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RITES Ltd
Earnings Call Analysis
Q1-2024 Analysis
RITES Ltd
The company has set its sight on regaining momentum in key revenue streams while striving to keep margins consistent. They've managed to sustain EBITDA margins at 29.6% and PAT margins around 21% despite a challenging environment. A committed effort to expand the project-management consultancy (PMC) business is evident, with a current order book standing at INR 2,700 crores, contributing notably to the company's strategy to ensure consultancy revenues stay above 50%.
New partnerships and expansion efforts are underway, with a particular focus on due diligence for investment proposals via collaborations with major financial PSUs like IRFC. These strategic moves align with the company's vision to capitalize on its reputation as a reliable consultancy firm.
An acknowledgment of the time-intensive characteristics of turnkey projects, which on average require about three years for completion, puts into perspective the company's project planning and revenue recognition timelines.
There's a deliberate push towards enhancing the export business, with an aim to achieve a balance where consultancy generates over 50% of revenue and turnkey projects capped at about 25%. The company wishes to rebound to pre-pandemic levels of revenue from Quality Assurance (QA), historically around INR 300 crores annually.
The reported cash reserves of INR 836 crores, exclusive of separate client funds which amount to about INR 2,500 crores, place the company in a strong liquidity position to maneuver future investments and operations.
The company is adapting to increased market competition, which has impacted revenue rates and necessitated strategies to foster growth in other client bases to compensate for these pressures.
As a consultancy-focused enterprise, the company maintains low capital expenditures, typically between INR 100-125 crores, concentrating instead on profitability and growth—as evidenced by RMCL's solid performance, being a debt-free entity with high dividends.
The company is actively seizing station development opportunities, emphasizing consultancy while also undertaking select turnkey projects, ensuring a balanced revenue mix within the established target range.
Recognizing the burgeoning potential of sustainability, a dedicated vertical has been created to leverage large-scale government allocations, reflecting a pivot towards environmental and social governance themes.
Embracing the reality of competitive bidding in the current market environment, the company is intent on sustaining healthy bottom-line growth, maintaining shareholder value, and strategically positioning itself to cope with margin pressures.
The company is proactive in mitigating impacts of INR 15 crores on revenue and INR 10 crores on profit by diversifying client bases and optimizing costs to shield profitability as new rates take effect.
With an impressive consultancy order book of INR 2,700 crores, the company not only foresees a continuation of strong performance and lucrative margins in domestic project consultancy, which grew by about 10% year-on-year, but also aspires for international consultancy growth; this sector contributing about 12% to the total consultancy revenue embodies the global aspirations of the company.
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Good morning, ladies and gentlemen. Welcome to the RITES Q1 FY '24 Earnings Conference Call hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Harshit Kapadia from Elara Securities Private Limited. Thank you, and over to you, sir.
Thank you, Lizanne. Good morning, everyone. On behalf of Elara Securities, we welcome you all for Q1 FY '24 Earnings Conference Call of RITES Limited. I take this opportunity to welcome the management of RITES Limited represented by Shri. Rahul Mithal, Chairman and Managing Director; Shri. B P Nayak, Director Finance; Shri. A K Singh, Director Projects; and Shri. Dr. Deepak Tripathi, Director Technical. We will begin the brief overview by the management followed by a Q&A session.I will now hand over the call to Rahul, sir, for his opening remarks. Over to you, sir.
Good morning, everyone. Let me start with the safe harbor statement. The presentation and the press release, which we have uploaded on stock exchanges and our website on Friday, and all discussions during the call today may have some forward-looking statements. These statements consider the environment we see as of today and obviously carry a risk in terms of uncertainty because of which the actual results could be different, and we do not undertake to update those statements periodically.Let me give you a brief overview of the -- let's breakdown the results of Q1. When we started this FY, our strategy was to minimize the impact of 2 challenges, one was our export steam revenue; and the other was the changed dynamics in the QA, that is the inspection stream of business, and both these schemes had an impact. The export stream had an impact of about INR 6 crores on our -- INR 16 crores on our profit. The inspection stream of business had an impact of about INR 10 crores on our business in our profit. In the inspection stream, we built up on our new client place -- base, further clients, and we also rationalized the cost to minimize the impact to the extent possible.As a strategy, we aggressively pursued efforts on expediting the project consultancy orders, the high-margin project consultancy orders to minimize the blunt the impact to the extent possible, and the project consultancy, domestic consultancy revenues showed a 10% year-on-year growth. We could sustain the margins in the consultancy at about 44%. And this, along with an increased profit of about INR 10 crores in our subsidiary RMCL could minimize the impact to a drop of about INR 19 crores in the EBITDA -- INR 19 crores in the EBITDA, while still being able to maintain our core EBITDA margins at 29.6%, and PAT margins of about 21%.So with this broad overview of the Q1 performance, I leave the floor open for questions.
