Garden Reach Shipbuilders & Engineers Ltd

NSE:GRSE

Earnings Call Transcript 2022-Q1

[Operator]

Good morning, ladies and gentlemen. I'm Janice, the moderator for this conference. Welcome to the conference call of Garden Reach Shipbuilders & Engineers Limited arranged by Concept Investor Relations to discuss its Q1 FY '22 results. We have with us today Rear Admiral Shri VK Saxena, Indian Navy Retired Chairman and Managing Director; and Shri RK Dash, Director, Finance. [Operator Instructions] Please note that this conference is being recorded. I now hand the call over to Shri VK Saxena. Thank you, and over to you, sir.

[Vipin Kumar Saxena, Chairman & MD]

Ladies and gentlemen, a very good morning to all of you. I am Rear Admiral VK Saxena, Chairman, Manging Director of Garden Reach Shipbuilders & Engineers Limited. I extend a very hearty and warm welcome to all of you to this conference call in which we will be discussing the financial performance of the company for the first quarter ended 30th June 2021 of FY '22. I also hope that all of you and your family members are doing fine, have taken the jabs, vaccinations and taking all the precautions and wishing you and your dear ones a very healthy time ahead. I'm just proud, privileged and honored to interact with all of you once again. And I would like to highlight to all of you that the financial results of the Q1 of FY '22 has been much better than the corresponding Q1 of FY '21. We, of course, have faced a similar kind of a challenge of the second wave, which was much more severe in this year during the Q1 of FY '22, you're all aware about it. We have the longest kind of lockdowns during the FY '21 Q1. But thankfully, this time, the lockdowns were of course restricted to around 20, 31-odd days. And hence, there was a complete production loss, and nothing could happen because of a very strict stringent lockdown, which was very much desirable. And hence, compared to the last year's Q1, where we had lost around close to 90-odd days of the production loss in the Q1 itself, we had a lesser, that is around almost 31 days. And as result of that, around 1 lakh man hours amounting to around INR 8 crores was the personnel cost, were recorded as exception losses in the Q1. And as a consequence of the no work happening, we have estimated a production loss that is a value of production, around INR 30-odd crores has been the loss in the Q1. As a result, the operating loss is also estimated to be in the range of around INR 6-odd crores. But the good note is although it was very, very serious, last time in the FY '21 Q1, we had most of the labor, et cetera, mandating and there was a complete disruption in supply chain. It did happen and the government also has accordingly developed force majeure to a large extent. And you know that in Kolkata, still the restrictions are on. As of now, they say that is a partial, I would say, that restrictions exist. Only yesterday, the government has come out announcing that the 100% industrial personnel would be permitted to work. Earlier it was 50%. So with all these limitations, your company still did quite well in the Q1 and Q2 also, we have been moving ahead at a fast pace. And as a result of that, we have seen the financial performance of the company has been very encouraging, where revenue from operations has -- and comparing the Q1 of FY '22 with Q1 of FY '21, where our revenue from operations has gone up by 176%. The total income has also risen to 115%. The EBITDA has gone up by 240%. PBT has improved 13x from INR 2 crores to INR 26 crores. The PAT is also nearly INR 15 lakh was the one in Q1 FY '21. It has gone up by 140x INR 21 crores. If we look at the margins, profitability margin, EBITDA margin stands at 10% as compared to 6% of the FY '21 Q1. As well, the PBT margin stands at 8%, 8x higher as compared to the corresponding first quarter of FY '21. The PAT margin stands at 67x higher. So that is what financially we have done very, very well. And when we look at the other activities in the shipyard, I'm very happy to report to all of you that the company continued of course the lockdown, we could not do much. But at the moment, the total lockdown got lifted, we started working in full swing. We did not face that kind of severe challenges of the nonavailability of the labor market, labor force. Of course, it was reduced, but still we have already learned the lessons from the previous first wave. And those strategies have really helped a lot the shipyard where we could move at a decent pace with regard to catching up with the various kind of milestones. And at this point of time, your company is handling 5 projects, you're all aware of that, that first project, 17 Alpha is still in the plan, so we get 3 numbers and all the 3 ships are under different stages of production. We are aware that we have already launched the first stealth frigate on 14th of December, ahead of schedule. The second ship is also progressing quite well in terms of its hull construction and we are expecting to launch the -- this second ship of the 17 Alpha by middle of next year, that is basically the -- and in next of June, in 2022. So with that we -- a lot of, I would say, the milestone would get achieved and good revenue collection will happen. And that is also going to be ahead of schedule as per the production time line that has been agreed with the Indian Navy that will be ahead of schedule. And of course, third ship key has already been laid down. So this major project of the Indian Navy 17 Alpha is going on at a good speed. Then we have another project of Indian Navy for construction of 4 surveys as a large ships. And all the ship -- 4 ships are under production despite of the COVID challenges and then we have ASW Shallow Water Craft project with us. In that we see 4 ships already under production at different stages. We have got another project of the coast guard for construction of 1 fast patrol vessel that is already under production. And 1 project from the Government of Guyana for construction of 1 number oceangoing passengers come fairy 1,700 ton of the ship, we got it, export orders. In the month of January, we signed a contract that is also going on