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Garden Reach Shipbuilders & Engineers Ltd
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Good afternoon, ladies and gentlemen. I'm Yashashri, the moderator for this conference. Welcome to the conference call of Garden Reach Shipbuilders & Engineers Limited, arranged by Concept Investor Relations, to discuss its second quarter and half year ended 30th September 2022 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] Please note, this conference is recorded. I would now like to hand over the floor to Commodore P.R. Hari, Chairman and Managing Director. Thank you, and over to you.
Thank you, Yashashri. Ladies and gentlemen, a very good afternoon to each one of you. I'm Commodore P.R. Hari, the Chairman and Managing Director of Garden Reach Shipbuilders & Engineers. And I have here with me Shri Ramesh Kumar Dash, the Director of Finance and CFO; and Ms. Aparajita Ghosh, Finance Head; and Shri Sandeep Mahapatra, the Company Secretary.
Let me welcome you all to this conference call to discuss the financial performance of the company for the second quarter and half year, 30th September 2022. I intend covering my talk under the following heads that is the financials, the order book position, the execution plan for the current order book and a brief glimpse on the future outlook. The half year ending 30th September, the financial performance has been very encouraging with the revenue from operations moving up from INR 726 crores to INR 1,262 crores. That is an increase by 74%, if one is comparing the half yearly performance of FY '22 to FY '23. When we compare the performance, revenue from operations of Q1 '23 to Q2 '23, there has been an increase of 18%. The figures have gone up from INR 580 crores to INR 682 crores.
Similarly, the total income half year to half year has gone up by 67%, from INR 802 crores to INR 1,344 crores. EBITDA has gone up half year to half year from INR 125 crores to INR 163 crores. There is an increase of 31%. From Q1 of '23 to Q2 of financial year '23, in EBITDA, there has been an increase of 20%, that is from INR 74 crores to INR 89 crores. The PAT, profit after tax, half year to half year comparison gone up by 37% from INR 79 crores to INR 109 crores. Q1 of FY '23, the PAT was INR 50 crores gone up by 17% to INR 59 crores. Earnings per share has gone from INR 6.93 to INR 9.51 That is 37% increase half year to half year.
So on the whole, the financial performance has been satisfactory. And we are very confident of maintaining the tempo that we have generated during the first half of the financial year and carry it forward to the second half and thereby give good financial performance during the current financial year.
Coming to our order book position. As of 30th of September 2022, our order book stands at INR 22,930 crores. This comprises of 7 shipbuilding projects, totaling to 24 platforms, marine platforms. These include 3 projects for the Indian Navy, the P-17 Alpha project comprising of 3 ships, the Anti-Submarine Shallow Water Craft project, comprising of 8 ships and a 4 ship Survey Vessel Large project. So these 3 projects for the Indian Navy total to 15 war ships.
In addition, we are executing a project for the Government of Guyana, a passenger cum ocean going ferry vessel and order of the Indian Coast Guard for a fast petrol vessel. We are also executing a project for the Government of Bangladesh for construction of 6 patrol boats and another for the Government of West Bengal for a next-generation electric ferry.
Shipbuilding comprises of a major strength of our order book, that is nearly 97% to 97.5% with the balance coming from the diversified segments of Bailey Bridges, deck machinery, diesel engine and ship repairs.
As far as the execution plan for the current projects, of the 7 projects -- shipbuilding projects that we are executing currently, 2 of these projects, we intend completing during the current financial year. That is the project being executed for the Government of Guyana, that is a ocean-going passenger cum ferry vessel. The vessel as of now has reached around 75% of physical construction, and this project is planned to be completed during the last quarter of this financial year. Similarly, the fast petrol vessels being constructed for the Indian Coast Guard, we almost touched 81% of physical progress, and the ship is now in the trial phase. This ship is planned to be delivered again during the last quarter of the current financial year.
As far as the other shipbuilding projects are concerned, let me first start with the P-17 Alpha project. As I stated earlier, we are presently constructing 3 P-17 Alpha Frigates for the Indian Navy. The first ship has already clocked around 43% of physical construction, the second ship around 35% and the third ship around 16%. The progress of these ships is satisfactory. And as per the present build plan, the first of these ships is scheduled to be delivered during mid-2025 and the last ship during mid-2026.
Now coming to the Survey Vessel Large project. We are presently constructing 4 ships under this project. And the first ship, which was launched during end 2021, has already touched 65% of physical construction. This ship will be now moving into the trial phase. And this ship, we plan to deliver during the first quarter of the next financial year. The second ship of the project has now achieved around 58% of physical construction. And that ship is likely to be delivered during the end of the next calendar year, that's the third quarter of FY '22. The construction progress of the last 2 ships of this project is also satisfactory, with both these ships having achieved 38% and 14%, respectively.
Coming to the Anti-Submarine Shallow Water Craft project, there are 8 ships in this project, and we have already started production of 5 of these ships. The first ship has achieved around 38 percentage of construction, and this ship is scheduled to be launched, and launch in shipbuilding is a milestone even where the ship is put to water for the first step after the hull takes its complete form. So this particular ship of the ASW Shallow Water Craft project is scheduled to be launched during the next month.
