Ladies and gentlemen, good day and welcome to the Mazagon Dock Shipbuilders Limited earnings conference call hosted by Nirmal Bang Institutional Equities Private Limited. 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 presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Jyoti Gupta from Nirmal Bang Institutional Equities Private Limited. Thank you, and over to you, ma'am.
Thank you, Ritija. Good evening, everyone. On behalf of Nirmal Bang Institutional Equities, I welcome you to the quarter four FY25 earnings conference call with the management of Mazagon Dock Shipbuilders Limited. We have with us Uncertain , Indian Navy retired, Chairman and Managing Director, Biju George, Director of Shipbuilding, Commander Vasudev Puranik, Indian Navy retired, Director of Corporate Planning and Personnel, Ruchir Aggarwal, Director of Finance, and Commodore Shailesh Bhalachandra Jamgaonkar, Indian Navy retired, Director of Submarine and Heavy Engineering. Without further ado, I would now request Uncertain , sir, to start with his opening comments, after which we can open the floor for questions and answers. Thank you. Over to you, sir.
Yeah, good evening, everyone, and welcome to Mazagon Dock Shipbuilders quarter four and annual earnings call for the period ended 31st March 2025. My name is Captain Gerald Maugham, Chairman and Managing Director, and I'm joined today by Director of Finance and CFO, Mr. Ruchir Aggarwal, Director of Shipbuilding, Mr. Biju George, Director of Corporate Planning and Personnel, Commander Vasudev Puranik, Director of Submarine and Heavy Engineering, Commodore Shailesh Bhalachandra Jamgaonkar. Before we begin, I would like to remind everyone that today's discussion may include forward-looking statements as defined under applicable securities laws. These statements are based on our current expectations and projections about future events and financial trends, and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. We undertake no obligations to update these forward-looking statements except as required by law.
For a detailed discussion of these risks and uncertainties, please refer to our latest financial results, press release, and regulatory filings available on the stock exchange websites and our company website. As a listed entity in India, we are committed to adhering to the highest standards of corporate governance and transparency, as mandated by SEBI LODR Regulations 2015. This call is being conducted in compliance with these regulations, ensuring timely and equitable dissemination of information to all stakeholders. We are pleased to share our financial and operational performance for the quarter four and the fiscal year ended 31st March 2025. Despite a challenging macroeconomic environment, we maintained our market position and managed to deliver a strong performance with robust revenue growth and improved profitability on a year-on-year basis.
During this call, we will provide an overview of our financial results, discuss key operational highlights, and share our outlook for the upcoming period. Following this, we will open the floor for your questions. We request you to limit your questions to two per participant in the initial round to ensure that everyone gets an opportunity. I would now like to hand over to Mr. Ruchir Aggarwal, Director of Finance and CFO, who will walk you through the detailed financial performance.
Good afternoon. I'm Ruchir Aggarwal, Director of Finance at Mazagon Dock. In this year, we have recorded the highest revenue from operations, which is INR 11,431 crores, and the profit before tax is INR 3,109 crores. Earnings per share profit after tax is INR 2,324.88 crores, with an earning of 57.63%. The operating profit is INR 1,940.43 crores, giving a percentage operating percentage of 16.97%, and PBT to revenue is 27.2%, against 26% which we reported last year, and the EBITDA margin of 28.24%, against 26.93% reported for last year, there is an increase of almost 2% on a year-to-year basis. As far as this quarter four is concerned, the revenue is on the upper side. It is INR 3,174 crores, and against the profit we earned is INR 406 crores. It is on a consolidated basis, and the earning per share is INR 8.11.
If we compare quarter to quarter, our EBITDA margin is 30.74% against 35.1% which we reported in December quarter. The primary reason for difference is the provision we made in our books for the two contracts. One is for supply of FPV to Coast Guard, and the other is the Denmark contract, where management is of the view that there is a likelihood of incurring losses on those contracts. We have made, as a prudent accounting policy, the provision in our books, and this is in line with the accounting standard 37. In the next year, on an every quarter basis, we will be reviewing this liability, and based on our assessment, we will be charging it to profit and loss and reducing the provision what we have created in our books.
Yeah, you may start 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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please limit your questions to two per participant, and you to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Atul Tiwari from J.P. Morgan . Please go ahead.
