Larsen & Toubro Limited

Ladies and gentlemen, good day and welcome to the Larson & Toubro Limited Q1 FY25 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 this conference, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. P Ramakrishnan, Head Investor Relations from Larsen & Dubrow Limited. Thank you. Hand over to you, sir.

Thank you, Darwin. Good evening, ladies and gentlemen. A very warm welcome to all of you into the Q1 FY25 earnings call of Larsen & Dubrow. The earnings presentation was uploaded on the stock exchange and then our website at around 6.30 p.m. As per the normal practice, instead of going through the entire presentation, I will take you through the important highlights for the quarter, followed by our financial performance summary for the same quarter in the next 30 minutes or so. And after that, I will be taking the Q&A. Before I begin the overview, the customary disclaimer. The presentation that we have uploaded on the stock exchange and our website today, including the discussions we may have on the call now, may contain certain forward-looking statements concerning L&T Group's 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. I would request you to go through the detailed disclaimer which is available in slide 2 of our earnings presentation that we have uploaded today. To start with, the Indian economy continues to display a strong growth momentum despite the global headwinds. With the conclusion of the general elections in the country, we expect policy continuity going forward. The union budget for FY25 that got announced yesterday has reaffirmed the government's commitment towards enhanced public capex in the medium term. The central government budgeted capex at Rs. 11.11 trillion is around 3.4% of the GDP. Further, to promote state government capex spending, an amount of Rs. 1.5 trillion has been set aside as long-term interest-free loans. With a combination of improved domestic demand conditions, a good availability of bank credit, further backed by government's incentives for manufacturing, and finally with the election risks behind us, the stage is set in a way for a revival in overall capex in the country. The government budget yesterday also mentioned about promoting private investments in infrastructure through a viability gap funding and enabling policies and regulations. In our opinion, the union budget strikes a fine balance between prudent resource allocation and achieving fiscal deficit reduction at the same time. Elsewhere, the countries in the Middle East are continuing to focus on investments in oil and gas, infrastructure, industrialization, and energy transition. Before I get into the details, let me share some important highlights for the quarter. Two coveted global credit-taking agencies, the Standard & Poor's and Fitch, have assigned BBB Plus rating to Larsen & Dubrow. This rating, with a stable outlook, by both the two rating agencies is too nauseous about the country's covering ratings and essentially underscores the company's exceptional credit quality and robust financial health. Secondly, MSCI ESG Research has also upgraded L&T's rating from BBB to BBB on account of company's improvement in various parameters, including ESG. Thirdly, L&T Semiconductor Technology Limited, a only one subsidiary, has entered into a share purchase agreement this month for acquisition of 100% stake in Silicon Systems, a Bangalore-based company. This subsidiary has also signed a master collaboration agreement with Aditya Infotech, limited to develop and supply state-of-the-art systems on chip, that is SOC and other system solutions for CCTV cameras. Coming to the financial services business, that is L&T Finance, we are happy to report that the company has achieved, that is L&T Finance Limited has achieved a 95% regionalization as of June 24th of its loan book. The retail book and the retail disbursement for Q1-FI25 has registered a growth of 31% and 33% respectively. The company also reported an entity-level path at Rs. 686 crore for Q1-FI25 that has registered a 29% growth over the corresponding quarter of the previous year. I will now cover the various financial performance parameters for Q1 FY25. This quarter was a quarter of robust performance across the various financial parameters. Our group order inflows, revenues and SPAC for Q1 FY25 is up by 8%, 15% and 12% respectively. Our working capital to revenue, NWC to revenue, at 13.9% in June 24th, registers a sequential increase of 190 basis points, whereas on a Y&Y basis, it has improved by 310 basis points. Moving on to the individual performance metrics. Our group order inflows for Q1 FY25 at Rs. 709 billion registered a Y&Y growth of 8%. Within that, our products and manufacturing businesses secured aggregate order inflows of Rs. 544 billion for Q1 reporting a growth of 8% over the corresponding period of previous year. Our Q1 order inflows in the projects and manufacturing portfolio are mainly from infrastructure, hydrocarbon and the precision engineering businesses. During the current quarter, our share of international orders in the projects and manufacturing portfolio is at 40% as compared to 35% in Q1 of the previous year. During the quarter, orders were received across multiple segments, sub-segments like offshore vertical of hydrocarbons, renewables, transmission and distribution, roads, nuclear power, hydrogen and tunnels, ferrous metals, health and deep precision engineering business. Moving on to the prospects pipeline, we have a total prospects pipeline of Rs. 9.07 trillion for the remaining 9 months of this financial year as compared to Rs. 10.07 trillion at the same time in the last year. This represents a drop of around 10% on a Y-on-Y basis. This decrease is primarily due to a fall in the hydrocarbons prospects pipeline. The broad breakup of the overall prospects pipeline for the remaining 9 months of FY25 would be as follows. Infrastructure is at Rs. 6.02 trillion vis-a-vis Rs. 5.86 trillion last year. Hydrographic is Rs. 2.17 trillion vis-a-vis Rs. 3.48 trillion as of June 23. Energy power is at Rs. 0.45 trillion in and around the same as the last years. The heavy engineering and the precision engineering and systems businesses in aggregate have order prospects pipeline of Rs. 0.31 trillion vis-a-vis Rs. 0.25 trillion last year. The green energy business has started off an order prospects pipeline of Rs. 0.10 trillion vis-a-vis Rs. 0.04 trillion last year. Moving on to the order book. Our order book as of June 24 is at Rs. 4.91 trillion, up 19% vis-a-vis June 23 of last year. The production manufacturing business, since it is largely India-centric, 62% of this order book is domestic and 38% international. Of the international order book of Rs. 1.86 trillion, around 92% is from Middle East, 1% from Africa, and the remaining 7% from various countries, including of Southeast Asia. Like I said earlier, the various countries in the Middle East are continuing to focus on investments in oil and gas, infrastructure, industrialization, and energy transition. The breakdown of the domestic order book at rupees 3.05 trillion, which I said earlier at 62% of the overall order book, is as follows. Central government orders share is 14%. State government accounts or state government contracts account to 28% of the domestic order book. Public sector corporations or state-owned enterprises