Q4 23/24

May 22, 2024

Summary

FY24 revenue rose 40% to INR 3,593 crore and PAT grew 37% to INR 354.24 crore. A INR 52,652.63 crore order book supports near-term execution, while new awards are key to sustaining growth beyond 2027.

Good afternoon, ladies and gentlemen. I am Aditya, Monitor for this conference. This is the conference call of Garden Reach Shipbuilders & Engineers Limited, arranged by Concept Investor Relations in relation to discuss its Q4 and FY 2024. We have with us today Commodore V.R. Hari, Indian Navy Retired, Chairman and Managing Director, and Shri R. Kadesh, Director of Finance and CFO. At this moment, all participants are in listen only mode. Later, we will conduct a question and answer session. At this time, if you have a question, please press star and one on your telephone keyboard. Please note, this conference is recorded. I now would like to hand over the floor to Commodore V.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 Commodore V.R. Hari, Chairman and Managing Director of your company. We have here Shri Krishna Dash, Director, Finance and Chief Financial Officer, Srimati Aparajita Ghosh, General Manager, Finance, and Mr. Samir Mahapatra, our Deputy Secretary. At the outset, let me thank each one of you who have taken out your valuable time to attend this phone call. I shall now cover my introductory talk, starting with the current order book. The status of the ongoing project, what are the orders in execution, and what are our future plans. The order book as on March 31, 2024 stands at INR 52,652.63 crores. This order book majorly consists of orders from the shipbuilding area, comprising of INR 26,593 crores with the P17A project having a value of INR 12,134 crores. The Survey Vessel (Large) project, INR 953 crores. The Anti Submarine Warfare Shallow Water Craft project, INR 4,886 crores. The Next Generation Offshore Patrol Vessels at INR 3,309 crores. Coming to the P17A project, this project, as you are aware, comprise of three warships, and all three ships have already been launched. The first ship is currently at 70% into the process of construction. The second ship at 43%. The ship is currently at 58% construction. The third ship is at 37% construction. As per the current schedule, we intend delivering the first ship during mid-2025, that is, middle of next year, and the third ship will be delivered of October 2026. That is, by August 2026, we will be completing this project. Coming to the Survey Vessel (Large) project. This is a three-ship project. Again, as you are aware, we have already delivered the first ship to the Indian Navy. This ship was commissioned into the Navy on February 21, 2024, after we delivered the ship on December 4, 2023. The ship is fully operational now and utilized for operations by the hydrographic arm of the Indian Navy. The second ship is at 87% construction. The ship has already undergone contract gun trial, and it is now getting ready for final gun trial and subsequent delivery. The third ship is currently under construction, and our fourth ship is very close by, at 58% construction. We intend delivering the second ship, which is currently at 87% construction, by August this year. The second ship will be delivered by the end of the current financial year. The last ship, the fourth of the series, will be delivered by first quarter of the next financial year. Coming to the Anti Submarine Warfare Shallow Water Craft project. This is again a three-ship project. You must be aware, Navy had a requirement of 16 Anti Submarine Warfare Shallow Water Craft, and it has been ordered to three shipyards, Mazagon Dock Shipbuilders and GRSE. Of these ships that are being executed by GRSE, two have already been launched, and one more ship is expected to be launched during the second quarter of the current financial year. The last ship, the eighth ship, will be launched during the last quarter of this financial year. Of these six ships that have been already launched, the first ship has touched 87% into the construction. The basin trials, the harbor trials of the ship have already been completed. The ship is getting ready for sea trials thereafter for handing over to the customer, that is the Navy. The second ship is at 70% construction. The third ship is 50%, and the fourth ship and fifth ship are around 40%-55% of construction. We have signed the contract for four Next Generation Offshore Patrol Vessels for the Indian Navy. This contract was signed on 30th of March 2023. Commence production of all the ships, and the ships are presently of percentage construction between 15% and 24%. We are also undertaking a project with the government of West Bengal for an all-electric ferry. The vessel is fully ready. All the trials have been completed, and the technical acceptance of the vessel has been taken by the government of West Bengal on 21st of March this year. The vessel will soon be handed over to the government of West Bengal during mid of June this year. We are also executing a project, six fast patrol boat project, for the government of Bangladesh. Three of these boats are nearly ready and have completed the trial. We are expecting government of Bangladesh to take over these vessels during June this year. We have recently won an order from Ministry of Earth Sciences. We were declared L1 during mid of third quarter of last year. We have received the Letter of Intent from the Ministry of Earth Sciences for Ocean Research Vessel. The order value is approximately INR 140 crores. We expect the formal contract to be signed sometime in June, so next month. Coming to the orders that are on the anvil. We have been declared L1 for an export order for the government of Bangladesh for a 48-cub dredger, and the order value is approximately INR 135 crores. We have received the LOI, and the contract is expected to be signed during the first week of June this year, that is, next month. Happy to inform you that we have also been declared L1 for an ocean-going tug for the government, again, for the government of Bangladesh. That's also an export order. The negotiations are in progress, and the order value could be around INR 160-INR 170 crores. Again, as late as two days back, we have been declared L1 for a DRDO ocean vessel. The order value is likely to tune of plus INR 500 crores. This was in a nutshell the status of our existing order book, the status of the projects that we are executing, and also the orders that are immediately on the anvil, where we have either been declared L1 or where we have received an LOI. Coming to the orders that are expected in the near future, where the RFPs are expected in the near future. I have been talking during the previous sections that we are expecting project exploration vessel project RFP to be issued by the Navy. We are expecting this RFP next week. As you are aware, the 8-ship project, the L1 shipyard taking 5 ships and the L2 shipyard taking 3 ships, and the order value is likely to tune of around INR 36,000 crores. Then come the other projects, again, for the Ministry of Earth Sciences for coastal research vessel. 