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Cochin Shipyard Ltd
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Ladies and gentlemen, good day, and welcome to the Cochin Shipyard Limited Q4 and FY '22 Conference Call, hosted by Kirin Advisors. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Vastupal Shah. Thank you, and over to you, sir.
Thank you. Good morning, everyone. I would like to welcome Shri Madhu S Nair, Chairman and Managing Director of Cochin Shipyard Limited; Shri Jose VJ, Director, Finance; and Shri Syamkamal N, Company Secretary of the Cochin Shipyard Limited.
Madhu, over to you, sir.
Thank you. Good morning, everyone for joining. Happy to have all of you here again. The year that's just gone by has been, I should say, a mixed bag for Cochin Shipyard Limited. We have done reasonably well in certain segments. There have been some disappointments. I'll just briefly touch upon what has happened in various areas and various [ themes ]. Shipbuilding projects, the key activities on the Indigenous Aircraft Carrier, which has now gone through 3 rounds of sea trials, which is a very significant achievement. And the vessel is readied for -- being readied for delivery as early as July of 2022 and for a potential commissioning into the Indian Navy by August 2022. So, significant efforts were put on the IAC. And from a fiscal point of view and financial point of view, the IAC attained targets, which we had set for the year.
We also effected deliveries of various vessels. So, most of the projects that was in various phases of construction in the company has been delivered now. So, we had delivered from the Floating Border Out-Post, which we were doing 9 numbers, 6 have been delivered, 3 are in advanced stages and getting ready for delivery next month. 500 Pax vessel had been delivered. The second vessel has completed all trials and is actually just waiting for formalities from the client side to be handed over. So, that also would happen, in fact, as early as this month end.
We are building a series of boats for the Cochin Water Metro. The total order value is about INR 175 crores. We take disappointment over there. We had delivered 1 vessel, 4 are in advanced stages in the company and 16 in various stages in the company. But we have not been able to deliver it, small technical hitches, but as we speak, we should be in a position to deliver another 4 of those coming month and those vessels are getting delivered. So all in all, there has been deliveries during the last year. And the progress -- works that is happening right now is -- I'll probably touch upon it as we move forward.
Ship Repair projects generally has been a steady year. Mumbai operations could do better, even though we have not been able to attain levels what we wanted. So, Mumbai has done about INR 85 crores approximately turnover in '21 and '22. Kolkata operations have given -- has done better than expected. We actually were just expecting to just started over there but we have been able to do, Kolkata could give a turnover of around INR 33 crore, INR 34 crore. And we have just started the operations in Andaman because COVID got a little bit prolonged in Andaman, where there was still travel restrictions into Andaman, so Andaman, just got started. Otherwise, in the Kochi main unit, we had 11 projects, we had other projects also. Generally, things went well.
On the shipbuilding side, looking into the future, we have been able to secure some new orders, which has been very, very gratifying for us. We have secured a new order for a large dredger for Dredging Corporation of India. And this is a very significant win for us because order value is about INR 900 crores approximately. And in all probability, this could go up to 3 vessels. What we have signed now is 1 vessel, but it could go up to 3 vessels and it's also a cooperation with international leader IHC of Netherlands and based under the Make in India initiative. So, this is a large profit that's coming.
We have also been successful in concluding contract for 8 numbers multipurpose vessels with a German client. And this, again, is a very significant achievement because this is coming from the what is called the short-sea vessel market in Europe. And these -- the area from where we had got the German order is actually the home of short-sea shipping in West Europe. So, it's not very easy to break into that group, but we have been welcomed into that group and this first set of orders have been signed.
The next-generation missile vessel, which we have been talking, you all aware where we are early on. The complete negotiation, everything is concluded and it is actually going through the final round of approval from the Navy. We have been promised prior to June of this year, but we are also getting conflicting signals. There are no issues, but then the [indiscernible] is taking a bit longer than what we probably thought. So, there could be a few more months, but we are [indiscernible] before June. There's nothing to be discussed further contracts and pricing, everything is done with the committee.
So, why I said it's been generally gratifying is like you are aware that we have embarked on what we are calling the CRUISE 2030 strategic initiative, which we prepared along with the Boston Consulting Group. So, the segments in the CRUISE 2030, which was dredges, short-sea vessels into Europe, we have been able to break into that. Tugs is one significant area that has been mentioned and we have been through our subsidiary in Udupi, the erstwhile, Tebma Shipyard Limited, which we have now renamed as Udupi Cochin Shipyard Limited has -- we have been able to do the first 2-tonne contract.
