Ladies and gentlemen, good day and welcome to the Larsen & Toubro Limited Q2 FY 2023 earnings conference call. 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 your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. P. Ramakrishnan. Thank you, and over to you, sir. Thank you, Faizan. Good evening, ladies and gentlemen. A very warm welcome to all of you to this Q2 FY 2023 earnings call of Larsen & Toubro Limited. The earnings presentation was uploaded on the stock exchange and our website in and around 6:35 P.M. Hope you have had a chance to have a quick glance at the same. As per past practice, instead of going through the entire presentation, I will take you through the key highlights for the quarter in the next 20-25 minutes, post which we'll take Q&A. Before I begin, our standard disclaimer. The presentation, which we have uploaded on the stock exchange and our website today, including the interaction in this call, contains or may contain certain forward-looking statements concerning our business prospects and profitability, which are subject to several risks and uncertainties, and the actual results could materially differ from those in such forward-looking statements. During Q2 FY 2023, despite the strong inflationary impulses, the Indian economy displayed surprising resilience, as evidenced by the pickup in high-frequency economic indicators, particularly increase in the consumption demand and higher public expenditure. The tax collections for the government have continued to remain strong, and the balance sheets of the banks as well as private sector is quite healthy. With COVID hopefully behind us, we expect festive spends to be strong this time around, and the above-average monsoon augurs good for a revival in the rural demand as well. Most of the Indian macro indicators, be it growth, current account, fiscal deficit, as well as inflation, are relatively better vis-à-vis other countries in the world. Despite the depreciation, the Indian rupee continues to be one of the better performing currencies in the world. Both the government and the RBI need to be complimented for having successfully navigated the country through these turbulent times. Within GCC, we see many countries building their non-oil economy by investing in areas like green energy, water, and at the same time are continuing to ramp up their spends on oil and gas investments. These are interesting times where despite the continuing global turmoil, both India and GCC, which are our group's primary geographies, remains relatively stable. I will now cover the various financial performance in parameters for Q2 FY 2023. Our group order inflows for Q2 FY 2023 at INR 519 billion registered a year-over-year growth of 23%. Within that, our projects and manufacturing businesses secured order inflows of INR 373 billion for Q2, registering a year-over-year growth of 24%. Our Q2 order inflows in the projects and manufacturing portfolio are mainly from infrastructure and hydrocarbon businesses. During the quarter, our share of international orders in this portfolio is at 21%, vis-à-vis 49% in Q2 of the previous year. The domestic ordering environment, therefore in Q2, was significantly better compared to Q2 of the previous year. At a macro level, there was an improvement in domestic tendering and awarding activity. Although the domestic award-to-tender ratio was a bit soft in the current quarter, the fact that the tendering momentum is strong augurs well for the quarters ahead. We also expect the public CapEx spends comprising of center, states, and PSUs in the current year to be better than that of the previous year. Year to date, the public CapEx spends have been significantly higher over the comparable period in the previous year, driven by center and PSUs, although the momentum in the state CapEx is yet to pick up. Private CapEx is also seeing signs of revival. In Q2, our share of private within the domestic orders was 29% vis-à-vis 22% last year, largely due to more orders in the buildings and factories and the minerals and metals sectors. We will be closely watching this momentum build up in private CapEx in the coming quarters. Our order prospects pipeline for the remaining six months of the current financial year is around INR 6.3 trillion, comprising of domestic prospects of around INR 5 trillion and international prospects of INR 1.3 trillion. The broad breakup of the overall prospects pipeline is as follows. Infrastructure contributes to INR 4.54 trillion. Hydrocarbon INR 1.13 trillion. Power INR 0.38 trillion. Other businesses comprising of heavy engineering, defense, and smart world, the balance INR 0.27 trillion. Moving on to order book. Our order book is at a record INR 3.72 trillion as of September 2022. Our projects and manufacturing business is largely India-centric, 72% of our order book is domestic and 28% international. Now, out of the international order book of INR 1.04 trillion, around 80% is from Middle East and 10% from Africa, and the balance 10% from countries across Southeast Asia. The remaining 10% is what I just now completed. Clearly, GCC CapEx in both infra and hydrocarbon is on an upswing post-recovery in the oil prices. The breakdown of the domestic order book of INR 2.68 trillion as of September 2022 comprises central government at 10% share, state government at 30%, PSUs or state-owned enterprises at 42%, and the private sector at 18%. Approximately around 27% of our total order book of INR 3.72 trillion is funded by bilateral and multilateral funding agencies. 91% of our total order book is from infrastructure and energy. You may kindly refer to the presentation slides for further details. During Q2 FY 2023, we have deleted around INR 16 billion of non-moving orders from the order book, and our slow-moving orders in the order book is around 3%-4%. Coming to revenues, our group revenues for Q2 FY 2023 at INR 428 billion registered a YoY growth of 23%. International revenues constituted 36% of the revenues during the quarter. The IT and TS portfolio continued to report industry-leading growth in Q2 as well. In the projects and manufacturing business portfolio, our revenues for Q2 FY 2023 at INR 281 billion also registered a YoY growth of 24%, largely contributed by the robust execution in infrastructure business. I will cover the details a little later when I cover each of the segments. Moving on to EBITDA. Our group level EBITDA margin without other income for Q2 FY 2023 is 11.5%, which is at the same level as Q2 of the previous year. The detailed breakup of the EBITDA margin business-wise is given in the annexures to the analyst presentation. You would have noticed that EBITDA margins in the projects and manufacturing businesses for Q2 FY 2023 is at 8.2% vis-a-vis 9% in Q2 of the previous year. This drop of around 80 basis points for the quarter is mainly due to job mix, cost pressures in certain jobs, and closeout costs in a couple of jobs. Despite the drop in EBITDA margin in the projects and manufacturing business, at an overall group level, we have been able to maintain EBITDA margin in Q2 current year at the same levels as Q2 previous year, primarily because of improved performance in the financial services and Hyderabad Metro. Our operational PAT for Q2 FY 2023 at INR 22 billion is up 29% over Q2 of last year, aided by improved treasury operations during the quarter. The reported PAT, though, has grown 23%, largely due to the INR 1 billion exceptionals net of tax and minority interest in Q2 last year, representing gain on divestment of stake in L&T Uttaranchal Hydropower and the tax expense arising on the transfer of the NxT Digital business from the parent L&T to Mindtree. The group performance P&L construct, along with the reasons for the major variances under the respective function heads, is provided in the presentation. Coming to working capital, our net working capital to sales ratio has improved from 22% in September 2021 to 20.2% in September 2022. There is also a sequential improvement in this ratio since we had reported 20.9% in June 2022. Our group level collections, excluding financial services for Q2 FY 2023, is INR 0.38 trillion vis-a-vis INR 0.32 trillion in Q2 of the previous year. Now moving on to the balance sheet. If you glance through the balance sheet given in the annexures to the presentation, you would notice that the debt level ratios are at comfortable levels with the gross debt equity at 1.33 and the net debt equity at 0.89. Finally, our trailing twelve-month ROE for Q2 FY 2023 is 12.1% vis-a-vis 11.8% in Q2 FY 2022. Very briefly, I will now summarize the performance of each business segment before we give our final comments on our outlook for the near term. First comes infrastructure, which is the largest. Coming