2 in number coastal research vessels. The shipyard, our shipyard has already submitted the bid for this project, and the order value is likely to tune up around INR 500 crores. Navy is likely to come out with an RFP for 2 in number multipurpose vessels. Order value is likely to be to the tune of around INR 1,800 crores. We expect the RFP to come out during the third quarter of the current financial year. Similarly, during the current financial year, again, maybe in the last quarter, we expect the RFP for 5 in number next-generation survey vessels to come out. Order value is to the tune of around INR 3,000 crores. I have covered briefly about the orders that are likely to be on the anvil. Coming to our focus area, in addition to domestic warship building, as I said, we are now venturing into non-defense platform like the oceanographic research vessel, MPO research vessels, coastal research vessels that we did for Bangladesh, dredger, and so on. In addition, we will also be aggressively pursuing commercial shipbuilding for export. We are in the process of negotiations with potential ship owners for multipurpose vessels, and hopefully, in the next interaction, I should be able to share positive news with you. Our thrust area, in addition to domestic warship building, commercial shipbuilding, as I just stated, will also be towards the development of green energy platforms. The first such initiative has already been successfully completed. We got completed the next generation electric ferry for the government of West Bengal. We have submitted our bids for a larger project, 15 in number, vessels for the government of West Bengal for their water metro, and also for a project for the Kerala water metro. This is the area that we would be focusing on in the near future. Also, autonomous platforms. Again, as I have stated during the last few interactions, that we have ventured into development of autonomous platforms in all 3 domains of operation, that is surface, subsurface, and aerial. Both in surface and subsurface domain, our products have already been successfully tested. On the aerial front, the drone capability for maritime operations, development is still in progress, and we expect the product to be successfully launched by end of the current calendar year. It is a case of record that we appreciate these 2 autonomous platforms are long-term investments, as we expect the armed forces, especially, to have a large quantum of autonomous platforms in their inventory in the coming years. One of the surface vessels I had mentioned, we already got an order from the. It is a very low-value order. But it is a beginning that we have won this on competitiveness, and the order is likely to be completed by July this year. We had entered into one collaboration with both Rolls-Royce for co-production of diesel engines, and also with Kongsberg in Finland for development of water jets. Of these, one of them, the MoU with Rolls-Royce has been converted into a license agreement. Similarly, the MoU with Kongsberg is now in the process of transition into a license agreement. These license agreement, once they get into place, we expect to be a strong contender for getting orders for both propulsion engines, diesel engine, and for water jets. Further, water jet FACs and similar platforms for which many RFIs are likely to come out in FY 2026 and onward. Exports continue to be a focus area. I had mentioned earlier that we are currently focusing on European clients. In addition to the IOR region countries where we already have our presence. Ladies and gentlemen, this in a nutshell gives you a sense of what our operational performance is and what all we expect in the near future in terms of potential orders and areas of focus. Now, coming to our financial performance. I am very happy to state that for the seventh quarter on the trot, our financial performance has been an upward and steady upward trend. Our revenue from operations, if you take in financial year FY 2024, we registered a 40% growth over the previous year, jumping from INR 2,561 crores during financial year 2023 to INR 3,593 crores during financial year 2024. Similarly, the total income has increased 48% growth with the current year's figure, FY 2024 figure, touching INR 3,892 crores. The EBITDA had jumped by 41% to INR 556 crores, and the profit after tax currently, that's for financial year 2024, stands at INR 354.24 crores, registering a growth of 37%. Our net worth also has been showing a steady increase, from INR 1,413 crores during financial year 2023 to INR 1,675 crores during FY 2024. The investors have shown confidence in us as evident from the both capitalizations, the share price and return on equity capitalization. You know about this better than me. I would not like to dwell much on this topic. Quarter on quarter, our revenue from operations as compared to the last year has grown 16% year-on-year. It has touched the first time above INR 1,000 crores during Q4 FY 2024. Our revenue from operations stand at INR 715 crores. The EBITDA registering 84% increase. The PAT, 102% increase. The EPS, 102% increase, touching INR 9.74 as against INR 4.8 during the corresponding quarter of FY 2023. Ladies and gentlemen, I conclude my introductory address. I am open for any questions from you. Thank you. 