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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.

Garden Reach To Focus On Domestic Warship Building | NDTV Profit

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