Yes, sir. Thanks a lot. So my first question is on medium-term margin profile. Over the next two, three years, what kind of EBITDA margin we should look at? Will the current level of EBITDA margins be maintained or perhaps be even increased from this level?
See, MDL expects margins and profitability to significantly improve over the next years as major orders materialize. We are expecting the P-75 additional submarines and the P-75I submarines contract to be signed in this financial year, and that is expected to increase our order book from the present INR 32,000 crore to more than INR 1.25 lakh crores. These big-ticket projects are the forte of MDL, and with these projects coming in, our margins and profitability are expected to significantly increase. The economies of scale of these large submarine projects and the efficiency initiatives under Shipyard 4.0 and digital transformation efforts is expected to enhance the overall profitability of the yard.
Sir, in the past year, the company has guided to PBT margin of 12%-15% over medium term versus 25%, 26% that we have been reporting. So now we should not work with the older guidance and assume the current level of 26%, 27% PBT margin to go up from here. Is that right and understanding?
See, if you look worldwide, the shipbuilding margins are approximately 15%. So the guidance of 15% is accurate, but what we must understand is that in shipbuilding, revenues and profits are directly correlated to the order book and the life cycle stages of current projects. Each project stage, whether at an initial design or a mid-stage construction or final delivery, influences both the revenue recognition and the profitability significantly. So we cannot assume that since we have achieved 26% in one quarter in one year, we will be able to achieve the same across the board. So it is safe to have a guidance of approximately 15%, and you can. There are other shipyards who are listed, and you can look at their profit margins, and you will get a. You can gauge what is the general range. We have exceeded the general profit margin significantly.
It is because the certain projects were at a late stage where greater revenue recognition and profitability were accrued, and these projects were actually also obtained at significantly good margins. So, but it is. I would consider that it is prudent to have a margin of approximately 15%.
So, sir, just trying to understand it clearly because earlier you said that obviously your margins this year were quite high, and it should keep on improving because of these large orders. But so that means that we should be looking at perhaps 30% or 31% PBT margin. But now your guidance is 15%. So what is the right number to work with?
You see, with respect to quarter four, you'll see our quarter four PBT is 12.8, if you see. Of course, it is primarily because of the large provisions that we have made, but these high margins which you are seeing over the last two, three quarters is because the large projects, 15 Bravo, have been delivered, and we have been able to accrue significant revenues and profits due to these. However, we cannot keep this as a standard profit margin that a shipyard can get. So I would still consider that. Considering this 12%, yes, we will have an increase, but not considering the 26% what we have done over the year.
Okay, sir. Very clear. And sir, my second question is on revenue growth. Your revenue has been growing at 20% plus over the past couple of years. Can we expect a similar kind of revenue growth over the next two, three years, or will the revenue growth temporarily slow down as the execution of large contracts that you will win this year will take some time to pick up?
You have seen a growth of 20% on a year-to-year basis, but that was a time when we had a steady order book. Now, since the order book for new 75C, 75, and 75I is a little bit delayed, so some time will be going towards their design and finalization of the basic parameters for their execution. So it may not be correct to say that this 20% will be maintained, but by and large, we will see that the growth of the company is almost around 8% to 10% every year.
Okay, sir. Thank you. Thank you a lot. I will come back and get you.
Thank you. The next question is from the line of Aniruddha Madharkar from Continental. Please go ahead.
Good evening, sir. Am I audible?
Yes, good evening.
Sir, my question was regarding Goa Shipyard Limited, one of the entities in which our company is holding a substantial stake. So any plans to list it in the future?
Actually, this is the decision of DIPAM because we are just a shareholder based on the government guidelines, and we are not making a decision for their listing or not. That will be decided by DIPAM and MOD what is their intention, and we will continue to be their shareholder as per the wishes of the MOD.
Thank you.
So that is shareholder there with more than 51%. We hold 47%, the government holds 51%, and that's the decision that the government will take.
Sir, my second question is how much cash we are having on our books right now?
It will be to the tune of around 11,000-12,000 crores, but out of which 6,000 is our margin, and balance is on. So advances from.
Thank you, sir.
Thank you. The next question is from the line of Raj Rishi from DCPL. Please go ahead.
Hi. Am I audible?
Yes.
Hello.
Yes, yes.
Yeah. What's the capacity increase expected over the next three to four years?