Similarly, the second ship of the project has achieved around 23% progress, and the other ships are following the build schedule. As per the existing plan and our build strategy, these ships will be delivered by FY '27. What I've just mentioned gives you an overview about the progress and the status of the ongoing shipbuilding projects. As you can see, the current order book of INR 22,930 crores will keep us steady with respect to workload up to FY '27.
Coming now to the orders on the anvil and the future outlook. As I mentioned during one of the earlier con calls, GRSE has been declared L2 in an RFP floated by the Indian Navy for construction of 11 next-generation ocean-going petrol vessels. As per the tender conditions, the L1 bidder gets to build 7 vessels and the L2 bidder, that is GRSE, gets to construct 4 vessels. The way things are moving, this contract is likely to be completed during the current financial year, and the order value is likely to the tune of around INR 3,000 crores to INR 3,200 crores.
What I'm trying to convey is that while on one side, we are executing the current order book, on the other side, there is a steady filling up of the gap generated in the order book through execution. So this INR 3,200 crores plus what we are going to execute during the current year is likely to ensure that we maintain an order book position of around INR 23,500 -- INR 24,000 crores at the end of the current financial year also.
As far as the other orders that are on the anvil, one major order that GRSE is eagerly looking forward to is that of the next-generation Corvette. The Defence Acquisition Council has already given an approval of necessity for this project of Indian Navy, and this is a high-value project costing almost INR 36,000 crores, and as per our current estimate, the RFP for this particular project is likely to be released by the Indian Navy by end of calendar year '23 or early 2024.
In addition, as per the -- again, as per our understanding and [ association ], this is an 8-ship project, with 2 shipyards, 5 and 3, 1 ship -- the L1 shipyard will get to build 5 ships, the second shipyard will get to build 3 ships. So with GRSE's experience in building and delivering Corvette -- this is the next-generation Corvette. So with GRSE's experience in building and delivering Corvette, with our experience, expertise and resources available, our bidding strategy, I'm sure will be appropriate to ensure that we stand a very good chance in winning this bid.
In addition to the next-generation Corvette, Indian Navy has also got a project -- a high-value project of landing platform docks. Here, the RFP again is likely to be released in 2024. In addition, the Navy is also looking forward to constructing 20 follow-on waterjet FACs. In case of waterjet FACs, as some of you may be aware, GRSE has got a history of delivering the maximum number of FPVs and waterjet FACs, both belong to the same class, 30 plus of these vessels to both Indian Navy and Indian Coast Guard. So similar to the next-generation Corvettes, when we keep pitching in for this bid also, our strategy would be appropriate to give adequate competition to our contemporary shipyards.
In addition to these 3 projects for the Indian Navy, the Indian Coast Guard has got a couple of projects that are likely to come up in the near future. There is a project for which the RFP is likely to be issued by the end of this calendar year. That means either this month and or the next month for 14 fast patrol vessels. The order value is likely to be the tune of around INR 1,500 crore to INR 2,000 crores. And also, the Indian Coast Guard is likely to come out with an RFP next year for 18 next-generation fast patrol vessels. So this in nutshell gives you an overview as to what is on the anvil. This covers the shipbuilding segment.
As far as ship repairs are concerned, again, as I said stated during an earlier investor con call, we had taken over the 3 drydocks and long-term leased spaces from the Kolkata Port Trust. And as of now, all these 3 drydocks are being extensively used for ship repair related activity. So our intent of taking over these drydocks was to give an impetus to ship repairs, another vertical now GRSE is looking very seriously.
While we have taken over the facility just about 11 months back, the results so far have been encouraging, and we have almost had 100% occupancy of this dock. And we have 1 bid of Indian Coast Guard for conductor of their ships and also a few commercial vessels, where we are undertaking the drydocking and repair. So this is an area which our shipyard will be focusing on in the coming years.
In addition to ship repair, our diversified segments include the Bailey Bridges division. As you may be aware that GRSE today has around 65% to 70% of the Indian market in Bailey Bridges, that's portable steel bridges. We have concluded an MOU with the Border Roads Organization for delivery of a particular type of modular bridges, for which we have proprietary rights, there's an IPR of the shipyard. And this will give us an edge in getting more orders from the potential customers, that is the Indian Army and the Border Roads Organization.
Coming to the Diesel Engine Plant. We have a Diesel Engine Plant at Ranchi, where we have a licensed agreement with MTU, Germany. And based on this licensed agreement, we are -- as we have the facility and the capability to assemble the MTU make diesel engine and conduct the trial and acceptance. On this segment, we expect orders from the Indian Navy for their projects, where medium- and small-sized diesel engines are required.
In addition, this particular unit, that is the Diesel Engine Plant, has got an order for delivery of 28 diesel alternators for the P-17 Alpha projects being executed by both Mazagon Dock and our shipyard, that is GRSE. And we also have another unit that manufactures and supplies deck machinery for the ships being built by GRSE and also by the other shipyard.
So on all these fronts, that is on the shipbuilding segment, which is definitely our major revenue earner, along with the Bailey Bridges, the ship repair, the deck machinery and the diesel engine verticals, we are very confident of having growth trajectory in the coming years, that will be very, very encouraging for you, the investors.
I have finished and open for questions, and moderator, you can take over.
[Operator Instructions] We have our first question from the line of Venkatesh Subramanian from Logic Tree Investment Advisers.