So, we are done with a company called Ocean Sparkle Limited, which as you would have seen in the press, which has recently been 100% acquired by the Adani Group. So, it's again good to get started with 2-tonne, which is now potentially going to the Adani Group. So all in all, the order intake side, we feel we have been comfortable. We have also been strongly talking in Europe and I'll touch upon that a little bit later as we move forward.
On the new infrastructure and the CapEx investments, again, it's been disappointing, both on the new dry dock project, which is being executed by L&T on a turnkey basis, progress has not been as expected. There has been technical challenges and the revised bids that have been touched now is July 2023 for completion of the civil infrastructure and thereafter the large crane is to be installed. The crane is practically ready in Kerala. So, it's waiting to be shipped out because we are not in a position to receive it right now. The civil construction is not yet complete. But once the train comes in, we expect after inflation and commissioning, Q1, early part of Q2, 2024, we should be able to get the dry dock up and running.
The next large CapEx infrastructure has been the International Ship Repair Facility, the IFRF, the ship repair, to which we are quoting, which is what percentage is completed, Jose. 78 percentage completed. But again the turnkey infrastructure company that was executing the project, that was Simplex Infrastructure Limited, we had difficulties, and we have actually terminated the contract in February. After we never wanted to do it, but we thought there was no other option and there has been continuous failures and we have actually terminated those contracts. So. now we will have to split the balance work into various contracts and then execute it ourselves and that is happening. And then we are -- so that's setting back the CapEx projects by some time and now the expected completion will be late 2023.
Hooghly Cochin Shipyard Limited, which has been [ secured ] through the subsidiary in Kolkata, that is complete. The infrastructure is complete. So, again delays in a particular crane not being able to be installed by the OEM. It got delayed by almost 6 months the crane inflation, but for the crane everything was completed. So, the crane has also now been installed and the facility is ready. We are sensing the potential further orders to flowing from Europe. There is a new activity happening in Europe, West Europe, especially in Norway, Green ship and advanced technology workers and we are [ starting ] many projects simultaneously and we are being received well. And you're aware that Cochin Shipyard is currently building a set of 2 vessels, which are autonomous zero emission vessels for Norwegian client, which we will be delivering 15th of June. So, those projects are giving us good difficulty in Europe. So, that we expect to continue through this year. '22-'23, we expect to garner more newbuilding orders from Europe for high-end advance vessels.
The overall market in the industry, we feel is exciting, international market, I'm talking. The international market looks exciting. The West European short-sea market looks promising. The Norwegian Scandinavian green vessel market looks promising and we expect to get something more over there. Tugs, which India has taken the view that tugs to be operated in India should be built in India. As I said, 2 vessels already contracted, but we expect further tugs to be done, but tugs we want to do it from the subsidiary in Udupi.
Overall, both the subsidiaries, the subsidiary in Udupi, which has now been rebranded as Udupi Cochin Shipyard Limited, is executing projects. They are actually participating in the Cochin Water Metro projects, 8 of the vessels being built by Cochin Shipyard Limited is actually being built at UPSL. They are doing 20 small fishing vessels and they've now got this new tug orders. We are trying from Europe to get some orders into UPSL. HCSL is still waiting for its first order from the commercial side. But in an inter-corporate within the group, what we have done is like there has been a large -- there's a INR 20 crore order, which we executed for Kolkata project, that has been handed over to HCSL to get the systems up and running.
Just to talk about system improvements in the company. The company has been operating over the last 10 years on a large SAP platform. And this SAP platform we have now migrated to the newer S/4HANA platform. So, this migration which has been a significant system improvement migration in the company has happened. The Dassault 3DEXPERIENCE platform, which we are now implementing in our design and engineering is almost ready to be rolled out. It's been a tough activity on that because this is the first time that such a large platform, which is being used by the industry at large, is being tried out in shipbuilding in the country, and we hope the effects of this large-scale transformation on the digital plane will unfold as we move forward and it will give us positive effects as we move toward.