have a share of 37%. and private sector at 21%. Approximately around 18% of this total order book of 4.91 trillion is funded by multilateral and bilateral funding agencies. Against this total order book of 4.91 trillion, 90% of that is coming from infrastructure and energy. The details of this are already there in the presentation slides. During Q1 FY25, we have deleted orders of Rs. 6 billion from the order book. And as of June 24, the slow moving orders is well less than 1% of the order book. Coming to revenues, our group revenues for Q1 FY25 at Rs. 561 billion registered a YMY growth of 15%. International revenues constituted 48% of the revenues during the quarter. The strong execution momentum in infrastructure, hydrocarbon and the precision engineering assistance within the projects and manufacturing portfolio enables the overall group revenues for the quarter. The revenue for the projects and manufacturing business for Q1 FY25 is at Rs. 386 billion, up 18% over the corresponding quarter of the previous year. Moving on to EBITDA margin, the group level EBITDA margin without other income for Q1 FY25 is 10.2% at the same levels as Q1 of the previous year. The breakup of the EBITDA margin business-wise including other income is given in the annexures to the earnings presentation. You may note that EBITDA margin in the projection manufacturing business for Q1 FY25 is at 7.6% as compared to 7.4% in Q1 FY24. I will come to details a little later when I talk about the performance of each of the segment. Our consolidated PAT for Q1 FY25 at Rs. 28 billion is up 12% over Q1 of last year. This PAT growth is reflective of improved activity levels, partly offset by lower other income. The drop in other income is a function of lower treasury investments in the current quarter as compared to the corresponding quarter of the previous year. And here again, the drop in treasury investments is largely due to the share bypass concluded by the company in the previous financial year. The group performance, the P&L construct along with the reasons for major variances under the respective function age is provided in the presentation. You may go through the same for further details. Coming to working capital, our NWC to sales ratio has moved from 12% in March 24 to 13.9% in June 24, mainly due to the build-up in the gross working capital during the quarter. However, on a wide-on-wide basis, the net NWC sales ratio has improved from 17% in June 23 to 13.9% in June 24. The group level connection that excludes L&D finance for Q1 FY25 is Rs. 459 billion as compared to Rs. 439 billion in Q1 FY24. This is a registering increase of 4% on a Y-on-Y basis. You may go through the cash flow statement as part of the annexures to the earnings presentation. Our cash flow from operations for Q1 FY25 as negative Rs. 5 billion vis-a-vis Rs. negative Rs. 9.9 billion in Q1 FY24. Finally, the trailing 12 months ROE for Q1 FY25 is 14.7% vis-a-vis 12.8% in Q1 FY24, an improvement of 190 basis points. The improved profitability with every passing quarter along with the return of capital to shareholders in the form of the buyback is contributing to this improvement. Very briefly, I will now comment on the performance of each business segment before we give our final comments. For infrastructure, coming to order inflows, this segment secured orders for Rs. 401 billion for Q1-FI25, largely flat on a Y-on-Y basis. During the current quarter, the orders were largely received in renewables, transmission and distribution, roads, nuclear power, hydro-land panel, ferrous metals, health and the precision engineering sectors. Our order prospects pipeline in infrastructure segment for the remaining 9 months is Rs. 6.03 trillion vis-a-vis Rs. 5.86 trillion during the same time last year. This represents an increase of 3%. The infra prospects pipeline of Rs. 6.03 trillion comprises of domestic prospects of Rs. 4.27 trillion And international prospects of Rs. 1.76 billion. The sub-segment breakup of the total order prospects in infra is as follows. Water and effluent treatment share is 20%. Power transmission and distribution including renewables is at 22%. Transportation infra 23%. Buildings and factories 12%. heavy civil infrastructure 18% and the share of minerals and metals, the residual 5%. The order book of this segment at Rs. 3.25 trillion as of June 24. The book build for Intra is around 3 years. The Q1 revenues at Rs. 269 billion registered a strong growth of 22% over the comparable quarter of the previous year largely aided by the strong execution progress across international jobs. Our EBITDA margin in this segment for Q1 FY25 is at 5.8% vis-a-vis 5.1% in the corresponding quarter of the previous year. The margin improvement is primarily explained by execution cost savings. Moving on to energy segment that comprises hydrocarbon and power. Hydrocarbon received multiple domestic offshore orders that enabled to increase its order book. The segment has a strong order prospect pipeline of Rs. 2.62 trillion for the remaining nine months of the current financial year. The breakup of this 2.62, hydrocarbon comprises rupees 2.17 trillion and energy power prospects of rupees 0.45 trillion. The order book for this energy segment is at rupees 1.18 trillion as of June 24 with hydrocarbon order book at rupees 1.13 trillion and power at rupees 46 billion. The Q1 FY25 revenues for this segment at Rs. 85 billion registers a healthy growth of 27%, mainly driven by execution ramp-up of international projects in the hydrocarbon sub-segment. Low revenues of power is largely reflective of a lower order book. The energy segment margin in Q1 FY25 is at 8.7%, vis-a-vis 9.1% in Q1 FY24. The hydrocarbon margin in Q1 is of current year, reflective of jobs in the early stages of execution, which is largely in line with our original plan for the year. The energy power margin improves on account of a favorable claim settlement accrued during the quarter. We will now move on to high-tech manufacturing segment that comprises the heavy engineering and the precision engineering and systems businesses. The receipt of shipbuilding order contributed to order inflow growth in the precision engineering and systems business, whereas heavy engineering business order inflow is largely in line with that of the previous year. The order book of this segment at Rs. 338 billion as of June 24. Our order prospects pipeline for the remaining 9 months in this segment is around Rs. 320 billion. Strong execution momentum drove revenues in the precision engineering systems business, whereas heavy engineering revenue was impacted due to a lower opening order book consequent upon order deferrals and jobs in the early stages. Coming to margin, execution cost savings helps the margin improvement in the precision engineering systems business, whereas heavy engineering margin benefits from a favorable job mix. Since we are on this heavy high-tech manufacturing segment, I would once again like to reiterate that the precision engineering system business does not manufacture any explosives nor ammunition of any kind, including cluster ammunitions or anti-personnel landmines or nuclear weapons or components for such of these munitions. The business also does not customize any delivery systems for such ammunitions. Moving on to the next segment, that is the IT technology and the technology