to order inflows, our Q2 FY 2023 order inflows are well spread across various subsegments. The infrastructure segment secured orders of INR 251 billion in Q2, registering a strong growth of 107% over Q2 of the previous year. Our order prospects pipeline in infra for the remaining six months of FY 2023 is at INR 4.54 trillion, comprising of domestic prospects of INR 3.98 trillion and international prospects of INR 0.56 trillion. The subsegment breakup of the total order prospects in infra would be as follows. Water would constitute 23%, heavy civil infrastructure, 22%, transportation infrastructure, 20%, buildings and factories, 19%, power transmission and distribution, including renewables at 14%, and minerals and metals at 1%. The order book in this segment is at INR 2.69 trillion as on September 2022. The book build for this segment is around three years. The Q2 current year revenues at INR 194 billion registered a growth of 39% over the comparable quarter of the previous year, largely aided by a combination of a large opening order book and improved customer collections during the quarter. As a philosophy, we always step up execution when customer collections are flowing at a healthy pace. This is essentially to strike a healthy balance between the P&L and the balance sheet. Our EBITDA margin in this segment dropped from 8.3% in Q2 FY 2022 to 6.6% in Q2 FY 2023, largely impacted by a combination of job mix, cost pressures, and close out costs in a couple of jobs. The 150-170 basis points variance is explained by 80 basis points attributable to closure of costs in some jobs, and 90 basis points is explained by a combination of an unfavorable job mix tilting more towards cost jobs and cost pressures in select jobs. The close out costs mainly refer to extra costs incurred due to extended stay and commissioning in two of the projects. Coming to explaining the other part of the impact on margin, it is due to a higher percentage of cost jobs in the current quarter, coupled with cost pressures in certain jobs, mainly due to changes in design leading to quantity variations and finally higher input costs to the extent our procurement orders were placed before the correction happened in the commodity prices. The current high energy prices is also to some extent affecting our ability to do timely sourcing of items. Moving on to the next segment, which is energy, which comprises of our hydrocarbons and power businesses. The receipt of multiple domestic orders in hydrocarbons boosted the order book, whereas power business benefits from receipt of a flue gas desulfurization order in Q2. The order prospects pipeline of INR 1.51 trillion for the remainder of the financial year is favorable. The order book for this energy segment is at INR 689 billion as of September 2022, with the international order book constituting 54% led by hydrocarbons. Q2 FY 2023 at INR 55. Q2 FY 2023 revenues at INR 55.9 billion registers a degrowth of around 7% over the comparable quarter of the previous year. The hydrocarbon revenues were impacted primarily due to supply chain challenges, whereas lower revenues in the power business is reflective of a depleting order book. The EBITDA margin of this segment at 8.5% for Q2 FY 2023 improved compared to 6.6% over the corresponding quarter of previous year. Execution cost savings in hydrocarbon and an improved ECL profile in power aided the margin improvement. We will now move on to the high tech manufacturing segment, which comprises of defense and heavy engineering businesses. In this quarter, we saw multiple order wins in heavy engineering, whereas defense ordering was a little subdued during this quarter. We had an order prospect pipeline of around INR 190 billion for the remaining two quarters of the current financial year. The order book of this segment is at INR 197 billion as of September 2022. The revenues for Q2 FY 2023 at INR 14.6 billion registers a marginal degrowth of around 1%. Improved execution drove the heavy engineering revenue, whereas the degrowth in the defense revenue is explained by certain defense contracts yet to pick up momentum. At this juncture, let me once again mention that the defense engineering business does not manufacture any explosives nor ammunition of any kind, including cluster munitions or anti-personnel landmines or nuclear weapons or components thereof. The business also does not customize any delivery systems for such munitions. Please also see the disclosure to this effect, as mentioned in the chairman's statement in the integrated annual report for FY 2022. Coming to the IT & TS services portfolio, our revenues for Q2 FY 2023 at INR 101.5 billion registered a growth of 29% over the corresponding quarter of the previous year, largely reflecting the continuing growth momentum in the sector with a surge in demand for technology-focused offerings. The business outlook for this segment continues to be strong despite the fears around global recession impacting IT spend. Lot of spends today are being directed towards cloud, data security and intelligence. Margins in this segment is lower in Q2 FY 2023 vis-a-vis the Q2 FY 2022, largely explained by increases in wage costs, partly offset by favorable movement in the dollar rupee and other improved operational efficiencies. The merger of LTI and Mindtree should hopefully get concluded before the end of this calendar year. I will not dwell too much on this segment, as all the three companies in the segment are listed entities, and the detailed fact sheets are already available in the public domain. Now we move on to financial services segment. Here again, L&T Finance Holdings is listed, and the detailed results are available in the public domain. The highlights for Q2 FY 2023 were improved net interest margin, improved fees, lower credit costs, better asset quality and a thrust towards retailization of the book. In fact, as of September 2022, the share of retail in the overall book is at 58%. The strategic deliverables in this business revolve around portfolio reorganization, strong asset quality and improvement in ROA. This business endeavors to be a top-class digitally enabled retail finance company, moving from a product focus to a customer focus approach. Finally, to conclude, sufficient growth capital is available in the balance sheet with the CRAR at around 22.6%. Moving on to development project segment. This segment currently includes the power development business of Nabha Power and Hyderabad Metro. The Q2 of the previous year also included two months of performance of the L&T Uttaranchal Hydropower Plant up to the date of its divestment. That is August 30, 2021. As you are aware, the roads and the transmission line concession business, which are a part of L&T IDPL, a joint venture, is consolidated at PAT level under the equity method. The majority of revenues in the development project segment is contributed by Nabha Power. Improved ridership in Metro and higher PLF in Nabha drive the revenue growth for this segment in this quarter. To give you some statistics, the average Metro ridership improved from 146,000 passengers a day in Q2 FY 2022 to around 355,000 passengers per day in Q2 FY 2023. Our average ridership in Q1 FY 2023 was around 285,000 passengers. We are happy to report that as we speak, the current ridership in Metro has touched a peak of 422,000 on September 8 in Q2 FY 2023. In the month of October, we have witnessed a new high of 441,000 and an averaging around 400,000 each day in the month of October. The Q2 FY 2023 margin in this segment at 5.2% is contributed by Metro operations only as the Nabha margin is not being recognized from Q3 of FY 2021. The improvement in average daily ridership has enabled Metro to report an EBITDA margin of 39% in Q2 FY 2023 vis-a-vis 13% in Q2 FY 2022. The Metro at a PAT level, we have consolidated a loss of INR 3.28 billion in Q2 FY 2023 vis-a-vis a loss of INR 4.47 billion in Q2 of the previous year. The operating and amortization costs for L&T Metro is around INR 0.8 billion each, whereas interest cost is INR 3.1 billion for the quarter. In Q2 last year, this interest cost was at INR 3.8 billion. At this juncture, I would like to give a quick status update on the divestments of our concessions portfolio. You may be aware, our stake in the L&T Uttaranchal Hydropower was successfully divested in Q2 of the previous year. For Nabha, we are looking at various divestment options are being explored, but nothing has materialized as of date. Coming to L&T IDPL divestment, we have achieved progress and hopefully should get concluded soon. For L&T Metro, with the prospect of improved ridership, the phased transit-oriented development monetization, the confirmed government interest-free loan