Ladies and gentlemen, good day and welcome to the Ahluwalia Contracts (India) Ltd. Q1 FY 2027 earnings conference call hosted by Ambit Capital Pvt. Ltd. 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 star then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sudeep Bora. Thank you, and over to you, sir. Good evening, everyone. On behalf of Ambit Capital, I thank the management of Ahluwalia Contracts (India) Ltd. for the opportunity to host the Q1 FY 2027 earnings conference call. To discuss the result, I am pleased to welcome Mr. Shobhit Uppal, Deputy Managing Director, Mr. Vikas Ahluwalia, Director, and Mr. Satbeer Singh, Chief Financial Officer. Now I invite the management to take us through the key highlights of the quarter, post which we will open up for Q&A. Thank you, and over to you, sir. Thank you. Good afternoon, everybody. Ahluwalia Contracts (India) Ltd has announced its financial results for Q1 FY 2027. During Q1 FY 2027, the company has achieved a turnover of INR 1,125.81 crore and a PAT of INR 11.42 crore in comparison to a turnover of INR 1,004.88 crores and a PAT of INR 51.11 crore during Q1 FY 2026. The company has registered a growth of 12.03% in turnover and de-growth of 77.65% in PAT during Q1 FY 2027 in comparison to Q1 FY 2026. EPS of the company for Q1 FY 2027 is INR 1.70 compared to EPS of INR 7.63 in Q1 FY 2026. During Q1 FY 2027, the company's EBITDA margin is 4.29%, as compared to 8.59% in Q1 FY 2026, and PAT margin is 1%, as compared to PAT margin of 5.01% in Q1 FY 2026. The primary reasons for the dip in EBITDA margin are as under. There has been a finalization of the bill of the AIIMS Jammu project, which has resulted in a reduction of bill value by INR 29 crore. This is a cause of dispute, and now that the bill has been finalized, the dispute will be raised through an arbitration process. The adverse impact on this account is 2.6% on our EBITDA. Then there has been an adverse impact on account of West Bengal and Assam SIR drive and elections. This has led to a reduction of turnover in the projects that are being executed in these states, and it has impacted in higher IBC costs, thereby impacting our EBITDA margins. Then, during this quarter, labor rates have increased significantly in NCR, which contributes nearly 50% to our total portfolio. The minimum wage increase has been to the tune of about 35% to 40%, spanning over unskilled and skilled categories. This has led to a substantial increase in our wage costs. Then there has been an increase in our staff costs, where we have significantly increased our employee base as we have strengthened the organization, mobilized staff resources for our enlarged project portfolio. The net order book of the company as on 30th June is INR 20,663.52 crore, to be executed over the next three to three and a half years. Total order inflow during FY 2027 till June 30, 2026, as well as up to date is INR 512.81 crore. We are ready to receive questions. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shravan Shah from Dolat Capital. Please go ahead. Hi, sir. Sir, to— Hi, Shravan. Hi. Hi, sir. Sir, to further understand this EBITDA margin, because this is 4.3% is kind of one of the historic lowest margin. I understand you try to explain, but further want to understand in detail. First, you are saying this INR 29 crore for AIIMS Jammu, that the bill which was under dispute, now finalized. So this INR 29 crore we have booked in raw material cost, and which has led to a kind of a 2.6% impact. You can say that. Okay. This is under dispute now after finalization of the bill. As you know, the project was completed last year, and final billing and its checking was under process. Now, during this quarter of Q1, it has been frozen, and now this final bill value has come down by INR 29 crore. Okay. You are right, the costs have been there, but the bill value has come down, the receivables have come down. But the other part, what you highlighted in terms of West Bengal, Assam, and the labor cost increase. In the last call then, when we did, that must be known to you at that time, or this was even post the last con call, this was the thing, and that's why there is a significant impact on the margin. The increase in labor was not known during the last call, and it is a hefty increase. While there is a labor escalation clause in a few of our contracts, quite a few contracts don't have this clause. A lot of our large orders with some large developers, the labor escalation is not there. Post this increase, we have reached out to these clients and submitted claims, if you may say, wherein we are asking for a revision in our item rates, which can lead to compensation on account of the large increase in labor cost. The most significant increase has been in NCR, especially Haryana and U.P., where 50% in NCR, 50% of our order book is in NCR. That is why it hit us in this quarter. Got it. So now, given these things we know, in Q2, do we see how much the clients have agreed to compensate or still it will take time? How one can look at our net in Q2, will the similar margin or can we Because we were looking at double- digit, when can we start seeing a double- digit from Q3 itself? So for full- year, how one can look at the margins? So look, there are a number of external factors, one being this radical increase in pricing by the government of Haryana and the government of U.P. So it is not possible for us to put a date as to when we will be compensated, whether it will be in Q2. But we expect that over the next two quarters, some of this compensation will start flowing in. Having answered the first part of your question. The second part, Q3, again, we are hearing rumors about NGT or the impact on account of NGT, government of Delhi and Haryana looking to take stringent measures. While nothing is still out, is there in black and white. But we can't quantify the impact on our EBITDA of the potential NGT impact. So I cannot tell you whether we will be hitting the double- digit in Q3. Q3 is likely to be impacted by NGT. How much? We cannot give you an indication today. So at current juncture, what do you think that the what kind of a margin we can