two from this NBFC crisis, capacit'e to as well'
Ayushi Mohta:
Sir. do we plan to bid fbr proieots urrdcr Murnbai Development Plan?
Rohit Katyalr
MumbaiDeve|opmentPlanasinwhatwhichc|ientareyoureferringto?
Ayushi Mohta:
Sir 2034?
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Rohit Katyal:
2034 is the Development Plan, which outlays the development control rules for
construction ofbuildings and as such all the buildings being constructed now are Under
the 2034 development control rules itself. So yes, we are bidding and we continue to be one of the most prominent contracting companies as far as the West Mumlai is concerned, So yes. we are bidding and we oontinue to bid
Ayush Mohta:
Will your fbcus remain on private sector order or will you be more aggressive
oublic sector?
Rohit Katyal:
As I saicl that our conlpan)' s philosophf is on client quality, so we have added a of sovernment sector olicnts also. We have added extremely marquee client tl private sector, we have added Raymonds, so yes, we will continue to add good it would be very difficult to give a bifurcation of private sector and government Client quality and geography will drive our order growth philosophy'
the
Ayush Mohta:
Thank you so much.
Moderator:
-t'hank you. 'lhe next question is trom the line of Ankit
Shah tiom White
Investment. Please go ahead.
Ankit Shah:
Rohit Katyal:
Ankit Shah;
Rohit Katyal:
Ankit Shah:
Rohit Katyal:
'Ihank you fbr taking my question. First on receivables sustainable run rate on receivable days fbr us?
piece what could
the
So. we have bccn nraintaining thc 55-56 days level, I explained the increase of I which is lhe one off situation beoause of the material advances getting netted off have been maintaining in the challenging times this level of 55-56 days and we
days,
we
no
reason for that to change in the coming quarters.
Sir, on the margins beat, we understand there was mobilization of a few bui Sir again in the next two quarters, few more building mobilized and should not have the hands on the margins in the next two quarters?
Mobilizing Rs 300 crore proiect and mobilizing Rs 1300 crore worth of projec{ts in a quarter is very diffcrcnt and even if we will be mobilizing the new project in tle next t'ew quarters, which obviously will be the case. The revenue ramp up of thes$ 1300 Crores will be well underway and therefore the EBITDA projections ol l5'7 to lp'3 are
given and sustainable.
Can you give some detarl on thc latest order wins tiom Oberoi and Raheja may be?
oberoi is Super high rise towers, two additional towers of super high rise, in the oberoi Sky city complex apart from that Raheja corp is a commercial complex at worli where earlier the Siemens buildings stood, so these are two projects' one is comlner --'<
and one is residential.
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Ankit Shah:
Sir. can you quantity the order sizes tbr these two.
Rohit Katyal:
So. the Rahe.ia is about 100 Crores. ldo not have
the exact number in front of me
excluding taxes and value ofsteel and concrete.
Ankit Shah:
Oberoi piece?
Rohit Katyal:
Oberoi is basically addition to the same earlier order, the addition stands at about 230
Crores excluding taxes.
Ankit Shah;
.lr,rst to clarif_t,this Oberoi ordcr fbr this Sky City'pro.lect. is it for the Residential paft or
is it something else.
Rohit Katyal:
Ankit Shah;
Rohit Katyal:
I do not have details at the moment in front of me. I think the press release they mentioned it. We are doing the Oberoi Sky City Mall and this is for the peripheral work that is peripheral buildings around it, so what exactly it is I will not be able to
comment.
Sir on the MHADA proiect, so we understand we have expected low capital commitment for this project due to the mobilization advance and the bank facility. Sir' would it be possible to kind of share with us the quantum of the bank facility that we
would have tied up. So, trying to understand the peak debt at this SPV level?