at good speed. At this juncture, the company is constructing 13 out of 17 ships. And I would say that at this juncture, 5 projects of different customers and so many number of ships being produced concurrently is not happening elsewhere. And I'm again saying that the happy note is this despite of the challenges, we are moving ahead with the targeted milestones and other things, which was planned. Of course, the minor delays, et cetera, are there, but still we are moving ahead. And we hope that the balance 4 ships. The construction should be happening soon in this current financial year itself. Another good thing happened to all of us in the shipyard long awaited the Goliath crane which was supposed to be coming from the South Korean form that finally is clear and what commissioned in the month of June and the availability of this 250 ton Goliath crane. Our interior construction mechanism is going to be now moving at a very, very good speed and huge multiplication of our productivity efficiencies and interior construction. So that is going to be a great help and benefit to us in speeding up the throughput and efficiency of the shipyard. Another good thing is that of course this happened recently where we have laid the keys of the 2 ships of the 2 projects by the washing of the label staff of the third Survey Vessel key has been laid. And on the same day, the first ASW Shallow Water Craft shipped, it has also been delayed. We have already commenced as we told you the production of the fourth ship of the [indiscernible] project and also on 14th of July, 2 ASW Shallow Water Craft ships production has already commenced. And also the -- another 4th ship of ASW Shallow Water Craft, that production has also commenced at the GRSE.Another good news is that ladies and gentlemen, as I've been always telling all of you that we are focusing in a big manner on export and the refit fund. So the good news to all of you, you know that Government of Guyana on a competitive bidding basis, global contract we have won, and that is what is already happening. And also, we have won an order with the government of -- from the Bangladesh we see a department, although in terms of the value, it's not big. But we all know that in terms of the penetration in the Bangladesh by a defense public sector company where we have got a construction contract of 6 patrol vessels of fisheries department. So that is another good sign. And I hope that now we should be -- we are bidding in the Bangladesh project, tons, 2 tons requirement was there. So we have also bid for that. And here, we have beaten the -- some of the renowned shipyard of, I would think, South Korea, the Netherlands and Sweden. And of course, some Sri Lankan shipyard was there apart from Bangladesh shipyard. There we became the L1. So this gives us a hope that the push and focus, although we are now getting small, small orders, but I would say it's a very good beginning and has given us more and more confidence that we are on the right path, and we are now bidding more and more tenders which are coming up for the export. Second thing I was telling you about the refit fund. That was also another important vertical. And here, we could get the order of 1 foreign ship offshore patrol vessel Barracuda, which was constructed and delivered by GRSE to the Government of Mauritius. That ship gave further refit at around USD 2.8-odd million worth of the refit that's happening here. This is a rather export kind of order that is there for the refit. In addition, we have the smaller amount of refit going on off the coast guard ships also. So this vertical has also started growing and showing good improvement. And hopefully, very shortly, we should be signing kind of a lease agreement with the Kolkata Port Trust, hiring there, taking on lease this 3 number drydocks of Kolkata Port Trust, which we shall be utilizing for the purpose of the refit and repairs of the ships of the Navy Coast Guard, any other customer that would come. In addition, we have a healthy order book. We continue with around -- as of now, excluding our order book is [ INR 25,463-odd ] crores. And all in all, I would say, ladies and gentlemen, the shipyard, the kind of improvement and changes we have brought it in terms of efficiency improvement. We have seen that despite of the first phase impact and so much of the losses of the [indiscernible] and other things, we have still -- could -- reasonably we could do well in the FY '21. And we hope that the way things are shaping up, and if the third wave does not hit us. That is what is being talked about, and I'm sure that the kind of precautions all of us are taking and the way the vaccine drive is going on. And if all goes well, we should be spared from the impact of the third wave. And then you have [Foreign Language] to do quite well. As far as the performance of the company is concerned, I am sure that the subsequent quarters if all goes well, should be much, much better in times to come. And FY '22 is going to be [ per mine ] as per the progress which I am seeing and hoping that company should be delivering very good results. So once again, ladies and gentlemen, I would like to thank all of you for participation in this conference call. And reassuring that your company is on the right path. The various new initiatives we have taken in terms of industry 4.0 and various CIS operations are already showing us good results. The various infrastructure augmentation that has been put in place. That is also giving us a good, good results. So all in all, the company is on the right path and so many projects now shaping up quite well. The construction of the ships now in certain ships where the hull part is almost getting over. And then the equipment phase -- lowering phase is starting. So revenue is expected to be going up. And therefore, the FY '22 is expected to be in a much better result that what is my hope and my belief is. So thank you very much and wishing you and your family all the very best, safer times. Please take vaccinations if at all not taken. Thank you very much, Jai Hind. If any questions there, we are prepared to answer your queries or any other things which you have in mind.

