Ladies and gentlemen, good day, and welcome to Rail Vikas Nigam Limited Q4 FY25 earnings conference call, hosted by Antique Stock Broking Limited. Please note, this conference call is for 45 minutes. 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 this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. And now, I hand the conference over to Mr. Vishal Periwal from Antique Stock Broking. Thank you, and over to you, Mr. Periwal.
Yeah, thanks, Nigam. Good afternoon, everyone, and welcome to the post-result earnings call of Rail Vikas Nigam Limited. We have the management with us to discuss the quarter four result and post which we'll have a Q&A session. The RVNL team in this call is led by Mr. Pradeep Gaur, Chairman and Managing Director, Mr. Sanjeev Kumar, Director of Finance and CFO, Mrs. Anupam, who's Director of Personnel at RVNL, and Mr. Rajesh Prasad , Director of Operations at the company. So we'll have a brief from the management, and then we'll open the line to Q&A.
Yeah, thank you, and over to you, sir.
Good afternoon, everyone. We have already.
Sorry to interrupt you. You're not audible.
We have already now declared our results for the financial year 2024-25, and we have performed to the best of our ability, both in assigned works of railways and whatever projects we have taken on bidding, so RVNL is, I mean, going ahead, and it's transitioning very smoothly from a business of only assigned works to work taken on bidding and moving from railway infrastructure to infrastructure in many fields like metros, highways, ports, manufacturing, and very recently into telecom in a big way with the BharatNet tenders, so I see, I mean, the organization is performing equally well what it was performing in projects taken on assignment, now to the projects what we have taken on competitive bidding, so the core strength of the organization in terms of creation of infrastructure, project management, project planning, and efficient execution is coming to force, and we are performing well.
I think that now we have reached to the point where our turnover definitely has gone down compared to the last year. Maybe this may be the last of that before we start rising again because this year also we are very confident that our turnover from bidding will increase multi-fold compared to the previous financial year and will be able to make up. My faith in whatever I have faith and conviction in whatever I am mentioning is because now today our work orders from projects taken on bidding, work taken on bidding exceeds the projects what we have taken, what we were assigned by the railways. This transition, I mean, this I'll complement the strength of the organization, its resilience, its versatility to navigate through the challenges.
Now we are quite primed to be in a competitive environment, and we are getting works also on bidding in multifarious fields. The best part is we are not putting all our eggs into one basket. We are moving in different directions, and I am very confident that in the coming time, RVNL will be a very outlier performer in various fields, and I see a very bright future for us. Right, thank you so much. We are ready for any questions, whatever is related to the annual results and quarter four results.
Thank you very much. We'll now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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. Participants, you may press star and one to ask a question. First question is from the line of Ranodeep Sen from MAS Capital. Please go ahead.
Thank you for the opportunity. So we had a guidance of INR 21,000 crores turnover. Any specific reason for missing out on that one? Was there some delay in order execution, and will we see an impact of this in Q1 of the subsequent year?
Yes, actually, we could have achieved turnover of INR 21,000 crores. Actually, we ended up around INR 19,500 crores. Basically, we had some issue of funding from the Ministry of Railways projects. Almost a lot of works which we have, which, I mean, due to whatever money, actually, we had asked for funds of around INR 23,000 crores from the Ministry of Railways, and finally, we ended up getting around INR 19,000 crores. So there was a gap which led to a bit of less expenditure in that. So that has led to this slight we could not achieve the INR 21,000 crores.
Sure, sure. So my next question is a little on the long term. We are aware that around INR 25 lakh crore investment is slated to happen in the railway space by 2047. Just wanted you to allude to what is our right to win in this segment. And the second part to that question is, I think our order book was at around INR 1 lakh crore with around INR 47,000 crore each for bidding and railways. How is it transitioning in the coming years? You can share on these lines.
Yes, so as far as the railways sector is concerned, definitely there are a lot of opportunities. I mean, in the short term, even up to 2030, they have talked of the rail plan. So our core strength being railways, definitely it is a good opportunity for us, and we'll have a good number of projects from the railway sector. But we are not banking upon only railways. We are diversifying into various fields. So, I mean, it is not something that we are not dependent only on railways. Railways, of course, whatever additional outlay and all what they give in railways, it is to our benefit, and we'll have more opportunity to increase our order book as well as the turnover. And second question, sorry, you asked about?
This was on the order book. I think last time you mentioned our order book is almost at one lakh crores, around 25,000 each in bidding and railways. How is it? Yeah.