So, Capacit'e lntia will not be tieing up fbr any bank limits. Tata Projects Limited is the financial leader and the1, will be tieing up tbr the bank limits depending on the peak requirement. For the llrst fwo years. we do not foresee any bank requirements for the pro.ieot as we explained earlier also. It is too early in the day to tell you the peak requirement. but with the cash what we have, we could say that the peak requirement in the 1'ear five or six could be at 500 Crores, but this is only a ballpark figure, it could be impossible to predict five years hence as on today.
Ankit Shah:
That is helpt'ul, I will.ioin back to the queue.
Moderator:
Thank you. The next question is from the line of Shashank Palan from Rockstud
Capital. Please go ahead.
Shashank Palan:
Thank you for the opporlunity. Sir, can you please tell me what is capex guidance for
FY2020, what is the capex trend?
Rohit Katyal:
It is approved at 75 Crores given the current order book.
Shashank Palan:
Sir.iust wanted that in Q4. we could say two items that that there is mobiliz.ation of large proieots. but is there
has increased you mentioned
something specific our othor
exDense and the 00nstructl0n cost, both have increased?
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Rohit Katyal:
Construction cost is in line. either the material cost will increase. if you added the material cost in the subcotltractor cost. rt will be the same level or may be l-basis poinls hcrc and lherc. At thc cnd 0l thc day, we arc the construction company' so the
projectwasexecutoctasperthebudgetandasperthecosttocompletewhichisupdated every quarter. So. 100-basis point increase in raw material cost for a particular quarter that carl htrppen given the nature o1'the items we are executing in that particular rlrrtrrlcr. hLrt il'yoLr itclcl Lrp thc nratorial cost ancl the subi:ontraotor cost. it stands aI'74o/o' which is in line with the whole year pro.ieclion what we have'
Shashank Palan:
InQ4aslcouldseeitisgrowing aI3'7o/oonY-o-Ybasis,solhaveaddedthatitcomes to 750h excluding other income and in Q4 last year aboutTlVo, so there is still 4%
increase?
Rohit Katval:
Asltoldyouthatwhenyouarestartingupmanyorders,yourquantumofconcreting work and steel work is higher. whcn the quantum of concreting work which is in Iayman|anguageknownasRMC,whenRMCandsteelworkishigher,thecostof material will be highor in that quarter and therelbre there is the temporary dip in the EBITDA in the pa(icular quartcr thar is what I was explaining in the earlier call also'
Shashank Palan:
Anything on the othcr cxpense side?
Rohit Katyal:
ldonothavethecompletebreakup.butlwouldappreciateifyouputsendasmallmail to our investors relation team and they will be very happy to provide the breakup and
comparison with Iast Year.
Shashank Palan:
Ifthere is any question, I will get back to you' Thank you'
Moderator:
Thankyou l'henextquestionisfromthelineofParvezAkhtarfromEdelweiss
Please
go ahead
Parvez Akhtar:
cood afternoon Sir. congratulations tbr a goocl set of numbers. Sir. Ijustwanted to get yourthoughtsonhowdoweseeaworkingcapitalcyclegoingaheadandalsosome
Rohit KatYal:
insidesonthemarginfiont.wehaveseensomereductioninmarginscomparetothe
historical|evelsoverthelasttwoyears.S0howweseeamargintrajectorygoing
ahcaci?
I would reatly cncourage you to have a look at the CACR over the last 4-5 years' temporarydipwhichwehaveexplainedthereasonthatcouldnotbereadintotoo much, however, having said that the networking capital which temporarily increased by
l2days,reasonforwhichlhavealreadyexplainedinmyopeningremarksandalsoto the question askecl by the earlier people is because of the raw material advance, not qettins netted otl'in the same month that is March 2019 and therefore, itbasically looks inflated bv l2 cla),s, Since thc nctworking capital in true sense is at 55-56 dai's' we believc that this level will continue in the corning months also. If you look at over
g/
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last two years, it has range between 48-62 days and I therefore believe 55-56 days is the same state level to assume and that will continue going forward.
