Garden Reach Shipbuilders & Engineers Ltd

NSE:GRSE

Earnings Call Transcript 2023-Q1

[Operator]

Good afternoon, ladies and gentlemen. I'm Michelle, 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 2023.

We have with us today, Shri Commodore P R Hari, Chairman and Managing Director, Additional Charge; and Shri R.K. Dash, Director, Finance.

[Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Shri Commodore P R Hari, Chairman and Managing Director. Thank you, and over to you, sir.

[P. Hari, executive]

Thank you, Michelle. And also let me clarify that it is not Additional Charge. So I have been in chair as the Chairman and Managing Director with effect from 10th of June this year.

Ladies and gentlemen, a very good afternoon to all of you. I'm Commodore Hari, as I mentioned, the Chairman and Managing Director of this company. And let me welcome you all to this conference call to discuss the financial performance of the company for the first quarter that ended on 30th of June, 2022. I have here with me, Shri Ramesh Kumar Dash, Director, Finance; Mrs. Aparajita Ghosh, Additional General Manager, in-charge Finance; and Shri Sandeep Mahapatra, the Company Secretary.

We have been interacting regularly with you all through con call and I appreciate that you are all familiar with the role and the broad functioning of our company. Before we move on to the financial performance during Q1 FY '23, let me take you all through the physical performance of the shipyard during the first quarter. Our order book position and the broad execution plan for these orders. As of 30th June, 2022, our order book stands at INR 23,583 crores.

With shipbuilding, that is our primary business, forming almost 98% of the total, which is INR 23,300 crores comes from the ship building segment, and ship repairs contributed INR 43 crores. We have a business vertical, the engineering division that comprises of bailey bridges, that is portable steel bridges and deck machinery, INR 102 crores coming from this segment and the Engines division, Diesel Engines division contributing INR 138 crores.

As I mentioned, shipping building earns almost 98% of our revenue and from the current order book of INR 23,300 crores comprising of 7 projects, including encompassing 23 platforms. These include 15 ships for the Indian Navy, that is 3 ships of the P17 Alpha advanced Frigates; 8 ships of the anti-submarine warfare Shallow Water Crafts; and 4 ships of the Survey Vessel Large project. All these put together comes to 15, as I had mentioned. The order we are executing for the Indian Coast Guard for a fast patrol vessel, a project for the Government of Bangladesh comprising of 8 platforms, 8 petrol boats; 1 passengers cum cargo vessel for the Co-operative Republic of Guyana; and 1 project for a next-generation electric ferry for the Government of West Bengal.

I'm happy to inform you that this order has been received, this order from the Government of Bangladesh has been received very recently, and this is a breakthrough for us into the green energy market. And I'm very confident that on completion of this project, there is a huge market potential, both for export and for domestic orders in this segment. That is the Green Energy segment.

On the fiscal performance side, FY '23 has started on a very positive note with 4 of our ships being launched during the first quarter. During one of my earlier con calls, I had mentioned that the launch is a very important milestone in the ship building cycle and that means the ships hulls are completely ready and the ship is being floated out for the first time. On completion of launch, the outfitting activities commence leading to the ship's delivery to the customer.

So as I mentioned, 4 ships have been launched during the first quarter. On 2nd of May, the fast patrol vessel that we are constructing for the Indian Coast Guard was launched. And on 28th of May, the second ship of the Survey Vessel Large project was launched. And on 15th of June, we launched the Export Ship, that is the passenger cum cargo vessel for the Co-operative Republic of Guyana, and on 15th of July, the second P17 Alpha ship was launched. This ship was launched by our Honourable Raksha Mantri, and this is a major event, considered that this ship is almost 6,700 tonnes in this statement.

In addition, on the 17th of June, we have laid the keel of 3 ships on a single day that is on 17th of June. We laid the keel of 1 Survey Vessel Large, and 2 Anti-Submarine Shallow Water Crafts. This is a very unique occasion, perhaps the first time in the country that 3 ships that too from 2 different warship building projects are being laid -- the keel of 3 ships has been laid on a single day.

