Q2 24/25

Nov 13, 2024

Quarterly report

Summary

Q2 FY25 revenue rose 28% YoY and PAT rose 21%, supported by a INR 24,221 crore order book. Management reiterated ~25% FY23–FY27 revenue CAGR, stable margins and investment in shipbuilding capacity and green vessels.

Good afternoon, ladies and gentlemen. I am Yashashri, the moderator for this conference. Welcome to the conference call of Garden Reach Shipbuilders & Engineers Limited, arranged by Concept Investor Relations to discuss its Q2 and H1 FY 2025. We have with us today Commodore P.R. Hari, Indian Navy Retired, Chairman and Managing Director, and Shri R.K. Dash, Director Finance and CFO. At this moment, all participants are in listen-only mode. Later, we will conduct a question and answer session. At that time, if you have a question, please press star and one on your telephone keypad. Please note that this conference is being recorded. I would now like to hand over the floor to Commodore P.R. Hari, Chairman and Managing Director. Thank you, and over to you, sir. Thank you, Yashaswini. Ladies and gentlemen, a very good afternoon to each one of you. I am P.R. Hari, Chairman and Managing Director of the company. With me here are Shri Rameshkumar Dash, Director Finance and CFO, Mrs. Aparajita Ghosh, General Manager Finance, and Shri Sandeep Mohapatra, the Company Secretary. I extend my warm welcome to each one of you for sparing your valuable time to attend this call. Our Q2 results have been very encouraging, and before I provide the highlights of our financial performance, let me provide you an insight on our physical performance. Our order book as on September 30, 2024, stands at INR 24,221.37 crores. This comprises 12 projects with 43 platforms, including four export projects comprising 10 platforms. These include 17 warships for the Navy. That is three P17A advanced stealth frigates, four Next Generation Offshore Patrol Vessels, eight Anti-Submarine Warfare Shallow Water Craft, two Survey Vessels (Large), and one oceanographic research vessel for the Ministry of Earth Sciences, one acoustic research vessel for a DRDO organization, the NPOL, 13 hybrid ferry for the government of West Bengal, an ocean-going tug for the government of Bangladesh, and a dredger and three patrol boats, again, for the government of Bangladesh, five multipurpose vessels for a German client, and one fully electric ferry for the government of West Bengal. As I said, 12 projects, 43 platforms. I will now give you an insight as to what status the projects are currently at and what is our execution plan. Coming to the P17A project, it is a three-ship project. All three ships have been launched, and the first ship has already attained around 83% of physical progress. The second ship around 65%, and the third ship around 50%. The first ship is expected to be delivered during the mid of next year, that is August 2025, and we intend completing this project by August 2026. Coming to the Survey Vessel Large project, it is a four-ship project, and we have already delivered two ships. First ship was delivered last year, that is December 4, 2023, and the second ship was delivered on October 8, 2024. The next two ships are at advanced stages of construction, with the third ship of the project having completed around 78% physical progress, and the fourth ship following closely at 72% physical progress. We intend delivering both these ships by the middle of next calendar year. That is the first quarter of FY 2026. The next project is the Anti-Submarine Warfare Shallow Water Craft project. It is an eight-ship project, and the first of these ships have already completed the contractor sea trials. It is now getting readied for delivery. We expect the ship to be delivered during January 2025. From then, the second ship is right now at around 83% physical progress, the third ship is around 70% and so on. We intend completing this project by October 2026. That means delivery of all the eight ships by October 2026. The fourth project that we are undertaking for the Indian Navy is the Next Generation Offshore Patrol Vessels. It again is a four-ship project. The progress is good so far, and we have commenced production of all the four ships, and the keel of two of these ships have been laid very recently. The first two ships have touched around 35% progress, and the last two ships around 25%. The delivery of these ships will be completed by 2028. As I mentioned earlier, in addition to these projects for the Indian Navy, we have a plethora of projects being undertaken, both for the state government, the central government research organizations, and also a few export projects. As per our current assessment, all these projects will be completed by 2028. That is FY 2029. I have so far given you a glimpse of the orders currently in hand. What is now on the anvil, I shall give you a glimpse so that you get an understanding as to what are the orders that are likely to materialize in the coming years. We had concluded a contract initially for four multipurpose vessels with an option clause for another four vessels. This option clause has been exercised, and the fifth vessel contract has been signed. We intend signing the contract for three more vessels by March 2025. We are also the L1. We have been declared L1 through a tender process for two coastal research vessels for the Geological Survey of India, and the price negotiations are currently in progress. This is a two-ship