So, this is overall on what is happening in the company. As I said at the start, a little bit of a mixed bag looking at year that's just gone by. The coming year, the second year, '22-'23, I should actually react a little bit cautiously. It's going to be more or less flat because of the way the present orders are structured. The Indigenous Aircraft Carrier turnover would taper down a little bit. The new large projects, which we are having is ASW Corvette, which is a INR 6,000 crore contract, out of which we have booked only INR 300 crores till now. But the balance, 22%, 23% is more in the hull cost, it's more in the steel cost. And the steel part, the turnover will not be much. The larger turnover will actually come in from the year '23 [Audio Gap] onwards. So this year, we will face some headwinds on the shipbuilding side.
Ship Repair should go steady and should go -- should improve a fair bit from where we are right now. But overall, from a turnover point of view, I think we should be largely flat as we go into '22-'23. But '23-'24 and '24-'25 because ASW Corvette project will peak. Also, the next-generation missile vessel projects will peak, the 8 vessel which we are doing for the German [indiscernible], turnover significantly will come next financial year, that's '23-'24. The dredger contract, which we have signed now, right now, it's in the engineering phase and coming March-April onwards, we start construction on that. So, that turnover will also come in '23-'24. So '22-'23, just wanted to be cautious on this because more or less flat. Margins should remain generally intact, but as we move forward into next year and '23-'24 and '24-'25, we see -- '23-'24 should create fairly significant jump from where we are.
So, this is just to give you a feel of where we are currently and where we could be headed. With this, I think I can stop and would actually be happy to answer questions. Thanks a lot. Thank you.
Please note, this call will run till 11:00 a.m. [Operator Instructions] We have the first question from the line of Mohit Kumar from DM Capital.
My first question is on the [indiscernible].
Yes.
And what's the time line of execution? Is it 6 years?
It's more than that. It's about 8.5 years.
And expected to be confirmed order.
Can you repeat that question again?
When do you expect this order to be converted to firm order?
See, we are actually expecting this by end of June. But maybe I think just to be conservative, I think we should give it a few more months, maybe another -- so something between June and September, that is what would be better to...
What kind of revenue you expect from ASW Corvette in FY '23 and FY '24 and '25? I'm just trying to figure out how the ramp-up will happen.
Just a minute. So, the ASW Corvette in FY '23, we should be somewhere between INR 1,000 crores to INR 1,200 crores. And FY '24, we should be between INR 1,200 crores to INR 1,400 crores.
Largely flattish, is it right?
Pardon?
Largely flattish, 2024?
[ '24 ] would be about -- see this year, '22-'23 from the ASW Corvette, we are expecting only about INR 600 crores levels. So, from INR 600 crores, we'll go to about INR 1,000 crores, INR 1,200 crores and then we'll go to INR 1,200 crores to INR 1,400 crores level.
How do you see the Ship Repair panning out in FY '23?
Just a minute. Did I get it wrong Jose? So, let me just correct, I got it wrong. So FY '23 from the ASW Corvette, we are targeting around INR 600 crores. FY '24, we are targeting about INR 1,000 crores to INR 1,200 crores. And FY '25, we are targeting about INR 1,200 crores to INR 1,400 crores.
Sir, my last question is, how do you see the order inflow for the rest of the year? Are you expecting some big order to get finalized in this fiscal?
See this fiscal, we are in advanced discussions in Europe on the -- on some vessels. We expect to conclude orders. I can't say whether it would be extremely large, but then there are multiple projects, which we are looking at. So, at least $100 million kind of order should come in current fiscal.
And what about the Navy side, sir, anything...
Nothing from the Navy this fiscal.
We have the next question from the line of Sandeep Tulsiyan from JM Financial.
The first question is pertaining to the execution profile of the orders, which will change materially because the variable price portion of the IAC was in final stages and that will get trimmed down in FY '23, while ASW Corvette execution will pick up. So in this regard, how do you see the margins because what we recall is ASW Corvette order was booked and there was a big gap between the L1 and the final award date between which we had seen significant movement in raw material prices as well as currency. So, how do you expect the shipbuilding margins to pan out over the next 2 years if you can guide us?
See the shipbuilding margins at an EBIT level, we would be purely from the shipbuilding side, we, currently because of the IAC, we have a significantly higher EBIT levels coming in. But over the next 2 years, like ASW and there is still a little bit of IAC to come in. So, we could be somewhere around a 16 percentage kind of margins at the EBIT levels coming from shipbuilding.
In FY '23?
Yes.
And going forward...
FY '23, we could be blended, including with what is there in the IAC, we could be, yes..
Around, so we can say...
Slightly more.
Slightly more.