[Operator Instructions] The first question is from the line of Dixit Doshi from Whitestone Financial. Advisors Private Limited.
My first question is regarding the export business. So in the presentation, we have mentioned the export order book of INR 56 crores, but I assume that we have received 2 orders of 1 Zimbabwe for around INR 850 crores and Mozambique, around INR 500 crores. So broadly, what is the order book, as of today, if you can elaborate? And also the execution time line and by when this will start flowing into the revenue, how much time the designing phase will take if you can explain a bit?
So our order books at exports stands at INR 56 crores. As far as the Zimbabwe, NRZ, National Railways of Zimbabwe order is concerned, this was an agreement signed between RITES and NRZ during the IndoAfrican CII Conference a few months back. And that had a condition, as we declared to the stock exchange that the formal LOA will get released on approvals of their requisite funding. So that's why we are not counting it in the order book, as of now. We are hopeful that, that process should fructify.As far as the Mozambique order is concerned, this was a global tenders -- a global tender. For 10 locomotives, there was a separate tender, and there was a separate tender for 300 wagons. Both were global tenders, and we were officially -- we were declared L1 in both of them. So as a mention of good practice, we declared it to the stock exchange with a clear clarification that we do process of finalizing the order, the CFM would follow the due process. So we are hopeful that they fructify into finite orders in the coming months.
Okay. So is it fair to assume that Mozambique revenue will start flowing in from FY '25 and Zimbabwe by when you expect if the funding to get sorted out?
So as far as Mozambique is concerned, we haven't still got the order, so I wouldn't like to speculate on when and what time frame. We are hopeful that this gets converted into a finite order. And as far as Zimbabwe is concerned, we are in touch with them. They have started, and they are also very keen. They are aggressively following the due process of getting the necessary funding approval. So again, it would not be fair for me to speculate on time frame. But I can only say the efforts that I've been mentioning in the past investor call also has been to get some orders, and we see movements in the positive direction in both these areas.
Okay. And one last question. So any more orders or a bidding in pipeline for exports?
Yes. We have bid across a number of continents, number of types of rolling stock, and we'll keep you apprised, as they develop as some developments happen. But this much I can assure you that we are bidding and entering into MOUs and agreements across countries and including global tenders for different types of rolling stock, so as to minimize the impact of this stream of revenue, which you've been seeing for the past few quarters, which is depressing the entire overall bottom line and top line.
Okay. Any rough...
Sorry to interrupt Mr. Doshi, thank you, sir. The next question is from the line of Shreyans Mehta from Equirus.
Sir, congratulations on the export wins. Just to dwell upon the margins, will it be similar to what we've been doing in terms of the exports in FY '22?
You see, again, I will not like to speculate or I would not call them wins right now. They are movements in the positive direction, as I clarified in my previous question. And as far as margins are concerned in Expotech, obviously, as more and more, these are becoming global tenders and competitive tenders, they will definitely not -- let me put it this way, it will be tough to maintain margins at the levels, which have been earlier, yes. But the aim will be to try and keep an overall margin as safe as possible by focusing on other streams of revenue, like, as I mentioned at the outset, my project consultancy revenue, which also has been able to maintain a margin of 44%.
Got it, sir. And sir, secondly, in terms of any guidance for FY '25, if you could want to highlight something on that front?
The guidance is that we'd like to -- we've lost ground, as I mentioned in the opening comments on both side streams of revenue and try and secure the margins [ too ], as close as possible at the trends, which have been.
The next question is from the line of Rahil Shah from Crown Capital.
My question was on similar lines, like based on current order books and so what are you expecting in FY '24? How will your revenues and margin shape up, sir, I think if you want to elaborate more what are you working like what steps are you taking in order to ensure good growth?