services that comprises the two listed entities, LTI-19 and LTTS. The revenues for this segment at Rs. 115 billion in Q1 FY25 registers a modest growth of 6%. This is largely in line with the subdued global macro conditions impacting discretionary IT spend. Despite the ongoing macroeconomic concerns, the deal pipeline for this segment is healthy with a good visibility across all the sub-segments. The segment margin variation vis-a-vis the previous year is explained by a lower operating leverage. As both the companies in this segment are listed entities, the detailed fact sheets of the performance are already available in the public domain. We move on to financial services segment represented by NIT Finance, one of our another third listed subsidy. Here again, the detailed results of the company are available in public domain, but very briefly to sum up, the Q1 revolved around strong retail disbursement, improved profitability and better asset quality. Further, the balance sheet is strong on the back of adequate provision coverage ratios. L&T Finance Limited today is well ahead of meeting its Lakshya 26 targets. The retail good growth, asset quality and the return on assets are highly satisfactory. The business is building itself on the five pillars of growth, that is, enhancing customer acquisition, sharpened credit underwriting, implementing futuristic digital architecture, improved brand visibility and capability building. And finally, sufficient capital in the balance sheet is available to pursue the growth in the medium term. Moving on to development project segment, this segment includes the power development business comprising of Naba Power and Hyderabad Metro. You may be aware that the company on April 10, 2024, concluded the sale of its stake in the Earthwide L&T Infrastructure Development Projects Limited, which was a holding company that was engaged in the toll roads and the transmission line business. Coming back to the current quarter, the majority of revenues in the development project segment is contributed by Naba Power. The improved ridership in Hyderabad Metro and a higher TLF in Napa Power contributed to the segment revenue growth. Whereas lower interest rate expense in the Napa Power aided the margin improvement at a segment level. Some ridership statistics for the Hyderabad metro assets. The average metro ridership has marginally declined from 4.42 lakh passengers a day in Q4 FY24 to 4.32 lakh passengers per day in Q1 FY25. On a YMY basis, the ridership has improved. The ridership in Q1 FY24 was 4.22 lakh passengers per day. The metro at a patch level, we have consolidated a loss of Rs. 2.14 billion in Q1 FY25, vis-a-vis a loss of Rs. 3.35 billion in Q1 FY24. Moving on to the other segment, this segment comprises reality business, industrial walls, construction equipment, mining machinery, rubber coasting machinery, and a small residual portion of the smart world and communication business. The Q1-FI25 revenue decreased by 37% over the corresponding quarter of the previous year. This has largely contributed to a lower handover of residential units in the reality business. The sale of a commercial space in the reality business and increased sale volumes in the walls business enabled the segment margin improvement. Coming to the last part of my presentation, the outlook. India's domestic activity has remained resilient with manufacturing activity continuing to gain ground on the banks of strengthening domestic demand. The service sector maintained its buoyancy as evidenced from the available high frequency indicators. Private consumption is the mainstay of aggregate demand is recovering with steady discretionary spending happening in the urban areas. The revival in rural demand is getting a flip from improving farm sector activity. With an expected normal southwest monsoon, the tariff production is likely to get a boost and the reservoir levels likely to be replenished satisfactorily. With the union elections behind and the likely political stability, the government's continued trust on capex and business optimism over wealth or investment activity. However, the pace of infrastructure progress could slow down due to skilled labour shortage in certain sectors. The Indian economy is at an inflection point in its path towards greater transformational changes that will bring about more stability and growth. The Union Government project presented yesterday a detailed roadmap for the pursuit of a Vikesit Bharat by 2047. The budget envisages sustained efforts on the nine different priorities in order to create ample opportunities for all. Number one, productivity and resilience in agriculture. Two is on employment skimming. Three, inclusive human resource development and social justice. Four, manufacturing services. 5. Urban Development 6. Energy Security 7. Infrastructure 8. Innovation and R&D and lastly 9. Next Generation Reforms It is good to note about the government's emphasis on the all-round development of the eastern part of the country through the Purva Raya scheme. Plans will be hopefully will get formulated for the development of states like Jharkhand, Bihar, West Bengal, Odisha and Andhra Pradesh. Secondly, the government is also likely to facilitate development of investment-ready, plug-in-free industrial parks with complete infrastructure in a near 100 cities. Thirdly, promoting water supply and sanitation projects in partnership with the various state governments and multilateral development banks is the need of the hour. Finally, a policy for promoting pump storage is also in the works and since nuclear energy is expected to form a significant part of the energy mix going forward, There is a plan to develop small and modular reactors, nuclear reactors as well. Moving on to other part of the world, the global economy is expected to witness a rebound. Though the run-up to the US presidential elections in November can exhibit economic volatility. With the change of government in the UK and a hung parliament in France, the concern about European economic recovery remains. China's economic recovery remains a little lopsided with rising trade tensions threatening to overshadow growth in the exports. The central banks in the west are closely tracking inflation data and may announce a couple of great cuts later in the current calendar year. Also, regional conflicts remain continued as of now without having major adverse implications for the global economy. The countries in the Middle East, like I said, are continuing to focus on investment in oil and gas, infrastructure, industrialization and energy transition projects. Our wetlands continue to linger around geopolitical conflicts, supply chain disruptions and commodity price volatility. Amidst all of this, the LNG will continue to focus on profitable execution of its very large order book in the background of a relatively stable environment. It is well-positioned to exploit the emerging opportunities across its diversified business portfolio and limit its exposure to non-core businesses. The company remains committed to maximizing sustainable value to all its stakeholders. Thank you, ladies and gentlemen, for the patient hearing. We can now commence the 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 1 on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to please use handsets while asking a question.

