Cemindia Projects Ltd

Transcript of Analysists / Investors conference call on Unaudited Financial Results for the quarter ended 30th June, 2024. Scrip Code No: 509496 (BSE) / ITDCEM (NSE) In terms of Regulation 30 read with clause 15 of Para A of Part A of Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed the Transcript of Analysists / Investors conference call held on 08th August, 2024 relating to the Unaudited Financial Results for the quarter ended 30th June, 2024. We have uploaded the same on the website of the Company at https://www.itdcem.co.in/wp-content/uploads/2016/06/Concall_Transcript_Q1_FY25_080824.pdf Please acknowledge and take the same on record. Thanking you, Yours faithfully, For ITD Cementation India Limited (RAHUL NEOGI) COMPANY SECRETARY Encl: as above ITD Cementation India Limited Registered & Corporate Office : 9th Floor, Prima Bay, Tower - B, Gate No. 5, Saki Vihar Road, Powai, Mumbai - 400 072. Tel.: 91-22-66931600 Fax : 91-22-66931628 www.itdcem.co.in Corporate Identity Number : L61000M H1978PLC020435 Rahul Neogi Digitally signed by Rahul Neogi Date: 2024.08.12 16:41:18 +05'30'

MR. JAYANTA BASU – MANAGING DIRECTOR, ITD CEMENTATION INDIA LIMITED MR. PRASAD PATWARDHAN – CFO, ITD CEMENTATION INDIA LIMITED MR. RAHUL AGARWAL – INVESTOR RELATIONS, ITD CEMENTATION INDIA LIMITED MODERATOR: MR. MOHIT – ICICI SECURITIES LIMITED

Ladies and gentlemen, good day and welcome to ITD Cementation Q1 FY25 Earnings Conference Call Hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing “*” then “0” on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit from ICICI. Thank you and over to you, sir. Mohit: Thank you, Sumit. Good afternoon. On behalf of ICICI Securities, I welcome you all to the Q1 FY25 Earnings Call of ITD Cementation India Limited. Today, we have with us from the management, Mr. Jayanta Basu - Managing Director, and Mr. Prasad Patwardhan – CFO and Mr. Rahul Agarwal from Investor Relations. Without much delay, I will hand over the call to Management for the “Opening Remarks”, which are followed by Q&A. Thank you and over to you, sir. Prasad Patwardhan: Thank you, Mohit. Good morning, everyone. This is Prasad Patwardhan. And I would like to thank you for joining us on this Q1 FY25 Earnings Call. Before we begin the discussion, I would like to mention that during the call, there could be some forward-looking statements about ITD's business prospects and operations which are subject to several risks and uncertainties, and the actual performance could differ materially from whatever is stated during the call. We declared our Q1 FY25 results yesterday, and I am sure you would have had a chance to go through the numbers. We have reported an excellent set of numbers for this quarter, with the highest-ever operating income of Rs. 2,381 crores, which represents a growth of about 30% on a year-on-year basis. Our EBITDA has come in at Rs. 237 crores which again represents a growth of about 36% on a year-on-year basis and profit after tax, this is the first time when our quarterly profit has reached Rs. 100 crores which is an achievement and a milestone in itself and which represents a growth of nearly 100% on a year-on-year basis. Our debt continues to be within controllable limits and the balance sheet is not at all leveraged. Our net debt to equity ratio is about 0.3x. That is as far as our financial performance is concerned. I will now hand over to our MD – Mr. Jayanta Basu for his initial comments. And then we will take your calls.