I have 2 questions, sir. One is on the last item that you mentioned on various other stuff, like ship repair and steel bridges, et cetera. All these units put together, say, over a period of 3 years from now, sir, what can be the approximate top line that you would envision on these projects? That's my first question. And the second question is on the INR 36,000 crore RFP on next-generation Corvettes. As L2 bidder, we'll get -- my sense is we'll get 3 -- orders for 3 vessels. And what could be the value of that, sir?
Thank you, Mr. Venkatesh. I'll answer your second question first, while my mind is calculating what is INR 36,000 crores into 3 by 8. So that comes to, 1 second, around INR 13,500 crores. But let me tell you, we are not looking at bidding L2. Finally, it is on how we bid and how are other more -- as to how our competitors are going to bid. But on a very serious note, we are not looking at L2 for this project at all. So to answer your question, if you become L1, the value that is going to be accrued from this project is around INR 22,500 crores, and if it is L2, around INR 13,500 crores.
Okay, sir. Great. And the second one was on the INR 3,000 crore orders, sir.
So the INR 3,000 crores order -- INR 3,000 crore or INR 3,200 crore order, this was a project where the -- it was opened in February this year, where -- this is, of course, between the tender, the participants are all the shipyards, all the 5 of us, that is 4 [indiscernible] L&T, Cochin shipyard and so on. So we have become -- and as per the tender conditions, 7 of these ships will move to the L1, that is the [indiscernible] shipyard and the 4 ships come to us. So right now, the project is at the negotiation stage between the bidders, the winning bidders and the Indian Navy. And as per the indications, so the contract is likely to be signed by -- during this financial year. So that will give us an order book value of around INR 3,000 crores to INR 3,200 crores.
So you're saying INR 3,200 crores for approximately 4 vessels, sir?
Yes. That's correct. 4 vessels, approximately INR 3,200 crores.
Okay. So that's INR 800 crores for 1. Last quick one. So the 18 next-generation patrol vessels, RFP is going to be out next year, you said, what would be the value of that, sir?
The 18 next-generation vessels, which the Coast Guard RFP is likely to come out next year. At this moment, I can only give you an indicative figure that is, in my appreciation, it could be around INR 3,000 crores vessel.
So INR 8,000 crores, sir?
INR 3,000 crores. These vessels are actually small vessels, okay?
Yes. And sir, on these small vessels, the execution time frame is usually shorter?
Yes. Definitely, the execution time of any war ship depends upon, one, the price and second, the complexity. When we are speaking about complexity, complexity depends upon the kind of weapon and [indiscernible] ship. These fast patrol vessels are compact vessels with, let us say, heavily dense population of equipment and systems. So while the price is small, the complexity is definitely not as small as it sounds, so it's called FPV and so on.
Since you asked the question for a conventional fast patrol vessel, what -- presently I'm executing an order for a fast patrol vessel for the Indian Coast Guard. The build period is 20 to 24 months. So from the time the design is chosen, it takes around 2 years for a ship -- the first ship of a class to be delivered. And from then on, we can deliver a ship of this particular type ship for 3 months there on -- thereafter.
Got it, sir. Got it. Great. So a question on the other 4 business divisions of ship repair, steel bridges, et cetera. Broadly, if you can give us over a 3-year period, if we -- some sort of a guidance, where we could be, sir?
Okay. As I mentioned when I started that our primary job is and the focus is on shipbuilding. And we've been shipbuilding -- on war ship building. And since we are a different public sector shipyard, our focus and aim would be to provide the quality war ships to the Indian Navy and the Indian Coast Guard as per their expectations. Now keeping that as our primary role, we also have ventured into as you're aware, this kind of diversification in India at this juncture only we have. So with this kind of diversification, as I had stated earlier, there are 4 verticals, which we have to see. One is the Bailey Bridges segment. While on one side, I stated that we have around 65% to 70% of the market share of Bailey Bridges, what you must appreciate is that the overall market in India itself is limited.
Now with our new products, that is the modular type of bridges and with a certain amount of aggressive marketing strategy that we have taken, there is an improvement. Actually, our turnover in the Bailey Bridges division is very, very miniscule. It has doubled in the last 3 years. So this is an area where I expect a maximum or twofold increase in the next 3 years.
Coming to ship repairs. Ship repairs, there are shipyards who have got an edge over us in terms of experience in ship repairs. They have been focusing on ship repairs for the last 10 to 15 to 20 years. We have taken this as a serious vertical from the last year on wards. And I had mentioned that we have taken over 3 drydocks to specifically give an impetus to ship repair. Again, in this field, we have started in the modest fashion. But this is an area where opportunities have [indiscernible] because the Navy and the Coast Guard have definite needs to carry out repairs of the ships on a periodic basis.
So at this juncture, I will not be able to put a figure to what the expectations are, but I can assure you, maybe what I would suggest is a year down the line, let us see where we stand. We started in a very modest fashion. Let us stabilize and this is the focus area, where the management's complete focus is there, and I expect a steep growth in this segment in the coming 3 years.
We have a next question from the line of Rohit Natarajan from Antique Stockbroking.
So one of your competitors was talking about some landing platform dock orders in the near term, plus there is a possibility that P-17 A -- repeat of P-17 A can also be thought about in near to medium term. Any color on these aspects, sir?