look at, let's say, for the full- year or maybe Q3, or when can we start seeing a double- digit from Q1 FY 2028, or still it will be a difficult, maybe a one-off? This year, there have been a few black swan events. One, of course, has been the war. Second, of course, has been this labor pricing has impacted us in a major way because a couple of our projects, the labor factors as it is are higher because some materials are being supplied by the client or clients. So it would be fair to say that this financial year, we are ruling out having a double-digit EBITDA margin. But at what max number one can look at, let's say, if I have to look at other way, how max, because as you highlighted Q3 also. Look, Q2 is an aberration. Primarily, as I said, 2.6 percentage points have been shaved off because of, one, this thing, and that also, it's something that the client at one time had agreed, and now for various reasons, they've gone back on it. We are already looking at We are starting arbitration proceedings. So, whatever we had, what was there in Q1 of the last financial year, we are hoping that we would get back to those margins over the next three quarters. The effect of NGT, that is a rider that I'm putting here. We are unaware how much that is going to contribute or hit our margins. This in any way is also impacting the execution. So whatever we were looking at 15%-20% growth for this year, any similar number for FY 2028. So is there any change on the lower side? No, there has been a top-line growth this time around. We still feel that we will grow at about 12%-15% top-line growth. As per the historical EBITDA margin over the past couple of years, we should be there and thereabouts. Okay. Some balance sheet numbers, sir. Sir, if you can provide— Yes —inventory data. Yeah, inventory data, trade payable. This is INR 776 crore. INR 776 crore? Yes. That is the debtors. Pardon? That is the debtors we want. Debtors. Trade receivable is INR 776 crore, you say? INR 776 crore trade payable, and debtors is INR 632 crore, and retention is INR 401 crore. Sorry, how much you said retention is? Retention INR 401 crore. INR 401 crore. Inventory is? Inventory, including real estate inventory, INR 391 crore. INR 391 crore. Mobilization and unbilled revenue? Mobilization INR 924 crore, unbilled revenue INR 946 crore. INR 946 crore. Hold on. Okay. That is also sharp increase. Gross debt and the cash? Debt is INR 2 crore, hardly. INR 2.28 lakhs. Yeah. Including cash and bank balance, it is INR 920 crore. INR 920 crore. Thank you, sir. Thank you. Thank you. The next question is from the line of Vaibhav Shah from JM Financial. Please go ahead. Sir, we saw a sharp increase in interest cost in the first quarter. The reason for that and could this be a recurring number in coming quarters? This is the increase in finance cost due to, we are aware that mobilization advanced during this quarter for the new project, Central Vista project. That is why there is increase in finance cost. In coming quarters, it should be a similar number every quarter, INR 15 crore-INR 16 crore? Yes. Interest only 8%. Interest is 8%, but that more proportion. It will be a similar number. Similar number. Amount will be similar. Okay. And sir, out of mobilization advance of INR 924 crore, what is the interest-bearing portion and the interest rate? This is 31%. And the interest rate? Interest rate, you might say, around average 8%. Okay. Sir, secondly, on Gems & Jewellery Park, what are the challenges which you are facing and when can the work on the ground begin? And what is the revenue expectation on the project in this year and next year? So, there is a change in design or requirement happening from the client side. That is why our architectural designing has been done, but that is undergoing a change. So I think work on the ground will not happen in this quarter. It is likely to begin in quarter three, and we are looking at a billing of about INR 100 crore in this financial year. Yes, sir. Sir, next year? Next year, the billing should be to tune about INR 450 crore. What is the timeframe of completion for the project? It is three and a half years. And sir, on the CSG project, we have not seen that kind of pickup even in the first quarter. How do you see the revenue moving in over there into this year and next year? We are looking at an average billing in the nine months after the first quarter to tune of about INR 40 crore- INR 45 crore. That is roughly a billing of about INR 450 crore. INR 450 crore. INR 400 crore to INR 450 crore in this financial year, which will be ramped- up to about INR 700 crore in the next year. Sir, what is the main challenge over here? Earlier, we were targeting close to INR 600 crore in this year. What is stopping us from doing that? We are hopeful that we will still touch about INR 500 crore. As I said, we have done about INR 70 crore in this quarter, and if we do about INR 450 crore in the balance nine months, we are hoping to cross INR 500 crore here. As I said— Any project-specific issues? Sorry? Any project-specific issues over there? No. The project is basically divided in two parts: one is the platforms and the station area, and the other is the new buildings which are coming up. Work on the new buildings, which is the LD Node, DRM building. The DRM building has started. LD Node will start now. The client is approving in stages. That's why the work cannot be taken up all at one go. As far as the platforms and station areas go, there we get blocks as per the traffic. That is why it is taking time. Okay. And sir, lastly, on Central Vistas, how is work on ground going, and what revenue are we targeting for 2027 and 2028? FY 2027 work, let me first tell you, there are two buildings which were to be broken there, Nirman Bhawan and Udyog Bhawan. Nirman Bhawan completely broken, the foundation casting has begun, and in September, we will start erecting the structural steel. Udyog Bhawan was handed over to us about three weeks ago, and 90% of that has been demolished. The demolition will be completed in the next 15 days, and we have started the excavation work. A month from now, the foundation works will start in that