Thank you, Prasad and good morning to all of you. And thank you for joining this Con-Call, Q1 FY 24-25. Prasad has mentioned that we had a good set of numbers this quarter. The revenue has crossed Rs. 2300 crores, close to Rs. 2400 crores, which was, a few years back, was whole year turnover. We have achieved in one quarter. And EBITDA is around 10%. Profit after tax also close to 4.2%, which was 3.6% a year back. So, there is improvement in all the parameters. And going forward, we hope that we will be able to maintain the same tempo, because there are not many good jobs in the pipeline. Before I explain about the new job prospect and the which are in pipeline, let me tell you that there are a few jobs which are quite critical for us in terms of the value and size. First of all, Ganga Expressway, we have almost completed 50%-55% of the job. And in the last quarter, we could do more than Rs. 600 crore revenue from a single job in Ganga Expressway, going very well. So, far, there is no problem. Now, because of monsoon, the progress is little muted. But from October, it will again start. So, I hope that within the time we will be able to complete this big road project. Chennai Metro, all the TBMs are working. It is going well. Bangalore Metro underground, the work job completion. In terms of marine job, Udangudi, as you know, our signature project is completed now. We have started a Navy job in East Coast of India, Project Varsha, that started well. Another job in West Coast that is Seabird is also on the verge of completion. And few other jobs, all are going well. Yes, we have a foreign job that is overseas job in Colombo for West Container Terminal. They are also going well. Bangladesh is little temporarily because of the latest issue. But good thing about Bangladesh out of this problem is that we have hardly done anything there. In fact, we should start the job from October this year. So, impact-wise, today we have got nothing to declare because our mobilization also not taking place where we are sitting on the mobilization advance, all people are safe, they have come back. And we will watch the situation how it goes and accordingly we will take our action. Coming back to the future prospect: As we have said many times that our focus is now on the international market, and we are trying our best to get some more job in international market. In domestic also, we have got enough opportunity. Some tenders have submitted, some are in pipeline. So, going forward, work in hand plus work expected, I think we will be able to maintain the same tempo what you see in the first quarter. That is all in the brief, and we are open to any questions. We will be happy to answer them. Thank you.

Thank you very much. We will now begin the question and answer session. The first question is from the line of Rishi Kothari from Pi Square Investments. Please go ahead. Rish Kothari: My first one, primary question was on the Bangladesh project that we right now are, as you know, that's a political battle that is going on in the country. And of course, as you mentioned that we haven't started the project yet. So, in future, let's say, if at all things become stable as it will start to with the project, so what are the possibilities that the project might end up eventually because of the crisis again happening? So, is there any provision that we have made for the project or not? Jayanta Basu: Well, what is going to happen, neither we know, neither you know, because it is not in our control. We have to watch and see. As I mentioned that we have secured the advance, which is with us and we have hardly mobilized. We are just about to start some mobilization, which is stopped now. Provision in the sense we have to see another few days or few weeks how it goes. Our expenditures hardly, we have done any expenditure in that project so far. So, that is what I have to say now. I don't have much, unless we know what is happening in future. Rishi Kothari: So, what is the revenue exposure do we have on the company? Right now the Maritime structure is about Rs. 6,400 crores of exposure. So, what's the percentage of that project Bangladesh can achieve? Jayanta Basu: Yes, for this year, total value of the project is around Rs. 1,500 crores and it is spanning in the three years’ time, roughly 2.5 to 3 years. In this year, we might have considered around Rs. 300 to Rs. 400 crores for this year, ‘24-25. Rishi Kothari: Sorry, I did not get the number in the beginning. How much exposure do we have? Jayanta Basu: Total value is Rs. 1,500 crores, which is spanning 2.5 to 3 years' time. And our estimate progress for these years will be around Rs. 400 crores, Rs. 500 crores, around that. Rishi Kothari: And my second question is on any updates on the parent company stake that has been happening in the market for the company? So, any updates on that front? Jayanta Basu: Update means you know that we have already informed the SEBI that our parent wants to dilute some stake and some process is going on at parent promoter level. So, it is, I think, quite initial stage. And we will come to know once it happens after a few weeks or months. Rishi Kothari: And in terms of the future growth perspective, what are the revenue growth expectations we have for 3-4 years down the line? Any growth number targets? Jayanta Basu: Yes, I think we have maintained growth of 15% to 25% in that range going forward, next year also.

And any margin expansion you are looking at operating level? Right now we are running at about 10% to 11%. Jayanta Basu: I think we have to live with this number. Unless we have overseas market in Indian market, I think that is okay. If you are able to do good, we will be happy. But I think for the time being 10% should be the number you should consider. Rishi Kothari: So, we will maintain the range of 10% to 11% for at least a year or so. Jayanta Basu: Yes, that is the expectation. Moderator: Thank you. The next question is from the line of Pratik Kothari from Unique Portfolio Managers. Please go ahead. Pratik Kothari: The way we have scaled over the last 3-4 years, it's just commendable. So, my first question, in the beginning of your commentary, you did say that Indian jobs are not too many good jobs in domestic markets. Can you highlight and elaborate on that? Jayanta Basu: No, I have not said too many good jobs. I say overseas market is our focus because if you see clearly, two years back, our presence was nil. We started doing some overseas business and we found that it is a good area to work because the contracts are all equitable contracts and margins are good. So, that is the focus we have. That does not mean that the domestic market is bad. Domestic market, we can get the volume and particularly the segment where we work in marine and underground sector. That is always good. Pratik Kothari: In terms of competition or availability of orders pipeline in domestic it stays the same what it was earlier? Jayanta Basu: Yes, competition is there and that is why I said that EBITDA, whatever is there now, it will be around that. Don't expect much from there because we have to secure the job based on the market price. Pratik Kothari: And sir in your annual report, you have mentioned the sentence which says that we are committed to expanding our capabilities and exploring new avenues. So, this is from a geographical perspective or even in terms of the kind of work we do, we are intending to venture out into more things? Jayanta Basu: See basically, we strongly believe that to have better performance, you have to grow inorganic manner because we have enough learning curve of new segments. Now the time has come we have to encash whatever we do good, let us do more. It is geographically increasing the footprint, yes that is the meaning of that.

