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Edited Transcript of WABAG.NSE earnings conference call or presentation 10-Feb-20 10:30am GMT

Q3 2020 Va Tech Wabag Ltd Earnings Call

Feb 21, 2020 (Thomson StreetEvents) -- Edited Transcript of Va Tech Wabag Ltd earnings conference call or presentation Monday, February 10, 2020 at 10:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Rajiv Devaraj Mittal

VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director

* Sandeep Kumar Agrawal

VA Tech Wabag Limited - CFO

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Conference Call Participants

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* Dhavan Shah

ICICIdirect.com, Research Division - Research Analyst

* Kaushik Poddar

KB Capital Markets Pvt Ltd. - Whole-Time Director

* Kirthi K Jain;Sundaram Mutual Fund;Analyst

* Mohit Kumar

IDFC Securities Limited, Research Division - Analyst

* Priyankar Biswas

Nomura Securities Co. Ltd., Research Division - VP

* Siddharth Rajpurohit

JHP Securities (P) Ltd., Research Division - Research Analyst

* Vikas Jain;Financial Quotient;Consultant

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the VA TECH WABAG LIMITED Q3 FY '20 Earnings Conference Call. (Operator Instructions) I now hand the conference over to Mr. Rajiv Mittal, Managing Director and Group CEO. Thank you, and over to you, sir.

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [2]

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Thank you. Dear friends, good afternoon. I welcome you all to the earnings call post announcement of Q3 FY '20 results of VA TECH WABAG LIMITED. Mr. Sandeep Agrawal, our Group CFO, joins me in this earnings call today.

We are extremely proud to have successfully commissioned the Koyambedu TTRO plant in Chennai, which was inaugurated by Honorable Chief Minister of Tamil Nadu in November. This is a landmark project, not only for city of Chennai but also for WABAG, and is also a largest water recycle and reuse plant in the country. This plant treats sewage into usable industrial water, thereby reducing freshwater stress to the city.

In our Dangote project in Nigeria, engineering and equipment ordering is largely completed. Client has started issuing dispatch clearance for key equipments and the dispatches are currently underway. Majority of engineering approvals for construction has also been released.

In Polgahawela, Sri Lanka project, design and approved -- designs are approved, and the project is now in advanced stage of execution. Treatment plant, intake structures and reservoirs have come above ground level and are progressing well. Supply of all 3 equipments is complete. The transmission and distribution pipeline have progressed well and are in full swing with multiple contractors at sites across multiple locations. Project commissioning is expected to commence in the third quarter of FY '21.

As you would remember, WABAG had taken over the operational management of sewage network in the city of Agra and Ghaziabad. Under the One City – One Operator model, we have now signed the contract in November and started progressively taking over the O&M activities in a phased manner from mid-December. We are confident that the success of this model will enable more state governments to replicate the same.

Coming to the progress on our MEA projects. In Jubail, STP project in Saudi Arabia being implemented by MARAFIQ, 90% of engineering has been completed. The engineering is scheduled for completion by March. Purchase orders for long-lead items have been placed and manufacturing clearance have been given. First batch of clarifiers have been inspected and major process items are lined up for inspection in the next 2 quarters. All major water retaining units, rafts have been completed, and civil works is in full force.

In our South Doha project in Qatar, detail engineering is nearly completed. All long-lead items have been ordered, and manufacturing is in progress. Nonprocess unit rehabilitation work is completed and under handing over. Process units, rehabilitation work is progressing well.

In Zarat, project in Tunisia, detail engineering work is underway and ordering of long-lead items is nearing complete. Construction of deep structures are nearing completion and construction work of other structures are in progress.

With regards to GENCO projects, with regards to TSGENCO, we have obtained the interim injunction order from Supreme Court against the arbitration proceeding initiated by Tecpro. Proceedings are underway, and we expect a Supreme Court order -- or sorry, the High Court order will be quashed very soon.

With regards to APGENCO, the customer has given us a clearance to proceed with the pending work, and the works are in progress. As stated in the previous quarter, these large new projects, along with our recent orders in India, have started to pick up further pace and are expected to progress further in the coming quarters. Our order book position continues to remain strong at INR 11,500 crores, which is about 3x of our annual revenue, which gives us confidence and visibility about the future.