See, we have already augmented our capacity from construction of six submarines to 11 submarines because we are preparing to take both the additional submarines of 75 and the six P-75I, for which we have already set up the SSAW facility or the submarine section assembly workshop. So that is one area, and we have also taken up land from the port for taking up small ships, and we are also having major CAPEX plans in that land as well as in the Nhava yard which we have, which we have a CAPEX of approximately INR 4,000 crores. So we can, at the moment, I think, consider constructing 10 major warships simultaneously and 11 submarines.
Okay, so is it correct to say that in three-to-four years, your capacity will be 3x of what it is today?
Once the two CapEx programs come to fruition and it becomes fully operational, definitely the capacities will go up, so now it is at the consultancy DPR stage. The exact contours of what would be the capacity, how it will increase, we'll be able to gauge only after those DPRs come because there are various technical considerations to finalize there, but definitely, the capacity will increase at least by two times.
Do you plan, can you say this is a follow-on?
Yes.
Hello?
Yes.
Yeah. Do you plan to take any debt for this CAPEX?
As of now, we are quite healthy, and we do not expect, but it will be based on the economics of the proposal. We will see.
Okay. And any plans for ship repairs, sir?
Yeah, we have a vertical in ship repairs. We already have a vertical in ship repairs that we are currently using our wet basin as well as dry dock. So we will be able to take ship repairs of larger ships. Only one per dock. Current docks are free. And in the long term, once this CapEx, which is there, once it gets operational, we will be able to undertake repairs of larger ships. And in addition, we are also taking submarine repairs, and that has contributed, I think, approximately INR 4,000 crores of revenue for us, both in the MRLC as well as AIP plugs for the submarines which are already in service with the Navy.
Okay, and sir, this supposed shipbuilding super cycle which is going on globally and this move away from China, etc., that should augur very well for companies like Mazagon Dock, right?
Yes, certainly. I think there are significant tailwinds that are going to further propel our growth, both commercially from the commercial shipbuilding as well as in the defense shipbuilding because of the geopolitical situation. And as we have seen, both the Navy is likely to come out with the RFP for the 17 Bravo frigates shortly, which is a 70,000 crore project. And we are poised best to take on that, although it is going to come on a competitive bidding. But MDL, with its proven capability and infrastructure and having demonstrated to have constructed and delivered these ships profitably, we are the best place to actually win these contracts. In addition, the Navy is also coming with a 44,000 crore MCMV project. It's at an AoN stage. That's also likely. The RFP is also likely in a few months from now.
There are a lot of orders in the pipeline, both for the defense as well as for the commercial shipbuilding sector.
Okay. Sir, some reports suggested that in the next 18 months to 24 months, there's a possibility that Mazagon Dock will get orders worth INR 2-2.5 lakh crore. Any comments? Or is it poised to get?
See, it's like this. It depends upon whether we are able to sign the 75 Alpha, 75 AS, and the 75I submarine contracts quickly. That adds up at least to 1 lakh crore. And if we win one of the shipbuilding contracts of, let's say, 17 Bravo and the MCMV contracts, we could at least theoretically reach those order book levels. We will see. But I'm confident that the submarine orders we are likely to sign quickly, particularly the 75 additional submarines.
Do you expect it by September, sir?
No, I expect that earlier because we have completed all the commercial negotiations with the Ministry of Defence, and we are at virtually the contract signing stage. So maybe it should happen as early as next month, hopefully.
Okay, sir. Thank you.
Thank you. The next question is from the line of . Please go ahead.
Thank you for the opportunity and congrats for the decent numbers. Sir, in the previous, participant was asking around submarine contracts that you replied that there's a possibility we can get in the next one or two months. So what is the expected value of this contract, sir?
Yeah, it's expected to be in the range of anywhere between INR 300-400 billion.
Okay. And the first participant asked a question about order book, and you replied that by the end of FY 26, our order book could be 1.25 lakh crore. Have I heard right?
Yes.
Sir.
That's provided we are able to sign the contracts for both the 75 additional submarines as well as the 75 India submarines project. Signing of the contracts for these two projects is crucial for us to achieve those order book figures.
So are these nuclear submarines or normal submarines?
Conventional. Not nuclear.
Okay. This P-75 conventional submarines, which we are expecting in the next one or two months, is INR 40,000 crore.
Yes. Approximately. Yes.
There is another, you're saying, 75 commercial submarines, and what is the value for that commercial submarines? Will that same amount?
