Good afternoon, ladies and gentlemen. I, Shalaka Singh, Associate Director, CRISIL Ratings, welcome all of you to the CRISIL webinar on emerging corporates in diversified EPC sector, building scale, balancing risk. The webinar will have a presentation followed by a panel discussion with industry experts and a Q&A session. I would also like to inform all participants that this session is being recorded. Our speakers for today's webinar are Aditya Patil, Management Trainee, CRISIL Intelligence, Raj Gurka, Senior Analyst, CRISIL Ratings. We also have here with us Himank Sharma, Director, CRISIL Ratings, who will join us for the panel discussion and the Q&A session. Besides, we are very glad to have an esteemed panel of leaders who have joined us as panelists today. I warmly welcome Vignesh Kumar, Group Financial Strategist from Ramalingam Construction Company Private Limited, L. Subramaniam, Promoter and Executive Director from SPL Infrastructure Private Limited, Prakash Sharma, Promoter and Director from SKS Infra Projects Private Limited, and Ranjan Mohapatra, CFO from Harsh Constructions Private Limited. Thank you all panelists for taking your precious time out for the webinar. India's emerging corporates in the diversified EPC and construction sector have evolved significantly over the past few years. Supported by a sustained infrastructure investment cycle, these companies have expanded beyond roads and into segments such as water infrastructure, urban infrastructure, and railways. Improved execution capabilities, better funding access, and increasing participation in larger projects have helped them strengthen business profiles and credit quality. One of the most notable developments has been the increasing contribution of water infrastructure projects within the order books. However, the sector's dependence on state funding in certain segments remains a key monitorable. While fiscal 2026 witnessed a moderation in growth due to execution disruptions arising from an extended monsoon season, election-related slowdown, and delays in fund releases across certain state-funded projects, the medium-term opportunity landscape remains favorable. With that being said, we will move to the presentation, which is divided into two segments. The first section will discuss the broader infrastructure investment landscape and assess how CapEx is expected to evolve across key sectors. The second section will focus on structural trends shaping the sector and credit perspective for emerging corporates. Let me take you through the key messages of today's presentation. First and foremost, diversification is helping emerging EPC players limit dependence on a particular segment and counterparty. The healthy order book of 2.5-2.8 times and broad-based infrastructure spending should support the top-line growth over the medium term. This is based on 11%-12% growth in current fiscal and going beyond. The expansion in order book has been driven by strong growth in water and private CapEx segment, while roads and urban infrastructure has continued to provide steady growth and order book volume. Operating profitability has remained resilient despite competitive intensity and execution headwinds in the last year. Operating margins should remain stable at 11%-12% over the medium term, backed by presence of escalation clauses and a leaner cost structure. While the working capital cycle has remained broadly stable, the increasing exposure towards the state counterparties, especially within water and urban infrastructure, will warrant close monitoring. Water infrastructure has also emerged as one of the major growth pillar, with its overall order book share doubling over the past year. With that being said, around 20%-25% of this order book is towards Jal Jeevan Mission-related projects, wherein timely execution as well as release of funds remains a critical aspect. From a credit perspective, emerging corporates continue to demonstrate resilience. While revenue growth has moderated in fiscal 2026, margins have remained stable and balance sheet strength has continued to improve. Going forward, working capital management, collection efficiency, execution discipline, and timely collection will remain important determinants of credit performance. I will now hand over to Aditya and Raj, who will take you through the presentation. Over to you, Aditya. Thank you, Shalaka, and good afternoon, everyone. To set context, let me first take you through the section which covers an overview of the infrastructure capital expenditure in the near term. The infrastructure CapEx is expected to grow and is to grow at a CAGR of 8%-10% for fiscal 2027 and 2028, primarily due to private sector investments in power. Previously, from fiscal 2022 to 2025, government expenditure carried infrastructure. In fiscal 2026, with the moderation in government CapEx, the growth was primarily driven by private investments in power sector, allowing the infrastructure CapEx to grow with a CAGR of 14% between fiscal 2022 and fiscal 2026. With the accelerated private investments, share of private sector in the overall CapEx is expected to grow from 14% in fiscal 2025 to 28% in fiscal 2028. Coming to the share of center, state, and private investments in key infrastructure sectors. Private investment share in power is expected to grow by 16%, that is, from 39% previously to 55% in the upcoming period due to increased investments mainly across generation and transmission sub-segments. Private investment share is also expected to grow in road sector by 5% with the MCA amendments in BOT model. Railways are primarily funded by central government, while irrigation, being a state subject, is primarily funded by state governments. Urban infra, consisting mainly of water supply and sanitation and metro projects, is majorly funded by states. In the next slide, we shall now look at the sectoral breakup of this infrastructure capital expenditure along with the growth-driving sectors. In the upcoming fiscals, CapEx on urban infra is expected to accelerate, and road sector CapEx is expected to sustain elevated levels. Roads has been one of the key drivers of capital expenditure, but with the moderation in government allocation, the power sector is gaining prominence. But even with the moderation in allocation, road sector is to remain a major contributor, contributing approximately 30% in the total, followed by substantial contributions by railways, irrigation, and urban infra, WSS as well. Now, looking at the sectoral contribution to growth in the right chart, the key sectors carried significant growth from fiscal 2023 to 2025, with majority of them witnessing a robust double-digit growth rate. But with expected moderation in government expenditure in the future, only power sector and urban infra WSS is expected to carry the growth in the upcoming fiscals. These sectors together form the infrastructure sector and account for more than 75% of the order book of diversified EPC players. In the next section, we will be looking at the performance and the CapEx trends of key infrastructure sectors. To begin with, roads. The sector is expected to witness normalized growth of 5%-7% in the upcoming fiscals, with the moderation in government allocation. For fiscal 2027, central government allocation grew by 8% and state government allocation grew by 5%. The moderation is due to low awarding and hence the lower construction activity of national highways. Highway awarding has been decreasing