project. One project that I have been mentioning in every interaction that we had before is the Next Generation Corvette project. The bids have already been submitted, and currently, the technical evaluation of the bids is in progress. We expect the L1 declaration sometime during December 2024, January 2025. This is the eight-ship project, with the L1 shipyard getting five ships and the L2 shipyard three ships. The L1 shipyard, for five ships, the expected order value is around INR 22,500 crores. RFPs that are likely to come from the Navy and the Coast Guard in the near future are for the Next Generation Survey Vessels Large, that is five ships. Approximate value of the project is around INR 3,000 crores. Next Generation Ocean-Going Patrol Vessels, Offshore Patrol Vessels for Indian Coast Guard, six ships. Approximate order value is around INR 2,000 plus crores. Next Generation Fast Patrol Vessels is a big project in numbers. They are 18 ships, and the order value is around INR 3,500 to INR 4,000 crores. Two multipurpose vessels for the Indian Navy, approximate order value around INR 1,200 crores. This is in addition to the other projects that the Navy has plans for. The P17 Bravo project for which the AoN has already been accorded. This is a seven-ship project, and the total order value is around INR 70,000 crores. As for the DAP timelines, the RFP will be promulgated in the due course. We expect the RFP to come out in the next year, 2026. This gives you also a highlight of the orders that are on the anvil. Now I will touch upon the financial performance of the company for the quarter ending September 30, 2024. As I had mentioned, the results have been very encouraging, and if you are doing a year-on-year comparison, our revenue from operations have gone up from INR 898 crores to INR 1,153 crores. That is registering a growth of around 28%. Total income from INR 969 crores to INR 1,228 crores, 27% growth. The EBITDA has gone up from INR 120 crores to INR 145 crores, 19% growth. The profit after tax registering a growth of 21% from INR 81 crores to INR 98 crores. Our order book is good. We are flushed with orders, as a matter of fact, and we expect more orders to come in the future. I have been consistently maintaining that we have a very clear execution strategy, and so the future looks bright. With that, I close my introductory address, and I am open for any questions as the moderator conducts the further course of events. Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We will take our first question from the line of Rifad Fatima from Yashvi Securities Private Limited. Please go ahead. Hi, am I audible? Yes, please go ahead. My first question is on the gross margin front. Why have we seen the cost going up so high this quarter? Ma'am, could you please repeat? Your voice is somewhat. Rifad, may I request you to use your handset mode? Yes. Is it clear now? A little better. Yeah. I was asking why has the cost gone up so high in this quarter? Cost? Is that what you mean? Cost of materials. Yes. Definitely the cost has gone up because the cost is directly dependent on the project maturity stage. What I am trying to convey is that in the initial stage of the project, the material cost will be less, and as the project matures, the material cost automatically goes up. This, in turn, gets translated into the value of production. Just to give you an example, in a conventional warship composition in terms of value, the material cost is around 65%-70%. In the initial stage of the project, when the basic hull construction and the design and the commercial activities are in progress, the material input is very less. When the project reaches the maturity stage of between 40%-60% levels of physical progress, then the material input goes up, and therefore the cost. So it is the natural phenomena in a shipbuilding cycle. Okay. That answers my question. Thank you. Thank you. Thank you. We will take our next question from the line of Karan, an individual investor. Please go ahead. Good afternoon, sir. Thank you for confirming my question. My first question is, what is the current utilization rate of the dockyards? Okay. If we have any more questions, then I will address all of them together. No. Do you have any more questions? You can ask a question on the utilization of the dockyards. Okay, sure. I have two to around three questions. The first question is, what is the current utilization rate of dockyards? The another question is, which countries do you see importing or from who the most? This question I didn't get. Which country would be importing? Yeah. Could you repeat the second question once again? Which country would be- Which countries you see exporting the most. Okay. Next question. Is the 3 questions? Yeah. The last question is, can you brief us more about the Double Lane Modular Steel Bridge and Bailey bridges JV with NHAI? How will this benefit you in the long term? Okay. First question is on our MOU with NHAI, how is it going to benefit us. Okay, I will answer your first question. Okay. Okay. I will take on the questions one by one. The dry dock and building boats are the key assets that any shipbuilding industry require. Garden Reach Shipbuilders have got adequate facilities. You may be aware that there were 3 dedicated shipbuilding units all in Kolkata. In addition, we have also taken over a facility from the Kolkata Port Trust, the Syama Prasad Mookerjee Port, which