Thank you, Mr. Rohit. The color as of now is gray. Both these projects -- see Navy has come out with an RFI for the landing platform dock some time earlier. After that, it has not really taken off. But the fact is that Navy has requirement for landing platform dock, and as per our appreciation, the RFP for 2 landing platform docks is expected to come out by 2024. That is the appreciation. And it definitely is going to be a high-value order. And yes, yes, the competitors in this field are our sister shipyards only.
And as far as the P-17 project. Now the P-17 Alpha project that we are currently executing is for 7 ship [indiscernible], both MDL and GRSE [indiscernible] constructing 4 of the ships and GRSE is building 3 ships. As per the current execution plan, these ships are likely to be delivered by FY '27, that is mid third quarter of 2026. So that is the time when this project will reach a closure. So Navy definitely has plans to go in for a follow-on of the ship that is still in discussion stage. So if Navy decides to go for a follow-on or more numbers of this, the clarity on this will emerge sometime in my appreciation only during 2024.
Okay. Sir, my second question is more to do with the margins front. On one side, we know that 1.5% is the physical execution progress that has done at each ship units level. But the margin, how does that get translated? As in -- is there any lumpiness when there are more broad out items sale as something that goes into our fitting or advanced outfitting stage. How does that really shape up? Can you give some color on it?
Okay. I will give you a brief intro on the shipbuilding process. So that will put things in the right perspective. Now shipbuilding starts with preparatory activities. That is a design stage, where one -- that is the preparatory activities before the actual construction of the ship starts. That is the stage when the design of the ship is finalized, the equipment are finalized and based on the equipment finalization, orders are placed on prospective OEMs for the equipment.
Once this project -- process is completed, along with procurement of steel, then starts, based on the design, the construction. And the construction starts with the plate cutting and the block fabrication, then the block direction. And at this stage, the equipment, which have already been ordered, starts coming in. These are lowered and the outfitting starts. Once the ship reaches a completeness in terms of hull form, that particular ship is launched on to the water, where the float worthiness of the ship is checked and thereafter, the outfitting goes in full flow, and once the outfitting gets completed, the trial's progress, leading to acceptance of the ship after the concerned speed trials at the harbor and speed trials. Just in a nutshell, you see an overview of the first phases of ship construction.
Now [indiscernible] if you're looking at the overall percentage in terms of cost, around 5% of our ship's cost. If you're looking at the ship's construction, it's the entirety, the hull, along with the basic fittings carry on 18% of the ships over -- if you're taking the ship as 100%, carries around 18%. Now in the initial stages of ship construction, the progress will be around 1% to 1.5%. After that, when the equipment starts getting lowered, the progress increases, then a stage will come when the equipment get integrated to the ship and the systems gets buttoned up. So there will be a stage in every ship's construction, where the progress leaps from 1% to 1.5% to 2% to 2.5% depending upon size of the ship.
I'll give you an example. In case of fast patrol vessel, this is a small ship. Initially, the progress is to the tune of, since the ship is small, 1% to 1.5%, and then it leaps to around 3%. There are stages when the ship per month gives around 7% of physical progress. In case of a big ship, we may not be able to touch 7%, but at times it touches 3%. So translating it into VOP, that is revenue from operations or the value of production is easy. The value of production is when the equipment and the systems along with the labor gets pumped into a ship's construction, though you cannot compare this with the profit. But that's completely different.
Profit is dependent on a variety of factors ranging from the equipment procurement process, the revenue expenditure, the internal efficiencies and so on. So the physical progress, since you asked the question about physical progress, where there is a lump of 1% to 1.5%, yes, that is at some stage of the construction, but there will be a stage where it will pick up. And this will happen when the ship touches around 60% to 65%.
Appreciate it, sir, quite -- that was quite detailed. Just a follow-up on this part. But when we say when a particular project at say, 7.5% EBIT margins, we may have some sort of capacity utilization factor in mind. So at that time, do you say you we have worked our estimates on maybe a 75% of the ship capacity that we have or 100% of capacity. And if there are margin surprises, it is purely based on the incremental capacity utilization. Is that the way -- right way to understand how the margin surprises come from?
See, capacity utilization is based on the resources and infrastructure that we have. So as -- I don't know whether it has been brought out earlier or not, but I'll just again clarify. Our capacity for ship construction at this juncture is around construction of 20 war ships at a time. Now again, this in reality translates to much more because when a project is executed, let us say a 4-ship project, all 4 ships will not be at the same phase of construction every point, in fact, which means if the first ship is at outfitting stage, the second ship will be at the prelaunch stage, and the third and fourth ships will be at some other stages of construction. So in our case, let us specifically talk about GRSE at this juncture, if I'm speaking about the P-17 Alpha project, the first and second ships are already in the outfitting stage, only the third ship is at the prelaunch stage. So as far as capacity is concerned, it has got no -- we have got no constraint at all.
And another aspect what you may like to note is that we have gone in for, as I mentioned, 3 drydocks, we have hired on a long-term basis [indiscernible]. And in addition to that, we are going for a [indiscernible] model with 2 of the shipyards, 1 based in Kolkata and 1 in the Eastern upfront, where part construction of some of our ships are in progress. So the resources, which are captive within our campus, is certainly not a constraint for executing concurrent project. What I'm trying to convey is capacity is not a constraint.