assistance and with the recently concluded debt refinancing, our performance parameters for Metro will look up in the later part of the current financial year. Moving on to the other segment. This segment comprises realty, industrial valves, smart world and communications, construction equipment, mining machinery and rubber processing machinery. The revenue buoyancy in this other segment in Q2 is largely driven by smart world and communications, as well as construction equipment and mining machinery and also rubber processing machinery. Lower handovers in realty and sales mix in the construction equipment and machinery impacted the segment margin in the current quarter vis-à-vis the quarter of the previous year. Coming to the outlook. Despite the ongoing military conflicts that we are witnessing and increased trade tensions globally, India clearly is a beacon of hope in this decade. The domestic growth momentum is healthy, largely driven by the improvement in private consumption and public CapEx. We also hope that private investments will also increase correspondingly. Outlook on GCC remains positive with the stability in oil prices. Our group will be a major beneficiary of the synchronous spends in India and GCC in the coming years. Having said that, one needs to be watchful of the continuing macro risk revolving around elevated levels of inflation, external and internal balances, the rising dollar and supply chain disruptions. The move away from quantitative easing to quantitative tightening will have its share of implications. Although at the moment we are not very clear of the immediate consequences. The company's projects and high-tech manufacturing businesses are rightly positioned to leverage the India and Middle East CapEx opportunity. With tech-enabled skills and offerings, the IT & TS business will continue to pursue growth in the global services domain. A robust port business portfolio, including some of the newer businesses, focuses on cash generation distribution, an eye on capital employed, and finally, the divestment of concessions and other non-core assets will lead to a better ROEs, as envisaged in our strategic plan for FY 2022 to FY 2026. Finally, since we are off to a good start in the first half of the year, we continue to retain our guidance of 12%-15% growth in the group order inflows and revenue with a stronger bias towards the upper end of the band. On the group level, NWC to sales, that is the working capital to sales, although we have guided for a range of 20%-22% for FY 2023, we will endeavor to end March 2023 at around 20%. As for the guidance on the margins for the projects and manufacturing business for the year is concerned, we do acknowledge that headwinds to achieve the targeted margin of 9.5% for FY 2023 does exist in the form of disrupted supply chain, volatile input costs. The growth and hence the growth of around 30 basis points we had planned over the margin reported in the previous year could be at risk. The developments over the next few months could give a clear indication of the final margin likely for the year. Thank you, ladies and gentlemen, for this patient hearing. We will now take up Q&A. 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 their touchtone 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 Mohit Kumar from DAM Capital. Please go ahead. Yeah. Good evening, sir, and congratulations on a very, very good quarter, especially on the order inflow. My first question is, of course, on the margin. As you said, you know, some of the margin may be recouped and there will be some improvement in margin. Qualitatively, are you seeing the reducing commodity prices to have very, very sharp improvement in margin for the second half? And secondly, on the revenue side, of course, we have this fabulous H1, very sharp revenue growth. Given that, the 12%-15% growth seems to be on the lower side for the entire fiscal. It looks like we'll grow only at, you know, 5%-7% in second half. Do you think there's a higher upside risk to the revenue guidance? Thank you, Mohit. There are two parts. I'll take the first one on the margin side. As I explained, the margins that we have reported for the first half of the current financial year at 8.2% obviously had some one-offs and some closure-related costs. It also had, I think, cost pressures arising out of the procurements that we contracted almost six months back that came into the P&L. I would like to say that when we gave a guidance of 9.5%, in a way it has been factored. We do expect with the current round of procurement that will see us in the next two or three quarters obviously will be at prices which are favorable to us. We do expect that like the way we have demonstrated the revenue uptick to seep into H2 of the current financial year, and we do believe that the margins with respect to the projects and manufacturing portfolio could be at a slightly higher plane, like what we witnessed in the H2 of the previous financial year. It is with this perspective we are talking about that, whereas it would be very difficult for us to position the exact number, but we do believe that we have sufficient levers and some of the projects getting into margin recognition, major projects getting into margin recognition threshold in the next six months, will enable us to improve the margin trajectory from what we have reported in the first six months of the current financial year. Coming to the revenue part, I maintain that like order inflow and revenue, we had given a guidance of a band of 12%-15% at the start of this financial year. With the consistent revenue growth that we have witnessed, more so in the projects and manufacturing business portfolio, this momentum will continue. At this juncture, knowing fully well, as I mentioned in my earlier part of this call, that because of certain supply chain disruption that could potentially happen, it becomes a little very difficult to again say whether it will be upwards of more than 15%. Today as we see it, we are confident to touch the higher end of the band that we have given at the start of this financial year. Certainly. A clarification, we heard somewhere that we are looking to reduce the debt on the L&T Metro Hyderabad, but from INR 130 billion- INR 20 billion over the next 24 months. I think this is based on the two key things. One is that monetization, which you're trying to do for the land and the soft loan from the government. My first question is how much is the monetization which is possible over the next 12-24 months, which we have been allowed? Secondly, what is the interest rate on the government loans? Okay. The Hyderabad Metro balance sheet today is almost INR 16,000 crore, I would say funded by bank debt, by external debt of INR 13,000 crore. Okay? Now, our endeavor is to, with the improved ridership, which is now in excess of 400,000, especially in the month of October, we do expect the ridership to consistently improve given the fact that all the other COVID-related restrictions are now off. We do expect a ramp up in the IT companies taking back their employees back to, you know, working from office. We do see a ridership improvement consistently happening. The target from an overall financial restructuring perspective is that to bring this INR 13,000 crore to a level of, say, INR 7,000-INR 8,000 crore over a period of two years, it's not going to happen immediately. As you are aware that the Government of Telangana has accorded a INR 3,000 crore interest-free long-term financial assistance to the Hyderabad Metro. This is expected to come in tranches over a period of two and a half years. Three thousand from thirteen thousand, if you subtract three, that brings to ten. The balance INR 2,000-INR 2,500 crore is what we expect to monetize of the various land parcels and some part of the already developed properties that we have over the near term. Near term could be in the next 12 months or so. With this INR 3,000 plus INR 2,000-INR 2,500, our loan book should come down in the next two years to a more manageable INR 7,500-INR 8,000 crore. With the ridership at 500,000-600,000, hopefully to come in the next, say, 12 months or 18 months, I guess the worst is over as far as L&T Hyderabad Metro is concerned. Thank you. That's very helpful, sir. Thank you and best of luck. Thank you, Mohit. Thank you. The next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead. Yeah. Hi, P.R. Congratulations on a very great set of numbers and robust order inflow. My first question is on Hyderabad Metro again. You said that this assistance from the Telangana government will come over the next two to two point five years. Is it right to assume that we are not going for any InvIT here and most of these restructuring or the soft