I'll now request Sandeep to take you through the financial highlights of the quarter. Over to you, Sandeep.

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Sandeep Kumar Agrawal, VA Tech Wabag Limited - CFO [3]

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Thank you, Mr. Mittal. Good afternoon, friends. First, you had an opportunity to look at the results update presentation as circulated and uploaded at our website. Now let me take you through the key financial highlights for the 9 months' period ended 31st December 2019.

Our revenue from operations for the 9 months' period ended stood at INR 1,772 crores on a consolidated basis and INR 1,250 (sic) [1,255] crores on a stand-alone basis. EBITDA for 9 months' period stood at INR 171 (sic) [172] crores, and on consolidated basis at INR 147 crores on stand-alone basis. Profit after tax attributable to owners for the 9 months' period stood at INR 61 (sic) [60] crores on consol basis and INR 57.4 (sic) [57] crores on stand-alone basis.

Our key projects have started picking up pace, as expected, enabling us to achieve good results and cash flow. Our constant efforts on cash and receivable management has also started paying off, and we will aim to keep the momentum going in the same direction.

Our net working capital has reduced by almost INR 270 crores year-on-year, a reduction of almost 22%. This is in line with our constant effort and action to improve the working capital position. Net debt position of the group -- at the group level as on 31st December 2019 stood at INR 285 crores as against INR 433 crores as on 31st March '19, a reduction of 34% in the net debt of the company in 9 months' period.

Continuing our efforts, our focus on generating positive cash flow, we have generated operating cash flow of INR 187 crores for 9 months period, and that resulted a free cash flow of INR 143 crores at consolidated level at the 9 months ended 31st December 2019. This is a direct result of our continued focus on receivables, working capital and cash management in this tough economic scenario. We continue to work closely with our bankers and are thankful to their continued support in providing nonfund lines for the new projects, which will further improve the cash and working capital position of the company.

With this, we are now opening the floor for question and answer.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We have a first question from the line of Vikas Jain from Financial Quotient.

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Vikas Jain;Financial Quotient;Consultant, [2]

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And I put forward my congratulations and complements to you for a nice quarterly result. More than that, I'm happy to see that we have now been able to generate free cash flow, which had been one of the dire thing for few quarters of the past. So that's a good thing for an investor.

I have 2 questions. So one is there had been some news on part of Andhra Pradesh Generation Company. So though I understand that Mr. Mittal did touch the subject, but I don't think that I could grasp the position on the outstanding debt and the repayment plan from APGENCO. So if you can throw some insight on them.

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [3]

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Vikas, there has not been any change in the status, and that's what I updated in my speech. Basically, we have the receivable in 3 buckets. One is TSGENCO, where everything has been done and the payments were ready to be made, but the RP of Tecpro had sought for an arbitration with TSGENCO. And that's where everything got stalled. And that's something which we and our client, TSGENCO, jointly represented in Supreme Court. And we've been able to stall that, so that has been stalled. Now the proceedings are on in Supreme Court to quash that they will take TSGENCO, our client, for arbitration. And as soon as this is done, I think in 2 or 3 quarters, we should be able to collect this INR 138 crores approximately, which is straight ready for disbursement after the Board approval and after the Supreme Court judgment.

The second part is something which is NCLT, which we have explained to all of you many times, I will repeat again, that INR 69 crores, which is directly with the Tecpro's RP. Because we are part of consortium, Tecpro had collected this money on our behalf and had not paid us. So this is treated as a trust or (inaudible). So we have preference over the secure of the financial creditors. So we have the first charge of getting this money. This was also certified by their own auditor that this amount is available in Tecpro's book. But while passing the order at NCLT, they conveniently forgot to mention anything about it, which we represented at NCLAT, and they have again directed NCLT to review and pass the order on this. So we are today back at NCLT for us to get a favorable reply, and we hope that very soon we'll get a favorable reply.

Third one, you know APGENCO, which is a project we still have some work to do because of elections and new governments and they wanted to review all the projects, which was done. And luckily, our project has gotten through. We have got our official intimation that we can continue to work and complete the project. And so that we expect in the next 8 months, we will finish our balance work, after which we'll get our first retention. And 1 year after that, we'll get our second retention. That's the feedback on GENCO projects.