Ladies and gentlemen, we will now wait for a moment while the question queue assembles. The first question is from the line of Mohit Kumar from ITIT Security.

Please go ahead. Good evening. Congratulations on a very good set of numbers. This is the order info. My first question is about the order prospects. You mentioned that the order prospects declined Q or Q. I think this is a very large drop. And according to the report, I think there was a comment that here I'm going to put in the CAPEX program, which could relate to this sign. Can you confirm that is it primarily related to Aramco and does it anyway impact our, you know, the order info guidance for this industry?

Okay, so thanks Mohit. Yes, at the start of the year, the order prospects that we talked about was around 12 trillion rupees and now it has come down to 9 trillion rupees. The drop is largely witnessed in the hydrocarbon segment and I would not like to specify answer to a particular customer. I think there has been some amount of tendering that has happened where we have not secured. Some of the projects have been shelled and some of them have possibly been deferred but this does not have any color in terms of whether there is any potential change with respect to our guidance for the ordering flow for the full year. We still maintain what we gave as 10% ordering flow that the guidance is still getting is being maintained but you can have some amount of order prospects getting deferred and something we have lost also in that particular segment. However, I would not like to comment on specific customers please. Understood.

My second question is a news article in the Mint. It stated that ALMT is eyeing the opportunity to make investments worth $50 to $60 billion in projects converting oil to chemicals and petrochemicals in the Middle Eastern region. Are you looking to invest in those businesses? Are you looking to invest in equities in some form? Is it the right understanding?

We are pursuing EPC opportunities in the oil to chemicals environment intermediaries which we believe will have overall investment made by our clients of the amounts that you are referring to.

We are not looking to form any JV, blah, blah, blah. Is that right in your understanding?

As far as the thing stands, the specific reference to oil to chemicals, it is all the customer's investment which is a sort of EPC opportunity for LATs.

Thank you sir. Thank you sir. Thank you all the best sir. Thank you. Thank you Mohit. Thank you. The next question is from the line of Sumit Kishore from Axis Capital. Please go ahead.

Good evening. My compliments on the fiscal. My question is has there been any outreach by Amritsar days to revise the Amravati contracts that were dropped from NMT's order book in the past? and any expected roadmap you know for another piece going forward so yes there has been i think initial discussions with the state government has comments but at this juncture too early to comment on the exact how it will shape up hopefully i think by the time we end the september q2 i think we will have a better visibility in terms of the revival of the various opportunities in Amravati. But at least the discussions have come in. My second question is, you know, your exchange pilot has mentioned that your renewable EPC portfolio was of 18 gigawatt cumulative capacity comprising solar and wind generation projects already commissioned and in the making. So, I just want to understand what is the size of renewable EPC, solar EPC in your order book presently? And what is the size of order prospects or opportunity that you see for REEPC in the middle specifically? So, in terms of solar renewable, the order books, I think the approximate share would be anywhere in the range of 55,000 to 60,000 crores. And as far as opportunities are concerned, that would be in the range of similar number of 60,000 or crores in the near term. So, in the order prospects, you have roughly about 600 billion rupees for the balance three quarters. Correct. Yeah, for the balance nine months. Yeah, yeah. Understood. Just one, you know, question on the, any color on the rationale of the ESG upgrade by MSCI to PD from DD, you know, is there anything to do with your defense exposure which they have taken a different view on or is that something else? So, as far as we know, the rating rationale of changing from BBB to BBB is on the back of an improved, I would say, environmental anti-safety statistics that L&T has been pursuing. I think that is one of the reasons which has enabled us to get this rating upgrade. And so far as Our exposure through the precision engineering systems business to defense, I don't think there has been any change in the outlook of MSCI. Got it. And this re-christening of the energy power segment to carbon light, does it mean you will not wait for coal power project or how should we reach that? So we are looking to focus on carbon capture projects and whatever manufacturing facility technical talents over a period of time we get into taking opportunities on those segments to make. Having said this we still have an order book of almost 5000 odd crores in the thermal power systems which we will execute and we will look at opportunities which are you know like for example we will continue to focus on any gas based power plant opportunity that may come and any other cleaner fuel opportunities that we will be able to leverage our current manufacturing in the as far as the coal based equipments are concerned over a period of time we will get repurposed.

Understood. Thank you and wish you all the best. Thank you.

We have the next question from the line of Aditya Bhatia from Investec.

Please go ahead. Hi, good evening, Sam.

So, my first question is on the reduction in prospect pipelines especially on the hydrocarbon side. Now, given that we are having a 10% reduction in overall prospect pipeline and we require almost like a 10-12% kind of a growth in order and proof to be the guidance, Where exactly are things changing? Are we anticipating a much better strike rate in the domestic business, which it appears had fallen a bit last year? Or is it that we are seeing competition being a little lesser on the domestic side this time?

Okay, so this structure, it's not correct for me to give a culture. I mean, overall, the perspective for the nine months, which kind of orders will, you know, will enable us to maintain the order inflow growth guidance. But I wish to tell you, given the fact that we still have a 931 rupees of order prospects, okay, and that is more or less balanced because last year, of course, the hydrocarbons part of the business did have a good set of orders. It's not necessarily that every time you can have the same business having the same run rate. But given the fact, if you look at just basic arithmetic, if I have to come up, if I have to talk about meeting or order is of guidance, what you see from the other prospects, I think a 22 to 23% conversion or a hit rate will enable us to reach there. And this 22 to 23% is not that something which is theoretical. We have demonstrated that in the recent past as well.

So... So, the second thing, you have spoken about labour availability issues and the potential of that to be slowing down execution. Where exactly are we seeing challenges and have they worsened over the last year or so?

Okay. So, two things.

Let me be a little, I would say, topical here. In the Q1, when we have given the overall guidance on revenues of 15%, It had based the fact that the Q1 would have been a little subdued for the largest part of what is called the infrastructure of the construction business in India. It was because of the general elections and you know very well that all these labour have the tendency to go back to their respective natives and vote. And plus this was further worsened because of the very very hot weather that was prevalent in large parts of the country. So this we hopefully from with the start of monsoon of course the monsoon has had a good start. This also has some implication into labour going into working on the agriculture side. But as far as we are concerned I guess we should see back the normalcy of labour coming back to fulfil our or execution of our order book. I think the point that is coming up is as India goes on expanding into investments in infrastructure or in industry, it is a time that we are looking at a shortage of skilled laborers. Because it's also important while the country goes into a capex mode or an investment mode across investments of all these sectors, it is also important that we have a steady supply of skilled labor to ensure that the projects are getting completed on time. Now, that has its developing implications. Now, as far as L&P is concerned, we are focusing to ensure that whatever labour we have through the various subcontractors, we continue to engage with them because we have a large order book. And simultaneously, we are also taking up steps to... also ensure that the future inflow of labour is appropriately skilled because the order book that we are looking at, given the positive investment climate that we are witnessing in the near term, I think it is important that the labour doesn't become a constraint in the GDP growth of the country. To that extent, I think the government also has realised it and if you see the Honourable Finance Minister coming out in her pronouncement in yesterday's budget, there is also sufficient mention of how they managed to bring this particular important resource. Last but not the least, one more development is not that the labour is only working here in India, some part of the labour is also getting exported to the neighbouring countries, especially Middle East, given the set of opportunities. So, we are working at, I would say, not necessarily an optimum level, but yes, if things persist like this going forward, there could be an implication. Understood.

And last, anything that you can share on the potential of monetization of Nava Power or Hyderabad Metro?

At this juncture, nothing to share. We are pursuing as far as, I mean, it is still going on. As far as Naba is concerned, Naba Power is doing well. It is back on to, I would say, a reasonable set of profits it is doing. We are evaluating, but nothing to comment at this juncture.

