NCC Limited — Call Transcript 2019

Nov 16, 2019

Ref. No Date NCCL/ Regulation 30&46/201 9 16-11-2019

The Secretary National Stock Exchange of lndia Ltd 5th Floor, Exchange Plaza Bandra - Kurla ComPlex Bandra (E) MUMBAI -500051.

The Secretary BSE Limited, Rotunda Building, P J Towers Dalal Street, Fort MU MBAI-400001.

Dear Sir(s),

Scrio Code : NSE: NCC&BSE:500294

sub: submission of Transcript of the conference call under Regulation 30&46 of sEBl (LODR), 2015

Please find enclosed herewith the transcript of the earnings conference call that took place on 5rh November, 2019 discussing about the performance & Financial Results of Q2 of the F.Y.2019-20. Kindly take the above information on record

Thanking you,

Yours faithfully

)titittq

For NCC LIMITED.

^r6-r[- 2-€.1 M V Srinivasa MurthY Company SecretarY & EVP (Legal) Encl : As above

NcC Limited (Formerly Naea4una Conskucnon aompanv Lrmrted) CIN: 172200TG1990P 1C011146 NCC House, Madhapur, Hyderabad 5OO 081 T +9140 2326 8888 F +9140 2312 5555 ncclimited com

'NCC Limited Q2 FY20 Earnings Conference Call"

November 05,2019

	MANAGEMENT: MR. R. S. RAJU - ASSOCIATE DIRECTOR, FINANCE & ACCOUNTS, NCC LIMITED MR. KRISHNA RAO - EXECUTIVE VICE PRESIDENT, INTERNAL AUDIT, NCC LIMITED MR. Y. D. MURTHY - EXECUTIVE VICE PRESIDENT,
	FINANCE, NCC LIMITED MR. K. DURGA PRASAD - JOINT GENERAL MANAGER, FINANCE, NCC LIMITED
MODERATOR:	MR. P. SURENDER RAO - CHIEF MANAGER, FINANCE, NCC LIMITED MR. JITEN RUSHI - BOB CAPITAL MARKETS LIMITED

Page 1 of 15

Moderator	Ladies and gentlemeD, good day and welcome to NCC Limited Q2 FY20 Eamings Conference Call hosted by BOB Capital Markets Limited. As a remnder, all pa(icipant lines will be in the listcn-only mode and there will be an opportunity fol you to ask questions after the preseohtion concludes. Should you rced assistarce during the conference call, please signal an operator by pressing * then O on your touchtone Phone. Please note that this conference is being recorded I now hand the conference over to Mr. Jiten Rushi from BOB Capihl Markets. Thank you, and over to you, sir.
Jitetr Rushi:	Thanks. Neerav, Good evening ladies and gentlemen On behalf of Bank of Baroda Capital Markets, I welcome everyone 1() the Q2 FY20 eamings call of NCC Limited We thank the management for giving us thN opportunity. Today from the management, we have with us Sn' R. S. Raju - Associate Dtector, Finance & Accounts; Sri Y. D. Murthy - Executive Vice President, Fmance; Sri- S V.N. Bhanoj i Rao - Vico President, Finance;Sri K Durga Prasad Jornt General Manager, Finance; Sri. P. Surender Rao - ChiefManaget Fmance ofth€ cofipany
Y D Murthy:	One correction Jiten, Mr. Bhanoji Rao is not there today We have Mr. Kishna Rao, he ls our Senior Executive Vice Pres iden1, lntemal Audit.
Jiten Rushi:	Now, we can stan our opening remark followed by Q&A. Thank you s1r
Y D Murthy:	Thanl you, Jiten Rushi a l thank you all the participants Ou board has met and declared t}le second quarter results whrch are already hosted on the website of the stock exchanges- I will now give you a briefpresentation about our second quarter results and also the Perforrnance of the cornpany for the lirst half of the current financial year, after that we can go ahead witb th€ question-answer sessions I request Mr. R. S. Raju to give his opening remarks.
R. S. Raju:	Gooal evening to ell ofyou. So about the company's perfomunce for the second qua(er, first I start from the order book
	So io the second quarter, the company has secured orders worth of Rs l5l8 crores and apart from thes€ orders, company also secured orders in October 2019 of about Rs 973 crores So first 7 months periodo f FY20, the company has secured orders worth Rs 3, 127 crores With respect to e segment wise order book as on 306 September 2019,just I would read out o ythe closing balances Buildings diYision Rs 15,243 crore; roads division Rs 8,143 crore; water environment and rarlways Rs 4,097 crore; electrical Rs 1,495 crore irrigation Rs 1527 crore; mining Rs 2ll8 crore; intemational Rs 273 crore; others Rs 277 crore; totaling to Rr l3,l7l

So in AP, already you are aware about thc orders cancellation We already given inforrnation about likely cancellation of orders ofRs 6,100 crore and as on date orders worth Rs 6076 crore cancelled. There is no firrther clarification or communication fiom the AP govemment on the balance orders. As on date, we are executing only part of the orders and not started balance orden as government has not paid the bills and not yet given the clearance on such orders.

