U.S. Markets closed

Edited Transcript of KEC.NSE earnings conference call or presentation 7-Aug-19 12:00pm GMT

Q1 2020 KEC International Ltd Earnings Call

Aug 14, 2019 (Thomson StreetEvents) -- Edited Transcript of KEC International Ltd earnings conference call or presentation Wednesday, August 7, 2019 at 12:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Rajeev Aggarwal

KEC International Limited - CFO

* Vimal Kejriwal

KEC International Limited - CEO, MD & Director

================================================================================

Conference Call Participants

================================================================================

* Amber Singhania

Asian Markets Securities Private Limited, Research Division - Senior Analyst

* Ankit Soni;Karvy Stock Broking;Analyst

* Bhalchandra Shinde

Anand Rathi Financial Services Limited, Research Division - Research Analyst

* Bhoomika Nair

IDFC Securities Limited, Research Division - Security Analyst

* Chandrasekhar Sridhar;Fidelity Investments;Analyst

* Deepesh Agarwal;UTI Mutual Fund;Analyst

* Girish Raj Sankunny

Quest Investment Advisors Pvt Ltd. - Research Analyst

* Niteen S. Dharmawat

Aurum Capital - Co-Founder

* Ravi Swaminathan

Spark Capital Advisors (India) Private Limited, Research Division - Assistant VP

* Renjith Sivaram

ICICI Securities Limited, Research Division - Assistant VP

* Renu Baid

IIFL Research - VP

* Rita Tahilramani;Invesco Mutual Fund;Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good day, ladies and gentlemen, and welcome to the Q1 FY '20 Results Conference Call of KEC International Limited.

We have with us today from the management, Mr. Vimal Kejriwal, Managing Director and CEO; and Mr. Rajeev Aggarwal, CFO.

(Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Vimal Kejriwal. Thank you, and over to you, sir.

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [2]

--------------------------------------------------------------------------------

Thank you. Good evening to all of you. I welcome you all to the Q1 earnings call of KEC. The key highlights of this quarter are, we have achieved a revenue -- year-on-year revenue growth of 15%, backed by a strong year-on-year growth of 25% in the T&D revenues. EBITDA has shown a similar growth of 16% for this quarter, with EBITDA margin stable at 10.4%. Our PBT and PAT margins stand at 5.7% and 3.7%. PBT and PAT have not grown in the same ratio as EBITDA growth. One is there has been an impact of lease accounting policy, whereby some costs have been shifted between the EBITDA and depreciation and interest, so that has impacted the numbers a bit. There has been a prepayment premium on one of our high-cost loans, which we will pay. And there has been lower other income as compared to the corresponding quarter of the previous year, thereby impacting the PBT growth.

Order inflows of INR 1,115 crores announced today, comprised of a fair mix of orders from transmission distribution, cables and civil, with the current L1 position of over INR 3,500 crores, majorly in T&D, railways and civil. We do expect the second half to be robust in terms of the domestic order inflows.

Our order book as of 30th June 2019, stands now at INR 19,016 crores, with a year-on-year growth of 5%.

Coming to the business details. FY '20 has commenced with a strong growth in the overall T&D revenues of 25%. Both domestic as well as international T&D have demonstrated a robust execution this quarter, despite some challenges due to elections in India. Revenue growth in the international market is expected to continue during the year.

SAE's quarter 1 revenues include revenue from execution of 1 EPC project, resulting in a Y-o-Y revenue growth 13% for SAE. Execution of other 2 EPC projects in Brazil have also commenced during the current quarter. Non-T&D revenues contributed upwards of 35% to the overall revenues, majorly backed by the railway revenue growth. Railway [achieved] revenues of INR 500 crores plus during this quarter, a Y-on-Y growth of 67%, with a large order book of close to INR 5,000 crores. The railway business is focusing on new segments, such as the RRTS ROBs in addition to the conventional railways. Civil business revenues and order intake have slowed down a bit this quarter due to slowdown in industrial CapEx, cautious approach in taking real estate projects and shortage of manpower due to elections. We have now started focusing on government projects, including commercial buildings, metro elevated corridors, airport extensions, et cetera, where we are gaining traction.

With this focus, we expect to build a robust [executive] order book, enabling us to achieve the desired scale-up plans for the business. Though cables has achieved higher volume, its revenues have grown marginally as compared to the last quarter due to lower commodity prices. While the execution of our 150-megawatt solar project in India is on track, Indian markets remain muted in terms of solar business. We have made some inroads in the international market, with L1 in 1 medium-sized multilateral funded solar EPC project.

Our borrowings as on 30th June are at INR 2,281 crores, in line with our guidance given of average borrowings at INR 2,500 crores and in line with our revenue growth. The execution ramp-up of the higher-margin T&D business will enable us to achieve a 15% to 20% revenue growth with EBITDA margins expected to remain at the current levels.

Thank you very much. I'm happy to take your questions now.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) The first question is from the line of Bhalchandra Shinde from Anand Rathi.

--------------------------------------------------------------------------------

Bhalchandra Shinde, Anand Rathi Financial Services Limited, Research Division - Research Analyst [2]

--------------------------------------------------------------------------------

Regarding the order book in railways, we have seen relatively lower growth even on the order inflow side. Any specific reason and how we expect this fully year to be, especially in railway order book?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [3]

--------------------------------------------------------------------------------

So I think the order book, as I said, has been a bit of a concern because from last March onwards, or I'll say as soon as the election announcement happened, most of the tenders got canceled, or even if they were tendered, they were not open. So we are seeing most of them now being tendered. And as I had earlier said also I think by Q2 or end of Q3, we will start seeing tenders being awarded. I also mentioned that we are L1 in some INR 3,500 crores. So I think some of them should get awarded hopefully in this quarter. Railways has been a little bit lesser in this quarter. Most of the tenders have got postponed or are not being awarded. We have a decent L1 in railways of more than INR 1,000 crores today, and we do hope that some of them will get awarded pretty quickly.

