Nila Infrastructures Limited has informed the Exchange regarding Analysts/Institutional Investor Meet/Con. Call Updates - Transcript of Conference Call held on February 17, 2020.
NILA INFRASTRUCTURES LIMITED
Nila/Cs/2020/24 Date: February 22, 2020
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,
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A conference call was arranged on February 17, 2020 to provide the information about the financial and operational performance of the Company for the quarter and nine months ended on December 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, Nila Infrastructures Lipa
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Dipen Y Parikh Company Secretary Membership Number: A24034
Encl: a/a
Reglstered Office:
ist floor, Sambhaav 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@nilalnfra.com
Ae Eeuenkine WWW.nilainfra.com
Nila Infrastructures Ltd. Q3 and 9MFY2020 Conference Call February 17, 2020
Moderator:
Ladies and gentlemen, good day and welcome to the Q3 FY20 Conference Call of Nila
Infrastructures Ltd. 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, please signal an operator by pressing ‘*’ then ‘0’
on your touchtone telephone. I would now like to hand the conference over to Mr. Anuj
Sonpal from Valorem Advisors. Thank you and over to you, Mr. Anuj Sonpal!
Anuj Sonpal:
Thank you, Janice. Good afternoon everyone 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 conference call for the third quarter of financial year
2020. Before we begin, I would like to mention a short cautionary statement as always. Some
of the statements made in today’s concall may be forward-looking in nature. Such forward-
looking statements are subject to risks and uncertainties which could cause actual results
differ from those anticipated. Such statements are based on management’s 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.
I would now like to introduce you to the management participating with us in today’s
earnings conference call and give it to them for opening remarks. We have with us Mr. Deep
Vadodaria – Chief Operating Officer, Mr. Prashant Sarkhedi – Chief Financial Officer and Mr.
Himanshu Bavishi - Group President. I now request Mr. Deep Vadodaria to give his opening
remarks. Thank you and over to you, sir!
Deep Vadodaria:
Good evening friends. I welcome you all to the Earnings Call for 9 months and quarter ended on 31st December 2019. Our proven execution leadership in affordable housing, ability to
master a new age business model for example Public Private Partnerships, strong talent pool,
financial discipline and professional process driven strategies places us in an advantageous
position to effectively capture meaningful business. We are certain about the sustainable
growth during FY2020. Our reasonable margins in 9M FY2020 vouch for our proprietary
knowledge to select right tenders, execute accurately, and in augmenting the functional
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capacity we need to fulfill our strong order book. We continued to focus on cost efficiency,
resource optimization and efficient fund management with the ultimate aim of delivering
shareholder value.
Now coming to our order book, at January 1, 2020 the company has confirmed unexecuted
order book of Rs. 5,774.9 million. The composition of the order book is well balanced and in
line with the company’s core activity as 41% is from Affordable Housing and 59% from other
civic urban infrastructure projects. Overall, the company is developing 7,552 units of
affordable housing. The major government client comprise of Ahmedabad Municipal
Corporation, Ahmedabad Urban Development Authority and Government of Rajasthan, EPIL,
which is Engineering Projects India Limited.
With this, I now invite Mr. Sarkhedi our CFO, to discuss the key financial and operational highlights for the 9 months and quarter ended on 31st December, 2019.
Prashant Sarkhedi:
Thank you, Mr. Vadodaria and good evening friends. I will quickly take you through the financial and operational highlights for the 9 months and quarter ended on 31st December,
2019.
Standalone Revenue of the Company increased by 17% to INR 639.3 million from INR 546.0
million as compared to the corresponding period of the previous year.
On the profitability front, the EBIDTA for Q3-FY2020 has witnessed decline by 14% i.e. from
Rs. 96.9 million to Rs. 83.7 million with an EBITDA margin of 13.75% in Q3-FY2020. The
profitability at EBIDTA level has reduced mainly due to reduction in operational efficiency on
back of to change in revenue-mix i.e. higher contribution from low-margin EPC projects. The
project/operations cost has increased with a few projects being in preliminary stage, the
employee cost has reduced due to reduction in overall employee base and/or replacement of
high-cost manpower with fresher/economical manpower.
