Q1 24/25

Aug 4, 2024

Quarterly report

Summary

The INR 25,231 crore order book and an active Navy and Coast Guard pipeline support 25%-30% revenue growth guidance for FY25 and similar growth in FY26. Management expects 7.5%-8% PAT margins and peak execution years through FY27.

Good afternoon, ladies and gentlemen. I am operator for this conference. Welcome to the conference call of Garden Reach Shipbuilders & Engineers Limited, arranged by Concept Investor Relations to discuss its Q1 FY 2025 results. We have with us today, Commodore P.R. Hari, Indian Navy Retired, Chairman and Managing Director, and Shri R.K. Das, Director of Finance and CFO. 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 opening remarks. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. I would now like to hand the floor to Commodore P.R. Hari, Chairman and Managing Director. Thank you, and over to you, sir. Thank you, Aditya. Ladies and gentlemen, a very good afternoon to each one of you. I am P.R. Hari, Chairman and Managing Director of your company. Along with me here are Shri R.K. Das, the Chief Finance Officer and Director of Finance; Ms. Aparajita Ghosh, General Manager Finance; and Mr. Sandip Mahapatra, the Company Secretary. My warm regards to all the participants who have taken their time from their busy schedule to attend this conference call. Before we discuss the financial highlights of Q1 FY 2025, I shall try and enlighten you on the operational performance of the company and few other aspects that may be of interest to you. I shall go in the following sequence. I shall first touch upon our order book position, the new orders which we have received in the recent past, their execution status, and the plan of action for completion of the ongoing projects, the orders on the anvil, and a glimpse on the future outlook. Coming to the order book position, our total order book stands at INR 25,231.29 crores as on 30th of June 2025. This comprises of mostly shipbuilding orders. I shall first touch upon the shipbuilding order. The P17A project are three warships being constructed for the Indian Navy, eight Anti-Submarine Warfare Shallow Water Craft, three Survey Vessel Large, and four next-generation ocean-going patrol vessels. All these ships put together, we are constructing 18 warships for the Indian Navy. In addition to these shipbuilding projects for the Navy, we are also executing a project for the Ministry of Earth Sciences, an oceanographic research vessel. In addition, we are also executing four export projects. One ocean-going tug, an advanced 1,000-meter cube hopper dredger, three fast patrol boats, and four multipurpose vessels. Among these, over the last two, three months, we have concluded the four contracts. The multipurpose vessel contracts for four ships have concluded with the European client, and there is an option for enhancing this quantity by another four, which means the total project could be for eight ships. Then, of course, two export projects that I mentioned regarding the dredger and the ocean-going tug, and also the oceanographic research vessel. The contracts for all these projects were signed during the last three months. We have also been declared L1 for a project for the DRDO, Naval Physical and Oceanographic Laboratory, for an acoustic research vessel; for the Geological Survey of India, two coastal research vessels; and for the Government of West Bengal, two projects for advanced hybrid ferry. Coming to the projects on the anvil. During the last few interactions, I have been stating that the next-generation corvette project, the RFP is likely to be out. Yes, the RFP is out, and we are currently in the process of preparation of the bid. As far as we can see, things are moving on the right track. This is a high-value project, around INR 36,000 crores, split between two shipyards. One shipyard getting five ships, and the other shipyard getting three ships. Thereafter, with both the Indian Navy and the Indian Coast Guard looking forward to expanding their fleet size, we expect the RFPs for two multipurpose vessels. Approximate order value could be between around INR 1,200-INR 1,300 crores. Five next-generation survey vessels, 21 waterjet FAC, 12 mine countermeasure vessels, 22 interceptor boats, and of course, followed by the P17 Bravo and the landing platform dock. In addition to these RFPs from Indian Coast Guard are likely to come for six next-generation ocean-going vessels and 18 next-generation fast patrol vessels. I am leaving out the projects that maybe have been there on the horizon. That is the next generation destroyers, the submarines, and the indigenous aircraft carrier. Now, coming to the overview of the projects that we are currently executing. I shall now provide you input as to what stage each of these projects have reached so far. The P17A project, it is a three-ship project that we are executing. The first ship has touched almost 75% of physical progress of construction, and the ship is currently being readied for harbor and sea trials. The second ship has reached around 62% of construction, and the third ship is following closely behind with around 50% of construction. Now, the first ship is expected to be delivered in the mid of the next calendar year, and the last of the ships is planned to be delivered during the mid of the calendar year 2026. Coming to the Talwar-class project, this is the fourth ship project. Of