--------------------------------------------------------------------------------

Bhalchandra Shinde, Anand Rathi Financial Services Limited, Research Division - Research Analyst [4]

--------------------------------------------------------------------------------

Okay. And sir, if you can guide on what kind of order inflows we see for FY '20 and the order book for FY '20. And even on the sales growth side, if you can say.

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [5]

--------------------------------------------------------------------------------

Sales growth, I already mentioned that we've been talking about a 15% to 20% sales growth. And I think we should have a similar growth in our order book. Last year, we had an order intake of around INR 14,000 crores. So we do expect that we should have around 15% to 20% growth, so maybe INR 16,000 crores, INR 17,000 crores. I don't have an exact number, but should be in that ballpark.

--------------------------------------------------------------------------------

Bhalchandra Shinde, Anand Rathi Financial Services Limited, Research Division - Research Analyst [6]

--------------------------------------------------------------------------------

Basically you are saying the order inflows, right?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [7]

--------------------------------------------------------------------------------

Yes, order inflows.

--------------------------------------------------------------------------------

Operator [8]

--------------------------------------------------------------------------------

The next question is from the line of Renu Baid from IIFL.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [9]

--------------------------------------------------------------------------------

Sir, as you mentioned that in the SAE business, you've started seeing 1 of the portfolios, there's a lot of the EPC execution starting to kick in. On the margin front, how would you comment in terms of the performance of the initial response from the EPC and are margins broadly on expected lines? And are we seeing margin improvement coming through?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [10]

--------------------------------------------------------------------------------

I think margins are, I'll say more or less on expected lines. We would have loved to do a little bit better, but I think what happened was last year with the change in government in Brazil, we have seen some cost increases happening on the transportation sector. And there was a dam which burst in Vale. So there was some price increase on steel, et cetera, which we have not yet been able to pass onto the client. Otherwise, I think we would have probably did more than what we have made. But I think we are happy with what we are doing right now.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [11]

--------------------------------------------------------------------------------

Right. Okay. So probably at this moment [I just --] our margins in SAE should be close to 8.5%, 9%, or...

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [12]

--------------------------------------------------------------------------------

Yes, I think they're somewhere around that range, but we would want to take them to double digit. And I think that by the end of the year, we should be crossing double-digit in SAE because I think the volumes are going up. And as I said that we, right now, we execute 1 project in quarter 1, now the other 2 have also started. So all 3 projects are under execution. So I think we should have some leverage also out of this additional income coming in.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [13]

--------------------------------------------------------------------------------

Right. Sure. So second would be on the interest expenses, they seem to be -- have been slightly more tighter. We understand the credit environment is equally tough. But with this kind of market [as an under] execution [phase,] does your guidance stand pretty much intact at 2.7% of revenues?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [14]

--------------------------------------------------------------------------------

See, first, Renu, we had couple of issues, I'll say, in this quarter. One was, as I said, that we had a onetime cost where we repaid a high interest – high-cost interest overseas loan, which was there on our books for some time. That was -- that's one reason why we had this. Secondly, I think it's very clear that whatever RBI talks that the transmission is still not happening, okay. We are at AA-, which is still is not the best credit risk considered by mutual funds and others right now on [and on , CPs] and other things.

So what's happening is that this quarter, I think we had a bit of a problem on the marginal cost of borrowing, where whatever was maturing, we were not able to actually place it back at those rates, in spite of the cuts in RBI, okay. We are now slowly seeing something happening. And what we have also done is that we have shifted a large amount of our loans to a foreign currency. You'll start seeing that impact, and which is the reason why you are seeing a ForEx loss instead of a ForEx gain in this quarter because we did not have too much money, too much dollars to sell. We have shifted our portfolio into creating more liabilities at a lower cost, both in dollars and euro. So I think we do hope that we are able to maintain our 2.7% guidance on interest cost.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [15]

--------------------------------------------------------------------------------

Right. And on the ForEx, what was -- on a Y-o-Y basis last year, we had a ForEx gain. And this time, what was the ForEx loss versus last year?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [16]

--------------------------------------------------------------------------------

So I think this quarter, we had a loss of around [INR 6 crores], as against a gain of roughly around INR 20 crores in the last quarter, corresponding quarter.

Rajeev wants to add something.

--------------------------------------------------------------------------------

Rajeev Aggarwal, KEC International Limited - CFO [17]

--------------------------------------------------------------------------------

And Renu, I just want to extend it. You know, in this quarter, if you compare the interest rate of the last quarter, both on the LIBOR front as well as on the rupee borrowing, interest rates are close to 0.5% to 0.7% higher on a year-to-year basis. So now the interest rate has started slightly going down probably. But if you compare year-to-year basis, the interest rates are higher -- were higher in Q1.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [18]

--------------------------------------------------------------------------------

Sure. And sir, my last question would be now that as you have mentioned that we're still to see meaningful traction in terms of large projects [-- wasn't] tendering. But based on your experience and the projects that we have in pipeline, how is the broad execution momentum in the market, both domestic and international? And do you foresee any potential headwinds? Or probably one should see that momentum being broadly [accelerating] -- (inaudible) the rest of the year?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [19]

--------------------------------------------------------------------------------

Renu, I think we are confident that we should be able to do a 15% to 20% growth, what we are talking about. I think the only headwind which we have seen is that right now, we are L1 in quite a few tenders, both in SEBs, power grid and everywhere. We are still not seeing the awards coming, okay. So if the awards keep on getting further delayed, then whether we'll be closer to 15% or closer to 20%, I do not know, okay.