As you see our current order book, as of 30th June is INR 5,700 crores, which is about INR 2,700 crores in consultancy, INR 2,700 crores in turnkey, only INR 50 crores in Expotech, INR 150 crores in leasing and about INR 100 crores in RMCL. So the focus, one is to be able to get some finite orders and Expotech that they start contributing to revenue by the latter part of the FY; two, to be able to blunt the impact of the QAC, where the rates -- the new rate, which has started cutting in for the railway inspection is about 1/5 of the earlier rate, and this impacts about 60% of my QA stream of business.So to be able to garner more other clients, who can -- we can fill up this lost ground and continue focusing on getting more orders in the project consultancy and expediting the execution of the existing orders. So with that, I think the -- and we being -- as a strategy, a bottom line-driven company rather than a top line-driven company, we would aim to recover lost ground from both these schemes of revenue. which are good contributors to the bottom line and also maintain margins to the extent possible, as I said, to the trend that [ has been ]. Like Q1, we have been still able to keep the margins in the trend -- in the past trend, our EBITDA margins at 29.6% and our PAT margins at about 21%.
[Operator Instructions] The next question is from the line of Viraj from Jupiter Financial.
Sir, my question is about your MOU with DNV. Can you throw some more light on that? Like how is going to be benefiting us in terms of growth, in terms of profit top line? If you can give some more color on that about this MOU you sign with DNV?
Yes, for sure. You see, as I mentioned at the outset, we are trying to tap as many new streams of revenue in the QA business to recover the lost ground, which is quite a substantial impact. And while exploring new clients, we've also got the certification for an independent safety assessment, the ISA certification. And with that and with others trying to tap various domestic and international opportunities for QA, DNV, as you're aware, is a reputed international inspecting agency spread -- headquartered in Norway and spread across more than 100 countries, including operations in India. So we will be complementing each other strength and geographies to try and explore more possible opportunities in the QA business.
Any quantification in terms of numbers possible right now? Or it's too early right?
It's too premature right now.
The next question is from the line of Venkatesh Subramaniam (sic) [ Subramanian ] from LogicTree Investment Advisors Private Limited.
Two questions, sir. One is you mentioned about project consulting business an order book of INR 2,700 crores.
Sorry to interrupt, Mr. [ Subramanian ], sir, we are not able to hear you clearly.
Yes. Is it better now?
No, sir. Still the same.
One second.
I think there's a lot of echo you can come back in the queue, while we take the next question. Hello? Yes.
Yes. Sir, my question is two-pronged. One is with respect to the project -- the PMC business, you said, you have an order book of INR 2,700 crores out of the overall order book of INR 5,700 crores, and there's a focus on Expotech. So say sir, 12 months to 18 months down the line, what percentage of your order book would you target, as to be part of exports?And second thing is other streams of revenue that you think you're looking at, what would that comprise of?
So you see our core vision, our core strategy is that we are a niche consultancy company, and we have been aiming that our consultancy revenue is always -- is aimed to be above 50%. And I must say that this was the first quarter after many quarters, where the contribution of the consultancy stream of revenue to our total revenue was 53%. So this is in line with our direction and vision moving forward. And we would see that this trend continuously grow on this trend.The export, as I have mentioned, has been [Technical Difficulty] 22:20 contribution has been decreasing over the last quarter because there were no fresh orders. We were executing the old order. So as we get some new orders in the coming quarter, the effort will be to get back the export contribution to a substantial amount to the revenue stream and replace the turnkey contribution, which normally will be kept in the range of about 25-odd percent of the total pie.
[Operator Instructions] The next question is from the line of Parimal Mithani from Credential Investments.
Sir, I just wanted to know, if you can elaborate in terms of collaboration with DNV, as well as IRFC, and if there -- if you can throw some light on it, sir? These are the 2 questions.
Good morning, Parimal. So IRFC, as you are aware, is a -- is in fact been there for many years and doing a lot of investments in the railway area. So we thought that both IRFC and RITES have lot of strength and which can complement each other. So our collaboration will be for doing the due diligence for them for their investment proposal. And they're looking at us for the prospective areas, where they can look for investments of their funds. So that is as far as IRFC is concerned, and this is in line with the recent MOU, which we signed with PFC also on a similar line. So both our major funding big PSUs, who we feel and they felt that the strength of RITES for doing due diligence for them and us looking at them for giving them opportunities for investment of their finances.DNV, as I mentioned shortly, is an international reputed inspecting -- inspection agency, where, as I said, in our bid to aggressively [ may could we ] lost ground due to the impact of the new orders, they have been cutting in of the railway, as a client of inspection. We are partnering with them to explore new clients and new geographies.