comprises of 3 more dry docks. So we are good with the dry docks. Now, coming to your question regarding the utilization. Right now, these dry docks and building boats that are at around 70% of utilization. Again, I would like to highlight, I think I mentioned during the last earnings call that our stated shipbuilding capacity was for current construction of 28 large, and then the small and medium, ships. What we have done, considering the orders that we currently have and also the orders on the anvil. In addition to taking up 3 dry docks on long-term lease from Syama Prasad Mookerjee Port, we had also revitalized some of the existing facilities that we had. With this initiative, we could augment our shipbuilding capacity from 20 to 24, and our current capacity is a construction of 24 warships configured, 8 large and 16 medium to small. To put in a nutshell, our capacity utilization with respect to dry docks and building boats is about 70% as of now. Your second question was on the country, which is importing and our export potential is very high. Most of the European nations, that is Germany, Netherlands and so on, they are now looking at India as a commercial shipbuilding hub. The results are very evident that almost all the Indian shipyards have orders from these clients. Earlier, they used to go to other nations for shipbuilding requirements, but now India is a sought-after destination, and we have orders that I mentioned, that we have an order already for 5 multiple purposes, which will go up to 8 by March 2025, and so do the other shipyards. We expect this trend to continue, and the export potential to be more towards the European nations who need commercial purposes and that too in large numbers. Coming to your third question, was the significance of the MOU with NHIDCL, right? National Highways and Infrastructure Development Corporation. This MOU, we have concluded for products that are in the Bailey bridges segment. As you are aware, Bailey bridges is one of our very stable steel bridges, is a strong business vertical that we have, and we are market leaders in this segment. We already had live MOUs with the Border Roads Organisation earlier. We have expanded this to NHIDCL. With this MOU, we expect the orders to come in from the NHIDCL over the next 2 years for 75 bridges, the total bridge steel bridges. I hope I've addressed all your queries. Yes, sir. Thank you very much. All the best. Thank you. Thank you. We will take our next question from the line of Hiren from Axis Securities. Please go ahead. Yeah. Thanks for the opportunity. Just two small questions. First is on the breakup of the export and the domestic order book in terms of quantum and the percentage. Second is, would like to know your outlook on the green energy vessels and how that space is developing, going forward, sir. Sure. I will provide the data regarding exports and domestic breakup of orders. I will first address your query on the green energy sector. This is a segment that has got huge potential. Some of the nations have mandated go green by as ambitious a target as 2030. India too is moving in the right direction. Already, the Ministry of Shipping has promulgated the Green Tug Transition Program, the GTTP. In addition, many of the state governments are going green. When we say green, we are looking at zero emission platforms, and the GRSE has already made a foray into this segment through a partially Office Development funded project on a fully electric ferry for the government of West Bengal, and we have successfully completed this project. We are awaiting the formal handover of the vessel to the government. Just for information, this is the largest in terms of passenger capacity, 150 passenger fully electric ferry for the government of West Bengal. In addition, we also won an order for 15 more hybrid ferries, again from the government of West Bengal. It is a World Bank-funded project. Currently in India, two shipyards, that is Cochin Shipyard and GRSE, have successfully completed the green energy vessels. This is an area where we see huge potential, and we will definitely be an active part of the Green Tug Transition Program, which I am very confident is moving in the right direction, where the ports will mandatorily use fully green tug. In addition to the GTTP, that is the Green Tug Transition Program, the Inland Waterways Authority of India, IWAI, also has got requirements for green vessels for inland water transportation. That is an area where we see huge potential in future. Thank you. Now, coming to your first question on the breakup of export and domestic orders. As I have again reiterated before, our core business is domestic vessel building, and the majority of our orders come from domestic vessel building. Now, since we have made a foray into the non-defense platform also, still the shipbuilding segment is almost 99% of our orders. Coming to exports within the shipbuilding segment, exports comes to around 3.1% as of now. The domestic, that is the domestic value, 96%. Okay, sir. Yeah, thank you. That was very helpful, sir. Thank you. Thank you. Thank you. We will take our next question from the line of Harshit Kapadia from Elara Capital. Please go ahead. Yeah, hi. Good afternoon, sir. Good evening, sir. Are you able to hear me? Yes, I am able to hear you. Good afternoon. Yeah, hi. So two questions from my side. Could you please share the order book breakup project-wise? That is the