So it will certainly be between the 2 of them. The awards come early, maybe we can go towards the higher band than the lower side of the band. I think that's only thing. Otherwise, I don't see too much of headwinds. We are seeing a similar of -- like last year, on the railway execution, the railway is still [with the tender covers to] do more and more execution. So I think railways will do well. Hopefully, the Green Energy Corridors will get awarded in maybe 2, 3 weeks or 4 weeks or so. Work should start on that also because those have to be completed by December 2020, as per the present guidelines, deadlines. So if those get awarded, then I think we can see some cost cutting also.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [20]

--------------------------------------------------------------------------------

Sure. So broadly, the business environment from your perspective, at least on execution orders still has not worsened, it remains pretty healthy and stable?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [21]

--------------------------------------------------------------------------------

Not on the execution. Order intake is a little bit concerning, let's hope that it improves. But I think with our current order book and the backlog and the L1s, I think we are really happy with what we are seeing on the execution front.

--------------------------------------------------------------------------------

Operator [22]

--------------------------------------------------------------------------------

The next question is from the line of Renjith Sivaram from ICICI Securities.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [23]

--------------------------------------------------------------------------------

Congrats on good set of numbers. Sir, this T&D growth has been very heartening to see. So if you can help us like how much of this was driven by domestic and what kind of growth we had seen in the overseas of this T&D execution?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [24]

--------------------------------------------------------------------------------

I don't have the exact number, but both of them are [about] 25%, [because SAE] is at [13%]. So on an average, we ended up at 25% on all 3 of them. I think international is slightly -- internationals are slightly better than the India piece, okay. Also primarily driven by SAARC and other pieces also. So to me, and if you look at our pace also last year, the international numbers were lower. I don't have the exact number, but international has done slightly better than India, but all of them are about 25%.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [25]

--------------------------------------------------------------------------------

Okay. And also this onetime prepayment, if you can help us, if you adjust for that, what will be your interest cost for this quarter, just to get...

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [26]

--------------------------------------------------------------------------------

(foreign language)

--------------------------------------------------------------------------------

Rajeev Aggarwal, KEC International Limited - CFO [27]

--------------------------------------------------------------------------------

It was about 5 crores.

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [28]

--------------------------------------------------------------------------------

5 crores or so.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [29]

--------------------------------------------------------------------------------

Okay. And just -- acceptances have gone up compared to last year. So what's your view on that?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [30]

--------------------------------------------------------------------------------

I think it somewhere goes back on what I said about the interest rates not going down, et cetera. So the issue is that either I do acceptances or [I take bank credit] and pay off my creditors or do something like that. So it's [one of the] same thing. What we are now finding in today's market, virtually the rate between, let's say a working capital loan or acceptance is similar. Normally, the vendors like acceptance and all that because they are able to discount with their bankers faster and quicker, and that's the way it operates. So for us, right now, it's almost something which we are (inaudible) by each other until and unless the [CP] market improves and where your marginal cost keeps on coming [down.] [Rajeev is] able to borrow more in foreign currency and change it. To me, it's going to be remaining, I think in the same manner.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [31]

--------------------------------------------------------------------------------

Okay. And just net working capital days, if you can just give some color on how is that -- how much is the debtor days and of that, how much is still pending from Saudi?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [32]

--------------------------------------------------------------------------------

So net working days today is around 120, okay. And I think that DSO if I'm not mistaken, has gone up by 3 or 4 days as compared to last corresponding quarter. Saudi, I don't know. It's come down significantly in this quarter as well as also in July, okay.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [33]

--------------------------------------------------------------------------------

So how much will be the outstanding there?

--------------------------------------------------------------------------------

Rajeev Aggarwal, KEC International Limited - CFO [34]

--------------------------------------------------------------------------------

That would be about [INR 704 crores] is the total outstanding, of which roughly about INR 350 crores would be the retention money...

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [35]

--------------------------------------------------------------------------------

Not due.

--------------------------------------------------------------------------------

Rajeev Aggarwal, KEC International Limited - CFO [36]

--------------------------------------------------------------------------------

Which is not due and even INR 350 crores [which is our total capital] payment is not yet due. Virtually, we have...

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [37]

--------------------------------------------------------------------------------

I think -- let me [further.] Renjith, whatever is due, has been paid, okay.

--------------------------------------------------------------------------------

Rajeev Aggarwal, KEC International Limited - CFO [38]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [39]

--------------------------------------------------------------------------------

So whatever [retentions] have not come is not -- is something which is not yet due. So we do not have any outstandings or overdues in Saudi.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [40]

--------------------------------------------------------------------------------

Okay. And what will be our debtor days in the net working capital?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [41]

--------------------------------------------------------------------------------

Around 250.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [42]

--------------------------------------------------------------------------------

Okay. So how has that moved? Is that increased? Or...

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [43]

--------------------------------------------------------------------------------

By 3 or 4 days, it's increased.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [44]

--------------------------------------------------------------------------------

Okay. And sir, lastly, if you can, you have given a very good order intake expectation. Of that, if you can break up like how much is from railway, how much is -- you are expecting from international T&D and how much from domestic T&D, just...

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [45]

--------------------------------------------------------------------------------

We will not be able to give that break up now, no.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [46]

--------------------------------------------------------------------------------

But this -- hello?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [47]

--------------------------------------------------------------------------------

We will not be able to give this breakup.

--------------------------------------------------------------------------------

Operator [48]

--------------------------------------------------------------------------------

(Operator Instructions) The next question is from the line of Niteen Dharmawat from Aurum Capital.

--------------------------------------------------------------------------------

Niteen S. Dharmawat, Aurum Capital - Co-Founder [49]

--------------------------------------------------------------------------------

I just wanted to know the consolidated debt as of this quarter? And what was the number the previous quarter?