On the ship repair segment, we are currently executing refit of a Coast Guard Vessel and have also 1 order for refits of 2 more ships. This is a testimony to the focus that we're giving on the ship repair pigment.

On the executions plan for the existing orders, as I has mentioned earlier, the first 2 ships of the P17 Alpha project have been already launched and construction of the third ship is in full swing. The first ship has achieved nearly 40% of the physical progress and AAA is undergoing the outfitting phase. The delivery of this ship is planned in 2025. The second ship, which was launched on 15th of July this year, is presently in drydock for the pre-phasing, that is the Pre-Contractor Sea Trials dry dock phase, and this ship is planned to be delivered during early 2026. The third ship is presently undergoing the pre-launch stage, and this ship is planned to be launched mid of next year. The delivery of this ship is planned during the 2026 second half.

As far as the Survey Vessel Large project is concerned, the first 2 ships have been already launched and the post launch outfitting is in progress, and both these ships are expected to be delivered during 2023. The third and fourth ships are the pre-launch stage, and these ships are planned to be delivered in 2024.

The Anti-Submarine Shallow Water Craft ships are at various stages of construction and the launch of the first 2 ships of these 8 ship project is planned during the current year. The completion of this project is scheduled by 2027, that's the delivery of all the ships is expected to be completed by 2027.

As I had mentioned, we had launched the passenger cum cargo vessel for Guyana during June this year, and this vessel is expected to be delivered by early 2023. Similarly, the fast patrol vessel, the construction, the post launch outfitting is in full flow, and we expect to deliver this ship also within the current financial year.

Same goes for the Bangladesh boats also. We will be completing this project, that is delivery of these 6 vessels to Government of Bangladesh during this financial year. I had mentioned that we have concluded a contract with the Government of West Bengal for the next generation electric ferry, which is a 12-month contract, and we'll be completing this project by July next year.

So, coming to the financial performance. The Q1 results have been the best ever in the history of GRSE, with a revenue from operations going up from INR 304 crores to INR 580 crores, if you're comparing Q1 of '22 to Q1 of '23, registered a growth of 90-plus percentage. Similarly, the total income has grown from INR 344 crores, registering a growth of 80.4 percentage to INR 621 crores.

Our PBT has grown from INR 34 crores to INR 64 crores, registering a growth of 88.2 percentage and the PAT from INR 21 crores to INR 50 crores, growing by 143%. The operational profit has registered 5x growth with the current operating profit at INR 23.39 crores. Having said that the Q1 has been very encouraging, and I expect good growth during the financial year in terms of revenue and profits.

With a very interesting outlook and starting the financial on a right note, our focus now is to ensure that the physical construction of the ships progress smoothly and the orders are executed on time. So towards this, our thrust areas are enhanced operational efficiency through internal process improvements, digitalization and artificial intelligence in applicable segment of our operations, thrust on exports, ship repair and the technical segment to enhance the revenue generation from these areas and adoption of an aggressive bidding strategy to win new orders.

Thank you. I concluded my introductory remarks. I'm open for questions now.

[Operator]

We will now begin the Question-and-Answer Session. [Operator Instructions] The first question is from the line of Bhagyesh Kagalkar from HDFC Mutual Funds.

[Bhagyesh Kagalkar, analyst]

One or 2 questions over here. One is on the margin issue, can you give guidance for this year, as well as the next 2 years, a broad guidance? And secondly, looking into future, for next 2 to 3 years, which are big orders that you are going to bid first in the next 18 months to 24 months? Yes, that's all.

[P. Hari, executive]

Thank you, Mr. Kagalkar. Coming to the margins, the Q1 margins are in the range of 10.35% PBT, and 8.08% PAT. See, I elaborated in the previous discussions also, in ship building when we say profit margins, anything which is satisfactory is around 7.5%. As I had just mentioned, our PBT margins of 10.35% and the PAT is 8.08% and we are above this threshold. We are confident of maintaining similar margins in the coming times also, considering our order book and the execution plan.