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Vikas Jain;Financial Quotient;Consultant, [4]

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Great. The next point that I wanted to raise is around a question though (inaudible). And I'm sure that this may not be the right forum to raise this, but having used other forums and it's not getting addressed, I'm left with no choice than to raise it on this platform, is that towards the interest of the minority shareholders, if VA TECH WABAG chooses to publish the information on the con calls ahead of time on the exchange website and their own website, it will be really helpful for the smaller investors to join the call and get more close view to what company is progressing on, which is not happening. I have dealt with the IR people as well and I do not see any improvement on the process. The con call invites still do not get posted over the BSE or NSE website, sir.

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [5]

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We'll check that, Vikas, and we'll make sure if there's anything left on our part, we'll correct that, and also the con call speech will get published in our own website also.

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Vikas Jain;Financial Quotient;Consultant, [6]

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Yes. Though the con call speech do get updated, sir, but having the con call invite, right, ahead of time helps people to join the con call. And if not ask questions, then at least go through the detailing what you looked -- that's a valuable information for even a minority shareholder. So it can be seen as a shareholder-friendly initiative as well, sir.

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [7]

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No problem, Vikas, we'll check that. And if any corrections required, we'll do that.

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Operator [8]

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We have next question from the line of Mohit Kumar from IDFC Securities.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [9]

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Sir, 2 questions. Sir, first, is it too early for the FY '21 revenue guidance? And given the FY '20 revenue guidance of INR 3,000 crores, are you sure of meeting the guidance for full year?

Second is around the -- there were 2 large projects, one was Chennai 400-MLD desalination plant and one was Mumbai sewage project. Can you give us any time line or sense of where is the tender, how things are moving on those 2 projects?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [10]

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Yes, Mohit. To the first one, yes, it's too early for giving a guidance on FY '21. As a tradition, we have always done that after our year-end. So in our next call, you will have that guidance.

Number two, regarding this Chennai and Mumbai projects, I think, Mumbai, you had the election. There was a change of government. And all this are fairly large projects. They all got delayed, and this is where they are today. They have all gone for re-tender, and I hope that it will be at least 6 to 8 months delayed.

Regarding Chennai, this is my [trusty] of raising this big JICA-funded 400-MLD project. I think they have just appointed a consultant. One would expect in the first quarter, they will have a PQ. And second quarter, we will see the request for quotations proposal. And in this financial year '21, they would finalize these orders.

Regarding your guidance, what we have given for this year of revenue INR 3,000 crores, yes, I think we are fairly confident. We have done this before. If you see in our FY '17 or FY '18, we have achieved in the last quarter revenues of more than INR 1,000 crores. So we are also very optimistic that this will be done. Of course, it -- a lot depends on how the project goes, how the supplier is able to do and how the site progress -- is progressing because we have multiple projects where this is going to come from. And hence, we feel -- yes, we will be very close to our guidance.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [11]

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Sir, any thoughts to give up the -- give us the breakup of receivables as it stands today?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [12]

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See, receivables, I think something which Sandeep will be able to guide you through. And just because one thing you must know that our receivables have not gone up in 2 terms, especially all the billed receivables we are more in less in the same range and Sandeep has already told you how our working capital has reduced. So I think basically, he can give you the detailed numbers.

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Sandeep Kumar Agrawal, VA Tech Wabag Limited - CFO [13]

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So we have receivables of about INR 1,548 crores as on 31st December. And in March, also we had about INR 1,500 crores, about INR 20 crores, INR 30 crores, as the receivables. So we are largely on the same level.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [14]

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As the breakup, sir, plant-wise, possible?

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Sandeep Kumar Agrawal, VA Tech Wabag Limited - CFO [15]

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Plant-wise? I mean plant-wise, we will provide you off-line.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [16]

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Where is that large amount? Where is the like APGENCO and all those, you know, large amounts?