[Operator]

[Operator Instructions] The first question is from the line of Umesh Raut from Dolat Capital.

[Umesh Raut, Vice President of Research]

Sir, congratulations for the major milestones achieved for the P-17 Alpha ship and resilient top line performance in Q1 despite the challenges. So sir, I have 3 questions. First 2, related to the execution. So wanted to understand, first, on the current ongoing activities at the shipyard as compared to pre-COVID level, how those are as a percentage of pre-COVID level, capacity utilization are they kind of normalizing in this quarter? And secondly, sir, because of this pandemic since last 1.5 years, are there any changes for scheduled delivery of P-17 ships which are likely to be earlier in August '23, August '24 and August '25. So would there be any major changes in those time lines?

[Vipin Kumar Saxena, Chairman & MD]

First thing is that the -- as far as the COVID impact is concerned, you are aware that the first wave and second wave, the government of India has already recognized. And accordingly, they have issued the kind of guided notification about the force majeure duration, the first wave that they've already granted. And the second wave also that is going to be coming up because of the lockdowns and then partial lockdowns and so many things happening. So there's no doubt about that we being a labor-intensive industry and supply chain dependent kind of organization, we certainly have the impact of the COVID. But the good thing which you have already noticed that the results of the Q1 of FY '22 are showing the good recovery. Therefore, in terms of the time of the ongoing project, yes, undoubtedly, whatever time loss has happened and the momentum got totally lost because of the first wave, no workforce was available. Second wave, while we did not have much of the issue on the -- not much, I would say, of the workforce, but the supply chain, of course, but impacted a number of important clusters. MSMEs in particular and Tier 2 industries also had the troubles in different states of the country. We are aware of that. And therefore, those things, of course, are going to be delayed. So hence, there is going to be some kind of an impact on that. And therefore, there's going to be acceptable kind of a delay by the customer also and by the government, and this is what is happening. But the good thing, which I would say that we have now decided that the -- as and when the equipment comes because whatever delay happens from the supplier side, we should have something else done up so that the time that was required, I would say, sequential activities, we will not be doing sequential things. We will be doing a lot of things casually. So we hope that we should be able to mitigate to some extent those kind of troubles and impact that we already had. So I told already that despite of the challenges, another thing we did not stop. We had a lot of, I would say, milestones getting achieved. You would have seen during the FY '21, we delivered 3 ships, warships in the -- despite of the COVID first wave. And then this year also, we had the production starting up certain ships, schemes have been laid of the ships. And very shortly, we'll be having the launching of the first Survey Vessel launch happening in the month of November or so. So in terms of the number of ships at this point of time, under production 13 numbers out of 17 ships is something really, I would say, in my mind, quite, quite appreciable kind of a thing. And hence, it gives me the hope and confidence that in times to come, we should be recovering back to the pre-COVID levels. I would say we are almost getting there. And in terms of the other infrastructure augmentation, we have utilized this time of COVID in having the -- some new facilities getting constructed, inaugurated, [indiscernible] has already come back. So therefore, it's going to actually multiply our throughput and production. So that's how I'm quite, quite hopeful that we should be doing well.

[Umesh Raut, Vice President of Research]

Yes, sir. Sir, is it possible to make up for the lost execution by adding extra shift, labor shift?

[Vipin Kumar Saxena, Chairman & MD]

I don't think that in the classical manner as to if you have lost some time, and you know that the COVID restrictions continue, please understand that. We are, again, a industry where, I don't know, you have seen the warship of a size of 6,600 odd tons, 17 Alpha or 3,300 tons Survey Vessel Large ship. Here if the people have to work in normal pre-COVID era, we had a small compartment, a large number of groups of different specializations working. But now in the COVID protocol, COVID appropriate behavior, you can't have that number of large groups. You have to have a lesser number of people, you have to follow the -- you have to wear the mask and you're wearing the mask, you can't continue to be there in a suffocated compartment for a long time, if you are doing welding, you're doing some cutting operation, you're doing some erection work or plumbing works. So many people cannot work because of the COVID restrictions. So that certainly has got the impact, but we still are working around and seeing that how best we can overcome all these challenges.