Yeah, so the order book of projects taken by assignment from railways definitely is depleting because a few years back, we had order book from railways of almost 1.15 lakh crores. Today, it is down to 45,000 crores. It will go further down. But we are more than compensating it with the order taken on bidding from market. So order book is not an issue. Now, the issue is only we have to have against a very known and a very comfortable margin in the assigned projects with less risk on that. Now we are transitioning to work taken on bidding. So our challenge will be to have the same sort of margins, even better than what we had in railways, so that this organization is both physical delivery as well as in financial terms is in excellent shape.
So one last question. This will be on the international orders, sir. So we've not heard any major updates on international orders. Can you throw some light on some of the marquee projects that you were slated to bag?
Yes, yes. I completely agree with you, but this is one of our areas of focus. The foreign, I mean, we are very, very we have a clarity on that, that at least our portfolio of overseas has to be, I mean, gradually it should reach up to even 40%-45% of the total because that is what, I mean, one is the exposure point of view, and second, even from the margin point of view, this is something very strategic for us, and we are working in this direction, and we are focusing on it. As of now, we have bid in projects worth almost 5,000-6,000 crores on immediate basis, which we have done in the last just week to 10 days back. And a lot of projects are in pipeline in different areas, like we are looking for a very major project in Albania.
This is a railway project worth more than INR 3,500 crores. Then we are going into Peru. We have a very strong, I mean, that's again a very big project in which we will be playing the role of sort of what I should say, project planner to then designer and all those things. Then we have a lot of opportunities in the Middle East, which we are, I mean, that is also under quotation in very near future, maybe 10-15 days from now. So a lot of things, it's our main focus area, and I'm sure in coming days and weeks, definitely we'll be doing a lot of bidding in overseas. And let us see what is the strike rate for us.
As of now, we have projects worth only INR 4,000 crores overseas, but I'm sure this year we will increase this figure by at least two, I mean, two, three-fold. Definitely, we should do it. So let us see.
All right, sir. Thank you. Thank you for the responses.
Thank you. Participants, you may press star and one to ask a question. Ladies and gentlemen, you may press star and one to ask a question. Next question is from the line of Rajesh Agrawal from Moneyore Capital. Please go ahead.
Sir, last year we did a turnover of INR 21,000 crores. How much turnover is expected this year, and can we protect the margin?
See, I am hopeful that this turnover for the current financial year will definitely be in the same order, or maybe it will increase further because still there is some effect of this reduction of assigned projects. So it should not go beyond that. I think we have hit the rock. We have hit the bottom now, whatever it could have been left. Because if we had continued with the same model, today we would have been in the range of maybe INR 26,000-INR 28,000 crores turnover per year.
But this change of this business model has definitely affected us, which has led to some downscaling, I mean, either stagnating or maybe not that much rise, and now it has reached a level at which I don't think we'll go further down because we have now sufficient order book from the projects taken on bidding, which will more than compensate for these projects on assignment. So I will put it around INR 21,000 crore only. I will not, I mean, I'll be realistic in this case. But I think beyond this, it is bound to increase now.
Okay. And, sir, will our better margin this year because of the bidding projects?
Margins, definitely, as of now, it is in the same range, but now that will be a challenge to not only maintain those margins but also improve it. That is where the core strength of organization is coming to the fore now. We are looking for alternate methods of working, and then secondly, we are trying to diversify. See, one of the important things which we have realized is that we cannot be only an EPC executing agency. We have to go beyond that. We have a core strength in different fields, so we are trying to enter into new fields like metro maintenance, then manufacturing, manufacturing in a small way, and then we will expand further, then overseas projects.
And so this way, definitely margins. I'm having conviction and confidence that not only we'll maintain the margins of work what we have taken on assignment, but we'll improve it further also. So this margin is very, very important. We are having a very close look at it, and that is what it is making us to think to not confine ourselves only to this EPC business because if I may use the word, there is sort of bloodbath in EPC contracts because people are quoting unrealistically low, even up to -20% to -25%. Even they have gone even to -30%.
Okay. But we will also have an EPC contract on that. The payment, execution risk, everything will be on our side.
No. Sorry, I could not get it. If you can please repeat and maybe slightly slowly.
Okay. We have also bid the orders for execution risk, working capital, working capital challenges, payment challenges, material challenges. Everything will be on us only now.
With EPC?
Ha, with EPC.