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 your 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. Question is from the line of Amit Dixit from ICICI Securities. Please go ahead, sir. Yeah. Hi. Good afternoon, everyone. I have a couple of questions, just for clarification for our good product numbers in this quarter. The first question is essentially around your EBITDA margins. If I see the EBITDA margin for Q4, and I am excluding other income here, it was a very healthy level of 8.9% almost. This is the highest margin that we have witnessed in the last several quarters. Just to understand the key drivers for the change. One thing I can see that subcontracting charges have declined QOQ. But other than that, there is something apart from revenue that you would like to highlight. That is the first question. Yes. Could you say the next question also and answer together? Yeah, sure. The second question is more on the long-term process. We have talked about the RFP of next generation corvettes, which will be out in new. Just wanted to understand the order timelines from here on, whether you expect any delay in India. If you could also highlight what about P17A frigate project. Thank you, Mr. Amit Dikshit. I will start with. Thank you. Thank you for congratulating us. I think we all, we means the management, the entire company, and also, each one of you, the investors, for giving us this opportunity to perform CEO presentations. Coming to the NGC corvettes project that we are eagerly looking for. As I mentioned, we expect the RFP to come out sometime in June. It's an ongoing assessment. We expect it to come out in June. This is an eight-ship project, as per our understanding, as per the RFI conditions, four of us who are qualified for that. Two of the shipyards would get into a ratio of five and three ships. Probably the factor is very high. The L1 shipyard could get around INR 2,000 static gross order, and the L2 shipyard around INR 3,000 dynamic gross. It is a very high value order. With our experience of having built and delivered both missile and submarine corvettes to the Navy. Just to find out and deliver nine corvettes to the Navy, all of them are in active service with the Navy. With that kind of experience and mix too, we would be benefit, which will be our strategy. As for the timelines, you had asked about the timelines. RFP comes out in June. It will take a normal timeline of around four months from RFP to get permission, which means the L1 could be declared towards the end of the current calendar year. From there, we take this possible scenario of around seven to eight months for conclusion of contract. Navy has also put a lot of efforts in streamlining the RFP this time. We expect there to be lesser discussions and negotiations between the L1 declaration and the contract signing. I expect, again, optimistically by July, August next year for the contract to be signed. Coming to the P17B project. Navy has a requirement as per our understanding request for 12 ships of the Alpha class. Right now, there's a seven-ship P17A project going on, and as you are aware, four of these are being built by Mazagon Docks and three by GRSE. The first of the class, and this definitely would be, is one of the ships that is built by our belief ship Mazagon Docks, and we expect that ship could come out sometime during the current financial year. The next ship or the R ship could come out sometime during the second quarter of the, or the first quarter of the next financial year. The project completion is expected by 2026-2027. My assessment, our assessment is that the requirement of Navy being genuine, they would like continuity in production of these ships from then onwards. Realistically, the RFP for this project could come out by 2026. That is the earliest time the RFP could come out. Coming to our margins. Margins this quarter have been increasing, have been really increasing, and as you rightly said, this has been one of the best with respect to margin previous. Subcontracted value has come down, and also production efficiency. I would say revenue expenditure reduction, subcontracted value reduction, and overall efficiency improvements were the reasons for margins being high. Thank you. One of the follow-ups, if I may. You mentioned that if contracting costs are lower, probably efficiencies have been built in. Do we expect that going ahead as well, you know, I believe these efficiencies which we have built in over a period of time, would also be sustainable. Would you be able to guide the margin, sustainable margin over next couple of years? Could it be more than 5.5% that we have seen? I have been regularly interacting with you all during the last seven quarters. We have been consistently stating that unlike any other manufacturing industry, in case of shipbuilding, net adds margin. I repeat, adds margin 7.5%. We have been delivering this and we have been consistently delivering similar margins. To answer your question, similar margin in the coming months. Okay. Thank you so much and all the best. Thank you. Next question is from the line of Venkatesh from Logiq Kale. Please go ahead. Good afternoon, sir. First of all, congratulations on a consistent performance and outstanding performance. To be honest with you, I think we have been tracking this company for many years, probably since IPO times, and one thing that we really appreciate is what we see is what we get. You do not make any fancy statements, neither do you make conservative statements. It is extremely realistic and lots of clarity. I appreciate you for keeping the investors informed on this, sir. Thank you for that. That is number one. Secondly, two questions. One is while you gave us a visibility on the possible orders over the next 12 months, in one of your earlier media interactions, you had pointed out that GRSE has the ability to attract a INR 1,20,000 crore order book over the next three years. Can you throw some light on it? We do not exactly need any commitments or anything like that. What are the possibilities considering various circumstances? That is question number one. Question number two is, the Rolls-Royce marine diesel engine opportunity and the waterjet opportunity with the Finland company. What is the size of the opportunity, sir? What is it that one can expect if things go well over a period of time? That is it from myself. Thank you. Thank you, Mr. Venkatesh. We started the MoU likely to be translated into a license agreement with the government of Finland for waterjets. Most of the high-speed, large-size ships for the Indian Navy and Coast Guard are having waterjet propulsion. With this Make in India initiative really gathering momentum, it is imperative that all the future marine platforms or the again