area also. We are looking at a billing of about INR 700 crore in this financial year. And sir, next year? Next year, it would be about INR 1,000 crore. Okay. And sir, you mentioned that— We are looking to complete the building which we started where Nirman Bhawan existed, which is about 50% of the job. We are looking to commission it by the end of next year. The entire project should be completed in FY 2029? Entire project will be completed in FY 2029, yes. Sir, on revenue, you mentioned 12%-15% growth, right? So we are lowering the guidance— Yeah —from the previous call. It was 15%. We are sticking to that. Okay. As I said, the lower 12%. The NGT is something which we are not sure about what impact that is going to cause. That is why. If it is similar to what happened last year, then we may cross 15%. Yes. Okay. Thank you, sir. Thank you. Thank you. The next question is from the line of Sandip Sabharwal from asksandipsabharwal.com. Please go ahead. Yes. I think your last conference call happened 15 days after the end of the previous quarter. It is very difficult to believe that you did not know the impact of the new labor charges, et cetera, and what impact it will have on your first quarter results. Because your results and con calls typically happen 45 days, last day of the results season. I have been observing that you have been giving guidance on growth, on margins, et cetera, last many quarters. But I think those have no relevance actually, because the numbers which come out are totally different. Have you any comments to offer on that? It is a very generic observation that you have given. You have some data? Or we can have a separate meeting, our CFO can meet you. I would like to think that we have been more or less in line with the guidance that I have been giving over the past three, four years, post-COVID. If you could be a little more specific. At the beginning of the year While I agree. No, let me complete. Let me address the first part of your query, that whether I was aware or whether we were aware of the impact of the price escalation on account of labor when we did our last Investor call. Are you insinuating that I was aware and I hid that? There is no— Or do you have some specific data which you want an answer from me to? No. Your last conference call happened 45 days after the end of the previous quarter. You, I think, had a call around the 15th or 16th of May. Okay. Are you saying that the new labor charges were imposed on you after 15th of May or before 15th of May? Was the impact If you know the— for the full month or full quarter or half of the quarter? If you know the nature of our business, if you track this industry, you would know that April, May, June, are traditionally that part of the calendar year where labor is in extreme short supply on account of various factors. This quarter, this was further exacerbated by a slew of festivals, especially Muslim festivals. 50%- 60% of our labor, skilled labor, or 80% of our skilled labor is Muslim. Right? So the impact on the ground was felt much more, which was very difficult to predict. Especially in NCR, especially in Haryana and U.P., where government further compounded this issue by increasing the labor cost by 35%-40% between skilled and unskilled. It was very difficult for us to predict the impact on our costs. Have I spelled out the position clearly? No, not really. Because when was the increase in labor cost done for you? Was it from 1st of April? It's an ongoing process. Then you are not understanding. Then it seems you've not tracked this industry. Please understand, what we are paying today on the ground to a bar binder or a carpenter or a mason, that is totally based on demand and supply, and in most cases, over the past two months, it has been more than what the government has mandated. It's a demand and supply issue. If you track this industry, you would know that. If you don't, we would be more than willing to meet up with you and give you a refresher course. No, I don't need a refresher course. There's no need for you to become aggressive on the call. It's a- No, I am just telling you. You are insinuating. Your first question that you asked me, you are insinuating that I have hidden some facts. I did not. You need to articulate better your questions. No, I said you have a call middle of the quarter. By that time, you should have a fair idea of what is happening in that quarter. If you do not have a fair idea of what is happening in that quarter, then any kind of guidance is of no relevance. Look, I know what guidance I am giving. It is your prerogative to agree to it, believe it or not believe it. I am willing to invest more time with you and trying to take you through what impacts my costs on the ground. You are the one who is saying you don't need it. What more do you expect from me? No, I don't think. Anyway, let it be. Let's move on. Thank you. The next question is from the line of Vishal Periwal from PL Capital. Please go ahead. Yes, sir. Thanks for the opportunity. Hi, Vishal. Yeah. Thanks, sir. Sir, on this labor, whenever these changes happen, can this be considered more like a GST-related changes, a change of law? Will this become applicable? And then same can be passed on to our clients? This is not considered as a statutory increase. While if a certain component of the increase, say if the PF was getting increased, tantamount of that would be taken as a statutory increase, which the clients would have to necessarily bear. In terms of increase by the government, it is not a statutory increase, I said. But having said that, we are still writing to all our clients and telling them that this increase, coupled with the demand and supply issue. Today, labor has become a big issue. Especially over the last two and a half months, all our projects, especially in NCR, have been operating at 40%-50% labor strength. So we have reached out to our clients, and they have been sympathetic in at least listening to or going through the numbers that we are presenting to them as to the impact on our costs. We are hopeful that the projects which do not have a labor escalation clause with some of our larger clients