Yeah, yeah, yeah. Those challenges are there, but as of now, I mean, we are not losing anywhere. And we have enough working capital to take care of all these things. And secondly, we are doing a lot of, I mean, we are having a lot of learning even in finance, financial issues. Regarding these BGs and all, now we are able to get the best of deals from the various banks. Banks have a lot of confidence in us. I mean, our BG rate is just 0.05%-0.1%. And wherever it is required. So I don't think we have any challenge on that thing, and we continue to remain debt-free, and we have sufficient capital to take care of even small-time manufacturing what we want to start and other things.
So now, what is the status? All the JVs are performing profitably, and what can be the growth in the JVs and the Vande train manufacturing? Just two questions.
JVs and train manufacturing.
Okay. JVs, man, there are two, three important JVs which are very important. One is, of course, whatever we have executed projects on public-private partnership model, that is the projects of Indian Railways. So all are commissioned now, and revenue has started coming. And in fact, we have got dividend from two or three.
25 crores. Two SPVs.
Two SPVs of INR 25 crores. So because they are taking care of their debt also, and they are moving now smoothly, and we will be having sufficient returns from that. Besides that, one of the important JV is that manufacturing of Vande Bharat . So that production will start from June 26 onwards. So we are hopeful, I mean, next year onwards, we'll start getting revenue on that. So as of now, it is only on the expenditure side. Now, recently, we are having a, I mean, it is still to be found, but I think it will come in very soon regarding the BharatNet. That also, we are going to have SPVs. Plus, we have taken some projects on HAM for which we have made the SPVs. So all these things are moving. I mean, we'll be making margins on that. There's no doubt on that.
Thank you. Thank you, sir.
Thank you so much.
Thank you. Participants, you may press star and one to ask a question. Next question is from the line of Anuj from Tijori Finance. Please go ahead.
Yeah, hello, sir. I'm Arunan.
Ha, yeah, please. It's a bit louder. It's a bit louder, please.
Okay. How much of a current cumulative order book do we have now, and what % of order comes from Indian Railways?
You are not audible, please. If you can make it a bit louder.
Anuj, may I request you to speak through the handset, please?
Yes, yes, yes.
Hello, I'm audible now, sir?
Hi, please.
So I was asking, sir, how much current cumulative order book do we have now, and what percentage of order book comes from Indian Railways?
Order book what we have presently is around 1 lakh crore, out of which 45,000 crore is from Indian Railways, which are assigned projects, and around 55,000 crore from projects taken on bidding.
Okay. Thank you, sir. Thanks.
Thank you. Participants, you may press star and one to ask a question. Next question is from the line of Mr. Vishal Periwal from Antique Stock Broking. Please go ahead.
Yes, sir. Thanks for the opportunity. Sir, you mentioned on the order book of INR 1 lakh crore. So between various sectors, will you have this data, like how this is split, say, railway, power, other sectors, sir?
Ha, Mr. Rajesh Prasad , my Director of Operations have got these details. He will just tell you. Yeah.
Good afternoon. Besides our order book from legacy railway projects, which is of order of around 45.
Sorry to interrupt you. May I request you to come a little closer towards the speaker and talk?
Good afternoon. I'm audible now?
Yes, sir.
Yeah. Out of our order book of roughly 1 lakh crore, 45,000 crore is from our legacy railway projects, and balance is from our bidding projects. The distribution of that bidding project is we have got an order of around 4,000 crore from our international projects. Then civil engineering projects, they roughly constitute around 9,500 crore projects, which are in various segments, be it in road sector, civil infrastructure sector, or in metro sectors. Then electrical engineering, we have got an order book of around 9,490 crore, which is majority of that is in RDSS, which is a Revamped Distribution Sector Scheme, basically for improvement of the state electricity system, which is for the last mile users.
And besides that, we have got some orders from Indian Railways in electrical also, which is for 2x 25 kV electrification, as well as the substation, and some order from even the solar sector from international, which is Uzbekistan and Kingdom of Saudi Arabia. Then Vande Bharat, our segment order, which is our share in the JVs, is around INR 9,640 crore. And in the field of telecom and signaling, our total order book is of order of INR 9,000 crore, which is comprising of the capital segment of the Vande Bharat Net, and in the safety field, that is coming from the automatic signaling for Indian Railways. The order book for Bharat Net, I'm talking about only the capital segment, that is around INR 7,000 crore.
If you add up the operation and maintenance over the year of the seven years' duration after completion of the project, that will be adding another INR 7,000 crore. Total BharatNet order will be around INR 14,000 crore.