Absolutely appreciate your answer, sir. That was quite helpful. I look forward for more questions. I'll get back in the queue.
[Operator Instructions] We have a next question from the line of [ Bharat Mani ] from Moneybee Advisors.
Congratulations on a great set of numbers. So I just wanted to know the physical execution progress monthly for P-17 Alpha and Survey Vessels and the ASWs. So I just wanted to know, is it different from [indiscernible] revenue is the most and then from [indiscernible] to the next level?
Thank you, Mr. Bharat. If I just take the P-17 Alpha project, the first ship has achieved 43%, the second ship is around 35%, and the third ship is around 16%. Now the physical progress from, let's say, 0 to 20, on a conventional note, we get around 1% to 1.5% per month. Then it starts getting picked -- the speed picks up and we get around 2%. The rate that this growth is accelerated is during a phase when the ship has touched around 60% of construction where majority of the equipment would have been already lowered and the integration and the setting to work of the system start, which means the percentage progress -- monthly percentage growth increases when the ship at a phase where it is between 60% and 80%.
If you just bring it down to a smaller ship -- size ship, then if you're taking, let's say, a fast patrol vessel, the fast patrol vessels in the first 0% to 15% starts with around 2% per month. And then it picks up maybe around 2.5% between 15% to 40% and 3% to 3.5%. And there will be one phase when the equipment trials are actually in progress, it touches around 6.5% to 7%. But on a serious note, the monthly progress is definitely good to monitor. It is required to be monitored. But what we actually look at is the milestone.
The major milestones in the ship construction are one, the plate cutting, where we start the production next to the keel laying, when the blocks, which get manufactured at various locations, get lowered on to the building blocks of the building [indiscernible]. And once they get consolidated, the next milestone that we look at is the launch of these ships. The next milestone is [indiscernible]. So on a serious note, we should not be really looking at monthly progress points, [indiscernible] understand, that it doesn't matter. What we must look at is the launch, the launch to trials and [indiscernible].
So for the second P-17 Alpha, so what is the expected delivery of that one?
The second P-17 Alpha is now -- it is expected to be delivered during the last quarter of the financial year -- FY '26. That's between Jan and March 2026.
Okay. And on the Survey Vessel number 3 and 4, the -- and those -- the delivery of those 2 ships?
See Survey Vessel, the first 2 ships are planned to be delivered during 2023. And the last 2 ships are planned to be delivered during calendar year 2024.
Okay. So in a shipbuilding process, there are, I guess, 15 milestone payments. So can you tell the duration of the payments?
See, it is more for -- it is more to do with stages than the duration. It starts with -- there is a payment which is on signing of contract for the -- 10% for the proprietary activities and the same related aspects, and then there is a 10% payment for placement of orders for various equipment and provision of the plan for construction of the ship and so on. Then at various milestones, you will pay, one will be for so many -- 40%. I'm just giving one figure, 40% of physical construction, you get a stage payment. For launch, you get a stage payment. Conducting basin trials, you get a stage payment. 85% of construction, you get a stage payment, leading to stage 14 will be a stage when the ship is finally delivered to the customer. And the stage 15 is when the ship completes the guarantee period, that is 1 year guarantee period. That is when 5% payment is received. So this comprises, in a nutshell, the 100% payment, staggered over 15 levels, 1 to 15.
We have a next question from the line of Abhineet Anand from Emkay Global Financial Services.
Sir, I just wanted to understand that you indicated that by F '27 all this INR 23,000-odd crores order book will be completed. Is it right, sir?
Yes, the existing order book, I'm not including the order, which is likely to come for the -- what I have mentioned also about an order, which is likely to come for the next-generation ocean-going patrol vessel. Excluding that, the current order book -- as per our execution plan, the execution period is FY '27, correct. You're right.
So very broadly, can you just make us understand that because from now till '27 is like 5 years, right? So over the next 3 years, what would be the broader execution?
Say, in terms of broader revenue, I'm not saying in guidance, but just say...
I will rather talk in terms of delivery of ships in this financial year...
I understand it, but our understanding on ship...
Okay. I'll give you a reasonable input for you to extrapolate [indiscernible]. See, in this ship, we already completed the first half. We are at INR 1,262 crores. As I mentioned, the progress of production of the various ships is satisfactory. And 2 of these projects are -- of course, there are small projects, we intend completing this year.
So I'll put it in a different fashion, so you get a better confidence. See, our current order book remaining is INR 22,930 crores. And I have also stated that as per the current execution plan, the order will be exhausted by 2027. If I keep the next-generation [indiscernible] completely out of the figure. In the next 5 years, that is INR 22,930 crores divided by 5 is around INR 4,586 crores. So this is for you to, I mean, extrapolate or calculate. There could be financial years where the revenue could be more than that. There will be financial years where there will be less than that depending upon the stage of construction of the ships, but it will definitely not be uniform.
Just to give you reassurance, which I have been stating repeatedly in the last 2 investors con calls also, is that as for our acquisition and considering the physical progress of construction of the ships because that is what is directly linked to payments, I mean revenue recognition. Considering both this aspect, the current year -- see, last year, our turnover was INR 1,758 crores. So when I finished the last financial year, when we were discussing the results, we have stated that the next 3 years, that is FY '23, '24 and '25 will be the best in terms of revenue regulation for [indiscernible]. So I have given you both the perspectives. I have mentioned what is the total order book, also stated what is our plan for execution. So I have even gone to the extent of dividing and telling you and also given you an assurance that this year, next year and next, next year will be -- the growth will be steady with perhaps FY '24, '25 or '26 [indiscernible].