in NCR, client will consider compensating us to some extent. Okay. From accounting point of view, the employee cost that we book in our P&L, does this have an impact of labor? Or it is only the HO related and other things which is part of the employee cost? Say INR 1 crore-INR 2 crore in this quarter. He can employ. He has. We can go on to that. To the extent that such labor is employed by the company, rest, it is included therein. What is not employed and they are into contractors or labor suppliers, that is in the subcontractor or labor costs. Okay. From the P&L, it looks like, I think, probably a INR 30 crore kind of impact, which is coming from the AIIMS. If it is getting booked somewhere in the raw material and subcontracting where the labor cost is also there, then that explains probably the INR 30 crore impact. The other impact is the employee cost increase. That is impacting much more to our P&L. I think that is what I could gather. That you already answered. One is that INR 30 crore. There is actually a threefold impact on our EBITDA. One is that INR 30 crore. The other is broadly split up into our increased staff cost and increased labor cost. Okay. Maybe one last thing, in terms of the employee cost, is there any one-off in terms of any bonuses or anything that has happened? It is more like a recurring employee cost kind of thing. No, it is just this, that this should rationalize over the next three quarters because we have ramped- up considerably on account of our large projects like Central Vista starting or The Dahlias starting. These are large projects. One is a INR 3,000+ crore project, one is a INR 2,000 crore+ project. Also, another project for DLF, which is DLF Downtown, which is also INR 1,600 crore- INR 1,700 crore project. That project has been delayed owing to design changes. So there, the timeline, the client is looking to compress timelines. We have further ramped- up our mobilization in terms of our staffing there. So these large projects, so to say, as their turnover from these projects or their contribution to top line increases, the percentage-wise staff cost will rationalize. Okay. I think that is all from my side, sir. Thank you very much. Thank you. Thank you. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead. Hello. Sir, currently the L1, last time we said INR 1,621 crore, the hospital in Delhi and Odisha Government University, Bhubaneswar. Out of that, which one got converted into LOA and— No, the university, they were asking us to increase our bid validity. We refused, because that was a fixed price contract. Seeing the volatility and the increase in cost at the ground level, we refused. That has fallen through. That is no longer live now. RML continues to be live. Okay. So INR 512 crore inflow for this quarter is different from the RML, which is still L1, or that is the one which got converted into RML is still L1. RML has not translated into work order as yet. Okay. So this INR 512 crore is different from that. Okay. So RML value is INR 700 crore-INR 600 crore? No, RML is INR 500 crore. INR 500 crore. INR 500 crore. Okay. Then full- year, what we guided in terms of inflow, INR 8,000 crore, so that remains intact? No. To be frank, we are no longer very aggressive. That should come down. Because this volatility, both in terms of material prices as well as labor prices, we are looking for this to stabilize. As it is, our order book is INR 20,000 crore +. We are being conservative as far as the rest of this year is concerned in our approach towards picking up new orders. Maybe INR 4,000 crore-INR 5,000 crore for full- year we can Yes, yes. Okay, got it. Currently, in terms of the bid pipeline, that will also will be now reduced, should be a INR 5,000 crore-INR 6,000 crore? What I am saying is our bid pipeline, the visibility is there. We will bid only, and we will factor in. We will not be very aggressive. We will factor in the ground realities and these fluctuations, and then bid. We will not bid very aggressively. Okay. Got it. Currently, from the total order book, INR 20,000 crore +, 11%-12% will be the fixed price contract? Yes. 10.34%. 10.34%. Okay. CapEx in Q1, how much we have done? For full- year, we were looking at INR 300 crore. There also, any slowdown in terms of the CapEx? Yeah. We are looking to reduce the CapEx for the— For INR 60 crore. This quarter was INR 60 crore, so that full- year, we will reduce it to anywhere between INR 220 crore to INR 260 crore. Okay. But overall, in terms of at that working capital level, from here on, do we see some further pressure will be there, or it will remain here, or can improve by year-end? We are expecting in this quarter that to be reduced from the existing level. That project is to 119 days, and because we are getting money from the Assam regions, and that we are expecting that to be at previous quarters level. Okay. Got it. Thank you, sir. Thank you. Thank you. The next question is from the line of Parvez Qazi from Nuvama Group. Please go ahead. Hi. Good afternoon, sir. Hi. Good afternoon. Thanks for taking my question. Hi. Yeah. The external environment is challenging. There is no doubt about it, both on execution and on the cost front. The first question is, we have a relatively lower proportion of fixed price contract at about 10-odd%, but in general, how have or how has commodity price volatility been over the last, let's say, 5- odd% months since the Iran war started? And on the ground, how difficult or easy has it been to navigate through these challenges? As I mentioned earlier, we are facing the brunt both on account of materials and labor. While labor, I have answered in detail as the questions have been asked since the call began. As far as the material is concerned, its impact is on two counts. One is the price increase, and second is the supply chain getting impacted in terms of the delivery getting impacted because of the war. That has also led to, let me give you an example. Now, we buy a lot of panels, which run into many, many crores. The switchgear is not available. So delivery, which used to take four to six weeks, is now taking three to four months. That is impacting our performance