We are actually at a negotiation stage with the Ministry of Defence, so it would not be appropriate for me to give any quote.
No issue. No issue. And given our huge order book, so could you please provide the revenue and a bit of guidance for next maybe three or four financial years?
As the Director of Finance just brought out, we expect revenue growth of anywhere between 8% to 10%, and our PBT margins, we expect around 15%.
But assuming a huge mammoth order book of around INR 1 lakh crore by the end of FY, so I think this kind of appears to be a very conservative 8%-10% top-line growth. It appears to me.
Actually, it takes time. If you see, it will be increasing by the time the finalization of design, placement of order comes into the picture, but it will depend upon how fast we are getting the orders from the Ministry and how fast we are on the drawing board. It will depend, and it is our estimation that it will be around 10%-15%, and it will increase as we progress in the project.
Okay. And I think I can see some provisions of INR 746 crores in the financial year. So could you please provide some more detailed insight, and is it one time or whether it is going to come next year also, or whether there is a probability of reversal of these provisions because it has impacted our EBITDA margin substantially?
Yeah. Actually, all, in my opening remark, I mentioned that other than INR 532 crores, which we have made a provision this year, others are normal business provisions. This INR 532 crores we are making as an estimate for a loss which we may incur in our two of the contracts. One is for Coast Guard 21 ships and six ships of Denmark. This is based on our estimate as of date, and we will be reviewing this estimate every quarter. And based on our further judgment, we will be either reversing these provisions or there may be chances of increasing the provisions too if we find that the losses are increasing. But the major part of our provision we have already brought in the book, and we will see how to mitigate this in time to come.
As we progress, this will be transferred from provision to profit and loss account, and provision will come down accordingly.
Could you please provide some insight what kind of these provisions are like, the accrued damages, some other losses?
We bid for this contract in 2022-2023, and the prices of the parts and components have increased significantly after those bids, maybe because due to the global shipbuilding boom, the number of shipment pricing has shot up from what was originally envisaged and factored into our costing. But we have not yet ordered the entire package, entire equipment. So as of now, for the equipment that has been ordered, there is a potential loss that has been provisioned, as DF has already mentioned. But the real picture will emerge as we complete the procurement, and the net impact can be computed at that stage that we will be doing in a quarterly manner and reporting.
Okay. And as of now, we have ordered 33,000. Sir, we are.
Come again. Come again.
So that we are able to maintain our margin. So then.
I'm sorry to interrupt you. Mr. Kumar, your voice is breaking. Can you please check?
Hello. Yes, ma'am.
Hello. Mr. Kumar?
Yes, ma'am. Yes, ma'am.
Your voice was breaking, sir. You may please go ahead now.
Yes, sir. Yeah, I'll repeat my question. So sir, we have an order book of 32,000 crores. So how much of these orders are cost-plus contracts or fixed-price contracts so that our EBITDA margins and bottom-line remains profitable?
See, there in our investor presentation, actually, the INR 32,260 crore order book, 15 Bravo, 17 Alpha, the P-75 Kalvari-class submarines, that put together comes to almost 20,000 crores. Approximately 20,000 crores is a few projects on fixed cost. The rest are also fixed costs, but they are with the lesser margins. Whereas these, out of the 32,000 crores, approximately two-thirds are projects with reasonably high margins.
Okay. And sir, during the recent conflict with Pakistan, and I think India should focus on more nuclear submarines. So is there a possibility that the Defense Ministry can think of preparation and ordering nuclear submarines to Mazagon or any other shipbuilder because defense is the number one priority for India now?
Yeah. You see, that's a call that the Indian Navy and the Ministry of Defence will take. And in fact, you may have read that the nuclear submarines fall under the strategic submarine category. And I think the government has already placed an order, but that is getting done through the Navy, through the shipbuilding center in Visakhapatnam, and not with MDL.
Nuclear submarines are built by our company, or it's a highly secretive operation only by the Navy?
No, it's not with us at the moment, and we don't want to comment on something which is not with us.
Okay. Okay. Thank you. Thank yo u, sir. All the best. Thank you.
Thank you. The next question is from the line of Dipen Vakil from PhillipCapital. Please go ahead.
Thank you for the opportunity. Sir, I wanted one clarification regarding your subcontracting charges, which have increased exponentially as a percentage through sales in this quarter. So can you tell us as to what these subcontracting charges are, and what can be the kind of trend that we could be looking at going ahead?