Slightly more. FY '23, the current year, we still have a bit of IAC coming in. So, the EBIT level would be about -- we can give it about 18 percentage approximately.
Secondly, you mentioned on the revenue guidance that you might be flat on a full year basis for FY '23, which is close to INR 3,200 crore. So, how would you guide this for each of the segments between Shipbuilding and Ship Repair? What can be the contribution?
Ship Repair would be about INR 900 crores out of maybe a flat, Ship Repair -- Ship Repair, current year, we have done about 678. So, that should go to about INR 900 crores. But the Shipbuilding, the balance is Shipbuilding, out of which the IAC could be about 1,400 levels.
And just some bookkeeping numbers. From the order book break-up that you have provided in the presentation, IAC still show that INR 2,700 crores. So one, if you could tell us how much of revenue was booked in IAC in FY '22 last year, the break-up between fixed price and the cost plus portion? And what is pending this break-up in the order book between fixed price and cost, so if you can guide, please?
Yes. Jose, can you do that?
Yes. Sandeep, Jose here. For FY '22 full year, we are booked from -- around INR 563 crores and the remaining INR 1,230 crores from cost plus, INR 1,230 crores from cost plus and fixed price INR 563 crores, so that's the total is INR 1,793 crores from IAC for FY '22.
And the order book portion for each?
The remaining from the fixed prices remaining is around INR 1,000 crores and the INR 1,700 crore from cost plus. So totally, INR 2,700 crores remaining to be booked.
And last question from my side is on the future large orders. Like other than next-generation missile vessels, if you can guide us maybe not in FY '23, you said nothing from Navy, but if one were to take a 2- to 4-year or 5-year view, which are the big contracts which have a high probability, which are probability for Cochin Shipyard? And any status on IAC-2? Completely scrapped or any plans to revise that? If you can give your thoughts on overall basis, sir, please?
Overall, as I said, this dredger, because the dredger, we are going to be about 3 vessels for sure. So, give it approximately INR 1,000 crore each. So, we have now signed 1 vessel. The second and third should come in when I was giving a 2- to 3-year profile, those orders should be coming in, that's for sure. So, let's say, another about INR 1,800, INR 2,000 crore kind of orders should come from the dredger. As I said, Europe, the green shipping area like there are projects which are at advanced stages of discussion. It will -- it's hanging around a little bit because many of these projects are also supported by the Norwegian government.
So, we expect, as I said, we should be -- don't hold me on to this, but then somewhere around EUR100 million kind of an order should actually come in over the next -- I give it this fiscal, early quarter next fiscal kind of thing. From the Navy, as you are probably aware, there is -- there are no big things that's happening right now. But as we move forward, the LPD, Landing Platform Docks, that is again coming back. Those discussions are happening. So, LPD, 4 vessel, LPD should be coming in, that is something which we would look at in the pipeline. The second IAC, while no firm potential discussions are happening, at least there is better, better energy there. And there are discussions that's taking place. So, that is positive. I think this is what I would like to comment right now.
So probably, just comment is that overall pipeline looks a little bit weaker than how it has been in the past, of course, this INR 10,000 crores vessel...
That is -- see, that is because see the Navy goes through one large cycle. See, if you are looking at Cochin Shipyard, see between the ASW Corvette has given INR 6,000 crore order and the NGMV, which is INR 10,000 crore. These are significant orders. So INR 15,000 crore, there are 2 orders that's come in for HSCPL. Similar orders have gone in [indiscernible] also. So even when you look at it in U.S. dollar terms, these are large value contracts that happened. So, we feel generally comfortable because there's no point of blocking orders, even these 2 orders, as I said, right to distort the NGMVs are -- last vessel is around 8, 8.5 years. I think that's generally good to have the backbone. With this backbone, we should actually be getting in the orders of say, around 100 million kind of a thing every year if you can garner, then I think we are good.
No, the comment was because our top line, if you look at it in the last 4 years has been, you're still at INR 3,000 crore number.
Correct, correct.
And to grow that I mean of course, the infrastructure...
I do agree, I do agree because the growth should prepare, we will have to grow faster, Shipbuilding because there's a particular ramp up that will happen in Shipbuilding. But when the ASW and the NGMV comes in, we expect that top line also to -- when the ASW and NGMV happen together, we expect that to be.
We have the next question from the line of [ Peter Adnan ] from Sima Wealth Management.
First question is that if you can give some color on the raw material basket. So, what was the raw material basket cost in the last 2, 3 years? And how do you foresee the raw material pressure going forward?
