Markolines Pavement Technologies Limited — Q1 FY26 earnings call

Currently, as of today, it is about Rs. 132 crores. ... particularly last year when because of we had worked a lot for the BMC and MMRD in Mumbai and because of the elections, we had some funds locked up, but which in my earlier presentation of the annual presentation also we had said that by April, we had recovered all the monies from the outsourcing money for the government projects.

Analyst questioned the increase in receivables from FY23 to FY25 and current outstanding, which is a key working capital metric for construction companies. Management provided current figure and context.

Asked by Madhur Rathi

most of the projects which are running are on the national grid and there would be a 50-50 contribution in terms of private and government. But government also, when I say, it is not directly government, it could be around 70-30. As the major, what do you say, specialized construction, all privatized, one project is through the consortium name and one is through the infrastructure players, but with the tripartite agreement. So there is no state government project as such.

Clarified the client mix for the order book, indicating a significant portion from private players or national grid projects, which typically have better payment terms than state government projects.

Asked by Madhur Rathi

So what happens is these specialized activities, particularly like tunnels, it is not economical for the large players to mobilize, though for us as a maintenance company, it is a large contract, but for the larger players to mobilize such a manpower and everything will not be that cost effective, wherein having experience and the local basis available everywhere, it becomes economical, wherein we could do better.

Addressed why Markolines achieves higher margins (18-20%) in specialized construction compared to EPC players, attributing it to their specialized expertise and cost-effectiveness for niche projects.

Asked by Madhur Rathi

So basically, till a particular time, we were only catering to the private players and major maintenance and to establish ourselves into the business has always been looking at the satisfaction, the transferred worksheets. And we have always operated on a costless basis. Now, what is changing for us is one, the larger ticket size, then the specialized construction. And as we are growing, we could also look at the projects from the government, which we are focusing slowly.

Analyst challenged the company's PAT margins, suggesting they should be higher given their specialized nature. Management explained the strategic shift towards larger ticket sizes and specialized construction to improve profitability.

Asked by Arvind Deshpande

So initially we said, but then as a management decided that, now, Mr. Aravindji asked me a question on increasing the profitability. So we had clearly decided last year that rather than the revenue, let us focus on building the bottomline. And that is how we majorly focused on the bottomline, worked with the specialized constructions. And of course, there was one more reason, particularly in the first semester of the pronged monsoon.

Analyst questioned the missed FY25 revenue target of ₹400 crores. Management clarified that the focus shifted to profitability and specialized constructions, compounded by a prolonged monsoon season.

Asked by Madhur Rathi

So material price, which I have already answered in my presentation that every contract that we signed has escalation clause. Generally, a bitumen is the major component, which is directly related to the crude oil. So the prices are subject to fluctuations. But because of the escalation clause is mandatory, we have in every, so escalations are taken care of. Then delays, particularly, we always keep a balance on government and private sector, rather our first focus is always on the private sector, where the less, probably the margins could be a little lesser, but the payments for sure. And this is how we keep the balance in terms of mitigating the risk.

Addressed key industry risks: raw material price volatility (mitigated by escalation clauses) and government payment delays (mitigated by balancing private and government projects with a preference for private for payment assurance).

Asked by D. A. Thakkar

So as I said, it has only come to us because we are the people who have introduced a lot of new technologies or a few technologies for the first time in India, like whether it could be CIPR, it was Microsurfacing with fiber, then we are working with a few other things also, like in the field of reactive asphalts, where the quick pothole filling can be done. Now, as far as competition is concerned, though we cannot bar anybody from being into the competition, but the credentials and credibility that we have built over the last 22 years, the long experience definitely keeps us ahead.

Management outlined their strategy to maintain market leadership, emphasizing their pioneering role in new technologies, 22 years of experience, credentials, and focus on customer satisfaction.

Asked by Adarsh Shetty