[Umesh Raut, Vice President of Research]

Got it, sir. Sir, my next question is related to the working capital. So are we seeing any delays from the customer payments because of this pandemic? And I wanted to know the current cash position, including the stage payments from the customer.

[Vipin Kumar Saxena, Chairman & MD]

No, we do not have any kind of a delay happening from the customers in terms of the stage payments. And again, we are lucky that we have customers like Indian Navy and Indian Coast Guard. And therefore, we are not really having any kind of impact as far as the cash flow is concerned, the stage payments are concerned and capital, et cetera. So there's no worry whatsoever.

[Umesh Raut, Vice President of Research]

And sir, cash position, including the stage payment?

[Vipin Kumar Saxena, Chairman & MD]

We have [ INR 3.09 crores ] as of now.

[Operator]

[Operator Instructions] The next question is from the line of Abhijit Mishra (sic) [ Mitra ] from ICICI Securities.

[Abhijit Mitra, Analyst]

I just had a question on the export side. So I think we are one of the select PSUs, though seeing very good tailwinds on the export side, executing and delivering then also timely. So just wanted to understand, in your bidding with the Bangladesh Fisheries Department, what was the key takeaways for you? I mean you were competing with some of the global ship makers or shipbuilders rather, you have won the contract. So can you highlight some of the advantages or disadvantages that you see? It can be an operational advantage, price disadvantage, a cost advantage or PSU being a PSU, how do you sort of see this -- do you see this as a potential business stream going forward?

[Vipin Kumar Saxena, Chairman & MD]

Yes, that's what I'm saying, thank you for question. And I would say that the export thrust we have been hearing from the Government of India and from the Prime Minister also, the country itself in all areas, we want to become a net exporter and defense has already set a target, Raksha Mantri has set a target of USD 5 billion by 2024, '25. So that is with regard to the private tax. And other thing is that we have -- suddenly this has driven us towards a new mindset of looking beyond within our own known customer that is in-house Indian Navy, Indian Coast Guard. And having so much of years of experience for 60 years of building the ships. And thankfully, today, the Indian Navy, which is the most important customer for us has become -- transformed itself from the buyers navy to builders navy and that has happened because of the various capable component shipyards, expertise we have gained. And hence, now we are very confident that the kind of ecosystem that has also developed Tier 1, Tier 2, Tier 3 industries in the country. The ecosystem that has come up is also becoming better. That is giving us the confidence that one is experienced. Second one is the kind of ecosystem. Third one is the government policies and huge support that is coming, first, which is being given. So we are targeting some of the potential countries and Bangladesh being a neighboring country very close to the Kolkata and Bengal, we are actually -- a push from the government side also that Bangladesh we want to seriously get into because we expect some good potential both in the Coast Guard and the Bangladesh Navy and also the other civilian organization like fisheries department, Inland Water Transport Corporation of Bangladesh. So somewhere we have to make inroads. So you know that they are -- I'm not going to name the countries who were earlier dominant, but we want to start from somewhere, and that was also the aim that we must look at any opportunity which comes up anywhere. Similarly, you've seen at Guyana also, which is in South America. But I have gone for being a warship builder primarily, but we are prepared to take on -- I've got huge experience and a huge and great design department, I can take on and do anything. So if I'm trying to look at the export potential and opportunity, I should not only look at the warship building alone. So Guyana we have got the orders, Bangladesh, the patrol vessels is something which we won't -- gone in, having a decent profit margin. But this is going to give us some kind of confidence to operate in Bangladesh. The moment you see my products. Now we are receiving the inquiries from other departments in Bangladesh. So we have to get into as a product of the India from the GRSE, that is still going to be demonstrated in the Bangladesh, Indian product has come in, and that is going to be quite -- I'm sure that would be appreciated. It just started off. Now we'll be learning the things as to how the atmosphere is there and how the thought process and how other things are there. So therefore, it is just a good beginning. But it gives me confidence that we should be able to get the orders, beating the other major shipyards of the world who had participated certainly gives GRSE, the confidence that we have the capability.

[Abhijit Mitra, Analyst]

Yes. No, I was more trying to understand that -- so for the export, our government is talking about putting in some subsidies to help export. And if not, given the current scale and the current cost structure, do you sort of feel that you could compete, say, for the Guyana. Guyana is an ideal example of cargo plus passengers ship. So you have a Korean or a Chinese shipbuilder come and compete. You see you can match with the thoughts and the execution?