Now coming to the orders on the annual. This year, 2 proposals for the Ministry of Defense has been played by the Defense Acquisition Council. We have given them for 2 proposals, one sometime in June, I think, I'm not sure about the date. It's a large quantum, INR 76,000 crores that been approved by the DAC, of which INR 36,000 crores pertain to a naval project for 18 month next-generation projects.

The second is the recent approval in July, again by the DAC for, on INR 27,000 crores of ships, there is a proposal for 14 fast patrol vessels for the Indian Coast Guard. Of course, the order values expected from the fast patrol vessels is to the tune of around INR 3,000 crores. The other order is -- order value is INR 36,000 crores. As per the indications, this is likely to be split among our 2 shipyards. Here we have an advantage, GRSE has built and delivered Missile Corvettes, both the Missile Corvettes and Anti-Submarine Warfare Corvettes to the Indian Navy and all these ships are in active service. So we have the resilient expertise and the capabilities and the resources. However, as I mentioned, this will be coming on a limited tender basis among all these shipyards. But the probability of getting these increases, because it is being put into shipyards first.

And second, our bidding strategy, continuing our experience and expertise, confident it will be appropriate to get a chunk of this order. Coming to the -- we expect the RFP to come out sometime next year, on this time, particularly in the RFP issuance and however it ranges between 12 months to 18 months, depending upon transition, first expected order that is on [indiscernible]. And second, as I mentioned is about the fast patrol vessels for Indian coast guard and the order value is expected to be to the tune INR 2,857 crores. Here the stakeholders are the 5 -- the contenders are the 5 shipyards, the 4 DPSU shipyards, plus the Cochin Shipyard, it's not a good time for bidding this.

There is also an RFI that is expected from the Indian Navy. There was an RFI issue sometime last to last year for a landing platform dock, LPD. The order values to the tune of -- there are 2 of them, which are likely to come up. The order value is expected to the tune of around INR 25,000 crores to INR 30,000 crores. So this also we'll be bidding. These in a nutshell, these in a nutshell are the orders that are on the anvil. Thank you.

[Operator]

Thank you. The next question is from the line of Rohit N from Antique Stockbroking Limited.

[Rohit Natarajan, analyst]

Sir, if you could help us with physical progress of the first, second and the third P17 Alpha, that is -- especially with the Goliath Crane coming up, what exactly the -- those common physical progress look like?

[P. Hari, executive]

Sure. Thank you, Mr. Rohit. Coming to the physical progress of the first 3 P17 Alpha ships. The first ship is presently plus 40% physical progress, that is the first P17 Alpha that just launched sometime during December 2020. And the second ship is presently at [indiscernible] catching up very fast. So we launched the ship almost 1.5 years after the first ship, after having learned the lessons and with doing our own process, the second ship is catching up very fast. And the third ship is approximately 14% physical progress.

Now coming to the Goliath Crane, since you mentioned in passing about the Goliath Crane. Now the Goliath Crane commissioning has been a major capability enhancer, as this crane, it's the 250 tonnes crane, covering the entire span of one side of the building blocks and areas where we navigate and assemble the blocks. So commissioning of this crane has been as I mentioned, a huge capability enhancer and then specific has been shifting the blocks on to the building first or the building top, where we can assemble it.

I hope this answers your query, the physical progress mentioned and the impact of the Goliath Crane.

[Rohit Natarajan, analyst]

Absolutely, absolutely, sir. It's perfectly all right, but, sir, looking at the physical progress, if I have to see, we had a mandate, if I understand it correctly, to complete all the work before FY '21 as such. So does this mean -- is it fair to assume that we will be moving to that INR 5,000 crores of revenue generation very soon?