significantly since fiscal 2024, leading to lower construction as well. The awarding is expected to remain at similar levels as the previous fiscals and is likely to affect actual highway construction in fiscal year 2027 and 2028. The normalized growth in CapEx is expected due to increased construction of 6 to 8 lane national highways. With the government's focus on the high-speed corridors, construction of 6 to 8 lane highways have gained momentum. Thus, even though fewer kilometers may be constructed, the expected increase in CapEx in the upcoming fiscals is driven by government's focus on constructing wider high-capacity highways. Next, we'll look into irrigation and railway sector in the next slide. In irrigation, CapEx growth is expected to remain steady and consistent for five years, growing at a CAGR of 7%-9%, with increased allocation by states to increase irrigated land area. Driving this growth are some key states that are Maharashtra, Telangana, Karnataka, Gujarat, Odisha, and Andhra Pradesh, which account for the largest contribution in the total expenditure on irrigation. These states have some key ongoing irrigation projects which are nearing completion. Coming to railways, the sector is expected to witness moderate uptick in growth and is expected to grow with a CAGR of 4%-6% in the upcoming fiscals. In the past few fiscals, the allocations, though elevated, have witnessed muted growth due to government's focus on increasing actualization of budgeted expenditure. The targeted capital is to be directed towards modernization of railways, rolling stock procurement, and safety infrastructure. Over the next few years, procurement of rolling stock is expected to increase, with wagons being procured to expand freight capacity of railways. Modern coaches are expected to be added with growing modern trains as Vande Bharat. Furthermore, capital would be spent on projects like Amrit Bharat Station Scheme, an initiative to modernize railway stations, and implementation of safety initiatives like Kavach. Moving next to urban infra and WSS sector. The CapEx here is expected to recover and grow at a CAGR of 10%-12% in the upcoming fiscals, with increased allocation by states for WSS. The capital allocation for fiscal 2026 dipped primarily due to Smart Cities Mission concluding in fiscal 2025, and secondly, due to lower allocation by states to WSS. The capital outlay for WSS fell by 7% due to lower transfers by center to states. The capital outlay on WSS is utilized to build tap water connections, to carry out sanitation works, build water treatment plants, et cetera. The capital outlay on WSS is expected to increase with increased budgetary allocation of states, and the key states driving this increase are U.P., Karnataka, West Bengal, Odisha, and Rajasthan. Furthermore, sustained CapEx in metro is expected to support urban infra growth. With the sustained CapEx provided by central, state governments, as well as from support of multilateral agencies, India's operational metro length is expected to reach 1,400 kilometers in fiscal 2028. With this, we now move on to the credit outlook section. I would request Raj to take this section up. Thank you, Aditya. Good afternoon, everyone. Having discussed the broader infrastructure outlook, let me now shift the focus to CRISIL-rated emerging companies in EPC sector and how the opportunity landscape is translating into business and credit profiles. This slide highlights how significantly the CRISIL-rated emerging EPC universe has evolved over the last four years. If you look at the chart on the left side, the number of companies in our portfolio of emerging companies have increased nearly threefold. More importantly, nearly 90% of the companies continue to be rated in the investment grade category. A similar trend can be seen in the chart on the right side, which reflects the rated debt quantum that has increased from INR 255 billion to close to INR 800 billion. Again, out of this, nearly 95% remains in the investment grade category. The key takeaway here is that the industry has seen growth with improving execution capabilities, diversification in order book, and favorable funding environment. In the next slide, we will deep dive into the order book breakup of the portfolio and respective growth drivers. As shown in the chart on the left side, the emerging corporates have steadily scaled up over the years, and today it accounts for nearly half of the CRISIL-rated construction portfolio in terms of number of companies rated. This is supported by improving execution capabilities and strengthening project credentials. Moving on to the chart on the right side, the order book has become more diversified across the infrastructure segment. While roads continues to remain a key contributor, the most notable change has been in the water infrastructure, with its share increasing to around 20% from earlier 10%. At the same time, railways and other infrastructure segment, including power-related projects, have also increased their contribution within the overall order. It is also important to note that a lower share of urban infrastructure does not indicate lower opportunities. In absolute terms, the order book in this segment have remained healthy, but the sectors such as water, railways, and power-related projects have grown at a faster pace, resulting in a lower relative share. As a result, order book of emerging companies today have become more balanced across segment, improving revenue visibility and providing resilience against slowdown in any particular segment. Having said that, the sharp increase in water infrastructure project has been one of the most notable development. Let us now look at the key drivers for this segment. As we saw in the previous slide, the water infrastructure order book has nearly doubled as a percentage of the overall order book. This growth has been supported by multiple investment drivers across both public and private sector. On the public side, the investment continues across water supply, wastewater treatment, sewerage network, irrigation projects, and river management initiatives. At the same time, the private sector is also creating new opportunities through increased focus on water security, wastewater reuse, and environmental compliance and industrial water management. In addition to this, greater participation through public-private partnerships and hybrid annuity model is also creating opportunities across a wider part of the project lifecycle. While the opportunities in water infrastructure remain significant, it is equally important to understand the associated risk and monitorable. Let us look at that in the next slide. While the opportunity landscape remains attractive, the ability of the companies to convert the opportunity in a profitable and a sustainable growth will increasingly depend on the execution quality, working capital management, and disciplined order book selection. One important monitorable risk remains JJM-related projects, which account for nearly 20%-25% of the current order book. Delays in execution and fund delays in some projects have resulted in higher working capital requirements, making counterparty diversification and project selection increasingly important. Having said that, the opportunity pipeline remains strong. Water infrastructure-related projects are creating new growth avenues, while public-private partnerships and hybrid annuity model structures are further expanding opportunities across