[Vipin Kumar Saxena, Chairman & MD]

Yes, you have brought in very, very important kind of topic and subject. And so far, as far as the commercial shipbuilding activities are concerned where ministry of shipping has got certain funds earmarked for that, they give the grant for that. And we have certainly factored at one when we bid for the Guyana ferry and that's why we became the winner there. And also, I would say that we have written it to and requesting and I think the Ministry of Defence is also looking at various possibilities. You would be aware that the MRO, the GST reduction has already happened whenever we talk about the MRO concept. So similar things are being talked about in terms of having this kind of subsidies or production and input costs to the taxation reduction, et cetera. So these things are certainly going to be a huge benefit to the defense products and especially in the platforms, warships or ships which we're going to be building and having it exported. And eventually, we hope that that should give us a price advantage when you're going to compete against the Chinese or against any South Koreans or any other countries. These are the things which are certainly being looked at, examined at the -- at Delhi at the government level. And I'm sure that in times ahead something positive may come out. But as of now, I see this was with the one with Bangladesh, we don't have any subsidiary, but still we have competed and we know that how we are placed in terms of the profit margins. So therefore, we have some kind of a belief that we can still compete in certain areas. And of course, this will be a very welcome kind of a thing when it happens in terms of the subsidiary or a separate fund that would be created for the export of the warship because I feel that the potential exists in the IO region for some of the platforms like FIB that is our fast interceptor boat or off-shore patrol vessels or the fast patrol vessels. All such kind of platforms are observed in nature, but will be I mean a huge benefit and advantage to the smaller countries in this region and that we have got a huge experience and therefore, the government is also looking at the possibilities and some kind of policies as to how this can be put in place so that we become, I would say, a dominant player in terms of exporting these kind of ships. You know that Seychelles, the government has given one of the TV that has been built by us early this year. And that got finally handed over formally by the Prime Minister of the country on the 8th of April, so Government of Seychelles. So these are the things which are happening around. And thankfully, the government is certainly looking at a very, very focused manner. The first act will be coming towards export from the PSUs also.

[Operator]

[Operator Instructions] The next question is from the line of [ Hamal ], an individual investor.

[Unknown Attendee]

I have a very simple question on raw material. Are you seeing the spike in the raw material? And the way your contracts are made, are you able to pass it on to your end consumers?

[Vipin Kumar Saxena, Chairman & MD]

As for the raw material is concerned, let me tell you, when it comes to the raw material that is steel plates primarily and the steel -- and that consumer that is supposed to be used for the fabrication and erection purpose. So it is very miniscule percentage of the overall cost of the washes that we talk about. So -- and most of the contracts which were now of course, in a competitive bidding, we have won at, those things are already started into our strategies of the costing. Therefore, in terms of the overall impact of this things in the -- whatever things are in the raw material. As of now, we really do not have much of the bearing on the overall cost or profitability, et cetera. And plus the good part is that with the -- a lot of technology intervention that has happened in terms of our design capabilities, and we have the virtual reality lab getting commissioned and a huge amount of new software has come in. Therefore, the wastage in factories was there has been brought down considerably, the time on -- in terms of the much better design. So therefore, all such things are giving us the quite good benefits in terms of the -- if any minor cost increase happened, but it is insignificant.

[Unknown Executive]

[indiscernible].

[Vipin Kumar Saxena, Chairman & MD]

I know. And they have been ordered some time back. So at this juncture, we are not really having any kind of significant input, which does worry me and my investors. And I'm not actually passing on to -- because this contract have already been signed, I'm not passing on any kind of a thing to the customer.

[Unknown Attendee]

Okay. Just one more question. Any -- just COVID wave 3 does not come and hopefully, it does not for all of us. You believe any guidance for the remaining part of the year as to what you expect in terms of revenue or...

[Vipin Kumar Saxena, Chairman & MD]

If there is no COVID wave 3, I would say once again that we'll be doing much better. We'll be doing much better than what -- we are seeing it. Where Q2 will be better, your Q3 will be further better likewise. So this FY '22 should be much, much better.

[Operator]

[Operator Instructions] The next question is from the line of Viraj Mithani from Jupiter Financial.

[Viraj Mithani]

And congratulations on good numbers.

[Vipin Kumar Saxena, Chairman & MD]

Thank you.

[Viraj Mithani]

Yes. Am I audible?

[Vipin Kumar Saxena, Chairman & MD]

Yes, you're audible.

[Viraj Mithani]

So my question is, what would be the cash level in our books, our own cash, that is one? And can you give me some sense on our refit business and the repair business in terms of medium term, say, 2, 3 years, how will you plan. And what percentage of base building and the refit and repair business would be? That would be helpful.