Okay. Sure, sir. Sure. And this BharatNet of INR 7,000 crore, that is our share, right, sir?
Yeah. That is our share.
Okay. Got it. Got it, sir. And sir, will you have this number? Last year, FY 25, what was our order inflow in RVNL?
I didn't get you. Order inflows?
Yes, sir. Last year. FY 25. Last year.
Yeah. FY 25, the total order flow was of order of INR 14,000 crores, and we hope to continue this momentum further, and we want to take it order. Our target is to increase it by another 20%-25% in the current financial year.
Okay. Got it. So basically, incrementally, almost like INR 3,000-4,000 crore increment, which is like INR 17,000-18,000 crore is what we are targeting as an inflow in FY 26.
Yes.
Okay. Got it. Got it. And sir, sorry, CMV sir mentioned that in EPC, there is a cut-throat competition, and we are not only focusing on EPC, we are focusing on other. So when you say others, what exactly it means? Is it an asset ownership sort of business that we are targeting now?
No. Other segment is like we want to venture into the segments which will give us a long-term revenue viability also. That is like we want to enter into the operation and maintenance of the metro. This is an exciting and emerging field. Already, some metros, NCRTC has given an operation and maintenance contract. Chennai Metro has entered into that. So in country, metros is under construction or operation in roughly 20 cities. So a lot of opportunities coming in the field of operation and maintenance of metro, and gradually, this is Indian Railways is also tying up with the idea of operation and maintenance of the workshops, and gradually, they will be transitioning to the operation and maintenance of track and other systems also.
Simultaneously, we want to enter into energy sector in the solar sector with the BESS storage, where if a long-term PPA is done, because Indian Railways has also a target to become a net-zero by 2030 for its traction requirements. So a lot of opportunity in the field of battery storage solar system is there. So we are exploring that option also. And we also want to enter into an exciting field. That is a new field coming up, that is small modular reactor of nuclear power also, because in the current budget, the Government of India has given a lot of emphasis on nuclear power sector also.
And add to that, we are into even data centers. That is another field which we are focusing on, and because that is also, it's a good return type of work. So that also, we are seriously moving towards that.
Okay. Sure, sir. And sir, Vande Bharat, the order book, which is almost like INR 9,600 crores. So where exactly we are, I think earlier, there was some change of scope was there, number of coaches got changed, and then they were revised back to the previous one. So where we are right now in terms of prototype, and I think you did mention next year, that is June 2026, some bit of revenue could start. Any color that can be provided on operational front, sir, on this order?
Yes. Now, it is, I mean, we are moving very smoothly on that, and because a lot of work what we had already done on it, it has not gone, I mean, it continues to be very relevant because Indian Railways, after dabbling with 24 coaches, they have gone back to the original listing. So now, we are back on stream as far as Vande Bharat is concerned, and Indian Railways has given us a revised date of June 26 because of this 10-month gap. So definitely, we are sure by June 26, the first prototype will come, and then the revenue generation and this positive cash inflow will start happening in this case. And sorry, just to add, the procurement plan and all this is, I mean, almost 80%-85% of procurement orders have been placed.
Material has started coming in, and maybe, I think, June onwards, we may start the assembly and this process at Latur workshop, so now, it's going to be smooth sailing from now onwards.
Okay. And in this, when you say June 26 is the first prototype, so prototype, again, that's the first, and then probably there will be certain approvals will be required. So in FY 27, will there be revenue, or approvals itself will move things to FY 28? So.
Yeah. June 26, first prototype, and immediately within 60 days, the second prototype will be there, and then they will be simultaneously on trials. So here, good thing is that this is mainly ICF design, which is where the trains are already running. Only thing, it is getting modified from chair car to sleeper type. So there are minor modifications in design. So some sort of trials will take place, but this will not be a trial of the type where the, I mean, rolling stock is being put for the first time. So to that extent, we expect a very fast trial, and once the trial finishes, definitely, because whatever the material is being ordered now, it is not being ordered only for two prototypes. These are being ordered for at least around 15 train sets.
So, I think we may start getting revenue from 2026-27, if the things go as what we have planned, unless because I don't expect any surprises in the trial because basically, 90% of design will continue to be ICF design on which the Vande Bharat trains are already running, and they are operational.
Right. Right. And just to recollect on the number, so each train set is INR 120 crore, and we need to supply 120.