Y D Murthy: One small clarification here. We started the year with an order book of Rs 4l,l97crore and based on th€ order issued by the ChiefSecretary, Sovernment of Andka Pradesh, about Rs 6,100 crore of orders pertaining to our company were likely to be cancelled and so we have proactively removed orde\$ worth Rs 6076 crore ftom the order book and effectively started the year wlth an order book ofRs 35,121 crores.

R. s. Rrju: So, now I move to the operatmg perforrnance ofthe comPany on statrdalone basis. So in the second quarter, on standalone basis reported a tumover including other income of Rs 1,802 crores as against Rs 3,138 crores rePorted in the corresPonding quarter ofthe previous year' So there is a dechne compared to the corresPonding quarter ofthe prevrous year

The reasoos for such a decline in the nrmover are; the Primary reson here is all ofyou know that AP projects and m second quarter, we expected at least some clarificahon tom Government of AP but nothiry has come which resulted in NIL tumover from AP Projects. And the second reason is the e)(ended mins. almost all the division and all the projects got effected because of the extended mms not in one state but across various states. ., In water division, the nonpayment in Telangana state apart from the AP and also some delay in getting the letter of awErd where they were Ll , d which they were considering in th€ir projectioN. In electrical division, client had requested us to resurvey the proje€ts,to change the scope and to chaoge the method of execution. , Here we have lost some time. These are the Primary reasons which affected the second quarter revenues-

So coming to the margins

As far Ls margins arc concemed in the second quarter, the gross rnargios increased ov€r the normal rnargins by about 5o%. The reasons for increase in gross margins in the EPC busmess, the gross margins always subject to nature of ihe projects and also the extra clatns and differences with the clients. As and when the differences and extra claims are settled, then in that quarter, in that year genemlly the rnargins increase So here extsa claims amounts in ³ projecls inMumbai region got settled in the second quarter which helped to report higher gross rnargins

And in the second quarter or ir the first 6 months o fFY20, the road division, earler ins igmficant, but in the curretrt year, because we are executing a big order of Rs 2,E50 crore contribured significantly., Generally in road division, the goss profit margin, EBITDA margins are relatively high. So this div\$ion helped to increase in the goss margin- Similarly, tirc mining division where we are executmg a large work order, which resulted in reporting relatively

NCG timited NCC Limited November 05, 2019

higher goss margin compared to other divisions.. So these are the three fundamental reasons which helped to increase in the gross margms ftom the normal level of l'lo/o or l8/"

EBITDA in second quarter:

The company reported an EBITDA of 13.5% as against 11 80% % in the conesponding quaner of the previous year, about L7o% increase rn EBITDA The reasons I explahed above for the goss profit margins increase, holds good for the increase m the EBITDA too

Net profit:

Second quarter reported a netprofitofRs 80 croles which includes ohernon oPerating income. So other income, we have reported about Rl 70 crores Rs ?0 crores repr€sents a profil on sale of land of about Rs 44.25 crores and balance 26 crores is the nonnal routme income whlch represents egain mainly hteres t recelpts from group companies and on the margin deposits with the banks. So in the second quarter, as far as exPenses are conceme4 they are under control except the interest cost which was increased to Rs 130-?5 crores Eom the Rs 108 crores of the corresponding quarter ofthe previous year. The quantum of loans are higher compared to tha previous quarter. And avenge interest cost, in fact there is no increase in average interest cost' It already has come down to 9.9%. BG and LC cost relahvely now higher lhan the prevrous year which also to certam extent resPonsible for the mcrease io the overall finance cost.