[Vipin Kumar Saxena, Chairman & MD]

See, I told you that as far as cash is concerned, we have around INR 3,500-odd crores in our bank. And this is all against the defense stage payment that we have received from the customers. And that is a project fund and that will be utilized eventually towards further payments to the various vendors and suppliers. In that, around INR 82 crores is our own cash. The company's cash that's with regard to the cash position. Coming to your next question about the effects of the ships. I mean we have been actually working towards creating a good refit vertical as a separate business kind of thing. And we have a good beginning now. I have been talking to all of you that refit has got a good prospect and possibility. And as a result of our efforts, we have been able to get some refits, especially from the foreign country. We have received the offshore patrol vessel refit that is happening now at the shipyard. We have received smaller orders from the Coast Guard, kind of smaller I would say in terms of value. So that has also started off well. So when we are actually working on that, we are prepared to participate, number one, created an infrastructure, created the refit division as such, with certain set of offices and the personnel and kind of a mechanism that has been put in place towards taking charge of the refit. So in going forward, with these initiatives that we have taken, we'll be now going forward with greater confidence and most of the bids that would be coming up. Earlier 2 years or 3 years back, if you see that we were not very keen. But slowly, slowly, we have started building up that kind of things. And now results are seeing that we are bringing certain orders. And that is going to give us more confidence that in the times ahead, we should be winning bigger orders of the refits of the Navy Coast Guard and any other thing that comes our way. And because of this reason that we have taken the 3 drydocks of the Kolkata Port Trust on the lease. Shortly, we'll be signing the lease. We have already concluded the discussions, negotiations with them, at a very nominal cost, we'll be taking the -- these drydocks on lease. Why? With the hope that there is good prospects and eventually whenever such opportunity comes, we should not be starving of the infrastructure or facility. So that is going to be a great help to us. That's how the scenario looks like going forward as far the refit is concerned.

[Viraj Mithani]

Sir, what would be our EBITDA percent wise. I understand the EBITDA percentage in refit and repair business must be higher, right? Compared to shipbuilding. Is that correct questioning?

[Vipin Kumar Saxena, Chairman & MD]

Yes. profitability factor is always good in the refit and repairs as compared to the normal ship production. Provided you are smart enough to bid in a smart manner and also complete the refits on time or ahead of time, that is how it provides a good kind of profitability things for the organization.

[Viraj Mithani]

So what would be your EBITDA margin sir, in the refit business, if you can give some ballpark figure?

[Vipin Kumar Saxena, Chairman & MD]

Let me again tell you as far as the EBITDA margins are concerned, at this point I told you that refit, this thing is very, very miniscule, very miniscule, okay? So therefore, by the time we finalize the thing, I mean the big refit, big financial at around 2.7-odd million worth of the refit we have taken is still going on. So unless the 2 digits complete around, we can have the books of account examined and seeing that. But certainly, it is going to be having decent margins better than the shipbuilding.

[Viraj Mithani]

Sir, is it possible that the refit and repair business in next 3 to 4 years would be 30%, 35%, 30% of the GRSE top line? Is this something which management is thinking?

[Vipin Kumar Saxena, Chairman & MD]

See, the management has -- yes. So as far as our strategy is concerned, we are certainly targeting to these -- to 25% to 30% of the percentage of our total revenue that would be coming, that's our aim and target is. But now it depends on the other competitors as to they are also -- everybody is waking up in this country, other shipyards which we are not getting into the refit affairs. You know that there were only a few shipyards involved in the refit, now today, all the [ repairs ], you also want to take on the refits. Therefore, the competition has increased. So we are expiring. We are also setting a target for our shipyard to get more and more orders. But going forward, we'll see that how it's really comes out with regard to our -- winning the orders on a competitive bidding basis. We're also in parallel looking at with the Indian Navy, requesting them to give us on a nomination basis, the ships which we have made for them for example, 8 LCU ships, which are based at Port Blair, so that discussion and talks are on and that comes our way, that would give us assured business. So we are actually working on all the fronts to look at that how we should grow this refit and repair business. So this is going to be -- while the target has been set aggressively, it will be difficult to say that what percentage we would be able to achieve under juncture.

[Operator]

[Operator Instructions] The next question is from the line of Bhagyesh Kagalkar from HDFC Mutual Fund.

[Bhagyesh Kagalkar, Senior Equity Analyst]

Sir, can you explain to us, so the -- now that the NGMV contract is more or less given to [indiscernible], which are the big orders or small size or big whatever it is in the order book that we can target for next 2 years where the bids will be open, RFPs?