120 crore each. And present production cost of these trains are around INR 95-97 crores as per what they are being manufactured in ICF. So let us hope it will be a positive decision.
Okay. Sure. Sure. And maybe one last thing, and then I'll come back in the queue. I can see a few. Yeah. So one last thing. Sir, I think in terms of we have moved to a couple of divisions, new sectors we have moved to. In terms of maybe employee strength, I'm pretty sure we are working on that front. So any color on the human resource side can be provided, like what could be the employee strength, maybe year back, how it has shaped now, and then what we are targeting next year, and anything that is available, sir.
See, we are moving in two directions. We are right-sizing the organization based on the requirement. Secondly, the metrics of the employees, that also is undergoing change because earlier, this organization was doing only the projects assigned from Indian Railways. So this organization consisted of almost 100% people drawn from railways. Now, the mix is changing. We are doing a lot of recruitments as per this plan while keeping the strength of the organization because normally, any organization in the government sector will have an attrition of around 3%-4%. So those people who are going, they are mostly from exclusively railway background. These are being replaced with people from various fields like highways, like solar, like other things based on wherever we are doing.
So that is a very challenging process for us, and I think we are moving in a very right direction, right mix of people and right sizing of the organization. So as far as employee strength is concerned, I think we have last year, we had 1,221 people, and now we have about 1,040. So strength is being right-sized, and the metrics is also undergoing change in a very, I mean, what I should say, in a very smooth manner without disturbing the whole thing and progressively based on whatever new fields we are taking. So we are acutely conscious of this, and this will be our focus area. I mean, we are not losing sight of that.
Sir, just one clarification. You said 1,040 is the employee strength, and the same number for last year was how much, sir? I just missed on that.
120.
120.
1221.
Yeah. Okay. 1221 is the current strength. Last year was 1,040.
It is the other way around, the reverse of that. Last year was 1,221, and this year, I mean, let me say, let me put the dates to it. 31/3/2024, it was 1,221, and 31/3/2025 is 1,042.
Okay. It has gone down. And these are permanent employees that we have with us, right, sir?
Let me tell you one more thing. Four years back, it used to be 2x25.
Okay. Sure, sir. I'll come back in the queue, sir.
Yes.
Thank you. Participants, you may press star and one to ask a question. Ladies and gentlemen, you may press star and one to ask a question. Next question is from the line of Rajesh Agrawal from Moneyore Capital. Please go ahead.
Sir, whenever the Vande Bharat train also comes in, we bid for that also.
Sorry, which one?
One day sleeper train.
We are already manufacturing sleeper trains.
These are sleeper trains only.
These are sleeper trains.
Sleeper trains, sir.
Definitely, we'll be for that. What we are manufacturing is also sleeper trains.
Okay. Okay. Understood. And.
Sir, hello?
Yeah. Please.
Okay, sir. My question is through. I'm through the questions.
Thank you. Participants, you may press star and one to ask a question. Next follow-up question is from the line of Ranodeep Sen from MAS Capital. Please go ahead.
Sir, anything you'd like to share on the IMEC? Those are huge projects that the government of India was envisioning. Any development, any thoughts that we initiated in that regard?
Which project you are talking about? INSTC, International North-South Transport Corridor?
Yeah. So the IMEC Corridor that the government of India was supporting.
Middle East, Europe.
Middle East, correct. Yeah.
Let's see how things evolve as of now. I think geopolitical situation is so fluid. A lot of countries are, I mean, stuck up with their own issues. I hope things move. Definitely, any opportunity comes, we are for it.
Some of the UAE projects, they are the component projects of the IMEC Corridor only. So we are already trying for those projects in Middle East, be it in Oman or Abu Dhabi.
Okay. Sir, my next question was there was a big opportunity in the RRTS space, right, the rapid system. So any development in that regard?
Yeah. Whatever opportunities will be there, we will bid for it. RRTS will continue to be our core this thing. It is our core strength, the train operations.
RRTS, Regional Rapid Transit System, like NCRTC.
No, that we will be this thing will be bidding for that, definitely.
In fact, RRTS is like any metro system only. So we are already having metro system construction in seven cities. So wherever RRTS construction opportunities comes, we'll be certainly bidding for it.
Yeah. Any rail-based tender, I mean, works. Definitely, RVNL will be, I mean, will be bidding for it, and we'll be having good visibility to work also.
Okay. Sir, thank you.
Thank you. A reminder to all the participants, you may press star and one to ask a question. As there are no further questions, we conclude today's conference call. On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thanks.