Earlier our expectations were we would stay at about 3%-3.5% of sales. And I think we have done a fantastic job in bringing this down. So, are these numbers, 2.2%-2.4% of sales, sustainable or is this something specific which is going on? Jayanta Basu: Well, I think Prasad, you can address this. Prasad Patwardhan: No, it is nothing specific. You know, these are operational efficiencies which are kicking in. But as our volume of operations grow and we get new orders, I think there is a possibility that the interest cost could inch up a bit as a percentage of revenue. Pratik Kothari: Anything specific now that the number is so low? Prasad Patwardhan: No, nothing specific. As I said, we got in. This typically happens in Q1, where we get a lot of payment from especially government clients in the month of March. And typically, we use that to reduce our debt. And that impacts our interest costs, especially in Q1. And that is what you have seen in this quarter. Pratik Kothari: Correct. And sir, last one, historically, we have seen that the parent of a company changed multiple times. But in your experience, how do we stand? Whether it's a matter of time or we don't even know if it's going to happen, but if they sell partially or completely, how does that change our organization, our outlook, our approach? Prasad Patwardhan: Well, it will be difficult to comment at this stage. But given what we have seen in the past, it doesn't impact our operations directly. We are not dependent on any funding from the parent or there are no guarantees that the parent has provided for us. So, in terms of operations, we don't expect, as of now, any impact on our day-to-day operations of the company. Pratik Kothari: And in terms of technical confidence, now we can go and apply to any projects on technical grounds? Jayanta Basu: Yes, our present promoter has really helped us during their tenure of the last 20 years or so. And now we know how to handle the tunnel boring machine. We know how to do the airport and some other areas. So, now, today you will see hardly any job we got in the joint venture. So, most of the jobs we are able to do standalone. And Marine, we never went to anybody, it is our own area, so we have been doing marine work for last 30 years or so. So, I think we are now self-sufficient, we don't require much of technical support. Technical support is always required you see. That does not mean it has to come only from the promoter. We can go anywhere else. Technology as much as is required. But per se whatever support we have got from ITD so far, that is not required because we are able to manage within ourselves. Moderator: Thank you. The next question is from the line of Nikhil from Kizuna Capital. Please go ahead.

So, sir, you mentioned that the last two years we have seen a significant ramp up in execution. So, I wanted to understand maybe internally, what's structural changes we would have done to affect this, and also from the environment perspective, what has really helped us in achieving this? Jayanta Basu: We have been doing well for many years. Only thing few one-off job was dragging us down. Otherwise, if you see the execution of other jobs, it is not today or yesterday that we have started doing well. Basically, we are doing well. Our operation team is quite efficient. And most important part is the people team which work for us. They are working with us for many years. They work, they continue to stay. So, those are the factors, and we emphasize putting right people at right location. So, that is also helping us to do better work. Franklin Morris: And sir, in terms of your gross debt equity ratio, current is at 0.6, any guidance which you would like to give? Prasad Patwardhan: It's difficult to give guidance frankly because the debt is a function of our scale of operations and the new orders can be secured. So, our endeavor is to have a lean balance sheet and not let the debt balloon significantly and that is what we keep on working on, but difficult to give a target for the debt number. Moderator: Thank you. The next question is from the line of Nidhi Shah from ICICI Securities. Please go ahead. Nidhi Shah: So, again, on the bid pipeline, I wanted to know what are the projects that we have already bid for in this year and we are looking forward to the announcement of that? And what do you see in the near future bid pipeline, some of the bid projects that could come up in this year? Jayanta Basu: Bid we have submitted, marine we have submitted 4 tenders and 2 of them is domestic; one for the JSW, one for AP Moller at Gujarat and another job we have submitted in Middle East for some client. I don't want to reveal the name. And there are some tender which are working, one for the DP World at Gujarat. Then one job at Vizhinjam which we are already working extension of that, one marine job in SOHAR. So, these are the kind of jobs we have submitted, under submission for the marine. And for metro, all we know, Patna Metro, Indore Metro, everybody is working there. So, these are the few jobs we have submitted so far. Nidhi Shah: Other than marine and metro were there any jobs that has been bid for in this quarter? Jayanta Basu: One job, as I mentioned, that commercial or residential building for CPWD Delhi, where we are already lowest, around 1,900-2,000 crore jobs. Nidhi Shah: And do you see any orders coming up in the highways, bridges, and flyover segment? Jayanta Basu: No, we are not pursuing any job for highways.