these, the first ship has already been delivered. The ship was delivered during the end of the last calendar year, 2023, September, we delivered the ship. The second ship has completed all the trials, and she is now getting ready for delivery, and we intend delivering the ship during the end of this month. The third and fourth ships, the third ship has reached almost 74% of physical progress, and she is getting ready for trial, and the fourth ship has touched around 70% of physical construction. We intend completing this project, that means delivery of the balance three ships, all the three ships, by the first quarter of FY26. Coming to the Anti-Submarine Shallow Water Craft project, this is a 16-ship project, eight being constructed by GRSE and eight by another PSU shipyard. Of our eight ships, the first ship has undergone the harbor trials, and she is getting ready for the sea trial, and we expect to deliver this ship in another three months. The ship has now reached a physical progress of construction of around 90%. The next ship has touched around 65%, the third ship around 55%, and so on. As far as this project is concerned, we intend completing this project by FY 2027. That means delivery of all the 8 ships. Coming to the next-generation OPV project, a 4-ship project. We signed the contract during March last year. The progress is good, and the first 2 ships have already touched around 25% of construction, and we have already started production of the last 2 ships also. As for the new order for which we have signed the contract during the last 3 months, the pre-production activity, that is the design activity, commercial activities, are currently in progress, and we expect all these projects to move as per schedule. Now, I have touched upon our main vertical, the shipbuilding, and in addition to shipbuilding, our other business verticals include ship repairs, commercial shipbuilding. Of course, I subsume commercial shipbuilding within the core shipbuilding activity. In case of ship repairs, we started in a very modest fashion around 2 years back, and at that point of time, around 1%, or just about 1% of our revenue was being generated by ship repair. Over the last 2 years, we have enhanced it to almost 5%. In addition to ship repair, we also have a vertical on open steel bridges. Here, as I stated before, we were and we are, we continue to be the market leader, Indian market leader. I am happy to inform you that the turnover, of course, it is modest if you look at our overall turnover. We have enhanced the turnover from around INR 60 crores to INR 140 crores recently, and the tempo is being maintained. We have live MOUs with the Border Roads Organisation, the National Highways and Infrastructure Development Corporation Limited, and few of the state public works department. So this vertical is currently doing well. In addition to this, we had ventured into green shipping. In green shipping, during our last interaction, I had mentioned that we had completed a project for the Government of West Bengal, a fully electric ferry. This ferry is the largest in terms of passenger capacity within India, a 150-passenger capacity ferry. So we had done the technical delivery of the ship to the government, and we expect the formal takeover during the coming month. Happy to inform you that I had mentioned before that we had won 2 more projects for the Government of West Bengal for construction of 13 in number advanced hybrid ferry. Here we see a huge potential because as with many other European nations, India also intends to go green as early as possible specifically for inland water transportation. So this is an area where we see huge potential, and we are moving on the right track. One product already ready and delivered, and with this new project coming up from the Government of West Bengal of 13 more ferries, I feel we have made a good foothold in this market. Export has been a focus area for us. During our last interaction, I have stated that during our next meeting, that is today, I will be able to share with you the happy news of a contract which was then being negotiated. We have concluded a contract with a European client, a German client, for four multipurpose vessels, as I had mentioned, with an option clause of four more vessels. Now, with most of the European nations looking at India as a destination for construction of commercial vessels, we see a huge opportunity on this front. Autonomous platforms. With the Navy having promulgated its autonomous roadmap, we see future on development of autonomous platforms. With this intent, we had successfully developed prototypes for surface and subsurface autonomous platforms, and we are in the process of developing a maritime operations capable drone. Once that product is also developed, we would have autonomous platforms in all three domains of operation. As a nation with respect to development of autonomous platforms, the technology competency is still in nascent stage, but we expect in future, maybe in the next 5 to 10 years, market opportunities for autonomous platforms will be definitely on an uprise. As far as collaborations are concerned, we have active collaborations with globally renowned OEMs for co-production of marine diesel engines and for waterjets. What we intend doing is to translate these MOUs to license agreement, which will in turn be utilized for co-production of these equipment for use on board Indian naval platforms. In a nutshell, with Navy and Coast Guard on a fleet expansion drive, the opportunities that are available for us in the immediate future and in the foreseeable future are substantial. I have given you a glimpse earlier on the platforms that are likely to be coming up through RFP. We shall also be focusing on ship repair, exports, specifically for commercial vessels, green platform development, and development of marine diesel engines while nurturing the small vertical of our Portable Steel Bridge Division. I have finished. I am open for any questions from you now. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, please limit your question to three per participant. Should you have a follow-up question, we request you to rejoin the queue. Our first question is from the line of Amit Dixit from ICICI Securities. Please go ahead. Yeah, good afternoon, everyone, and thanks for the opportunity. I have three questions. The first one- Sorry to interrupt, sir. Please use your handset while asking a question. No, I'm using my handset only. Am I audible now? Yes, sir. Your voice is Yes. Can you speak a bit more louder, please, Mr. Amit? Yes, sir. Surely, I will do. My first question is on the order book that we have at the moment, and if you can split it across the platforms that we are currently doing. That is the first question. Please go ahead. I will take all your questions and answer them together. The second one is that, considering the current crisis in Bangladesh, I understand that we had two orders from Bangladesh also. Do we expect some delay in execution or delay in payment? Bangladesh was one of the countries where in the past also we have supplied vessels. Are we looking at a little bit of pause in ordering from that country? The third question is on next-generation corvettes. Why we have highlighted that the RFP is out now? When do we expect the order for this? These are my three questions. Okay. Thank you. Thank you, Mr. Amit. Now, coming to the order book detail. The order book as on June 31 stands at INR 25,231.29 crores. I will just give a breakup of this. 90% of this comes from the shipbuilding segment, the P17A. The remaining portion of the order book is INR 14,392 crores. That comes to almost 55%-56% of the total order book. The Anti-Submarine Warfare Shallow Water Craft, INR 4,600 crores approximately. Survey Vessel Large is INR 855 crores. This project is, as I mentioned, likely to finish within a year. The next-generation ocean-going patrol vessels, INR 3,183 crores. The oceanographic research vessel for the Ministry of Earth Sciences is INR 800 crores. The export orders, that is the multipurpose vessels, the dredger, and the ocean-going tug, are put together around INR 750 crores. In addition to that, we also have an order for around INR 200 crores to INR 230 crores worth on a naval surface vessel. This gives you a broad breakdown of the order book. Now, coming to the second point, what you had mentioned about Bangladesh. See, I had given you an overall status of the order book. Order book total value is INR 25,231 crores. The percentage of the Bangladesh orders both put together is just about 1.2%. Any combination, the impact is insignificant. One. Second, we do not see any issue. Unlike a normal manufacturing industry, whether you place an order for a product and you get it within a day, within a month, within a week, here, shipbuilding orders are long lead time activities, where depending upon the size of the platform, the delivery time, project duration ranges from a very aggressive 18 months to 36 months, and in some cases, 60 months. We feel the current situation is a passing phase, as with every situation that has happened so far in the world. We do not see any impact on our project execution. Both the contracts have already been concluded, and right now the preparatory activities of production are on hand. To answer your question, in a nutshell, we do not see any impact with respect to the current situation on project execution. The third point you had asked about the next-generation corvettes. As I have mentioned, the RFP is out. We expect the bid submissions during this month. From then, in the normal course of events, how the system works, it takes around 3 months for the L1 to be declared, and from then, the most optimistic scenario would be another 6 to 9 months for completion of contract. I presume I have answered all your queries. You can just calculate and see where it falls with respect to the contract value. Thank you. Yes, sir. It is very clear. Thank you so much. Thank you. Thank you. Our next question is from the line of Harshit Kapadia from Elara Capital. Please go ahead. Yeah. Hi. Thanks for the opportunity and good set of quarters. I think this has been your best quarter as far as Q1 is concerned. Just wanted to get your sense of how do you see this run rate of INR 1,000 crores which you have achieved in Q1? Do you think this run rate is going to continue for the balance of the year, given that your order book has increased? That is the first question. Secondly, can you dwell a bit on the order pipeline, apart from the next-generation corvette? Any large order which you are sensing where discussions have started, maybe RFI or RFP can be launched in next 2 or 3 years. Any color would be helpful. Thank you, Mr. Harshit. Thank you for your wishes regarding the Q1 results. Yes, the results