NBCC (India) Limited — Call Transcript 2020

Sep 19, 2020

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NBCC/BS/98/2020-21 September 19, 2020

	National Stock Exchange of India Ltd. Exchange Plaza, 5th Floor, Plot no. C/1,G Block Bandra –Kurla Complex Bandra (E), Mumbai-400051 NSE Symbol: NBCC/EQ	BSE Limited, Floor 25 ,Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400 001 ScripCode: 534309

SUB: Transcript of Earning Conference Call dated Sep 15, 2020 (Q1 FY 2020-21 unaudited Financial Results)

Sir,

Pursuant to Regulation 30 read with Part A of schedule III and Regulation 46(2) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and our letter dated September 11, 2020 in respect with earning conference call, please find enclosed herewith the transcript of discussion held during conference call.

The aforesaid information is also available on the website of the Company at https://www.nbccindia.com/webEnglish/announcementNotices.

This is for your record & information. Kindly acknowledge receipt.

Thanking you

Yours Sincerely,

For NBCC (India) Limited

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Deepti Gambhir Company Secretary F-4984

Encl: As above

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“NBCC India Limited Q1 FY ‟21 Earnings Conference Call hosted by Yes Securities Limited”

September 15, 2020

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MANAGEMENT: MR. P. K. GUPTA – CHAIRMAN AND MANAGING DIRECTOR, NBCC INDIA LIMITED

MR. RAJENDRA CHAUDHARI – DIRECTOR, COMMERCIAL, NBCC INDIA LIMITED

MR. NEELESH KUMAR SHAH – DIRECTOR, PROJECTS MRS. B. K. SOKHEY – DIRECTOR, FINANCE, NBCC INDIA LIMITED MR. PRADEEP SHARMA – GM (ENGINEERING), NBCC INDIA LIMITED

NBCC INVESTOR RELATION: BALKISHAN SINGLA

MODERATOR: MR. LOKESH KASHIKAR – YES SECURITIES

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Moderator:

Ladies and Gentlemen, Good Day and Welcome to the NBCC India Limited Q1 FY ‟21 Earnings Conference Call hosted by Yes Securities Limited. As a reminder, all participants‟ lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing „*‟ and then „0‟ on your touchtone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Lokesh Kashikar of Yes Securities. Thank you and over to you, Sir.

Lokesh Kashikar: Thank you. Good Afternoon everyone. I Welcome you all to the Q1 FY ‟21 EARNINGS CON Call of NBCC India Limited. We have with us Mr. P. K. Gupta, Chairman and Managing Director; Mr. Rajendra Chaudhari, Director, Commercial; Mr. Neelesh Kumar Shah, Director, Projects; Mrs. B. K. Sokhey, Director, Finance; and Mr. Pradeep Sharma, GM, Engineering. We would start the call with the opening remarks from the Management followed by Q&A session. Thank you and over to you, Sir.

P. K. Gupta: Good Afternoon everybody, our total income during Quarter-1 has been much lower than earlier year, so practically there was a lockdown. The total income had been 477 crores, but still we have been able to maintain marginal profit and we have all our salaries and all other dues, but April and May were practically washout, very little progress and June we had started, the work, but after June the works have picked up, labor has started coming back to the site and we hope that next quarter will be much better than the first one. Total order book as of now is close to Rs. 70,000 crores about half in PMC projects and half in redevelopment projects. We have started Amrapali Projects in a big way during this period. We have awarded 19 tenders and work on two projects have already been finished during the last year and work on 17 projects is going on and this covers total 30,000 houses. The balance tenders of Amrapali is also under tendering except two projects for which orders from Supreme Court receiver are yet to be obtained, so pending tenders will constitute about 16,000 houses, so the Amrapali has been a big achievement in the last quarter. This is all about opening remarks.

Moderator: Thank you very much. We will now begin the question and answer session. The first question is from the line of Rohit Natarajan from Antique Stock Broking. Please go ahead.

Rohit Natarajan: Thank you for the opportunity, Sir if I understand currently the PMC project, can you talk something on the labor availability, how much quantum of work is going on, how much we are planning to award in this particular year to contractors?

