Ladies and gentlemen, good day and welcome to the Rail Vikas Nigam Limited Earnings Conference Call hosted by Antique Stock Broking. Please note, this call is for 40 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 the call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Periwal from Antique Stock Broking. Thank you and over to you, Mr. Periwal.
Yeah, thanks Leo and good afternoon, everyone, and welcome to the post-results call of Rail Vikas Nigam Limited. From the management side, today we have with us Mr. Pradeep Gaur Ji who is the Chairman and Managing Director, Mr. Sanjeev Kumar Ji who is Director of Finance and CFO, and Mr. M.P. Singh who is Director of Operations. So, as usual we will have maybe a brief from the management, and then we'll have lines open for Q&A. Yeah thank you, and over to you Sir.
Actually, what we'll do, because the time is short, why don't we go ahead and take more and more questions? I think that will be preferable.
Yeah sure, Sir. Sure.
Sure. We'll now begin with the question and answer sessions. Anyone who wishes to ask questions 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 use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and one. The first question is from Rajesh Agarwal from Moneyore. Please go ahead.
Sir my question is, on the guidance of 21,000 crore, now in the nine months, we have done 13,000 crore, so we can do 8,000 crore in the last quarter itself? This is my first question. And second Sir, the profits from JV which have come at 56 crore this quarter is that sustainable? And the bidding intensity pipeline? Three questions.
So, as far as turnover is concerned, definitely INR 8,000 crore in the last quarter is absolutely achievable because that is where the maximum turnover we get historically also. So, I think we are quite confident. We are in line with that. Regarding this JV, INR 56 crore, what is this INR 56 crore JV?
Sir, this is the profit from JV.
Profit from JV. See, this is not only sustainable, this is going to, in fact, improve substantially because in this one, we are showing minus INR 76 crore under Kinet. This is our joint venture for manufacturing. So, there the revenue stream is going to start maybe after a year or so. So, this is a notional negative because manufacturing is still to start, and we have invested a lot of money. So, this is going to get returned. So, not only it will sustain, but I think we'll get to see much improved figures in this case.
So, any comment? Yearly, what can be the figures, sir, for JV from association next year?
Kindly repeat.
Next year, 2026, 2027, profits from JV in the yearly basis, how much it can be?
We'll assess and give it because it will be difficult, because if, suppose, this Kinet JV minus 76 was not there, the profit itself should have been almost INR 130 crore from this.
Okay. Understood. So, immediately when the revenue starts, it will come into profit? That Kinet JV?
Yeah, yeah, definitely. Definitely, because that is the way it has been planned. I will give you some figures of this one, that our manufacturing cost, what we have bid for this is 120 crore per train set. Of course, then there'll be a price variation close to it. I don't know, it may come to maybe 2-3% further, or even 4%. And manufacturing cost as of by Integral Coach Factory and Chennai is 90 crore. So, definitely, it's a profitable venture. And then when the production unit of railways can do it at that cost, definitely in a joint venture with Russians and with much improved working, it will improve.
Okay. And sir, now I'm talking about 2026, 2027 turnover at the base will be INR 21,000 crore. From that, we will increase by how much next year revenue, overall revenue?
Okay, so let me be slightly bit upfront on this. We are undergoing a transition. As you are aware, we were an organization which was confined to doing work exclusively assigned to us by Ministry of Railways, and that assignment pipeline has stopped, but we have navigated it through very, I mean, adroitly. And now, I'll be happy to share with you that out of our today's order book of around INR 97,000 crore, we have gone it is INR 49,000 crore from the bidding works and INR 47,000 something from the railway works, so this is the transition we are undergoing. When this assignment works were stopped, our value of order book from railways was almost INR 140,000 crore, INR 140,000 crore, sorry, so this is some sort of this thing.
So, turnover either will maintain, maybe it may dip slightly, but we are on a very sound trajectory now because we have got enough orders from the market by bidding. So, I will not say this will be the base, but we will not be too much off the mark.
But any time frame S ir, the INR 95,000 crore order book has to be executed over two years or three years. Any time frame on that?
Yes. Typically, this is around 97,000 crore. So, normal gestation period for all the projects is three to four years. So I think and plus, orders will go on adding because even this year as of now, we have got orders of almost 25,000 crore exclusively this year itself.
Understood. But are the orders at a good margin, sir? Margin will be maintained?
The margins are I mean, the price is decided by the market but because we will of course like to have more and more margins, but this organization, which has been one of the outlier in project execution with the kind of efficiency and all that definitely, our margins will not take any beating from whatever we were getting from assigned, and maybe in a few cases, will be even better than that.