Now coming to the operating results orl consolidated basis

Reported a tumover ofRs 1,998 dores as against Rs 3,262 crores repo(ed inthe corresPonding qua(er of the prevrous year and reported a net profit ofRs 78.78 crores as against profit of Rs 122.55 crores in the correspondhg quarter ofthe previous year. So here also in the revenue and profit, there is nobigdifference befween slanda lone and consolidated since the group compames reportsvery insignificant tumovers and there are no significant losses reported by the gpup companies All group companies put together reported aloss ofsome Rs 1.52 crores So thereby the net profit stands at Rs 78 ?8 crores as against Rs 80 crores reported by the standalone So the gross profit margins also stand at 22.8olo as against 18.4% reported in the corresPonding quarter of the last year. So the reasons I ex?lained for the increase in the standalone margins are the same reasons here also contributed for the increase in the gross rnargin EBITDA on ^a consolidated basis reported for second qua net l3-3o/o as ¹²4y' in the corresPonding qua(er ofthe Previous Year.

Consolidated net profit

Company s reported a net profit ofRr 78.8 crores 41%as against 3 E% of the conespondiog qua(erofthe previous year. For 6 months periodon aconsolidated basis, reported a tumover of Rs 4,3?0 crores as against Rs 5,791 crores and repo(ed net profit ofRs 157 crores as against profit ofRs 225 crores Compared to the balance sheet iterns, , the debt rn fact has come down

by fu ^II 2 crores in second quarter on standalone basis ftom Rs 2,400 crores to Rs 2,28 8 crores ln the second quarter, there is a dividend Payment ofR5 1I0 crores including dividend tax. So, despite the dividend paymert and also despite the pending collechons Aom AP state, the deht has come down because of good collectiom in other states

On the CAPEX:

So ir the ftrst 6 months, the company spent Rs 82 crores on CAPEX. There is no increase in the plant and rnachinery, property, as. whatever depreciation repo(ed, at the same level CAPEX has becn incurred., thereby there is no significant change in the balance sheet items of prop€rty, plant and equipmer . As far as cash flows are concemed in the second quarter on a standalone basis, there is a cash generated from operations by about Rs 210 crores and cash generated fiom investing activities by about Rs 65 crores due to land sale and also the asset sal€ ofTellapur-These are the prirnary reasons for cash genemtion Fom lnvesting activities And the cash used in financing activity is about Rs 337 crores. So in this Rs t t2 crores, we have used for rePayment of the loan Iiom 40 to 5 O crores we have used for futercsr payment and Rs I 10 cror€s we have used for the dividend payment These are the primary reasons for u\$ge of the resou rce in financing activities.

As far as working capital is conceme4 there is no increase in working capital ln fact, decltne has happen€d in working capttal by about Rs 4t crores in second quarter to Rs 3,928 crores' But the workmg capital days have increaied ftom previous level of 158 to 175 days. This is because of the low topline.

So comes to lhe trade receivables, so there N an improvement in tmde rec€i bles in this quarter' Earlier. it stands at Rs 1,155 crores, now has come down to Rs 3,012 crores h the second quaner So there ls a decline by aboutroughlyRs I5O crores. The debt collectior period however stands at l4l days as against 95 days as of 3ln March 2019. So the rcason for hcreased debt collection period is pnmarily due to decline in the topline So these are the remarks on our operations of ihe seconal quarter. So, we will answer f any specrfic questions or clariEcations you require on any of lhe topics related to the second quarter resulLs

Mod.rrtor:	Thank you very much We will now begin the question-and-answer session
Y D Murthy:	One small clarification here.I requestallthe particiPan6 notto ask more than two questions per participant and also, we want to close maximum of 25 participants Participattg ln queshon answer session because ofthe paucrty oftime. Kindly keep this in rmnd and honor our request
Moderrtor	The tustquestion is fiom the line ofshmvan Shah Fom Dolat Capital Please go ahead
Shrrvatr Shrh	Sir, firstly on the EBITDA margilL As you mentioned thele was some claim that for Mumbai, so what was the amount that we have booked in this quarter?

• R S. Raju: There are three projects where we have the extm clainrs pending wilh the client Now the projects are almost 90-95% completed Final bills were cenified- So along withfinal bills, the claims whatever we have lodged, were also certified. About 3l crores from 3 projects fiom Mumbai region relatmg to Nagpur flyover and Pune Metro, flyover. From these works, these claim amouDts have come.
• Shrevan Shah: So. f this would have not been there, then the EBImA ftom 233 crores would have been 203

R. S. Rrju: Yes, you are right.

ShrevAtr Shah: And secondly sir, then ifthat is the case, then why we are reduchg for the firll year EBITDA margin. Last time, we guided fi om l l T% to t2% end now we have said ll.2% to l l 5% So is it also linked to definitely the revenue needed, to ask the questions that *tatever we are seeing 9,500 to 10,000 crores revenue for the full year, so close to 5,600 to 6,000 crores revenre in the second half. First of all, are we able to achieve that revenue and are we seeing any pressure in terms ofthe margin in the second halfl