offshore platforms have a certain amount of indigenous content which is something. I think that waterjets are definitely used in large numbers in these ships. Once our license agreement is translated for commercial action, the opportunity is huge. For an exact number, I would not be able to do it at this stage. I would just say that there is 120 FIC fast intercept craft coming up for the Indian Navy, and then 22 waterjet FIC project again coming from the Indian Navy, and then 18 fast patrol vessel project coming from the Indian Coast Guard. All these are likely to come up in the next three to five years. It is at that time, by that time, that this collaboration will gain momentum. At this juncture, I would not be able to put a value to these numbers, nor even the cost to these numbers. All I can state is that, yes, there is opportunity, a huge opportunity on this. Now, to reach the INR 1,20,000 crore order position. Let me again clarify. I will put it this way. Again, I am repeating from what I stated earlier, but I am repeating purely to provide clarity. As far as domestic war shipbuilding, I will just keep other things constant this moment. As far as domestic war shipbuilding is concerned, there are four different public sector undertakings. There is MDL plus GRSE plus GSL plus HSL, public sector undertakings under the Ministry of Shipping and Water Transport, and a couple of private players. The leader among the private players is Mazagon Dock Shipbuilders, plus Chowgule, Shah, Titagarh and so on. These are smaller shipyards. These are the shipyards available in India who are eligible for competing or bidding for various types of ships, depending upon their classification and the assessment by the Navy or Coast Guard. Coming to the value of INR 1,20,000 crore orders. The first one is what I mentioned about the concept plane. These are the things which are likely to come up in a span of three to five years. One of them is definitely the next generation corvette. The second one is likely to come up in the multi-role vessel. The third is the next generation survey vessel. The fourth is the 120 FIC fast intercept craft for the Navy. Then there is the project for 2 in number landing platform dock for the Indian Navy. More platforms again coming up, like the Coast Guard is looking for 18 next generation fast patrol vessels. All put together in a span of three to five years, the likely order value is to the tune of INR 1,20,000 crores. For this, depending upon the capacity, at least we have three construction for building capacity and Indian Coast Guard have shortlisted shipyards. Coming to one, I will just give you one example. As I mentioned earlier, 7 shipyards have been shortlisted. Four plus 1 plus L&T plus a couple of small shipyards. Of these 7 or 8 shipyards, for the NGC project, as of now, only 4 shipyards have been shortlisted. This INR 1,20,000 that is coming in the next three to five years, depending upon the classification and the capability, some of them qualify for. In a very conservative manner, if you spread across, a substantial amount of this would come to GRSE too. That was the statement which I had mentioned about the orders on the anvil. Both with great faith. Yes, sir. Absolutely. I think just trying to get the understanding right. When there is a significant flow of orders and the orders flow, if GRSE is able to secure over the next two, three years, because we will achieve pretty much peak revenues in FY 2025, FY 2026, et cetera. Will these order flows help us to maintain the run rate of the revenue over the foreseeable five, seven years, if we are able to secure those orders? We actually need these orders. At least around INR 25,000 crores we need to sustain the revenue tempo beyond 2027. Exactly. This is actually stated that it was moving definitely on an upward trajectory. A lot of it being on civil works and the order source. But the next year making, we need orders at least in the region of INR 27,000 to INR 28,000 crores to sustain beyond 2027. That is why we are looking at two projects as a next generation corvettes. Also, if you observe, we also have not shied away from taking small orders. We have taken orders worth around INR 700 crores from this year, worth 500. As I mentioned, we have another INR 500 crores plus. So we are maintaining our kitty certainly still, that sustained revenue flow happens. Even if there is a, let us hypothetically say we don't get one NGC order. Let us say we don't get NGSC, so on. But we will fill the gap with small orders. Of course, aggressively looking for the big order like the NGC, and relentlessly pursuing the navy requirement for NGC. Very nice, sir. So green energy platforms, autonomous platforms, Rolls-Royce marine engines, these are also, of course, significant opportunity sizes, quite a lot bigger. Would you say that? If you are looking purely from the money part, money comes from almost ship wash building orders. The big chunk of money comes originally off the wash because purely because of the equipment fit, the value goes up. So let us say, conventional green energy platform, the cost is nothing much. The cost is not. The volumes could be more. That way we tend to make profits or to get into actual markets. Same for autonomous platforms. We are now investing towards development of autonomous platforms. Realistically, we will not see much revenue coming from these platforms in the next 3 to 5 years. But fully acknowledging and understanding the shifts in the future, because maybe at some later stage in the roadmap, an autonomous work 5 to 10 years, we will start getting revenue from autonomous platforms. If the question about green energy, it is provided and promulgated by some of the Scandinavian countries. By 2030, we will go green, which means all their inland water transportation, all their ferries, barges, the commercial ships which are plying with their waters, they will go green. Similarly, India also made a commitment with respect to go green in a time-bound manner, which means all the conventional platforms, diesel or similar energy-using platforms will get reduced to zero. Subsequently, we are developing capability in these two domains, green and autonomous. Thank you. Got it, sir. Thank you, sir. Thanks a lot. Thank you. Our next question is from the line of Umesh Raut from Nomura India. Hi, sir. Congratulations on the good set