Okay. Understood, sir. So, this means we came to INR 30,000 crore. If we have to do over three, three and a half years, the average run rate should be INR 28,000-INR 29,000 crore yearly?
I think that's a realistic figure. That's a realistic figure.
Thank you, Sir. Thank you.
Thank you so much.
Thank you. Participants who wish to ask questions, please press star and one. Ladies and gentlemen, to ask questions, please press star and one. The next question is from Pranav Furia from Antique Stock Broking. Please go ahead.
Yeah, good evening, sir. Thank you for the opportunity. So, my question is, is there any update on the Vande Bharat order? When will we start executing?
Sir, Vande Bharat is concerned actually, we were on stream. Everything was moving quite smoothly. Actually, we were wanting some change in configuration of the trains from 16 coaches to 24 coaches. This decision was taken somewhere in June or July of 2024, so which led to change in design and all those things. Railways have gone back to the original 16-coach trains, so this has sort of put back the whole initiative by around 8 to 9 months, and railways have also given a currency extension for that, so the first prototype, which was supposed to be in September to October 2025, will now take place somewhere in the first half of the next year. Otherwise, everything is in very proper shape. The factory is completely ready to manufacture.
And now, the ministry has told that, "Please go back to the original." And so, that gives us another comfort that for whatever we were planning, so we are going ahead with that. So, most probably, maybe first half of 2026, the first prototype will be ready for the trials.
Okay, sir. And the 97,000 crore order book that you mentioned, so we've included the Vande Bharat order yet, or it's yet to be included in the order book?
This is excluding Vande Bharat. This is excluding Vande Bharat because Vande Bharat, we are not taking it in that sense because it will start generating revenue after maybe a year or so. So, we are keeping it slightly as far as our calculations is concerned, we are not adding it for the time.
What would be the broad order value based on the current currency rate?
Sorry, slightly if you may kindly speak slightly louder.
Is it better now?
Yeah, please, please.
Yeah, Sir, I was asking what would be the broad order value based on the current exchange rate?
Current exchange rate. No, but it is in rupees.
It is in rupees only?
It is in rupees only. The contract is in rupees. The total contract is around INR 30,000 crore, out of which our share is 25%, which comes to around INR 7,500 crore. I think it will come to around.
Total is 65,000, including the maintenance of 35,000.
Okay. I'm sorry. I'm sorry. Let me correct myself. The total order is 120.
120.
24.
120.
Sir, 14,400 is the FY24 price. Another 30,000 is for the FY25.
34 price.
Yeah, that total order is, no, no, it is all right. Total order is around INR 32,000 crore and in 2.25.
It will become 34 crore.
So, it is around INR 8,000-9,000 crore. But of course, there is a price variation to it, so some percentage may go up.
Okay, sir. That was very helpful. That's it from my side.
Anyhow, it is not part of this 97,000 crore what I have shared. This is beyond that.
Okay, okay, Sir. Thank you.
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. Ladies and gentlemen, to ask a question, please press star and one. Next question is from Vivek Nayak, who's an individual investor. Please go ahead.
Yes. Sir, you said that I'm audible?
Yeah, yeah. If you can be a bit louder, a bit louder.
Okay. It's better now?
Okay. Please, please go ahead.
Sir, you said that there's a de-commit from the railways with respect to all legacy projects. But your Director of Finance yesterday on CNBC said that there is INR 40,000 crore of legacy orders. So just can you clarify what is this all about?
Yes. Because out of this INR 97,000 crore orders, what we have told the railway orders are around INR 47,600 crore. So these are the orders, these are the balance works, what we have on hand of the projects which were assigned to us by Ministry of Railways.
Okay. Are you saying going forward, we will not get any such orders?
No, policies may change, but as of now, this is the policy because we have seen a lot of policies changing. I mean, it is up to the government how it sees it because this organization was established exclusively for executing the railway projects assigned to it by ministry. In fact, there was a time when we wanted to venture out for something else also beyond railways, so we were told, "Nothing doing. You have to confine to railway projects," so that was a policy once. Now, policy is, "You please go to the market and get the works." Now, depending on how the CAPEX is spent by zonal railways, how it is performed. Government is, I mean, free to take decisions. It is quite possible they may go back to it or the other possibility of existing policy continues, so everything is on the table.
Nothing can be said for I mean, sure.
Okay. Sir, any color on the international projects? I think there is some, apart from railways, there was something in Kazakhstan and other countries. So can you give us an update on that?