R- S, Rriu: As far as gross nrargins are concemed, whatever gross margln we reported earlier, whatever we grven explaitring to those kind of goss rnargins, at this moment we are confident to achieve' And what the gross margin now we are explaining related to some projecls' The same thing may not happen, that depends upon prorect to proiect. So in the construction business, always 27'- 3% would be ihere and these margins sometrmes depend upon outcome on certificatioq on admission of lhe claims. So, for lhe second half ye3r, the EBImA rmrgin whatever we given, that margh will be achieved ard it is subject to again the topline The same topline if they achieve m the second quarter, the same level of EBITDA margins remained in As far as gross margins are concemed! whatever we giver gudance, those gross nargins w€ are confident to

Shrrvatr Shah: And sir lastly on the inflow. These 7 months, definitely the inflows are much lower, and we are confident to achieve a 14,000-14,500 crores Just if you can help us in terms of from where' which segments or ftom which state or centml government agencies' are we lookmg to get that kind of significant orders?

R. S. Rrju: See, overall we were a bit unsuccessful in these CIDCO projects lasttime 'xhen they announced, but now turtherbidding is expected in the state ofMaharashtra where we are lookhg ata positive inflow oforde6 and also we ar€ looking at the bullet tsains, though it is delayed ooes again, I think the tendering is postponed to January 2020, but there is a good possrbiliry there also we can get some orders and because we are a major construclion company wtth having strong presence ln the buildings division, on all India basis we are padcipating in various building activities across the states and a good tmcnoD is available and we expect to get some orders in tbe buildrngs division also And likewise, we are already doing the MSRDC road project about Rs 2E5O crores and simrlar orders we lre looking at Participating We were unsuccessfirl in

NCC Umited NCC Limited Novembet 05, 2019

Bundelkhand in UP and also Gorakhpur linl expressway, but we do participate, ard all these thirgs put together give us theconfidence that we will be able to achieve the guidance for FY20 FYl9, we achreved about Rs 25,000 crores oforder accretion in that year, but for FY20, we brought it down to 14,000, no doubt the order accretion was very sluggish m the first quarter mainly because of election and second quarter because ofrains, but now pickup we are seemg and also NIIAI is also planning to award substantial cash contracts in the second half and we will definrtely participate in ihose orders-

Shravan Sheh: And lastly ifl may be permitted, what ktnd ofdebt level we are looking at by end ofFY201 R. S. Rrju: Basirg on the present scenario, we are hoping a fifther reduction m the debt fiom the cunenl

level ofRs 2.200 crores to Rr 1,900 or Rs 1,800 crores

Y D Murthy: Like Iastyear

Moderator: Thanl you The next question N from the line ofMohit Kumar from IDFC Secunties Please go ahead.

Mohit Kumrr: Sir, two questions Firstly, execution has been rather low in the Hl and has the work started moving on the pending GoAP orders esPecially TIDCo orders and how confident are vou for meeting the glidance of95 to lO0% reYenue given that we already in November' do you think ary risk to this revenue guidance?

Y D Murhy: First of all, AP, we are having about Rs 4,350 crores of orders in affordable housing and about Rs 6,600 crores of orders in lhe capital crty and about Rs t, 100 crores of orders other than these tv',o that is ADB tunded and AMRUT projects The ADB and AMRUT projects are goin8 on es per schedule. Payments are also being received. As far as affordable housing is conceme4 the government has called all lhe contractors for discussion- There ale three contsactors involved rn this that is L&T, Shapoorji andNCC who had detailed drscussroos with the govemment They appear to be very keen on taking this projects forward We also wanted them to give an assurance in terms of paying our outshnding bills fast and also give an assumnce in tenns of when the work is completed and bill is certified, the pa)T nent should come within the stipulated timeftame' Now, we are awaiting a cleamnce in the government of AP that has not yet come So we are also car€fully examming. As far as the capital city is concemed, they are focusing on the core capital crty pa(icularly undergound dninage, radial roads and outer ring road and also some building projects for MLA quarters,IAS ofticer quarters etc. vrhere we are executing many ofthem They are also likely to star! but at this point in time we cannot tell at what Point in tlme they are likely to sta( As far as the glidance of revenue of Rs 10,000 crore ls concemed, as you know for the first 6 months, we have done about Rs 4OO0 crore of topline. So, in the rernaioing 6 months, we have lo do Rs 6,000 crores that means aroundRl l,O0O crore amonth that should not be a Imjor problem for us which we have delivered earlier also. In fact, in a quaner we have done as much as Rs 3200 crores lastyear and we are confident that Rs 6000 crore can be easily achieved rnainly because we arc doing some marquee projects lfte the Lucknow airport project, Patna arport

projec! All Indla Institute ofMedical Sciences at three locations and also one Defence housing projectthat rs Seabird, Karwar mKarnataki and the[ MSRDC road project where a hnus clause is there. Client has issued financial closure: payment cycle is good. Now, ihe rains are behind us and for speedy executio& we are fully gefied tbr that AII these things, measures put togeth€r, we have the confidence that in the remaining 6 monllN ofthe curr€nt year, we will be able to achieve Rs 6000 crores oftopline.