on the ground also. While in between, whenever there was a call for ceasefire or news of ceasefire happening, the prices used to stabilize, but the impact, it has been up and down. So this quarter has been impacted by that also. Coming back to some of our large contracts and labor specifically, for instance, DLF, there have been changes in design at The Dahlias, which is one of our largest projects. That has also contributed to lesser work being done in this quarter on that project. Our IBC costs have also impacted our margins there. So these are some things which have sort of hit us as far as this quarter is concerned. Having said that, geographically, these projects are in NCR. NCR seems to have borne the brunt as far as supply chain issues are concerned also, and labor price increase is concerned also. Hopefully, going forward, I think now that these projects have started in real earnest, we are targeting a billing of, as I said, nearly INR 30 crore-INR 35 crore every month from The Dahlias. We are targeting a billing of close to INR 60 crore from Central Vista. We are targeting a billing of INR 25 crore-INR 30 crores from DLF Downtown, where design issues also seem to be a thing of the past. So, I think the increased turnover from these projects should sort of help us in sort of getting back to the margins that we were showing over the past couple of years. Sure. Secondly, in terms of payments, et cetera, how are things today vis-a-vis, let us say, what they were six months back, specifically with regards to central government, state government, et cetera? Central government projects payments are not an issue. Central Vista just started. We are doing Varanasi, Darbhanga. These are Airports Authority of India projects. There is a project that we are doing, which is a central university in Himachal, where we haven't been paid for the last five months because the project has gone over budget. Our bills are lying certified, but the payments are not coming through. Other than that one project, central government projects, we are not having any issue. State government, as Satbeer mentioned, Assam, due to elections, our bills were not getting signed off and payments were not coming. But as of 15 days ago, that process also seems to be getting streamlined, and we have started receiving major chunks of our outstanding dues. Sure. Lastly, when we look at the business over the last three, four years, in general, one would say volatility has increased in terms of, labor is a perpetual problem. But whether it is NGT, whether it's supply chain issue or even approvals, et cetera, those have become difficult, and it is impacting everyone. How are we kind of incorporating it in our risk management framework, especially when bidding for newer projects so that we can at least contain the impact of some of these issues in future projects? One thing, the more obvious thing that our experience over the last year and a half, whatever the impact on our bottom line we have seen, the empirical data shows we are actually now putting that as a part of our costing while bidding for future tenders. Say, for instance, we know there is a huge shortage of carpenters, bar binders, as I mentioned earlier. Our bid prices are now incorporating this. We have virtually doubled our shuttering prices or steel prices and other such similar items where labor is in extreme short supply. Secondly, we are seeing that staff cost, this has become the new normal. Our project staff cost used to be about 3.5%- 4%- 4.5%. Now, with extreme increased focus on safety measures, especially with large developers and even government clients, our safety budget we have increased from about 1 percentage point to nearly 3 percentage points. Our staff cost, we have now started taking in excess of 5%. All this is being incorporated in our bids going forward. We feel that this is something that all large construction companies have begun doing. This is how we feel going forward in our newer jobs, getting these higher rates, quoting and getting these higher rates will help us get back to our historical high margins. Sure, sir. Thanks and all the best. Thank you. Thank you. The next question is from the line of Jainam Shah from Equirus Securities. Please go ahead. Mr. Shah, your line has been unmuted. Please go ahead with your question. Yeah. Hi, can you hear me now? Yes. Yeah, somewhat. Yeah. My question is on the AIIMS Jammu part. Of course, INR 29 crore has not been recognized into the revenue. Do we have anything in terms of unbilled revenue or inventory or any other asset item related to this income that you were talking about? In Jammu, for Jammu project? Yeah. No. That project is now closed. Okay, so we have booked everything in the expense, but this INR 29 crore has not been recognized into the revenue because of some issue. Yeah. So I think what you seem to be asking is: Is there a potential for any further hit? No. Got it. Yeah. Thank you so much, sir. Thank you. The next question is from the line of Parth Thakkar from JM Financial. Please go ahead. Thank you for the opportunity. Sir, depreciation was higher in the first quarter. Can we expect this to be recurring in the nature, or it was just a one-time thing? Yes, that would be recurring because the higher capital expenditure in the last two, three years, that now that would be recurring. Okay. Can we expect the margins to be double-digit in FY 2028? In FY? FY 2028. Next financial year. Yes. As I said, we aspire to get there, and we are hopefully, whatever our empirical data has shown us over the last year and a half, we are trying to factor that in our costing and bidding. Your guess is as good as mine, but as Parvez said, and Shravan also said, this is becoming a number of issues which keep cropping up, like the NGT or labor shortage for that matter. Elections. Elections around the year in some part of the country or the other. There are a number of headwinds which sort of, two, three years ago, these used to be occurring only one or two months in a year. Now, something or the other happens every other month. It is very difficult to give a projection or prediction. Okay. Thank you, sir. Those