My colleague, Mr. M.P. Singh, will speak on this.
Yeah. Good evening. We have got already some foreign projects which we have already got through bidding or through MOU. So some of them are solar projects in Uzbekistan and Kingdom of Saudi Arabia. And we got a project in Congo also that is a transmission line project. And we are actively bidding for the railway and metro projects in Turkey. And simultaneously, we are exploring options for railway projects in Peru through government-to-government contracting also. And already one international project is execution in Maldives. That is a harbor project.
Okay.
I will add to what Mr. M.P. Singh is telling. See, we are very very keen to have a lot of our footprint in the international market because that is absolutely important and necessary for the organization to go on even an exponential growth trajectory. So we are trying our best. We kindly appreciate that we have started bidding in just the last two to three years. So domestic was easy to get. International, I'm not saying it is difficult, but we were less exposed to that. Now we are getting into a lot of partnership, a lot of this thing. Whatever projects we have taken, like solar and all, we have entered into partnership. So we are finding our feet there. And definitely, this is one of the important areas for us to stretch on.
Yes. Thank you, sir. I am an investor right from the IPO days, and I will continue to hold the shares.
Right. Thank you, sir.
Thank you. Participants who wish to ask questions, please press star and one. The next question is from Rajesh Agarwal from Moneyore. Please go ahead.
Hello?
Hello. Yeah, please, please go ahead.
Hello?
Hello.
Yes, sir. Continue. Can I ask a question?
Yeah, please, please.
Sir, how has been the cash flow? Do we need working capital? How is the working capital situation now? And what is the working capital number of days now?
Working capital is not an issue at the moment. We have surpluses, reserves, and surplus with which we finance. And plus, in many of the projects acquired through bidding, there is a mobilization advance without interest, which is used for working capital. And yeah, we have sufficient reserves with us. So that is not an issue at the moment.
So we don't have to borrow, no interest cost will come for that, no?
No, no. No interest. And I'll just add to what Director of Finance has spoken that even when we take mobilization advance based on the bank guarantees, so our finance team has done an excellent work, and we are getting an extremely competitive. I think it is just 0.1%. 0.08% is the premium what we pay as compared to many of the organizations paying even 2%-3%. So credibility and creditworthiness of RVNL is quite high with almost all the banks. So that is another happy situation. The capital, I mean, the money gets saved on even these types of expenditures.
Sir, for that, can I say we said it will make a margin of INR 30 crore per train set per coach on one day train?
No. Yeah. What I'm trying to say is that our quote is INR 120 crore. Presently, it is getting manufactured in ICF in 90s of crore. It can be 92, it can be 97. I'm not sure. So as of now, it is quite all right.
So our share will be 25% of that, our share. Because we have 25% in the JV, no?
Yeah. Our share is 25%.
Our profit may be around INR 7-8 crores per year.
Yes. If Russia shares with us.
All right, and we have to make 120, no?
120 sets. 120 sets we have to make.
120 sets, and you're saying INR 90 crores per set, INR 130 crores per set?
I did not say 90 exactly. I said it is in 90s.
Okay. Understood, sir. And sir, when will the BharatNet order we got when the execution will begin?
Okay. BharatNet, we have recently got a letter of acceptance. So that value is around INR 13,200 crores. So now, things we will, I mean, we have already deposited performance security and all those things. And all the groundwork has been done. So again, that is again a new area which, I mean, which we have put our this thing. We have treaded on a slightly known territory, not fully, because we have been doing a lot of communication work even in railways, but not to this extent.
This is also in JV, no? What is our share in the JV?
We are 100%. This is quote only by RVNL. We are 100%. And again, as Director of Finance mentioned in this thing, I think in the previous question or this one, this again provides a mobilization advance of almost INR 1,000 crores free of interest. So even the capital availability will be quite good. So we have to, and we are making an SPV exclusively for this, 100% owned by us, which will be executing this project so that we will firewall this balance sheet with RVNL's balance sheet and all that so that accountability and all these things will do. So we are quite excited about this, and we are looking at it not only as a big venture. It is almost INR 13,000 crore, which is expected to go to even INR 17,000-18,000 crores.
But it opens up a huge vista of opportunities for us in the telecom sector, which is a very, very sort of sunrise sector for the country.
It's a good margin order, sir? Margin surplus in this?
Yes. Of course, the bidding was competitive, but we have done our calculations well. And even when BSNL wanted to do negotiations, we have stuck to our figure. And so we have not made any compromise on it.
Sir, any update on the Uzbekistan what we have formed a company in Uzbekistan Railway? Any update on that?