of numbers and excellent entry through the year as well. This is Umesh Raut here from Nomura India. My first question is more of a follow-up on Amit's question, where you have mentioned that there are four total shipyards who have qualified for next generation corvette contract. Can you please specify other three names? I am not sure whether this is open to the domain or not. Frankly, I am not sure at this juncture whether other shipyards' name is in the open domain, which I am not sure I would not like to mention all. I will suffice to say that they are among those four that I mentioned earlier. Okay, no issue, sir. Sir, my second question is more of on the indigenization. If I remember correctly, if I look at warship in three plus segments, float, move, and fight content, I think as a country, we are relatively having lower indigenization towards move and fight content, basically about closer to maybe 60% indigenization content in moving components for warship. And about maybe closer to 30% kind of indigenization for state equipment. Is there any idea or any thought process to increase indigenization for move and fight functions within the promotion? Thank you. Very interesting question. Yes. In any marine platform, there are four components. There is float, move, fight, and survive. Which is a float? Float as in acts as the image, the prices of the steel hull and the float components that related as a nation, we have achieved 100% indigenization. Especially steel that earlier used to be important. All of such items is being presently manufactured within India, and there 100% indigenization is there. I will come to the last one, survey. Survey weapons, the life rafts, the life boats, the firefighting equipment, LSA. We call LSA for life-saving and firefighting equipment, and even life jackets. Again, as a nation, we have achieved over 90% of our indigenization. This is the last 10%, as a country, the threshold we are pursuing, but no issues with that. Now comes the move and fight. Hang on. Move components, as of now, we have an indigenization percentage of just about 60%, and fight just around 50%, 35%, approximately. There is a definite impetus being given by the government of India to increase the percentage of indigenization to an extent. It is being monitored very closely at the level of my ministry and also the check on our competition ministry. This component mainly comprises of the propulsion-related equipment and, of course, associated electronics, control systems, and navigation aids and so on. In this, why 60%? Because as a nation again, we have not yet developed sufficiently to have our own propulsion engines, which form the heart of the move component. As you may be aware, there are various DPP government methodologies. One of the main Make-I, Make-II, Make-III and so on. Propulsion engines are getting indigenized under the Make policy. In the Make-II category, again, the propulsion engines can be classified into high-power engines and low-power engines. You might have heard about our collaboration with Rolls-Royce towards co-production of the high-speed, low power engines. The low-speed, high-power engines, that is beyond six megawatt engines. That is a big project which is already going on, and we expect to see the light of day, its completion, by five years from now under the IPPS process. This is getting covered. The move component, the indigenization component will definitely go beyond 85%-90%. Now fight component. Here the growth, the indigenization percentage growth has to be steady and systematic. The country has got a very clear policy towards indigenization of defense equipment. The immediate target in my appreciation would be to increase this percentage from 60% to 65% by 2020. This is my current appreciation on the indigenization process for the move and fight components. Got it, sir. Sir, my next question is more of a difference between NGC and ASW corvette that we have delivered earlier. Basically P28 contract and now the upcoming contract which is coming up for NGC. In terms of technical aspects or maybe the kind of missile systems that we are thinking to install on that particular NGC. How it will be different and what additional systems or other things we are talking about in terms of upgrades? Right. If you talk about the Anti Submarine Warfare Shallow Water Craft corvette, the Anti Submarine Warfare Shallow Water Craft corvette has got both surface-to-surface and above-surface missiles and torpedo weapons plus the sonars that it carries. I think the RFP for the NGC is not yet out. I think it is just around the corner. I would not like to actually compare the specs of the two. Suffice to say, that will be the most advanced corvettes that have yet been produced in the country. Just to give you an idea, so that you can take a calculator from that, just to give you an idea. In every ship, equipment component is around 50%-65%, and it could even touch closer to 70% in terms of equipment component. The cost of a ASW corvette was around INR 1,600 crores. INR 1,615 crores, I think. The cost of a NGC, the AoN cost is around INR 4,500 crores. You can imagine if you are just extrapolating the equipment component of around 65%, 70%. Naturally, the cost, why the value has gone up is because of advanced systems and sensors that are going to be put in this vessel. As I said, this RFP has not yet been issued. I would not like to comment further on this. Good enough, sir. My last question is pertaining to status on Landing Platform Dock program, because it has been delayed for quite some time now. Whether this time private sector along with public sector will compete amongst themselves in terms of bidding, or is it only for private sector in terms of participation? As you rightly said, the LPD Landing Platform Dock project has been shuttling, yes, no, for the last seven or eight years as a requirement or even more. This is a requirement of the Indian Navy, very much known as part of their proficiency plan. As per my understanding, it is going to be a competitive between potential shipyards, which include both private and public. The RFP is likely to come out at its leisure. It is not known. It definitely would be somewhere in the queue. Priority projects like the NGSC or the NGSV or LPD are far more advanced with respect to AoN and having been accessed. If you ask for my appreciation, I do not