See, if you're alluding to the commodities like steel, steel pricing has definitely gone up. And the newer projects, which we've taken for example, the German project, which we have taken as a dredger we have taken, we have factored current steel pricing. It has cooled a little bit over the last, let's say, 2 months or so, but steel pricing is actually high. It's something that was around $700, $750 a tonne, has gone up to around $1,100, $1,200, even slightly more than that per tonne. But the good part for us is many of these projects we are doing, especially the naval projects are low on steel. So, the overall impact is not extremely high.
But yes, steel price increases are a point of concern for the entire shipbuilding industry. And we feel this cooling down, which is happening now, we were expecting this cooling down, and we see it will cool down a little bit more. The other major cost increases that has actually happened would be copper has gone up for electrical cables and the [indiscernible] things pricing has gone up a little bit. Because of the petrochem increases, paint costs have actually gone up a little bit. So, these were the larger things. But I think from our perspective, generally manageable. This is all I would like to say.
Sir, in terms -- in line with the same question, sir, so can we assume, do you have a good -- of course, it depends on the contract. So for most of the contracts, do you have a pass-through or...
No, we don't have a pass-through except on the IAC contract. We don't have a pass-through. All commercial contracts are fixed price contracts, even the naval contracts are fixed price contracts. So, we don't have a pass through. So, that is why I said it is actually a point of concern. But when you are signing a new contract for example, see on the ASW Corvette, it's a contract which has been signed in the past. So, any increase there, we'll have to bear the increases. What I'm saying is the ASW Corvette, the entire, fairly it's just 300 tonnes of -- 250 tonnes of steel and 50 tonnes of aluminum. So, out of 300 tonnes, even if you see some increases, which definitely we don't want that increases, but then I think it's manageable over the full project cost.
And in terms of your revenue guidance, if we keep a little bit. You had mentioned FY '23 will be flat. But for FY '24 and '25, what kind of growth can we expect broadly?
FY '24, we should see anywhere between 16 percentage to 20 percentage growth.
And '25, sir?
'25 from that position, maybe another 12 percentage.
And sir, in terms of the export, with [ OVC ] export percentage last 2, 3 years...
I don't have that figure right away. But the export has been practically nil, practically nil last 2, 3 years. Yes, we just have a project for the Norwegian, there this one project for the Norwegian. But now we are touching more. Cochin Shipyard, if look at it in the past, about 5, 6 years back, there was a fair bit of export percentage that was -- that had almost gone to zero and with the ASKO project...
9 percentage.
It's around 9 percentage. And now we'll come back a little bit more.
So, my final question is regarding exports only. Just to understand, because of the new geopolitical tensions, are we taking more order, part one? And part 2 is the export market, for example, Europe, which you are throwing some light on to get more orders, are they also following some kind of an Atmanirbhar strategy and because of which we may not get orders? Can you throw some light on it?
What you said, the geopolitical cost, not the Ukraine effect, I don't think we have seen any effect of the Ukraine, other than overall price tightening and some decisions being put off to the right a little bit. But we're definitely sensing a liking for a company like Cochin Shipyard in India. So, let me put it very clearly. I'm not saying anything. I'm saying Cochin Shipyard, we have been actively involved in the European market almost now 18 to 20 years. We are definitely seeing a liking. There's huge warmth in their discussions and there are multiple projects which we are being involved. I'm not saying all the projects will come towards us, but we are actually being involved on multiple project discussions.
So compared to, let's say, the option of taking some of these new advanced technology, new technology reference to China, people are looking definitely at a place like India. That is for sure. In fact, if you are seeing like, even our friends in [ Chowgule ] in Goa has secured orders out of Europe. So, this is one thing. And the second part you said is like would the Europeans are some sort of Atmanirbhar kind of a thing. They don't have it right now. They are actually like all they want to select some of the German ones, although one thing, they want some of these equipment to be European make, that is not because of Atmanirbhar, that's because of serviceable reasons, because these vessels are shipping market. And it's a finely tuned market where you can't take downtime. So, some of the critical equipment, they want European brands, which we are also otherwise we didn't have an issue on that, we have been working on many of those equipments. So that is not an issue.
We have the next question from the line of Vijay Goel from ICICI Securities.
