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00:00Well, we have with us a very special gentleman joining us from Garden Reach Shipbuilders,
00:06Komodro P. R. Hari, Chairman and Managing Director at Garden Reach Shipbuilders and
00:10Engineers joins in.
00:11Hi, sir.
00:12Thank you very much for joining in.
00:14We had talked to you last quarter as well when you had reported a phenomenal set of
00:17numbers.
00:18This time around, the numbers are looking good.
00:21There's an uptick on revenue, your EBITDA has done well, profits are also healthy.
00:25But what stood out for me is that margins have declined in this quarter versus what
00:29we saw in the same quarter last year.
00:32Basic hygiene, take us through those earnings and tell us and give us a sense of the kind
00:36of growth that your company may be able to sustain for the rest of F525.
00:43Thank you, Samina, and at the outset, wishing everybody a very, very happy 78th Independence
00:50Day.
00:51Yes, our Q1 results have been encouraging and definitely both our revenue from operations
00:58and the PAT have moved up.
01:00The revenue from operations almost 34% and the PAT is up by 14%.
01:07There has been a slight dip in the margin.
01:09You said it right, but this is like a sine wave.
01:13There are quarters where the margins may drop a bit, but there are other quarters where
01:18we catch up.
01:20Now, in shipbuilding, the PAT margin, I'm talking about the overall PAT margin, is around
01:277.5%.
01:29And as I stated before, and what I'll maintain is that we'll be able to maintain margins
01:36above this in future too.
01:39Now, coming to our order book, currently our order book stands at 25,231 crores.
01:46And these orders mostly come from the shipbuilding project where shipbuilding contributes almost
01:5190% of our order book value.
01:56And of these shipbuilding orders, we are currently executing four projects for the
02:01Indian Navy, the 17 Alpha, the anti-submarine shallow water craft, and the next generation
02:07ocean going patrol vessel, and the survey vessel.
02:11Most of our revenues accrue from these projects because these projects are at a maturity level
02:16where maximum revenue recognition happens.
02:19In addition to these four projects, we are also executing a project for the Ministry
02:24of Earth Sciences.
02:26It's a very interesting project on oceanographic research vessel, and four export projects.
02:31That is what is interesting.
02:34And I'm happy to inform you that in the last two to three months, we have signed four export
02:41contracts, rather four contracts, three export contracts, and one of course for the oceanographic
02:46research vessel.
02:48And the one is for a European client for multipurpose vessels, four of them, with an option clause
02:53for another four.
02:56What is emerging is that India is now being looked at as a destination for the European
03:01shipbuilders, ship owners, for ship construction.
03:04That provides good opportunities for all the Indian shipbuilders, and we too have already
03:11made the headway in this direction, as I mentioned, having signed an order for four ships.
03:18So right now, we are in a position where, considering the project status, to maintain
03:25the upward trend in revenue recognition and naturally the patents on in the coming years
03:33too.
03:34We have been maintaining a growth rate of almost 25 to 30% over the last two to three
03:39years.
03:40We are very confident of maintaining similar tempo during the current financial year and
03:45the coming two financial years too.
03:47That sounds very encouraging.
03:49I mean, you have done 33% this year, so taking a cue from that, similar sort of revenue growth
03:54could be expected from Garden Reach.
03:57You know, you indicated that margins will see an improvement in the next couple of quarters.
04:02What is that on back of?
04:04Is it back on back of operational efficiency or have you managed to onboard new clients
04:10or win new orders that offer you better margins?
04:14I am also making the assumption here that exports would bring in better margins for
04:18you.
04:19Is that a correct and a fair way of looking at it?
04:21A reasonably fair assessment.
04:24One is exports will get us better margins.
04:28The ship repair segment, which was about a percentage of our overall order value about
04:33two years back, now we are getting around 4.68, nearly 5% of our orders comprised of
04:40ship building, ship repair orders.
04:41There, the margins are better.
04:43Third is the P17 alpha project, which is at a maturity level where maximum revenue recognition
04:50takes place and correspondingly, the profit margins also will be high.
04:53That is the reason why I said that we'd be able to maintain a margin of 7.5 plus, that
04:57is 8 plus percentage PAT margins in the coming years.
05:01Sir, you did mention that a majority of your projects are near maturity.