P. K. Gupta: Currently, we have around 34,000 number of labor on all our side, which is about 60% of the total requirement that we have, but labor is increasing day by day and it is coming back, I think by mid of October we should have full quorum of labor or at least 80%. As far as tenders are concerned, we plan to award another 5000 to 6000 crores worth of tenders during the current financial year, around 4600 crore worth of tenders we have already awarded during the financial year, so the total figure will be close to 10,000 at the end of financial year, majority of this is Amrapali Project and certain other projects like CCL Ranchi, and Election Commission building also to be awarded.

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Rohit Natarajan: Sir, out of the 70,000-order backlog that we have, what is the proportion in which the work is currently going on, what is the quantum of orders that we are currently working on? P. K. Gupta: Total value of work which is underway is 16,500 crores, that is, works have been awarded. Rohit Natarajan: And by the end of this fiscal, what is that number expected to be? P. K. Gupta: It will increase by 7000-8000 hopefully closely, will be close to 25,000. Rohit Natarajan: Okay, Sir what about the guidance that you gave in the initial part of the year that you were talking about 20% kind of guidance, but would that be possible at this current situation? P. K. Gupta: That will be difficult with the pandemic coming, the 20% increase seems difficult because we expected that Corona will go away but it does not seem to be going, so works are affected so that type of increase is not possible. Rohit Natarajan: Okay, Sir on Amrapali Project if I may have to ask you something on the finances part, I understand the current tie-up that we have with SBI and other such things, that number really does not gel up to all the way to 82 million kind of number that you want to execute the complete project, so how are the stage wise, can you explain how much will be awarded in this year, how much could be awarded next year and what will be the sources of finance? P. K. Gupta: We plan to award all the tenders during the current financial year and source of funding is around Rs. 4000 crores has to come from the home buyer and Hon'ble Supreme Court has issued the details for installments by which home buyers are supposed to deposit the money to the receiver and another decision taken by Hon'ble Supreme Court is that all the accounts of home buyers which were NPA, loan accounts with various banks, so Hon'ble Supreme Court has ordered that NPA tax should be removed and bank should give the loan to home buyers, so that process has already started, so we hope that the full amount of money will come in installments and around 2000 crores is to come from the unsold inventory. Once the construction picks up then we will be able to sell the unsold inventory and that money will also come. Temporarily, some loan is being tied up with SBI Cap and other banks to bridge over this time gap, so I hope money will not be a problem. To start with, we have got the funds from Supreme Court and our projects are going through…. Rohit Natarajan: Sir, lastly if I can squeeze in one more question, that is more on Jaypee acquisition, what is the progress? P. K. Gupta: The case is in Hon'ble Supreme Court, there was number of appeals against the resolution plan and the decision given by NCLT, so appeals were filed in NCLAT and now Hon'ble Supreme Court has taken all this appeal to themselves and the decision is likely to come for this, twothree hearings have already taken place.

Rohit Natarajan: Okay, so you expect in this particular quarter maybe by before September or in the next quarter you expect?

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P. K. Gupta:

Maybe in the October, all depends on Hon'ble Supreme Court but since all the appeals have been taken together by Hon'ble Supreme Court at which one step of NCLT is now over, so we expect that the results will come out.

Moderator: Thank you. The next question is from the line of Himanshu Shah from Potentialities Unlimited. Please go ahead.

Himanshu Shah: Good Afternoon Sir, I had a question, last quarter you said that if the redevelopment projects are awarded, our tendering will go all the way up to 46,000 crores, but what is the scene on that front? P. K. Gupta: You see we told that yes, tendering will go up to 46,000 crores once all the statutory approvals are given, so we are in the process of getting the approvals, only few approvals they are in process, and maybe another two months or three months, we may get all these approvals and we are ready with tender documents and it will be immediately tendered during this financial year subject to as early as we get approvals.