the sector. However, timely execution amidst operational challenges, including approvals and availability of associated infrastructure, collection efficiencies with evolving counterparty dynamics across states and urban local bodies, and sustenance of profitability amidst increasing competition will remain a key monitorable going forward. In the next slide, we will examine exposure to the central, state, and private sector counterparties, how it has changed over time. In earlier slides, we saw that road and urban infrastructure together account for more than half of the overall order book. This slide shows how the counterparty profile has changed over time. Starting with civil and urban infrastructure, as seen on the chart in the left-HAM side, the share of state-funded project has increased over the last couple of years, supported by state-level investment. While this has expanded the growth opportunities, it has also increased the dependence on state budgets and allocations and fund releases, making collection efficiencies and working capital management a critical factor for credit profiles. At the same time, the road order book continues to remain a diversified counterparty, with the balance mix of state, central, and private sector exposure, supporting execution visibility and cash flow stability, which can be seen on the right-HAM side chart. Another interesting aspect is the road segment in the participation of emerging corporates in the complex HAM projects, which we'll see in the next slide. Despite the moderation in the road sector awarding over the last 2-3 fiscals, emerging corporates continue to maintain a meaningful presence within the HAM sector. While large corporates are increasingly winning the larger projects, as can be seen in the below chart, emerging companies are still securing a healthy share of the opportunities and continue to retain a meaningful share. The ability to participate in the complex HAM projects reflects improving execution capabilities, stronger project credentials, and better access to funding. Now, having discussed some of the key structural trends shaping within the order book, let us now look at the operating performance for this company. As you can see from the chart, after a prolonged period of strong revenue growth, the same has seen a moderation in fiscal 2026, however, at a higher base and at a higher order book. More importantly, the moderation was largely execution-led rather than demand-led, primarily due to disruption arising from adverse weather condition, election-related slowdown, and the slower release of funds from the certain state projects. Looking ahead, the execution activity is expected to normalize in the current fiscal. Additionally, the order book to revenue ratio is likely to remain healthy at around 2.5 to 2.8 times of the revenue, supporting revenue visibility over the medium term. Consequently, the revenue growth is expected to recover to around 11%-12% in fiscal 2027 and sustain healthy growth for next fiscal as well. Let us now look at how the operating margins have performed and what are the key drivers for the same. While revenue growth moderated in fiscal 2026, profitability across emerging EPC companies have remained stable, with the EBITDA margin sustaining at around 11%-12%, which reflects the disciplined cost management and presence of escalation clauses within the contract. Going forward, margins are expected to remain broadly stable, although sustaining profitability amidst rising competition, commodity fluctuations, and bidding intensity will remain a key monitorable. Next, we will have a look at the working capital parameters. Working capital remains one of the key credit monitorables for the sector, particularly as the order books continue to diversify across segment and the counterparties. Over the years, working capital cycle has remained relatively stable. This is largely because roads and civil urban infrastructure continue to account for a significant portion of the order book, which has a relatively better payment mechanism and collection cycle, as against water segment, which has seen a longer debtor cycle of around 100 days as compared to sector average of 75 days. The sector also inherently operates at a elevated gross current asset level due to structural requirements such as retention money and various deposits, which also contribute to the working capital intensity. However, gradual adoption of surety bonds would reduce the working capital intensity to some extent. With that being said, while the working capital requirements are likely to remain high, the increasing share of state-funded project makes the timely collection and release of fund increasingly important to ensure the cash flow stability. Next, we will have a look at the financial profile of this company. Alongside business growth, emerging EPC companies have also strengthened their balance sheets over the past few years. As order books have expanded over the years, companies continued to invest in equipment and the machineries to support execution capabilities, resulting in an annual CapEx of around INR 3,500-INR 4,500 crores. However, despite the increase in borrowing, leverage metrics continues to remain comfortable, as can be seen on the right-HAM side chart. The total outside liabilities to adjusted net worth has continued to remain below one time, reflecting a stronger net worth accretion and prudent financial management across the sector. At the same time, healthy operating profitability has also supported the strong interest coverage levels. Emerging EPC companies have been able to scale up operations without materially weakening their financial risk profile. While the sector continues to benefit from the healthy growth opportunities and improving credit metrics, it is also important to understand the key risks that could influence the performance going forward. Let us look at this in the next slide. Here are the few risks and their comparison for the large and emerging corporates. Commodity price fluctuation and implementation-related risks remain similar for both emerging and large corporates. However, the counterparty risk remains low for large corporates and moderate for emerging corporates due to the mix of central and state-funded projects amongst the emerging corporates. This has further intensified with the increasing exposure toward the state-funded projects, as discussed earlier. Competition risk remains high for the emerging corporates, given the large number of players participating in the bids. Funding availability risk remains moderate for emerging corporates as compared to large players, given the higher dependence on external bank borrowings for funding requirements. Having discussed the key strengths, risks, and monitorable for the sector, let us now look at how the trends have translated into the rating performance over the past few years. The trends that we discussed across the previous slides are also reflected in the rating action observed over the last few years. As seen in the chart, the upgrades have continued to outpace the downgrades since fiscal 2022, reflecting an improvement in scale of operations, improving execution capabilities, diversification in order book, and overall credit profile across the emerging EPC companies. Although downgrades have increased in the current fiscal compared to previous, the primary reason has been working capital pressure and execution delays. More broadly, the credit