loan assistance will bring down the levels of profitability to service the interest and the debt? Maybe we look at monetization only after 3 years now. Parikshit, I think we have maintained this aspect earlier as well, that the immediate actions that L&T is doing as far as Hyderabad Metro is concerned, is to bring down the debt levels and hopefully with improved ridership, the stress on L&T's performance because of L&T Metro should come down. The ridership has been, I would say, ahead of our own expectations, and we do expect that you know, the ridership will improve by another 100,000 or 150,000 over the next 6 quarters. At this juncture, with the current debt levels, I think it would not be an attractive proposition to do an InvIT right away. What we are looking to InvIT possibly could be two-three years down the line. That is the time when you could have investors who could look at this at a more attractive investment option rather than at this juncture. Okay. What kind of loss funding because we have to incur in this year and over the next two to three years, because in the first quarter itself, despite the improved ridership, we booked a loss of about INR 330 crores. Yeah. I would say that our total cash exposure to L&T Metro today cumulatively is around INR 7,500 crores, comprising of equity of INR 2,500, and the balance is the cash assistance. In the current financial, we have not done any significant amount of cash assistance to tide over, because operationally, the metro is now making positive EBITDA. With the government support in the form of loan and also the TOD monetization that I was referring to. In fact, the TOD monetization could happen at a faster pace in terms of because the government financing or funding or the government assistance will be over a period of two years or so average. We do expect with these inflows of INR 3,000 +, INR 2,000-odd crore should hopefully not have implications for L&T in terms of a higher cash support to the metro operations. Okay. Just, second question was on, so compared to the first quarter commentary and, overall outlook, we seem to be little more guarded this quarter. Despite reporting a very strong quarter, I'm a little surprised on your guarded commentary on growth, on margins, on supply chain, when commodity prices seems to be coming off, supply chain issue seems to be getting more smoother. Just bit of worried why this kind of defensive approach is there this time. No, I think, Parikshit, let me put it like this, see, we have our first half margins of the current financial year is actually lower than the H1 of the previous year. Okay? It is because of the explanations that I already provided for. We do believe with the softening of the commodity prices and a higher revenue uptick, hopefully, which will happen in H2, I guess our margin trajectory in H2 should be better than the H2 of the previous year. It's always a question of, as I said, if there is a particular supply chain issue which impacts a particular job not achieving the margin threshold, then obviously it will have some impact on the margin trajectory. We are sufficiently confident that we should be in a position to somehow meet the 9.5%. If not, at least maybe because of the composition of jobs and that could happen in the H2 of the current year, we are reasonably confident that we should be inching closer to the targeted margin for the current financial year. I don't think it is a guarded statement. It is a question of the assessments that we have been doing. As you may be aware, commodity price softening is one aspect, but there is also the fact the volatility in commodity prices is also creating some amount of, I would say, in the way we are you know, executing the jobs and also the continuing energy crisis in Europe, which is also impacting to some extent procurements in terms of time delays. We have to be mindful of all these factors, and hence we believe that we are on the job to, I would say, touch the targeted margin. There could be some slippages that we have witnessed in Q in the first half, which probably could be difficult to completely compensate that in H2. We are reasonably confident that we should be in and around the levels that we have forecasted for FY 2023. Okay. This is the last question. Typically when we do cost to completion accounting, we know that some of, as you said, some of the projects there were issues, site idling, delays, few projects, cost of closure. When we do this accounting, was this a negative surprise which came up suddenly this quarter or it's a regular exercise which keeps happening every quarter and we see more of these negative surprises coming for the rest of the half? No. Okay, Parikshit, it's like this. When I talked about a particular aspect of closure costs in two jobs that we have got completed, it was not an accounting consideration per se. There have been additional costs that we had to incur to complete the jobs as per the customer specifications. In terms of the claims that we will lodge, it is something which we have not factored. Okay. We are taking up with the client for these additional costs that we have incurred. Hopefully, I guess when the claims get certified, that comes back to the system as clean margin. Since we don't account for claims unless until they are certified by the client, so you are unconstrained to take the cost as it is. Okay. Got it, P.R. Thank you. Those were my questions. Thank you. Thank you. The next question is from the line of Sumit Kishore from Axis Capital. Please go ahead. Good evening, P.R. Very strong inflow execution working capital performance. My first question on inflows, where infra segment has you know seen a very strong performance. Could you give some sub-segment color here for infra and elaborate which pockets have done relatively better? You also mentioned in your opening remarks regarding private sector also seeing some pockets of growth. Could you please elaborate on this performance for infra segment? Sumit, within infra, we have five sub-segments, which is buildings and factories, transportation infrastructure, heavy civil, water, power transmission and distribution, and minerals and metals. All the sub-segments have, you know, barring for transportation infrastructure, have shown a growth in revenue, which compares to the 39% growth that we have witnessed in Q2. That has definitely, I've been there, I would say, all the sub-segments obviously reflecting the respective order books being sizable and also the fact that improved execution visibility. As far as order inflows are concerned, we have seen a robust order inflow again in all the segments I would say barring for transportation infrastructure, where we are targeting only select opportunities. Unfortunately in the order inflow side on TI, on transportation infrastructure, we are not being quite successful. In so far as the other segments, be it water, be it power transmission and distribution, buildings and factories and heavy civil infra, including minerals and metals. The redeeming fact in infrastructure segment order inflows has been a surge in buildings and factories inflows and minerals and metals in a way trying to give a comfort that private sector CapEx is coming in some form or the other. Okay. Your order prospects though, at the end of Q2 are down about 8% year-on-year. We were expecting that this order prospect base might possibly, you know, improve as we go through the year. That is what was mentioned, at the beginning of the fiscal. Any thoughts, there? And particularly on states, what is the trend that you are seeing? Why are the awards getting delayed, and what is the outlook for 2H? In fact, Sumit, when we started this year, I think we have been a little more careful in terms of looking at the right order prospects, where our chances of getting, once they get tendered, the chances of getting the conversion of tender to award improves in our favor. As of June, what we are referring to INR 6.32 trillion the order prospects across all the segments. This was INR 7.6 trillion is what we had indicated as of June. Obviously there has been a passage of time. We have seen tenders getting awarded. Some of them we have won, some of them we have lost. We do expect that the 6.32, what we have now talked about again are those prospects where L&T will try to put a serious bid, of course, assuming that the tenders will happen. We do expect a decent share of these tenders to get converted to awards and L&T to get a, I would say, a decent share, more than what is there in the earlier years or so. I guess that is not something. I mean, we are conscious of the fact that when we are given a 12%-15% order inflow guidance for FY 2023, and I just now mentioned that as the