Himanshu Shah: So money is not a problem in that case, Sir? P. K. Gupta: You see this development is self-sustainable, we will be selling some of the built-up spaces and from there we will be generating money and with that money, we will construct rest of this. Himanshu Shah: But Sir, are you able to sell because they have been postponing auction for a few times last? P. K. Gupta: You can very well understand during this COVID, so we are aggressively trying because this is the main crux of the redevelopment project, the more we are successful in selling our built-up space, the project will… Himanshu Shah: Sir, my question only comes because you said this fiscal you are only going to do 25,000 crores some tendering, so that question in relation to that. Sir, just one more question on the labor front last time your report shows that we have 1900 people on the payroll for the company and we have the employee benefit of 330 crores, this is about the last entire year so the average salary comes to about Rs. 19 lakh that comes from everybody from top to bottom, I fail to understand the quantum of salary because then 5000-6000 crores of turnover is only going to salary, can you enlighten on that?

B. K. Sokhey: Your question is not clear, could you repeat your question?

Himanshu Shah: Madam, my question is we have last year given out 330 crores towards employee benefits and every quarter the salary is roughly in the region of 60 crores, so basically the difference is that 90 crores maybe with something that I am missing out on that front and even if I take that amount 330 crores, if I divide it by the 1900 people that we have on our payroll according to the last annual report?

B. K. Sokhey: I just would like to clear here you are talking about the consolidated salary part, right?

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Himanshu Shah: Yes, consolidated. B. K. Sokhey: As regard with NBCC, it is more or less constant, rather it is now on the reducing side as the people are not superannuating and we are not enrolling currently the further manpower, so on NBCC front you have seen that it is 60 crores per quarter, it will remain constant during this period rather slowly will go down. Himanshu Shah: But Madam even that figure comes to like 240 crores for the year, which is almost like if you do a 5000 crore turnover and if you have a 7% OPM margin which you said in the last quarter, you just have the first 5000 crores going towards the employees, is it not? B. K. Sokhey: Yes, you have very correctly noticed this,that is the breakeven for us to achieve that to reach out our salary part. Himanshu Shah: But Madam if you take the number of employees on the payroll which is like 1900 or something, right? B. K. Sokhey: It is not 1900, it is now like 1600 on NBCC‟s roll. B. K. Sokhey: The salary structure in the PSU is regarded by the Department of Public Enterprises and it is made applicable on the PPSEs on the same patron and there is no variation from that, so maybe you are taking out the average salary, otherwise, there are scales according to which the salaries of each and every employee and cadre wise is set out. Moderator: Thank you. The next question is from the line of Ankur Deore from Bank of America. Please go ahead. Ankur Deore: Thank you Sir, thank you for the opportunity, I have two questions, one is on the Nauroji Nagar project, during the last call you had said that in July you had sold property of around 500 crores and till then total property sell for that project was around 2500 crores, so if you could give some of it as what has been sold after that and on-ground execution if it has picked up anything on that particular project? My second question is on Netaji Nagar and Sarojini Nagar, last time you had updated that all approvals for the revised design were also in place, the only one remaining was forest clearance from the Delhi Government, so if you could tell us what is the status on that?

RAJENDRA CHAUDHARI: You see yes we have sold till date 2500 crores in Nauroji Nagar and we are continuously making attempt and there are few Government agency as well as others who are interested in buying the properties, so we are in the process of continuous auction so as to get through the sale. Now, as far as the Sarojini Nagar and Netaji Nagar, yes forest is still pending, the reason being they were making some separate changes in their Forest Act or something like that, so we are every day pursuing the matter with Delhi Government and we hope to get it soon.

