Nila Infrastructures Limited has informed the Exchange regarding Analysts/Institutional Investor Meet/Con. Call Updates - Transcript of Conference Call held on November 18, 2019
NILA INFRASTRUCTURES LIMITED
Nila/Cs/2019 /328 Date: November 22, 2019
To, The Department of Corporate Services BSE Limited Phirozee Jeejeebhoy Towers, Dalal Street, Fort, Mumbai- 400 001
To, The Listing Department National Stock Exchange of India Limited Exchange Plaza, Plot no. C/1, G Block, Bandra-Kurla Complex,Bandra(E), Mumbai- 400 051
Scrip Code: 530377
Scrip Symbol: NILAINFRA
Dear Sir,
Subject: Transcript of Conference Call held on November 18. 2019
..
A conference call was arranged on November 18, 2 019 to provide the information about the financial and operational performance of the Company for the quarter and half year ended on September 30, 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 webs.ite of the Company at www.nilainfra.com which may please be noted.
Thanking you, Yours faithfully, For, Nila Infrastructures Limited ~1~ ~\ D . Company Secretary
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Registered Office: 1st floor, Sombhaav House
Opp , Chief Justice's Bungalow
Bodakdev, Ahmedabad 380015
Tel. : +91 79 4003 6817/18, 2687 0258
Fax: +91 79 3012 6371
e-mail: info@nilainfra.com
CIN : L45201 GJ1990PLC013417
www.nilainfra.com
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Nila Infrastructures Limited Earnings Conference Call November 18, 2019
Moderator:
Ladies and gentlemen, Good day and welcome to the Q2 FY20 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 an operator by pressing
“*” and then “0” on your telephone phone. Please note that this conference is being
recorded. I would now like to hand the floor to Mr. Anuj Sonpal from Valorem Advisors.
Thank you and over to you, sir.
Anuj Sonpal:
Thank you Neerav. Good afternoon and a warm welcome to you all. My name is Anuj Sonpal
from Valorem Advisors. 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 company’s
earnings concall for the second quarter of financial year 2020. Before we begin, I would like
to mention short cautionary statements as always. Some of the statements made in today’s
concall 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 with us in today’s earnings concall. We have
with us Mr. Deep Vadodaria – Chief Operating Officer, Mr. Prashant Sarkhedi – Chief Financial
Officer, Mr. Himanshu Bavishi – Group President Finance. I request now Mr. Deep Vadodaria
to give his opening remarks.
Deep Vadodaria:
Good afternoon friends. I welcome you all to the earnings call for the second quarter of
financial year 2020. We ended the quarter with steady growth despite increased volatility in
the general economy. We remain confident for the medium to long term perspectives as the
demand continues to be very strong as evidenced by our robust orderbook and in getting
repeat and multiple orders. Our meticulous execution seeing increased client appreciation
which is clearly helping our principal clients in their growth and achievement of objectives.
Our strategy on anchoring or participating in meaningful tenders for varied structures for
selective clients is what is with a strong fundamental belief to maintain growth momentum
while ensuring healthy margins and balance sheet strength. During the quarter we also
secured well diversified orders that augur well with our sustainable growth. The restricted
availability of labor during Quarter 1 FY20 on account of general elections that succeeded the
vacation of Holi and the rainfall during Quarter 2 FY20 unduly restricted the possible
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execution though we have a robust order book. The workforce has since been fully deployed
while the rains have been subsided and with a clear possession on most of our projects sites,
we are certain about the sustainable growth during the remaining part of financial year 20.
Now coming to our order book at September 30th 2019 the company has confirmed
unexecuted order book of Rs. 6,786.3 million. The composition of such order book is well
balanced and in line with company’s core activity as 55% of that is affordable housing and
45% of the unexecuted order book is other Civic Urban Infrastructure Project. Overall the
company is developing 8,764 units of affordable housing. The major government clientele
comprises of Engineering Project
India Limited and the municipal corporation and
Ahmadabad urban development authority. With this, I now invite Mr. Prashant Sarkhedi our
CFO to discuss the key financial and operational highlights of Quarter 2 FY20.
Prashant Sarkhedi:
Thank you Mr. Vadodaria and good afternoon friends. I will quickly take you through the financial and operational highlights for the quarter and half year ended 30th September 2019.