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Sandeep Kumar Agrawal, VA Tech Wabag Limited - CFO [17]

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Please write to us. Definitely, we will send you the details.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [18]

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One last question, sir. This Kankarbagh-Digha, what is the time line of the project to be completed?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [19]

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See, it's 2 phases of it. One is a DBO contract, which is about INR 1,000 crores. There's a HAM, which is about INR 200 crores. So it's 3 years for the DBO and about just over 24 months for the HAM project.

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Operator [20]

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(Operator Instructions) We have next question from the line of Kirthi Jain from Sundaram Mutual Fund.

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Kirthi K Jain;Sundaram Mutual Fund;Analyst, [21]

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Sir, first of all, congratulations for improved margin performance, sir. First of all, congratulations for that.

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [22]

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Thank you.

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Kirthi K Jain;Sundaram Mutual Fund;Analyst, [23]

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So sir, in your press release, you highlighted that in Europe region, we have been able to do some cost curtailment. Like how much the cost curtailment is there? And how much you can furthermore bring it down? On a quarterly basis or on a 12-month basis, how much you can bring it down?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [24]

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See, I think that Sandeep will take the numbers. But generally, this is nothing new, Kirthi. We have been doing this over the years because this is all about doing the work where we have the right resources and right cost structure.

Now over a period of time, we are doing most of our projects in Middle East and Africa from Europe. So naturally, I think we have more and more people at local level and less and less at the center like in Vienna and all that.

So naturally, when you reduce the people, especially noncore, which are not project management, process engineers and technologists, this, we can reduce it in Vienna and increase in local areas like Africa or in Middle East. Naturally, the cost will come down. But I think exact numbers, I'll leave it to Sandeep to give you that.

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Sandeep Kumar Agrawal, VA Tech Wabag Limited - CFO [25]

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So during the 9 months' period, we were able to curtail the total cost at the Europe level is close to about, say, EUR 1.5 million, and on a full year basis, maybe another some EUR 300,000 to EUR 400,000 may add. So in terms of percentage, it is close to about 8%, 8.5%.

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Kirthi K Jain;Sundaram Mutual Fund;Analyst, [26]

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So EUR 2 million totally, right, sir?

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Sandeep Kumar Agrawal, VA Tech Wabag Limited - CFO [27]

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Full year basis will be, yes. Right now, it is about EUR 1.5 million.

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Kirthi K Jain;Sundaram Mutual Fund;Analyst, [28]

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Okay. So furthermore, how much we can bring, sir? Like...

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Sandeep Kumar Agrawal, VA Tech Wabag Limited - CFO [29]

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Furthermore, it all depends. Again, I said you have to extrapolate your numbers. So...

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Kirthi K Jain;Sundaram Mutual Fund;Analyst, [30]

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Okay. Sir, in terms of the, like say, O&M share, like given that NCR contract deal signed, when we expect the execution to begin? And when do you expect the margins to furthermore improve from here?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [31]

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Just the contracts, as I told you, we have already started taking over from mid-December onwards, both the Agra and Ghaziabad, more or less on the assets we have taken over. So I think we are going to start building now. So in this quarter itself, you will see a good amount of building happening for this quarter. And for -- from now on, this 10 years, we have this contract. This will be an annuity model. Month-on-month, we'll build and collect the cash.

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Kirthi K Jain;Sundaram Mutual Fund;Analyst, [32]

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Okay. Okay. Sir, so -- sir, next year, how you see the order flow pipeline, sir, exhaust this Chennai and Mumbai?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [33]

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Yes. I think, Kirthi, as we said, we have enough orders for next 3 years revenue. So we are going to be very selective in this market as we have been in the past. We will only go for orders which have a funding well in place. That would mean we'll only focus on projects which are funded by central government, which will have a sovereign guarantee like Namami Gange project or multilaterally funded projects, which we have been focusing now. So almost 95% overall large projects are multilaterally funded or central government funded, and this will continue to grow. So that will be the basis on our selection, and we'll also have a mix of projects in India and international.

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Operator [34]

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(Operator Instructions) We have next question from the line of Priyankar Biswas from Nomura.