So this is in contrast to what we call as actually the subcontracting, which is what we normally define as when within our premises a work is executed by another party. What we mean by outsourcing is when the work is executed in a remote location, not in our premises. So because we have around 27 ships to be built simultaneously, some of this work will have to be executed outside. Now, at the same time, we are unable to give the entire ship outside. So these blocks have to be transported. Transportation cost is also involved. So therefore, there is an increased incentive to executing the work within our premises. Executing it outside turns out to be costlier than executing it inside.
So the simultaneous demand of what we call as the asking rate of all this put together is demanding outsourcing, and that is why the cost is on the higher side.
Got it, sir. So if my understanding is correct, so subcontracting includes subcontracting as well as outsourcing, right?
Yes. Yes.
Got it.
Yeah, that's correct. One more thing you need to keep in mind is that for the larger ships, let's say 15 Bravo and 17 Alpha, which are very, very high-value projects, then it makes sense for us to use our manpower, which is a little more expensive than subcontract manpower. So whereas the smaller projects like the export project and the 21 ships that we are doing for Coast Guard ships, it is better to do a subcontract model. And that is why, since, of course, like what Director Shipbuilding just said, that since we have 27 ships and another three large ships that are presently on order, we have resorted to extensive subcontracting, and that's why the subcontracting costs are higher.
Got it. Got it. Thank you so much for answering my questions, and all the best for FY 26.
Thank you.
Thank you. Next question is from the line of Deepak Krishnan from Kotak Institutional Equities. Please go ahead.
Hi, sir. I'm Hoop from Audible. I just wanted to check one thing on the next generation corvette order. Are we sort of active on the order? Are we able to, or is that an order that we've sort of given a pass?
The bids are open, and I think it's gone to GRSE and GSL and not to MDL.
Sure, sir. That was the question, and thank you for the clarification.
Thank you. The next question is from the line of Aniruddh Madharkar from Continental. Please go ahead.
I just wanted to ask regarding that subcontracting, which I think the management has already answered. But my only thing is that in this subcontract, which we have made a very high expenditure, so is that in the future it is getting reversed, or it is a fixed expenditure?
It's a fixed expenditure.
Okay. Okay. Thank you, sir.
Hello. Thank you. The next question is from the line of Sanjeev Zarbade from Antique Stockbroking. Please go ahead.
Yes, sir. Am I audible?
Yes.
Yes, sir. Thanks for taking my question. Sir.
Yeah. Please speak a little louder.
Yeah. My question was regarding the revenue booking. So if we are able to win the two large orders for submarines, FY 27 may not have much of order book revenue booking, but could FY 28, we might see up to 10% of revenue booking from these two orders?
FY 28 may be a little too distant away, but definitely for FY 26, we can confidently say yes, we'll be 10% more.
No, no. Sir, I'm asking about the revenue contribution from the two large submarine orders that we.
Okay. So what is the question?
It will depend upon cost of production, and this will depend upon how fast we are getting orders and their execution taking place. Because first of all, after getting the orders, everything is only on the drawing board.
So that's a preparatory period.
Preparatory period.
For project design as well as for procurement. So the revenue recognition will come only after the start of production and as the equipment goes on board. But you are right. If that is the question, FY 28 definitely, at least the P-75 additional submarines revenue will start to kick in.
Could it be around 10% of the order value or lesser than that?
Yes, you could say that because this P-75 AS project is a repeat of the Scorpene P-75 project, which have already delivered to the Navy, and we have already commenced some kind of a preparatory work. So I think confidently we can say yes, we will contribute at least we'll contribute 10% of the order book of 75 AS will contract value of 75 AS will come in as a revenue for FY 2028.
Yes. And sir, my next question was regarding the P-17A, in which we have pending order book of 13,493 crores. In what time frame is it executed to you, sir, and in what in terms of and also.
Yeah. We are delivering the second ship next month, and the third ship. There are four ships. One has already been delivered. The second ship will be delivered next month. The third ship will be delivered maybe in the month of November. And the fourth ship will be the only one pending in the next financial year. That also we expect to deliver by April 2026.
The guarantee liabilities associated with this project will extend up to 2027. What is balance shown will progressively get liquidated in that time frame. Bulk of this 13,493 crores will get booked in terms of revenue in FY 26 and 27?