Parvez Akhtar:
On the EBIDTA margin fiont?
Rohit Katyal:
I just gave the item 15.7 -16.3 that is the items for the two and half years that does not change. Because our margins are based on the cost to complete and since the projects are non-speculative that means we are not impacted by any increaSe or decrease in material prices. theretbre. wc cost to oomplete updated as on April 1,2019 that will project EBI-f DA level to be maintained between 15.7 and 16.3.
Parvez Akhtarl
Thanks that should tiorr rny side and all the best in the future'
Rohit Katyal:
T'hank you.
Moderator:
'I-he next question is ltorn the line of Amol Mhatre fiom Akash Ganga Investments.
Please go ahead.
Amol Mhatre:
I just wanted to take your view on public sector order book that is current year 915 Crores, what kind of opportunities are you seeing in the public sector space going
forward?
Rohit Katyal:
Well there is hunrongous opportunity. but as I said that we look at the client quality very deeply betbre participating for any govemment project, so we will continue to focus on clients like MMRDA, ONCC, BMC, SIDCO and we do believe that the order book by the end of current financial year from private sector should be somewhere
close to lSVoto22Vo ofthe overall order book.
Amol Mhatre:
Thanl< you Sir.
Moderator:
The next question is from the line ofPrem Thakkar from Unilazer Ventures' Please go
ahead.
Prem Thakkarl
Rohit Katyal:
Sir,.just couple of book keeping questions. Interest expense has been trending upwards from Ql FY20l9 to Q4 FY20l9 we look at l5 crores, so was there lot of bank charges in this or how should be read that?
l-he total flnance cost ol'49 Crores is split up into. bank interest on cc and bank interest on term loan ad.iusting processing f'ee, this adds up to 20.85 Crores. The comnrissions on BC that would stack up to 10.05 crores and the remaining are saleable discounting and other bank charges. Now: however, when you look at this 49 Crores. you have to reduce interest reoeived on SBD and flxed deposits kept with the bank of 32.41 crores. I explained in the last quarler also the net interest is practically negative. Ofuourse. Lhere will be bank charges as a company grows and gives bank guarantee charges, there will be some cost on the bank guarantee, but however, ifyou
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look fiorn the perspeclivc. overall order book the bank guarantee commissions have
been quite reasonable and that is vcr1, fair level.
Prem Thakkar:
Our depreciation expense has come in around Rs 25 Crores, so we assume the same run
rate going fbrward.
Rohit Katyal:
As I explained for the core assets, the depreciation is already normalized over the last
one year. The amortisation of site establishment expenses is even proportion to the
topline, and for the full year was Rs 59-60 Crores approximately, the details can be sort
from the IR team. However, if there is an increase in revenue, obviously the write off will also increase and if there is increase in order inflow the built up to site establishment may, increase. So. it depends on what is the inflow for the current
financial year, but yes, we do believe that in the current financial year about Rs 62-63
Crores would bc the depreciatron on lcvcl ol'amortisation and similar levels of cunent
tlnanoial year depreciation on the core assets.
Prem Thakkar:
Just a llnal question. I missed the oapex number for FY20l9 was it 89 Crores.
Rohit Katyal:
Core capex is 89 Crores.
Prem Thakkar:
Thanks a lot Sir.
Moderator:
Thank you. The next question is from the line of Rachit Kamat from Anand Rathi.
Please go ahead.
Rachit Kamat:
Good morning Sir. l.just wanted to know the unbilled revenues as on March 31.2019?
Rohit Katyal:
Can you please repeat your question?
Rachit Kamat:
Sir, l.just wanled to know the unbilled revenues number as on March 31,2019?
Rohit Katyal:
Unbilled revcnuc?
Rachit Kamat:
Sir like when you look at the inventory days, they have come down from around 59 days in March 2018 to l9 days in the current year, so that is the kind ofdrop for round 40 days, so now I am expecting some part it will be unbilled revenue is getting
converted?