Mohil Kumar: My second question is on the tax mtes. Have you opted ior lower tax regime Soing forward ol 25o/n22/. zJl,dlmtt ntch implied taxes on the sale ofland in thls quartefl

R- S. Rrju As far as the lower tax rate is concemed, we have examined and €valuated the process Whal happened here NCC claiming certarn exemptions anddeductions- So when we are clairruDg certain deductrcns, then , when we choose lower rate, we should stop claiming the exenrptions So what kind of exemptions we are claiming, what is the arnount of benefit through those exemptions, all that we have evaluated So now \ e have about Rs 140 crores MAT credit available as per the IT retums submitted including the IT retum for the year lE-19. So to avail Rs l4O crores MAT credit, we should continue in the old mte. So, we have evaluated basing on the evaluation and also basing on the expe€ted outcome on lhe assessment orders allowing whatever we are claiming. Section 80_IB exemptions are there for the affordable housingwhere we are constructing some affordable housing projects. So basing on that, we at this moment intended to continue in the old rate for a while, it is probably I year. So thereby now for the second quarter, we worked out basing on the existing rate. So we agam revisit this subject in the yearly closmg in the month of April-May- At that time, some more clarity will come and some assessments, orders we expect in the December 19 So at that time, agarn we will revrsit and again we will conclude whether going for the new rdte or continuing the old rate for the year 19_ 20.

Mohit Kumrr How much tax paid on the sale of land in this quarter?

R. S. Raiu: Tax, we have not pard.n., We are clalrning some deduction on that transactions

Modcrator Thant you The nexl question is Aom the line of Parikhit KandPal ftom IIDFC securitles Please go ahead.

Parikshit X-sndpal Sir, in AP we have started seeing some movement, the Polavaram project has started now lhrough the reverse bidding mechanism So just wanted your views on ourorderbook ofl2,000 crores- How much protected we are with regards to the reverse bidding?

Y D Munhy As I said, as Sr as the aflordable housing is conc€med, they called us for discussion and the govemment is also apparently is keen on starting the affordable housing projects mainly because the YSRCongess govemment election rnanifesto talks about housmg for the urban Poor as one ofthe manifesto promises and so there is some likelihood ofar improvement commg there but then would not know for sure whethor affordable housing can also b€ subjected to reverse

	bidding, like they have done in Polavaram we are also waiting and *ztching the situation As far as lhe capital city is concemed, the core capitalcity some works have cornmenced. They told us, the MLA quarteN and tAS olficer quarler works have commenced and is likely to continue. Other projects in AP. still there is no clanty.
Parikshit Kandpal:	So on what quantum of the order book still the clarity is not there, I rn€an, leaving aside this affordable housing and rhe MLA quarters a IAS buildings?
Y D Mrrthy	See, in AP, minus the ADB project and AMRtn proiect is about Rs t 1,000 crcres oforderbook is there, comprising of af[ordabte hous ing about Rs 4,300 crores and balance fu 6,600 at capital city. So th is Rs I t,000 crores as of today there is no clarity We are also carefully observing the situation.
Parikshit Ketrdpal:	So just on the Sembcorp, so now at what state ofaftltration we arg I think you were expecting resoluhon somewhere around this nnle, September or October. So what is the status oftha0
Y D Murthy:	Which arbitration are you talking about?
Parikshit Xrndpal:	Sembcorp.
Y D Murthy:	See, both the a itmtors approached the High Coun and because of the volumitrous documenhtior they wanted extension of nme by about 6 monlhs which is apparently granted to them. So the arbitration processes wil I be concluded by March 2020 and thereafter th€ aftitmtion award is likelyto be delivered
Parikshit Kindpal:	Just lastly on this quarter, how much was the contribution fiom the Mumbal-Nagpur expressway to the revenues. this Rs 2800 crores of. - . ?
R. s. Raju:	About 170 crores is the topline rev€nue
Perikshit Krtrdprl:	Okay. Sir, Iirst quaner we have received 38 crores Iiom NCC urban and ftll year we were targetmg close to IOO crores. So we are on target, how much we have received for 2Q?
R S RTJU:	In Q2, we have not received any siSnificant amount we have received the interest antunt In October month again, we received I0 crores. So about totally t00 crores we are confident to get ftom them. And what happened, NCC urban lhey cleared in the Iirst 6 months majority ofthet additional debt. Now they are becomrng free ftom the additioml debt. So now from here onwards. from their intemal cash flows, they l\ant to clear the NCC loan. So they are plaming at least mnimum ofRs 100 crores to pay by March
Parikshit Kendprl:	They have paid already 38 plus t0 you said, so 40?
R. S. Ra.ju	Yes. their other plan is sale ofthe land pockes. If any land pocket sale has happened, theo entire