The Profit after Tax is Rs. 51.6 million i.e. 8.07%. The higher finance cost has further affected
PBT, which has collectively been marginally offset at PAT level mainly due to one-time
exceptional income tax-rate reduction benefit. The marginal reduction in depreciation
corresponds to commensurate movement in fixed assets. The marginal reduction in finance
cost corresponds to lower utilization of credit facilities. None of the Bank Guarantees
submitted by the Company has ever been invoked by any Principal/Client. And now with
respect to the 9 months performance, standalone Revenue of the Company increased by 10%
to Rs. 1,745.2 million from Rs. 1,580.6 million as compared to the corresponding period of the
previous year. On the profitability front, the EBIDTA for 9M-FY2020 has witnessed a decline
by 265 bps i.e. from Rs. 258.1 million to Rs. 238.5 million with an EBITDA margin of 14.35% in
9M-FY2020. The Profit after Tax is Rs. 148.7 million i.e. 8.52% margins. At December 31, 2019,
the Standalone Net worth of the Company is INR 1,406.0 million and Standalone Gross Debt is
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INR 1,468.0 million, while the Cash and Bank Balances on the standalone basis is INR 68.5
million. The Net debt to Net worth computes 0.99x.
I now open the floor for the question and answers that may require further clarification.
Thank you.
Moderator:
Thank you. Ladies and gentlemen, we will now begin the question-answer session. We take
the first question from the line of Bhavik Shah. Please go ahead.
Bhavik Shah:
One is the, what is the order inflow sir for this particular quarter?
Deep Vadodaria:
The order inflow is Rs. 89 crores i.e. Rs. 8,962 million.
Bhavik Shah:
And sir, we had that Vadaj project in JV. So is it included in this order book and.
Deep Vadodaria:
No, it is not included in the order book. So, we had won this project on 31-3-2017 but it is a
slum project and it was awarded to us based on our expertise in developing the slums. But
however, that is a large chunk of slum as Ahmedabad’s largest slum. Actually they are
undergoing a lot of negotiations and we believe that the project is not going to start for
another 3 quarters maybe and the rates that we had quoted to the party were no longer
applicable at the this point of time it is under construction. So, we have decided to withdraw
from the order.
Bhavik Shah:
So, it has been withdrawn?
Deep Vadodaria:
Yes, it’s been withdrawn in the, it is not comprising in our unexecuted order book.
Bhavik Shah:
And just last questions, sir. On the demand side how do you see over a period of 2 years
panning out? And how will be the margins going forward, basically it has been below 15%
now. So, what will be the stabilized margin within 3 to 5 years down the line, sir?
Deep Vadodaria:
3 to 5 years down the line seems a very far-fetched thought at this point of time. We have
been very flexible in terms of our business model and that is being our key to success till now.
So, whenever we have seen opportunities the overall focus has always been on profitability.
So, we have also kept on shifting our product-mix depending on that. And now when the
market that is too competitive on the EPC business. We have slowly shifted focused to some
more PPP orders as well. In terms of growth you are talking about, I believe we are in the
segment which is going to continuously grow and we were expecting things from the budget
to come in. Obviously nothing great was going to come in from the budget because they have
already given a lot to the affordable housing segment. But yes, obviously the continual push
from the government on the affordable housing model and the consistency with the new
government, the 5 year government which came in 2019, will keep on chasing the affordable
housing, “Housing for All” mission with a more aggressive vigor. So, we are reasonably
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confident on the demand front in terms of the order opportunities that are going to come to
us from the areas that we operate in, even in the areas which were just-on-watch-only basis.
In terms of margins, margins look pretty much around the same window. I think we will be
settling-in around anywhere close to 14% to 15% at the EBITDA. We are pretty comfortable
with that sort of margins.
Bhavik Shah:
So basically in excess of ballpark figure can you elaborate on the order book what will be the
ballpark figure growth based on your assumptions?