Rohit Katyal:
Yes as per the Ind-AS-l15, adoption of the same has resulted that the WIP, which
earlierwasaoartof stock.whichstandsaround 2l2CroresasonMarch3l,20l9,now is appearing under Other financial assets, and that is known as Unbilled revenue, it is
nothing but the WIP in the earlier accounting methodology. However, the uncertified
bills as on today 126 Crores only which is about 20 days of revenue.
R
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Rachit Kamat:
What kind of revenue guidance are we looking over the next three-year period if I look at, was given a current order backlog of I 5% to 20yo grgwth kind of scenario is
possi ble?
Rohit Katyal:
What we have pertbrmed is in front of you, our order book and the quality of clients is in fiont of you, As always we clo not glve any revenue guidance. We do not want to pressurize our operations team to keep working without receiving money. I hope you
will appreciate that.
Rachit Kamat:
lf I have anv question. I will get back to you.
Moderator:
'Ihank you. The next question is tiom the line of Sriram Kumar lrom Spark Capital'
Please go ahead.
Sriram Kumar:
Good afternoon. I have a bookkeeping question, what will be the unbilled revenue that
will be in other assets at the end ofthe year?
Rohit Katyal:
Around March 3 l, 2019, it is 2 l2 Crores.
Sriram Kumar:
'fhe next question is what is the update on the MHADA projects, if it on schedule?
Rohit Katyal:
It is on schedLrle and the designing part 01'the flrst two phases have been completed and
we stan with the physical execulion this current month.
Sriram Kumar:
All the approvals. timcline has been on the same or is that being extended?
Rohit Katyal:
well the approvals are in the scope of the clients and not with the sPV of Tata Projects and Capacit'e, so the approvals are available to start with the transit camp buitdings by this month end that is what exactly I mentioned that we start with the physical execution this month end.
Sriram Kumar;
Thanks.
Moderator:
1'hank you. The next question is from the line of Surbhi B from Ambit Capital. Please
go ahead.
Surbhi B:
Rohit Katyal:
l.just wanted to know if there is any quantum of unutilized IPo proceeds and if we are looking to retire any debt over the next two years?
Madam, the debt reduction will be as a result of the cash flow. We cannot say it is unutilized IPO proceeds, but yes close to 30 Crores offixed deposits receipts continue to be available fbr the company and that level we tend to increase to close to 50 Crores
in the first two quafters,
Surbhi B:
Thank you.
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Moderator:
Thank you. l'he next question is fiom the line of Manjeet Buaria from Solidarity
Investment. Pleasc go ahead.
Manjeet Buaria:
Good afternoon. Thanks fbr taking my questions. My first question was if you could
.iust help me understand how the industry structure is in terms of competition which you face and the second question is how do I think of the industry, in terms of, is it more geographical play and if you are to enter a new geography let us say a new state it is more dif'ficult to do it or you can seamlessly do it based on your current expeftise?
Rohit Katyal:
So, competition ditlers from geography-to-geography. Cunently or over the last six
years Capacit'e has been cxecuting pro.lects in Mumbai, Pune, Bengaluru, Hyderabad, Vi.jayawada. Chennai. Cochin. and Delhi MCR including Varanasi. So, we have worked across multiple geographies and multiple states; however, our philosophy again is to look at the client quality more than the geography and we only enter into geography once wc are sure about the supply chain management and the quality ofthe
client, So far the policy has been that our existing client like Tata Projects would take
us to Varanasi or Godre.i Mumbai would take us to Delhi, NCR or existing Bengaluru client taking us to Chennai and that policy would continue. We do not intend in these challenging times to add any more geographies. As I have explained earlier, it is time for abundant caution and obviously along with you we also have to exercise with abundant caution. Coming to the geography, there is no thumb rule that particular thing needs to be done to enter the geography, what generally any company would look at is the management bandwidth, supply ohain management and the client quality.