amounl as tarBeted or as explalned, could be cleared.

Perikshit Katrdpal: This Tellapur land was not part oftheir land Parcel, right, which war sold? That was not. See, they had lands in Kakinada which they watrted to sell and there was a good interest also from ONm But for a variety of reasons, because of this RERA and all, earlier with demonetization, there is slowdown in the real estate sector. So actually ONGC backed out. But there ls a possibility they may come back once again and that is a good deal if it happens, they are like to get at least about Rs 140 crores or so and out ofthat, they can repay the loans for the parent companies. But no!'! keeping that aside, based on the intemal clsh accruals, sale of their apartments and other project assets, they are likely to rePay about Rs 100 crores to us by March 2020 Thank you. The ne)( question is ftom the line of Nisarg Vakharia ftom Lucky Investment Managers. Please go ahead Sir, is it possible for you to quartiry as b how much revenue we would have lost due to the inational rainfall that we have experienced this year in this qua(er? Roughly about Rs 250 crores to Rs 3OO crores to effect on the progress would be there, all projects, very difficult to quantiry. See, m the first quarter we have done Rs 2200 crores. In the nomal course based on the order book and our execution capabilities, we werc expecting second quaner also we would do ^a similar number, Rs 2200 crore or so. But that does not hapPen mainly because of excess rainfall and stoppage ofconstruction activity across the country-Thank you very much. The next question is from the line of Ashish Shah ftom Centrum Broking Lmited Please go ahead. Sir on the margin guidance, I mean I understand that the EBITDA margin will dep€nd on the tumover that we actually do in the second half, but what will be the goss margm guidance, for let us say Q3 and Q4 that one should be looking at because your mix has changed because of which this quarter you also got some benefit ofmargin Gross margin stay about l7o/o to l8%o. Okay. So for the second half turnover, we should build a 177-t8% kind of a gross margtn Secondly on the impairment that we have done during the quarter, on what account is that? NCC IHL's Pondicherry- Tindivanam Tollway Limited is a loss-making comPatry. So, basedon reassessment and also based on compliaoce as Per the accounting standard loan to the PTT by NCCIHL, they made a prcvision Similar provision we rnade in the standalone bookr of Y D Murthy: Modcrator: Nisarg Vakharia: R. s. Rrju Y D Murthy Moderator Ashish Shah: R S. Rrju Ashish Shah R. S. Rrju

R S Raju:	In the books ofNCC, for rhe nnpairment in rhe value fo.lhe invesrment to rhe extent ofRs 16.5
Ashish Shah:	And so that is entirely done now, or something still remains?
R S. Reju	Total loar is over in that account
Ashish Shah	Okay- So {hatever was on account ofPondicherry
R s Rrjr:	Yes. it is done.
Ashish Shrh:	Sir,lastly on the tunding limits ihat we have. So obvrcusly it has been a concem that it a dilficutr to get the limits enhanced. So where do we stand orthat, what are the cunent limits thet we havc in terms offunded and non-funded and whether they have already been enhanced now?
Y D Muthy	You see, there is what is called the assessment of the working capital limits, apprdisal is done bythe leaderand based on thal we will Iile ourapplications with the consortium members, they process EverythiDg will go to the respectNe boards for sanchor and all that. We are looking to enhance the BG limits by about Rs 4000 crores and LC limits by about Rs 300 crores and fund based limits by about Rs 142 crores Already about Rs 1000 crores of BG and LC limts have been tied up and they have been released to us also The balance are in various stages We are looking at the participaung consortium banks to etrhance thet shares ofthe enhancement and also we are looking at new bank to partlcipate, to bring them into the consortiunL particularly banks lfte Bank of Baroda, Bank oflndia, Indian Banlq Exm Bank, BaDk ofMaharashtm who are not part ofthe consortiun! who have already submitted the applications. ln some cases, we already got the NBG clearance also and most likely ln the nexf 2 to 3 nrcnths, some of these banks will come on board and help us ro tie up the balance funding requirements. And as far as the ftnd based limits are concemed, we are not having much difficulty and in fact our requirement also projected to increase by only Rs 142 crores, ftom Rs 2058 crore to Rs 2200 crores. Out of that, alrcady about Rs 30 crores-Rs 40 crores has been tied up and disbursed to us. So that is not arl issue. So what is the critical for us at this point in time is the bank guamntee limits So we are focusing on that and talking to various banks, not only the exrsting banks but also the new banl(s- And now we have substantial limits ofbank guarantee, say about Rs 9000 crores are there. Ard also, we are looking at very careful utiliz tion, retum ofbank guaraotees, cancellation of baDk guarantees etc There is good improvem€nt in that area also- So we are confident for ourbusiness requirements because of our longs tandiog associatio4 many banks in the consortiumwe are dealing with them for the past25 to 30 years. Theysupported as well and so would have grown to this level, that support is going to continue for us and definitely the required financial alsistance for the banking system is going to be available to us.
Ashish Shsh:	So sir, once the hmits are enhanced, we will tre at about Rs 12,000 crores ofBG limits, ls that?