Sir, just wanted to understand one thing. What kind of blended EBITDA margin we can expect for next year as we are expecting revenue share from ship this year is going to increase to 28% this year from 20%, I think we had in FY '22. So, what kind of margin differential is there between these 2 segments?
Ship Repair, we are getting an EBIT level of something like -- it depends a little bit, but 21 percentage to 23 percentage kind of thing. And a blended EBIT level, you're talking about current FY '23, isn't it?
Right.
So FY '23...
15 to 19.
18, 19 percentage.
On the EBIT level, yes?
At the EBIT level, EBIT level.
And sir, one more thing. You mentioned that in FY '23, I mean, the revenues from Ship Repair is expected at INR 900 crores, but as on date, I think we have order book of about INR 500 crores only in Ship Repair. So, are we expecting more orders in Ship Repair and will be executed in the same year?
See, Ship Repair, the order we have said if you note, we have said, approximate because Ship Repair order book is a little bit dicey always. We are giving this a fair bit of guidance only. So, Ship Repair, the order book, see we would be participating in something. We are actually fairly close to securing a fairly big order, which we expect to be executed in our operations with Mumbai on Ship Repair. So, the confidence is coming from that. And it may not have been concluded. In the presentation, we wouldn't give things which is not concluded, but then the target is coming from the optimism and optimism in which it's practically done, but then not yet signed, that kind of thing. We would expect to do -- and there naval project which is coming in, which we expect to do now in our Bombay operation.
We have the next question from the line of Nikhil from SIMPL.
I hope I'm audible?
Yes.
Sir, 2 things. One is, at AGM, you had mentioned when we had raised the question that would we be looking at shipbuilding of, say, the large vessel like the Panamax or Suezmax and you said the focus would only be on the niche segment. Now just to understand this niche segments and you even in the call, you mentioned that the order which we've got from the German operations, the dredging, what I want to understand how large are we in presence and do we spend -- how is the competition in these segments and the way we see the profitability in [indiscernible].
Nikhil, you are coming a little bit broken. I heard what you said on the what is niche and what is the expectations on that. But what was the last part you said? Can you repeat that again?
[indiscernible].
You're again broken.
Mr. Nikhil, if you could kindly go off the speaker phone and come on the headset will be much easier for us.
I'm on headset only.
Now you are better.
Hello?
Yes, go ahead.
I was trying to understand that how does [indiscernible] niche segment?
Okay. See this, let me talk about 2 spaces we have. One is a European short-sea market. So, the European short-sea market is a set of mid-sized vessels. These are vessels, which would be about 7,000 tonnes, 8,000 tonnes dead weight. So, each of these vessels would be size-wise about 120 meter long. Now, these are vessels which operate in the rivers and the coastal areas in Europe. So, they travel across the rain, [ river ] water season, they do trading into the Baltics, they do trading into the Caspian and also across West Europe on the sea coast. Now, this market is fairly big. There are about 2,500 ships out there in this market and this fleet is very old.
The fleet is about 18, 19 years old. So, this fleet will need replacement. And when they are trying for replacement, they've been waiting. Last 4, 5 years, they have been waiting because of all this transition that is happening in the energy market. So, now the ordering is starting. And these guys would order -- there would always be numbers here. That is why -- see, we are now talking 8 vessels. There are many, many shipping companies like this and these are -- all the funds are raised like our mutual funds, they do these like [ KG ] companies and then raise funds in closed group, part will be funded, so almost 50 percentage will come as equity from Chennai.
So, there is a particular ambience under this whole market happens. And the vessels there will always be numbers. And it's a continual flow. If you can pick up orders, we can actually pick up large numbers. In fact, the Chowgule in India, I mentioned this is one company which was active in the slightly more smaller niche vessel segment in the past. Chowgule has been a different company in the past also. They have executed more than 20, 25 vessels into Europe in the past. We are now getting into a slightly more larger space. We are doing about 120, 130 meter kind of vessels. So, we feel if we can deliver this vessel good because these are not -- these are just clearly European-grade vessels of a reasonably high quality. It's not flashy. It doesn't have anything great on it, but steady, straightforward things, but delivered in good time and at a competitive price, I think there is a fairly large market available there.
Similarly, on the Scandinavian side, these are advanced vessels getting readied for new energies. It could be ready for methanol, it could be ready for hydrogen. So, then the competition is not big, and they are comfortable only with companies like Cochin Shipyard or similar in East Europe or some companies, of course, in China, which is good on engineering and which are ready to do a little bit high-end engineering. So, we feel connected on both these spaces.