see this RFP coming out in the current financial year. But to answer your question, when it comes out, as per the recent policy, it will be a competitive bid between both public and private shipyards. Thank you. Thank you so much, sir. I will get back with you. And all the best. Thank you. Thank you. Ladies and gentlemen, a reminder to all participants, you may press star then one to ask a question. Next question is from the line of Dipujit from RUPY Investment. Please go ahead, sir. Hello. Yes, sir. Thank you for giving this opportunity, and congratulations for the set of numbers which the company has delivered on the tenth day. My first question is, sir, recently our defense minister and even our chief has mentioned that India is working on our aircraft carrier warship. As you mentioned, currently India has only two aircraft carrier warships, and in the speed of time in the coming timeframe, we at least require two line warships. The size of this warship is also going to be very huge. Can you just throw some light on the same? Thank you. I understand you are asking about the indigenous, you are talking about the aircraft carriers. Yeah, aircraft carrier warships. Currently has two of them, one which is Vikramaditya, and the second that is a Russian ship. The second is a domestic built limited aircraft carrier. The first aircraft carrier will be built by India, by one of our sister ships. As to what you have stated, the Russians have expressed their intent to enhance the aircraft carrier fleet of India. Definitely, this is also part of the strategic plan of the Navy. It is very much on plan base. When it is going to come out, that is not known at this stage. But from what we have heard and what we have seen, today the focus is on indigenous ship building and of the 56 platforms that are being currently built in India for the Navy, 54 are indigenous ships. Definitely, if the same philosophy is likely followed, the next aircraft carrier is also most likely to be built in India. It is still like a strategic leisure. There is no official communication in the media that the shipbuilders have expressed their intent to expand the aircraft carrier fleet of the nation. What is the value of per carrier ship, if you can throw some data approximately the value compared. It seems that it will be in lakhs to build a warship carrier. Just want to get an understanding on the same. See, I'll give you an analogy. If you are going in for an SUV, you can get a Scorpio, you can get the Innova, and so on. Even within aircraft carriers, there are different types of carriers. The cost varies. Like the first aircraft carrier which was built by India Aircraft Carrier or Indigenous Aircraft Carrier Vikrant, the cost came to the tune of around 25,000 tons. There is a 40,000 ton vessel. If the country is looking for an aircraft carrier of similar tonnage, because it depends upon the tonnage, because as the tonnage increases, the size increases, and so does the number of aircraft which are going to be there, and so does the capacity and so on. So if we are looking for a 40,000 ton aircraft carrier or a 50,000 ton aircraft carrier, it could be to the tune. I am saying the country is looking for a 40,000 ton. My next question will be, sir, recently you have conducted one more investor interview in the month of March. At that time you mentioned about some share capital which was, which is being introduced from DIPAM. If you can throw some light, and any plan for any bonus shares or We avoid repetition. Could you please repeat the question? And I will hand over my chance to answer this question. Thank you. Sir, recently, in the month of March, you have conducted one investor conference. At that time, you have mentioned that there is some introduction of share capital, which has been mentioned from the DIPAM side. So you said it will be shared to the investor in 2 months. So any update on the same and any plan on bonus shares? Actually, it was not discussed there, but you asked, some of the investors, they asked regarding this authorized share capital. Okay. That is actually as per the BCOM guidelines. Actually, no final decision has been taken on this. Okay. That is more to the action taken. As of now, it is work in progress. We will let you know as soon as we get clarity on this. Sure. Not an issue, sir. Thank you for providing all the valuable information. Thank you. Ladies and gentlemen, a reminder to all participants, you may press star and one to ask question. The next question is from the line of Miraj from Citadel Financial. Please go ahead, sir. Yeah. Good afternoon, sir, and congratulations on the outstanding numbers. My question is, since you talked about so much of orders coming in for the Navy in post 2027 onwards, are we looking at a sort of capacity expansion? Right now, at what level of capacity utilization are we in? That is my question, one. Yeah. If you have any more questions you can ask, then I'll answer together. Yeah. My next question is, sir, are there any plans to do offshore ships to your knowledge? You can share some light on that as well. That's it from my side. Okay, I'll answer the second question first. Offshore ships, we are awaiting further instructions from government. As and when we get clarity on this, we'll let you know and we will accordingly. Coming to the orders which are currently under execution, and also where we are in, like the L1 and negotiations and progress, and where we are expected to conclude the contracts soon, and also orders that are expected from DIPAM in the near future and beyond 2032. There are also questions about current capacity utilization and also the plans for capacity enhancement. You may be aware that we have, unlike many other shipbuilding companies in India, we are the users of Satyam too. For Satyam, we have three separate shipbuilding facilities. In addition, we have taken on three dry docks, dry docks being one of the core assets required for shipbuilding and ship repairs. We've taken over three more dry docks on long-term lease from Kolkata Port Trust. We are in the process of taking over one more dry dock from the Kolkata Port Trust. In addition to that, we have revived or taken over one facility from the Central Inland Water Transport Corporation, where resources which is completely defunct. So we have taken up an infrastructure augmentation or rather regeneration