We have a next question from the line of Shalini Gupta from East India Securities.
I had 2 very basic question, sir. If I understood correct, the revenue per ship that you make, it's about INR 700 crores. Am I right?
Ma'am, it varies from project to project. I'm not sure which project you're talking about...
No, sir. I'm just trying to get a ballpark figure because -- just for my projections. So is it correct between, say, INR 500 crores to INR 700 crore, would I be correct?
No, ma'am, I'll put it and I'll put you in the right perspective. See our current order book is INR 22,930 crores. One second, yes -- of this around INR 14,997 crores pertain to the P-17 Alpha project for preships. So that comes to balance around INR 5,000 crores per that ship. If I'm taking the Anti-Submarine Shallow Water Craft, INR 5,821 crores were still remaining for execution, divided by 8, that comes to almost...
Around INR 727 crores.
Around INR 727 crores per ship remaining. In case of Survey Vessel, 4 ships, INR 1,600 crores remaining. That means around INR 400 crores remaining. In case of the FPV, fast patrol vessel, INR 23 crores remaining, 1 ship. So it depends upon the size of the ship and the order value. Have you -- are we on the same page?
Sir, I'll listen to the conference call again. If I have another more questions, I'll probably send you a mail or something because sir, I'm just trying to understand how I should will my projections. Sir, my second question is just what kind of EBITDA margin should we take because you were explaining how you arrive at your EBITDA margin. But I mean, it will be very difficult for me to calculate the kind of EBITDA margins you may arrive at? So would it be correct to say your EBITDA margins will be somewhere around 17% to 18%, will I be correct?
Right now EBITDA margin are around 12.7% to 13%. So we -- considering our current order book, the margins at [indiscernible] project. The EBITDA margins, what we anticipate in the coming years is to be steady, more or less steadier around this range, at least 12.7% to 13%.
We have a next question from the line of Vignesh Iyer from Sequent Investments.
Congratulations, sir, on good set of numbers. On Alpha [indiscernible] I just wanted to know what is the original order value of these 3 figures that we are making?
Okay. The 3 figures that we are making the order value, the total order value is INR 19,296 crores, and the remaining order value is INR 14,997 crores.
So roughly around INR 15,000 crores, right?
Yes. Roughly around INR 15,000 crores.
Okay. And the original value is around INR 19,296 crores, right?
Correct. Correct.
Okay, yes. Okay. This confirms it. Second is, sir, if things -- there have been news that there a lot of ships which are actually due for a maintenance, and we are also into the maintenance contract part of it. So can you give us some idea about -- on that part of the business as in when the ship has to be gone from maintenance for maybe once every 2 years or such. So if you...
Okay. I'll answer this question. Both the Navy and Coast Guard have ships get periodically repaired, that's called refit and repair. So based on the -- when the ship is built, an operation cum refit cycle is formed, where the maintenance routines of the ships are decided. And periodically, the ship goes, let us say, every 2 years for a short refit and drydocking to check the underwater package and so on. And every 5 years the ship goes for a major refit. Now for undertaking these refits and repair, the Indian Navy has got Naval Repair Organization. But considering the range and scale of the ships that the Navy processes, the yards or the repair yards, Naval Repair Organizations [indiscernible], they have capacity constraints. When they have those capacity constraints, they outsource these refits to capable shipyards.
Now Coast Guard, on the other side, they do not have the similar repair or set up like the Indian Navy. What I'm trying to convey is that every Indian Coast Guard ship goes for refit and repairs to outside shipyards and private firms. So -- and akin to maybe these refits and repairs come for a short duration, every 2 years, and for a longer duration, every 5 to 6 years. So the opportunities available in this -- at this front both with the Navy having capacity constraints and with the Coast Guard currently not having any captive repair organization is huge.
It is specifically with this intent that we have ventured into this ship repair segment in a reasonably aggressive fashion. And towards this, as I've mentioned, we have taken over 3 drydocks in the Kolkata Port Trust. And we have already executed 5 projects for Indian Coast Guard, including 2 major refits and 3 minor refits over the last 1 to 1.5 years. We are -- currently also as on date also, we are executing a project for the Indian Coast Guard refit. And we have 1 more ship coming in for refit in the next year. So to answer your question, yes, both the Indian Navy and the Indian Coast Guard have a methodology where in maintenance is carried out in a periodic manner. And as the business entity, we have huge opportunity in this segment.
We have a next question from the line of Venkatesh Subramanian from Logic Tree Investment Advisors.
Yes. So actually, my questions have broadly been answered, but just a quick reconfirmation. So FY '23, '24, '25 are the peak years for the execution. So is that right, sir? Just reconfirming.
FY '23, '24, '25 and now I'll add on FY '26 also that the peak put us during FY '25 are [indiscernible] considering our delivery schedule and with the order book planned to be executed by FY '27. So if you're looking at '23, '24, '25, what I can assure you is that the revenue growth will be on upward, a steady upward trajectory with either '25 or '26 being the peak years.