Sure, sir. Thank you so much.

Thank you. The next question is from the line of Amit Mahavir from UBS. Please go ahead.

Yes, I have just two quick questions. First on the Middle Eastern market, can you throw some light on the execution position in the last six, eight months? Have you seen some delays in execution on most of the large Saudi Arabia projects? Things are on time and I want to broadly understand your comment on The competition, especially from the Korean Chinese players, given that European and Japanese are not very active.

Okay, so in the meetings today, last minute to prop primary, I would say is engaged in hydrocarbon projects and solar renewable projects. As it stands now, the Q1 execution momentum that we have witnessed, there is nothing for us to bring to your attention to say that there is something unusual, increase or decrease. So, it is as business as usual. So, as far as competitive intensity is concerned, I would like to mention here that We believe that the size of the market, which markets are we referring? We are referring to the renewable part of investments that are happening. and also the hydro pumps. And possibly going forward, there could be major investments happening on the transit, be it on metro packages or rail packages. I think going forward, there is a large, I would say, investment activity expected to happen. And I see that given the large size of the pie, each of the contractors have a fair share. So, it's all a question of in some quarter you may get, in some quarter others competition may get. But structurally, I don't think there is any change for us to comment from the earlier comments that we made in the month of May.

Yes, yes, thank you. And the second question is more on the COVID margins. If I see, we fired the year with a good 60-70 basis point margin expansion in the inshore side and the reason we have given is execution cost savings. Is this execution cost saving maybe one of quarterly nature or do you think, you know, for the full year, we have a much better margin expectation and everything on that? Yes, thank you.

So, Amit, let me tell you, I think I did conclude on my, on the speech saying that we are on track to more or less meet our targets at this juncture. I think we have started off very well as far as the margins is concerned. The overall P&M margin last year was 7.4. So, we have managed to bring a 20 basis point improvement. And that improvement is actually coming from a, I would say, a reasonably large improvement that we have seen in the infrastructure segment. But as you are aware, the project business, the quarter on quarter, the job mix, the project going into recognition threshold, completion of project is still keep on happening. But we have had a good start and hopefully I guess we should be maintaining the slight improvement in the marketing momentum. But too early to comment on any change in the guidance. Finally, I think maybe another two quarters before we finally see where the margin will likely to end in the current year.

Thank you Veer and good luck to the entire team.

Thank you. The next question is from the line of Priyankar Biswas from BNP Paribas Exchange. Please go ahead. Thanks for the opportunity and congratulations to the team. So my first question is If you can explain about since we have a 526 ROE target of 18% and so we are kind of just a little below 15. So what is the bridge from this current 14.5-15% levels to attaining this 18% level if you can shed some light on that first.

So Priyankar I guess we have been talking in multiple calls like this and also in the investor meetings. So, today if you talk about, I guess if I have to make it very simple, the 1% increase would be if Hyderabad Metro were to make zero profit, zero loss. So, as I was talking, that particular investment had a loss of almost 214 crores in Q1. So, over a period of time, if you are able to bring that down, so that will demonstrate at least a 1% increase in the ROE. The second 1% would be as we have been talking about that the M&T is looking at given the fact that we are having a cautious approach to increasing the size of our balance sheet so we are also looking at keeping the balance sheet a little more leaner which also means we are looking at a 1% improvement on the account of higher payouts to shareholders. Now, in what form, I guess that we have to see, especially in the development in the budget yesterday. So, we have to look at it, but definitely 1% can be attributed to, I would say, payouts to, I mean, capital restructuring in terms of larger payouts. And the last 1% is the overall margin improvement in the P&M part of, or the traditional business of products and manufacturing. I just give a simple explanation of the bridge from 15 to 18. In what forms, what happens, only the next two years will say.

So, since last year, particularly, the payout levels were quite high. So, should we be expecting, like, I am not going into what form of the payout, but similar payouts like last year?

I have given you our bridge. You asked me a question about the bridge, which I have given you. Now, when the payout will happen, in what form, I guess, only time will tell.

And we have just one more question from the site. So, there has been this news and probably OTC was... So, there has been this news of the collaboration for Saudi Aramco projects. And we have also seen that in Saudi Aramco's own CAPEX guidance for this year, they seem to have factored in a YY increase, especially in the gas projects. So, is there any reason why the Middle Eastern hydrocarbon projects have been cut, prospects have been cut down? So, what exactly is it derived from?

So, of course, I wish to tell you that structurally I think Saudi hydrocarbon spend for FY24 is almost 48 billion US and next year is going to be around 60 billion US or so and this is as per the public domain whatever messages are coming out yes there can be some reallocation of projects in that overall pipe maybe all the percentage of oil could come down oil exploration and production but as far as gas space opportunities are concerned oil to chemical opportunities are concerned I think all those plans are still on and we are working with the clients like any other contracting company closely with the client and hopefully we should get some of those opportunities in our favor in the near term.

It was more like on the cutting of the Middle East Hyderabad prospect.

So since you highlighted the Saudi is actually going up. So here the prospect is going down. I just tried to reconcile that. So is it from... No, no.

This is a point of... So Priyankar, it is for the next nine months. Okay? for the next 9 months. So, we also are working closely with the various clients. Let's not stick to only Saudi Arabia. We are also looking at other countries as well, be it UAE, Qatar, also some of the oil producing countries in North Africa. There are some opportunities out there but I feel it is specific to one quarter this has come up but I don't think this is any at this juncture for us to say there is a structural drop in the overall opportunity landscape.

Okay, thanks, Dev. That's very clear now.

Thank you. The next question is from the line of Parikshit Kanpal from HDFC Securities. Please go ahead.

Hi, PR. Congratulations on a decent quarter, sir. My first question is on increasing exposure of international in the order book. Will it have any impact on the margin? Given that we have given 8.2% of guidance for P&M margins for FI25 and share, international has been increasing. So, will that impact our guidance on P&M side?

So, this I think the only thing which I would like to mention is all the international projects are largely fixed price contracts and if we continue to perform in line with the completion deadline of those contracts and the input costs remain what they are, so I think the margin trajectory should not At all, version. In fact, if you are able to complete the process on time, I don't see a reason why margins even for the fixed price contract can improve. But as it stands now, since we refer to margin guidance to the extent of that particular year, this year raises the construct of the various projects that are getting into execution mode across the segments, across the geography. We have maintained the target at 8.2 to 8.25 for FY25. Q1 has started off with a, I would say, good start. If you see the margins for the energy segment actually has come down. But it is only because of the state of execution of the jobs in the segment. So hopefully I guess you should see an improvement out there as well. But I wish to tell you that if you are able to complete the jobs on time on the international order book, definitely margins could be more positive than what we are looking at today.