were my questions. Thank you. The next question is from the line of Mahesh Patil from ICICI Securities. Please go ahead. Yeah. Hi, sir. Sir, mostly my questions have been answered. Just one query. I think last call we discussed that 89% of our order book has escalation clause for the materials, right? In terms of labor also, can we quantify it? In how much percentage of our order book value do we have this clause and for the remaining, we have to kind of get it done, especially for NCR. We don't have that data as of now, but you can reach out to Satbeer. We will get back to you on that. You may send mail to me, please. Okay, sir. Thanks. Thank you. Thank you. The next question is from the line of Shubham Harne from Purnartha Investment Advisers. Please go ahead. Hi, sir. Thanks for the opportunity. My first question is how many months of increased labor cost impact is in numbers? Sorry, I do not understand your question. Could you clarify? Labor cost increase is in mid of the quarter, let's say for one month or one and a half month, we got impacted by increased labor cost. It is a one-month or two-month time period or for the whole quarter No. labor cost has been increased? No. Whole quarter and going forward, the labor cost, once the labor price gets increased, it doesn't come back down. No, that's clear to me. But in the current quarter, for the whole three months, increased labor cost is there? For the quarter, three months, yes. It is. Okay. This would be a new base? Yes. Okay. Second on NGT impact. In last con call, you have said that Defense Central Vista will start, so NGT impact would be minimum for the current year. Yeah. Now you are saying that— On that particular project, that work will go on there. The impact will only be limited to if at all, because we are trying to get special permissions, will be limited to raw material coming in from other parts of the country. Okay. Earlier also, the same assumption would work there, correct? Yes. Central Vista, the work per se on the ground does not stop. Can you move labor from other projects in NCR to Central Vista? We will definitely do that. Got it. My last question is on EBITDA margin. 2.6% impact is roughly due to AIIMS Jammu issue, 2.6%, while the rest is of raw material and increased labor cost. Correct? There is nothing else. Increased staffing cost also. Okay. Increased staffing and labor cost will continue, and material price will vary, basically. Yes. As material price will vary and a lot of material costs or volatile material cost is a passthrough, like cement, steel. That's a passthrough. The major impact, which is what I've been stressing from the beginning of the call, is on account of labor. Got it. Since this increased material cost, what is the time lag between increased cost and what usually our customers will give that increased labor cost to us? I think I did say earlier that it would take over the next two quarters for the client to agree or get the client to agree to compensate us. No, material cost, so already client has agreed, correct? That is a passthrough. On material cost, what is the time lag? What is the time lag to that passthrough? There are two formulae for this. On the private sector side, there is a base price for cement and steel. Any increase from that base price is compensated to us with every bill. The lag is about 30 days. Right? Okay. As regards the government contracts, the escalation is based on wholesale price index, which is released every quarter. Every quarter an escalation bill is proffered and based on the index published, the government pays. Got it. Thank you, sir. Thank you. Thank you. The next question is from the line of Vaibhav Shah from JM Financial. Please go ahead. Yeah. Just one thing, you mentioned initially in the call that you are in talks with the clients regarding this higher labor cost. So it is for the 90% of the book, which is variable price in nature? Primarily, we are in talks with our clients in NCR. Few of our large, where the impact has been sizable. We are sort of talking to them, showing them what the actual costs are and telling them that it will be very difficult for us to continue to work on old pricing. Sir, but if they don't agree, it is not necessary they may comply to this, right? Or it is in the clause- I agree with you. Contractually, strictly going by the contract, they may not. Okay. We know that the labor rates are here to stay. You mentioned that you don't expect it to come back down once they are increased now. So in that case, for the NCR book, there could be a sizable impact on the margins from where we had bidded when we won the project? So wherever the impact is sizable, we have already told the client that. So there are two parts to this compensation. One is for the job already executed in this quarter, where the impact has already been felt by us. The other is going forward and the potential for the impact on the balance contract. So we are telling the client, we are giving them various options that, one is the impact till now. They are within their rights to say no. Going forward, we are telling them that either they agree to supply the labor. There are various options that we are discussing with them. All I can say at this stage is that the clients are looking at what we are saying favorably. Because they have realized that today one major thing which can make or mar a project is labor. Labor is in extreme, especially skilled labor is in extreme short supply. Okay. Got it, sir. Okay. Thank you. Yeah. Thank you. The next question is from the line of Madhur Rathi from CounterCyclic Investments. Please go ahead. Sir, I am trying to understand that due to one reason or the other, if we look at our numbers, till FY 2024 the growth was really strong Sir, but after that, even though our unexecuted order book has doubled over the last two years, the execution is just not moving due to either labor or this or that, sir, but basically labor is a core thing. It is a part of our business. If there is a shortage and everything, NGT and so on, sir, these are all routine matters. Now, sir, the concern is I hope it is not the case that we will have to