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Ankur Deore:	Thank you, just a follow up question, 2500 has sold out of 12,000 right, the total potential there?
**RAJENDRA CHAUDHARI: **	Yes, Nauroji Nagar is 12,000 crores and out of that we have so far sold 2500 crores.
Ankur Deore:	Sir, in terms of on-ground execution, you had said that it had just started with around 180 crores,
	is it ongoing right now or?
**RAJENDRA CHAUDHARI: **	It is full-fledged going on and right now we have around 1500 labors, 1200 working in day
	and 300 working in night.
Moderator:	Thank you. The next question is from the line of Binod Modi from Reliance Securities. Please
	go ahead.
Binod Modi:	Thank you for the opportunity Sir, sorry I joined little bit late if my question is repeated, Sir just
	wanted to understand the mobilization of labor, last time you said you could mobilize around
	18,000 labors till first quarter or out of your almost more than 40,000 of pre-COVID, so what is
	the status as of now Sir if you can broadly guide me?
P. K. Gupta:	We have around 34,000 labors on our site as of date.
Binod Modi:	Sir, essentially, we can say we are almost at 80%-85% of our pre-COVID level?
P. K. Gupta:	No, 60%-65% of the requirement, we are comparing with the total requirement, so we are around
	60%-65%.
Binod Modi:	Okay, so by October end we may be at 85% plus or maybe 90%?
P. K. Gupta:	Yes.
Binod Modi:	About the order book profile Sir, we understand that around 70,000 odd crores at standalone
	level you had said in the previous quarter considering low execution and I think order inflow
	during the quarter would have been it is not that much so, can essentially say that the order book
	more or less remains same as of now or if there is any sort of change?
P. K. Gupta:	Practically it remains the same, we have got some more orders, but more or less in that range
	only.
Binod Modi:	Sir, it is more or less at the similar range, right?
P. K. Gupta:	Yes.
Binod Modi:	Sir, just wanted to understand last time you said only 13,000 crores of order out of the 70,000
	crores were under execution, what is the status as of now how much of order is under execution
	and how much do you expect still to award in coming months, if you can?

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P. K. Gupta:	Ongoing works are 16,500 crores and we are going to award another 6000-7000 crores.
Binod Modi:	6000-7000 crores for this entire fiscal Sir or for the first quarter?
P. K. Gupta:	Yes, entire fiscal means, too early to say, but minimum around this value we will be awarding.
Binod Modi:	Sir, would there be any sort of change in your guidance and all, you had last time guided around
	6000 kind of top line almost 25% growth, so is there any sort of change after this?
P. K. Gupta:	That kind of growth will be difficult to maintain because the pandemic is still on, so difficult to
	guess, but that kind of growth will be difficult.
Binod Modi:	So will we be able to give any sort of guidance today as per current status?
P. K. Gupta:	We should be able to do more than the last year in spite of pandemic, we will be able to do more
	than last year.
Moderator:	Thank you. The next question is from the line of Parvez Akhtar from Edelweiss Securities.
	Please go ahead.
Parvez Akhtar:	Good Afternoon Sir, two questions from my side, what would be our current cash and bank
	balance at the consolidated level and from that how much would be our own money and how
	much would be customer advances?
B. K. Sokhey:	We have 5000 crores of cash and bank balance on consolidated basis in our book and
	approximately 500 crores pertain to our own funds including our subsidiaries and the amount of
	client balance is around approximately 4500 crores.
Moderator:	Thank you. The next question is from the line of Sagar Parekh from One-Off Finance. Please go
	ahead.
Sagar Parekh:	Thank you for taking my question Sir, my first question is on the status of the redevelopment
	projects for railway station in Gomti Nagar and Charbagh, what is the status of these two projects
	and are we going to award any more railway station redevelopment projects in the current
	financial year?
P. K. Gupta:	The Charbagh project, there were some change in planning, so we are not doing Charbagh.
	Gomti Nagar is on, but we do not plan to do any more railway station projects in the current
	financial year.
Sagar Parekh:	Okay, so Gomti Nagar I believe that the construction work is going on very slowly, so what is
	basically stopping us from ramping up the projects?
P. K. Gupta:	The problem is sales during pandemic, the sales have been very low, we have not been able to
	sell the property that is one of the very reason.