In Kyrgyzstan, we have formed a joint venture company that is with the Kyrgyzindustry. We are expecting a joint venture project that the government of Kyrgyzstan is signing up for the finances for that project. We have already submitted a DPR for that project, and based on their evaluation, there were certain issues with the lending rate from the foreign bankers. So that the government of Kyrgyzstan is trying to resolve it. And we hope to see if this project will see light soon.
Thank you. Thank you, sir. I'm through.
Thank you. Next question is from Vishal Periwal from Antique Stock Broking. Please go ahead.
Yes, sir. Thanks for the opportunity. Sir, the order book that we have, 97,000 crore, can you give a breakup like how it is like to ICB railways?
Railways out of this assigned projects of railways is exactly INR 47,600 crores. The balance INR 49,000 crores is in various sectors, starting from metros, national highways. Even some projects we have taken from railways on bidding also. And irrigation port. This includes all domestic as well as international.
Okay. So between domestic and international, what could be the number of international, sir? Maybe a ballpark number.
International as of now is around INR 4,500 crores. So as of now, it forms just almost 10%, but we are looking at it to go at least up to 40%-50% in the near future.
Okay, sir. Okay, and for this, you mentioned Kyrgyzstan is one work that we are eyeing. And then further, there are a couple of Turkey, Peru, in Congo, T&D in transmission distribution. These are the further projects which can build up the order book. Is that correct?
Actually, we are looking, I mean, this is one of our focus areas. And wherever opportunity is coming, we are definitely putting all our effort towards it. So this will be one of the areas which we are looking at it very, very, I mean, strategically as well as commercially.
Okay, sir. And then you mentioned total inflow in this year is INR 25,000 crore. So is this LOA plus L1 combined together, or it is the LOA which is received?
Which one?
This order book.
That is only by bidding work. LOAs.
LOAs only.
L1 and LOA.
Okay, so 25,000 is the LOA that we have received for this year inflow.
Yes.
Okay. Okay. And then I think on this BharatNet, you did mention we are the lead member and there are consortium members. So I mean, the full work.
There is no consortium member. I said Armell is, I mean, it is 100%, I mean, LOA to Armell only. There is no consortium.
Okay. Okay. Maybe I think I saw that in the question.
At HFCL, we have just entered an MOU for the supply of element, but they are not part of this bidding.
Okay. Got it, sir.
That is a pre-bid arrangement with them, but the contract is to us. Even whatever they are going to supply to us, Armell will have a margin even on that.
Okay. Got it. Got it. And maybe from an industry perspective, can you give some color? We do bidding in railways and a couple of others also, metro, highway, and all. So where do you find the competitive intensity is higher? Where do you find, I mean, probably there are way less players and we have a niche in that? So any industry-specific color, if you can describe, maybe qualitative aspect will be helpful.
Actually, I mean, competition is becoming not only, I should say, more. It has gone to unhealthy levels. People are quoting very low, but there are some projects like HAM projects, BOT projects. These are the ones where competition is still not that much as EPC and other contracts. So that is one area which we are looking at. And government has also, I mean, improved a lot of conditions for BOT projects. So we have bid two, three big value BOT. That is another area which we are looking at where the competition is less and the margins can be better. So that is one area. And second, which one you said?
Metros. Metros.
Metros, of course. Metros is another area where we are getting, I mean, we are performing also well and margins are also good.
Okay. So you mentioned BOT. So BOT is which segment we are eyeing order?
Basically, national highway projects.
In highways. Maybe, sir, broadly, is it possible to share? Because in BOT also, we have seen, I think there are a lot of bugs that government will be avoiding work. But somehow it has been kind of delayed and those things. So anything on that, is it the DPR work or maybe some bit of documentation that is still pending that is delaying things or anything just a procedural delay which is there?
At least two projects we have bid recently, which is two projects of INR 5,000 crores each, so I think things have started moving on that because this has come in last one and a half to two months only. So I think things will move. In the coming year, I think we'll see more and more because that is the preferred option for NHAI today because they have a lot of debt on their books. So they are also going for more and more BOT projects. I think their debt is almost in the range of 3 lakh crores, the NHAI.
Okay. Okay. Maybe one last question from me. What could be our, I mean, the projects where we have bid and we are awaiting outcome? Maybe a quantum if it is handy with you, sir.