quality at the sector level continues to remain supported by healthy order book visibility, resilient profitability, and strengthening balance sheets. With that, let me conclude by summarizing the key themes and outlook going forward. To summarize, emerging EPC companies today account for nearly half of the CRISIL-rated construction portfolio, reflecting the scale-up in operation, diversification in order book, and improving execution capabilities achieved over the past two years. At the same time, despite the execution-related challenges witnessed during fiscal 2026, order book to revenue ratio remains healthy, supporting the growth and recovery in the current fiscal and next. Operating profitability, working capital metrics, and overall credit quality have remained broadly resilient for the sector. Water infrastructure has emerged as one of the important growth pillars alongside roads and urban infrastructure, broadening opportunities across the sector. With that being said, there are few monitorables, which includes timely receipts of fund amidst increasing exposure towards state-funded projects, timely execution and funding availability of water and irrigation-related projects, and sustenance of operating margins amidst competitive intensity and commodity price fluctuation. With that, I conclude my presentation and hand it over to Mr. Himank Sharma for the panel discussion. Thank you, Aditya and Raj, for an insightful presentation. Before we move on to our next segment, I would like to announce that CRISIL Ratings has a mobile application, Ratings Analytica, and a portal, ratingsanalytica.com, which offers high-quality, timely, and actionable insights by combining data, domain expertise, and decades of institutional experience. We have been receiving several requests from the audience for the webinar presentations. I would like to inform that even presentation for today's webinar will be available on our mobile app as well as the portal in the next few days. You may also download the mobile app by scanning the QR codes visible on your screen. Now we move on to our next section, the panel discussion. During the discussion, we would also be running a poll to know the participants' views on the sector. Now we begin with our panel discussion, which is the key highlight of the webinar. As we had mentioned earlier, we have quite an eminent panel today, and I'm quite proud to introduce them. Our first panelist, Mr. Vignesh Kumar, a group financial strategist at Ramalingam Construction Company Private Limited. Mr. Vignesh Kumar is a seasoned finance professional with over 16 years of experience in the EPC and infrastructure sector. Having served as CFO of Ramalingam Construction for over a decade, he played a pivotal role in building and scaling the company's finance function. In his current role as group finance strategist, he advises the promoters on capital allocation, growth initiatives, funding strategy, and long-term value creation, bringing a unique blend of operational finance and strategic planning. A warm welcome, sir. Thank you. Our next panelist, Mr. L. Subramaniam, promoter and executive director, SPL Infrastructure Private Limited. Overseeing the company's financial and he has played an important role in strengthening and improving operational processes through ERP-led initiatives across various business verticals. A warm welcome, sir. Welcome, sir. Our next panelist, Mr. Prakash Sharma, who's promoter and director at SKS Infra. Studied from IIT Delhi, and previous to joining SKS Infra, he was associated with A.T. Kearney as a management consultant. Mr. Sharma is closely involved in the company's growth journey with the infrastructure sector, and under his leadership, the company has expanded its presence across projects while maintaining a focus on execution excellence, project delivery, and sustainable business growth. A warm welcome to you as well, Mr. Sharma. Thank you. Hi, sir. Welcome. Our next panelist, Mr. Ranjan Mohapatra, who is CFO at Harsh Constructions Private Limited. Mr. Mohapatra is a senior finance leader with over 38 years of experience across infrastructure and diverse industries. A chartered accountant by qualification, extensive experience, expertise in the project finance, treasury management, working capital optimization, fundraising, and financial restructuring. As CFO of Harsh Constructions, he has played a key role in supporting the execution and financing of large infrastructure projects while driving the company's long-term financial strategy. Thank you for taking out your precious time for the webinar. Once again, we thank all of you for joining us today. Maybe the first question that I wanted to pose to you, Mr. Vignesh, if we can start with you on the discussion. Yeah. What we have seen is that there have been sustained and significant investments across sectors such as solar transmission, water, and railways, over the last few years. How do you see the supply and demand dynamics evolving for the EPC players now? Are the opportunities expanding at a pace that supports the industry growth, or is there an intensification of the competition also which you are seeing now? Opportunity is enormous. Earlier, it was EPC, engineering, procurement, and construction was pertained to majorly civil, road, bridge infra. Now getting expanded to electrical infra, digital infra. The new kind of opportunity is picking up, and there are enormous. The size itself is becoming larger. Managing or picking the phase to the new technology which is needed for the country's growth is bringing that full-fledged opportunities. That is where, yeah. Sure. Do you see maybe the competition being intensified over the next one to two years, or you see that maybe there is ample opportunity for everybody to grow and the industry also to grow? There will be ample opportunity for everybody. Because the industry size itself is becoming big, even there are lot many players, room for new companies to come in. There are number of projects which needs more players to participate so that country gets or the deliverables to the authority is done on time. There is a good scale of opportunity for the next decades for the EPC player. That is what I believe. Thank you. Thank you for that perspective, sir. I think that is useful. Mr. Subramaniam, if I can move on to the next question with you. What we have seen is that last two years, the road projects awarding has moderated from the peak levels, despite the continuous infrastructure spending. Do you see this influencing industry structure? As sir also pointed out, competitive intensity is not going to be too much. From a project opportunities perspective also, how do you see the things panning out in the road segment? Right. We are into the EPC side as well as the capital intensive side of an HAM model. I would put this way, it is not a slowdown, it is just a transition. The moderate leads to more competition and aggressive bidding, but the industry should be careful. The aggressive bidding to a technically qualified project will always be around, and there is so much of opportunities. Winning an order is as equally important as winning a quality order. End of the day, there are a lot of opportunities now, like the urban infrastructure, like water, there is urban infrastructure, like on the metro side, development of the cities. There is a lot of opportunities there as well. Even though it is a moderate award of road projects, I would put that there is a