And in the coming year, do you wish to participate in any other bridge in this segment? Jayanta Basu: We don't have such a plan now. Nidhi Shah: And lastly, my question would be on the TBM. So, I am able to gather, I might be wrong on this, but that a TBM gets entirely depreciated during one project. So, my question would be on the accounting front. How do you depreciate your TBM? Do you depreciate it over the duration of the project or then do you hold it in your book for say 5 or 10 years? So, what is the policy that you use? Jayanta Basu: This is typically our business secret. How do you expect me to reveal all this? Because everybody knows what is the cost of TBM. If I reveal that how much we depreciate in this project, everybody will know how much I have charged. So, let it be within us. Nidhi Shah: So, I just wanted to know the policy. Do you do it over a couple of years, or do you depreciate in your books or accounts over the project? Jayanta Basu: It depends again. I mean we don't have a policy which is very rigid. The flexible policy based on the bid we are submitting. Based on the market, based on our work in hand, we change our policies. Moderator: Thank you. The next question is from the line of Prateek Bhandari from Arth Ventures. Please go ahead. Prateek Bhandari: Yes, so I just wanted to understand as to where are we anticipating the order book by the year end and what would be the order inflow for the complete year? Jayanta Basu: As I mentioned that Rs. 4000 crores is already there. Balance Rs. 6,000 to Rs. 7000 crores would come, some marine, some underground metro and some building jobs. Prateek Bhandari: So, by year end, we see the order inflow to be around Rs. 14,000- Rs. 15,000? Jayanta Basu: No, 10,000 plus. Prateek Bhandari: Order inflow? Jayanta Basu: Yes, for the whole year. Prateek Bhandari: And where do we see the order book going by the year end? Prasad Patwardhan: That will be a function of the order secured and the execution during the year. We have already given you in the past as well, we have indicated what sort of growth number we are looking at

Just a couple of clarification. The private side order book, which is 35%, primarily it is coming from which segment for us? Prasad Patwardhan: Primarily it is coming from the roads and highways, which is Ganga Expressway. Jayanta Basu: Yes, Ganga Expressway, that is from Adani Group. Then we have got a few jobs from ArcelorMittal. And some more jobs from Adani, Marine and Hydel. Vishal Periwal: And then, I think I just missed that number. The international order book is what percentage of our total? Prasad Patwardhan: It is much less, it's around 7% of our order book. Moderator: Thank you. The next question is from the line of Ashwani Sharma from Emkay Global Financial Services. Please go ahead. Ashwani Sharma: Sir, I am a little new to the company. I just wanted to understand that if you could speak about our core competences in each of our segments, that will help, sir? Jayanta Basu: We work in five verticals and five verticals covers around 10-12 segments and some of them are very good in like marine, that is maritime jobs, port, harbor, construction of jetty, breakwater, flip way like that, ship repairing facilities. Then underground metro, like in various cities we are doing using tunnel boring machine. We are also good in normal tunnel; we call it NAML by drilling and blasting method for roads and railways. We do a lot of building work, either commercial or residential, including airport terminals, that is also core of competency. We are good in road bridges and highways, though our presence in highways was not much, but we are quite good in that. And our core business which we have started with that is a specialized foundation job. We call it diaphragm wall piling. So, those are the areas we work and some jobs in hydel, water, so that's all. Ashwani Sharma: And sir, in the domestic market, typically what is the win ratio across these segments? Jayanta Basu: It varies. I think around 18% to 20% is ours. Ashwani Sharma: And lastly, sir, when you say opportunities in the overseas market, if you could give us which are the geographies where you see this opportunity that you discussed is that if you could talk about the name of the geographies? Jayanta Basu: Mostly neighboring countries like Sri Lanka, Maldives, even Bangladesh. Though Bangladesh is a problem now, but there are opportunities as well. And then East Africa, West Africa and Middle East.