--------------------------------------------------------------------------------

Rajeev Aggarwal, KEC International Limited - CFO [50]

--------------------------------------------------------------------------------

So roughly, (inaudible) was about INR 2,200 crores net debt as of 30th of June this year. It is almost close to about INR 500 crores lower than last year, the same quarter. So last year, same quarter was close to about INR 2,700 crores.

--------------------------------------------------------------------------------

Niteen S. Dharmawat, Aurum Capital - Co-Founder [51]

--------------------------------------------------------------------------------

No, no, not last year. I'm talking about the March quarter.

--------------------------------------------------------------------------------

Rajeev Aggarwal, KEC International Limited - CFO [52]

--------------------------------------------------------------------------------

March quarter was actually not really comparable, but the actual number for the March quarter was close to about INR 1,600 crores on a net borrowing basis.

--------------------------------------------------------------------------------

Niteen S. Dharmawat, Aurum Capital - Co-Founder [53]

--------------------------------------------------------------------------------

Okay. So it has gone slightly up from March quarter. So why it is not comparable? Just wanted to know that.

--------------------------------------------------------------------------------

Rajeev Aggarwal, KEC International Limited - CFO [54]

--------------------------------------------------------------------------------

One, your volume growth is almost close to 15%; two, the March quarter, we have received a significant amount of advances from the customer wherein we received orders in Bangladesh and other countries. So those advances were -- had reduced our debt level in the March quarter. And subsequently, we guided the market at our normal borrowing level would be close about 2,400 crores, 2,500 crore considering that this year, we are expecting a 15% to 20% growth in the volumes.

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [55]

--------------------------------------------------------------------------------

Niteen, we have clearly mentioned in our call for the March quarter that the debt levels which were attained in March were abnormally low because we had received a large amount of payments from some of our big clients and as well, Rajeev said, advances. So that meant INR 1,500-and-odd crores and INR 1,600 crores was not sustainable. That was very clear.

--------------------------------------------------------------------------------

Niteen S. Dharmawat, Aurum Capital - Co-Founder [56]

--------------------------------------------------------------------------------

Got it, sir. The second question pertaining to, you mentioned that the subsequent quarters or the next quarters will have the order book increasing, and we are expecting good orders. So can you also throw some light on that? Which sectors we are expecting more orders from -- railways or the power sector, can you elaborate on that as well?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [57]

--------------------------------------------------------------------------------

I think we are expecting orders across all the sectors. Transmission we have been (inaudible). You know earlier that the Green Energy Corridor orders should be coming in. States, we are already L1 in some states, and we are seeing some traction happening. International, we are seeing a lot of orders coming in, in Saudi, okay. So I think that railway has done, again, we are seeing a lot of tenders coming on the civil side, especially on ROBs, et cetera. On the civil, we are seeing tenders coming out on metros, elevated roads, apart from (inaudible). I think overall, we (inaudible) on the order book as well (inaudible) sectors.

--------------------------------------------------------------------------------

Operator [58]

--------------------------------------------------------------------------------

The next question is from the line of Girish Raj from Quest Investment.

--------------------------------------------------------------------------------

Girish Raj Sankunny, Quest Investment Advisors Pvt Ltd. - Research Analyst [59]

--------------------------------------------------------------------------------

Sir, on this other expenses, when I compare year-on-year basis, it has increased to INR 252 crores versus INR 158 crores. What exactly has led to this?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [60]

--------------------------------------------------------------------------------

I think, Girish, I don't have the exact numbers, but what I can tell you offhand is that the ForEx gain which we talked about would have been sitting in other expenses last year, okay.

--------------------------------------------------------------------------------

Girish Raj Sankunny, Quest Investment Advisors Pvt Ltd. - Research Analyst [61]

--------------------------------------------------------------------------------

So 20 crores.

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [62]

--------------------------------------------------------------------------------

20 crores. And this year, it could be negative 6 crores, okay. That would be one major reason why it would have changed.

--------------------------------------------------------------------------------

Girish Raj Sankunny, Quest Investment Advisors Pvt Ltd. - Research Analyst [63]

--------------------------------------------------------------------------------

Yes, but still doesn't explain the total increase.

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [64]

--------------------------------------------------------------------------------

I think the other, I don't -- I'll go and check on it, if I can get back to you on the other part. But I think the other thing is that, when I said that the international numbers have grown very well, there's a lot of logistic cost which has gone into that because we have got a lot of projects in Africa and Central America, where the shipments have happened [this.] I think the other item which is there, and that is some contribution on account of electoral bonds also is there in that.

--------------------------------------------------------------------------------

Girish Raj Sankunny, Quest Investment Advisors Pvt Ltd. - Research Analyst [65]

--------------------------------------------------------------------------------

Can you quantify that, sir?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [66]

--------------------------------------------------------------------------------

I don't think I would like to give the number here.

--------------------------------------------------------------------------------

Girish Raj Sankunny, Quest Investment Advisors Pvt Ltd. - Research Analyst [67]

--------------------------------------------------------------------------------

Okay. Okay. I'll take it from -- so second question is, sir, can you quantify the Ind AS impact on the depreciation and interest?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [68]

--------------------------------------------------------------------------------

Come again?

--------------------------------------------------------------------------------

Girish Raj Sankunny, Quest Investment Advisors Pvt Ltd. - Research Analyst [69]

--------------------------------------------------------------------------------

The Ind AS 116...

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [70]

--------------------------------------------------------------------------------

I think the net impact is probably 1.5 crores, [2 crores] or something. But broadly, what has happened is that EBITDA has gone up by around 7 crores or so. And interest and depreciation has gone up by 9 crores, okay.