lot of opportunities, as Mr. Vignesh said, there is so much of opportunities. Understood. Thank you. Thank you for sharing that as well, sir. Mr. Sharma, if I could move on to the next question to you. With the revised highway EPC framework placing greater emphasis on contractor performance and also linking performance security to the ratings, internal ratings of NHAI, how do you see this changing the competitive intensity and the bidding behavior in the sector? Could it increasingly favor some of the established better-performing EPC players as well? Sorry. Your voice was. It is now coming in, sir. Please go ahead. Yeah, so I was saying that a very well-accepted move across the industry, particularly because you are finally putting a number on your performance and whatever the past performance has been and how you are performing currently as well. There are two moves that they are doing. First is definitely linking performance security, which will be a deterrence, because taking more and more guarantees is a challenge for all of us that we are facing. Secondly, they have also put two categories of project, and if you are scoring below 70, then you cannot bid for your own category. That also serves as a big deterrence and reduces competition, and definitely favors very well-established players who are more focused on quality and not particularly focused on aggressive bidding per se. We see the competition intensity reducing because both of these moves, but they are yet to be implemented. We have not yet seen the updated RFPs. We have just seen the circulars till now. Once I think this gets put into action, we will definitely see reduced intensity of competition. Understood. Well, and maybe from your perspective, sir, do you see maybe some of the better-established players and then the maybe already players with significant credentials gaining ground? That is what you are trying to say. Yeah, Himank, definitely. And there are other moves also, as in the eligibility criteria for HAM projects, wherein they have changed the definition from net worth to available net worth and increased from 15% to 20%. So measures like these will definitely support and promote better and established players in the industry. Understood. Thank you for sharing that as well. Mr. Mohapatra, the next question that I wanted to check with you. What we have seen is that last few years, diversification beyond traditional road projects has been one of the key growth drivers for the emerging EPC companies. Which opportunity areas could be the ones that will likely contribute most to the next leg of growth, and how do you see the mix evolving across roads, water infrastructure, urban, as well as private sector CapEx? Yeah. Himank, am I audible? Yes, sir. Yes, please. Yeah. See, let me just give you a few numbers, perspectives. When you look at the infrastructure, the parent being the central government, the outlay for the budget was INR 12.22 trillion, central government. If you look at Government of Maharashtra, for the year, it is INR 7.7 trillion. UP, INR 9.71 trillion. Ganga, Kalinga, that we are now thinking about major, major push is we are yet to see, but it is coming. Bengal, INR 4.38 trillion. Bihar, INR 3.47 trillion. Odisha, INR 3.10 trillion. INR 10.95 trillion. Ganga, Kalinga. So if you look at this kind of outlays, and you look at what is happening in Maharashtra, because Mumbai is, all of us know, changing very quickly for us, because the Trans-Harbour Link, and now the Navi Mumbai that we are talking about, transforming into a edu city, where two to three Ivy League universities are going to come. And then with the Tatas, the government has signed up to make it a innovation city to absorb the output. What they perceive is 1 lakh students studying there, coming out each year. So, it is not just this thing. Under UDAN, we see 100 airports. The old budget is INR 30,000 crores, the old budget. I am sure going forward, the number will again change. And out of that INR 12.23 trillion central government outlay, railways alone is almost INR 2.93 trillion. The other thing that we are talking about is judiciary. Judiciary, it is a policy made at the center that all judiciaries will become integrated premises. When I say integrated premises, it means that once you enter the court, you are not able to come out. You want to go to a civil court, to a family court, to a criminal court, whatever courts you want to go, it is under one premises. It should take you through the escalators, through the lifts, and it should have the digital displays, what case is going on, if you are supposed, so that a lawyer wants to attend a court, or as somebody wants to go just visit the court to know about the proceedings, they can go through the digital displays. These are the kind of things that we are now talking about. Yes, roads, as you said, very nice that you have picked up roads, is now coming to 5% of the total cake. Yes. Maybe Maharashtra, maybe a little more. Maharashtra, 6.8%, and going forward, Maharashtra will be a little more because Maharashtra roads are not as good as the Tamil Nadu roads are. So lot of things are still to be done for Maharashtra. But Samruddhi has changed the way we look at road infrastructure today. Okay. A lot of things are happening with Pune, from a sleepy town, now Pune has gone into a modern infrastructure completely. And literally, after the missing link is executed in Navi Mumbai and Pune is becoming a satellite town of Navi Mumbai, just 45 minutes journey to the Navi Mumbai airport. We are talking about Vadhavan Port. Vadhavan Port itself, the initial DPR is in progress, what they are talking about is INR 45,000 crores. Then there is a Vadhavan Airport coming in. We are talking about a complete city in the sea, where you will have an airport, you will have a port, and a complete ecostructure there. Similarly, we are talking about now bullet trains, possibly Ahmedabad-Mumbai, which is the first bullet train link we will see running. When the bullet train comes, proposition comes, a congested city like Mumbai can look at decongesting. Because we are not talking about just modernization of railways, we are talking about bringing an economic infrastructure into the railway platforms. Okay. So, railways modernization, INR 2.93 lakh crores is just a modernization of the project. But what it brings in itself is a catapulting effect, complete catapulting effect. What we are talking about moving towards the Viksit, being Viksit. Viksit Bharat is no longer a sloganeering. It is happening. It is really happening. It is taking shape. Definitely the infrastructure juggernaut that we call it's not just 5-year story or 10-year story, 15-year story. Maharashtra itself, in next 10 years, is bound to have minimum INR 35 trillion to INR 50 trillion outlay to completely change. Because any Viksit Bharat program or any program of this kind of nature, history will tell us that it is Maharashtra which leads the way. It's the engine of growth. It's the economic capital, it's the engine of growth. So, we will see similar infrastructures. As I told you, judiciary will see many hospitals coming up like the AIIMS. It will literally go to every town. Because what is happening is through the Ayushman Bharat card, even a common man can afford the treatment today in a five-star hospital, provided it is run by the government. So, these kind of things are happening and happening very fast. So, numbers are huge. As you said, if I go back