Standalone revenue of the company increased by 9.91% to Rupees 556 million from Rupees
506 million as compared to the corresponding period of the previous year. On the
profitability front EBITDA for the Quarter 2 FY20 witnessed a decline of 16.64% from Rupees
89.5 million to Rupees 74.6 million with an EBITDA margin of 14.16% in the Quarter 2 FY20.
The profitability at EBITDA level has reduced mainly due to the reduction in the operational
efficiency on the back of the change in the revenue mix that is higher contribution from the
lower margin EPC project. The project operation cost has increased with a few projects being
in preliminary stage the employee cost has reduced due to the reduction in the overall
employee and replacement of the high cost manpower with fresh economic manpower. The
marginal reduction in the depreciation corresponding to the commensurate movement in the
fixed assets. The financial cost increased due to the higher utilization of credit facility. The
higher finance cost has further affected PBT which has collectively been marginally offset at
the PAT level mainly due to onetime exceptional income tax rate reduction benefit. The profit
after tax is Rupees 56.8 million that is 10.21% margin.
Now with respect to the half yearly performance standalone revenue of the company
increased 6.89% to Rupees 1,105.9 million from Rupees 1,034.6 million recorded during the
corresponding period of the previous year. On the profitability front the EBITDA for the first
half ‘20 has witnessed a decline of 4.03% that is Rupees 161 million to Rupees 154.8 million
with an EBITDA margin of 14.70%. The profit after tax is Rupees 97.1 million that is 8.78%
margin.
At the September 30th, 2019 the standalone networth of the company has increased to
Rupees 1,353.5 million due to the plough back of the entire profit of the standalone gross
debt is Rupees 1,467.2 million while cash and bank balance is on the standalone basis is
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Rupees 68.2 million. The net debt to net worth stood at 1.03. The company has on all its
financial commitment and the accounting standard with all the lenders. None of the bank
guarantee submitted by the company as ever been invoked by the principal or the client. I
now open the floor for the question and answer that may require the further clarification.
Thank you.
Moderator:
Thank you. We will now begin the question and answer session. The first question is from the
line of Priyanka Gandhi an Individual Investor. Please go ahead.
Priyanka Gandhi:
Sorry can you please explain again what was the reason for the overall swollen margins and
will this be able to go back to the earlier levels in the coming quarter?
Deep Vadodaria:
See this is on account of more revenues coming in from EPC projects, which we have
mentioned in the past, is comparatively lesser margins than the PPP projects that we do and
the execution under PPP was not slow, but there are few projects which were starting now
which we thought would give us revenues by first half of FY20 but that has not happened it is
going to happen in the H2 and the quarter goes through Q3 and Q4 we will see the
profitability inching back towards the levels that we had promised at the start of the year
which is anywhere in between 15%, 16% on the EBITDA margin. So this is a temporary thing
which has happened to the profitability in this quarter.
Moderator:
Thank you. The next question is from the line of Rajesh Gandhi an Individual Investor. Please
go ahead.
Rajesh Gandhi:
Sir, my question was regarding the order book so what has been the order inflow this quarter
and what is the expectation for second half and also on the revenue front so with the new
order inflow and last week orders what is the outlook on our company’s top line and bottom
line for FY21?
Deep Vadodaria:
So the order inflow in the H1 has been Rupees 121.98 crores there are two orders that we
received one for the construction of Sonaria Block which is a affordable housing project and
then we receive one more order from Dholera SIR this is pertaining to civil common
infrastructure. The government is creating a special industrial city and our work is to level up
small 17 locations inside the SIR where the utility buildings are to be done by us and going
forward the order book inflow look strong. We are bided for projects worth Rupees 131
crores. As you have seen in the past we have been very selective with our biddings and then
our projects took about Rupees 175 crores where we were declared L1 and we are awaiting
further confirmation from the government. Once the work order is released obviously we will
come out in the market to announce those orders and going forward best part as the
revenues are concerned we have stated all through the year that even though when the year
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has Q1 has been somewhat lackluster because of extended holidays and lack of manpower.
We will show reasonable growth in this year and continue the growth momentum as well as
keep the profitability impact which is something that which is also very important going
forward.