Yeah. We have bid projects of around 80,000 crores this year. We have got orders of 23,000 crores. So maybe another 10 to 20,000 crores will be there bidding which we are awaiting the results of that. Maybe it will be in the range of around 20,000 crores. Around 20,000 crores is something which we are still awaiting the outcome of our bidding. For our strike rate, strike rate generally has been varying from 30%-40% in different sectors. Like our electrical segment, the strike rate is almost 40%-45%. Again, signaling telecom and all, our strike rate is quite high. And in these EPC projects of civil infrastructure, our strike rate varies from 25%-30%. So as of now, 28,000 crores is.
Under evaluation.
Is something which we have bid and it is under evaluation.
Okay. Okay. Sure, sir. Maybe I'll just ask one last thing. So in BharatNet, when we have bid, sir, what will be the number of players who have bid for the BharatNet according to you? We just want to understand the competitive intensity. Is it similar to what EPC highway or Indian Railways works that we have or it's a little less?
I think I will just confirm. My officer is there. He will come. I think mostly there were three to four players.
They're in each bid.
This is what I faintly remember, but I'll confirm it to you.
Okay. Okay. Sure, sir. Sure, sir. I think this is very helpful in answering, sir, all the questions, sir. Thank you, and I'll come back in the queue.
Thank you so much.
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Vivek Nayak who's an individual investor. Please go ahead.
Yeah. Sir, any insight on the Mumbai-Dubai corridor, train corridor? And also, I think it's linked to the India-Middle East-Europe rail connectivity.
India-Middle East-Europe corridor.
You are talking of India-Middle East-Europe corridor?
Yes, yes. Yes.
So that is still something in making. Let us see. I mean, it will open huge opportunities, of course, as and when it happens. But as of now, I think a lot of geopolitical situation has to settle down before this takes some sort of right path. But as and when it happens, it will because that is one area which organization like RVNL will have a lot to, I mean, participate because it will be rail-based. And it will be, I mean, going long distances to Middle East and right up to Europe. That will open huge opportunities. Even Israel Metro also is another area which the team had come, and they were very positive about RVNL's capability in metros. So that is another area of opportunity they are looking at. They are talking of next maybe one to two years before they start.
Indian government is trying government-to-government arrangement so that Indian companies can go and do the job there. Let us see. A lot of things are there. Let us see how things move further.
Sir, yeah, one more question is I understand there have been execution delays for the past nine months, and we hope to catch up in Q4 of this year. So how confident is the management that we will catch the INR 22,000 crores revenue, which was communicated in the past phone calls?
No, I'll not say it is a delay in execution. I mean, delay, yes. Delay to the extent, see, monsoon is in between. That takes three to four months. Then there are festival season comes. And this time, even elections were there which had taken because a lot of labor movement takes place that time. They go to their native places for vote and all this thing. And the way the present elections are held, people stay for almost a month or so. So a lot of this thing was there, but still we are there. But this is the last quarter is something where we are out of all festivals, and the weather is also most suitable for work. And money also, organizations want to spend the money. So I think very favorable, and we will achieve whatever we have planned to achieve.
Thank you, sir.
Thank you. Due to time constraints, we'll be able to take one last question. The last question is from Roshan Dere from Roha Asset Managers. Please go ahead.
Hello.
Hi, yeah, please.
Sir, last quarter, KRCL joint venture payment, any issue? How many time to take it solve?
Can you clarify the question?
Kindly say it again.
Last quarter, December quarter, you reported in your profit loss statement, KRCL joint venture [Foreign language] जो है, the payment is delay for 1,400,000 crores का.
Okay.
1,400,000 is 1,400,000.
Yeah, 1,400 crores is. That is with the interest also. But they have started paying back. Plus, there is an arbitration award already there of around 584 crores. So that is in favor of KRCL. So next date is 20th February. Let us hope if this gets executed, that order, I mean, that arbitration award. So I think that cash flow situation of Krishnapatnam and all will improve. And that will help us get our money back. But in spite of that, KRCL is getting good traffic, and they are able to pay almost at the range of 100 to 200 crores per year. I think last year they gave 200 crores.
150.
100?
150.
This year it will be 200 crores. So I think we are getting our money back slowly. But if this arbitration award is executed, then it will become quite. It will give a good jump to this thing.
have one last question, sir. How much order book have to complete it? Time to take?
The present order book is around INR 97,000 crores, and most of the work takes place over the next three years or so.
Yeah. Okay. Thank you, sir.
Thank you.
Thank you very much. We'll take that as the last question. On behalf.
Thank you so much. Thank you.
Sure. You're welcome. On behalf of Rail Vikas Nigam Limited, we thank you for joining the call, and you may now disconnect your lines.
Thank you so much.
Thank you.