first question. Second, sir, as you are now looking at 40%-60% of your projects are in the mature stage, so once we cross this mature stage, again, the margins will look up at a gross margin level as well as at EBITDA margin level. Would that be at least two, three quarters away? Would that be a right assumption to make? Harshit, if you can self mute, please, there is background disturbance. Thank you. Thank you. Hello? Mr. Harshith? Thank you. Yes, sir, please go ahead. Coming to the order book breakup. The current order book is, as I mentioned earlier, is INR 24,221.37 crores, and this, again, as I mentioned, comprises mostly of shipbuilding orders, which comes to 99.4%. Coming to the order book breakup project-wise. The P17A, the balance order remaining is around INR 13,937 crores. The Anti-Submarine Warfare Shallow Water Craft is around INR 4,331 crores. The Survey Vessel Large project is two ships are remaining, around INR 729 crores. The Next Generation Offshore Patrol Vessels, INR 3,023 crores. The Oceanographic Research Vessel for the NCPOR, Ministry of Earth Sciences, or NEDC, is INR 796 crores. The multipurpose vessels, around INR 520 crores. Two export projects for the government of Bangladesh, around INR 315 crores. And naval strategic command project, around INR 235 crores. This gives you a breakup of the current order book. Your second question was on the margins. So, as I am stating this consistently, that in shipbuilding, the optimal margins where satisfactory efficiency existing is around 7.5% to 8% when we are in a competitive environment. We have been maintaining this kind of margins, so we are hopeful and confident of maintaining similar margins in future too. Thank you. Yeah. Hi, sir. One more question on the Next Generation Corvette order. What is the status? By Q4, are the tender results expected out or there could be a delay and probably in FY 2026, the results would be out. Then second thing you mentioned on the pipeline P17 Bravo frigate. So destroyers will not be coming. Is that a correct understanding? Because what we understand, either frigates would come or destroyers would come in terms of order pipeline over next 2, 3 years. Any color on that would be helpful. Okay. I will give my views on this. The Next Generation Corvette, as I had told you before, that we have already submitted the bid. There are four shipyards who have bid for this project, and currently the technical evaluation is in progress. We expect the bid to be open either in December or January. I mean, December 2024 or at the close of January 2025. What I am trying to convey is that in our appreciation, the bid results will be declared during the current financial year itself. Of course, then the contract negotiations will happen, and we expect the order to be signed only during the next financial year. Your next question was on the P17 Bravo project and the Next Generation Destroyer project. For the P17 Bravo project, the DAC, the Defence Acquisition Council, has already accorded the AoN. Again, what I am trying to convey is the process channel. So once the AoN has been accorded, the Navy finalizes the SoT and the RFP will be promulgated. We expect the RFP to come out sometime in the calendar year 2025. That means during FY 2026, we expect the RFP to come out. Coming to the Next Generation Destroyer, yes, in our appreciation, as per our assessment of the prospective plan of the Navy's need of these vessels. At this moment, we do not have any clarity as to when the project is going to fructify because they have not yet gone for the AoN. So that's what I say of query, NGC, P17 Bravo, and the Next Generation Destroyer. Thank you for answering all the questions and wishing you all the best. Thank you. We will take our next question from the line of Amit Dixit from ICICI. Please go ahead. Yes, sir. Thanks for the opportunity and congratulations for a good set of numbers. Just three questions from my side. This quarter, if we see the gross margin has declined, it is now below 30%. While I understand that quarter-on-quarter, we should not look at a defense company, but since this below 30%, we have not seen for a very long time in many, many quarters. Just wanted to understand what is behind that. Is it just the execution phase or we expect to see gross margin at this level only? Okay. If you are looking at the gross margins- Yeah Even during our earlier interactions also, I have maintained that we will be providing margins which are consistent. Consistent in terms of we are looking at the PAT margins around 8%, which we are maintaining. I expect a similar trend to continue in future also. We do not see any decline, nor we do not expect any steep rise. We will be maintaining this kind of margins in future too. Most of our revenue is coming from shipbuilding. Yes, we have ventured into ship repairs where the margins are much better. As and when our ships repair revenue goes up, the high margins of the ship repair segment will offset the relatively lower margins of shipbuilding, and we could see an increase. All I can say at this moment, considering our current order book and the execution strategy, the current margins we will be able to maintain. Okay, sir. That is very clear. The second one is on Next Generation Corvettes. Now, two parts here. The first one is that when you mentioned to Harshit's answer that you expect the contract negotiation to go on in next financial year. Assuming