Rajesh Gandhi:
Sir, if you can come again on what kind of orders we are bidding for and what kind of margin
profile are we expecting on those orders?
Deep Vadodaria:
As we bid for multiple areas of project in terms of order, so we classify them into two which is
affordable housing and civic urban infrastructure. Obviously the civic urban infrastructures
are pretty large fields where we are trying to participate in newer bid something that is not
done before. Meanwhile, we have also been building capabilities on areas where we have not
done something like a medical college which we are just about to finish and it is going to
enable us to bid for medical and educational orders going forward. With such capabilities
which we had very limited to the sense of bidding before the completion of this project and
going forward there will be a decent mix. I think the mix of order book right now is 55%
coming in from affordable housing 45% coming in from civic urban infrastructure projects. I
think going forward you will see this range largely maintained. Maybe affordable housing
pushing to about 60% of the unexecuted order book and civic urban infrastructure to the
tune of about 40% and profitability as I said before various models will have different
profitability, but cumulated together we are looking at profitability to the tune of 15%, 16%
on the EBITDA that we are very confident of achieving.
Moderator:
Thank you very much. The next question is from the line of Atul Kothari from Cromwell
Securities. Please go ahead.
Atul Kothari:
Sir wanted to know is what is the average execution period for current order book?
Deep Vadodaria:
Current orders that we have in our order book most of the orders are two years as per their
timelines, but usually we see with these kinds it takes about 27 months for us to execute. This
is just a general average obviously the project vary from demography to size of the project,
but if you were to answer average of that it would be anywhere close to 24 to 27 months that
includes this periods.
Atul Kothari:
Sir, can you give us a guidance in terms of outlook as to what top line we can achieve in FY20
and FY21?
Deep Vadodaria:
No, as a matter of policy we do not come out to guidance, but as I said even though first half
of the year is a little lackluster than expected mainly because of seasons which were not
primarily in the control of the company and were pertaining to the workforce, but we still are
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very confident that the H2, like all the years, is going to be better half of the year for
execution and the order book the visibility is good, execution is on and maturity of the sites
and we have possession on largely most of the sites that are pertaining there. So we are
expecting decent growth to comment on the revenues and maintain the bottom line.
Atul Kothari:
Sir, can you give some color as to how many days of working were lost because of heavy rains
in Q2 FY20?
Deep Vadodaria:
It largely depends on the demography because you are operating in multiple demography
which is just to give you a small feedback is something like a project in Udaipur. So Udaipur
recorded highest rainfall in 50 years this time. So a lot of working days were lost depending
on the primary location, but to the tune it also depends on the stage of the projects which is
it in so there were lot of projects which is started off obviously they are more affected by the
day in because they are underneath the surface at this point of time. So just to give out exact
date might not be possible because it largely varies on the demography, but in general
something if we compare it to last year maybe 15%, 20% of more number of days were
wasted this year because of extended monsoon.
Atul Kothari:
So there is no particular reference to last year so can you tell me is to what last year how
many days of work was lost and how many days of work was lost I am saying in a first number
I am not saying give me an absolute?
Deep Vadodaria:
See the approximate number I will have to get back to you on which my team will get back to
you on the calculation will be there it is not having with me at this moment, but as I said it
largely varies from demography, but we will give you an average of two different
demography which is bifurcating it in Gujarat and Rajasthan.
Atul Kothari:
What are your CAPEX plans for FY20 and FY21?
Deep Vadodaria:
Well we do not need to raise any more capital we believe to service unexecuted order book
that we have in hand.
Atul Kothari:
Sir, with the current resource or with the current bandwidth sir how much maximum
execution can be achieved in a particular year?
Deep Vadodaria:
Well that question has been asked to us in the past well there might not be the optimum
numbers, but there is something that we are looking at in terms of execution I think we can
largely go up another 30%, 35% on the top line easily with the same resources.
Atul Kothari:
Sir, can you give us an outlook is what could be the PAT margins going forward?
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Deep Vadodaria:
The PAT look at comfortable level right now we would be happy with anything around 8% to
9% and we are very confident with the product mix that we have in store and the execution
starting on multiple projects we will be able to comfortably achieve that.