pay some penalty to our customers for not executing the projects on time. Ahluwalia has not paid any penalty to any customer. If you were to go through, we would be more than happy to share historical data, especially over the last two years or three years, where projects have been delayed, but it has been amply proven and accepted by the client that they have been delayed for no fault of ours. It is not only Ahluwalia Contracts. If you were to do a deep dive into the historical project completion dates of all our peers, you will see there are a number of factors leading to headwinds as far as project execution is concerned. Labor is one thing, and this labor shortage has been building up over the last four, five, six, seven years. Projects have become more and more complex. Projects have increased in scale. There are changes happening as we move along executing a project on a month-to-month basis from the client side, which clients are recognizing. That is why extension of time is granted on projects, be it on private projects or government sector projects. If you have been covering this sector, you would know all this is a part and parcel of this industry. When we bid for a project, we factor in some delays. But as I said, there have been a few black swan events over the last two to three years, which are part of the historical data. The impact that has been felt on our bottom- line has been more than we could have predicted. It is not only us. If you do a peer-to-peer comparison, I think we have been showing better numbers than some of our peers. Now, sir, if we compare B. L. Kashyap, which operates in our geography, is a fraction of our size, has balance sheet nowhere compared to us, drowning in debt, sir, they have grown in the first quarter. Their EBITDA actually has also grown. I am not able to understand in the— Their base is very small. What I am trying to tell you is you do a comparison which is spread over a larger tract of time. You do a comparison with, say, if you want to do B. L. Kashyap, compare the results for the last two years at least. Their base is very small. When we were at that base, our margins were, as some of your peers would tell you, our margins were 12%- 13%. Sir, in fact, that was my another question that I remember that few years back when I had asked that why our margins have declined from low- teens to single- digits. So you had said that once the private sector orders become the majority of our order book, then our margins will expand to the previous levels of low- teens. Sir, but now our private sector is 62% of our order book, but still our margins have actually declined to single- digits. As I said, there are a number of factors or newer factors which have cropped up in the last two, three, four years, labor shortage being one, and as I said, the projects have become much more complex, increased staffing costs and other IBC costs. These are some things which have hit our margins, which are leading us to going forward, when we are bidding for large projects, we are factoring the same. Sir, now lastly, sir, if you look at our stock price since 2008 till now, then the stock price was INR 350, today it is INR 795. So the stock price has grown at less than 5% CAGR, and there have been no dividends also. Sir, so after such a huge underperformance also, we have a cash-rich balance sheet. The stock price has halved since FY [inaudible] We are a dividend-paying company. I think we have been paying dividends for the last three to four years. Sir, it is 0.07% dividend yield. It is practically irrelevant. My point is different, sir. My point is that when our stock price has grown at sub 5% CAGR for the past 18 years, and we have surplus cash on balance sheet, then why are not we doing share buyback? I think I had answered this question during the last conference call. This sector is facing extreme volatility. Our focus is on growing our business. We do not want to use our war chest to buy back our share. At the moment, we want to, going forward, as it is, we are at an inflection point. We are growing rapidly. We have a healthy order book. We want to digitize. We want to become more efficient. We want to invest in machinery to counter or offset the labor paucity. All that, share buyback is not really on the anvil for us. It is not a part of our plan. I did explain this in detail last time around also. Understood, sir. Thank you very much. Thank you. Thank you. The next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead. Yeah. Hi, Shobhit. Hi, Parikshit. Yeah. My question is more on industry and generic question. On the NCR market, there is 50% of our order book. I just wanted to understand how much of our labor cost or how many laborers are deployed in that market. Are all these laborers currently at minimum wages because you said that there is a demand supply issue also, so I would understand that there would be a certain portion of the labor which will be above the minimum wages. If you can help us understand the quantification in terms of how many would be at just about the minimum wages, how many above that, and what was the total quantifiable impact in terms of crores on the profitability or the EBITDA in this quarter because of labor issue in NCR? Okay. Just to put a number, this may not be extremely accurate, but it would be there and thereabout. We would have close to about 10,000 to 12,000 people working for us, which I would categorize as labor, both unskilled and skilled. Now, 70% of this labor would be skilled, which would constitute the bar binders, carpenters, masons, electricians, plumbers, and so on and so forth. While the unskilled labor would be at the threshold of the minimum wage, the skilled labor would be in excess of that, excess of the skilled wage declared by the government. It is the skilled labor which is in extreme short supply. Demand and supply conundrum that I mentioned. The impact on our projects in NCR per se would vary on our total top- line. I am talking about the impact. Again, detailed figures, Satbeer can get back to you on if you write to him, but it could vary from 2% on some projects to about 5% of the turnover where the