Sir,.iust one tbllowup on this al your company's end or in the entire ecosystem who has to manage the tocal regulations in terms of permits and all. Is it the developer who Lrasically gives you the contract or is it you and when it put a new geography how do you kind of manage that regulatory environment. if it is a new place and I justtryingto
understand that'l
Manjeet Buaria:
Rohit Katval
It is the client whether a developer. whether it is a govemment, whether it is environmental clearance, building permission, CC, OC, everything is in the scope of
client as a contractor none ofthe contractors take that in their scope.
Manjeet Buaria:
The labour laws would come under you?
Rohit Katyal:
Iror sure because we deploy so many workmen and therefore the labour laws whether it is Pension scheme or whether that is taking care ofthe insurance so on and so forth' will remain under us. including providing hygienic living and sanitation working
environmenl
Manjeet Buaria:
I will.join back the qucue, 1'hank you.
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M oderator:
Thank you. The next question is tiom the line of Subramaniam Yadav from TCG Asset
Managenrent Companv. Please go aheacl.
Subramaniam Yadav:
Sir. i1-you can give us the capex fbrthe next yearFY2020-2021 possibly?
Rohit Katyal:
AL the moment. 75 (lrores is approved by the board
Subramaniam Yadav:
For 202 l, ifyou can give?
Rohit Katyal:
We would be able to give out a number after six months because we will have to
monitor the order inflow. Once the order inflow for the first six months is clear, only
then can we give you any commentary on the next year's capex buildup.
Subramaniam Yadav:
What about the revenue guidance ifyou had shared any for FY2020?
Rohit Katyal:
We have been growing al f-air CAGR over the last few flnancial years given the order
book. we do believe that momentum should continue; however, as a policy we do not
give any revenue guidance
Subramaniam Yadav:
Can you give us some color on the debt may be ending FY2020?
Rohit Katyal:
So, excluding the bill discounting limit, we continue to be at 168 Crores including
short-term and long-term. we believe that this 168 to 175 Crore levels will continue
going lbrward also. You could see some reduction in that.
Subramaniam Yadav:
Thank you Sir.
Moderator:
Thank you. The next question is fiom the line of Vijay Gaur from First Global. Please
go aneao
Vijay Caur:
Cood aflernoon Sir. CongraLulations on a good set of number. I .just wanted to understand the expected inflow lbr FY2020 and202l .
Rohit Katyal:
The inflow of'/?
Vijay Gaur:
Order book Sir.
Rohit Katyal:
Order book as I explained that we work on the philosophy of having an order book
close to 2.8 to 3 times of our projected revenue, which means that we will have to book
orders of close to I 800 to 2000 Crores in the current financial year and similar level of
orders in the next financial years; however, we have always done much better than the
targeted order book.
Vijay Gaur:
Sir. the Ml{ADA nroiect is likely to start tiom this month?
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Rohit Katyal:
Yes Sir.
Capacit' e Infraproj ects Limited Mav 14.2019
Vijay Gaur:
So, what kind of the incremental revenue are you looking from the MHADA project
for FY2020?
Rohit Katyal:
We do not have any clarity on the consolidation at the moment in time. Yes, the profit
will definitelv be consolidated.
Vijay Guar:
'l
hank 1ou Sir. All thc hust.
Rohit Katyal:
T'hank you.
Moderator:
Thank you. The next question is from the line of Utsav Goswami from Evolve India.
Please go ahead.
Utsav Goswami:
Good afternoon everyone and congratulations on the good set of numbers. Slightly
qualitative question this time, what would be the top three risks in your mind for the
year ahead for the business?