Deep Vadodaria:
That is a really speculative figure but if you can study the company over the period of time, I
think we will be reasonably growing at a pace that with its commendable and at the same
point of time the core thing remains profitability has been intact and that is something that
we want to focus on. And order book, obviously giving a ballpark figure to the order book
position, but we are pretty much comfortable around this window of X of order books. So, we
will be somewhere close to 2X, 2.5X in that range not beyond not below that.
Bhavik Shah:
So, this 2X will be over a period of 3 to 5 years?
Deep Vadodaria:
Well, again 3-5 years is a larger span but yes I think we will be, we will try and keep it above 2
at all points of time and then if its potential opportunity is coming up there has been periods
in time where this has even gone to about 2.6-2.7. So, we are broadly above 2 is this
something that I can comment at this point of time. 3 to 5 years is a longer time. May be we
may open up more territory, we don’t know.
Moderator:
Thank you. Next question is from the line of Vikram Raina, individual investor. Please go
ahead.
Vikram Raina:
Sir, I have 2 questions. The first question is, sir, what is the leasing revenue received from
Bechraji projects in year-to-date? And how much are we expecting it to come in financial year
2021?
Deep Vadodaria:
Prashant can you take this one for me in terms of the numbers.
Prashant Sarkhedi:
Leasing revenue from Bechraji we have already clocked about Rs. 6 million during this year,
and next year we expect about Rs. 85 million.
Vikram Raina:
And just a follow up question for this. So, what is the current status of Kent and Romanovia,
logistic path?
Deep Vadodaria:
Romanovia Phase-I is almost complete, it is already leased out. We are going to start Phase-II.
We have not been into any sort of building activity as of this now. This is not a slowdown in
terms of demand but in terms of the relocation in that where to happen because of the
production line of Suzuki obviously to took a little bit of hitting in the last quarter. However, it
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is stabilized now and the productions been elevated to almost maximum and they are
committed to the exports and they want to do from that unit to the African markets because
of its good connection to the ports. So, the demand will pick up in the last couple of months.
We have not really built up warehouses on presumptive demand. So, as and when the
demand comes-in we have been quoting. The Phase-II common areas, we will start
construction in another quarter or two’s time. So, that is on Romanovia. As far as Kent is
concerned, we already have about 5 dormitories which are leased. To be very honest, there
are still land related disputes that are taking place between the farmers and SIR which has
been formed, which is delaying the process of SIR really opening up the roads and putting up
the common amenities in terms of the basic amenities that are required inside the SIR. But
we are very hopeful and we already have plotted out projects. We will be plotting out a
housing project pretty soon, maybe by end of this financial year or at the start of the next
financial year. That is purely a housing project. And that is a large project and that is
something that is on the cards. And then as and when the more real estate that we hold
becomes motorable because of the government infrastructure coming in place in the TP
Scheme-I, which is where majority of our land lies. The order has been issued by the
government to a specific contractor for construction of roads and essentials of this. So, we
are expecting the work to begin on the ground pretty soon and once that is done obviously
with more of our real estate is motorable, the development will be much faster in the years
to come.
Vikram Raina:
Just one last question. How will our revenue mix for the company will change going ahead in
FY21 as there is a composition change between affordable housing and civic urban infra?
Deep Vadodaria:
Yes, it is because of that because of this large order which is gone off from there. So, I think
we will be in range of 45 to 55 that is 45% civic component infrastructure and 55 affordable
housing. Because affordable housing has always been the area of interest so that is the mix,
composition mix that we are targeting for FY21.
Moderator:
Thank you. Well ladies and gentlemen, that was the last question for today. I would now like
to hand the conference over to Mr. Deep Vadodaria from Nila Infrastructures Ltd. Thank you
and over to you, sir.
Deep Vadodaria:
Thank you friends for joining us today. Going forward as a pure play civic urban infrastructure
company we will continue on the growth path. We look forward to having you with us on the
next quarter’s call. In the meanwhile our team and our IR team will be more than happy to
assist you. Thank you. Thank you again.
Moderator:
Thank you. On behalf of Nila Infrastructure Ltd, that concludes this conference. Thank you for
joining us and you may now disconnect your lines.
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