process. All these put together, our capacity as of stands at approximately 20 warships currently, between eight large and 12 medium as well. We can fully understand that this calls for government enhanced capacity. So we have gone ahead with a new strategy, which has been effective thus far, wherein utilization of the spare capacity of the partner shipyards that is effective. In addition, work is already in progress for enhancing our own internal capacity from 20 to 24. By the end of the calendar year, our capacity for construction will see 25 ships instead of the current 20 ships. These put together will finally enhance the activity of shipbuilding by 20 ships. In addition, the familiarity of shipbuilding, where ship construction is a tedious business. At any point of time, the pre-launch phase where ships are considered in building or berths or dry docks, and that post-launch phase when they are outfitted in berths and steel. All put together, we are good to take the orders that are on the anvil and also to execute the current order books. Sir, when we utilize partners specifically, do we pay them lease or what sort of agreement is that? You mean capacity? When we utilize the partner's shipyard capacity, how does it work? Do we pay them the lease fee or? What we do is we, through a standard EOI or tendering process, we identify capable shipyards who at that point of time have spare capacity. So we offload outsourced part construction of few of the platforms to facilitate construction. The complete ship design of the ships are completely procurement is completed by us. The project management is completed by us. But construction happens in this vendor premises. That completion is part of the construction. So this is the contract is a variant facility that is ours, where the final outfitting happens in the ship. Very effective model which we have followed. That's the reason how we could get focus on the participation levels of the. Okay. Thank you, sir, and all the best. Thank you. Our next question is from the line of Venkatesh from Logiq Kale. Please go ahead, sir. Sir, there are a couple of follow-up questions. One is on the ship repair facility, which you have mentioned some time back in a few calls. Would you say that that will come into effect in the few years? Because I think it's a high margin business, and I remember Cochin Shipyard has signed a contract with the U.S. Navy, or probably has signed or something is in the annual in terms of repairing ships for that. Do we have some plans like that going forward in the future with the India-U.S. strategic partnership? Second question is on Rolls-Royce marine diesel engines, sir, if you can elaborate on that opportunity. Coming to ship repairs, these are not, it was previous ship repairs around three, four years back. As late as end of 2023 itself, the actual operations commenced from there during early 2023. We have taken over three dry docks from the previous owners. Just to state that, we almost have unencumbered the facilities for the. Sorry, 14 refits for the Indian Coast Guard, and currently we're executing one normal refit, the major refit for them. So this facility has actually taken off. Coming to your specific question on the India-U.S. collaboration for ship repairs. As of now, three shipyards were on the government-to-government pact, CXC. Cochin Shipyard, then Mazagon Docks, and Garden Reach Shipbuilders. They have agreement wherein their ships, whenever they come for operational turnaround or minor repairs there. We have not yet gone into this agreement. Under this scheme of the U.S.-India cooperation for ship repairs, we have not yet started to do that. We will be examining this. Please understand, when we have a ship, every ship that we have, ours is a riverine shipyard. Ships, when a ship comes, it's a very short duration. Most of the U.S. ships that we call, very short durations. When it comes for a short duration, it can do the river coming in, finishing the repairs, and going back. But feasibility and viability of that needs to be, for example, instead of focusing on that, we would rather go in for the refit of ships who are likely to stay for longer duration, like what we are doing for the Navy. That would be our focus. Because the Rolls-Royce is our equipment. The intent of going in for it, we have a long association with engine, which is powered by Rolls-Royce, for assembly, testing of marine diesel engines. We have just shifted gear, and instead of just assembly and testing, we are going in for co-production. Co-production with a, under a Make-II philosophy, that we would be initially looking for engine assembly process. The opportunity that is available is a change from the water body. I think earlier you may had asked regarding the water interface. On these ships, these ships are high-speed ships. These ships, while having water interface issue, these are high-speed engines. Very, very high-speed engines. And it is for those high-speed engines that we are working for collaboration with Rolls-Royce. I think to what you expected from, I really mentioned I cannot transmit the number of ships or engines to water jets to cost, but probably similar to what we are doing for six. In which case, we have already signed the license agreement also. And we expect the first of our piece from GE for the water jet interfaces to come there sometime during FY 2020. Great. Where these engines are actually used. Yeah. Thanks. Any little bit, if I can squeeze in on any small businesses coming in terms of the bridges and other unique things about GRSE, sir? Oh, yes. I was trying to, I mean, just to confine my narrative. I did not speak about such a very interesting business vertical. It is a small vertical, very attractive business compact vertical, where we are the market leaders in India, and just to state the growth it has got. The last year, FY 2023, the revenue from operations from the bridge segment was INR 57 crores. In FY 2024, it is INR 140 crores. Wow. That is what is very interesting. Actually, I would like to speak on things that are much longer duration from today. But the team, a very, very skillful team is managing this business. They connect with professional customers. Our major customers are the various organizations with whom we have live agreements for Mahaseer project, Indian Army, and the National Highways and Infrastructure Development