--------------------------------------------------------------------------------

Girish Raj Sankunny, Quest Investment Advisors Pvt Ltd. - Research Analyst [71]

--------------------------------------------------------------------------------

Why I'm asking is, if I adjust that 7 crores impact, so our EBITDA margin comes to around 11 -- sorry, 10.13% approximately. And you're also indicating that by the year-end, we may -- with increase in SAE volume and all. So excluding this Ind AS impact, how do we see margin going forward?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [72]

--------------------------------------------------------------------------------

Well, I said that we should be able to maintain our margins. We have shown 10.4%. I have always been guiding between 10% to 10.5%, okay. That's what I think the guidance remains that. Hopefully, we should be able to maintain the same in spite of that ForEx gain not being there as of now in the first quarter.

--------------------------------------------------------------------------------

Operator [73]

--------------------------------------------------------------------------------

I would request Mr. Raj to come back in queue for follow-up questions. (Operator Instructions) The next question is from the line of Ravi Swaminathan from Spark Capital.

--------------------------------------------------------------------------------

Ravi Swaminathan, Spark Capital Advisors (India) Private Limited, Research Division - Assistant VP [74]

--------------------------------------------------------------------------------

Sir, last year we had seen close to 6,700 crores of international inflows where -- I mean that had seen a very good growth of 35%. Will we be able to see similar, I mean kind of growth there, given the fact that it's already a large base on which we are sitting on? And internationally, also things are -- going by all the news, et cetera, things seem to be at the macro level, worsening only.

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [75]

--------------------------------------------------------------------------------

So Ravi, I do not think we should be looking at 35% growth. I think last year was -- we did get some very large orders in -- especially in Bangladesh, which is the reason why the international growth shot up. As far as macro is concerned, I'm still not too much worried about macro, because macro is not on those countries where we are operating that much, okay. Honestly, we will talk about U.S. and Europe and other places, but when you look at Africa and the SAARC region and other countries, I don't think right now, we are worried about macro. I think the only place that I'm still worried about is countries like Saudi, et cetera, where there is a huge potential. We are slowly seeing projects, tenders coming in, but if the oil prices continue to remain depressed, that's one country where we may have some problems in terms of order booking. Other countries, as of today, we are not seeing any concern on account of the macros.

--------------------------------------------------------------------------------

Ravi Swaminathan, Spark Capital Advisors (India) Private Limited, Research Division - Assistant VP [76]

--------------------------------------------------------------------------------

Okay. Got it, sir. And my second and final question is, how much amount of debt is related to dollar-denominated debt and have we hedged it? Because if the currency depreciates or fluctuates here and there, so we can have continued ForEx losses (inaudible).

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [77]

--------------------------------------------------------------------------------

Ravi, I think we are roughly around 40% is our dollar-denominated debt out of that. It varies depending upon when [PCFCs] get paid and all that stuff. But broadly, it ranges from 35% to 45%. I think currently it's around 45%....

--------------------------------------------------------------------------------

Rajeev Aggarwal, KEC International Limited - CFO [78]

--------------------------------------------------------------------------------

In July, it is 45%.

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [79]

--------------------------------------------------------------------------------

July, it's 45%. Okay. So it's around 45% as of today. And normally, what we do is we may not hedge that separately, but we do our hedging on a net basis, where all our receivables and our payables are netted out and then we hedge, okay. So in a way, you can say it is completely covered because we have netted off from our receivables.

--------------------------------------------------------------------------------

Operator [80]

--------------------------------------------------------------------------------

The next question is from the line of Bhoomika Nair from IDFC.

--------------------------------------------------------------------------------

Bhoomika Nair, IDFC Securities Limited, Research Division - Security Analyst [81]

--------------------------------------------------------------------------------

Sir, on this one, continuing on the order intake. So last year, we saw some good large orders from Bangladesh, et cetera. And so how are you looking in terms of pipeline in terms of order intake for the T&D segment? Also in terms of -- also for SAE.

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [82]

--------------------------------------------------------------------------------

I think we are quite confident about more orders coming in. Like if you look at Bangladesh, the annual budget they're talking about is $2 billion. So I think Bangladesh, Nepal and to an extent, I'd say Afghanistan will continue with their order intake. We have seen a lot of tenders coming out in Africa and also in Far East, Malaysia, Thailand, et cetera. So I think international, we are happy. Abu Dhabi, we are not seeing too many. So we just -- we do hope that UAE, that is Dubai and Abu Dhabi come out with some tenders. Saudi has started coming out with tenders regularly now; not to the extent they were doing earlier, but now we are seeing every 15 days, we are seeing 1 tender being quoted. As of now, we are not successful because a lot of local players are still quoting very low, and we don't want to reduce our margins.

So I think overall, internationally, we are okay.

Brazil, this time partly what has happened is that there was a single auction in December. So there, there was no auction in May, which was planned earlier, seeing that we have only 1 auction during the year. So right now, we are negotiating with some of the developers who have won orders in 2017, 2018. Right now, orders mostly for 2016 are under execution, couple of 2017 ones have started coming in. But since they have 5 years, people are still waiting because they want to take all the environmental approvals, et cetera, before bidding out the EPC. So Brazil, I think we will probably see more orders coming in Q3 and Q4.

But we have some L1s from the earlier orders, which -- where the agreements have not yet been signed and they are lying in our L1. So if those contracts, those get signed, probably another [500 crores] or so can be added to our order book in Brazil quickly.

--------------------------------------------------------------------------------

Bhoomika Nair, IDFC Securities Limited, Research Division - Security Analyst [83]

--------------------------------------------------------------------------------

Okay. Okay. And in terms of the domestic market, sir, I mean given that there is some bidding going on in terms of TBCB for the renewable grid. So how are you seeing both on PGCIL as also in terms of SEBs, if you can throw some more color.