[P. Hari, executive]

See, yes, we have a mandate. We have a plan to complete our projects by 2027, that's right. And so you may have observed, our order book stands at INR 23,386 crores -- Yes, INR 23,586 crores. Yes, so revenue accrual will definitely be during the next 5 years. And we expect the revenue to -- revenue generation to grow in an upward trajectory, especially during FY '23, FY '24 and FY '25 which are peak years where we expect our revenue to be catching.

[Rohit Natarajan, analyst]

Sir, any guidance that you would want to touch on like how those numbers would look like in this [indiscernible] and maybe some one-offs that you incurred?

[P. Hari, executive]

See, you've seen the first quarter results, you've seen the first quarter results, you have seen the last quarter of FY '22, you've seen the Q3 of '22. So there is a [indiscernible]. Just to sum up. I'm not -- naturally, I'll not be giving you exact figures, this seems like give you exact figures. But just to tell you that FY '23, '24 and '25, you will see a definite upward movement. And also the assurance, the reasonable assurance is that we've got to complete this project by FY '27. And maximum revenue generation occurs when the projects move from a state of physical progress of almost 40% to 65%. That is the state when the equipment goes, and when equipment, high-value equipment goes in, automatically the revenue generation increases. To answer your question again in a indirect FY '23, '24, '25, we can expect a substantial increase. Thank you.

[Rohit Natarajan, analyst]

Sir, final question from my side, if I may. You highlighted lot of opportunities coming up, especially this close to INR 750 billion of loss in terms of the new generation corvettes and even in the fast patrol vessel. If I have to look at the capacity that you have at this point in time, the order backlog that you have at this point in time, what is this weak order backlog that you can have at any given point in time? And what is the best case execution you can deliver?

[P. Hari, executive]

Okay. Now you had mentioned 2 projects, that is the next-generation products. The total value of this order is around INR 36,000 crores. So if you are splitting it between, since the government decision is to split it between 2 shipyards, the best case scenario is 5%, one. And these are large ships, akin to the -- I would not say as big as P17 Alpha ships, so akin to that ships that we have delivered Anti-Submarine Corvettes which we have delivered, the P28 projects a couple of years back.

Now the FPVs are small ships, as evident from the order value, but though the numbers are large, here we can go to the pre-production. So now coming to the capacity. Directly today have a product capacity, approval capacity is to build a 20 warships concurrently. These include 8 warship large and 12 small or medium sized warships. So when you say concurrent construction and with the project teams stagger, at every point of time, in a ships project, one ship still be at a post-launch space, the second and third ships perhaps at the pre-launch phase. So all put together, 20 ships we can undertake concurrently.

Now on real terms, the corvette, if at all the order comes to us, with the best case scenario of 5 ships coming to us, the most likely, yes, when the order typically will be -- the contract will be concluded will be 2024, the first quarter of 2022. From then, after the design is frozen, the production will start only by '25, and by 2025, all the backlog ships which we are at under construction would have definitely crossed the pre-launch space. Some of them that have been delivered, some of them could be at the post-launch space, as they can deliver into the entire pre-launch resources assets will be empty. So there is no [indiscernible] capacity.

Second. Now coming to the FPV project. FPVs are akin to the water [indiscernible], this is a niche product of Garden Reach Shipbuilders, having delivered nearly 30-plus platforms to both Indian coast guard. So we have a serious production line to address the requirement of fast patrol vessels. And you may have -- may be aware that we have taken over a facility, the Raja Bagan Dockyard from the Central Inland Water Transport Corporation early, in 2006. And we have developed this into a full-fledged independent facility for construction of small warships. And this is where we'll be focusing on construction of fast patrol vessels.

So as far as capacity is concerned, there are no issues and as far as the backlogs and the current order book, no issues at all, because by the time with new orders, if we get it or when we get it, the backlog would have been already cleared.

[Operator]

The next question is from the line of Yash Shah from Vedant Securities LLP.

[Unknown Analyst]

I had just few questions that what will be the cash on books. And of this, what will be the part of advances that we have received from our clients? Hello?

