Supreme Infrastructure India held a conference call on June 9, 2015. In the conference call the company was represented by Vikram Sharma, Managing Director and Vikas Sharma, Whole Time Director.

Key takeaways of the call

Order book (excluding L1 orders) as end of March 31, 2015 stood at Rs 4249.6 crore. In addition the L1 orders were about Rs 782.8 crore. Order book including L1 orders was about Rs 5032.4 crore. Of the order book about 22% is BOT Roads, buildings 32%, water 7%, power 11%, roads & bridges 27% and railways 1%.

The company had some positive moments in the last four months. The company in Q4FY15 has raised Rs 100.0350 crore by issue of 3.6 million shares at a price of Rs 277.39 to Qualified Institutional buyers. The bankers (through Masters Joint Lenders Forum Agreement) has restructured and rescheduled the existing debt by providing 2 year moratorium for repayment of loan. Apart from rescheduling debt payments the bankers have also given fresh line of credit of Rs 75 crore (fund based) and Rs 175 crore (non fund based).

Funds on hands as well as collection of milestone payments struck in projects will ease cash flow tightness and improve the project execution going forward.

Backed by strong order book and required funds, the company expects ramp up in execution from Sep 2015 onwards. Expect a revenue growth of 20-25% for FY16. The FY15 EBITDA margin got a boost of Rs 21 crore of claim recovery which accounted as part of FY15 revenue and thus maintaining EBITDA margin at this levels depends on claims recovery. Further the company¡¯s margin has not declined even during the worst periods.

Of the BOT order book pie of the company the slow moving orders are Panvel Indapur and Jaipur Ring Road projects. The JRR project is caught in land acquisition issues. This has hurt the sales of FY15. Similarly the cash flow tightness has hurt the EPC order burnout.

Apart from Jaipur ring road project, all other under©\construction BOT projects will get completed by June 2016, taking the number of operational assets to 10.

Future EPC cash flows from the EPC Business can no longer be used to support the BOT arm of the company.

Of the Rs 933 crore of receivables as end of March 31, 2015 about Rs 235 crore ( against Rs 175 crore as end of FY14) is retention money. Moreover about Rs 97.52 crore (against Rs 124 crore as end of FY14) are over due for substantial period of time. These 97.52 crore receivable and of the balance about Rs 98 crore (down from Rs 124 crore as end of FY14) is overdue for substantial period which is especially from private builders.

Interest outgo for CC Limit will commence from Oct 1, 2015 and in case of Term Loan it will commence only from Oct 1, 2016. Interest outgo will be about Rs 130 crore for FY17 as the company has moratorium for part of the period. Interest outgo for current fiscal will be about Rs 50 crore.

Working capital to improve as minimal mobilization advances to be utilized for the project work to initiate. Release of milestone payments in 5 projects/sites alone will reduce the working capital cycle to about 140-150 days and the target is to reduce it to 120 days.

Sale of 2 BOT projects ¨C The company is in negotiations with both Piramals and SREI Infra and expects the deal will be closed soon. The chance of closing the deal in current quarter is 80%.

Balance equity commitment in BOT projects is about Rs 95-110 crore of which about RS 70-80 crore is for Jaipur Ring Road project which has to be infused in FY2017 . In Panvel-Indapur project about Rs 25-30 crore balance has to be infused.

Once all the 10 BOT projects are operational the estimated Daily Toll will be about Rs 1.3 crore per day and when all the 11 BOT assets are operational the estimated Daily Toll will be about Rs 1.7 crore per day.

The company has struck with two low cost housing projects in Delhi aggregating to a value of Rs 280 crore, where work is completed to the tune of 57% and 48%. In these projects the milestone payments were not coming due to client side reasons. DSIDC one of the client does not have a MD for some time delaying the milestone payments but now they paid Rs 18 crore. Similarly another Rs 22 crore is released in these projects and another Rs 22 crore payment will be released in next couple of weeks.

In one of a contract in Delhi the company wanted some extension and that was not granted by the client who preferred termination of the contract and recovered the advance through encashment of BG. The client has also gone for rebidding where the company is also participated. But the time allowed in re-bid is equal to that of the time extension the company has asked for. So the company preferred an appeal in the Hon¡¯ble Highcourt for restoration of contract and providing stay on BG invoked by the client and also approached SC for restraining client from taking further action of re-awarding the work to other contractors. The trade receivables and unbilled work as end of March 31, 2015 carries an amount of Rs 10.66 crore and Rs 9.16 crore respectively in relation to these projects. The company have not provided for this yet.

No major capex required for the next 2-3 years. Entire Raw material capex already in place with presence across 13 states in the country.