We have our next question from the line of Swechha from ANS Wealth. Swechha, can you please unmute your line? Since there is no response from the line, we'll take the next question from Sumit Chandwani from Arth Equity Advisors LLP.
Yes. So sir, how do you protect your margins since most of these are fixed contracts, fixed [indiscernible] contracts. Can you give us some idea on how do you protect your margins and these are 3, 4 year projects?
Okay. Thank you, Sumit, very interesting question. Now there was an era much before we are listed and well maybe 10 years back, when the shipyards were having contracts that were cost-plus contracts, then came an era of nomination contracts. And now we are at a very, very interesting phase where we have all the contracts on competitive bidding place. And let me give you confidence and assurance that the transformation of the shipyard from, first, the cost-plus era to the nomination, of course, it was tough. And from nomination to fixed cost and competitive has been successful and smooth. Now how do we -- since we're going for a competitive bidding along with our counterparts, the other shipyards, naturally, the bids are absolutely competitive, the margins [indiscernible].
So how do we maintain the margin? See, over a period of time, all our production processes have been [indiscernible]. We have brought in automation. See shipbuilding you may appreciate that unlike any other manufacturing industry is labor intensive. But even in this segment, we have brought in measures to automize areas that are practically feasible to be automized. We have cut down our revenue expenditure by rationalization of a large amount of [indiscernible]. And our focus as a business strategy, our noncore activities are outsourced. So we keep our captive manpower only for core activities, core production shipbuilding activity. With all these measures, we have been able to maintain the margins, the level what we are taking.
Sir, my question is more around equipment and material costs, so we've seen [indiscernible] prices fluctuate a lot this year. So how do you [indiscernible] with the component of...
Understood, I'll answer this question...
And similarly foreign currency risk, you have a lot of imported equipment, how do you hedge that? If you can give us some color on your procurement policies that will be great.
Okay. Both the questions, I will answer. Both of them are related to equipment and systems procurement. Now in a shipbuilding project as you may now be aware that the equipment and systems cost almost 60% to 65% of the project cost. And all these projects are fixed-price contract projects. And these projects, both the P-17 Alpha, the Survey Vessel, I'm only thinking about the major key projects, which contribute the majority of -- major chunks of our order book. All these contracts have been concluded before the financial year 2019. These are fixed-price contracts, and since these contracts have been concluded before FY '19, all our equipment orders have been placed well in advance that is well before the market fluctuations started first because of the covid because of the current situation. So like we have fixed-price contracts from our customers, all our contracts with our equipment manufacturers and the major contractors are on a fixed cost base.
So what I'm trying to convey there is no impact with respect to the price fluctuation. Now a small component that is not the equipment, not the major systems, but the yard [indiscernible] such as yard material, which mostly compares of steel and certain fasteners and insulation and so on, that comprises only a very miniscule scale of the overall project. Even within the steel, we have an understanding [indiscernible] understanding with another PSU, that is [indiscernible] of protection is there against the [indiscernible]. Coming to the balance material, which comes to, if you're looking at the overall project cost [indiscernible] 5% that is the yard material less steel, there have been fluctuations that have been impacted because many of these are supplied by the MSME vendors. But -- and there have been escalations. But if you're looking at from the overall perspective, the impact is minimal.
Coming to the [ ERV ], the projects, the key projects that is the P-17 Alpha and the Survey Vessel project, they're protected against the ERV because ERV variation clause is existing in the contract with the customer. So there's no impact with respect to these projects.
We have our next question from the line of Prabir Adhikary from Ratnabali Investments.
A couple of questions. The first question is, sir, I want to understand something about this shipbuilding phases. Like you said that it starts from a plate cutting to the delivery stages. As most of the equipments have [indiscernible], so can you just give us a sense that at different phases, what should be the gross margins?
Could you just repeat the question once again?
Yes, I'm saying that shipbuilding happens normally in phases, like from plate cutting to the delivery each stage and most of the equipments that you installed there in the ship bought out components. So this must be that your gross margin also fluctuates. So can you please explain like what should -- what could be the gross margin that happens in every phases?
See, we are looking at -- we are currently executing multiple projects, multiple projects, like I just in my [indiscernible] I mentioned that we are building 15 ships for the Indian Navy itself, and all these ships are at various stages of construction. If you look at holistically, in shipbuilding, the conservative optimal profit margin is hovering around 7% to 7.5%. To give you again a further understanding on the building cycle, as you rightly said, before plate cutting, of course, I'll add another phase, where the preparatory activities are intended, then the plate cutting, then the block -- that the panel fabrication, block fabrication and the block assembly, which happens in the [indiscernible]. Equipment what had been ordered starts coming in during these phases, which is lowered on court, then starts the integration, then the launch, then the outfitting, final outfitting and the trials and acceptance.
Now if you're taking a shipyard, now when we're looking at the gross margins, you should look at from a holistic perspective yard to shipyard. I've got 7 projects currently being executed, shipbuilding project. All of them are at various stages of production. Some ships at the final stage. Some ships at the preparatory phase. So again, as I mentioned, the margin -- the overall margin per ship building project hovers around 7% to 7.5%. Now what -- how do we take it beyond this 7% to 7.5% is where the challenge is. That is where, answering to your previous question, I have mentioned that we have gone through a sea of measures, starting from automation to the extent feasible, manpower rationalization, resources utilization, adopting to PPP, outsourcing, and that's how we have been able to maintain margins.