Yes. Correct.
In the next two years. That's right.
Two years.
Okay. And sir, although we have delivered P-15B and P-75, there is 3,700 crore order backlog and 2,700 crore order backlog in these two projects, which we have already delivered. So what is it?
If you see 15 Bravo, we have ₹3,716 has been. So there also, the liabilities are not at over. So we keep that for future contingencies if any, because depending on the operational needs of the ship, we need to some expenditure has to be incurred. So two to three ships are still under guarantee. And in addition, we have to deliver the base and depot spares to the Navy. That's also a significant amount. But those also, we expect a considerable amount to get this year and maybe the beginning of the first half of the next financial year.
Sir, this 3,700 crore, it will get booked in one or two years, or this will be.
Which one? Can you repeat?
This INR 3,700 crore.
I'm sorry to interrupt you, Mr. Sanjeev. You are sounding very low, sir. Can you speak a bit louder?
Yeah. Yeah. Sir, I wanted to know about the order pending in the two orders of Coast Guard and the Denmark order. How much is the outstanding value over there, sir?
I think, see, that delivery, I think, is in 2029, if I'm not wrong. The last ship gets delivered. So the revenue will be split up to FY 2029. Actually, FY 30.
For the order value for the two orders that you mentioned for which we have booked provisions, the Coast Guard and the Denmark, what is the outstanding?
That will be put together around INR 3,500 crores.
Okay. Okay. And to be delivered over next four years, you are saying?
To FY 2030. 2029, 2030. Yes.
Okay, sir. If I have more questions, I'll come back. Thank you.
Okay.
Thank you. The next question is from the line of Chinmay Gandre from Canara HSBC Life Insurance. Please go ahead.
Yeah. Thank you for taking my question. So most of the questions have been answered. Just on the P-75, so what is the stage right now that we are discussing commercials is what you mentioned? I just wanted to get a check on that.
Our technical offer has been accepted by the Navy and MOD, and the commercial negotiations were just supposed to start. Then after that, we have not heard yet. So we are in the early phases of the commercial negotiations for the project. Once the commercial negotiations conclude, then the contract will be signed.
Regarding the Scorpene class submarine, I mean, more or less, we thought that we should get it by last year itself. I mean, so just the operational-related delays or anything else, should we be doing that?
I mean, finally, the contract is signed with the Ministry of Defence and the Government of India. So there are some procedural delays, perhaps. So it's not entirely in MDL's hands. But we expect that it will conclude shortly.
Sure. And lastly, I mean, in terms of the deliveries you mentioned about the P-17A frigates, and these are pretty good margin orders, which you also kind of mentioned. So I mean, then broadly, because we are going to deliver three of them or rather two of them in the coming fiscal year, rather FY 2026 per se, I mean, then ideally, the PBT margin should be much better than the 15% guidance, which you are kind of alluding to.
Yeah. We hope so. We would like to underpromise and overdeliver. But we would like to keep the guidance at 15%, which is considered to be good for a shipyard. But we are hopeful that we will do better.
Okay. Thank you. Thank you so much, sir.
Thank you. The next question is from the line of Atul Tiwari from J.P. Morgan. Please go ahead.
Yes, sir. Just one question on the contract structure. So for your fixed-price contract, do you get some kind of raw material escalation over the life of the execution of contract?
We have to procure all the raw material. So the raw material costing is a part of the overall project cost, and the shipyard does the procurement.
Yeah, but I mean, obviously, these contracts can go on for four, five years, right, so do you procure everything at the beginning itself, or do you keep on procuring over four, five years? That is the question.
We do the procurement and the negotiations with the supplier at the early stages. However, we ensure that the delivery is staggered so that the inventory is controlled and the costs are minimal to the shipyard.
Oh. So you lock in all the raw material costs at the beginning itself in most cases?
Yes.
Okay. Okay. Good. Thank you.
Thank you. We'll take our next question from the line of Rahul Arvind Padarkar, an individual investor. Please go ahead.
Hello. Thanks for the opportunity. I just wanted to ask, sir, about this delay in contract that we're considering. So are we also considered to add additional cost that would remain incurred so that we don't have to do any provisioning? And the second question is that I see that most of these orders are coming either from MOD or Indian Navy. Are we also considering to go outside commercial and bid for those shipbuilding efforts? Thank you.