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Sagar Parekh:	So when do we expect this project to ramp up significantly for us?
P. K. Gupta:	You see we are going cautiously in Gomti Nagar because entire real estate sector is having a
	severe downtrend, so we are doing construction but at the same time we are trying to sell so that
	we get the money generated through sale and construction.
Sagar Parekh:	My last question would be on the guidance that you just mentioned of, you would be able to do
	better than last year in terms of top line, so let us say consolidated top line for last FY ‟21 was
	8000 odd crores, so when we say more than that, so we are talking about consol level, so if I just
	reduce the 377 crores of top line for Q1, we are talking about at least 7300 crores of top line for
	the remaining nine months, so do you think that is achievable considering the pandemic is still
	on and it is just a broad suggestion that ideally shareholders would be happy if you under promise
	and over deliver rather than if you constantly giving guidance and then not achieving that
	guidance?
P. K. Gupta:	We will be able to achieve the level of last year in spite of pandemic, 8500 crores.
Sagar Parekh:	So 8000 crores right, 8000 crores will be the number?
P. K. Gupta:	8000-8500
Sagar Parekh:	In terms of margins Sir any guidance on the margins because I believe now the new orders are
	coming at lower margins as far as PMC is concerned, so what kind of margin should we expect
	now for the consol level for us?
B. K. Sokhey:	EBITDA will remain in the range of 1% to 1.5%.
Moderator:	Thank you. The next question is from the line of Sunil Bansal, an Individual Investor. Please go
	ahead.
Sunil Bansal:	Good afternoon, Sir I am a retail investor for longtime and I just want to know what is the
	outlook for the company in long-term, and second question is, earlier we used to have a
	presentation from the NBCC management, from 2018 that has been stopped for the
	shareholder that would give us some idea what is happening?
P. K. Gupta:	Outlook is very strong, unfortunately for the pandemic we would have started many more work.
	One of the major projects that is likely to come in Jaypee and AIIMS redevelopment projects
	also we have started in West Ansari Nagar and Ayur Vigyan Nagar is also likely to start and if
	the redevelopment projects also start, we are waiting for the effect of pandemic to be over, so
	the future is quite strong, but our major focus would be on redevelopment projects.
Sunil Bansal:	Second question is regarding presentation, you used to have since 2018 that has been stopped
	quarterly presentation from the company‟s outlook etc.?

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P. K. Gupta:	We are thinking of starting that again, there was changes in the top Management that could have
	been the reason, but we are going to start it again.
Moderator:	Thank you. The next question is from the line of Rohit Natarajan from Antique Stock Broking.
	Please go ahead.
Rohit Natarajan:	Thank you for this follow up, so my question is more to do more systemic in nature that is this
	projects were part of master plan of Delhi 2021 and now Government has already thinking
	about unveiling master plan of Delhi in 2041, is there a possibility that some of these projects
	could probably be considered in MPD 2041 or is there any changes, any ideas that has been
	talked about by Government to you?
**Rajendra Chaudhari: **	You see they have initiated the process of making MPD 2041 and it is a very lengthy process,
	our projects most probably will get sanctioned in MPD 2021.
Rohit Natarajan:	So for MPD 2021 the deadline, what is exactly is there any such deadlines that they have to
	strictly adhere to or is it like something long-term in nature?
**Rajendra Chaudhari: **	As far as MPD 2021 is concerned, till the 2041 does not come, this will remain because we
	submit all our plans to various statutory bodies and whatever is applicable, accordingly they
	sanction it.
Rohit Natarajan:	Sir, just one question on the Jaypee part, one is that the monetization, the bankers part how do
	you plan to extinguish the debt, does that include the selling of road asset or if not would you be
	taking up debt in that particular STD, is there some financial thoughts that you have given at this
	point in time?
**Rajendra Chaudhari: **	If you go through the resolution plan, our resolution plan consists everything in detail.
Moderator:	Thank you. The next question is from the line of Rachit Kamath from Anand Rathi Shares and
	Stockbrokers. Please go ahead.
Rachit Kamath:	Madam, I wanted to understand the standalone cash that we have that is NBCC‟s money and
	then the subsidiaries money?
B. K. Sokhey:	On standalone basis, we are having a cash and bank balance of 1600 crores and in consolidated
	it is 5000 crores, and 500 crores is approximately of our own for a group as a whole.
Rachit Kamath:	Madam, my next question, so you had said in the beginning of the call that we are targeting to
	end up around 25,000 crores kind of projects under execution by end of this year, but then we
	are planning to only involve additional projects of only around 6000 to 7000 odd crores, now
	given the fact I think we are at around 16,000 odd crores, what is the exact number like, there is
	some mismatch of around 2000 odd crores, 1000 to 2000 odd books?

Your voice is not very clear, it is cracking.