I mean, second question was on domestic ordering, domestic prospect pipeline. So, some of the segments we have seen that government may increase the PPP share. Government intends to increase the PPP share. Like in TNB, we are already seeing the TBCD and then in roads, BOP is getting revived. So, do you think there is a case for you and maybe in the airways also some kind of PPP may emerge. Is there any case for you to come back and have a relocated city way of investing into these projects given that it may reduce the prospect pipeline if you don't do that?

Actually, the order prospects that I have given for construction part of the business, they are all what we are planning to bid for. And these are all projects that are on out-and-out EPC basis. There aren't any, I would say, significant POT opportunities. And I think L&T has made a clear statement that we would not like to pursue the investments onto the concessions part of the business.

Okay. This is the last question on the arbitration bit. So, I mean, we have, if you can help us quantify what are the arbitration claims currently under progress and do you think at some point of time in this year, if the Amrab Act, you think, plays out and there are some revivals, do you think there could be some tailwinds to a margin uptake, possibly, with the claims coming back by the government, so if you can help us understand a bit or give some more color on the arbitration terms?

So, politicians, I think I answered to this question as far as Andhra Gov's are concerned. So, discussions have started. That itself is a positive development. And hopefully, I guess the discussions have come and itself is positive. Now, how will the discussions pan out in terms of revival of each part of the project, recovery of each part of the money, I think it's still too early to comment upon. But this is a very, very positive outcome. Now, its impact on margins and all of that, how arbitration awards that come in our favor going against us, I think it's a part of the overall contracting business. But specifically, it is a positive development.

But what is the overall arbitration pipeline? Because I understand AP alone was about, if I remember in the past, because you mentioned about I think 1500 crores was the pending receivables. So, correct me if that is still the number and overall what could be the arbitration being perceived right now in terms of overall company?

So, Parishit, I think if we have to really give a data statistic of how much of claims that the company is pursuing against its various projects with its customers and it's also important that some of the customers also have other claims for L&T. So, this all goes into a negotiation mode. It is very, very inappropriate for me to come out to the court to actually put out a number. It is only when we believe that a claim is coming out to a place where the customer and entity are in to still agree to, you know, settle. It is that point of time it is threatened in the FDNF.

Okay. This one, the Hyderabad metro, if you can help because of this government issue. So, how are you choosing it now? So, how do you think that Radishes will play out and in terms of government support, but has anything come in versus the last quarter, support which was supposed to come, if you can update us on that.

Yeah, okay, so the ridership in Q4 was 4.32, sorry, Q1, the current quarter was 4.32. Some amount of impact is there because of the free busking to ladies. But definitely, one of the reasons for a small drop in ridership is compared to Q4, which was at 4.42 is because Q1 was a summer months and holidays and so on. So, as we are getting into Q2, the average ridership on a weekday, that is Monday to Friday, it goes up to almost ranging between 4.8 to 5. And during weekends, it comes down to maybe 3.5 to 3.7. So, there will be a steady increase in ridership, but I guess the ridership improvement is not the resolving the issue that we have. I think it's more to do with the fact that how do we reduce the current debt of almost 2500 crores digitally. So, we were to, till now we have received around 900 odd crores from the government in terms of the soft loan. Hopefully, I think the government should be proactive enough to provide the balanced 2100 crore of loans that has been clear in the assembly in the last year or so. So, I guess still discussions are happening. Once those things come, definitely will enable us to bring down the current loans and lower the interest costs and thereby at least reduce the losses.

Okay. Sure, sir. Thank you. Those were my questions and it's all about that.

Thank you. We have the next question from the line of Nidhi Shah from ICICI Securities. Please go ahead.

Hello, am I audible?

Yes, you are.

Thank you so much for taking my question. Congratulations on an amazing quarter. So I have two questions. Firstly, what do you think about the offshore wind business in the medium term? As per the annual report, it looks like the company is pursuing bids in offshore projects globally. That is the first one. And the second is that how is green hydrogen opportunities panning out? Are the discussions progressing like we had hoped? And are there more closures of projects in the near term?

Okay. So, Nikki, as a start, I guess during the current quarter, we did get an offshore wind project. It was an international project that is almost just above $100 million or so. I think it's the first foray for L&T to get into this business where we are leveraging primarily our offshore skills in the hydrocarbons part of the business into this offshore wind part of the business. So it's one of the first orders. I think it's a good thing to start with having got such an order from a very prestigious client And we believe that this part of the business is a little more complicated than any other normal wind business. I think we have to be careful and it's a little more capex intensive. We will pursue these opportunities because we feel that this is a sustainable, I would say, capex that is going to happen in this particular renewable energy segment. Not necessarily like in emerging markets. India is also talking about it. But I guess some of the European markets will definitely look into this kind of investment. That offers well for us. But to start with, as I said, we have secured one of the first quarters. So hopefully I think we should be getting more and executing them properly as well. And your second question was on, I missed that.

Yes, I didn't. So, are the opportunities panning out and are the discussions progressing like we had hoped and are there any new closures on projects on specifically green hydrogen?

So, we did get a first project opportunity from green hydrogen with a private sector client to set up an electrolyzer unit. So, we are... We are evaluating various options and various opportunities. But in terms of what we call a meaningful opportunity is the IOCL tender that we are looking to build through our joint venture with IOCL itself, IOCL and Renew. So, it is too early days in terms of trying to, you know, look at the overall size of this market. As I mentioned, the auto prospects pipeline as of June for this green energy part is still around, I would say, 10,000 or so. So, it's too early stage, but we believe that this will get scaled up in the next one and a half to two years to something very much more meaningful. Because all the players, be it the developers or be it the customers, all of them are evaluating the opportunity in terms of the scalability, the scalability of the end product because obviously there is some amount of cost that has to be higher than what is the current end product which is using either a glass or a blue hydrogen. I think maybe a transition phase but we are looking at both domestic and also adjacent geographies for you know, EPC solutions in this particular area.

Alright. And you mentioned the IOCR project. So, what is the, what is the, what is the basically progress on the bidding part of it and when this gets tendered out finally, what do we expect the timelines to be on this?

So, the bids have been opened. So, it is a 10 KTPA kind of a project and there are two bidders, I believe, I mean, ours and another bidder. So, the bids have been submitted. It is up to IOCL to take the next step from this.