have been good, and we feel that sets a good tempo for the full financial year. Yes, the figures are good. You had asked a specific question on maintaining the run rate. I had mentioned this earlier also in a lighter way. This is not a T20 match or even a One Day period. In case of shipbuilding, that's the point which I would like to make. It's a long race, like a Test match, at best. Yes, we would like to maintain the run rate and considering the order book position and also the current state of projects, where we are in a position for our major projects where the maturity is adequate for revenue generation, we feel we'll be able to maintain that tempo. That is as per our project execution strategy, ERP, and also the project current status, current maturity level, and also the healthy order book that we are having. You are asking about the order pipeline. I had mentioned that we have been declared L1 on a couple of RFPs that the bids have been opened recently. The contract negotiations are in progress. We expect these contracts to be signed within the next 3 to 6 months. Plus the NGC, where we are also eagerly looking forward this 8 ships contract, with the L1 taking 5 and L2 taking 3. So the probability factor is very high. In addition to this, both the Indian Navy and the Indian Coast Guard are likely to come up with RFPs. I cannot fix a time for that, but in my association, if you just split it into 2 parts, one short-term, in the next 1 year, and second is from the next 1 year to 4 years. That means a 3-year period from first to fourth year. In the first year, the RFPs for multipurpose vessels 2, and next generation survey vessels 5, and 22 waterjet assisted. These 3 are likely to come from the Indian Navy. From the Indian Coast Guard, 22 interceptor boats And 6 next generation These are likely to come from the Indian Coast Guard. Thereafter, from the first year to fourth year, the P17 Bravo, then the mine countermeasure vessel, MCMV, mine countermeasure vessel, it is a high value order, 12 vessels that are AoN cost of around INR 32 crores and the P17 Bravo, of course, you know, it is high value also. So that is the mid to long-term, including the LPD, which maybe has been waiting induction for the last 5 to 10 years. Fair enough, sir. This was really helpful. This last question on the margin front, I know you have been addressing the margin query, but we are still not- I think your three questions are over, but margin seems to be a very favorite topic, so I will answer this question. Okay. Thanks for this. Just on, our run rate has touched now INR 1,000 crores, but we are still, my margins are sub below 6%. So, any color you can give us, that would be helpful. Will it be able to touch a double-digit margin after run rate improves from here on? I'll put it this fashion. I have mentioned this, and I need to reiterate, that in shipbuilding, there are orders that are non-competitive shipbuilding, where majority of our revenue comes from shipbuilding, where orders have been non-competitive building. We strive to maintain PAT margins of +12.5% to 18%, and we have been maintaining these margins, and we will continue maintaining these margins in the future also. But you also must understand that when the revenue will grow substantially in the coming years, revenue certainly cannot be directly proportional to the margin increase. We'll have to strike a balance. What I can assure you from our perspective is that we'll be able to maintain margins of similar kind, that means 8% PAT margins in the coming quarters with the rest. Thank you. Understood. Thank you and wish you all the best, sir. Thank you. Thank you. Ladies and gentlemen, a reminder to all participants, you may press star and 1 to ask questions. Our next question is from the line of Venkatesh from Logictry Consultancy Private Limited. Please go ahead. Good afternoon, sir. Thank you for the opportunity. Based on your guidance and, over the last many quarters on the shipbuilding cycle and how our execution has been progressing, we have been doing some modeling, but I think, we did miss a couple of estimates of what we did. Considering that we will have to complete what we have in hand right now by the middle of 2027, CY 2025, CY 2026 would be very crucial years. Would it be fair to assume that, probably in FY 2025 and FY 2026, you will have to report top lines of close to INR 6,000, INR 7,000 odd crores, probably in a trot, and then another year of INR 6,000 crores? Because if the aggregation is on track, this has to get completed, rather than, I would say INR 4,000, INR 8,000 or something. I am just trying to figure out how it comes, because the similar order cycle for Mazagon Dock follows the same pattern, but their vessels are slightly different. Could you just guide us, sir? Thank you, Mr. Venkatesh. I had explained about the shipbuilding cycle that it forms an S-curve. There is a phase in shipbuilding where the revenue recognition is 0. In our position, we are exactly in that phase with respect to our max revenue generation peak, that is the P17A. The second aspect that you brought out was that considering the execution of these projects by FY 2027, that is P17A, by FY 2027, yes, the revenue generation will go out. I will just highlight one aspect, so that we are all on the same page. When a shipbuilding order is given, the order value for the P17A project was initially 19%, INR 293 crores. After