Corporation. As far as the diversification is concerned, one of the verticals which we are able to focus on is either military construction or infrastructure. Of course, you have already listened to clean energy platforms like that. Thank you. I missed the part on who are your core customers in the bridge. Is it National Highways Authority, sir? Our major customer is the Border Roads Organization, BRO. Next is the Indian Army. Third is the National Highways and Infrastructure Development Corporation, NHIDCL. Of course, the various state public road departments. What are the operating margins of this particular business segment, sir? If you have a revenue of INR 140 crores, what will be the operating profit margin, sir? It is around 7%-7.5%. Is there also fixed margin here? See, it is again, it is competitive. It is competitive except for some of the products where we have IPR. I mean, it is our patented product. Others, the Indian Army, are our competition. All our margins will be around 7%-7.5%. Over a five-year period, can this revenue be about INR 500 crores or something like that, sir? Would that be an internal vision for you? See, 500 might be too ambitious for my own liking, but I would definitely like to double this within the next five years. At least touch 50% in the next five years. Here, again, just to mention that the total market, when I proudly state that we are the market leader and we own around 90% of the market, its size is limited. Interesting. It's a very unique business, I guess. Yes. Okay. All the best. Thank you. Next question is from the line of Abhishek Poddar from HDFC Mutual Funds. Please go ahead, sir. Thanks for taking my question. Sir, could you guide us how to think about the revenue booking for the next two years, as you mentioned that you would see a peak revenue in next two years? One is that, and second is also, let's assume that in 2025, you are able to win next-gen corvette order. First couple of years will be hull construction. So how will 2027, 2028 look like? Would it be a lean period, or we could see some growth there also? Mr. Abhishek, you are right. The next year and the next next year are going to be the peaks from this estimation year. Earlier interactions, I had assured a revenue growth of around 20%-27% year-over-year. I hope we have surpassed our expectations. We have a current order book of INR 22,000 plus crores. Keeping the NGOPV, which is around INR 3,000 to INR 5,000 crores, maybe INR 3,400 crores pending, and the one-off projects that we are bidding now, INR 2,000 plus crores, so that is INR 4,000 or INR 5,000 crores. Majority of the revenue in the next two years will come from the P17A project and the Next Generation Offshore Patrol Vessels project. The Survey Vessel (Large) project already having crossed the ocean. Next year and next year, this INR 22,000 plus crores of that, if you subtract around INR 3,000, INR 4,000, INR 5,000 crores, INR 9,000 crores will be executed by FY 2027. I am going back to what I mentioned, we will be aspiring for a growth of over 20% to 25% year-on-year from now, in the next two years. Coming to your second question. You had asked the second question about our expectation on NGOPV. Definitely, we should compare when the order comes in financial year 2026 as towards March, calendar year 2025. The actual revenue recognition will start sometime two years from now. The first two years. The first year is the pre-design phase. The initial phase drafts, after the direction starts, will be mostly for hull construction where the revenue recognition is minimal. August is good for us because this is my best trade. That means by FY 2028, FY 2027, 2028 is when our existing order comes. That is the time when the NGOPV will start giving us revenues. Also to offset this delivery gap, as I mentioned in one of the earlier discussions, that we are bidding and winning orders from multiple customers, including DRDO, the Ministry of Earth Sciences, and definitely in the next conf call, hopefully, I will be able to convey the actuals regarding how much we should book. That will offset the gap, if at all, I mean, I do not see it happening, but just in case it does happen. Understood. But would the commercial shipbuilding orders, if you manage to win it, sir, would it be large enough? No, we are not yet. Yeah. No, we have not yet won it. We have not won commercial. I am not counting the Bangladesh export project, which is commercial in nature. That order, I will just put it in the CEO order. I am looking at potential prospects for European clients who have shown interest. You know the market is open, and these European clients are looking at India as a potential destination for shipbuilding. We have stated our willingness. Negotiations are in progress. We will be starting definitely in a modest fashion. First, because we have not yet been into serious promotion. It is also a one-off project with the government of Guyana. We will start in a modest fashion, and we will build up from there. Just to answer your question, the numbers are going to be attractive in the coming years with respect to order and commercial issues. Understood. Sir, one last question. On the margin side, you mentioned about 7.5% is what you are looking at. If you look at the margin level for last two years, you are doing about 10% or so. Should we assume this level of margin, what you are doing now will sustain or should we assume 7.5% is what- We assume we will be sustaining the level of margin that we are currently achieving. Understood. We should not look it from EBITDA margin perspective, but we should look it from the PBT perspective because other income will vary. EBITDA margin and other income will keep on varying. No, no varying. Okay. Thanks a lot, sir. All the best. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Kumudogia Hari, sir, for closing comments. Thank you, Aditya, and thank you, Gaurav from Concept IR, for organizing this conference call. Once again, I would like to express my sincere gratitude to all the investors and analysts for keeping their time out to attend this conference call and listen to what we had to communicate to you. In case you have any specific comments, get in touch with us and we will clarify each one of them. We will be happy to answer each one of them. Thank you once again, and cheers. Thank you. You may now disconnect your line.