Y D Murthy

Modcrator:	Thank you very much. The next question is from the line of Jiten Rushi fiom BOB Capital Markets. Please go ahead.
Jitcn Rushi:	Sn, I have a few book-keeping questions So I wanted to understand the retentiorN and withheld rhe unbilled revenues, the mobilization advance as on date and what are the receivables stuck in AP as on date sir?
R. S. Rlju	The receivables stuck at AP as on date is of aboul Rs 800 crores. And we have mobilization advance from those protjects about to Rs 500 crores Ifyou net lt off, it comes to the net exposure or receivables is about Rs 300 crores. And you are asking what are the klnd offigures for th€ receivables retention money?
Jit€tr Rushi:	Yes sir. retentions and mobilization advance, total ret€ntion, total mobilization and unbilled revenue total, on standalone basis sir?
R S Raju:	Outstanding is Rs 2,277 E crores at the end ofthe second quarter
Jiten Rushi	Sir, these are the rete ion?
RSR ju	Retention money Rs 22??-8 crores, mobilization advance is fu 1671.4 crores, cash and bank balance is 158-5 crores.
Jitcn Rushi:	Unbilled revenue sir?
R s Rrju	fu 1700 crores, approxmBtely
Jiten Rushi:	And sir what is our total exposure in tems of investments and loans and advances to subsidianes and associates? Canyou give the breakup please?
R S Roiu:	Yes At the end of the second quarter, iovestment in subsidiaries and associates and IVs is Rs 914 9 crores and loans and advances, both long term and short term put together is Rs 537.6 crores. Hence our €xposure to the group companies that is investment plus loans rs 1452.5 crores
Moderator:	Thank you very much Next question is ftom the line of Ankita Shah ftom Elara. Please go ahead
Atrkit. Shrh	Sirjust wanted to understand the status or that MMRC project where there was a stay order for Rs 972 crores and
Y D Murthy:	Actually, the Supreme Court slay does not Pertain to the location where the Metro Bhavan project is coming up which is awarded to us and only the other things, the car shed and other things in that Aarey Milk Colony where tree cuttrng is happening. So we got the clear picrure and in fact we are going ahead with providing the p€rformance guarantees etc and yet other approvals also and stoplled the work So we don't see any problem there