[Vipin Kumar Saxena, Chairman & MD]

Yes. While you know that it is a competitive era where most shipyards are trying to look at bidding very, very aggressively. And I don't know what kind of margins they are looking at that's why in the recent past, some orders have gone to other shipyards. But anyway, it's a process where everybody will have to keep learning the things from the [ bidding process still time ], and we look at evaluate, examine and analyze as to what needs to be done by us further. So as a part of that, those [indiscernible] already on. And as of now, we are looking at the stage faster to reserve bid, which has been submitted by us for the Indian Coast Guard. That is what we'll look forward for next, I would say, within a year or so, it should get opened, which has been long pending. Second one is that...

[Bhagyesh Kagalkar, Senior Equity Analyst]

What is size of this order, sir, fast patrol vessel?

[Vipin Kumar Saxena, Chairman & MD]

This will be in the range of around INR 800-odd crores. And the other one is, I would say, a [ 12 ] number air cushion vessels that was for the Coast Guard and for the Indian Army, ACVs, but that RFP has been withdrawn, and we hope that in next -- again, this month itself or maybe next one, a revised RFP would be coming out. So we know that hovercraft, basically ACV is nothing but a hovercraft. So we are the only one which we have made the hovercraft and supply to the Indian Coast Guard earlier. So we'll be bidding very, I would say, strong on that ACV project. And the third one is now towards the 11 number of new generation offshore patrol vessel NGOPV. And by 27th of August, we are supposed to submit the bids for construction of these 11 NGOPVs. So these are the...

[Bhagyesh Kagalkar, Senior Equity Analyst]

What is the price of these?

[Vipin Kumar Saxena, Chairman & MD]

Huh?

[Bhagyesh Kagalkar, Senior Equity Analyst]

Price of these all?

[Vipin Kumar Saxena, Chairman & MD]

So I think that each ship -- so they have got a different kind of assessment kind of thing as for the RFP terms and conditions. So we expect it to be around -- could be in the range of -- it would be in the range of INR 5,000 crore or INR 6,000-odd crores because it depends on what kind of the way things would be fit there. But it will be a huge huge order. They are looking at 7 plus 4. So L1 shipyard will be having 7 ships and L2 shipyard if it matches the cost of L1, 4 ships will be given to them. And if nobody is able to match the cost of the L1, that is all 11 will go to a single shipyard. So it is fairly a big order, and we are working towards that to participate in the bid also.

[Bhagyesh Kagalkar, Senior Equity Analyst]

So broadly around INR 8,000 crores or INR 10,000 crores of bids you're participating it in the next 1 year?

[Vipin Kumar Saxena, Chairman & MD]

Yes.

[Operator]

The next question is from the line of Venkatesh from LogicTree.

[Unknown Analyst]

Sir, just a continuation of the earlier question, the air cushion vessels, the hovercraft, what is the size of the orders, usually? And then for the offshore patrol vessel 11 numbers, usually, what is the execution time frame, if at all, you are able to execute?

[Vipin Kumar Saxena, Chairman & MD]

Yes. As far as the hovercraft is concerned, we expect it to be in the same around INR 750 crores or INR 800-odd crores range, okay? And what was your second question?

[Unknown Analyst]

The execution time frame for the patrol vessels, 11 numbers?

[Vipin Kumar Saxena, Chairman & MD]

Yes. So as for the RFP terms and condition is concerned, the first ship delivery will be in 42 months. And then thereafter, each ship 6 months in delivery.

[Unknown Analyst]

Okay. [ 42 ], okay. So broadly 4 years, sir?

[Vipin Kumar Saxena, Chairman & MD]

No, it could be more. 42 months, that are now for each ship, 6 months. So in a year, we will have 2 ships getting delivered.

[Operator]

The next question is from the line of Umesh Raut from Dolat Capital.

[Umesh Raut, Vice President of Research]

Sir, in your recently published annual report, you have mentioned about one particular initiative in your future plans that to include the new range of nondefense maritime products. So basically, I wanted to understand what kind of these products are and how the business potential is looking like?