to the question put to the earlier panelist, yes, the pie is too large. Here the company has to manage between need and greed because somewhere I read that managing the capital is available to the disciplined players. There is no dearth of capital, provided one keeps the order book and the visibility and executability in balance. Because just booking orders doesn't help because you can always book orders. Because the earlier panelist, Sharma Prasanna said, yes, today they have given us surety bonds. But surety bonds are very, very nichely applied, like a road project by NHAI accepts this bond. Railway still today has not accepted surety bonds. So, surety bonds has got very limited application. Surety bond is definitely a great instrument for contractors. Sure, sir. But when surety bonds make the contractors more aggressive and more, as I said, greed versus greed, tending towards greed, then that needs to be balanced. It will only help the cash flows because we have to put in cash margin, we have to pay the bank and the guarantee charges are also higher compared to what we pay for the bonds, surety bonds. So, definitely that is going to help in working capital management. So, today, particularly for an A-rated category, there's no dearth of capital because there's no trust deficiency. Which used to be in negative outlook for most of the banks, including SBI, today has suddenly come up. Sure. Fair. Thanks for that perspective, sir. Maybe, Mr. Sharma, if I could ask the next question to you, largely with regards to the competitive landscape, particularly the urban infrastructure today. Obviously, there is a significant expansion of competitive intensity. Even let's say the peer base has significantly expanded here. Has that led to significant amount of bidding aggression? What does that mean for the margins? How do the players select specific projects in order to grow? Sir, you are on mute if you are speaking. Mr. Sharma, not able to hear you. Hello? Yeah, yeah. Please go ahead, sir. Hello? Yeah. I think, Aman, the aggression is obviously there, and we are all feeling it, specifically in roads. But I believe the aggression is uneven. There are projects that are divided into three categories, according to me. There is complex work, which includes metro, underground tunneling, high-level iconic bridges, maybe large energy projects with longer O&Ms. Very few players in India have the credibility, eligibility, equipment, or even the risk appetite to execute those projects. So, competition there, I feel, is not very high. Then there are corridors, which are access-controlled expressways or bullet train corridors, elevated viaducts, ring roads, all of these. Somewhat moderate competition is present because mostly national-level players get to compete for these particular projects. Then there are grids, which can be water grids, drainage systems, city roads, sewerage, everything. In those projects, I feel the entry barriers are quite low, and there are many regional players. So, bids are the most aggressive there. Yeah, I think there is a larger peer base which is driving the aggression, but the aggression is, I feel, uneven in many ways. Sector margins, particularly talking about, I feel, the margin pressure that we were seeing in roads has also spread to railways and waters. They have squeezed down from 13%-14% in FY22-23 to around 11% or so in the recent years, as was also shown in the presentation as well. So, I expect the gap between the crowded end and the differentiated end to widen going further. Project selection, I think the last part of the question was about project selection. So, it depends on four particular things. First is obviously who is the paymaster and where is the money tied up? Is it a central agency? Is it a state budget line or a multilateral lender? Second is the project site ready? Are the utilities mapped? Are the encroachments clear? Is the proper planning for the project in place? Third is there a fair price variation clause in place? If the completion timeline is realistic for all the activities involved in the project. Fourth is obviously very personal to each company. Does it fit what we do well, so that we are able to deliver it well and are also rated well on it after the completion? These four points, I think, constitutes project selection according to me in this current times. Understood. Understood. Okay. Maybe the next question, Mr. Vignesh Kumar, if I can ask you, in terms of the scale as well as the credentials for the emerging EPC companies, they've been consistently improving, and that has led to significant market share gains also for the players. From your perspective, how do you see or what have been the key tenets of this growth, maybe in terms of how have the players been able to compete successfully despite the intense competition, aggressive bidding? Do you see the ability to kind of stay ahead of the curve, continuing with this segment of the players? Yeah. In last nearly like 12, 13 years, the face of infrastructure has taken a big shift. That's what I believe. In 2010 to 2015, the kind of projects or the under infra space, the terminologies what we were using, like hydro, thermal plant, road, now has taken totally a different- I think we've lost connection with Mr. Kumar. Sorry. I think maybe Mr. Kumar is facing some network issue. Question till the time Mr. Kumar comes back. What we've seen is that the order book remains healthy across the sectors. However, the project mix, sector mix, and the profiles of the customers are also changing. From your perspective, how should all the stakeholders of the industry assess the quality of an order book beyond simply looking at the order book size? Mr. Kumar, I'll come back to you. Maybe I think the network is back. Maybe we'll come back. Yeah, sorry. I think this is probably one of the. Yeah, I think most important question in this EPC industry. Historically, there is a tendency to judge a company based on order book, which is not bad. At the same time, the industry need to move beyond that approach of the order book. The order book means it is not an indicator of future profitability. We need to measure a sustainability indicator. Basically, while taking the order book, there are five parameters which is we need to look into. One is the client, and now the NHAI is a robust body, where a senior presentation said there's about 7,000 kilometers, and there are also state projects as well as the other sectors. The client and the project funding, we need to first, we need to know, and then the project economics. That's where these are the two parameters, very important parameters. As the previous panelists said, the land acquisition and other local issues becoming another important parameter while doing your assessment. The most important is the working capital cycle. It's a company, and it should not rush to book the order book. Rather than get an order book, stabilize, matching their execution capabilities, and then just move ahead. Lastly, the concentration risk. Pan-India makes a difference or concentrating on the south or a specific state. Those kind of risk management has to be done. Basically, I would put predictable cash flows should be there. The order book quantity is important as well as the sustainability indicator is also very important. Basically, your EBITDA and your actual collection and your future growth of the company. We are basically on the EPC side, which is the execution side, and also the