So is that -- my understanding is right that the 7% of EBITDA margin for the current quarter can go up to around 12% to 13%...
I'll put it. The current EBITDA margin for the current quarter is 12.16%, it is not 7%, and our PAT margin itself is 8.11% for the half year ended 30 September So I'm talking about the PAT margin. The PAT margin itself is plus 8%. The EBITDA margin, and again, answering to a previous question, I have mentioned that our EBITDA margins have been hovering between 12.5% to rather 12% to 13%. And we'll be able to maintain this in the coming days and years.
We have our next question from the line of Vignesh Iyer from Sequent Investments.
I just wanted to ask you about -- so in our balance sheet, right, so we [indiscernible] a good amount of money as an advance for the project execution, right? So it would be a request from my side that if you could show the amount received as advance separately from the cash and cash equivalent that we are actually generating from our internal approval because it's kind of misleading because we cannot use that entire cash because it's kind of an advance from customers than your clients, right? So we want -- in order to calculate the free cash flow in a better way, right, and to find out the closing free cash flow, cash and cash equivalents. It could be better if the advance from customer and the amount you hold in your account, which you're free to you, is shown separately.
Yes. This is Director of Finance, R.K. Dash. First of all, I want to tell is that the money what we are showing is not [indiscernible] because in shipbuilding projects, wherever we have submitted our report, we have not taken...
I'm sorry to interrupt sir, you're not clearly audible, sir.
Yes. Am I audible now?
Yes, sir.
So that's what -- we don't have any financing cost because our contract is made in such a manner, our working capital is financed by the customer. So that means whenever we are attending a particular stage of completion or we are attending a particular milestone, at that time we are getting money. So first, I want to clear, it is not an advance. Second thing I want to tell that so [indiscernible] whatever our balance sheet we are seeing our items, it is not in [indiscernible]. You know that, it is already as per our whatever prescribed in the company. As per that, we are seeing our items.
So in this case, whatever money we are getting, it is coming to our account. That's what I'm showing. It is my care as well as customer care. I don't have a separate bank account to save so separately my accruals and customer. It can be calculated from the balance sheet itself. A financial analysts, you can make out how much is own care and how much is also customer care because everything [indiscernible], we are also showing that advance from the customers [indiscernible] whatever we have got money. On the asset side also, utilization [indiscernible] also inventory that is also [indiscernible]. So there is no scope to show our own money and also customer money separately.
Okay, once again, I would like to reiterate that this question, we have been hearing often in the shipbuilding projects. As per the existing contract, there is the [indiscernible] advance is not there. They are all various stage payments to meet the various project requirements.
We have a next question from the line of Abhineet Anand from Emkay Global Financial Service.
Sir, you -- on the project orders on the anvil, you had to -- first, you had mentioned this L1 [indiscernible] also. So who was the L1 here, sir?
L1 is [indiscernible].
Okay. And the 3 Navy orders that you mentioned. One, obviously, Corvette one you said, that RFP will be likely in FY '23 or early '24. So when can we expect this contract to come up?
See, this contract as per the current progress or what we have seen whatever our experience based on the earlier RFPs and the contract conclusion. If the RFP is coming out, let us say, let's take a conservative period of 2024 beginning, then the contract will be concluded, is likely to be concluded during the first quarter of FY '23.
We have a last question from the line of Prabir Adhikary from Ratnabali Investments.
I want to understand this execution cycle of ASWC as these ships are smaller and the order sales is roughly around INR 700 crores to INR 800 crores. And also the launch date was around '22 to '23, something like that. So is it true if my understanding is correct that you can execute as this already started and launch date is there so you can execute that all the 5 ships by 2024 or 2025?
Okay. This, as you rightly said, these ships are smaller in size. But they are complex ships because these are pure weapon platforms. Then despite the size of a shipping, if the weapon intensity is high, the complexity of shipbuilding is equally high. Now coming to these 8 ships, we intend launching the first ship. The ship has already reached launch stage. The first ship is intended to be launched the next month. And then we are as close as 1 month away from launch of the first ship. As per the execution plan, this project is planned to be completed. The 8 ships, the delivery is planned to be completed by end of 2026.
Thank you. I now hand the conference over to Commodore P.R. Hari for closing comments. Over to you, sir.
Thank you, Yashashri. Before I give my closing remarks, I'd like to highlight one aspect to the investors. Very interesting questions we have today, with a few of them hovering around the margins. While we have endeavored plans to answer all these questions, what I would like to highlight and reiterate that our revenues have gone up and net has gone up. As a matter of fact, our network has gone up to INR 1,360 crores from INR 1,257 crores at the end of last year. Our earnings per share has gone up. [Indiscernible] investment has gone up, market capitalization, another interesting aspect, it has gone up by 400%.
While this reflects the confidence of investors in the shipyard, what I would like to reiterate is that we are fully conscious about your expectations and all efforts to be put in to match your expectations.
With that, let me once again thank Yashashri, and thank you, Gaurav from Concert IR for organizing this conference call. I would like to pay 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 questions, I would request all of you to please get in touch with us, and we'll be happy to address them all. Thank you once again. Jai Hind.
Thank you, sir. On behalf of Garden Reach Shipbuilders & Engineers Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.