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [84]

--------------------------------------------------------------------------------

So I think SEB is, by itself, is doing well. We are already L1 in, I think 3 or 4 tenders in SEBs. Hopefully, they should get converted quickly. And we are seeing there are more tenders coming out in SEBs. So I think SEBs, we are pretty hopeful about more business coming in.

On TBCB, if you look at it as of today, in the last 1 month, 8 bids have been awarded, okay. So 8 developers have been selected. So I think most of them have got their LoAs from REC, PFC. And now the EPCs should get awarded in maybe 2 weeks, 3 weeks. But out of the [8], 6 of them have to be completed by December. 2 of them are of longer duration. So we are just keeping our fingers crossed that those awards happen quickly. I think people also know that (inaudible). So they are also already saying that we will award by August and September, so work can start by October -- middle of October or something. So I think end of Q2 or probably start of Q3, we should see quite a few of the EPC from Green Energy and 2 other tenders which have been awarded from on the TBCB should result into EPC orders.

--------------------------------------------------------------------------------

Bhoomika Nair, IDFC Securities Limited, Research Division - Security Analyst [85]

--------------------------------------------------------------------------------

Okay. And last thing, sir, on this civil, I know it's a very small part of our overall business. But 1Q has seen a decent decline in terms of the revenue execution. So how are you seeing this segment moving ahead in terms of both order intake as also in terms of the revenue growth?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [86]

--------------------------------------------------------------------------------

So for as far as revenue is concerned, I think at least 50%, 60% growth [will definitely] happen. We are looking at a slightly larger number at the start of the year. I think what has happened is that with the industrial slowdown which we have seen -- and also we had thought that we'd be able to get -- we should be taking a couple of more orders in residential. But seeing what's happening in residential, we have sort of slowed down on that. So combined this 2, and first quarter, I think revenues were also impacted because of nonavailability of workers [because of] elections. We saw that most of the workers who are from Bihar and Jharkhand had gone back to their states. So that impacted revenue.

But if you look at where we are targeting. We have started targeting more at light infra, as we call it. We are already L1 in one of our -- a small metro project. We have put in for a couple of elevated -- we are not there on the NHAI and all that, but on some of the specialized projects and all that, we have been focusing. And I think we are reasonably well placed. So I think hopefully, in the next maybe quarter or so you will see some orders coming in from civil.

--------------------------------------------------------------------------------

Operator [87]

--------------------------------------------------------------------------------

The next question is from the line of Ankit Soni from Karvy Stock Broking.

--------------------------------------------------------------------------------

Ankit Soni;Karvy Stock Broking;Analyst, [88]

--------------------------------------------------------------------------------

Just want to know, almost all my questions have been answered. Just want to know like on the sticky projects which was going on, what is the status or any leads from there?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [89]

--------------------------------------------------------------------------------

Sticky project was not going on. That's the problem, Ankit.

--------------------------------------------------------------------------------

Ankit Soni;Karvy Stock Broking;Analyst, [90]

--------------------------------------------------------------------------------

Yes. So like when are we going to get any leads from there on what is the process as of now? What is the status as of now?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [91]

--------------------------------------------------------------------------------

Ankit, what I can tell you is that it's a project of national importance, a lot of people are watching it. What we understand is that the bankers who have got a large exposure to this project have already started looking for people in a very formal manner. And I think, hopefully, maybe, I don't know, 4 weeks, 6 weeks or so we should have some clear way forward on this, okay.

And we are today -- let me put it this way, we are today in a better position than we were when I spoke to you last time, when we were stuck completely and we were not seeing what's happening. But right now, I think a path has been defined, and we are seeing some people walking on that path. Let's see whether they can reach the conclusion or get stuck again. But our talks with the parties who are interested are -- as I said, they are looking at it very positively. But to me, I think once the Green Energy Corridor decisions are made and the balance of 4 or 5 tenders are awarded, that's when people who don't get it or people have got less and all that, then they will come back and relook at it, okay.

--------------------------------------------------------------------------------

Ankit Soni;Karvy Stock Broking;Analyst, [92]

--------------------------------------------------------------------------------

Okay. Makes sense. So basically, we'll be getting a clear picture by next quarter, most probably?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [93]

--------------------------------------------------------------------------------

The next quarter or maybe earlier, if the transactions go through faster.

--------------------------------------------------------------------------------

Operator [94]

--------------------------------------------------------------------------------

(Operator Instructions) The next question is from the line of Deepesh Agarwal from UTI Mutual Fund.

--------------------------------------------------------------------------------

Deepesh Agarwal;UTI Mutual Fund;Analyst, [95]

--------------------------------------------------------------------------------

One clarification. In your Note #7, you have mentioned you have an exposure of INR 147 crores to that slow-moving project. Is that balance sheet exposure?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [96]

--------------------------------------------------------------------------------

Yes, this is.

--------------------------------------------------------------------------------

Deepesh Agarwal;UTI Mutual Fund;Analyst, [97]

--------------------------------------------------------------------------------

So this would be the outstanding receivables from that project, right?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [98]

--------------------------------------------------------------------------------

Absolutely. That's the one which I was just talking before you asked me the question.

--------------------------------------------------------------------------------

Deepesh Agarwal;UTI Mutual Fund;Analyst, [99]

--------------------------------------------------------------------------------

Okay. And sir, what is the unexecuted order book pertaining to this project? Is it, again, INR 400 crores?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [100]

--------------------------------------------------------------------------------

Roughly, I think INR 450 crores is what I had said. I think it's roughly in that range.

--------------------------------------------------------------------------------

Operator [101]

--------------------------------------------------------------------------------

(Operator Instructions) The next question is from the line of Renjith Sivaram from ICICI Securities.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [102]

--------------------------------------------------------------------------------

Just a small clarification. This order inflows which you have given is for YTD. So as on end of Q1, what will be your order intake?