05:08I'm looking at your order book, which roughly sums up to about 22,000, 23,000 crores at
05:13the moment.
05:14You can please correct me if I'm wrong here.
05:17Can you give us timelines on at what point in time are these majority of your projects
05:23coming to completion, full completion?
05:26After that, how are we going about revenue recognition?
05:30What sort of projects will then come into full stream in terms of execution?
05:37The order book value as of 30th June stands at 25,231.29 crores.
05:45Now, as I mentioned earlier, majority of the order comprise of ship building projects.
05:51Of these ship building projects, I will just take a couple of projects so that you get
05:55a general idea.
05:56The P17 alpha project comprise of three ships and the remaining order value of these ships
06:03is around 14,700 crores.
06:05Now, the first of the P17 alphas is expected to be delivered as per the project schedule
06:10next year.
06:11That is the mid of the first quarter of FY26.
06:16And the last ship is to be, the third ship is expected to be delivered by that means
06:20the project completion will be by the mid of FY27.
06:26So this is a period where we expect maximum revenue recognition.
06:30The next project, the anti-submarine shallow water craft project where we have around 4,000
06:35crores remaining for execution.
06:38Each ship project, the project is expected to be completed by FY27.
06:42The survey vessel large project, of course, we just got about 1,000 crores remaining for
06:46execution.
06:47This will get completed by the mid of the next year.
06:50That is FY26, the first quarter maybe.
06:53This in a nutshell gives you an idea as to how we are going to implement what I just
06:58stated that is a growth in revenue over the coming next two to three years.
07:05Now, we also have padded up, when we execute orders, naturally the order book depletes,
07:10but as you have seen, our order book has actually increased.
07:14In the last three months alone, our order book value has gone up by almost 3,000 crores.
07:21These include the orders that I just mentioned that we have concluded.
07:25And in the coming years, when the current order book gets exhausted, one is we supplement
07:32with new orders.
07:33And as far as the Navy is concerned, the Navy has already come out with an RFP for a very
07:38high value project, around 36,000 crore project for the next generation corvettes, four shipyards
07:43competing.
07:44And we are very much in the game and we are very confident we are moving on the right
07:46track.
07:48In addition to that, the Navy is also coming up with RFPs for two multipurpose vessels,
07:56likely to come up with RFP for next generation survey vessels, the next generation ocean
08:04going patrol vessels, that is the Coast Guard project, P-17 Bravo landing platform dock.
08:09What I'm trying to convey is that in the coming three to five years, the orders that are expected
08:15for the Indian shipyards, I repeat, for the Indian shipyards from Navy and Coast Guard
08:19are phenomenally high.
08:21And considering the number of Indian shipyards available, we, as one of the leading shipbuilders
08:25of the nation, are very confident of getting a good chunk out of this, the piece that is
08:32available in front of us.
08:33So when the current orders are getting executed and the order value drops, new orders will
08:38come in, which is very, very natural phenomenon and we are very confident of achieving this.
08:41Are you already in conversation on these orders with potential clients and also quick update
08:47on the corvette project?
08:49If you can share with me the timeline and when this turns revenue creative, the financial
08:53implications of this on Garden Reach would be very helpful for our viewers.
08:58Okay, first question with the discussions with potential clients for order conclusion.
09:08We have been declared L1 in around three to four contracts and we are in discussions with
09:16the government agencies and also others involved for contract conclusion and we expect these
09:22contracts to be concluded in the next three to six months.
09:25We are also in discussion with the more European clients for commercial ships.
09:31Now coming to the Next Generation Corvette Project, this is a long awaited project where
09:35I've been talking about this for the last two years.
09:38The RFP is out already and we are in the process of the bid preparation and this is a 36,000
09:44crew project split between two shipyards, eight ship project.
09:47The L1 shipyard gets five ships, the L2 shipyard three ships.
09:50In the best case scenario, the L1 gets around 22,500 crews and the L2 gets around 13,500
09:56crews.
09:57So, it's for you to guess and we are very confident and we are moving aggressively towards
10:01this project.
10:02Thank you very much, sir.
10:03Good luck.
10:04We'll hopefully catch you soon next quarter, if not before that.
10:06It's been a good quarter.
10:07Hopefully, it goes well for you.