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Priyankar Biswas, Nomura Securities Co. Ltd., Research Division - VP [35]

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Congrats for good results this time. So my question is, so while we were mentioning about this Tecpro resolution, so there -- it seems that there has been some High Court judgment. So what exactly is this High Court judgment? Can you elaborate that one?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [36]

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That, I said in my speech, I think maybe you missed it. This is the High Court judgment, which Tecpro was trying to start the arbitration process against our client, TSGENCO. And together with TSGENCO and us, we had appealed in Supreme Court. In the first itself, they have put a stake on that and the process is continuing. And the aim is to quash this requirement of arbitration, which is initiated by Tecpro, which we understand in the next 1 or 2 sittings, this will be quashed, so that we can collect our money.

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Priyankar Biswas, Nomura Securities Co. Ltd., Research Division - VP [37]

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And sir, for these O&M projects that you were speaking of, that is One City – One Operator, so in a steady state, what can be the monthly billing?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [38]

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See it's almost close to about INR 12 crores-odd will be monthly billing.

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Priyankar Biswas, Nomura Securities Co. Ltd., Research Division - VP [39]

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Okay. And any color on what would be the margin profile of this? Like I understand the overall margin profile right now is somewhere around 8.5%, 9%. So this, when and what can be that comparable amount?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [40]

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You know that O&M margins are always better than this. But here, we would not like to mention that. But definitely, O&M margins will be better than our normal EPC margins or the -- at the company level margins. We expect these projects to do much better.

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Priyankar Biswas, Nomura Securities Co. Ltd., Research Division - VP [41]

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No, sir. What I was coming from is like I'm looking more like from an FY '21 or a '22 perspective. So like probably how much margin improvements we can see? That is what I was trying to assess.

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [42]

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See, you have seen our other O&M business. At least you can see O&M business what we run today, at least we should take it at that level. And if you want anything more, please get in touch with our team. They will be able to give you more detailed information on a one-to-one basis.

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Priyankar Biswas, Nomura Securities Co. Ltd., Research Division - VP [43]

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And sir, last question from my side, for the fourth quarter. So which are the projects you are seeing that is going to give you this INR 1,000-plus -- INR 1,000-crore-plus revenues? I mean which are the projects that will drive it?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [44]

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See, obviously the projects will be the large ones, which even if you see our investor presentation, we have shown you some of the key contracts in our order book.

One, we were just talking about Agra and Ghaziabad. That itself will give you at least INR 150 crores. There's Kankarbagh and Digha. We will start itself with the DBO part and then go to HAM, then we'll go to our MARAFIQ Jubail projects. And KMDA will get financial closure this time. HMEL will happen. Dangote will happen. Jajmau will continue. MRPL should happen. And Polgahawela, Sri Lanka should continue to give us good revenues.

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Operator [45]

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We have next question from the line of Siddharth Rajpurohit from JHP Securities.

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Siddharth Rajpurohit, JHP Securities (P) Ltd., Research Division - Research Analyst [46]

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Congratulations for a stable set of numbers, sir. Sir, can you guide on the HAM projects that we have, sir? What is the total equity requirement there and also on a strategic investor we were looking out there?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [47]

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Basically, as a company, since our inception about almost 25 years back, we have been an asset-light company. And this we have said before also and we continue to make the statements which you can register that we will be an asset-light company. So we have done all the necessary steps to have the debt and equity partner in place, which we are -- from sheets, we have finalized. We are waiting for our customer who achieved certain condition precedent. As soon as it will happen, which we expect in the next month, we should have that, we will achieve the financial closure of this project.

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Siddharth Rajpurohit, JHP Securities (P) Ltd., Research Division - Research Analyst [48]

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Okay. So we already had an investor for...

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [49]

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Yes, yes.

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Siddharth Rajpurohit, JHP Securities (P) Ltd., Research Division - Research Analyst [50]

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Strategic investor. Sir, what would be the equity investments, sir? And how would be divided over the next 2 years?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [51]

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See, I can tell you at this stage it will not be significant at all. Our portion of equity investment will be very low, and these are the things we can tell you on one-to-one basis, but our equity investments will be very low.

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Siddharth Rajpurohit, JHP Securities (P) Ltd., Research Division - Research Analyst [52]

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Okay, sir. And what is our sustainable EBITDA margin, sir?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [53]

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At least double digit.