that I am just giving you an example so that you understand clearly. After that, the government enhanced the order value considering certain fluctuations from the development to orders. Basically, some of the equipment are being developed, or procured in India. Considering the fluctuations in cost, they enhanced the order value to around 21%. That means the order value for P17A is 21%. Of this 21%, 15% of the order value comprises the base, that is called base and depot spares. That is 85% of this 21% is the ship construction cost, and 15% is the base and depot spares. What are those base and depot spares? Base and depot spares are spares which we order and then supply to the Navy for maintaining the ship through its life cycle. Some of these are required right from the first day that the ship is delivered, maybe if a defect occurs or if any requirement comes. I assume a very, very conservative 5% of this 15% having been delivered before the ship is delivered to Indian Navy. That leaves around 10%. This 10% is delivered over the next one or 2 years as per the Indian Navy's requirement, because some of them are very long lead items. In P17A, out of this INR 21,000, we have already completed around INR 7,000. As I had mentioned, when we are discussing the order book, we are still left with around INR 15,392 crores. Of this INR 15,000 based on which was placed, if 5% we deliver at the time of the delivering of the ship, still 10% will be remaining. That means around INR 1,500 crores out of the INR 15,392 will still remain for the next one year. Same is applicable for all the major shipbuilding projects. What I am trying to say, that when we deliver or complete a project with respect to delivery of the ship, still a percentage, I have given a ballpark of around 10% remaining. Considering not assigning all these things, when we are completing the project in FY 2024, there will still be You are absolutely right, there will still be a year, a financial year, where our revenues will cross the 6%. It is pure arithmetic. I cannot pinpoint whether it is 5%, 7%, or 6%, 200, but between now, that is FY 2025, FY 2026, and naturally FY 2027 also because, the ship will be delivered during that year. These 3 years are going to be the peak years, with FY 2026 most likely the highest in terms of revenue generation. Okay, sir. Thank you. Thank you very much, sir. Thank you. Thank you. Our next question is from the line of Kartik Bhat, an individual investor. Please go ahead. Yeah, sir. Thanks for your opportunity. Sir, I missed the timeline that you mentioned for P17A, second and the third ship. Sir, Mr. Kartik, could you repeat once again? Your voice was a bit- Sir, I missed the timelines that you mentioned for delivery for 2nd and the 3rd P17 Alpha. Can you please repeat, sir? Sure. The 1st ship, I am sure you heard. The 2nd ship, P17 Alpha, right now at around 62% construction. 1st ship around 50. The 2nd ship, that is what you want to know, we intend delivering by February 2026, and 3rd ship by the mid of the same year, that is by around August, September 2026. Okay. Sure. Sir, any further update on P17 Bravo, and when are we likely to have any further Actually, when it is likely to be- 1st point is that P17 Bravo is definitely a project that is going to come because Navy wants to build more ships of the same kind, because they 1st built P17, then now the P17 Alpha, and P17 Bravo is very much on the anvil as per their perspective now. When the project is likely to come, we very conservative estimate, the tender could be out, maybe by mid of 2025. Okay. Sure, sir. Out of this order book of about INR 25,300 crores, about 20%-25%, can we consider a ballpark which is supposed to be delivered over the next 10 months? No. 20% to 25%, you mentioned next 10 months? Yeah. Over the next 10 months or so. No. Okay. I had actually elaborated the delivery timelines a bit earlier. If I have missed, I can just run you through that once again. Of these 18 platforms which are the naval orders, which are high-value orders, we intend completing the first large project in the coming one year. The ammunition overhaul craft, a couple of ships we will be delivering this year. That apart, the revenue generation will come from the P17A project, which is now at a stage where maximum revenue generation takes place. If you are asking me what will be the revenue generation during FY 2025, I will just give you a background. In FY 2022, our revenue from operation was INR 1,754 crores. In FY 2023, it was INR 2,561 crores. In FY 2024, it was INR 3,592 crores. So we will maintain the similar trend. Last time also, I mentioned that we will give a growth of between 25% to 30%. Okay. Sure. And sir, regarding the Bangladesh project, I think there were a couple of them that you mentioned, Ocean Going, Lessen, and then Cube Breaker. So including all of those, you are saying that the impact is less than 1%, and then also it is more of a passing phase. We feel it is a passing phase, and the percentage of order value is just 1.2. Okay. You are not understanding. That apart, as I mentioned, right now the preparatory activities are in place. Once the production anyway is happening in India, we are immune to the conditions there, and the lead time for delivery is far away, it is almost 2 years from now. So we do not see any impact on this project. Okay, sure sir. Thank you. Thank you. Thank you. Our next question is