Rohit Katyal:
Number one, risk would be assessing the quality of the client's, aftermath of the NBFC
issues because it is now even more that external risk which is not attributable to the
industry of oonstruction or dircctll' to thc company has impacted subsequent to the
NBtiC liqLridin' issues So obviously our risk assessment sheet has undergone a change
arrd the client quality will be assessed accordingly. that is number one, and the most
important thing. Number two, the fbcus has to be on collections and therefore the client
quality is all the more important which we have explained earlier also and therefore
you see that the company has added exceptionally good clients in Q4 as similarly in Ql
of the current financial year. so these are the two things which we basically have to be
very careful about because you would not know suddenly which NBFC goes bad and
suddenly stops f'unding and therefore any project not paying for more than two months
from Q4 of the last financial year will be suspended come what may.
Utbav Goswami:
Thank you so much.
Moderator:
'fhank you. The next question is from the line of Nitesh Jain from Birla Mutual Fund.
[)lease go aheacl
Nitesh Jain:
'fhank you Can you share some details about this BDD Chawl Project, so what is the
total size. I guess 12000 Crores is the total number which I see. Does this include the
steel and the cemcnt as well and secondly what is your share between you, Tata
Projects and CITIC and lastly what kind of EBIDTA margin do expect out of this
pro.j ect?
Rohit Katyal:
So, it is an integrated pro.lect, integrated SPV between Tata Project, Capacit'e and
CITIC. The share of Capacit'e is 37.1o/o. The project is divided into two parts, one is
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the LSPK. Lump Surn tumkcy on square f'eet basis which includes design built and the
remaining portion is on Lhe SOR means schedule of rate as published by PWD of
Maharashtra or Murnbai Municipal Corporation. The EBITDA in such a project should
bc upward of l-5 and that is what we are expecting. Our share we have already
infbrmed you.
Nitesh Jain:
Basically, the current order book, which you mentioned like the 7177, it does not
include this right?
Rohit Katyal:
No, it does not include the MHADA project because it is into a separate integrated
SPV. It has a separate team for execution made up ofpeople who have been transfened
from Tata Projects and Capacit'e and newly recruited.
Nitesh Jain:
Lastly does MHADA have some sort of debt tie up with any of the global agencies or international organiz-ation fbr this pro.iect or they are funding on from thelr own
budget?
Rohit Katyalr
So. they have the budget allocation already available, the first tranche ofmobilization advances have already been received and it is good to see the three major projects being executed for MHADA by L&T, Shapoor.ii and the third one by Tata Project Capacit'e SPV. So, I do not see any concern whether they have tied up with any foreign agency or not. It is a project ofsocial set up to rehabilitate the depleted building
inhabitants and therefore has central government and the state government support.
Nitesh Jain:
This is like what time execution you are looking at?
Rohit Katyal:
L,ike 8-9 years.
Nitesh Jain:
Moderator:
8-9 years to complete.
-l-hank you very much. Much appreciate it.
Thank you. The next question is from the line of Jiten Rushi from Bank of Baroda
(--apital Market Please go ahead.
Jiten Rushi:
Good afternoon Sir. My question is related to what is the outstanding retention money
as on March 2019 and the customer advances is on March 2019?
Rohit Katyal:
So, I 30 Crores is the cash retention as on March 31,2019 and the total advances as for the financial will be 212 Crores include the 61 Crores of material advance which we
explained,
Jiten Rushi:
Another question is on your fund based and non-fund based limit, can you please
highlight on that Sir?
Rohit Katyal:
Sir. t do not have the details in liont of me, but the total limits for fund based, we have already given in the tlnancials, which including bill discounting is 190 Crores andthe
Ri\r'
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total non-fund based limits which include bank guarantee and LC should be
approximately 940 Crores, but however, you can send a small mail to our IR team and
thcy will rcspond immcdiatcll'rvith the exact dctails, but approximately 1130 Crores as
on date.
Jiten Rushi:
Sir one more thing in terms of your cash and bank balance, how will you maintain the
bank balance because now with retention as you said you are looking to replace
retention money by giving bank guarantee, so going forward your non-fund based limit
should go up,. so u'hat is th0 lelel which wc would not maintain going forward?