B. K. Sokhey:

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Balkishan:	You can contact me on my on my investor e-mail id.
Rachit Kamath:	Sure, I have one last question regarding this Nauroji Nagar projects, what kind of revenues are
	you expecting to be booked over in this year?
P. K. Gupta:	What kind of…?
Rachit Kamath:	What kind of revenues are you looking at from the Nauroji Nagar project in this year given the
	fact that is the only Delhi Development project that is underway for us and that also happens to
	be the largest project?
**Rajendra Chaudhari: **	Are you asking turnover from Nauroji Nagar?
Rachit Kamath:	Yes, like what kind of contribution or are we expecting over there?
Rajendra Chaudhari:	Nauroji Nagar we may touch 700 crores.
Rachit Kamath:	My last question is regarding on the standalone entity, what kind of revenues are we expecting,
	will it be around 5000 crores?
P. K. Gupta:	Standalone is more than 5000 crores.
Rachit Kamath:	Sure, but then given the fact that we only had around 430 odd crores in this quarter, it kind of
	works out to almost 1600 crores kind of a run rate for the balance three quarters?
Krishna:	Actually, your voice is not audible, either you can call later or email me your querry, I am sorry
	your voice is not audible properly.
Rachit Kamath:	Sure Sir.
Moderator:	Thank you. The next question is from the line of Himanshu Shah from Potentialities Ultimate.
	Please go ahead.
Himanshu Shah:	I just wanted to know how over staffed we are, that was my question we left at, like what kind
	of staff reduction that is possible within this setup because of the high labor cost that we have?
P. K. Gupta:	You see we have an order book of 70,000 crores, we are not looking into staff reduction.
Himanshu Shah:	Okay, we are not. Sir, one more question about the labor ministry, we have some 400+ hundred
	crores with the Labor Ministry that they were supposed to receive, for last three years I have
	been asking this question and it was always in the process, where are we reached, is there some
	arbitration there or something going on with that?
Neelesh Shah:	Your talking about the EISC project with the Labor Ministry, so we have around eight or nine
	hospitals all over India and hospital projects are in the last 8 days we had some progress actually

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because of the various reasons, there are problems, it is not Greenfield sites for the hospital are running hospital, so now except two hospitals we have completed all major seven hospitals all over India, so now it is in the process, in fact finalization is under process because the hospitals were not completed, so client was first willing to complete the work and then now they have taken up our claims like lot of deviation is there, different type of projects where NBCC is only a contractor and PMC is having claims, he is having his own PMC as consultancy, so hopefully we had a high-level meeting also represented at the level of Secretary of Labor and Labor Minister and now gradually it is in process and we hope to realize soon.

Himanshu Shah: Okay, about the hospital because of the pandemic, do you think is there any thrust by the Government that they could like award a lot of hospitals or something like that to companies like ours? NEELESH SHAH: Yes definitely, because we are now some new hospitals are in pipeline in Rajasthan, so there are some new projects are hospitals in Rajasthan and recently we have got one project in Himachal Pradesh also in Chamba which we have already started, now we have awarded that work plus another advantage, these old hospitals which have been not taken over by the clients, so some two or three big hospitals, they have taken over and they have converted into COVID hospitals, of course lot of thrust is there from Government. Himanshu Shah: Sir, one question on the Jaypee, as a company like NBCC at the end of the road, what will be left with NBCC out of acquiring Jaypee, a rough ballpark figure? Rajendra Chaudhari: It will be once we acquire Jaypee it will give business for another 10 years with the land available. Himanshu Shah: But we must have done some analysis of numbers, like if you are putting X amount over a period of 10 years then you will be left with some amount? Rajendra Chaudhari: We will answer this question after acquisition. Himanshu Shah: After acquisition, okay, Sir and how much money we are putting… Rajendra Chaudhari: No, this is sub judice, so lots of detail to be given. Himanshu Shah: Correct Sir, out of our own money we will be investing in to Jaypee some money acquiring the equity capital, what is that initial sum? Rajendra Chaudhari: Up to 125 crores and these all things are available in resolution. Himanshu Shah: Sir, 125 million will give us what percentage of shares? Rajendra Chaudhari: 100% our company, fully owned subsidiary of NBCC.

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Moderator: Thank you. Ladies and Gentlemen, due to time constraints that was the last question. I now hand the conference over to the Management for closing comments. Balkishan: Thank you so much for joining, if you guys have any issue or any further query, you can call NBCC investor relations. Moderator: Thank you. Ladies and Gentlemen, on behalf of Yes Securities Limited, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.

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