And any competition from the Green Shipyard because they've been doing these ships for a long period of time?
As I said, competition is not great. Competition, one large area of competition is Turkey. Turkey has come up very, very strongly in the past and since they've got a European flavor also. The other areas of East Europe, Romania and yards in [ Poland ]. So, from a pricing point of view, we may be able to outsmart the East European. Turkey is always tough. But -- and then, of course, there are these mid-sized Chinese yards.
Secondly, sir, what we are looking at when we are talking to more defense companies and there is a big push on export and to the friendly nations like Philippines, Malaysia? And these are all coastal area countries founded by the sea and who have their own shipping requirements for their own navy. So, is Cochin Shipyard doing anything on those sort or do we have anything for any of the products, which we have already delivered to be exported to these markets? Anything which we are looking at probably we can grow a thing in a significant way?
We are aware and we are looking at these spaces, but then we haven't seen anything large in this areas because when you're talking about Philippines, Philippines has also got a shipbuilding ecosystem, which can actually deliver these things. So, unless there is a governmental involvement or something else, we are not very sure whether these markets will open up. But yes, of course, the offshore patrol vessel market is all available. But whether it will mature immediately, I'm not too sure. So, we are just watching this space. We haven't done anything specific over there. But we are ready that we are participating in the narrative, but we haven't seen anything specific.
We have the next question from the line of Kaushik Poddar from KB Capital Markets.
I just missed it, what is the turnover progression you are looking at? I mean this year will be flat, you said, is it?
Correct.
And what about FY '24 and '25.
I said we could grow at 16 percentage to 20 percentage and '25, no, no, FY '24. FY '25, at 12 percentage.
FY '25, 12%, okay. And in your segmental reporting, you have given unallocated, the segment unallocated, there the profit has -- PBIT has gone up from INR 4.55 crore to INR 142.96 crores. Can you please explain that?
Jose? On the unallocated segment, it's gone up from...
From INR 4.5 crore to nearly INR 143 crore, the segmental accounting in unallocated segment.
That is mainly because we had some other income which is a one-off nature. This is because of that, because as CMD mentioned, we had a contract termination for the CapEx EPC contractor. So, there was some bank guarantee and cash [ expense ] towards that. And similarly, there was an arbitration case, which was -- award came in favor of us, so that income was also there. So, the last -- you can see that other income has one-off this year quite a lot because of that.
And in the Ship Repair thing, of course, you have said that your turnover will go from, say, INR 678 crore this year to INR 900 crores. That's fine. But I don't see too many repairs of private ships. I mean, is this something you are not looking at?
No. See private ship, we definitely look at. See, the whole thing is it's mix and match of what is the best and what is more profitable. As a general rule, private ship owners, especially in India, see a foreign ship owner is not just coming for repair, nobody does it that way unless he is active in this area. So generally, the Indian shipowners actually bring in vessels. We do handle a lot of private ship repairs also, but the money is elsewhere. And the money is because if it's a Navy or a Coastguard or a Shipping Corporation of India or a Dredging Corporation of India, they all have a particular method of planned repairs and they spend money in that particular thing.
What a private shipowner does is, he comes into a yard like Cochin Shipyard only to do what he can't do elsewhere. He will actually get it done in our docks, underwater work is what they will do with us. And then they take it and then [Audio Gap] they use these local workshops, and their Superintendent will handle it themselves. And they do it at the lowest ever price. So, that is a model for most private ship owners. So, they restrict our path to say underwater or the critical works. But if it's a Navy or a Coastguard, they do the full package. And we are more keen to do it that way. But as we move forward and we build up our new ISR and then the new dry dock, we will grow for larger level private from the export market, from the international market. They handle things a little bit differently. Indian shipowners, the private shipowners, generally, mostly, most people are with secondhand vessels. They don't want to spend too much on those vessels.
And lastly, this dry dock facility you're putting up, will that handle -- I mean, will that make different kind of vessels? Or is there more -- I mean, different, say, higher dead weight sort of thing, or is it more...
No, it's a much larger one. It's a much larger one.
And do you see -- you said that this year, the margin is 19%. Next year also, you see that is FY '24 also, you see the margin at that level? Or will it come down?
See, EBIT, we are not exactly planning this out, but then 18 percentage, 19 percentage EBIT levels, I think we should be able to hold.
That's a steady state you are thinking of?