Rohit Katyal:
It is very ditllcult to say that we have an unclaimed retention of 130 Crores, this level
has been r.luite consistent over the last 24 months which obviously implies that we have
issued bank guarantees and got our retention back, We will have unutilized portion of
close to 250 Crores of bank guarantee limits which will be utilized for performance advances and retention as we move forward, We also believe that there will be guarantees which will be relieved during the course of the year which will help us
augment bank guarantee limits by another 70-80 Crores and that would be sufficient
I'or the current financial year.
Jiten Rushi:
The liquidity level will remain in the similar range of 0.1 times which we have seen as
M arch 20 I 9?
Rohit Katyal:
Should remain the similar rangc. apart from bill discounting, we continue at 168 to 175
Crores: however minor chanqes cannot be ruled out.
Jiten Rushi:
'|hanks a lot Sir.
Moderator:
Thank you. The next question is from the line of Parkishit Kandpal from HDFC
Securities. Please go ahead.
Parkishit Kandpal:
What will be the total debt right now including the bill discounting?
Rohit Katyal:
Rs,274 crores.
Parkishit Kandpal:
So, roughly we have around Rs 100 Crores ofbill discounting, so how do you secure in
case of a default by an underlying the developer on the receivables, so how do we
secure our I iabi I ities?
Rohit Katyal:
Our experience tirst o1-all, all these bill discounting are backed by Bitls Of Exchange
(BOE) and PDC and certitled bill. so far there has not seen any default and therefore,
the experience and the quality of clients suggest that we do not foresee any default as
on now, but any bill of exchange limit you can have two limits either it can be invoice
financing without BOE or PDC; however, we generally prefer bill discounting which is
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backed b1, BOE, and PDC-'. so that is the security available, obviously the primary securities are debt and the certified bill is available along with the BOE
Parkishit KandPal:
ButinOasethedeveloperitsel|detaultsifthePDCbounces,sothenwehavetotake
the risk right?
Rohit KatYal:
Ihopeitdoesnothappen,butincasethathappenslikeanyothercontractorwewill
have to go to NCLT.
Parkishit KandPal:
Thesetwocaseslikefbreclosure.soIunderstandPurvankarawewiIlcontinuewiththe
otherpro.iects.butincaseoIRadiuswestiIlhavearound280Croresofaprojectwhich
ispending.soarewetaKlngthatprojectorthatisalsonowonthestateofforeclosure?
Rohit KatYal:
Whichever pro.lects are paying money, we are continuing with that' Harbor Heights was a.ioint venture between Radius and Sumer Developers and obviously we were not verykeeninoontinuingsaytheprojecthadbeensuspendedinQ3and/orQ4stafting'
soweagreedtofbrec|oseandthefbreclosureagreementshavebeenexecutedandthe cheques have been recervcd and therefore the outstanding including the hiring aharges whichhavebeenapproved,thechequeshavebeenreaeived'itshouldbewiththe
company before June 30,2019'
Parkishit KandPal:
The6lCrorematerialadvanceldonotunderstandhasitcomeinMarchoritcamein
April and that is rvhy our mobiliz-ation?
Rohit KatYal:
ltcameinMarch.'|hetota|advancesfromcustomersstandat2|2Croresofwhich6l
Moderator:
Ashwin H:
Croresismaterialadvanca.General|y,inthenormaltrend,itshouldhavebeenoffsetin the March 20lg bill itself.: however. that got shifted to April and therefore in the ba|anceSheet.thedebtorsarethatmuchhigherby6lCroreswhichimpliesaboutl2'5 days from thc debtor level perspective This was adjusted in the cunent year that is March 2019.
Thank you. Thc next question is fiom the line of Ashwin H from A&S lnvestment' Please go ahead.
Thanks for the opportunrty. I had a question about your manpower as you look at the next 2 or 3 years or so because what we hear is lot ofEPC contractors now have good order book to bill ratro. so we are going to see an explosion in terms ofthe revenue' but that needs to be backed up by execution I guess' so as we look at your next 2 or 3 years. how do you see the talent crunch especially at a project management and the planning level and how are you covered for the same?