that we finish the contract negotiation in next financial year and we are ready for, and we get the order. How much time will it take for us to mobilize and start recording the revenue? Okay. Very interesting question. If you just take the timeline, logical, realistic timelines. If the bid is going to be open by December 2024, January 2025, and let us put a very reasonable figure about six months for contract negotiations and six to eight months. That means in Q3 of FY 2026, if the contract is concluded, the revenue recognition will start two years from then. If GRSE gets this order, it is perfect in terms of the timeline. Why perfect is because at least from 2026, if you take two years, that comes to 2028, and that perhaps is the time when our current order book will get exhausted. So time and space-wise, the NGC project is moving in the right direction if you get it. I am just cautioning that if you get it, 2026 means two years hence, the revenue recognition starts, and that is the time when more or less our existing order book gets exhausted. Does that answer your question? Yes, sir. Certainly. The part B of this question is what level of indigenization are we targeting on this NGC? Okay. Indigenization, which I am sure you are keeping track of not only our company, but all the shipbuilding companies in India. Indigenization is the focus area of the government, and almost all the shipyards have a clear mandate to maximize the indigenous content on their ships. As evident over the last two, three projects that we have completed, be it the Landing Craft Utility project, be it the Anti-Submarine Warfare Corvette project, or something like the fast patrol vessels for the Indian Coast Guard. So indigenization content has been hovering between 80%-92%. Now, for the P17A project, it's a major project, where certain equipment are of import nature, the indigenization content is around 80%-82%. But the other three projects which we have, again, it hovers in this direction. I am not, at this moment, assuming any major change in the indigenization content, even in NGC. I expect it to be, in its raw acquisition, that it will be between 85%-90% tops. But there will still be an element of import content in that, maybe in a part of the propulsion package or some of the government services. So around 10%, an optimistic level import content, and 15% at the finished level. Okay, that's very clear, sir. The third question from my side is that there were some media articles suggesting that we are planning indigenous hovercraft for military operations. Just wanted to get your thoughts on this. We are trying to collaborate with some private sector also, that is what that media article says. So are we doing something on that front? What kind of market do you see? If so, when it will translate into revenue or orders for us? Okay. As far as hovercrafts are concerned, so far, our hovercrafts are being used only by the Indian Coast Guard, and Indian Coast Guard has two sets of hovercrafts. One, which they directly imported from a U.K.-based company, and second, manufactured by GRSE through a collaboration with Defense. Now, this is past history. Now, both the Coast Guard and Army, they need the hovercraft. The business volumes of this venture, I will not say it very attractive, but there is a need to indigenize hovercraft because hovercraft manufacturing technology so far is not available in India. It is with this intent that we have taken an initiative, and you may be aware that the Department of Defence Production has a scheme, iDEX scheme, for encouraging startups and private sector to come up with solutions towards indigenization and new product development. We have took it as a challenge, and we have identified a partner, a private sector partner, and we are confident of achieving indigenization of hovercraft by 2024. Because it takes time. Because certain components of technology has to be developed. We expect a three-year period to develop this product. The second question that you asked is what is the potential? Both the Coast Guard and the Army have got a requirement. If the product is indigenous, naturally, the cost is going to be much lesser and the maintenance aspects will be much better handled in India. I expect a potential, I would not say huge potential, but reasonable market potential for this product sometime in early 2030. Okay. Great, sir. Thank you so much for answering my questions, and all the best. Thank you. Thank you. We'll take our next question from the line of Sunil Shah from SREPMS. Please go ahead. Yeah. Thanks for the opportunity. Sir, just need to have an understanding on the P17 Bravo project. Sir, our P17A is going to get completed by August 2026, is what I understand from your notes. Sir, what will be the timeline for this P17 Bravo to recognize the revenue for us? The way in which you explained about the Next Generation Corvettes, which is 2 years after we get the order. Similarly, if we get 4 orders for P17 Bravo, sir, how would the revenue recognition happen in terms of the timeline? If you could make me understand that, please. Okay. You heard about Nostradamus? Sorry, sir? You heard about Nostradamus? Sir, we are working with an assumption of four out of seven. I am already within the date, because anything which is predictive is interesting, as long as you take it in the right spirit and the market takes it in the right spirit. Yes, sir. The fact is that