Thank you. The next question is from the line of Nikhil Abhyankar from ICICI Securities. Please go ahead. Nikhil Abhyankar: I just wanted to understand our decision as to why not to bid for road projects. And just to follow up on that, a lot of BoT projects have been approved recently. That is quite a huge opportunity. So, will we be looking to do the EPC part of these BoT projects? Jayanta Basu: Yes, I don't say that we will not go for road project. We have to have a proper assessment of the project because normally what happens, whenever we have a lengthy project, either metro or road, normally in our country, it is very difficult to get the front available within the time. And if you don't have the front, you have got all the resources mobilized, you keep idle and you incur additional cost. So, those are the issues, number one. Number two, road projects involve a lot of local materials to be sourced, like earthwork, which is a big problem because none of the customer or client is ready to supply by themselves. The contractor has to arrange. And unless you are a local player, it is very difficult to arrange. So, that's why those uncertainties are there. So, we have to be very careful. If it is good, we will target some road projects. Nikhil Abhyankar: Since we are already executing an EPC part of the BoT project in UP, there are a few power projects coming up in UP as well. So, will you be looking to participate in that, the EPC portion of it? Jayanta Basu: Yes, why not? As I told you, the parameters that I have just mentioned, if we can fulfill and if you are satisfied, yes, we will target. Moderator: Thank you. The next question is from the line of Sunil Kothari, an individual investor. Please go ahead. Sunil Kothari: Congratulations, Basu sir, Mr. Prasad, for such a wonderful job you people are doing. So, my question to Mr. Basu is during the last 25, 30 years, you've seen almost 3-4 parents changing the way you navigated this company up to this level, you have seen so many challenges of economy and parent side, some domestic demands, some international challenges and domestic challenges also. My question is sir now again our parent is going to be changed, I would just like to take your view what will be your preference, it should be some domestic ownership or international also doesn't make any difference. And second, in terms of technical capability, what your preferences will be for your new parents and in terms of financial strength, does it make any major difference if they are very financially strong owners? Your thoughts will be really helpful sir because you have faced so many parents and you are so strong now. Jayanta Basu: So, I think you have rightly said, we have quite experience in this particular aspect and we are strong now. So, whoever comes, we will be able to manage. I may have many preferences, but there is no point in saying that because whatever is going to happen will happen. So, that doesn't mean that we will not be able to perform. We look after only for this company, our performance.

Yes, Vadhavan Port should be a big opportunity for people like us who do the marine job. The big port is coming up, so somehow or other something will be there for all of us. So, I will not be able to say when it is coming. But basically, I think the ball has started rolling. The first package which has come now is on the BOT basis, that is the dredging part and reclamation part. And hopefully, soon the other packages will come, I think it's a matter of one or two quarters when the tender will come. Jiten Rushi: So, we will not be doing the dredging because we are not exporting that what I understand. Right sir? Jayanta Basu: Yes. I think we can help the company who will get the job if they require, but directly we don't participate for such jobs. Jiten Rushi: So, sir in this Rs. 76,000 – Rs. 80,000 crore project, dredging would be what Rs. 10,000 to Rs. 15,000 crores or will be more? Jayanta Basu: It's a big total value of this Vadhavan Port will be close to Rs. 70,000 crores and dredging itself will be around Rs. 15,000 crores and then breakwater will be another Rs. 10,000 crores in that range. So, big numbers. Jiten Rushi: So, anytime we are eligible for broadly around Rs. 50,000- Rs. 60,000 crores of orders, if we are participating, except for dredging, that is what I understand. Right, sir? Jayanta Basu: Yes. It depends upon how tender they frame. They may frame it in two phases. We don't know, really. So, the total number is like that. Moderator: Thank you. The next question is from the line of Vipul Kumar Shah from Sumangal Investment. Please go ahead. Vipul Kumar Shah: So, my question is, sir, we had several JVs with our parent company, and we were executing several projects through those JVs where equity participation was different for different projects. And basically, all those JVs were due to technical expertise or due to the financial strength of the parent. So, now with the parent company gone, will we not be able to compete in these type of projects? So, what are your thoughts sir? Jayanta Basu: Yes, I clarify it. The last JV we have quoted with a parent company was almost 10, 19 years back. So, today, only one or two JVs are running, which is running means job is almost completed, so final bill etc. going on. Thereafter, whatever job we have submitted or is secured, similar nature of job, even bigger than that, we have done standalone. So, we don't really require their support for us to qualify for such jobs anymore. Vipul Kumar Shah: Technically and financially you can bid on your own sir?