from the line of Devesh Shah from Kushit Capital. Please go ahead. Hello. Can you hear me? Yes. Yes, Mr. Devesh. Please tell me. Sir, you have very nicely elaborated all your orders and schedules for the projection. Sir, we as investors are very layman. My simple understanding is just now one answer to the previous question, you have given a guidance of 25% to 30%. Our order book is supposed to be precisely INR 25,000 crore. Sir, roughly in a value sense, within next 2 years, how much value we will be executing? You have every schedule in your hand, month-wise, quarter-wise. How much we will complete by March 2026? Combination of 2025 and 2026. Let us bifurcate into 2 parts of INR 25,000 crore. How much we will complete in first 2 years, next immediate 2 years? Okay, thank you. As far as FY 2025 is concerned, I have just given indication to the previous caller that we are targeting a growth of around 25% of the current year. We expect to maintain the similar tempo in the next year also. We almost understand that. One second. We like to understand that it is due to the project maturity stage. As I mentioned earlier, the P17A is in a state where the revenue is coming in. If we are able to maintain a 25% to 30% range of growth in the current year and the next year, we ourselves can assess where we will be standing. One more thing, when I have stated that we will be completing the orders by FY 2027, that is for the orders which we were already executing. You may also note that in the last few months, we have received fresh orders. Naturally, the fresh orders will be as per the project timelines, which will definitely, I understand the last of these projects will be in FY 2029. That is some of the new projects. Just to answer your question, yes, 25%-30% growth this year and a similar growth next year. Sir, just to understand the maths, I am very weak in maths. To understand the maths, sir, 25% of INR 4,000 crore of last year comes to INR 5,000 crore, roughly plus or minus 5%-10%. Then above that, 30% comes to INR 6,500 crore. So within next two years, it comes out to be INR 11,500 crore. One statement you gave that 2026 will be the maximum value. So I fail to understand how INR 25,000 crore will be executed in next four years. Because- One second. We are now in the beginning of FY 2025. Yeah. I repeat again, the INR 25,000 crore comprise of earlier orders, the P17A, the naval projects, and also the new projects that we have recently obtained. Many of these new projects will still roll in. Second, to a previous caller, I had explained that within the order book, a certain percentage is for the base and depot spares, or based on a conservative basis, around 10% will be provided to the customer after the ship is delivered, after the project is completed. So if you remove the new order, that means if you remove the new orders which have recently come, the order book falls to, it not falls, it will come to around INR 22,000-INR 23,000. From that, again, you remove the 10%, that is the net will come to around 20%. Of this 20%, actually exactly that based on my input, that if you are getting a 25%-30% growth, yes, around INR 11,500 crores will go in the coming year and the next year, with just about INR 10,000 crores remaining in the next two years. This is a fair assessment. Yes, sir. Very good. Excellent answer, sir. In the same way, sir, regarding the margin, I will put it in a different way, sir. Our quarterly margins are not similar. On a yearly basis, can you give a ballpark figure what our EBITDA margin should be on a yearly basis? How we can judge as a layman? I will just go to the PAT margin, because I always work on the PAT margin. The PAT margin will maintain a minimum of 7.5%-8%. On a yearly basis we can assume. There will be marginal fluctuations up or down quarter to quarter depending upon the project mix. But we will maintain a PAT margin of 7.5%-8%. Thank you. Thank you, sir. Thank you. Ladies and gentlemen, a reminder to all participants, you may press star and one to ask questions. Our next question is from the line of Gagan from ASK Investment Managers. Please go ahead. Yeah, good evening, sir. I hope I am audible. Yes, sir. Yes. Please go ahead. Yeah. Sir, the order pipeline that you've indicated, one, if you could cumulatively give the total value of, because you rattled out so many projects in such a short span that it's difficult for us to sort of keep tabs on it, one. Second, you perhaps did not give the entire value of the pipeline, two. Therefore, if you could give the total value of the pipeline and if possible, at least mention the critical key ones. Sure. Thank you. But you must also understand that what I'm going to indicate is based on our acquisition and the inputs on the respective plans of both the Indian Navy and the Indian Coast Guard. At this junction, I am keeping away what we are pursuing outside the country on this commercial shipbuilding segment and for the other export activities. So I'm just focusing on our acquisition of the Indian Navy and the Indian Coast Guard requirements. Now, as you are aware, the next-generation corvette, I just mentioned earlier as an answer to another caller, the AoN cost, which has been approved by the Defence Acquisition Council around two years back, was INR 36,000 crores. This split between two shipyards. L1 shipyard will get around INR 22,000 crores, and the second shipyard, L2 shipyard, the