Yeah. First is we are making efforts to diversify. And towards that, you will see that we have already got a significant amount of contracts from the offshore segment from ONGC. Our order book from ONGC is approximately INR 6,500 crores. And from commercial shipbuilding is the multi-purpose vessel, which we have got from a European client, which is approximately INR 715 crores. So that is our attempts to diversify away from the single client of MOD. With regard to what was the first part of the question?
It is not getting costed.
Yeah.
Yeah.
See, the present fully covers all known risks.
Then if the signing of the contract gets delayed, we don't get any additional compensation for that.
Okay. Thank you.
Thank you. We'll take our next question from the line of Gagandeep Arora from ASK Investment Managers. Please go ahead.
Yeah. Good evening. I hope I'm audible.
Yeah. Go ahead.
Sir, the first question pertains to your other expenses and project-related expenses, which are also fairly elevated on a year-on-year basis. Can you elaborate on why that is the case?
See, it is as probably it is not depending upon the project lifecycle. Since around 27 ships are at the early stages of construction, the entire procurement of material would have happened. So although I don't have the exact figures with me, but it is quite likely because it is at some it's also possible that some of the large orders of 17 Alpha, we must have procured the B&D spares or the B&D spares, which comes to approximately 15% of the project cost. So that could be the reason for the increase in cost.
Okay. And is it possible for you to—I mean, I'm referring to the order book details mentioned in your presentation. Is it possible for you to give us broad delivery timelines of at least the large-sized orders within the order book which are outstanding and also give an idea of broadly over what time can you fully invoice the current order book that you have?
See, 15 Bravo, as we just discussed, we intend to finish this balance, INR 3,700 crores, by FY 2027-28. The stealth frigates may be by 2029. Because there will be a small portion, but the majority we will complete by 2027. Maybe a little portion of the base and depot spares and the guarantee liabilities will be there. The Coast Guard projects and the multi-purpose vessel, we will complete by FY 2029-30. We will complete. The P-75 Kalvaris, INR 2,400 crores, we should be able to complete maybe by FY majority by FY 2026 and maybe first half of FY 2027. The MRLC, we should be able to complete maybe FY 2027, mid of FY 2027. The ONGC projects also, we expect to complete the majority of it by end of FY 2027.
The AIP project will take some time because some of the deliverables from DRDO is expected to be delayed. And anyhow, it's a 42-month contract. So that's it.
Great. I understand that deliveries, the timelines might extend into 2028 and 2029. But would it be a reasonable surmise that a large portion of the outstanding order book can be invoiced over the next two years? Some parts may extend beyond the next two years, but largely, we book them.
Out of the 32,000, maybe almost 24,000 crores next two years.
Okay. So 24,000 can be. And you generally have a sort of arrangement on turnover targets with the MOD. Have they been finalized for FY 26, and can you therefore convey it to us?
Yeah. We have finalized it, but I'm not sure whether it can be given to public. So there are figures both on top line and bottom line and other parameters, including R&D expenditure. I'm not sure whether we can make it public.
That is currently under discussion. We'll be able to.
Because you disclose it in your annual reports, at least the turnover if, you know.
It's still under discussion with the current.
All right. All right, sir, and in the past, you have indicated that on the Kalvari-class submarine, there were some cost escalations for which you got compensation from the Navy for at least three of the submarines, and one or two were pending, I think, INR 140 crores of perhaps provisions needed to be written back. Is it still the case, and do you expect to book it in the coming two quarters?
See, we have made provisions for liquidated damages for the submarines. And I think we have got it. It has come back to us for, I think, four submarines. We expect that there's only the first boat that the LD has not been reversed, which we expect that this financial year, we should be able to reverse it. But that, of course, is a decision that MOD will take. But we anticipate that we will be getting the liquidated damages reversed for at least one submarine this financial year.
Was anything booked in Q4 from this or no?
No, no. Not for these. That were already pushed in the last financial year or the year before that.
Okay. And I think there was also an indication, at least in the past calls, that as the projects come closer towards final delivery, there is a reassessment of your D-448 liabilities. And if you are able to deliver on time or before time, you could actually incur cost savings. Is that potentially the case with some of the deliveries due for next year, and therefore, do you plan to benefit from that?
What I can tell you is what has happened in the recent past. All the four 15 Bravo destroyers were delivered ahead of schedule, and the shipyard has benefited because of the early deliveries.