Rohit KatYal:
So. fbrtunately Capacit'e is the company with only focus on one segment building construction and r'r'e havc cttntinucd ro do that'Obviously there will be a challenge and nrorethanstafTitwouldbetheworkmenchallengebecausestaffcanberetained'it4f <"r
!4
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an educated class. it is casier to retain them and there has been hardly attrition at the too level or the mid level. attrition is more so in the iunior engineer and supervisory stafT and that is the case with any of the companies, number one. Number two, the bigger ohallenge is workmen and the trained workmen and therefore in one of the earlier questions I said entering the geography needs tie up with all the resources. You cannot just enter geography and then start scouting for skilled labor or workmen. ]'herclbre. evcly oompan),is sficking to its core and only way forward is to stick with the core and thc geography in which you are working till we have more resources in Ibrm of manpower. manpower means workforce available for executing the projects' The second thing is that the intert'ace of the technology is increasing which means while it will reduce the requirement of workforce to some extent, but it cannot be replaced obviously, so we are to look at these two fronts while we agree to increase our revenue by 10o/o or 20oh or 30o/o. So far, we have been able to do it quite efficiently and whatever geograpntes we are working. but I cannot deny the fact that it is the challenge and theretorc the Inanagenrent banclwidth and the tbcus on geographical approach will
be necessary.
Thanks, by any chance in the extreme cases, have you had to go slow on any projects because the manpower crunch in the past or do you see that happening in the next oouple of years in anvwaY:
No, we have not seen that. but for example you have election time, then therefore' it is mandatorl, and as per law to permit the workforce to go to their respective villages
whetheritisUP,Bihar,Bengal,Soobviouslynotwe,buttheindustryisfacingthat crunch at the moment in time, but this is a normal trend, if there is election, there will be a crunch. Ifthere is a festival, there will be a crunch. So these things are typical to the Indian market and it cannot be compared with other overseas market, but apart tiom this we have never tbreclose or gone slow because of labor crunch. we have tbreclosed the pro.iecl if the payment has not come from the client and that is fair'
Thanks so much fbr your tirne. Indeed appreciate it'
Thank you. The next question is from the line of Nitesh Jain from BirlaMutual Fund.
Please go ahead.
Sorryfbrchippinginagain..|ustonelastthing'isthetwopro.jectswhichyou mentioned you fbrecloscd bccause of some issues. what is the total the idling charges or the receivables which is there from these two clients or perhaps the expenditure which you would have incurred?
There are difl'erent reasons for foreclosing. We have not foreclosed project of Purva EVOQbecauseofanynonpaymentissue'Thepro.iectgotsuspendedbecauseof pcrmissions liom their side and the revised pricing which we submitted was not in line with rhe client's expcctation. so theretbre we let the pro.lect go. Purvankara is the very
Page 18 of 19
Ashwin H:
Rohit Katyal:
Ashwin H;
Moderator:
Nitesh Jain:
Rohit Katyal:
f,
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C ap ac it' e Infr aPr oj e ct s Lirnite d Mav 14' 2019
'
Nitesh Jain:
Moderator:
Alok Deora:
Rohit KatYal:
Moderator:
close to a Crores and a half'
Thank you ver)r muon
Ladiesandgentlemanduetotimeconstraintthatwasthelastquestion.lnowhandthe
conf'erence over to Mr' Alok Deora for comments and then to the management for
closing oomments
Thank you very much' We will look forward to speaking to you all in the next quarter'
Thank You.
Ladies and gentlemen on Thank You fbr joining us
the behalf of Yes Securities that concludes this conference' You maY now disconnect Your llnes'
x * * t< * * {. * * *'r *'< +'r :t {' t :t * * t( * * * *'!|< * * * * * * * *
"
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