Ankitr Shah	Okay. So otherthan that AP Rs ll00 crores ofprojects where there is no clarity, all other Projects are progressing well?
Y D Murthy:	Yes. Progressing well and as I mentioned many of them are marquee projects and the executron is happenin8 at a faster clip, payment Is not a problem. All are centml government agencies and payment cycle is also good. One defence project l5 there. There also, pa,T nent difficulties are not there- Other than AP, rest ofthe countsy the things are looking good for us.
Ankit, Sh.h	And have we receiyed the bank guarantees given for the projects which were cancelled?
Y D Murthy	Yes, we got it. But unfortunately the performance Suarantee is only 2 5o2. So for Rs 6000 crores, we got back only Rs 150 crores of bank 8larartees, but n€vertheless they have come back and they are ava able for firture projects
Ankitr Shrh	Okay And Just to understand the change m the revenue mlr(, can you please help rn€ with the revenue breakdown, segment wise?
Y D Murthy:	It is more or less the same mamly because bu dings and housing constitute a Predominant portion ofour business. We will give the deta s ofthe execution region wise
R. S Rrju:	for the 6 months penod, Building division rePorted about Rs 1766 crore , 43%, roads Rs 506 crore, l27o; B,ater environment Rs E98 crores, 22%; electrical Rs 469 crore, I t%; inigation Rr 141 crore,3%; mining Rs 146 crore,4%; int€malioral Rs 154 crore,4% and others Rs 22 crores, 1%. The revenue mix what I explained is for 6 months Period
Moderrtor:	Thanl you very much. The next quostion is from the line ofvfthor Singhal ftom Phillipcap'tal Please go ahead.
vibhor Singhrl	sirjust two questions again ftom my side. Sir, one is on the order inflow ftont, sir what we have seen through the year is that, as you mentioned that we missed out on the SIDCO orders in Maharashtra and also m Gorakhpur Express Project and the Bundelkhand one. In Buodelkhand, if I remember correclly, out of6 Packages we had bid only for one package and in other projec6 also sir I think tt is not that the other players have bided very aggressively, the diEereoce between Ll and L2 has not been that great. So any specific reasons that we have missed out in getting those projects in terms of our rnargin expectations being much higher than the otheN or we not bemg present m the area is something which has led to other getting lhose projects vis d-vis we getting those projects?
Y D Murthy:	As far as CIDCO is concemed, there are 4 packages and ihere are 5 bidders including NCC and in this case, all the bids have Sone to local Player, the Bombav baied like L&T' ShaPoo4r, Kapacity and BG Shirke We are unsuccessirl And also, I would lfte to mention to you we never bid for projects aggressively because we want to protect our rnargins. Profit margins are very importert for us and that has been he DNA of this company. We do not bld aggressively'

but definitely we will get our orders with our margins We are having already a comfortable order book also and also you should keeP in mind with these kind of mindset m FYt8, we got Rs 25,000 crores offresh ordels, m FYl9 we got another fu 25,000 crores offresh orders So we are not much worned about order accretion. It is definitely going to pick up in the second halt

• vibhor Sitrghal Sure sir. But I think the concem that comes in is that the Rs 25,000 crores of order inllow that we got in FYIE and 19, I know hey were spread across the counto/, but a large part of those orders did come from our home state which is AP, most of those orders today, we do not have ^a visibility on gefting cancelled. So will we be able io Iill the void that AP orders are not there in this year or nEybe the nexl year or we will not be as much as we basically they were m the last 2 years? The concern is that will we be able to fill that gap which has come up because ofth€ non-existing or slowing do\$'n oforders in AP?
• Y D Murthy Ifyou look at rt, we sta(ed the year with an order book ofRs 41,197 crores.Rs 6076 in AP is cancelled, that means Rs 35,121 crores Now Rs 12,000 crore in AP is not moving that leaves tts with an order book of 23,000 crores irl the rest of the country and many of these are very marquee orders and where executlon is going on- Based on this order book, we ere confident about Rs l0,o0o crores of toplme we will achieve in FY20. Now coming to order accretion in ihe current yefi, I agree because ofelection in the first quartet the tendering process itself got disrupted and some orders were given in the second quarter, but we were not very luclT though we got Metso Bhavan and similar orders. But going forward, order accretion is about to be increasing It should not b€ a problen
• Vibhor sitrghal Slr lastly, what was the cash Inflow ftom the land sale that we did m lhis qua(er on which we booked at Rs 44.25 crores ofprofit on sale of asset. So what was the cash inflow that we got {iom that sale?
• R. S. Raju The entire amount was received Out ofwhich, Rs 33 crores we received by 30d September of l9 and balance \ae leceived m fie Oclober lq.

Yibhor Sitrghrl: So fu lJ crores rn Q2 and balance in October

R. s. Rrju October yes

• Moderator: Thank you very much. Ladies and gentlemen, due to time constraints, that will b€ the last question for today I will now hand the conference over to the management for closing
• Y D Munhv: We thank all the participants for their enthusiastic participation. We tried oul best to answer your questions. If arybody is not able to [5k his questions because of the paucrty of time' you are welcome to call us ard ask your questions or send us an e-mail I hope our e'mail ids are there

with all the participants. I once agair thanl rhe BOB Securities for hosting the conference and grvrng an opportunity to the company to talk to the shareholders Thankyou all.

R S. Raju Thank you all

Modcrator: Thanl you very much. On behalf of BOB Capital Markers Limited that concludes this conference Thant you forjoining us. You may now dsconnectyour l1nes