material is free issue by the client. So you are saying in this quarter, particularly in this quarter, what is the quantifiable impact on EBITDA because of the labor increase, the minimum wage? At a company level, it is about a percentage and a half, 1.5%. This is permanent in nature. We start off, if there is no escalation given on this account from the customer. We have a 150 basis point hit on the NCR order book because of the labor issues as of now. Is it the right assumption? There will be a hit if there is no escalation given, but it would be to the tune of about 1%, because in some of these contracts, escalation is a pass-through, and some of the contracts, the escalation kicks in after a certain amount of time has elapsed on a particular project, which varies from six months to a year. Max damage is about 100 basis point if the client doesn't give us any escalation. We have a hit of about 100 basis points. I think we took a lot of time debating this. I think if this was quantified, it would have been helpful earlier. How do you intend to cover up this, like productivity, cost savings, other measures? How much do you think if the client doesn't give us any escalation, any off days, any growth which will come in? Do you think you can cover a part of this damage? Again, what is happening, as I said earlier, client is recognizing this. What client is doing, while we feel on some of the projects, some of our larger clients will look at this favorably, but even if they do not, what they have already started doing, the Godrej of this world, the DLF of this world, the Signature Global of this world, they have started announcing incentives which are linked to progress or stage-wise timely completion. You cast a certain number of slabs in a month, they give incentive. Which to some extent may offset some of these higher costs. You will gain a part of it through the productivity gains or the site levels, which could be ahead of schedule. Exactly. Yeah. Part of that could be— That is why a lot of you, as I mentioned earlier, should be more than open to share. You should do a deep dive. This labor problem is a huge problem, right? Yeah. While some of us. I am sure you cover this sector and you have been doing it for a number of years. We would be more than happy to take you to project sites and show you how we are being impacted. Some of our peers may have recognized that impact this quarter. They will also feel it going forward. Different geographies are facing it at different times. The bigger question right now is, one was what was the motivation of the Haryana government to do this? If other states start doing it, then it becomes a broader level issue on the entire order book, which can exacerbate our overall margin impact. If you can help us understand why it did happen first, and then also earlier in the call, you said 70% of the labor is skilled. I assume that the hit would not have been there. It would be at the labor which is at the borderline level, right? If you can help us understand what was the motivation behind this and why was the hit so high if it was only to the part of the labor force because the skilled. Sorry, go ahead. Sorry. Yes, I am saying it was out of the 100% labor, you said 70% is skilled, where anyways it is a market-determined pricing. So I assume it will be push and pull, which will determine their wages, not the government-mandated minimum wages. It will be more like where the part was exposed to the minimum level of wages, where you had to align with the government policy or given escalation. So what was the motivation of the Haryana government, and secondly, whether other states can also now implement this, at least for the borderline cases? Your first question, what was the motivation of the government? The Haryana government, over the past one month, has cracked down on RMC manufacturing plants, and today 90% of the plants are shut down in Haryana. What is the motivation behind it? Who can say? Okay. With governments, it is very difficult to say. Similarly, they have, at such a time, increased the labor pricing. While the developer lobbies are talking to the government, they may agree to sort of reopen some of these plants. But I do not think there is going to be a rollback on the labor pricing. It has never happened. It is a very sensitive political issue. It is very difficult for us to comment. Second thing is, push and pull on the skilled labor is right, but as I said, it is demand and supply. There is a huge shortage of skilled manpower, and whatever skilled manpower is there, the skill levels are down. The buildings are becoming more and more complex. So that leads to low productivity on the project. So that is why our costs are rising. That is why I am saying that maybe it would be prudent for you guys to. We would be more than happy to take you to our project sites and show you how it is very difficult to sort of explain all this on an investor call. But at ground zero, we can show to you how the impact is happening. Just last question, can you replace. Is it only for the labor domiciled in Haryana state? Or if you can, say, pull out labor from A.P. or Bihar or some other states, you still have to pay them the minimum wages? So how does it work? This is all migrant labor which works in a particular state. This labor is coming in from Bihar or Bengal or Odisha or Madhya Pradesh. It is not Haryana labor. Okay. It is not a domicile issue. I still don't understand the motivation, but anyway, I will take it offline. Thank you. Yeah. Thank you. Thank you. Ladies and gentlemen, due to time constraints, we will take that as the last question for the day, and I would now like to hand the conference over to the management for closing comments. Thank you so much, everybody. As I said, any further queries, please reach out to us and we would be more than happy to explain the ground realities to some of you, or even if you want to sort of visit our project site to get more clarity. Thank you so much. See you on the next call. Thank you. On behalf of Ambit Capital Pvt. Ltd., that concludes this conference. Thank you for joining us, and you may now disconnect your lines.