P17 Bravo, the AoN has been already accorded in the last week. The clock has started ticking for our Navy to come up with the RFP. The best-case scenario, the RFP could come out during, it is our assumption. It is only an assumption, that the RFP could come out during mid-2026 calendar year. The project is a big project. Two shipyards will be undertaking this project. It is a seven-ship project, and overall cost is around INR 70,000 crores. Any one shipyard could get INR 40,000 crores worth order, around it, and the second shipyard three sixth of the proportionate cost. If the RFP is out during mid-2026, you keep a year from the RFP to contract signing, best-case scenario, actually. That means mid-2026, the contract is signed. As with the other projects, it will take two years for the regular recognition, which should come to 2028, 2029. This is it, sir. Okay. Okay. Thanks, sir. Thanks for all this understanding that you gave me. Thank you so much, sir. All the best. Thank you. Thank you. We'll take the next question from the line of Vijay Bhayani from Samyak Financial Consultants. Please go ahead. Yes. Thank you, ma'am. Sir, I would like to understand about this government's new initiative. The Indian shipbuilding industry right now is very small in the global context, and we are hearing that the government wants to bring Indian shipbuilding industry among the top five in the world, and that the government is planning to give it an infrastructure status and all kind of incentives to boost the Indian shipbuilding industry. So if you can explain, sir, what exactly is the government planning to do, what kind of incentives they are likely to give, or by what timeframe this is likely to come, and most importantly, sir, how can GRSE benefit out of this whole thing, sir? That is my one question, sir. Okay. Thank you. Yes, it's a fact that the government is already starting the process of formulating a shipbuilding policy framework with the sole aim to bring India into the top nations in terms of shipbuilding. If our market share in the overall global shipbuilding scenario as a nation is very similarly low, and the intent is to enhance this and become one of the top nations. Whatever initiatives currently the government is taking, all that is available in the open media. Open source information is available. Our assessment is that the Shipbuilding Financial Assistance scheme would continue, because right now the scheme is available and it is for a specific timeframe. That scheme will continue. Second, there will be focus on green initiatives with a clear intent for a transition from conventional energy-driven platforms to green energy platforms. Third, there would be a focus on linking shipbreaking with shipbuilding, which means it's a very innovative scheme they are likely to propose. That if a shipowner breaks the ship in India, he gets a certain amount of credit. And if he builds the next ship in India, he can avail that credit. Such very innovative schemes are likely to come up. As far as the timeline is concerned, if anyone's guessed, as I understand, it's one of the focus areas of the government. Any time now, because as I understand, the process is at advanced stages. Any time now, maybe in the next three to six months, the policy framework could come out. Now, coming to GRSE itself. While our focus has been, is, and would be, primary focus would be on war shipbuilding, for which there is always a structured process, because war shipbuilding thrives on a specific plan of both the Armed Forces of the Indian Navy and the Indian Coast Guard and the budget availability. So there is a very structured plan. Our primary focus would remain on war shipbuilding, but considering the opportunities available in the non-defense segment, we are aware that this policy framework is going to come. The government focus would be on encouraging shipbuilding in India. With that clear understanding, we have slowly diversified into and rather prepared ourselves through one, gaining experience in construction of commercial ships. The results are here. Gaining experience in building specialized research vessels. Again, the results are here to see. We already got order and execution. Gaining experience by developing clean energy vessels. Again, we already developed, more orders already in hand. And fourth is capacity enhancement. That is capability, already we have capacity enhancement. Infrastructure and enhancement process has already commenced. What we had targeted, my department, GRSE's target would be to achieve a shipbuilding capacity of around 28 ships concurrently. We are at 24 now. By 2025, we will be able to achieve that. To answer your specific question, what is in store for GRSE? Very much is on the anvil, and we are fully geared to take on this challenge in the coming years. Thank you. Sir, will there be some kind of a PLI scheme for shipbuilding industry under this financial assistance program? As per my understanding, while infrastructure status may be there, at this juncture, it is my understanding that there is no thought process to accord, or rather, to provide a PLI scheme for shipbuilding. Okay, sir. Thank you very much, sir. Thank you. Thank you. Before we take the next question, I would like to remind participants to press star and one to ask a question. Next question is from the line of Basant Bansal, an individual investor. Please go ahead. Yeah. Good evening, sir. I have two, three