way things stand out in terms of our H1 performance and on the basis of the order prospects and our own assessments of when these tenders get concluded, we are reasonably sure that we should be positioned to meeting the higher end of the guidance that we have indicated. Okay. Basically the win ratio could improve because the order prospects as of September are down on a year-on-year basis. Yeah. Yeah. Yeah. Also one small clarification. If you could indicate roughly what is the size of solar EPC contracts in your order backlog? In any way have margins here dragged down overall margins for your EPC segment? The solar EPC contracts in the order backlog will be in the range of, maybe around INR 20,000 crore-INR 22,000 crore, $2.8-$3 billion, sorry, $2.8 billion or so. While we have given the margin guidance for the current year, it takes into account some of the earlier solar orders having got impacted because of prices, but that is already factored in. Okay. Thank you, and I wish you all the best. Thank you. The next question is from the line of Ashish Shah from Centrum Broking. Please go ahead. Yeah, good evening to you. My first question is on the private sector prospect pipeline. We did mention on a couple of occasions that it's looking very good. If you could quantify out of the INR 6.3-odd trillion of prospects, approximately how much could be the private sector prospects and any specific segments where they're coming from? The total 6.32 obviously includes international as well. At a 6.32 level, the private prospects pipeline will be ranging between 18%-20% or so, largely led by prospects that will come up in the buildings and factories and the minerals and metals sectors. Okay. Is the proportion more if I look at domestic, let's say of the INR 5 trillion? In terms of, yes, the domestic proportion looks to be better. Of course, in international, the major prospect pipeline are more tilted towards hydrocarbons. Hydrocarbons, as you know, most of the ordering momentum comes from the state-owned enterprises in the respective, you know, domains, be it Saudi or UAE. As far as domestic is concerned, I guess largely, it will be coming largely from the domestic part itself. Right. This proportion, is it appearing to be far higher than what it used to be, let's say, same time last year? Yes, it is more. I would say almost a 10% increase in the private order prospects is there as compared to September 2021. Sure. Note that. Secondly, if you can, you know, share if there's any update on some of the new businesses that we are planning. We had spoken at length about some of these initiatives in the fourth quarter of 2022 call. It's been about six months. Any update that we should be aware of, any progress, any capital outlays which have already begun? Okay. I mean, there are I mean, yeah. Sorry. Yeah. Finish, Ashish. No, no. What I was trying to say is just need to be more specific about the, you know, electrolyzers and the fuel cells, et cetera, so the new age businesses. Insofar as the new businesses are concerned, as you may be aware, both L&T-SuFin and L&T EduTech, the two digital platforms, one is on the B2B supply chain and other is on the higher education, especially on the engineering side. Both of them have got commissioned, and their numbers are as per our plans itself as we speak. Coming to data centers, which is another diversification of L&T to get into this part of the business. We are putting up a pilot data center in Panvel, which should hopefully get commissioned in January. We are setting up a new data center in Kanchipuram. Hopefully, I guess that should get completed by December 2023 to March 2024. There will be a second more data center in Panvel that will start, in terms of construction and all, maybe early next calendar year. Again, the investment and the activity is as per plan. As far as electrolysis is concerned, the pilot plant to make green hydrogen in our Hazira campus is almost ready. In our test cases it is producing for captive requirements. I think in terms of commercial operations, maybe it will happen in this particular month. Sorry, in the month of November. As far as the mainstream electrolysis is concerned, we are looking for a JV partner. As we had mentioned in the May call, I think the selection of JV partner should happen by March 2023 or so. As far as storage batteries is concerned, anyway, that was planned to be an activity that will come in sometime in the early part of the next financial year. Sure. That's it from my side. Thank you, sir. Thank you, Ashish. Thank you. The next question is from the line of Deepak Krishnan from Macquarie. Please go ahead. Well, thanks for the opportunity, sir. I just wanted to check one from the margin profile. In terms of the order backlog, are we still 1/3 fixed price, 2/3 variable price? Any still legacy projects that could kind of hamper our execution or any procurement impact that will continue into 2H? At our overall projects and manufacturing portfolio, the order book of INR 3.72 trillion, there has been no major change in terms of what we reported for the end of Q1, in a sense that two-thirds of the order book is variable price or contracts that are linked to inflation indexes, and the balance one-third is fixed price contracts. In terms of the order book for infrastructure is concerned, this INR 3.72 trillion is the total projects and manufacturing. As far as infrastructure is concerned, almost 85% of the contracts are variable price contracts, and the balance 15% are I would say some sort of fixed price contracts. It is this part of the fixed price contracts. Obviously, the ones that we had secured in periods prior to 2021 would be having some amount of margin impact because of the commodity prices. I wish to tell you that contracts that we secured in the later part of the last financial year, we have been careful enough to emphasize on escalations. If it's a pure fixed price contract, appropriate buffers have been considered. Taking all of this account, and that is the basis by which we gave the margin guidance of 9.5% for FY 2023. Sure, sir. Thanks for that. Just maybe one last question on the order prospect pipeline. If you look at Q1 or, you know, 1H itself, the win ratio for 2Q itself was north of 35%. Then for 2H we are implying a slightly, you know, just north close to about 20% win rate. Is that the order wins in Q1 were larger order basis or is there anything different in terms of the prospect base at the start of the year versus what we are kind of targeting for 2H? Deepak, what happens is that this is a, of course, this question is valid. But when we talk about order prospects and then conversion, we are only talking of numbers. But it is quite possible in the first half of the current financial year, we actually secured certain orders which never featured in the order prospects itself. Okay. Some of the order prospects that we have has been postponed to H2, so which hopefully when gets tendered, we should be getting. From a pure statistic perspective, it seems to suggest that our award conversions have been better. But we do see that our strike rate, I would say we are talking about the past strike rates in H2. Maybe in H1, the strike rate was a little more higher, upwards of 22%-23%. As you know that one or two large orders, if you get it, then the strike rate exactly improves. If it gets postponed or we lose it, then the strike rate will come down. It's a question of absolute numbers. I guess we have assumed the standard strike rate based on our assessment of the tenders that are going to happen in the next six months and getting awarded. We have taken the average strike rate that we have witnessed in the previous years. Sure, sir. Those were my questions. Best of luck for the quarters ahead. Thank you. Thank you. The next question is from the line of Aditya Bhartia from Investec. Please go ahead. Hi, good evening, sir. My first question is, again, on margins. But leaving aside this particular year and looking slightly kind of longer term, in the past, we have done 10%-10.5% kind of core margins, and that was also done in a period wherein CapEx cycle was actually not very strong. Do you think we can get back to 10%-10.5% kind of margins over the next two to three years? Aditya, I guess this has been a question which keeps coming up, but I wish to tell you in the projects and manufacturing business portfolio, it becomes a little difficult to try to forecast a margin trajectory ahead of, you know, more than 12 months beyond. We usually stick to what we believe the margin guidance, given the order book that we have, the combination of fixed price and variable price contracts, the stage of completion that we envisage in each of the segments across the