Atul Kothari:
Between 6% to 8% right?
Deep Vadodaria:
No between 8% to 9%.
Moderator:
Thank you very much. The next question is from the line of Nitin Shah an Individual Investor.
Please go ahead.
Nitin Shah:
Sir, actually I have two, three questions regarding the Becharaji project. So firstly like how has
been the progress of the two logistic parks at Becharaji since like basically since there has
been a slowdown in the auto sector so how is it progressing. Firstly this is the question
another is like did we had any new clients for Becharaji project and another is like what is the
opportunity size for the company Becharaji so these will be my three major questions?
Deep Vadodaria:
Can you repeat the first question again sorry I missed the first one this is Becharaji two
logistic parks that you spoke about let me just answer one by the others. So we have two
parts out of which Romanovia INDUSTRIAL PARK is a purely logistical park where phase one is
already completed and we already have tenants which are operating out of the park. The
phase two development we will start shortly in the coming quarter maybe or the quarter
after that, but we are purely restricted to bid to suit warehouses at this point of time and we
are not building anything speculative that is our stand on Becharaji and the market well the
market demand is pretty much there. Yes in the middle because of the sentiment in the auto
numbers and some bit of slowdown in production that we had to do to adjust those numbers.
The demand had sort of dive down in the last quarter, but we are seeing it pick up again the
demand. See what Suzuki is trying to achieve in that area is very long term and they have
really honestly stuck to their plan and we are very confident because we are in very close
stuck with them and they are very confident about because it is not only the Indian market
that their production facilities are focused on it is also a ballpark export to Africa that they are
looking from the specific plant. So however obviously the sentiment does affect because of
whatever happens in the auto industry in the last couple of quarters, but the demand season
looks pretty strong and the demand has started coming back, but our focus has been build-
to-suit and we are not indulging into any speculative warehouses and waiting for the clients
to come in there, it is kind of a clear cut advantage because both our industrial parks are two
kilometers from the Suzuki gate so at least for the logical part location advantage is the very
big key because they want to be closer to their client and on the other land parcel we will
have to wait it seems like another one quarter because the SIR is going to now handover the
order to make basic roads and services on town planning scheme one which is a bulk of our
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land case is situated and the industrial monetization of back part is going to take some bit of
more time. However we are keenly pursuing and in the next quarter we will be opening up
some bit of our residential inventory in Kent Residential and Industrial Park in the coming
quarter and that demand has been very robust even in quarter like last quarter where the
auto demand slowed the residential demand has been pretty strong on that guidance. On the
question two the new client that we have added in the last quarter no we have not added any
client in the last quarter, but as I said the flow has come back and we are in talks with
multiple number of players who are looking at a setup there some small manufacturing units
and even industrial sort of logistic players. So maybe we should add something in the coming
quarter, but in the last specific quarter we have not added any new client there in Becharaji
and in terms of opportunities well we have spoken a lot about this in the past the potential is
absolutely meant because the land parcels that we have the location advantage which
obviously is going to become bigger and bigger as the area start developing so Romanovia
150 acres of total land parcel and Kent is anywhere close to 130 to 140 acres divided of
course into residential and industrial. So the potential is pretty huge, but as of now as I said
one part of the land is Kent where monetization will start in steps where we are starting to
monetize now in the coming quarter we will start monetizing in from the residential belt and
then going forward once the basic government infrastructure comes into play more of our
land become motorable we will able to do industrial development we will be able to do
industrial development there and meanwhile all the queries from the customers where right
now focusing on Romanovia when it comes to logistic park and maybe in phase two once
Romanovia is reasonably full and we will move towards developing more industrial pockets
into Kent Residential and Industrial Park.
Moderator:
Thank you very much. As there are no further questions I will now hand the conference over
to the management for closing comments.
Deep Vadodaria:
Thank you friends for joining us today. Going forward as a pure play urban infrastructure
company we will continue on the growth park and we will look forward to having you with us
on the next quarters call and in the meanwhile our team and our IR team will be more than
happy to assist you. Thank you again. Have a good day.
Moderator:
Thank you very much. On behalf of Nila Infrastructures Limited that concludes this
conference call. Thank you for joining us and you may now disconnect your lines.
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