questions. The first one is that in your opening remarks, you said that you are working on three, four projects for the government of Bangladesh. So are you facing any challenge in terms of execution because of the social unrest kind of situation prevailing over there? Secondly, you are working on 24 projects, as you said. So are you facing any challenge in terms of, again, execution due to supply chain related issue or any other issue which can delay the execution part? And the third one is that in the first half, you have clocked 30% revenue growth. So will it be maintained for the full year, for the current year, as well as for the subsequent years? Okay. Thank you, Mr. Bansal. I will address your questions one by one. You have asked about Bangladesh. Yes, we are executing three projects for Bangladesh. But if you see our overall order book and compare it with the orders in hand for Bangladesh, the total order value from Bangladesh is just about INR 300 crores, which comes to about 1.5% of our total order book. So the impact on the company is negligible. Now, coming to the impact on the projects. We have been undertaking a patrol vessel project, patrol boat project for Bangladesh, 50% of the boats are already delivered, and the other three boats will be delivered by end of the year. We do not envisage any issue with that. The other two projects, again, are very small projects. One is for a dredger and one is for a tug. The dredger project is moving in the right direction. The tug project is still in preparatory phase. So on that, we do not see any impact. And on a positive note, I feel as a nation, this is just a passing phase. It is a debt that they have. Once they have been stabilized, I do not see any issue, especially considering the shipbuilding, unlike any other manufacturing industry, the projects are long-term projects. So by the time the situation becomes normal, the project continues what it has been doing and it will catch up. So whatever initial teething issues are there, so I do not see any problems with the Bangladesh projects. Coming to the supply chain impact on shipbuilding, over the time in the post-COVID phase, definitely in the COVID phase and post-COVID phase, there was an issue with supply chain, but those issues have been fully tided over. And at this juncture, we do not have any supply chain issues. When I said 24, what I meant was that GRSE has got the capacity to construct 24 vessels concurrently within our physical boundaries. To answer your question, nil impact on supply chain as of now. Coming to revenue growth, yes, we have registered 30% growth during the first half of the year. Here, I would like to make a statement, which I am only reiterating what I have mentioned during our previous interactions, that we had assured a CAGR of around 25% during the four-year period from FY 2023 to FY 2027. We are confident of maintaining that kind of CAGR. We will only exceed your expectations, maintaining similar growth rate. Thank you. Yeah. Thank you very much. Thank you. We'll take our next question from the line of Kartik Bhatt from Kuber Investments. Please go ahead. Yeah. Hi, sir. Sir, if you can throw some light on the contract that you signed with this German company, I think, for multipurpose vessels. Was it a competitive bid? How many other companies were bidding? What is the order value and the timeline over which it's to be delivered? Sorry, Mr. Kartik, could you repeat that? Perhaps I hadn't registered properly. Could you please repeat the question? The contract that you signed with the German company for multipurpose vessels, 8 multipurpose vessels, I believe. Was it a competitive bid? What is the order value and the timeline over which it's to be delivered? Okay. Yes, this is for the orders for our German client, eight multipurpose vessels. The initial contract when we signed about four months back was for four ships with an option clause for another four ships. We already exercised the option clause, and as of now, we have signed contract for five of the vessels. The next three ships will be signing the contracts by March 2025. The total order value for the eight ships is around INR 890 crores. To answer your question, with foreign clients, we do not go on a conventional tendering and competitive process. They approach potential shipyards directly, do a capacity assessment, and when they find a particular shipyard is competent and capable of undertaking, executing their project, they take a, let us say, a cost bid from us, then they negotiate with us. They have a method. I am sure they would have approached multiple shipyards before coming on to GRSE and assessing our capacity. To answer your question, the order value is around INR 890 crores. Okay. Sir, I believe this is the first contract with a European company. I think in the last call also, you were alluding to a lot of European nations looking at India as a destination for construction of commercial vessels. Are we in talks with more such companies? I mean, is it a sign of things to come that we will be participating in more such contract tenders? Yes, it is a sign of things to come. More and more European clients are approaching not only us, all the Indian shipyards. They are looking seriously at India as a hub for commercial shipbuilding. It is a very positive sign and good type of things to come in future. We will be actively pursuing more opportunities in this sector. That