year. That will actually determine the margin trajectory. Last but not the least, margins can be a function of one-offs, like the cost pressures that I talked about in the previous part of this call. At the same time, margins can also get impacted favorably because of customer claim settlements. From a timing effect of contracts where you have variable price index-based passthroughs. Costs getting impacted in a particular quarter and getting repaid in the index prevailing in subsequent quarters based on the milestone that we have invoiced. It becomes a little difficult, but I would like to emphasize here that we are extremely careful today while we are executing the jobs in terms of course, the jobs that we are bidding, we are taking into account what we believe the appropriate contingencies buffers. But the volatility of prices that we have been witnessing on the commodity side for the last 15 months has been unprecedented, so it has to be a more careful assessment is being done. The risk mitigation or the risk management for this is also at a heightened level. The larger point here is L&T at this juncture is trying to focus between P&L and balance sheet in terms of ensuring that our execution and thereof, thereupon the margin, I would say, margin development over the execution is in line to ensure that the working capital does not get exposed too much. A short answer to your question is that it's a little difficult for us to go into a margin kind of an outlook for the subsequent financial years because of the reason that I just now spoke about. Okay. The reason I was asking this question is that this 9.5% itself has been impacted a lot by commodity cost inflation and by all the cost pressures that you spoke about. Assuming that things normalize and we are back to a stable commodity cost environment, shouldn't we be building in a fairly sharp expansion? Also because if CapEx cycle is picking up, then competition should also easily. One point, Aditya, I would like to refer to is also a question of the mix of orders that we are getting. Obviously, domestic orders for the last two to three years have been largely led by public sector, which is obviously the L1 approach. The competition has been quite fierce in some of the sub-segments that we operate. Similarly, margin mix at 9.5%-10% or whatever you may refer also depends on the composition of how much of orders come between infrastructure and hydrocarbons. In hydrocarbons, how much of orders are accruing in upstream and downstream. It is a dynamic, I would say variable, comprising the way all of these ordering momentum happens. One important thing here is obviously if the private sector ordering, which has been below 20%-odd today, if that goes to crossing 20%, 22% or 25%, we do see expectations of a better margin in subsequent years, if the share of private sector improves. Understood. That's it. On the electrolyzer side, I understand that we have done a JV with IOCL, and we also had the technology sharing agreement, I think with HydrogenPro. Which is the JV that you were referring to in one of the earlier questions? Also a related question, we were also thinking of doing 500 megawatt of PEM. Is the technology sharing agreement for the same already signed? As far as technology agreements are concerned, as I told earlier as well, that we expect to close out the technology partner for electrolyzers hopefully by March 2023. Insofar as the IOCL JV is concerned, I guess that particular JV where L&T and IOCL will have a stake, will be largely led for setting up plants for IOCL and maybe for other public sector oil refineries on a BOO concept where the JV will set up a BOO entity or a special purpose vehicle, where L&T, IOCL and also the partner that will provide us renewable energy, all of them would have an equal stake. Not equal stake, but stakes in line with the proportions of their work is concerned. That's the overall spirit of the JV. So far as technology partner is concerned, I think it would be speculative to comment on names at this juncture. The finalization of partner should hope to happen by the end of this fiscal. Perfect. That's great, sir. Thank you so much. Thank you. The next question is from the line of Renu Baid from IIFL. Please go ahead. Yeah. Hi, good evening, sir. I have three questions. First is on the hydrocarbon segment. We see, while the order backlog built up has been happening now for almost 3-4 quarters, execution has continued to trail. Should we expect pickup in execution in second half materially or also, the project in Africa which was stuck, is there any development on that project? That's the first question. The hydrocarbons project in Africa, I guess we are executing a job in one of the countries in North Africa, and it is almost, I think, on the verge of completion. I don't think we are executing any hydrocarbon project in Africa other than the one I talked about, which is almost, I think, getting over. Okay. As far as the- Okay. The order backlog-to-conversion is concerned, Renu, it is hydrocarbons, as I mentioned, that the revenue target could not achieve because of certain supply chain issues and close out with customers in terms of the final design changes. We do expect a ramp-up in the momentum of execution to happen in H2. Got it. Secondly, while you just shared the combined prospect list for the high tech engineering segment, how would the different prospects look like? Because there are a couple of large projects where we are well placed and the cumulative prospects, if I got the number right, was about INR 190 billion. How should we look at the split between defense and heavy engineering? Of the defense prospects, are you including K9 Vajra as well as the recent, I think, the [Air and Surface River] L1 that would already be a part of it? Renu, it is like this. In the order book prospects of INR 6.382 trillion, INR 6.32 trillion that I was referring to, the combination of the high-tech manufacturing is, I would say, the Heavy Engineering division 3,300 crores or so, and the defense, including the shipbuilding, is around INR 16,000 crores. Okay. Smart World and Communications around INR 8,000 crores. That in a way combines the total INR 0.27 trillion that I was referring to comprising our Heavy Engineering, defense and Smart World. The defense part of the business around INR 15,000, INR 16,000 crores has, I would say, a list of seven or eight opportunities. I think it would be inappropriate for me to comment on which of those opportunities are, given the fact that they are opportunities and we do believe that going forward we should be in a position to have some of them, because typically in defense our strike rates are far more better. It also depends on the customer to get into the procurement mode. Got it. Lastly, the cost to completion provision on account of project closures, which you mentioned now, would it be possible for you to highlight which sub-segment was it related to or any particular large projects to highlight here? No, it is. I would say, I mean, it would be inappropriate for obvious reasons to comment on the two projects where we had cost closures. I think for obvious reasons it would not be right for me to comment on that. I would say that they are to be considered as one-offs while we have reported the Q2 numbers. Got it. Lastly, related to this, if I recollect, I mean, now for almost last three months to six months, we have been expecting that because of the steep inflationary impact which we had in the last fiscal, second half of the first part of this calendar year, you were expecting significant cost reimbursement of claims to be placed with clients. Now that your margin guidance is also a bit shy of what the risk of being shy compared to last year's margins, do we see a scenario where some of these costs, I mean, the differences which we had because of volatility may not actually be reimbursed by clients, or it's more of a timing difference between March and the next fiscal? Renu, it is a combination of both. I guess, wherever we have had cost escalations, considering the unprecedented increase in the commodity prices, we have gone back to clients for those type of fixed price contracts that we had secured sometime in 2021 for, obviously, some amount of compensation. It has been a sort of a give and take. Because of that, I would say the I think otherwise, maybe the margin trajectory would have been worse off. To some extent, our customers also are aware of the frequent situation we are in, and there has been some amount of additional compensation that has got factored. But it is not essentially that the entire cost escalation can be passed off, especially when you bid it out in a fixed price job. I would say that it has been some