Correct. Correct. Correct.
And irrespective of this raw material price rise and all those things. So, how do you plan to tackle this [ visibility ] in the raw material prices?
See, raw material price, if you are getting in commercial orders of larger ships, we will have to block the raw material because then the field costs are a very major factor over there. Today, the vessels we are handling now the midsize segment and, let's say, the German vessels, these have got steel, but then it's all happening within a very short time, and we have already factored it in and we have actually -- there is a little bit of a pass-through kind of a clause which we are building up with them, up or down 5 percentage on either side, nobody talks, but beyond that people chip in that kind of thing which we are trying to do. But on large contracts, we'll have to be more cautious. That is what we are.
So, this 18%, 19% guidance you are giving, so that should take care of this volatility for FY '24-'25? Beyond that, probably, you have to...
It should, it should. See, we are today like hitching orders, which will all be delivered other than the 2 large Naval orders. Anything we are looking at is actually around '24. It won't go beyond that. And later part of this year, we'll start picking up orders for execution in '24 and beyond. And by that time, we would have factored in this volatility. So, we would have factored in the higher steel cost and the markets will also be ready because the market, see if it's a German client or an Norwegian client, he is also looking at pricing, which he is getting from elsewhere, and they would have also factored in this cost.
And lastly, it's a question of a longer time frame. Last year, I think you have been given an extension for 5 years. How do you see your company that is Cochin Shipyard at the end of your term? Where do you see it? What is the destination you are aiming for?
See, the destination we are aiming for is spelt out in our CRUISE 2030, we have -- that's a 2030 target. In 2030, roughly internally, we have coined about a $2 billion company. Now even if we fall short, I would be happy if we cross INR 1,000 crores by 2030. So, that's top. So, I will leave here early 2026. So, by which time, I should -- I should admit that COVID and its impact over the last 1.5 years, it has impacted us badly. But then with the large orders which we have, the INR 15,000 crore naval level orders, certain things which we are seeing in Europe, Ship Repair doing well, we should do fairly well. We should -- by the time I leave, I think we should be...
[Technical difficulty]
Operator, is the management connected with us?
I am connected, right?
Yes. Give me a moment. Let's check. All right. It appears that the management has dropped. Give us a moment. Ladies and gentlemen, we have the management reconnected. Sir, you may go ahead.
Yes. We are just talking to Mr. Kaushik and...
Yes, I am online, yes.
Yes. Okay. So, that's a long-term direction. And let us be clear, this is not going to come just from Shipbuilding and Ship Repair, there will likely be something new also. And we -- that's why we have set up the new division called the CSL, Strategic and Advanced Solutions. We expect something to come in from that. We expect our subsidiaries, 2 of the subsidiaries to chip in from Udupi and from Kolkata. So, I would be happy when I leave if I see INR 6,000 crores, INR 6,500 crores, I think I should be happy.
And the margins are on the same level, right?
I think these margins, we should be able to sustain because without these margins, there's no point doing this business. Shipbuilding, we need to get a particular EBIT level and Ship Repair, with the challenges on the road we face, we need to always see 21 percentage to 23 percentage EBIT level in Ship Repair. If we do that blended, we should fall around 18%, 19%. This is -- this is a hope and this is the direction which we are taking.
This 21% you're talking of from the Shipbuilding, right?
Ship Repair.
Ship Repair, okay.
Ship Repair, 21 percentage to 23 percentage. But blended 18 percentage to 19 percentage.
We have the next question from the line of Dixit Doshi from Whitestone Financial.
Most of the questions are answered. Just one question. You mentioned in the other income, there were some one-offs. So, can you quantify for the full year, how much would be the one-off?
Ladies and gentlemen, we have the management dropped from the conference. Please stay connected, we will reconnect with the management. Ladies and gentlemen, we have the management reconnected.
My question was you mentioned that this year we had some one-off income and other income also. So, for the full year, how much would it be?
That one-off was around INR 86 crores.
INR 86 crores for the full year?
Full year, full year.
Shall we close?
Yes, that was the last question. I now hand it to Vastupal Shah for the closing comments.
Thank you. Thanks, everyone, for joining the conference call of Cochin Shipyard Limited. If you have any queries, you can mail us at vastupal@kirinadvisors.com and [indiscernible] and all the participants. Thank you.
Thank you. On behalf of Kirin Advisors that concludes this conference. Thank you for joining us and you may now disconnect your lines.