Alright. So, at this point, there is no visibility on when the bids could be closed and when the... The bids have been submitted.

The price trades, there are two bidders. So, the customer will have to take a call, which I believe should be in the near term. We cannot comment on the timelines per se, no?

Alright. Thank you so much.

Thank you. We have the next question from the line of Amit Binde from Morgan Stanley.

Please go ahead. Amit, the line for you has been unmuted. You may proceed with your question.

As we're not receiving a response from the current participant, we will proceed to the next question, which will be from the line of Kulkit Patni. From Goldman Sachs. Please go ahead. Hi, Pierre. Just one question. This has been a quarter where the domination both on top line as well as on other inflow has been by the international business. And your margins have at the margin improved a little bit. So any read across on how we should look at margin the next few quarters given that domestic should actually come back in terms of its bigger contribution on the overall revenue footprint. So, any sense on how we should look at margins in the next few quarters in light of what we saw in Q1?

So, if you were to break up this P&M revenue into domestic international, I think the international part of the business did well considering that there were no constraints per se. Whereas on the domestic side, there were constraints in terms of the heat, and also the election season. So, going forward, I guess, he will come back to, I would say, complete normalcy. Not that when he gave the guidance of revenues of 15%, we were not aware of this aspect, that the domestic part of the execution could be a little more subdued into one. All of that is based in the guidance. Insofar, margins are concerned. Margins could be a combination of the project mix and, you know, whatever we talk about, utilization, execution, transfer, some of the projects to cross the margin recognition threshold, all of this is an aggregate, including, you know, favorable claim settlements or settlements to the clients on the other side. So, it's a combination of those. We have had a good start into Q1 as far as the margins are concerned. The P&M margins, as I said earlier, has improved by 20 basis points and I believe that we don't have anything for us to comment for the balance 9 months where we have a indicator to say margins could be a little softer than what we have demonstrated in Q1. So, but too early to comment on the landing part of the yearly FI25 returns on margins, but at this juncture, we have had a good start.

Sure, no problem, Piyan. That's the only question. Thank you. Thank you. The next question is from the line of Baranidhar Vijayakumar from Aventus Park. Please go ahead. Yeah, good evening, sir. Am I audible?

You are, Barani.

Okay, great. So, can you reflect us on your capabilities on nuclear and what are the upcoming opportunities there? There was a recent Karnataka order that was stripped by. So, can you just talk on that nuclear portion?

So, as far as nuclear is concerned, we cover almost I believe the length and breadth of a nuclear power plant right from full scale construction including the turbine island, the nuclear island and all of the balance of plant. So, of course, there can always be hits and misses in the highly competitive landscape that we have. But as far as the construction part is concerned, going forward, I think the order prospects that we have in the nuclear construction part, I think would be in the range of maybe around Rs. 10,000 to Rs. 10,000. The near next nine months of prospects in this particular part. Okay. And this would be largely NPCIL's project? Nuclear in India is largely NPCIL, no? On this aspect, what I said was nuclear power plant construction and related mechanical works. When it comes to specific, because the government is also talking about diversifying into the smaller and modular reactors, the barge reactors and all, these are all really opportunities beyond this. What I just gave you, 7,000 to 10,000 or close, relating to only the further projects of NPCIL in this particular segment.

Right. So, the on or the upcoming initiatives by the government and its plan. So, where would we come in that? Where would we be contributing?

As I mentioned earlier, we do have a full-scale capability in this segment. Having worked very closely with NPTEL across most of their most of the nuclear power plant installations in the country, I think it's a joint effort and we will be able to we will be able to meet up to those requirements. Incidentally, our heavy engineering division, which is forming part of our projects and manufacturing, is already pre-qualified on the smaller and modular reactors to supply them. So, we have, technically we are qualified. It's all a question of when the customer wants to start investing on those.

Understood. My final question is on Saudi Arabian operations. So, there, are we looking at these new projects like the new Moraba, the 9 design of projects, apart from hydrocarbon and renewables.

The focus of, I mean, as far as Middle East is concerned, we continue to focus on renewables and hydrocarbons, apart from road and railway projects. Road project means I am referring to railway projects and also metro packages in various parts of the Middle East.

So, basically these other urban infrastructure projects like the LINE, the new Murabba, so that we are right now not focusing.

The other prospects that I talked about with respect to the international workforce is largely factors the kind of proposals that I just now referred to.

Okay, sir. All the best. Thank you. The next question is from the line of Nikhil Niganya from Bernstein. Please go ahead. Hi, thank you for taking my question. I had just one question.

Now that we have such a big exposure to the Middle East, we have been talking about local employment requirements. But what we read from other ATG companies globally is that there are local sourcing requirements as well. So I wanted to check does L&T also have local sourcing requirements and do we see a risk of delays due to these requirements. So, Nikhil, I mean, as we have grown big in many of these places, I guess we are also in line with the requirements that have been put forward by these jurisdictions. In fact, most of our Saudi orders are actually getting awarded to the local subsidiary of L&T there. It's not getting awarded to the parents, Laskaran and Dubro in India. And as part of the local subsidiaries, I would say capabilities, there is need to put up proper project management, resource staffing, everything else is being done.

And all of this is getting appropriately priced in the contract. Understood. So you don't see broadly risk of delays given your experience there and given the setup there. That's what I should take away from here. At this juncture, no. Understood. Sorry. Thank you. That's all I wanted to ask you.

Thank you. The next question has come from the line of Sreeni B. Karlekar from HSBC. Please go ahead. Yeah. Hi. Thank you for the opportunity and congratulations on good set of numbers. A couple of questions from mine. I just wanted to hear your thoughts on the domestic private capex cycle with election uncertainty behind us. How is L&T seeing from this end market?