capital intensive side, which is the HAM project. Taking a HAM project should not be the route to build an order book, because totally EPC and HAM are totally are different. It is good to mix both, but and always EPC is a sector where it give you the consistent cash flows, and your HAM should be based on your balance sheet and your capital. This has to be planned. As you rightly said, there need to be a diversification with the current scenario and the competition that is existing. Like lot of emerging EPC companies want to become a player in this road sector, and there's a stiff competition. In the rush, there are professional companies who've been there for many years, who's very technically and professionally capable. They need to concentrate more on the technical side, like precast or water projects. Those kind of technically qualified projects, they should concentrate rather than getting into the crowd. The order book size, this is my say on that. Thank you, sir. Thank you for that perspective. I think that's a really well-articulated thought. Mr. Vignesh, if you would want to finish what you were saying, because I think we lost you in the interruption. Yeah. I was just talking about the opportunities which is coming up for the mid-segment players and how it has the last 10, 15 years of country's growth and the phase of change in infrastructure has helped them to build the eligibility. The key point is now detailing of how I'm going to execute each project will bring in their profitability or will determine whether they have made a healthy competition or healthy bid. At each point of time, it is on each individual's, each company's situation. Already I have a INR 2,000 crore order, whether this is the right time to pick up another order should be a right question, which will help them, or as a industry, which will bring the healthy competition into the play. That's what I was trying to put it. Hmm. Understood. Thank you for that perspective. Mr. Mohapatra, if I can come back to you on one more question with regards to the comparison between the governments and local bodies versus, let's say, the central government share. What we've seen is that state governments, local bodies, these are gaining significant amount of share in terms of the order books, and the opportunities that these companies are bringing in or these authorities are bringing in are higher than the central government projects as well. So in water, buildings, and urban infrastructure, we've seen a larger share of state governments as well as local bodies. Does this change the operating nuances for the EPC players, particularly in terms of, let's say, project execution, timelines, collections, as well as working capital management? Yeah, it does, because, see, to take a specific Maharashtra, ambitious government like Maharashtra, which is, I say, they're in the seventh gear, particularly because they definitely took time to do their financial closures, for INR 7.7 trillion. It's a huge number that this thing. They took a lot of time to do their financial closure, transit closure, which the banks had done earlier. But then it was the question of the government bringing in the required equity. Central government, we are seeing month after month the GST collections going up and the central government allocating the funds to the different states based on the fixed ratios. It definitely took some time for them to get the entire thing collated. Having done that, and many of the states typically gone into that welfare, which is basically not too good for economy like India. Typically, large key bearing project, where the non-productive money gets leaked out of the system. That puts lot of pressure on a government like Gujarat government or a Maharashtra government. These are the type of things we have seen. We have seen delays because of this one putting pressure on the working capital cycle. But then, the company that you're looking, this thing, each company needs to be proactive, very, very proactive to see the things through. That's what I said, when you're balancing the need versus greed, the entire thing is coming. Data centers are coming. As somebody said, digital world. Yes, data centers are coming. Huge opportunities. Urbanization, as I said, it's not just a station or an airport. It's bringing in economic activities. It's relocating the cities. The population dispersal, it's happening. But one has to be very, very careful to pick projects where monies are pre-allocated. Although they are state government projects, they should be of national priority. An airport is an airport. Any airport built by a state government is also monitored by Airport Authority of Mumbai. So it is of national significance. Any hospital built, it's of national significance. Any medical college built, it's of national significance. So these are the type of projects where the monies are pre-allocated. Now housing, Housing for All. Certainly, when they go up to the road projects, we have seen competition. Somebody was mentioning about HAM. We have seen NHAI projects, people bidding aggressively, somebody bidding 35% below. This kind of scenarios, there is no way they can make money. That is why you see a lot of project getting stuck. One has to There is the kick here. Pie is so huge, there's no need for the industry to be so aggressive in their bidding perspective. The industry needs to rethink on the bidding perspectives. In their excitement to book, order book, as somebody said, is the order book is not the right way to measure the efficiencies. Very true. What quality of the order? What is the EBITDA those order books are promising? These are going to be the qualitative questions coming up. Not just that I booked an order book of INR 10,000 crore. Oh, yeah, but I have got them at 40% less than the real price. No way. Particularly, if you're doing this job for the Airport Authority of Mumbai, things are very, very stricter. 40% business is complete suicide, and there is no reason for that. One issue each industry has, everybody is important. Players are very less in India. You have been rating. If you collect all the players and take the capabilities, capacities, the competition, maximum competition we have seen in the airport is 10 to 12 players. That is all. Very few, you know, having those skills. There is no need for them to go for excessive bidding. If somebody gets in something, somebody will get another thing because the bid capacity will be booked for somebody. Correct. You actually have to rethink the bidding strategies, come together, and bid wisely, so that nobody is going to take away. You lose one, you get one. It is applicable for all. I mean, you are talking about 100 airports. You do not have 50 players. I am talking about two airports for each. You do not have 50 players. You have just 12 to 15 players. So, three airports for three to four airports, each one should be good enough. Why should I aim for two, to go for 10 and bid below such a distinct price and make huge losses? Correct. The pie is huge. That is the reason I gave the numbers. It is huge. And definitely, Maharashtra will have, in the next 10 years, including the INR 7.7 trillion, it will not less than INR 35 trillion to INR 50 trillion. So, huge number. That is only Maharashtra. And we have seen U.P. changing very fast. Ganga, Bihar will change very fast. What we are going to face is about skilled labor. But skilled labor, I think Odisha was the first one to bring in the