is very clear, sir. Thank you so much. Thank you. Thank you. We will take our next question from the line of Harshit Kapadia from Elara Capital. Please go ahead. Thanks for the opportunity again. Sir, my question is largely on your working capital. There has been a specific budget which is given to Indian Navy. Till now, your working capital has been extremely good. Now, there are 2 big projects which Indian Navy is going to impose. One is a drone and the other is Rafale, as per news reports, by end of this financial year. Do you think this can strain your receivables at least for a year as we approach March 2025? Any color would be helpful. Okay, I'll put it this way. In the budget capital, budget allocation, all three services are given the funds based on the projections and of course, the decision of the government. In our appreciation, the budget allocated to Indian Navy is more than adequate to meet the requirements of the ongoing projects. Neither would the drone nor the Rafale projects, which have been publicized now, would have any impact on the fund flow from the ongoing capital projects of the Indian Navy. Once an AoN is accorded, it is with the consideration that the budget is available. I'm even talking about, be it an NGC or be it I'm not talking about the orders already in hand. There I have told zero impact. I'm only speaking about the orders on the handling, be it NGC or be it P17 Bravo. These considerations have already been factored while according AoN or coming out with RFP. We do not see any budget constraint. The other point I'd like to highlight is that, unlike an outright purchase where you expend the complete project value in one shot, in case of shipbuilding, it is spread over a period of time, sometimes ranging from three years for a small platform or a project to five to 10 years for a large project. You take the Indigenous Aircraft Carrier project, which was being handled by one of the other Indian shipyards. The project is almost 12 to 13 years long. Budget is not a constraint in my appreciation as far as the projects which we are executing or what we are likely to get in the coming years. Thank you. Okay, sir. Just one final question on the electric ferry. If this helps us understand, sir, there is no change in the design of a ship. You will largely replace a diesel engine in a ship with an electrical engine. Is that a correct understanding? Are you right now manufacturing or importing these engines? If you can give a color on that. Okay. In case of, when we say a zero-emission vessel, what we try to convey is that emissions which come from a diesel engine or a gas turbine or a erstwhile coal engine, that is no longer there. While an engine is not there, the propulsion mode that is used in a ferry, electric ferry, is the battery. The battery will drive a propulsion motor, and the propulsion motor in turn drives the shaft which propels the ship. This is the basic difference. Whereas in case of a diesel engine or a gas turbine propel or a steam-propelled ship, the steam engine, the diesel engine, or the gas turbine drives through a gearbox, the shaft. Here, the shaft driving is undertaken by a propulsion motor, which in turn gets power from a battery pack. Batteries are of different types. I am sure you would not like me to go into those details, but the basic difference is the conventional propulsion methods are not available. Understood, sir. Yes. Sir. That is helpful. Thank you. We will take our next question from the line of Basant Bansal, an individual investor. Please go ahead. Yes. Sir, when I see your sales receivable turnover ratio for the last year, 6 months, it was 39.48, and now it is 19.64. So this vast variation, can you explain this? Sir, could you repeat the turnover to what ratio? Sales receivable turnover ratio. Last year for the 6 months, it was 39.48, and for the current year, 6 months, it is 19.64. Can you explain to me what is this? I will just request my Director Finance, CFO, to answer this question. Actually, in shipbuilding, last stage of payment, we get after the requirements get released. In some period, the requirement will be very fast. In the last payment, there is some guarantee period. Because of the guarantee period, or at least the last payment gets released by 1 year. Because of that, whenever there is delivery, when we load delivery, receivable automatically will be more. Whatever discrepancy you are finding, the reason is because of when delivery start. Now we have started delivery, so receivable will go up. In the last few months, we have delivered two vessels. One, two survey vessels, and their last stage payment, the last trade receipt-based phase payment is contractually also, it is linked to the guarantee period. That is the reason why the turnover to receivable ratio is varying. Okay. Thank you. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments. Over to you, sir. Thank you, Yashaswini. It has always been a pleasure, ladies and gentlemen, to interact with you. I look forward to such interactions because it is an eye-opener as to what you expect from us. I am very confident that to the best of our ability, we have tried to clarify all your queries and looking forward to meeting you next. Thank you. Jai Hind. Thank you, sir. Thank you, Gaurav and Yashaswini. Thank you. It was our pleasure, sir. On behalf of Garden Reach Shipbuilders & Engineers Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.