--------------------------------------------------------------------------------

Rajeev Aggarwal, KEC International Limited - CFO [103]

--------------------------------------------------------------------------------

I don't have the number. More or less all in the same quarter [only.]

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [104]

--------------------------------------------------------------------------------

I don't have the exact number, maybe 1,500 crores, maybe something which may have come in July. But most of it are for the last quarter only.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [105]

--------------------------------------------------------------------------------

Okay. And regarding the L1 position. You have -- in your call, you mentioned INR 3,500 crores, but in your -- so that INR 3,500 crore is the one which stands at L1 currently, right? That's what we should understand?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [106]

--------------------------------------------------------------------------------

Yes. Yes, yes.

--------------------------------------------------------------------------------

Operator [107]

--------------------------------------------------------------------------------

(Operator Instructions) The next question is from the line of Amber Singhania from Asian Market Securities.

--------------------------------------------------------------------------------

Amber Singhania, Asian Markets Securities Private Limited, Research Division - Senior Analyst [108]

--------------------------------------------------------------------------------

Sir, just one thing I wanted to know, you mentioned during the opening remarks and later on also that order award is a bit concerning as of now for you. Sir, just wanted some elaboration on that, which pockets we are seeing some concerns coming in, as there is typically India side, we are not seeing any award happening [per se] on the T&D side. A lot of talks have been there for Green Corridor and other projects, but we have not yet seen the award happening yet. So where exactly things are getting stuck? What is your assessment of the award in this year going forward, when we'll see those orders will be coming in (inaudible)?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [109]

--------------------------------------------------------------------------------

So for Green Energy, I just talked about it. As I said that 6 projects have already been awarded on Green Energy to the developers, Sterlite, Adani Power Grid and all that. So I think it's -- they will now quickly award the EPCs because they have to complete the projects in 15 to 18 months starting December 2020, for most of the projects [on the] deadline. So those orders will start coming in any, I'll say maybe 1 week, maybe 2 weeks, I don't know. But they should come in very quickly, okay.

As far as states are concerned, what they have done was most of the tendering had been stopped or canceled. They have restarted that. Some of the tenders have actually been opened. Some of our -- [of our] INR 3,500 crores [in] L1. I think we have a decent amount of L1s from states. So we are keeping our fingers crossed that those L1s will be awarded in Q2 itself. Most of them should be awarded. So something will come from that, okay. Rest of that will come from countries like Bangladesh, et cetera, and some projects in Africa. And maybe something will come in from Far East.

--------------------------------------------------------------------------------

Amber Singhania, Asian Markets Securities Private Limited, Research Division - Senior Analyst [110]

--------------------------------------------------------------------------------

Sir, the domestic side, sir, if I ask specifically like Power Grid, we have seen last 2 years completely slow down on the order award. This year, they're talking about INR 15,000 crores kind of award. So with the Green Corridor, there was a talk of INR 40,000 crores, I am not very sure how much is the plans to award in this year. So [roughly,] what kind of overall award you were expecting from T&D side on the domestic part, from state, Green Corridor and the PGCIL?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [111]

--------------------------------------------------------------------------------

(foreign language) Okay, [the total] Green Corridor, the total number we were talking about is INR 15,000 crores, INR 16,000 crores, okay. Of which a part of it has been given to Power Grid on a nomination basis. If my numbers are correct, I mean INR 13,000 crores was the exact number upon TBCB, okay. Apart from that, they have now come out with some more TBCB tenders in UP and other UP and in the other places. We have got to wait and watch what happens. And Jharkhand has also a lot of TBCB tenders, which have been sort of bid out to Power Grid. Now I do not know what -- when the actual RFPs will happen for those tenders. So I think we're seeing a little bit of a flux. But as I said earlier that in the last 1 month, 8 projects have been awarded on TBCB, okay. And those should come on now.

--------------------------------------------------------------------------------

Amber Singhania, Asian Markets Securities Private Limited, Research Division - Senior Analyst [112]

--------------------------------------------------------------------------------

Okay. And sir, just 2 small things, sir, how much of private orders we are having in our order book currently from the TBCB side? And what kind of inflows we're expecting from this segment?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [113]

--------------------------------------------------------------------------------

I think (foreign language) I don't have the exact number. (foreign language) Essel (foreign language) all put together (foreign language).

--------------------------------------------------------------------------------

Rajeev Aggarwal, KEC International Limited - CFO [114]

--------------------------------------------------------------------------------

If it gets [allowed.]

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [115]

--------------------------------------------------------------------------------

(inaudible)

--------------------------------------------------------------------------------

Rajeev Aggarwal, KEC International Limited - CFO [116]

--------------------------------------------------------------------------------

(inaudible) we would be close to [1,400-odd crores.]

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [117]

--------------------------------------------------------------------------------

I think we [have -- to me,] we have Essel of 450. We have got a couple of orders from Adani and a small order from Sterlite (foreign language).

--------------------------------------------------------------------------------

Amber Singhania, Asian Markets Securities Private Limited, Research Division - Senior Analyst [118]

--------------------------------------------------------------------------------

Okay, sir. Any issues on Essel side now, how things are there on that part?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [119]

--------------------------------------------------------------------------------

As I said earlier, Essel is -- from my own understanding, is still in the [lengths] of talking to other people to come in, okay. And let's see how Essel has sourced some part of it, some equity. So let's -- we are keeping our fingers crossed.

--------------------------------------------------------------------------------

Amber Singhania, Asian Markets Securities Private Limited, Research Division - Senior Analyst [120]

--------------------------------------------------------------------------------

Sir, a tiny question, if I may ask. I believe there has been some tenders have started from the smart metering side on a turnkey basis. So is that a segment we are also looking as an opportunity? And if yes, then which pockets of those we are...

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [121]

--------------------------------------------------------------------------------

We are not there in that business.