World Skill Centres. Very quickly, the Singapore government, Maharashtra has co-opted in and established the World Skill Centres. Pune will have a World Skill Centre, Mumbai will have. Similarly, all states should very quickly adopt this skill center. So, it is no longer capital, limiting factors is no longer capital. It is going to be the skilled labor. Understood. Fair. Sure. Thank you for sharing that wide perspectives. I think that's really helpful, I think, to the audience as well. Maybe we would have liked to continue this interesting discussion, but given the paucity of time, we will now move to the question and answer session. But before we move to our next segment, I would like to inform the audience that a feedback poll will shortly be visible on your screens. Request you to share your feedback by selecting the appropriate options, and the poll will be live for about 30 seconds. Ladies and gentlemen, we will now begin the question and answer session. You will be able to see a Q&A chatbot at the bottom of your screen. If you have a question, please type your question there along with the company name and await your turn. Participants are requested to refrain from asking any company-specific questions. Maybe, Mr. Vignesh, we have one question already available to us. Basically, just wanted to check, in terms of the EPC players, the diversification from roads into segments such as solar and transmission, how do you see the margin profiles comparing across these businesses? And maybe what factors are the most critical in terms of sustaining these margins as the order books evolve? Okay. Sector-specific margins are nearly gone. Those days are gone. Whatever segment you are, whether road, solar, or you're getting into new technology, whatever, it's as a EPC player, where it terms as engineering, procurement, and construction, how much detailing I am planning for my project is where we make the margin. It's not like company has to develop their own skills, and they have to place their own strategy, which project to bid, where I am comfortable, my employee strength, my purchasing capacity, my capital which I can infuse. I might have eligibility to bid for a tunnel project, but do I have the capacity to infuse that much of capital? That's where these kind of questioning yourself and making the plan for execution in detail, not only in terms of programming, in terms of purchase, in terms of capital infusion, in terms of approvals which can be obtained from authority. All these various factors brings you the margin in today's ecosystem. That's what I believe. Because now the prices are open. Everybody knows every price. Data is open. Anybody can access what is the sales or sale price, purchase price of whatever product across on a majority level. I would rather put it like, it is company-specific to upskill their team to make margin is what I feel than the sector-specific or the location-specific. Understood, sir. Thank you. Thank you for that perspective. I think the audience definitely will benefit from it. Maybe Mr. Mohapatra, the next question that I can check with you in terms of the tendering momentum and the capital outlays. Again, I think you have already discussed at length in terms of how we are seeing the evolving landscape. But from a railways and civil infrastructure perspective, we have seen that there is a significant amount of capital outlay that the government has done. Is this effectively translating into maybe fresh tendering as well as project awards, or maybe is it just completion of existing projects which is happening using this out? No, come again. I did not catch you. Come again. Yeah. So basically, sir, the question is, between railway and civil infrastructure, we have seen significant capital outlays in the last few years. Yeah. Is this leading to fresh tendering as well as new awards being granted for this segment? Are you looking at just completion or a refurbishment of the erstwhile projects which are there? No, no. Railways are coming up with new projects, definitely new projects. I mean, just few days back, we just bagged the Bikaner Railway Station, completely refurbishing the railway station. Okay. Similarly, what we are seeing in Nashik Airport is completely greenfield expansion, linking it to the existing. So, maybe railways have given this thing complete modernization. Complete modernization means to do the existing infrastructure or maybe adding greenfield and brownfield together. So, it is not just completion of the earlier ones. It is definitely fresh capital budget, capital outlays that we are seeing for the civil infrastructure. So, the railways and airport is completely new, fresh capital infrastructure for fresh structures, completely fresh structures. Understood. Understood, sir. Thank you. Thank you for sharing that. Maybe we can take one more question. Mr. L. Subramaniam, if I can ask you this question, because this is with regards to water as well. So, we have seen water infrastructure also is scaling up in the last few years. But maybe there are certain structural and operational challenges that we are seeing around the ecosystem readiness, and then maybe even commercial viability of project. Then what we have seen is that there is a limited operating track record in some of the water assets. So, do you see any uncertainty around the long-term performance and the output quality of these projects, and any other operational challenges that you foresee for the players in this segment? See, water infrastructure, as you rightly said, it is very less concentrated area in terms of HAM model, or the, for per se, beyond construction of pipelines and treatment plants, there are so many steps like sourcing, distribution, treatment, and finally, the wastewater management and end user. See how the positioning is there and what is the demand and the pricing strategy. This is a new sector for emerging EPC companies. It is a good thing to explore by leveraging your current execution capabilities and having a strategic partnership with a technical player. And these emerging EPC player can definitely get into water infrastructure by considering the ecosystem readiness, not just pipeline. It is about, there are a few desalination plants project going on even in Tamil Nadu. So, lot of scope is there, but the end goal of demand and pricing mechanism is still not clear. That needs little bit of exploration according to me. Understood, sir. Understood. I think that's also a fair perspective. So, obviously, due to the shortage of time, I would have wanted to, despite this, I think would have wanted to continue this discussion, but we would have to conclude this session. If there are any further questions from the audience, please write to events@crisil.com. So, on behalf of CRISIL, I convey our sincere thanks to all of you for taking part in today's webinar. We hope that you found today's discussion insightful and timely. We also hope that your queries have been answered satisfactorily. I express my deep felt thanks to the speakers for the evening, Mr. Vignesh Kumar, Mr. L. Subramaniam, Mr. Ranjan Mohapatra, and Mr. Prakash Sharma for sharing their insights, experiences, and precious time today. With this, we conclude today's webinar and look forward to connecting with you in our next webinar on the consumer durable sector on November 5th. Thank you and goodbye. Thank you. Thank you, Mr. Vignesh Kumar. Thank you, Mr. L. Subramaniam. Thank you. Thank you, Mr. Prakash Sharma.