amount of that has been factored. Wherever you have had actual cost escalations and we have put up the claims, obviously we don't recognize extra cost claims unless until they get certified. In a quarter when such claims can get certified, as I was mentioning in response to some other person's question, that you could have some positive surprises on margins as well when these claims get crystallized. Right. Got it. Good, sir. Thanks much and all the best. Thank you. Thank you. Thank you. The next question is from the line of Girish Achhipalia from Morgan Stanley. Please go ahead. My questions have been answered. Thank you. Thank you. The next question is from the line of Priyankar Biswas from Nomura. Please go ahead. Yeah, good evening, sir. My first question is again related to this defense opportunity questions that I heard. If I go into slightly longer term, not necessarily for the next six months, let's say on a two to three years, and there has been a substantial emphasis on indigenization. List has also been taken out. Can you just elaborate on what are your addressable market opportunities and what sort of growth rates can we expect? Priyanka, I guess there has been, I would say, a positive set of announcements by the government insofar as defence procurement and the indigenization strategy is concerned. I guess that is something that will shape up well for companies like us, like L&T, to get advantage of the increased indigenization program. But that is an announcement from, coming from the overall Ministry of Defence or their thought process. Now, from there to get converted into the actual procurement placement of orders, I guess that will take some time. Like the Ministry of Surface Transport, when they decided to go ahead with privatization on the roads part of it, especially on concessions. It took some time for them to develop the overall business model for Ministry of Surface Transport in conjunction with NHAI. Similarly, I believe that, whereas the prospects look good and the positive announcements obviously augur very well for indigenous defense procurement, but it also depends on the procurement strategy, how fast-paced it is. We do expect, considering that the government's emphasis has been quite overt in terms of they intend to do this on a faster pace. But at this juncture it would be premature to really comment. Maybe by March 2023 we will have a better, I would say, handle on this aspect. But yes, to allude to your question, we do expect the defense engineering segment to, you know, take a larger share of the pie or opportunities. Not pie, but in terms of larger share of the opportunities, especially when it concerns the army and the navy procurements. Okay, sir. Just one question here at a broader level. You said that in this quarter there has been some slowdown in the tender to award ratio. If you can give us some, like you gave it in the last quarter and the quarter before that, what has been the trend and how does it at least compare with pre-COVID levels? Lastly, carrying forward there as well, you also highlighted some closeout challenges on the EBITDA margin. Are those challenges behind us in 2Q or do we see some flow-through impact in the 3Q as well? The closeout challenges, what I was mentioning about, which had an 80 basis points impact in Q2, can be positioned as a one-off incident in the quarter. Okay? Let me clarify once more. As far as the award to tender ratio is concerned, the Q2 award to tender ratio was, I would say, 34% in the current year as compared to Q1 of the current year, which was at 69%. Again, these are all timing differences, I would say, Priyankar. If you were to look at a H1 level, H1 current year, the awards to tender ratio is 49% as compared to H1 of the previous year, which was at 40%. Definitely it has improved, but you could have some quarterly volatilities here and there. I guess on a longer term, if you see, this is something which has definitely improved. Same thing, like if it had been like a pre-COVID level, let's say, so what is the typical tender to award ratio on an annual basis, so in your experience? Here again, in the first half, I think a 35%-40% award to tender ratio is expected, whereas in the second half, usually India sees a busy second half in terms of tendering, in terms of business activity and so on. That could be upwards of 55%. Okay, sir. Sir, just last question from my side. If you can comment on the thermal power tendering outlook, because last four years hardly anything has happened, but now we are seeing some movement. What is your commentary on that regarding the prospects on thermal? The total order prospects that we are looking at thermal, which is a shade better than what we saw in the month of March, let me tell you that, today is almost around INR 38,000 crore. Okay? Out of which we do have in the horizon almost, across three particular projects, in aggregate totaling to 800 megawatt into five units across three clients that are hopefully expected, the tenders are expected to happen by the end of this fiscal. That is what is featuring largely in our order prospects of INR 38,000 crore. Okay, sir. That's all from my side. Thank you so much. Thank you, Priyankar. Thank you. The next question is from the line of Deepika Mundra from JPMorgan. Please go ahead. Hi, sir. Good evening, and thanks for the opportunity. Just two things from my side. Firstly, on whatever margin impact that we've seen in the quarter, how much, what share of that would be eligible for future claims? Secondly, I think you'd mentioned last year also there were some pending claims in the fourth quarter. Has any of that recovery come through in the first half of the year? Deepika, in fact, last year when we started the year, we had given a guidance of 10% and we reported finally 9.2% for the year. Obviously, you get a break-up of cost increased cost pressures because of commodity prices, and some part of that didn't approve because of customer claims. This year, when we gave a guidance of 9.5%, we have not taken into account customer claims, because typically customer claims take some time to get certified, especially if it is, obviously customer claims that are related to government in some form, be it center, state, or public sector corporation. I guess, at this juncture, it would be inappropriate for us to factor those claims by giving a guidance. We have not done that. At this juncture, yes, in one or two customer claims, we are far more favorably placed than what we were while in the month of March, but it would be premature for us to conclude whether that will happen in the current financial year or next financial year. Understood, sir. Just lastly, on the order inflow from international hydrocarbons of course is a tad weaker this quarter. Any specific reason for that? Secondly, the large order projects which are being executed in Saudi Arabia, are any of these large infra projects in your prospect base? The hydrocarbons international order inflow could be a little lower optically because in Q2 of previous year we had a, I would say, a large order that we got awarded from a reputed client in Middle East. Obviously, a particular order, a big chunk which comes then optically that comes as a relative measure, it is optically down. But in terms of, I would say, the overall prospects for hydrocarbon in the Middle East, is that the robustness seems to continue as well. Understood. On the infra side? On the infra side, as far as infrastructure is concerned, I think a major part of the total order prospects that we have for infra at INR 4.54 trillion, almost INR 3.97 trillion is domestic. It is a small portion of INR 0.56 trillion, which is international, and that too, it is largely led by the opportunities that we have in our traditional power transmission and distribution business out there. Understood. That's very clear. Thank you so much. Thank you. The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead. Yeah, thank you for the question. P.R., can you tell us what is the CapEx that we should build in for the next couple of years, taking into consideration the investment into new energy businesses, et cetera? Pulkit, I think we had mentioned this during our May call, where we covered the strategic plan. In terms of the traditional CapEx, that is the CapEx that is required for our projects and manufacturing portfolio. This is the kind of orders that we are looking at and what we have seen in the past. An average of, I would say, INR 3,000 crore is what we can consider each year as part of traditional CapEx. This again depends. If you have a whole lot of jobs in the hydel and in the underground metro where you need tunneling work, obviously you need a higher number of equipment, especially