Right. The final question from my side. The master ship repair agreement that you have with, I think, the US Navy, since signing, I mean, do you foresee any commercial contribution starting from that in the near future, or is it still some distance away?
Yeah. Yeah. So we are still one of the contenders. But the issue is the vessels that are coming for repairs, some of them are large, and that will not fit into our current infrastructure. So we will participate in that signed agreement only for vessels which can be accommodated within our premises. So a couple of offers which had come, we couldn't participate because of this reason.
Okay. Fine. Thank you. I'll get back in the queue. Thanks for taking my questions.
Thank you. Ladies and gentlemen, you are requested to please limit your questions to two per participant. The next question is from the line of Raj Rishi from DCPL. Please go ahead.
Yeah. Thanks for the follow-on question. Any plans for a tie-up with the Korean shipyard or something? Because some news reports suggest that some tie-ups are on the anvil with Indian shipyards.
See, the Ministry of Shipping is trying to promote shipbuilding within the country, and it's actually much needed. They are planning to have four large clusters by 2030 and operational by 2035. The Ministry of Shipping is looking at large shipyards like us to tie up with some major shipyards, global shipyards. We are at the very, very early stages of examining this, but we will keep our options open wherever we are presented with a good business opportunity.
The previous person was asking about this master ship agreement you have with the U.S., and the answer was that you could not accommodate them because it was much larger than what you can accommodate. Do you expect any business on this front in the future?
See, this is a large US fleet which is based out of Singapore, primarily servicing the Indian Ocean region. So most of these vessels are large. So there is a draft limitation also in our vessels. So that is why we are unable to accommodate. So it's only a very small subset of the entire fleet which can come here. And when those things are repaired, that is the time where we'll have the opportunity to participate. That's what I mentioned. So right now, I don't see anything in the immediate future.
Gotcha. And so what's the export potential business for MDL in the next one or two years?
Right now, we already have an order by CMB for six vessels, INR 715 crores. If everything goes on well, there is an optional clause also in there where they will order four more ships. But that will depend on how we are able to deliver these ships in time and within the contracted cost. So that is a call which we have to take later. The potential.
So you're, yes, sir.
No, potential is there for export orders. These are the vessels. These are the cargo ships which completely fit into our infrastructure, and yes.
And so your collaborator for P-75, I think ThyssenKrupp, was talking about making India a hub for submarines. So you expect MDL also to benefit?
Yes, of course. Our collaboration with them is for the P-75I project, for which.
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A significant amount of transfer of technology and indigenization. There will be more than 60% of indigenous content in this submarine, much higher than what we have done for the Scorpene project.
Okay. Your voice is breaking. Hello? Hello?
Please give me a moment, sir.
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Open again. Hello?
Ladies and gentlemen, please stay connected. The line of the management has been disconnected. Ladies and gentlemen, we have the management line reconnected. Over to you, sir.
Yeah. Please go ahead.
Mr. Raj Rishi, please go ahead with the question.
Yeah. The question was ThyssenKrupp has talked about making India a hub for submarines. And I can see they are your collaborator. How do you stand to benefit from this if it happens?
First, this is a part of the P-75I project, and we will be constructing these six submarines for the Indian Navy in collaboration with ThyssenKrupp. And the contours of the contract is that ThyssenKrupp will significantly transfer technology in the design and construction of these conventional submarines. So the indigenous component will be high. So MDL will straight away have a benefit on these contracts. Notwithstanding that, once we gain the know-how in the design and construction of these submarines, we will also benefit in both maintenance of these submarines which are in service in the navies all over the world, as well as ThyssenKrupp has said that when they get export orders, particularly in Asia and South America, they will look at constructing it in MDL for their global orders. So there will be a twofold benefit for MDL from this collaboration with TKMS.
It sounds very significant, sir, whatever you have said right now.
Yes, it is.
Okay. Okay. Okay. Thanks, sir.
Yeah.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Ms. Jyoti Gupta for closing comments.
Thank you. On behalf of Nirmal Bang Institutional Equities, I would like to thank the management of Mazagon Dock Shipbuilders Limited for the call, and I also extend my gratitude to the participants for joining the call. Ritija, you may now close the call. Thank you, sir.
Thank you very much.
Thank you. On behalf of Nirmal Bang Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your line.