[Vipin Kumar Saxena, Chairman & MD]

See, the thing is that when we talk about the nondefense product. The thing is that we are looking at Inland Water Transport and Inland Water Authority of India. And you know that the Government of India is giving huge trust on the riverine transportation. So this is one interesting area wherein having so much of expertise and having so many boats also built for the Ministry of Home Affairs around 80-plus odd boats we have built for them. And also now, we are making the -- in fact, in the past, we have made a huge number of commercial civilian vessels. So that tubs, the bridges, the various boats, ferries and likewise, I see that if you look at the government, the Bangladesh Fisheries Department, what is that? There are patrol vessels to use by the fisheries department. So I see that there's a huge potential exist where GRSE should -- we are focusing on developing this because earlier, we have actually focused only on the defense sector that is the Indian Navy, Indian Coast Guard. Whether it is internal requirements in the country or export also, so we are not restricting ourselves only towards the defense platforms. Therefore, we have now become more and more open to do the R&D and also to develop new kind of technology, which meets the requirement of the nondefense areas. For example, we have been talking to the Bengal government. We have had a discussion with their transport minister. They are, again, very keen for a green study, basically nonfuel-based, is batty-operated new technologies. We are already designing the thing. We are collaborating with one of the well renowned companies in terms of the R&D efforts, and we'll develop that. So we -- this is how we are looking at developing new kind of things. And also the Bailey bridge which I'm hearing that earlier you supply to Indian Army and BRO, a lot of state governments are also looking at the Bailey bridges, portable steel Bailey bridges which are being used by different states, especially in the north and northeast and also we have [indiscernible], Bihar, now in Maharashtra, where is very difficult terrain, is because of great news, and they can be assembled in, say, 7 to 8, 10 days time. And then 220 feet is a length and which is 4.3 single lane and 7.5 meters is a double lane and they can carry 100 tons of the load. So they are, again, a very good product. We are already having it with us, and we want to further improve upon new products are being developed, double lane which has been already developed and trials have been successful. And also, we would say, in terms of the -- our Taratala Unit, which manufactures the various deck machinery items, capstans and boat davits. It can be also used by any other commercial ships as well. So there are different possibilities. We have an engineering division. We have now boat building division. So these are the areas which we are very seriously looking at and expanding our footprint in different fields.

[Umesh Raut, Vice President of Research]

Got it, sir. Got it. Sir, over the medium course, is it possible for us to work with any foreign shipyard as a part of supply agreement for some of the components related to the shipbuilding?

[Vipin Kumar Saxena, Chairman & MD]

See, we already -- as far as a component of shipbuilding is concerned, shipyard doesn't supply the component. But yes, we are working with -- we have the collaborative agreement with the Bangladesh Shipyard, Khulna Shipyard and Ananda Shipyard there in Bangladesh. Aim is to see to it that if they get the order, we should go forward and provide them the know-how technology, design support, project management support, et cetera, so they can build the ships with our help in their country. But we are -- we feel that we have got a lot to offer. And likewise, we have been talking to some of the shipyard, they -- some shipyard in Kenya or some other countries where we are exploring the possibility that can we collaborate and do the things locally. Because every country today is looking for the local manufacturing. So can we go forward and provide them the kind of this design support et cetera. So these are the areas and opportunities where we are looking at working with the different foreign shipyards or the firms. And also, we are looking at some of the companies who are product suppliers and trying to collaborate with them. For example, we already are working with MTU Germany for the supply of the prime movers as far as the engines are concerned. At our Diesel Engine Plant Ranchi, which is a big one, we are doing a hell of a lot of work for the Navy and the Coast Guard in terms of the engine overhauling, engine assembly, engine trials. There are CKD and CKD components are coming from MTU Germany. So we undertake the complete assembly of the major marine diesel engines, these are alternators. So likewise, and also like MTS, U.K., where we are working with them for helo traversing system, rail-less helicopter traversing system. And many other companies where we are collaborating with them to take the technology and develop them here in our country, maximize the indigenous component and eventually achieve [Foreign Language] in those areas.

[Operator]

[Operator Instructions] Ladies and gentlemen, that was the last question for today. Well, this is the management, we have just one question lined up. Can we take that up?

[Vipin Kumar Saxena, Chairman & MD]

Yes.

[Operator]

The next question is from the line of Venkatesh from Logic Tree.

[Unknown Analyst]

Sir, you had mentioned that there is -- this year will be a relatively good year for us in terms of order execution. So FY '22, FY '23 and '24, the next 3 years, if I understand from previous calls or broadly for the current execution, there would be high-performance years. Would that be a right assumption, sir, the next 3 years?

[Vipin Kumar Saxena, Chairman & MD]

That's correct because if no, I would say, further pandemic or any other external factors does not impede our activities which is beyond our control, I'm quite sure and hopeful that the FY '22 and beyond is going to be much, much better for the shipyard. Because of the [indiscernible] the way things are progressing in terms of so many ships, building up happening and hulls getting ready and thereafter equipment will start going and then 5 projects, 17 ships, you can imagine that it has to happen. There's no other way out. So it is going to be good.

[Operator]

[Operator Instructions] Ladies and gentlemen, that was the last question for today. Thank you for attending the conference call. If you have any further queries, please send an e-mail to [e-mail]. Thank you all.