three ships will get around INR 13,500 crores. As I mentioned, the RFP is out, so we expect the L1 declaration four months from now, and from then it will take around six months to nine months for the contract conclusion. Why I am going into that much of details for this project? Because the RFP is already out. Now, coming to the next two multipurpose vessels, our assessment of the cost is around, order value is likely to be around INR 1,200 crores. Then five next-generation survey vessels, around INR 3,000 crores could be the order value. And 22 waterjet FACs, the order value could be to the tune of around INR 2,200 crores. These three projects we expect the RFP to come out in the next one year. This is for the Navy. For the Coast Guard, we expect RFPs for 22 interceptor boats around INR 1,200 crores, and six next-generation ocean-going patrol vessels around INR 2,000 crores. We expect these RFPs also to come out in the next one year. Now, after the first year, that means one year to four years, we expect the RFP for 12 mine countermeasure vessels. This is a high-value project. For this project, the AoN has already been approved. The AoN cost is around INR 32,000 crores. In addition to that, we also expect the RFP for two LPDs. This project has been going on for some time. This is where the Navy is wishlisted, it has moved up and down. This is a high-value order. It is around INR 35,000 to INR 30,000 crores, two vessels. Then for the Coast Guard, 18 next-generation fast patrol vessels. The order value is likely to be around INR 4,000 crores. Plus the P17B rival ships. There are seven ships which the Navy is taking, and the order value could be to the tune of around INR 70,000 crores. These are the RFPs that we expect to come out between the first year, one to four, that three-year bracket. I am leaving out the next-generation destroyer, the submarines, and the indigenous aircraft carrier, if at all, as we do not have any clarity on these three projects. Does that answer your question to an extent? Yes, sir. To a very large extent. That is very helpful. So, even if we execute over the next three years almost 19- Sorry, your voice is a bit low. Could you- Yeah. Better now? Very good. Can you hear me now? Yeah. Yes, I can. I am saying that the two large projects which you execute by FY 2027, a total value of almost INR 17,000 crores-INR 18,000 crores ex of the base and depot spares. Given this kind of pipeline, there is no reason to believe that the order book at any point in time should be dropping below what we currently have, despite a very sharp execution ramp-up? We have been maintaining a INR 20,000 plus crore order book despite our revenue from operations. As you rightly said, it is moving up in a sharp manner for the last four to five years. If the projects that are on the anvil, if the RFPs are out on time, and if we succeed in the NGC project, we will be able to maintain order book positions above the figure that I just stated. Finally, sir, from a capacity standpoint, if you are able to very successfully bid for some of these very large orders, the mine countermeasure vessels, the next-generation corvettes, and the waterjet FACs and so on, P17B also. From a capacity standpoint, what do you envisage will be your requirements over the next three to five years, and what sort of investment will they entail? A very interesting question. Yes. We are fully pleased of the current capacity and the need to enhance our capacity. Our capacity, shipbuilding capacity, I repeat, the stated shipbuilding capacity is for concurrent construction of 20 platforms. That is 8 large and 12 medium. Which we had got up from a very modest figure of around 12 to 20 after a certain modernization process. Considering that we are fully aware about the projects that are coming, we have already instituted the process of capacity enhancement. Just for information, we have 3 dedicated shipbuilding units, and one of the units has been completely revamped. By the end of this calendar year, I repeat, by the end of this calendar year, our shipbuilding capacity will enhance from 20 to 24 ships. This is one part. Second, going beyond the physical boundaries of our shipyard, we have also taken over 3 dry docks on a long-term lease basis from the Kolkata Port Trust. We are exclusively using that facility for ship repairs because we didn't want to mix up ship repairs and shipbuilding. In addition to that, when we had realized that concurrent construction will facilitate faster project progress, we have got into a public-private partnership model with two other shipyards and successfully implemented that. What I'm trying to say, it's a three-pronged approach. One, enhance the capacity within our physical boundaries from 20 to 24 by this calendar year-end. Effectively utilize the dry docks that we have taken off because in case of shipbuilding, one of the major assets that we need is dry dock and building docks. Utilize these dry docks, which we have taken off from the Kolkata Port Trust. Just to make a statement, we are also looking for other facilities wherein we can do concurrent construction. In addition to the partnerships, we have got with capable private players with spare capacity. Just for information, we also have a tie-up with private shipyards from the western coast. Should a situation come, they're all live partnerships. Should a situation come where we get more export