--------------------------------------------------------------------------------

Operator [122]

--------------------------------------------------------------------------------

The next question is from the line of Rita Tahilramani from Invesco Mutual Fund.

--------------------------------------------------------------------------------

Rita Tahilramani;Invesco Mutual Fund;Analyst, [123]

--------------------------------------------------------------------------------

So 2 questions from my side. What would be the cash on the book as on date, as on Q1?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [124]

--------------------------------------------------------------------------------

I think we'll come back to you. (foreign language) It is around 300 crores, sorry, as of now, yes.

--------------------------------------------------------------------------------

Rita Tahilramani;Invesco Mutual Fund;Analyst, [125]

--------------------------------------------------------------------------------

Okay. And we mentioned that we are L1 in our Solar EPC project. Could you help us with the quantum of the project and what geography is this?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [126]

--------------------------------------------------------------------------------

It's a 30-megawatt project in Africa, funded by World Bank.

--------------------------------------------------------------------------------

Rita Tahilramani;Invesco Mutual Fund;Analyst, [127]

--------------------------------------------------------------------------------

Okay. Okay. And what could be the quantum of this project?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [128]

--------------------------------------------------------------------------------

I think it's more than 100 crores. I don't have the exact number.

--------------------------------------------------------------------------------

Operator [129]

--------------------------------------------------------------------------------

(Operator Instructions) The next question is from the line of Chandrasekhar Sridhar from Fidelity Investments.

--------------------------------------------------------------------------------

Chandrasekhar Sridhar;Fidelity Investments;Analyst, [130]

--------------------------------------------------------------------------------

So just wanted to understand just when will the color of the inflows in the railway segment change gradually towards signaling. And just on that, where has been the decision process of the government on either Level 2 signaling systems or Level 3 like signaling systems?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [131]

--------------------------------------------------------------------------------

So Chandrasekhar, as of now, there are 4 large tenders out for Level 2 signaling, but they've been out for the last 4 months. And they are getting postponed every month. As of now, I think they are due somewhere end of [third] quarter. What?

--------------------------------------------------------------------------------

Rajeev Aggarwal, KEC International Limited - CFO [132]

--------------------------------------------------------------------------------

[2nd September.]

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [133]

--------------------------------------------------------------------------------

[2nd] September is when they are due as of now. I honestly do not know whether they will happen or not. Because what we have also seen, at the regional level, they are still issuing tenders of Level 1, okay. When you talk to technology suppliers, senior railway people are talking to them about Level 3. So I honestly -- we do not know what will happen on this. Right now, the tenders are at -- for Level 2 and large tenders. I think probably around INR 3,000 crores or something like that, okay. We are ready to bid for them if the tenders are bid on the due date. If they get postponed, they'll get postponed because the last 3 months they were postponed ahead.

--------------------------------------------------------------------------------

Chandrasekhar Sridhar;Fidelity Investments;Analyst, [134]

--------------------------------------------------------------------------------

Right. So policy-wise you're not sort of finalized eventually still in which direction they want to head?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [135]

--------------------------------------------------------------------------------

We don't know but the way the tenders are getting postponed, looks like a policy issue, okay. Whatever we are hearing in the market is that, I think there are 2 views whether they should stick with 2, which is proven right now or straight away shift to Level 3, okay. I think that's where the tenders of Level 2 are getting postponed.

--------------------------------------------------------------------------------

Chandrasekhar Sridhar;Fidelity Investments;Analyst, [136]

--------------------------------------------------------------------------------

All right. So if in that case, so how should we look at the color of your inflows expected in railways this year?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [137]

--------------------------------------------------------------------------------

I think, as I said at the start of this, the railways probably this year would be more on the stable side, which would be, like we are L1 in RRTS. We are also talking about some other ROBs, et cetera on the civil side. Apart from our normal OHE and doubling, tripling and track renewals, we are expected to do a lot more on signaling, but unless this issue gets resolved, signaling may have to wait for some time. Station building is -- rebuilding is another big [tick] number, which is going around, where they want to remodel or rebuild 200 stations and now they have agreed to do it on EPC. On an average cost of 200 crore, it's becoming a 40,000 crore business. So I think for the time being, going forward for next 2 quarters, at least, my railway order book will be more on OHE, track laying and on the civil infra.

--------------------------------------------------------------------------------

Chandrasekhar Sridhar;Fidelity Investments;Analyst, [138]

--------------------------------------------------------------------------------

All right. And how should we look at the CapEx for this year?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [139]

--------------------------------------------------------------------------------

CapEx, I think what we've been looking at the railway CapEx would probably beyond 40 crores, 50 crores. If you're asking my CapEx [around] 30 crores, 40 crores or something like that for our side, okay.

--------------------------------------------------------------------------------

Chandrasekhar Sridhar;Fidelity Investments;Analyst, [140]

--------------------------------------------------------------------------------

Right. And for the overall?

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [141]

--------------------------------------------------------------------------------

Overall for the company, we've been looking around 150 crores, 170 crores. But the CapEx within railway and civil will be interchangeable because most of it is in terms of matching plants, transit mixers and cranes, et cetera. So we will decide that. There could be some CapEx happening on in Brazil on the EPC side, okay. So most of it would be more on the projects at factories and all that, maybe 30 crores, 40 crores, all the factories put together.

--------------------------------------------------------------------------------

Operator [142]

--------------------------------------------------------------------------------

Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Vimal Kejriwal for closing comments.

--------------------------------------------------------------------------------

Vimal Kejriwal, KEC International Limited - CEO, MD & Director [143]

--------------------------------------------------------------------------------

Thank you very much for your continued interest in KEC. Thank you.

--------------------------------------------------------------------------------

Operator [144]

--------------------------------------------------------------------------------

Thank you. On behalf of KEC International Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.