So, Sriniji, the domestic private cap is that we are looking at and we see a lot of traction, I think, is first in the area of real estate, okay. Now, when I talk about real estate, I take all the colors of real estate. So, from residential to commercial to, I would say, hybrid city development or to even data centers. I guess there has been a big jump into this particular segment and all of that is happening through private sector capex itself. As far as the other part of private capex is concerned, one can look at only either two areas. One is the confessions part with the public-private capex and the other one is investment into pure industrials or new age sectors. As far as industrials are concerned, all the entities that are directly related to the construction part of the overall infrastructure space, that is, cement, steel, paints, fittings and all. All the end manufacturers are looking to increase the capacities either green field or brown field and in some of those expansions L&T also has got I would say some amount of contracts. Having said this, the value of first contract of building a factory building will be in the range of say 200 crores to 300 crores. So, That's not going to necessarily move the needle for us, but I would like to reaffirm that segments that are directly related to the overall infrastructure, especially on the real estate, I think there is a positive momentum. The one aspect where the momentum is possibly a little subdued or possibly even missing would be the public-private capex part because that is the large investment. Now, in that case of investments happening, L&T also has a good chance to bid for such kind of projects as an EPC contractor. I think that is still some time away. But having said this, I believe going forward with the continuity and the stability of the government focus on investments or the GDP led through investment related growth in the next five years or so, I guess we could see some large ticket investment happening into the U.S. sectors. Apart from data centers, which is again an extension of real estate, but into data centers, but U.S. sectors like electronics manufacturing or semiconductor manufacturing, those things could come up in sizable amounts, but it is still early days for us to conclude on that.

Right. It's a good to hear. And sir, what I wanted to also ask is on the Hyderabad Metro TOD pipeline, last year we had a good number. How is prospect pipeline for the TOD monetization looking like for this financially?

So, we still have TOD monetization of almost 14.9 million square feet. But e-couples monetization requires the prior approval of the government. So out of this 14.9 we already have a 1.3 million developed infrastructure in terms of either malls or commercial establishment. We will be looking forward to monetize them over a period of time and upon receipt of the approval that particular transaction will get consummated in that specific quarter. Like the way it happened I think in Q2 of the previous year.

Great. And the last one if I make Sir, you gave a number on the solar EPC backlog that you have. May I ask you to please repeat that?

It's 60,000 crores. Around 60,000 crores as a backlog. And other prospects also in and around the same value.

And sir, how is this split across domestic and international?

Largely international.

Sir, what is really happening that in domestic solar EPC, L&T seems to be less aggressive or say less active in the industry?

So, the kind of solar or renewable package in international, the sizes are large. Okay. Whereas we don't get such kind of large parcels in India for this kind of investment. So obviously then it becomes sub-optimization of your entire resources. So we are focusing on the renewable international opportunities only. On the solar side, As far as renewables are concerned in India, I guess for the benefit of all, what we are looking at something as a good investment that are happening which NIT also is getting, I would say, some amount of fraction in terms of orders is on pump storage projects.

Great. Thank you for answering my questions and all the very best. Thank you. The next question is from the line of Amit Bindi from Morgan Stanley. Please go ahead. Yeah, hi, sir. Girish here. Sorry, we had a technical issue for drop-off. Sir, the question was, and sorry if I'm repeating it. So, you mentioned that domestic revenue growth was weaker because of possibly two things. One was 8 days and excess 8 days. And secondly, also because of the election cycle. Now, quarter 2 is also having a lesser number of construction days because possibly because of all the rain, excess rain that we are seeing right now. So, is it possible that the domestic revenue execution likely picks up more in second half? And then I had this one follow-up question on the prospect list.

Okay. So, Girish, while he gave a guidance of revenue uptake on the 15% at group level, in fact, the projects and manufacturing part of the portfolio also will be in and around the same levels itself. A factor subdued domestic growth in Q1. A little more improved traction in Q2 and H2 will be the best second half as far as revenue or execution of projects in India is concerned. Okay. So, that is building. Hopefully, I think the Q2 conditions is far more better than what we have seen in Q1. Because Q1, we had the same problems of... shortage of labour due to elections and also extreme heat. Although we try to bring down the effect by having shifts early in the morning and late in the afternoon but that will not enable the full productivity for a congenial working 8 or 9 hours at the site level. So Q2 should be more better and hopefully H2 will take the lion's share of the growth as far as domestic is concerned. As far as international is concerned, I guess Q1 was like any other quarter and I don't foresee per se unless there are other geopolitical events that we are not aware of happen. I think the ramp-up of execution in the international side will be more or less equal over the four quarters.

Okay, thank you.

Sir, if you, because you do a bottom-up analysis of the prospect pipeline, if it's comfortable to share, on a year-on-year basis for the first quarter ending now, prospect list in terms of how center versus state versus private versus, you know, how that is moved and for international, any delta around country level, whether it's Saudi Arabia or it's Qatar, if you can share any qualitative colors or quantitative color here.

So, the English, I think the amount of unstressed or wake-up we are giving between domestic international and across the sub-segment, I thought is quite detailed enough. Now, if you were to talk about, you know, the reason I ask, no, the reason I ask is because as you know, I mean, this is a shortened year.

I was more focused around how states are behaving versus central PSUs. That was largely it and if any colors that you can provide at a country level in international, that is the same.

So, as far as India-based prospects are concerned, if I have to break up the India-based prospects, then the center state PSU and private, I think we don't see anything unusual from the other than 15, 25, 35, 25 combination, which is 15% central government sponsored projects. State government projects account for almost 25%. Public sector corporations are state-owned companies, 35% and private sector in largely the real estate and some of the various sectors that I am looking at is at 25% Okay, that's the way if we have to look at the India prospects is concerned, the breakup. In terms of the international prospects which I talked about which is almost 3.87 trillion rupees as per the balance 9 months I think the major share of that is almost 50% of that is coming from hydrocarbons, and the balance is largely coming from a combination of the various sub-segments on the infra, but less through the power transmission distribution. So, going through that methodology, one can say, if you have to take a break-up of the geography out of this 3.87, almost 45% could be from Saudi.

Is there one...

small follow up bookkeeping other income has dropped sequentially by 12% I don't know if you have covered this but is there any one off in the base quarter Q4 or how should we read the Q1 number at 921 crores so we have given the other income has dropped Q1 of the previous year because of the drop in investment that we had to stand alone ok

It dropped sequentially also, but is it because of yield or is it just the number of, you know, the cash balance being the way it is?

It's more of a cash balance. The other income, as far as Q1 of previous years is concerned, as a standalone, there is almost a drop of almost 10,000 odd crores in surplus between June 23 to June 24 because of the buyback. That has had an impact on the other income drop.

Okay. And the CAPEX number for this year would be about 3,000, 3,500? Around that range?

Yeah, around 4,000. Yeah. Okay. Thank you so much.

Thank you. Ladies and gentlemen, we have no further questions. I would now like to hand the conference over to Mr. P. Ramakrishnan for closing comments. Over to you, sir.

Thank you everyone for attending this call at this late hour. It was a pleasure to interact with all of you. Good luck and wishing you all the very best. Good night.

Thank you. On behalf of Lassen and Dubrow Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.