[P. Hari, executive]

Yes, one second. Let me just check the results. Our percent cash on book is INR 3,270 crores. And of that, by the way, I would like to clarify, there is no advance. We don't get any advance. Whatever we will get are as per the project milestone. See in the Defense Acquisition Process we had in 2020, there are x number of project milestones. As per, let us say, the previous month of that milestone, we get certain amount, which were requested for the design and the preparatory activities. So let me clarify, there is nothing on advance in warship and domestic warship. Of the INR 3,270 crores, project milestone cash is INR 3,140 crores and own cash is INR 130 crores. Thank you.

[Unknown Analyst]

Okay. And sir, second question on the ship repair side. What is our target going ahead that are we trying to expand on the western side of our western coast or what is it?

[P. Hari, executive]

See, ship repair is an area which we are focusing from the last year. And as a first step, what we had done was we have taken over a free drydocks of the Kolkata Port of Syama Prasad, because we're focused on long-term lease free drydocks. And in ship repair, for that matter, even in shipbuilding, one of the major asset that returns to your capabilities is the availability of drydocks. So we have taken over 3 drydocks and there are captive drydocks as of now. Now the results have started showing and we have started bidding aggressively for both commercial and coast guard ship repair order. And as I mentioned during my introductory remarks that we have also in the last year, in 2022 when we started we completed 4 ships. And during the current year, we are already in the process of completion by September mid we'll be completing the Mauritius coast guard ship and 2 more ship orders are in hand. So ship repairs is a cleansing facility in the vertical, which we intend focusing upon.

To answer your question, at this juncture, we would like to focus on our own captive facilities for ship repair plus the augmented capability that we have presently got with the Kolkata ports for free drydocks. So our focus on ship repairs will be in and around Kolkata. To answer your question, this actually covers the Eastern Sea build requirements.

[Operator]

The next question is from the line of Parimal Mithani from Credential Investments.

[Parimal Mithani, analyst]

Yes. Can you hear me? Hello?

[P. Hari, executive]

Sure. Please go ahead, I can hear you.

[Parimal Mithani, analyst]

Sir, I have a clarification. You mentioned cash on hand is INR 130 crores, which is owned by company, right?

[P. Hari, executive]

Correct.

[Parimal Mithani, analyst]

And, sir, going to your previous con call, sir, you mentioned last year in projects P17 Alpha, the executive was close to INR 3,500-odd crores. And in [indiscernible] was close to INR 400 crores. If I take the last year as a base, is it fair to say that this year is going to have a very high historic revenue in terms of FY '23, '24?

[P. Hari, executive]

Could you repeat the question, please?

[Parimal Mithani, analyst]

Sir, taking last year your construction for project P17 Alpha is INR 3,500-odd crores, as well as for [indiscernible] is around INR 370 crore that we did last year execution. Is it fair to say the value of production this year will be close to high levels [indiscernible] over the last 5 years in terms of INR 4,000 crores-odd?

[P. Hari, executive]

See, the last year, that is FY '22, our total value of production was to the tune of INR 1,650 crores -- INR 1,750 crores, that was the value of production from the -- during the last year. See, of this, definitely, P17 Alpha has contributed a large chunk. And this year, the proportion of [indiscernible] is definitely better, speaking on an earlier -- to answer to an earlier question, I had mentioned that the maximum revenue generation from a project, a ship, let's take a ship, comes when the ship between 40% to 65% finished. And again, I'm turning to a previous first question, I had mentioned that the first P17 Alpha has always touched the 40% progress.

Now of the -- I mentioned this question, of the INR 1,750-odd crores, which we has -- value of production last year. The revenue from P17 Alpha is close to INR 915 crores. The cumulative, look, what you're talking about INR 3,500 crore was the cumulative EOP derived from P17 Alpha till date, that absolutely you're right, that was INR 3,512 crores as of 31st March.

[Parimal Mithani, analyst]

And sir, just your -- is it fair to say that execution should be on a much higher side in terms of your P17 Alpha in terms of the launch? Just to make the revenue models. Just to make the revenue models [indiscernible].

[P. Hari, executive]

Revenue figures, you may like to extrapolate from our Q1 results is what I can say. But both -- see, I'll also mention that there are 2 services we intend delivering during the next -- early next financial year, that is FY '23 '24. So when the ship is scheduled to be delivered during the next financial year, the revenue accrual recognition from 2 of the services will be maximum during the current financial year. And the ship is moving from, let's say, 40% to 70% of progress. To answer your question, yes, the revenue generation from P17 Alpha, especially the first 2 ships, and more so on the first ship, and both the derivatives would be much, much larger than [indiscernible]. Thank you.

[Parimal Mithani, analyst]

Okay, sir. And sir, last question, if I can ask. Sir, you mentioned about the forthcoming orders which is of Corvette, as well as the landing platform. Who are the contenders in the Corvette business and the landing platform extending, if you can explore that?

[P. Hari, executive]

Okay. See, there are 4 of us from different shipyards plus Cochin Shipyard, there is another public sector undertaking under the Ministry of Revenue, so the 5 PSU shipyards, plus, of course, there is L&T and 2 small shipyards, Hooghly and SHOFT. Now, of these, the Corvette, the contenders are going to be definitely us, that is that ownership [indiscernible] shipyard. Now again, I have mentioned that having delivered 9 Corvettes and the only Indian shipyard to deliver 9 Corvettes, it is a government policy that nowadays the ships are being awarded on a competitive basis. This is a pure government policy. But the probability factor for winning this order is very high, considering that we are splitting this package of 8 ships in 2, that is 5 and 3. So the chances are very high.

Second, coming to the LPD. LPD, the contenders are Mazagon Dock, Cochin Shipyard, us and [indiscernible].

[Operator]

Thank you. The next question is from the line of Harshit Kapadia from Elara Capital.

[Harshit Kapadia, analyst]

I have a few questions. Can you update us on the order wise you were an L2 [indiscernible] L2 with Goa Shipyard, it's a INR 9,000 crore project. What's the status? There is a chance, then it could be [indiscernible] between you and Goa, and by when it is expected to [indiscernible]?

[P. Hari, executive]

Okay. Thank you, Mr. Harshit. Yes, we have been declared L2 in an RF2 floated by the Indian Navy for [indiscernible] the total number of 11 next-generation ocean going patrol vessels. And as you rightly said, the order value is to the tune of INR 9,000 crore to INR 9,500 crores. And as per the tender conditions, the order will be split between 2 shipyards. The L1 will get 7 and the L2 will get 4. So in effect, we will be getting associates. Right now, the negotiations are in progress between the customer, that is the Indian Navy and L1 shipyard. Once the negotiations are complete between the L1 and the customer, there after the contract between L2 [indiscernible] shipyard and [indiscernible]. We are hopeful that this contract will get completed during the year.

[Harshit Kapadia, analyst]

Okay. In [indiscernible] the competitor also mentioned by the discussions of P17B, just like P17A is there. So is there a -- and how large is that size? And by when do you expect that order to be -- you have to be expected in RFP to be floated, any color on that, sir?

[P. Hari, executive]

See, as per the maritime prospective plans of the Indian Navy, there is a definite requirement for the Navy to augment this frontline fleet. We are very hopeful that the people [indiscernible] project, right now it's still in liquid form. It is still in paper. The project may fructify in the next to 3 years to 4 years. This perhaps is the right time, because in the next 3 years to 4 years, the ongoing project, that is the P17 Alpha project will get completed. So, and I appreciate that the Navy will be matching time in such a way that once this project is completed in all aspects between us and the Mazagon Dock, the people will -- [indiscernible] will be put to most. So in real terms, it could take about 3 years to 4 years for the project to take it's leg, right now it's still in liquid form.

[Harshit Kapadia, analyst]

Sir, last question from my side. And the first participant asked the question would be margin. If you could also dwell something on the EBITDA margin front as well? And secondly, with your revenue rising every year during FY '23 to '25, do you expect -- how much margin bump-up may come next when you go to FY '24 and FY '25. Any color on that would be really helpful.

[P. Hari, executive]

Okay, margins, the 3 important margins, EBITDA margin for Q1 was 11.95% -- 11.98%, the PBT at 10.34%, and PAT at 8.08%. Now coming to, you has asked, what is in store in the coming year? See, our revenue is going to grow in the coming years is purely because the order book is healthy and the project execution phase is such that the revenue generation will be on a growth trajectory in the coming years. So naturally, the PBT, PAT and EBITDA will be more.

As far as margins are concerned, as I mentioned in response to an earlier query, that in ship building for projects which have run on competitive bidding, the best margins that we get is hovering around 7.5%, PBT margins. And so far, we have been above this threshold and this has been achieved mostly through our own internal efficiency improvement, internal efficiency, and we are confident of maintaining similar margins in future also.

[Harshit Kapadia, analyst]

But was there any bump up because of your revenue rising, would maybe be operating numbers, which has gone up because your revenues are rising, we understand 7.5% which you have given and how much about that and GRSE [indiscernible]?

[P. Hari, executive]

Yes. I actually, I wouldn't be in a position to quantify the amount, the percentage. But all I can say is that we'll be above this threshold.

[Operator]

Thank you. [Operator Instructions] The next question is from the line of Venkatesh Subramanian from LogicTree.

[Unknown]

I have 2 questions. First question is on the ship repair business that you talked about, where we have an outstanding order of INR 43 crores and engineering division has got INR 102 crores. And then you mentioned something else as well, which has got about INR 138 crores. I didn't get that right. So these 3 divisions, what kind -- how do we see the revenues panning out? Should we pair engineering division and the third one, would they be monetized this year, FY '23, or would it be FY '24?

[P. Hari, executive]

Okay. There are 3 verticals that everybody are aware that perhaps [indiscernible] shipyards, we are the only one who has diversified to [indiscernible]. Of course, some of the other shipyards have about 2 products other than warships or commercial ships. We have 3 business [indiscernible] where you rightly mentioned the INR 43 crores, the current order book. And definitely, this [indiscernible] will be accrued during the current financial year.

And the second is the engineering division segment, which comprises of 2 subverticals. One is the Bailey Bridges, which is a very interesting segment, totally steel bridges. And today, in India, we almost have 65% of domestic market. Yes, of course the other side of the domestic market expense is limited, with the major customers being the Indian Army, the [indiscernible] organization and, of course, some of the state governments and sort of little export potential for the friendly foreign countries, such as Nepal, Myanmar and Sudan and Bangladesh, now they also come to our line.

Now this orders of INR 102 crores between these 2 segments of which we expect around 70% to be completed during the current financial year and the next financial year the balance. But sort of the acquisition is a dynamic scenario. Today, I'm having an order book of INR 102 crores. And maybe next month I'll get a fresh order for around INR 20 crores on the [indiscernible] basis. We already have orders on that around INR 25 crores. It's a dynamic -- so to answer your question, of this INR 102 crores, which we have live as of now, around 70% will be company executing and recognizing during this financial year. So the balance coming in the next year, plus [indiscernible] we will get done till the second coming days or months.

The third division is an interesting, again, interesting but we have a diesel engine plant at Ranchi called DEP Ranchi, where we, at present, we have a license agreement with MTU in Germany. And we, engine, we have a dedicated respect there and thereafter, deliver these to the customers. Plus we have a -- the same facility, they have a dedicated setup for integration and trials for diesel alternative. Now this INR 138 crores, which is remaining in our order book kitty for this segment is through an order for the India maybe actually it's one of our projects for the P17 Alpha project, we are manufacturing, moreover assembling and delivering paper alternatives. This INR 138 crore, however will spill over to '23-'24, but it is purely as per the delivery schedule. And this will be realized between FY '23 and FY '20.

[Unknown]

And what would be the margins in ship repairs and in engineering division and as well as in the diesel engine conversions business?

[P. Hari, executive]

Here as evident as compared to shipbuilding, the volumes were very low or 96% of our orders are coming from [indiscernible]. Now coming to this segment, just considering it as small. The margins in case of daily printers is around 7% to 7.5% because see here, we have to compete with a large amount of small firms. And so the margins are fixed around 7% to 7.5%. And in case the ship repair, the margins are high, it is to the tune of around 20% margin. But should as you have noted, the volume is low. Definite focus is there on improving the business in this segment. And the diesel engines, presently we are just striking even, because it's the project for our own shipyards.

[Unknown]

Right. I got it, sir. So just a question on the cash balance which you mentioned. We have INR 3,000-odd crores of cash balance. Just to get some clarity on, we do our project at financials, which is for FY -- if we have a cash balance of INR 3,000 crores, as per your internal working capital management, at the end of this financial year, as on 31st March. FY '23, what is it likely to be? Just going to be a broad number, sir, I don't need an exact number.

[P. Hari, executive]

It will be around INR 3,000 crores. It will more or less, the cash balance is going to be around INR 3,000 crores.

[Unknown]

Okay, sir. So for the entire year, broadly, we will be maintaining broadly INR 3,000 crore cash balance for the next 9 months?

[P. Hari, executive]

For next financial, current financials we will be maintaining more or less the same -- similar kind of cash balance.

[Unknown]

Okay, sir. And one last question, sir. I know people have asked, but just a little clarity. Value of production, when we did the cycle of peak years FY '23, '24, '25, and if I take P17 Alpha, which is around INR 15,800-odd crores of production value remaining. If you want to complete the bulk of it in the next year, FY '23, '24 and '25, is it fair to assume that it's not linear, but the top line could range anywhere between INR 4,000 crores to INR 6,000 crores, INR 7,000 crores over the next 3 years, some peak, some low, some pause?

[P. Hari, executive]

A very logical question, that P17 Alpha, the revenue -- there is a order book value [indiscernible], to the tune of around INR 15,000 and with the delivery of the ships planned between '25 and '26, that is FY '26 first half and FY '27 second half. That is a broad band between which we plan to deliver the ships. So yes, again, some answer to a previous query, I had mentioned that maximum revenue recognition happens when the ship is moving from now, that is from around 40% to where it touches 65% to 70% where [indiscernible].

So phase, especially for the fresh ship has already started and it will move on, that phase for the first ship will move on till '24. For second ship it will move on until, maybe '24 second half and the third ship which will be '24, and '25 you will see an upward trajectory, which will consume most of the order book value from this project. Concurrently, with [indiscernible] large project maturing as and when we plan to deliver 2 of these ships in the coming -- for the next financial year, first one in next financial year. So revenue recognition from these 2, first 2 ships is also going to be high. So to sum up, though I'm not giving exact figures, '23, '24, '25 you can extrapolate the growth from what you have -- the financial success this quarter with respect to revenue recognition.

[Unknown]

Fine sir, that's very, very help, sir.

[Operator]

Thank you. As there are no further questions from the participants, I now hand the conference over to Shri Commodore P R Hari for closing comments.

[P. Hari, executive]

Yes. Thank you, Michelle. First, you made me Additional Incharge, now you made me Srihari, no problem, taken.

[Operator]

I'm so sorry, sir.

[P. Hari, executive]

No issues. Thank you and Thank you, Mr. Gaurav from Concept PR for organizing this conference call. I would like to say my sincere gratitude to all my analysts and investor friends who have taken time out of their busy schedule to listen to us today. If you have any further queries, I would request you all to please get in touch with us, and we'll be very happy to address all your queries. Thank you once again. Stay safe, stay healthy [indiscernible].

[Operator]

Thank you. On behalf of Garden Reach Shipbuilders & Engineers Limited, that concludes this conference. If you have any further queries, please send an e-mail to [e-mail]. Thank you for joining us, and you may now disconnect your lines.