the tunnel boring machines. In fact, in the first six months, we have seen a sizable buildup of CapEx on the as far as the projects and the construction, manufacturing portfolio is concerned. It would be, at this juncture, good to assume that on a steady state, INR 2,500 crores-INR 3,500 crores is what we can consider as CapEx part. As far as the new investments are concerned, obviously it's aggregating to almost INR 7,500 odd crores, where data centers, INR 2,000 odd crores, electrolyzers. This is investment. Data centers is being incubated in the parent L&T itself. The entire INR 2,000 crore will come as CapEx. The overall investment outlay for electrolyzers, which is INR 1,500-odd crore, which will happen in terms of actual spend likely to happen next financial year after we close out with the technology partner. That will be the total investment. Obviously, I don't think the equity exposure of L&T into that JV will be as much. Obviously, we'll have some amount of leverage and also the partner equity stakes as well. Similarly, when it comes to the storage batteries, where we expect to close out the technology partner maybe next financial year. The overall investment at this juncture for the current financial strategic plan ending FY 2026 is expected to be around INR 3,000-odd crore, INR 3,000 crore-3,500 crore. Again, that is a full investment, so not necessarily L&T's exposure. That are the, I would say, the data centers, the electrolyzers, and the storage batteries. The overall investment is in the range of INR 7,000 crore-INR 7,500 crore, is what we are now looking at in terms of CapEx or investment. Understood, P.R., P.R, just an extension of this, given the fact that. This is part of it, huh? Pulkit. Understood. Yeah. No, I wanna understand that given the fact that our working capital is a lot more comfortable now, we don't have any meaningful CapEx going forward, and our leverage ratios are also comfortable. Is buyback on the cards anytime in the near future or it is not something that is being considered? Pulkit, sorry. We had indicated once more at the start of this financial year when we concluded on the strategic plan part. Definitely, the objective of the group is to improve the ROE trajectory of 11%-18% over a series of steps, which includes divestments of non-core businesses like concessions, reduced exposure to L&T Metro in terms of further cash assistance, and, you know, steady state, consistent margins and growth in a controlled working capital as far as projects and manufacturing is concerned. All of this should hopefully see us through from 12% to 15% to 16%. Now, the 16%-18% is obviously what we call as the balance sheet actions. Now, in what combination it will pan out, I think, it would be premature for us to conclude or comment at this juncture, but definitely it is being thought about seriously within the group. Not in the near future. No, I did not. I said it is being thought about. It would be not appropriate for me to comment as with the timelines at this juncture. Understood. Thank you, P.R. That's it from my side. Thank you. Ladies and gentlemen, we will take the last question from the line of Aditya Mongia from Kotak Institutional Equities. Please go ahead. Good evening, P.R. and the team, and thanks for the opportunity. The first question that I wanted to ask you was on execution. If I see whatever is the rate of execution on, let's say, the prior quarter's backlog, there has been an improvement seen in 2Q versus previous 2Qs, but not to the extent where we were, let's say, just prior to COVID. I'm just trying to get a sense from you whether pace of execution can further move up and if that requires further reduction in working capital. Okay. Aditya, it is like this. First and foremost, as far as the infrastructure segment is concerned, let me tell you that the execution momentum has achieved levels even better than what was pre-COVID, okay? In terms of the overall execution momentum, of course, in hydrocarbons we have had, as I mentioned earlier, some amount of supply-related supply chain challenges that keeps coming once in a while. The aspect today is, Aditya, that we are a little conscious about the fact that we don't want to go just on the basis of execution without getting paid. The focus of L&T right now is to balance execution with monies getting collected. It is, I think, one important parameter that all of us should be aware of, that we would like to keep the overall working capital in check and not to get into numbers that we have witnessed some years back where the projects and manufacturing part of the portfolio has even seen 23%-24%. We are a little conscious about the fact that we would like to. While we don't have challenges per se as far as execution is concerned, but we are fully conscious of the fact that we would like to get paid. To that extent, if there are delays in payment, the execution gets trimmed to the extent of the payments that are coming from the client. Thanks for the clarification on this one. P.R., the related question was on working capital, and I think I've been having discussions with you on these procurements and guidelines that came about, wherein the government is thinking through kind of streamlining the entire EPC ecosystem in terms of payments. Any actions that you have seen that are concrete and have been taken in that regard? Aditya, it is like this, that this guidelines came in October 2021, but as far as we are concerned or I am aware of, I think the guidelines are yet to be getting enforced by the central government or PSUs itself. Maybe you could see that happening maybe in some other. As of now, that has not been, we have not seen cases where the three or four areas that they were talking about that L1 need not be the only basis of awarding a contract. It has to be a combination of both the technical and financial credentials, price credentials. Second is single bid awards can be given as award. Until now, we have not seen anything that way of bid because we are also being a little selective. I don't think those conditions have still got applied. Okay. Is it fair to assume that there is a scope of improving the pace of execution if for some reason working capital, payments, were to be more streamlined? Is it possible for L&T to move things faster? Absolutely. I would say that, if obviously for all the projects in India, if we are getting paid on time, I do think that our execution ramp up could obviously hasten at a faster pace. Understood. One more question on the margins. I think questions have been asked. I'll try to put in a simpler manner. Are we seeing any trends in, let's say, our own bid margins becoming better off in certain segments or on an aggregate basis? Just on the basis of whatever orders we are winning. I'm trying to get a sense from you on competition because it seems as if you're getting orders that you are not even factoring in. Just trying to kind of probe you slightly more on that aspect. No, Aditya, let me put it like this. I think in the last six or seven quarters, ever since the commodity prices slowly started shaping up, we have been extremely careful while we are pricing our bids. We are focusing on a, I would say, a smaller set of prospects where our ability to win is improved. At the same time, we are not compromising per se on margins, but also one should know that it is also a function of what we call a competitive intensity. It is a blend between competitive intensity to demonstrate, and the, you know, and also keep ensuring that we don't cede market share to any of the competition. I guess it's a healthy mix that we are, you know, we are adopting. Yes, if the propensity of orders largely comes from state-owned or public sector, then obviously L1 being the primary, I would say, determinant for award of contracts, I guess that aspect will continue to remain. Got that. Those are my questions, and thank you very much for your color. Thank you. Thank you, Aditya. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. P. Ramakrishnan for closing comments. Thank you everyone for taking this time of the day for attending this call. It was our pleasure to interact with all of you. We have tried to answer as much as possible in response to the questions, and also we have covered that in our presentation and also in the call that we just now had. In case if you have any follow-on questions or hygiene-related questions, please feel free to call me or Harish, my colleague Harish, and we'll be glad to answer all of them. Thanks to all of you for your time. Thank you. Thank you. Ladies and gentlemen, on behalf of Larsen & Toubro Limited, that concludes this conference call. Thank you for joining us and you may now disconnect your lines.