orders, nothing prevent executing them on the west coast. Capacity-wise, we do not see a limitation now or in the coming years. Right. Sorry, Mayank. Can I take one more, or should I get back in with you later? Unless you are going to ask me another tricky question, you may please. Yeah. From a manpower perspective, I mean, naval architects, welders, and welding specialists, the current pipeline, is the manpower availability adequate to meet these requirements? Or you feel there could be a competition for talent which will lead to a cost spiral of any sort? I'm hearing this kind of question, a very interesting question. Yes. Absolutely right. There is a necessity to enhance the strength of skilled manpower. Just for information, we have adopted a strategy wherein non-core jobs are outsourced. Non-core means we retain the core strength in certain activities like fabrication of complex blocks, design activities, our core commercial activities, and shafting, and so on. So core strength we retain, and non-core activities we outsource. The advantage of an outsourced model is that that is scalable, but yes, there is a need, and again, we have experimented this with the P17A project, we have experimented this with the commercial shipbuilding project that we are going to execute. The outsourced manpower for non-core activities is absolutely scalable, and we have our vendors working at my premises, the GRSE premises from places as geographically separated as between Chennai and Mumbai. Manpower resources, human resources is not a problem, but yes, it's a point for us to note. Thank you. Thank you. Next question is from the line of Sunil Shah from CPMS. Please go ahead. Yeah. Thanks for the opportunity. Sir, I guess most of the questions have been very nicely and in detail explained. Sir, I have just one point to ask and check with you. Sir, in terms of the government's priority, post the election mandate, which is what is there in front of everybody, has the priority taken some kind of a back seat for announcing orders or Make in India stuff? Or is there any change pre-election and post-election? If you could make us understand a little bit on that. Is there any delays? Because earlier we were talking about the next-generation corvette orders or maybe it would fall in place by September or so, but now maybe I just want to understand whether things are in line, or we have taken a slight slow stance from the government. That's the only question, sir, that I would like to understand from you. Thank you. Thank you. It's a tricky question because I am not part of the government, but I'll answer as clearly as possible. In our acquisition, there has been no letup in the pace. Since you specifically mentioned the next-generation corvettes, as per the DAP, from the time the AoN is obtained to RFP, 13 months time is there, and the government has issued the tender ahead of that 13 months. It is moving very much on schedule. From our acquisition, the government initiatives in enhancing the shipbuilding industry in India, we are eagerly waiting for the promised policy to come out soon. So things are moving in the right direction. Just to answer another statement which you made, as far as the Make in India efforts are concerned, 66 of the 67 ships being built for the Indian Navy, 64 are being constructed by Indian shipyards, and two of the shipyards, the orders were placed much earlier. Two of the ships which are being constructed outside, the orders were placed much earlier. In our appreciation, none of the orders for Indian Navy construction are going out of India. As far as Coast Guard is concerned, 100% of the ships being constructed for the Coast Guard are being constructed by Indian shipyards. So in our appreciation, there is no letup in the pace being paid, there is no change in policy. Things are moving as good and as fast as possible. Thank you. Yeah. Thank you, sir. Just one point, sir. Even on the Project P17 Bravo, which is the INR 70,000 crore order, of which four and three would be the classification, even that could be on schedule? Just the only point I want to clarify from my side. See, all I can say is that there is a process involved in getting an approval by the government. That's a DAC approval, and thereafter, the RFP issuance. That's why when I made an earlier comment, I had made a statement that in our appreciation, the RFP could come out during 2025, during the second half of 2025. That is our appreciation. Now, the fact is that Navy wants these vessels, and I'm sure they'll put in all efforts to get the tender out as fast as possible. Thank you. Bye. Thank you, sir. Thank you so much. Bye. Thank you. Ladies and gentlemen, to ask a question, you may press star and one. As there are no further questions, I would now like to hand the conference over to the management for the closing comments. Thank you, Aditya, and thank you, Gaurav from Concept IR for organizing this conference call. I would like to pay my sincere gratitude to all my analysts and investor friends who have taken time out of their busy schedules and listened to us today. If you have any further queries, I request all of you to please get in touch with us, and we would be happy to address each one of your queries. Thank you once again. Wish you a very happy Independence Day. Jai Hind. Thank you. On behalf of Garden Reach Shipbuilders & Engineers Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.