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Siddharth Rajpurohit, JHP Securities (P) Ltd., Research Division - Research Analyst [54]

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Double digit. Great, sir. Great, sir. Congratulations and all the best, sir.

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Operator [55]

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We have next question from the line of Kaushik Poddar from KB Capital Markets.

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Kaushik Poddar, KB Capital Markets Pvt Ltd. - Whole-Time Director [56]

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In your presentation, you had talked about the debt coming down. Can you give me the numbers once again? And that is question number A. And question B is, when do you see your debt -- you are becoming debt-free totally -- net debt-free?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [57]

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This is what we are working toward, Kaushik. I'll leave it to Sandeep to answer you on the details. But we know because of APGENCO, we used to be -- almost more than 20 years, we used to be debt-free. It's a very small working capital. All the company growth we have achieved, without even raising any funds from the market. Also we have not taken any debt. Our debt-to-equity ratio is extremely low. After executing APGENCO, our debt levels have gone up. But as we are executing new projects, I'm sure it's only a matter of time, maybe in a couple of years, we should be able to bring down our debt.

The exact numbers, I'll leave to Sandeep to give it to you.

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Kaushik Poddar, KB Capital Markets Pvt Ltd. - Whole-Time Director [58]

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Yes, if he can give it to me.

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Sandeep Kumar Agrawal, VA Tech Wabag Limited - CFO [59]

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So net debt, I mentioned that currently we are at INR 285 crores as against INR 433 crores in March.

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Operator [60]

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We have next question from the line of Dhavan Shah from ICICI Securities.

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Dhavan Shah, ICICIdirect.com, Research Division - Research Analyst [61]

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So basically, I have a question on the other expenditure part. So I think in the stand-alone account, the other expenditure stands at around INR 33-odd crores, whereas in consolidated around INR 26-odd crores. So can you please mention the difference between these 2? And the ideal provision, what you have made in the stand-alone accounts, can you give us the amount?

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [62]

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Just 1 minute, I think we are just taking out the sheet.

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Sandeep Kumar Agrawal, VA Tech Wabag Limited - CFO [63]

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So the major difference on account of other expenditure in stand-alone and the group is mainly the reversal of some provision for doubtful debts at the Europe level, at the -- you can say other than India level. So that has resulted in lower numbers. Otherwise, it is in line.

And in India, we have provided for provision for our projects in line with our ECL policy. That's the major difference what you are looking at right now.

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Dhavan Shah, ICICIdirect.com, Research Division - Research Analyst [64]

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So the provision -- in the -- at the subsidiary level is around INR 7.5-odd crores and the entire...

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Sandeep Kumar Agrawal, VA Tech Wabag Limited - CFO [65]

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Yes, around that, yes.

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Dhavan Shah, ICICIdirect.com, Research Division - Research Analyst [66]

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Okay. And based on our calculation, it seems that around INR 200-odd crores is logged at the receivables side. So you mentioned that there has been cash flow generation of around INR 187-odd crores. So can you please share the cash flow from operating activities before changes in working capital? And then you mentioned the working capital changes. So that could be helpful. And is there any CFI as well, if you can share these 2 numbers on a 9-month basis?

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Sandeep Kumar Agrawal, VA Tech Wabag Limited - CFO [67]

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So I think you are talking about the cash flow of the company. So without working capital changes, there's nothing but EBITDA. So operating cash flow number, I've already shared in my call, that is about INR 180-odd crores we have generated on an -- at operating level, which is after working capital changes; and about INR 143 crores on -- as a free cash flow, which has gone into a reduction of the borrowing.

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Operator [68]

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Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Rajiv Mittal for closing comments. Sir, over to you.

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Rajiv Devaraj Mittal, VA Tech Wabag Limited - Group CEO, MD, Head of SBU -MBG & Director [69]

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Thank you, everyone, for your participation in our Q3 FY '20 earnings call. We have uploaded the analyst presentation in our website. In case you have any further queries, you may get in touch with Stellar IR Advisors, our investor adviser based in Mumbai, or feel free to get in touch with us directly. Thank you once again.

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Operator [70]

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Thank you very much, sir. Ladies and gentlemen, on behalf of VA TECH WABAG LIMITED, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines.