Garden Reach Shipbuilders & Engineers Ltd

NSE:GRSE

Earnings Call Analysis

Strong Growth Driven by Defense Contracts

Garden Reach Shipbuilders & Engineers Limited reported robust performance with a total order book of ₹25,231 crores, primarily from defense contracts. Major projects include the P-17 Alpha warships and various export contracts. The management forecasts 25-30% revenue growth for FY '25 and similar growth for the next year, maintaining a PAT margin of 7.5-8%. They anticipate peak revenue in FY '26, nearing ₹6,000 crores annually. Recent initiatives in green shipping and autonomous platforms signal future growth prospects.

Navigating Growth in Shipbuilding

The earnings call primarily outlines the strong growth trajectory for Garden Reach Shipbuilders & Engineers Limited (GRSE) as it aims to capitalize on its substantial order book. The current order book stands at approximately INR 25,231.29 crores, a diverse portfolio that is predominantly shipbuilding-related, primarily focusing on naval projects. This includes high-value initiatives like the P-17 Alpha project which is now generating significant revenues.

Revenue Guidance Provides Clarity

The management provided a robust growth guidance of 25% to 30% for the current and next fiscal year. This translates to expected revenues of about INR 5,000 crores for FY '25 and potentially reaching up to INR 6,500 crores in FY '26. The company plans to sustain this momentum, leveraging the revenue maturity phase of several projects. The P-17 Alpha project alone is expected to significantly contribute to these figures, with completion milestones scheduled for FY '27.

Profit Margins on Steady Course

Management assured stakeholders that the profit after tax (PAT) margins would be maintained in the range of 7.5% to 8%. This consistency reflects GRSE's operational efficiency in shipbuilding, which requires balancing revenue growth with margin management. It is important to note that while revenue is projected to rise, the margin increase may not be directly proportional, necessitating a careful strategic approach.

Key Projects and Timelines

The P-17 Alpha project involves constructing three warships, with the first ship set for delivery in mid-calendar year 2025, the second by February 2026, and the third around August of the same year. In addition to the P-17 Alpha, the company is actively executing various naval and export projects, reinforcing its strong position in the market. Upcoming contracts, including high-value projects like the next-generation corvettes and mine countermeasure vessels, will further bolster the order book in the coming years.

Future Opportunities and Market Position

The call also highlighted numerous upcoming opportunities in the pipeline, with expectations for Request for Proposals (RFPs) for several projects, including multipurpose vessels and ocean-going patrol vessels. The potential order values for these projects cumulatively could exceed INR 30,000 crores. This positions GRSE for sustainable growth amid increasing demands from the Indian Navy and Coast Guard, establishing a robust framework for future expansions.

Short-term Challenges and Strategic Resilience

While there may be short-term challenges, such as geopolitical tensions affecting adjacent projects, GRSE's operational strategy remains resilient. The leadership emphasized that at most, only 1.2% of the order value is impacted, indicating that ongoing production within India minimizes external risks. This adaptability ensures that GRSE continues to meet delivery timelines without significant disruptions.

Capacity Enhancements to Meet Increased Demand

To support growing project demands, GRSE is enhancing its shipbuilding capacity from 20 to 24 platforms, leveraging both existing facilities and long-term leases taken from the Kolkata Port Trust for additional dry dock space. This proactive capacity expansion positions the company well to execute current and future contracts efficiently, maintaining competitive leverage in the shipbuilding sector.

Conclusion: A Strong Investment Proposition

Overall, GRSE showcases a compelling narrative of growth, strategic execution, and capability enhancement that appeals to both novice and experienced investors. With substantial revenue growth estimates, stable profit margins, a strong project pipeline, and a clear strategy for capacity expansion, GRSE appears to be well-positioned for sustained success in the shipbuilding industry.

Earnings Call Transcript 2025-Q1

[Operator]

Good afternoon, ladies and gentlemen. I'm auditor for this conference. Welcome to the conference call of Garden Reach Shipbuilders & Engineers Limited, arranged by Concept Investor Relations to discuss its Q1 FY '25 results.

We have with us today Commodore P.R. Hari, Indian Navy Retired, Chairman and Managing Director; and Shri R.K. Dash, Director of Finance and CFO.

[Operator Instructions] I would now like to hand the floor to Mr. Commodore P.R. Hari, Chairman and Managing Director. Thank you, and over to you, sir.

[P. Hari, executive]

Thank you, Aditya. Ladies and gentlemen, a very good afternoon to each one of you. I'm P.R. Hari, Chairman and Managing Director of your company. And along with me here are Shri R.K. Dash, Chief Finance Officer and Director Finance; Ms. Aparajita Ghosh, General Manager, Finance; and Mr. Sandeep Mahapatra, the company Secretary.

My warm regards to all the participants who have taken their time in their busy schedule to attend this conference call. Before we discuss the financial highlights of Q1 FY '25, I shall try and highlight and enlighten you on the operational performance of the company and a few other aspects that may be of interest to you.

I shall go in the following sequence: I shall first touch upon our order book position. The new orders, which we have received in the recent past, their execution status and the plan of action for completion of the projects -- ongoing projects; the orders on the anvil; and a glimpse on the future outlook.

Coming to the order book position. Our total order book stands at INR 25,231.29 crores as on 30th June 2024, which comprises of mostly shipbuilding orders. So I shall first touch upon the shipbuilding orders: the P-17 Alpha project of 3 warships being constructed for the Indian Navy; 8 Anti-Submarine Shallow Water Crafts; 3 Survey Vessels Large; and 4 Next-generation Ocean-Going Patrol Vessels. All these ships put together we are constructing 18 warships for the India Navy. In addition to these shipbuilding projects for the Navy, we are also executing a project for the Ministry of Earth Sciences, an Oceanographic research vessel.

And in addition, we are also executing 4 export projects: one oceangoing tug; an advanced 1,000-meter cube of a dredger; 3 fast patrol boats; and 4 multipurpose vessels. Among these, the last 2, 3 months, we have concluded the 4 contracts. The multipurpose vessel contract for 4 ships was concluded with the European client, and there is an option for financing this quantity by another 4. That means the total project could be for 8 ships.

Then, of course, 2 export projects that I mentioned regarding the dredger and the oceangoing tug and the oceanographic research vessel. All these 4 projects were -- the contract for all these projects were signed during the last 3 months.

We have also been declared L1 for a project for the DRDO, Naval Sociological and Oceanographic Laboratory, for an acoustic research vessel; for the Geological Survey of India, 2 coastal research vessels; and for the Government of West Bengal, 2 projects for hybrid -- advanced hybrid service.

Coming to the projects on the anvil. I have been -- during the last few interactions, I have been stating that the next-generation corvette project, the RFP is likely to be out. Yes, the RFP is out, and we are currently in the process preparation of the deck and as far as soon as we can see, things are moving on the right track. This is a high-value project around INR 36,000 crores, split between 2 shipyards, the L1 shipyard getting 5 ships and the L2 shipyard getting 3 ships.

Thereafter, with both the Navy and the Coast Guard looking forward to expanding their fleet size, we expect the RFPs for 2 multipurpose vessels, approximate order value could be to the tune of around INR 1,000 to INR 1,200 crores; 5 next-generation survey vessels; 21 waterjet FAPs; 12 mine countermeasure vessels; 22 interceptor boats; and, of course, followed by the P-17 Bravo and the landing platform dock.

In addition to these RFPs on Coast Guard, Indian Coast Guard are likely to come for 6 next-generation oceangoing vessels and 18 next-generation fast patrol vessels.

I'm leaving out the projects that maybe, have in their horizon, that is the next-generation destroyers, the submarines and the indigenous aircraft carrier.

Now coming to the overview of the projects that we are currently executing. I shall now provide you inputs as to what stage each of these projects have played so far.

The P-17 Alpha project is a 3-ship project that we are executing. The first ship has touched almost 75 percentage of physical progress of construction and the ship is currently being readied for harbor and sea trials, the second ship has reached around 62 percentage of construction, and the third ship is following closely behind with around 50 percentage of construction. Now the first ship is expected to be delivered in the mid of the next calendar year and the last of the ships is planned to be delivered during the mid of the calendar year 2026.

Coming to the survey vessel large project. This is the 4-ship project. Of this, the first ship has already been delivered. It was delivered -- the ship was delivered during the end of the last calendar year 2023, December, we delivered the ship.

The second ship has completed all the trials, and she is now getting ready for delivery and we intend delivering this shift during the end of this month.

The third and fourth ships: the third ship has reached almost [ 74 ] percentage of physical program, and she's getting ready for trial; and the fourth ship has touched around 70% of physical construction. We intend completing this project, that means delivery of the balance 3 ships -- all the 3 ships by the first quarter of FY '26.

Coming to the Anti-Submarine Shallow Water Craft project. This is a 16-ship project, 8 being constructed by GRSE and 8 by another PSU shipyard. Of our 8 ships, the first ship has undergone the harbor trials and she's getting ready for the speed trials, and we expect to deliver this ship in another 3 months. The ship has now reached a physical progress of construction of around 90%.

The next ship has touched around 65%, the third ship around 55% and so on. As far as this project is concerned, we intend completing this project by FY '27, that means delivery of all the 8 ships.

Coming to the next-generation OPV project, 4-ship project, we signed a contract during March last year. The progress is good, and the first 2 ships have already touched around 25 percentage of construction, and we have already started production of the last 2 ships also.

As far as the new orders, which we have -- for which we have signed a contract during the last 3 months, the preproduction activities like the design activities, commercial activities are currently in progress, and we expect all these projects to move as per schedule.

Now I have touched upon the -- our main verticals, that is the shipbuilding. And in addition to shipbuilding, our other business verticals include ship repairs; commercial shipbuilding, of course, I touched on commercial shipbuilding within the core shipbuilding activity. In case of ship repairs, we started in a very modest fashion around 2 years back. And at that point of time, around 1% or just about 1 percentage of our revenue was being generated by -- through ship repair.

And over the last 2 years, we have enhanced it to almost 5%. In addition to ship repairs, we also have a vertical on portable steel bridges. Here, as I stated before, we were and we are -- we continue to be the market leader -- Indian market leader. I'm happy to inform you that the turnover; of course, it is modest, if you look at our overall turnover, we've enhanced the turnover from around INR 60 crores to INR 140 crores recently and the tempo is being maintained. And we have live MOUs with the Border Roads Organization, the National Highway Infrastructure Development Corporation and a few of the state Public Works Department. So this vertical is currently doing well.

In addition to this, we had ventured into green shipping. In green shipping, we had -- during our last interaction, we had mentioned -- I had mentioned that we had completed a project for the Government of West Bengal, a fully electric ferry. This ferry is the largest in terms of passenger capacity within India, 150-passenger capacity ferry.

So we have done the technical delivery of the ship to the government, and we expect the formal takeover during the coming month. Happy to inform you that I had mentioned before, that we have won 2 more projects for the Government of West Bengal for construction of 15 in number advanced hybrid ferries. Here, we see a huge potential because as with many other European nations, India also intends to go green as early as possible, specifically for inland water transportation.

So this is an area where we see huge potential, and we are moving on the right track, one product already ready and delivered. And with this new project coming up from the Government of West Bengal for 13 more ferries, I feel we have made a good foothold in this market. Export has been a focus area for us. During our last interaction, I have stated that in our next meeting, that is today, I'll be able to share you the happy news of contract, which was then being negotiated.

We have concluded a contract with a European client, a German client, for 4 multipurpose vessels. As I had mentioned, for -- with an option to add 4 more vessels. Now with most of the European nations looking at India as a destination for construction of commercial vessels, we see a huge opportunity on this front.

Autonomous platforms. With the Navy having promulgated its autonomous road map, we see future on development of autonomous platforms. With this intent, we had successfully developed prototypes for surface and subsurface autonomous platforms, and we are in the process of developing a maritime operations capable drone.

So once that product is also developed, we would have autonomous platforms in all 3 domains of operation. As a nation, with respect to development of autonomous platforms, the technology competency is still in nascent states, but we expect in the future, maybe in the next 5 to 10 years, market opportunities for autonomous platforms will be definitely on uprise.

As far as collaborations are concerned, we have active collaborations with globally renowned OEMs for coproduction of marine diesel engines and for water jets. What we intend doing is to translate these MOUs to license agreements, which will in turn be utilized for coproduction of these equipments for use on board India Naval platforms.

So in a nutshell, with maybe Coast Guard on a fleet expansion trial, the opportunities that are available for us in the next -- in the immediate future and in the foreseeable future are substantial.

I've given you a glimpse earlier on the platforms that are likely to be coming up through RFPs. We shall also be focusing on ship repairs; exports, specifically for commercial vessels; green platform development; and development of marine diesel engines, while nurturing the small vertical of our portable steel bridges division.

I am finished. We can -- I'm open for any questions from you now.

[Operator]

[Operator Instructions]

Our first question is from the line of Amit Dixit from ICICI Securities.

[Amit Dixit, analyst]

I have 3 questions. So my first question is on the order book that we have at the moment. And if you can split it across the platforms that we are currently doing? That is the first question.

[P. Hari, executive]

Yes, yes, please go ahead. I will take all your questions and answer them together.

[Amit Dixit, analyst]

Okay. The second one is that considering the current crisis in Bangladesh, I understand that we had 2 orders from Bangladesh also. So do we expect some delay in execution or delay in payment? And Bangladesh was one of the countries where in past also, we have supplied vessels. So are we looking at a little bit of pause in ordering from that country? The third question is on next-generation corvettes. If -- while you have highlighted that the RFP is out now, when do we expect the order for this? These are my 3 questions, sir.

[P. Hari, executive]

Okay. Thank you. Thank you, Mr. Amit. Now coming to the order book details. The order book as on 30th of June stands at INR 25,231.29 crores. I'll just give a breakup of this. The 90% of this comes from the Shipbuilding segment. The P-17 Alpha, the remaining portion of the order book, has [ INR 14,392 ] crores. That comes to almost 55 to 56 percentage of the total order book. The Anti-Submarine Shallow Water Craft, INR 4,600 crores approximately. Survey Vessel Large, INR 855 crores. This project is, as I have mentioned, it is likely to finish within a year.

The Next-generation Ocean-Going Patrol Vessel, INR 8,183 crores. The oceanographic research vessel for the Ministry of Earth Sciences is INR 800 crores. The export orders, that is the multipurpose vessels, the dredger and the oceangoing tug are put together around INR 750 crores. In addition to that, we also have another for around INR 200 crores, [indiscernible]. So this, you see a broad breakdown of the order book.

Now coming to the second point, what you had mentioned about Bangladesh. See, I have given you an overall status of the order book. Order book, total value is INR 25,231 crores. The percentage of the Bangladesh orders both put together is just about 1.2 percentage. So any combination, the impact is insignificant, one.

Second, we do not see any issue. Unlike a normal manufacturing industry, whether you place some order for a product and you're getting within a day, within a month, within a week. Here, shipping orders are long lead-time activities where depending upon the size of the platform, the delivery type, project duration changes from a very, very aggressive 18 months to 36 months and in some cases, 60 months.

We feel the current situation is a passing phase, as is every situation which has happened so far in the world. We don't see any impact on our price execution, but both the contracts have already been concluded. And right now, the preparatory activities of production are in hand. So to answer your question in a nutshell, we don't see any impact with respect to the current situation on project execution.

Third point, you had asked about that next-generation corvettes. As I mentioned, the RFP is out. So we expect the bid submission during this month. And from then in the normal course of events, how the system works, it takes around 4 months for the L1 to be declared and from then, the most optimistic scenario would be another 6 to 9 months for completion of contract.

So I presume I have answered all your queries. You can just calculate and see where it falls with respect to the contract for you. Thank you.

[Operator]

Our next question is from the line of Harshit Kapadia from Elara Capital.

[Harshit Kapadia, analyst]

Good set of quarter. I think this has been your best quarter as far as Q1 is concerned. So just wanted to get your sense, how do you see this run rate of INR 1,000 crores which you have achieved in Q1? Do you think this run rate is going to continue for the balance of the year, given that your order book has increased. That's the first question.

Secondly, can you delve a bit on the order pipeline apart from the next-generation corvette. Any large order which you are sensing, where discussions have started. Maybe RFI or RFP can be launched in next 2 or 3 years? Any color would be helpful.

[P. Hari, executive]

Thank you, Mr. Harshit. Thank you for your wishes regarding the Q1 results. Yes, the results have been good, and we feel that sets the good tempo for the full financial year.

Now, yes, the figures are good. You had asked a specific question on maintaining the run rate. I had mentioned this earlier also in a lighter vein, this is not a T20 match or even a 1-day series. In case of shipbuilding, that's the point which I would like to reiterate, it's the long -- it's like a test match at best.

So yes, we would like to maintain the run rate and considering the order book position and also the current state of projects where we are in a position for our major projects where the maturity is adequate for revenue generation, we feel we'll be able to maintain that tempo. So that is as per our project execution strategy, I repeat, and also the project current status, current maturity level and also the healthy order book what we are having.

Now you are asking about the order pipeline. I had mentioned that we have been declared L1 among a couple of RFPs that -- the bids have been opened recently. The contract negotiations are in progress. We expect these contracts to be signed within the next 3 to 6 months; plus the NGC, where we are also eagerly looking forward. This 8-ship contract with the L1 taking 5 and L2 taking 3. So the probability factor is very, very high.

In addition to this, both the Navy and the Coast Guard are likely to come up with RFPs. I cannot fix a time for that, but in my anticipation, if you just split it into 2 parts, 1 short term in the next 1 year and second is from the next 1 year to 4 years, that means a 3-year period from first to fourth year.

In the first year, the RFP is for multipurpose vessels 2 and the next-generation survey vessels 5 and 22 water jet FACs. These 3 are likely to come from the Navy.

And from the Coast Guard, 22 interceptor boats and 6 next-generation ocean-going. These are likely to come from the Coast Guard. Thereafter, from the first year to fourth year, the P-17 Bravo, then the mine countermeasure vessel -- MCMV, mine countermeasure vessel. It's a high-value order, 12 vessels at a AoN cost of around INR 32,000 crores. And the P-17 Bravo, of course, is high value project. So that is the mid- to long term, including the LPDs, which maybe has been waiting induction for the last 5 to 10 years.

[Harshit Kapadia, analyst]

Fair enough. Sir, this was really helpful. And just last question on the margin front. I know you have been addressing the margin query, but we are still not...

[P. Hari, executive]

I think your 3 questions are over. But margins seems to be a very favorite topic. So I will answer this question.

[Harshit Kapadia, analyst]

Okay. Just on our run rate has touched now INR 1,000 crores, but still margins are sub below 6%. So any color you can give us, that would be helpful. Will it be able to touch a double-digit margin if the run rate improves from here on?

[P. Hari, executive]

See, I'll put a discussion. I have mentioned this and I need to reiterate that in shipbuilding, where orders are won on -- competitive shipbuilding, where orders -- where majority of our revenue comes from shipbuilding, where orders are won on competitive basis.

We strive to maintain PAT margins of plus 7.5% to 8%. And we have been maintaining those margins, and we will continue maintaining those margin in the future also. But you also must understand that when the revenue goes up, revenue will grow substantially in the coming years, it certainly cannot be directly proportionate to the margin increase. We'll have to strike a balance. What I can assure you from our perspective is that we'll be able to maintain margins of similar kind, that means 8% PAT margins, in the coming quarters and years. Thank you.

[Operator]

[Operator Instructions] Our next question is from the line of Venkatesh from LogicTree Consultancy Private Limited.

[Venkatesh Subramanian, analyst]

Sir, based on your guidance and over the last many quarters on the shipbuilding cycle and how our execution has been progressing, we have been doing some modeling, but I think we did miss a couple of estimates of what we did. So considering that we have to complete what we have in hand right now by the middle of 27, CY '25-CY '26 would be a very crucial year. Would it be fair to assume that probably in FY '25 and FY '26, you will have to report top lines of close to INR 6,000 crores or INR 7,000-odd crores, probably in a trot and then another year of INR 6,000 crores?

Because if the execution is on track, this has to get completed rather than, I would say, INR 4,000 crores or INR 8,000 crores or something. So I'm just trying to figure out how it comes because the similar order cycle for Mazagon Docks follows the same pattern, but their vessels are slightly different. But could you just guide us, sir?

[P. Hari, executive]

Thank you, Mr. Venkatesh. I had explained about the shipbuilding cycle [indiscernible]. So there's a phase in shipbuilding where the revenue recognition is [ nice ]. So in our position, we are exactly in that phase. The prospect of max revenue generation project there is the P-17 Alpha.

Second aspect that you brought out was that considering the execution of these projects by FY '27, that is P-17 Alpha, by FY '27. Yes, the revenue generation will go up.

Now I will just highlight one aspect such that we are all on the same page. When a shipbuilding order is given, the order value for the P-17 Alpha project was initially INR 19,293 crores. After that, I'm just giving an example so that you understand clearly.

After that, the government enhanced the order value considering certain fluctuations from the developmental orders. Basically, some of the equipment are being developed within India. So considering the fluctuations in cost, they enhanced the order value to around INR 21,000 crores. Now that means order value for P-17 Alpha is INR 21,000 crores. Now of this INR 21,000 crores, 15% of the order value comprises of thing called base and depot spares. That is 85% of this INR 21,000 crores is the ship construction cost and 15% is the base and depot spares. Now what are these base and depot spares?

Base and depot spares are spares which we order and then supply to the Navy for maintaining the ship throughout its life cycle. Now some of these are required right from the first day that the ship is delivered to the successor or if any requirement comes. So I assume very, very conservative 5% of this 15% having been delivered before the ship is delivered to Navy. That leaves around 10%. This 10% is delivered over the next 1 or 2 years as per the Navy's requirement because some of [indiscernible].

Now in P-17 Alpha, out of this INR 21,000-odd crores, we have already completed around INR 7,000 crores. As I mentioned when we are discussing the order book, we are still left with around INR 14,392 crores. Now of this 15% base and depot spares, the 5% is delivered at the time of delivering of the ship, still 10% would be remaining. That means, around INR 1,500 crores out of this INR 14,392 crores will still remain for the next 1 year.

Same is applicable for all the naval shipbuilding projects. So what I'm trying to say is that when we deliver or complete a project with respect to delivery of the ship, still a percentage, I've given a ballpark of 10% remaining. Considering not withstanding all these things, when they complete the project by FY '27, there will still be -- you're absolutely right, there will still be a financial year where our revenues will cross the INR 6,000 crores. It is pure arithmetics.

I cannot pinpoint whether it is INR 5,700 crores or INR 6,200 crores, but between now, that is FY '25, '26 and naturally FY '27 also, because the ship will be delivered during the year. These 3 years are going to be the peak years, but FY '26 most likely the highest in terms of revenue generation.

[Operator]

Our next question is from the line of [ Karthik Bhat ], an individual investor.

[Unknown Attendee]

I missed the time line that you mentioned for 17-P Alpha, second and the third ship?

[P. Hari, executive]

Yes, Could you -- Mr. [ Karthik ], could you repeat once again. Your voice was a bit [indiscernible].

[Unknown Attendee]

Against the time line that you mentioned for delivery for second and the third P-17 Alpha, can you please repeat, sir?

[P. Hari, executive]

Sure. Our first ship, I'm sure you heard. The second ship P-17 Alpha, right now at around 62% construction, third ship around 50%. The second ship, that's what you wanted to know, we intend delivering by February 2026 and third ship by the mid of the same year, that means by around August, September 2026.

[Unknown Attendee]

Okay. Okay, sir. And sir, any further update on P-17 Bravo? When are we likely to have any further -- as you know, when it's likely to be...

[P. Hari, executive]

First point is that P-17 Bravo is definitely a project that is going to come because Navy wants to build more ships at the same time because they first built P-17, then now the P-17 Alpha and P-17 Bravo is very much on the anvil, but that is as per their perspective plan. Now when the project is likely to come? We -- a very, very conservative estimate, the tender could be out maybe, maybe by mid of 2025.

[Unknown Attendee]

Okay. Okay. Sure, sir. And sir, out of this order book of about INR 25,300 crores, about 20% to 25%, can we consider a ballpark, which is supposed to be delivered over the next 10 months?

[P. Hari, executive]

No, 20% to 25% -- you mentioned next 10 months?

[Unknown Attendee]

Yes, yes. Over the next 10 months or so?

[P. Hari, executive]

No. No. In the -- see, I had actually -- and I had actually elaborated the delivery time lines a bit earlier, you may have missed. I can just give you -- I can just run you through that once again. We are -- of these 18 platforms, which are the naval orders, which are high-value orders, we intend completing the Survey Vessel Large project in the coming 1 year. And the Anti-Submarine Shallow Water Craft, a couple of ships we'll be delivering this year.

But that apart, the revenue generation will come from the P-17 Alpha project, which is now at a stage where maximum revenue generation takes place. Now if you're asking what would be the revenue generation during FY '25, I will just give you a background. Until FY '22, our revenue from operations was INR 1,754 crores. In FY '23, it was INR 2,561 crores. In FY '24, it was INR 3,592 crores. So we'll maintain those similar trend. Last time also, I had mentioned that we will give a growth of between 25% to 30%.

[Unknown Attendee]

Okay. Okay. Sure. And sir, I think regarding the Bangladesh project, I think there were a couple of run rate you mentioned, ocean-going vessel and then cube dredger. So including all of those, you're saying that the impact is less than 1% and then also, it's more of a passing phase?

[P. Hari, executive]

We feel it is a passing phase and the percentage of order value is just 1.2. But notwithstanding, that apart, as I had mentioned, right now, the preparatory activities are in place. Once the -- the production anyway is happening in India, we are immune to the conditions there. And the lead time for delivery is far away, it is almost 2 years from now. So we don't see any impact on these projects.

[Operator]

Our next question is from the line of [ Devesh Shah from Uchit Capital ].

[Unknown Analyst]

Sir, you have very nicely elaborated all your orders and schedules for the projection. Sir, we as the investors are very laymen. So my simple understanding is just now one answer to the previous questions, you have given a guidance of 25% to 30%. Our order book is -- suppose is -- to be precisely INR 25,000 crores. So sir, roughly in value terms, within next 2 years, how much value we will be executing? You have every schedule in your hand month-wise, quarter-wise. So how much we will complete by '26 March, combination of '25 and '26? So let us bifurcate into 2 parts of INR 25,000 crores. How much we will complete in first 2 years, next immediate 2 years?

[P. Hari, executive]

Okay. Thank you. Now as far as FY '25 is concerned, I just gave an indication to the previous caller that we'll be -- we're targeting a growth of around 25% of the current year. And we expect to maintain a similar tempo in the next year also.

See, you must understand that -- you may like to understand that this is due to the project maturity stage. As I mentioned earlier, the 17 Alpha is in a state where the revenue is coming in. So if we are able to maintain a 25% to 30% of growth in the coming -- in the current year and the next year, you yourself can assess where we will be standing.

And one more thing. When I've stated that we'll be completing the orders by FY '27, that is for the orders which we were already executing. You may also note that in the last few months, we have received orders -- fresh orders. So naturally, the fresh orders will be as per the project time lines. Yes, this will definitely -- I understand the last of these projects will be in FY '29. Some of that -- that is some of the new projects.

So just to answer your question, yes, 25% to 30% growth this year and a similar growth next year.

[Unknown Analyst]

Sir, just to understand the math, I'm very weak in maths. To understand the math, sir, 25% of INR 4,000 crores of last year comes to INR 5,000 crores, roughly plus or minus 5%, 10%. And then above that, 30% comes to INR 6,500 crores. So within next 2 years, it comes down to the INR 11,500 crores. And remaining is -- in one statement you gave that '26 will be the maximum value. So I fail to understand how INR 25,000 crores will be executive in the next 4 years?

[P. Hari, executive]

We are now in FY '25, the beginning of FY '25. And I repeat again, the INR 25,000 crores comprised of earlier orders, the 17 Alpha, the Naval projects and also the new projects that we have recently obtained. Many of these new projects will still [ go well ].

Second, to a previous caller, I had explained that within the order book, a certain percentage is for the base and depot spares of which on a consolidated basis, around 10% will be provided to the customer after the ship is delivered, after the project is completed.

So if you just take -- if you remove the new orders, that means if you remove the new orders, the order book position, if you remove the new orders, which have recently come, the order book falls to -- not falls, it will come to around INR 22,000 crores INR 23,000 crores.

From that again you remove 10%, then the net will come to around INR 20,000 crores Of this INR 20,000 crores, as you exactly said based on my input that if you are getting a 25% to 30% growth, yes, around INR 11,500 crores will go in the coming year and the next year, but just about INR 10,000 crores remaining in the next 2 years. So it's a fair assessment.

[Unknown Analyst]

Yes. Sir, very good, excellent answer, sir. And same way, sir, regarding the margin, I will put it in a different way. So our quarterly margins are not similar. So on a yearly basis, can you give a ballpark figure what should be on a yearly basis, our margin -- EBITDA margins would be? How we can judge as a layman?

[Ramesh Dash, executive]

I will just gone to the PAT margin. Because I always refer the PAT margin. The PAT margin will maintain a minimum of 7.5% to 8%.

[P. Hari, executive]

On an yearly basis, we can assure. There will be marginal fluctuations up or down quarter-to-quarter depending upon the project maturity, but we'll maintain a PAT margin of 7.5% to 8%. Thank you.

[Operator]

[Operator Instructions] Our next question is from the line of [ Gagan ] from ASK Investment Managers.

[Unknown Analyst]

The order pipeline that you've indicated, one, if you could cumulatively give the total value of, because you rattled out so many projects in such a short span that it's difficult for us to sort of keep tabs on it, one. Second, you perhaps did not give the entire value of the pipeline, two. So therefore, if you could give the total value of the pipeline and if possible, at least mention the critical key ones?

[P. Hari, executive]

Sure. Thank you. But you must also understand that what I'm going to indicate is based on our appreciation of -- and the inputs on the prospective plans of both Navy and the Coastal. At this juncture, I'm keeping away what we are foreseeing outside the country on the commercial shipbuilding segment and for the other export activities.

So I'm just focusing on our association of the Indian Navy and the Indian Coast Guard requirement. Now as you are aware, the next generation corvette, I just mentioned earlier as an answer to one of the callers, the AOL, that is the AOL cost, which has been approved by the Defense Acquisition Council around 2 years back was INR 36,000 crores. This is split between 2 shipyards: the L1 shipyard will get around INR 22,000 crores; and the second shipyard, L2 shipyard, the 3 ships will get INR 13,500 crores. As I mentioned, the RFP is out. So we expect the L1 declaration 4 months from now.

And from then, it will take around 6 months to 9 months for the contract completion. Why I'm going to that much of details for this project because the RFP is already out.

Now coming to the next 2 multipurpose vessels, our assessment of the cost is around -- the order value is likely to be around INR 1,200 crores; then 5 next-generation survey vessels, around INR 3,000 crores could be the order value; and 22 waterjet FACs, the order value could be to the tune of around [ INR 2,200 crores ].

These 3 projects, we expect the RFP to come out in the next 1 year. This is for the Navy. For the Coast Guard, we expect RFPs for 22 interceptor boats around INR 1,200 crores and 6 next-generation oceangoing patrol vessels around INR 2,000 crores. We expect these RFPs also to come out in the next 1 year.

Now after that -- after the first 1 year to 4 years, we expect the RFPs for 12 mine countermeasure vessels. This is a high-value project. The AOL cost -- for this project, the AOL has already been accounted. The AOL cost is around INR 32,000 crores. In addition to that, we also expect the RFP for 2 LPDs.

This project has been going on for some time. This is there in the Navy's wish list. It has moved up and down. It is a high-value order. It's around INR 25,000 crores to INR 30,000 crores, 2 vessels. Then for the Coast Guard, 18 next-generation fast patrol vessels, the order value is likely to be around [indiscernible], plus the P-17 Bravo ships, there are 7 ships which the Navy is taking and the order value could be to the tune of around INR 70,000 crores.

These are the RFPs that I expect to come out -- we expect to come out between the first year -- so that 3-year bracket. I'm leaving out the next-generation destroyer, the submarines and the indigenous aircraft carrier, if at all, as we do not have any clarity on these 3 projects. Does that answer your question to an extent?

[Unknown Analyst]

Yes, sir, to a very large extent. That is very, very helpful. And even if we execute over the next few years almost...

[P. Hari, executive]

Sorry, your voice is a bit blurred, could you...

[Unknown Analyst]

So I'm saying that the 2 large projects which you execute by FY '27, a total value of almost INR 17,000 crores to INR 18,000 crores ex of the base and depot spares. Given this kind of pipeline, there is no reason to believe that the order book at any point in time should be dropping below what we currently have despite of a very sharp execution ramp-up?

[P. Hari, executive]

See, we have been maintaining a INR 20,000-plus crore order book. But despite our revaluation operations, as you rightly said, it is moving up in a sharp manner for the last 5 -- 4 to 5 years. If the projects that are on the anvil, if the RFPs are out on time, and if you succeed in the NGC project, yes, we'll be able to maintain order book positions above the figure that I just stated.

[Unknown Analyst]

And finally, sir, I mean, from a capacity standpoint, if you're able to very successfully bid for some of these very large orders, the mine countermeasures, the next-generation corvettes and the waterjets and so on, P-17B also. From a capacity standpoint, what do you envisage will be your requirements over the next 3 to 5 years? And what sort of investment will they entail?

[P. Hari, executive]

Very interesting question. Yes, we fully seized up the capacity -- current capacity and the need to enhance our capacity. Now our capacity, shipbuilding capacity stated, I repeat, the stated shipbuilding capacity is for concurrent construction of 20 platforms, that is 8 large and 12 small and medium.

This we have got up from a very modest figure of around 12 to 20 after a certain modernization process. Considering that we are fully aware about the projects that are coming, we have already initiated the process of capacity enhancement. And one of -- just for information, we have 3 dedicated shipbuilding units and one of our units has been completely revamped. And by the end of this calendar year, I repeat, by the end of this calendar year, our shipbuilding capacity will enhance some 20 to 24 ships. This is one point.

Second, going beyond the boundaries -- physical boundaries of our shipyard, we have also taken over 3 dry docks on long-term lease basis from the Kolkata Port Trust. We are exclusively using that facility for ship repairs because we didn't want to mix up ship repairs and shipbuilding.

In addition to that, when we had realized that concurrent construction will facilitate faster, let's say, project progress. We have got to do a public-private partnership and few of the shipyards have successfully implemented that. So what I'm trying to say, it's a 3-pronged approach: one, enhance the capacity within our physical boundaries from 2024 by this calendar year end; effectively utilize the dry docks that we have taken off, because see, in case of shipbuilding, one of the major assets that we need is dry dock and building berth. So utilize these dry docks which we have taken off in the Kolkata Port Trust.

And just to make a statement, we are also looking for other facilities wherein we can do concurrent construction. In addition to the partnerships we have got, the capable private players with spare capacity. Just for information, we also have a tie-up with shipyards, private shipyards on the Western front. So should a situation come, we are on live partnerships. Should the situation come where we get more export orders, we can think about executing them on the West Coast. So capacity-wise, we do not see a limitation now or in the coming years.

[Unknown Analyst]

Okay. Right. Can I take one more or should I get back in the queue later?

[P. Hari, executive]

Unless you are going to ask me a tricky question, you may please.

[Unknown Analyst]

Yes. So from a manpower perspective, I mean, naval architects, welders and vending specialists, the current pipeline, is the manpower availability adequate to meet these requirements? Or you feel there could be a competition for talent, which will lead to a cost spiral of any sort?

[P. Hari, executive]

See, I mean, I'm hearing this kind of -- so firstly, a very interesting question. Yes, absolutely right. There is a capacity to enhance the strength of skilled manpower. Just for information. We have adopted a strategy where in noncore jobs are outsourced. Noncore means, we retain the core strengthening activities like fabrication, complex block, design activities, our core commercial activities and shafting and so on. So core strength, we retain. And noncore activities, we outsource.

But yes, the advantage of an outsourced model is that, that is scalable. But yes, there is a need and again, we have experimented this with the P-17 Alpha project. We have experimented this with the commercial shipbuilding project that we are going to execute. The outsourced manpower for noncore activities is absolutely scalable. And we have got vendors working at my premises, the GRSE premises, from places as separate geographically such as Cochin, Chennai and Mumbai. So manpower -- resources -- human business is not a problem, but yes, it's a point for us to make.

[Operator]

Next question is from the line of [ Sunil Shah from CPMS ].

[Unknown Analyst]

Yes. Sir, I guess most of the questions have been very nicely and in detail explained. Sir, I have just one point to ask and check with you. Sir, in terms of the government's priority, what was the election mandate, which is what is there in front of everybody. Has the priority taken some kind of a back seat for announcing orders or Make in India stuff? Or is there any change pre-election and post elections? If you could make us understand a little bit on that?

Is there any delays because earlier, we are talking about the next generation corvette orders or maybe it would fall in place by September or so. But now maybe -- so I just want to understand whether things are in line or we have taken a slight slow stance from the government? That's the only question, sir, that I would like to understand from you.

[P. Hari, executive]

Thank you. It's a tricky question because I am not part of the government, but I'll answer that and I'll answer as clearly as possible. In our appreciation, there has been no let up in the space. Since you specifically mentioned the next-generation corvette.

As per the DAP, from the time the AOL is obtained to RFP, 15 months' time is there, and the government has issued the tender ahead of that 15 months. It is moving very much on schedule. From our appreciation, the government's initiatives in enhancing the shipbuilding industry in India, we are eagerly waiting for the policies, the promised policy to come out soon. So things are moving in the right direction.

Just to answer another question, another statement which we made as far as the Make in India efforts are concerned, of the 66 ships being built for the Indian Navy, 64 are being constructed by Indian shipyards. And 2 of the shipyards, the orders were placed much earlier -- 2 of the ships which have been constructed outside, the orders were placed much earlier.

In our appreciation, none of the orders for Indian Navy construction are going out of India. As far as Coast Guard is concerned, 100% of the ships being constructed for the Coast Guard are being constructed by Indian shipyards. So in our appreciation, there is no let up in space, there is no change in policy, things are moving as good and as fast as possible.

[Unknown Analyst]

Just one point, sir. Even on the Project Bravo, which is the INR 70,000 crore order of which 4 and 3 would be the bifurcation, even that could be on schedule, just the only point I want to clarify from my side?

[P. Hari, executive]

See, all I can say is that there is a process involved in -- there is a schedule. There is a process involved in getting an approval by the government of the DAP approval, and thereafter the RFP issuance. That's when -- when I made an earlier comment, I made a statement that in our appreciation, the RFP could come off during 2025 -- during the fag end of 2025, that is our appreciation. Now the fact is that Navy wants these processed and I'm sure we'll put in our efforts to get the tender out as fast as possible.

[Operator]

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for the closing comments.

[P. Hari, executive]

Thank you, Aditya, and thank you, Gaurav, from Concept IR for organizing this conference call. I'd like to pay my sincere gratitude to all my analysts and investor friends who've taken time out of their busy schedule and listen to us today. If you have any further queries, I request all of you to please get in touch with us, and we would be happy to address each one of your queries. Thank you once again. I wish you a very, very happy Independence Day, Jai Hind.

[Operator]

Thank you. On behalf of Garden Reach Shipbuilders & Engineers Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.