Sorry, just a follow-up on the...
Sorry to interrupt, Mr. Mithani, sir, may we request that you return to the question queue. There are participants waiting for their turn. The next question is from the line of Uttam Kumar Srimal from Axis Securities Limited.
Sir, currently, we have turnkey order book of around INR 2,695. So what is the time line for execution of these turnkey projects?
See, each project varies. But on an average, our experience shows that turnkey project, normally [Technical Difficulty] 25:35 execution on an average, some could be quicker be about 2 years or some could be about 3 years, 3.5 years. But on an average see -- average turnkey project takes about 3 years to be executed.
And sir, any guidance for RMCL revenue?
Sorry to interrupt Mr. Srimal, may we request that you return to the question queue. The next question is from the line of Shreyans Mehta from Equirus.
Yes. So sir, just wanted to understand once these export orders translate into form orders, what would be the time line for completion of those projects? Would it be 2 years, 2.5 years?
So you see, in general, the different types of soft export of rolling stock take different time frames. There are locomotives, there are DMUs, there are coaches and there are wagons. By nature, wagons take the least amount of time and the maximum amount of time is normally taken by normally a locomotive and sometimes by DMU because the DMU consists of 8 to 10 coaches together and the whole [ consign ] has to be exported. So the time frame could vary anything from about starting from wagons for about 9 months to 12 months to about 2 years to 2.5 years on the extreme side for the higher-end rolling stock.
Got it. And sir, if you could help us with the net cash status.
Sorry to interrupt, Mr. Mehta, may we request you to return to the question queue. We'll move on to the next question. That is from the line of Viraj from Jupiter Financial.
Sir, any targets for the -- you talked about the lost ground in terms of export and QA business. Are we setting any targets, say, year-to-year for this to achieve, and if you can throw some light on that, like in some number -- quantify that more?
So if you see the contribution of export and QA business for the last 2 FYs, that is '21, '22 and '22, '23, where post COVID, this will give you an idea of the QA average stream of business, what was the revenue, and that is what we'd like to come back to. So the QA business has been always giving a revenue of INR 300 crores plus normally.And the export stream of revenue, if you even out has -- it should -- it has given us some quarters, but if the export happens on a particular quarter and then the revenue gets booked. So again, the aim is that going forward, the consultancy should contribute to the overall revenue by of at least above 50% and turnkey, as the export revenue grows up, the turnkey should be limited to about 25-odd percent. So that's the overall target. And that is now moving forward, we would like the export business to develop.
Any number on export target, sir?
Sorry to interrupt, Mr. Viraj, may we request that you return to the question queue. [Operator Instructions] The next question is from the line of Venkatesh Subramanian from LogicTree Investment Advisors.
Sir, my question was on DNV. Since you said they have a huge presence, and we want to explore working with the macro geographies, which means that if there are other infrastructure sectors in the country, other projects that require certification, safety, quality, et cetera, RITES would be keen to collaborate on that front as well?
Yes. We are doing inspection across verticals, across projects. So yes, that's the -- as I mentioned that the railway inspection business accounts for roughly about which has got impacted by these new orders is about 60% of my total QA-5. So we would like to grow the other portion, the other clients, that base to grow across possible clients, both domestic and international, so that, as I said, we recover lost ground, which the current rates are about 1/5 of the earlier rate for the railway inspection.
The next question is from the line of Shreyans Mehta from Equirus.
Sir, could you please help us with the debt and the cash numbers?
So the cash balance is about INR 900 crores. And in fact, the exact figure is INR 836 crores is the cash balance, and client funds are separate. We don't count them in cash balance. Client funds as of Q1 is about INR 2,500 crores.
So INR 836 crores is our own cash.
INR 836 crores is our own cash. We don't count the client fund in our cash balance.
[Operator Instructions] The next question is from the line of Parimal Mithani from Credential Investments.
Sir, the MOU with PFC, you will be on a consultancy business, right, if I'm -- is it safe to assume that, sir?
Yes, for sure. Both PFC and IRFC, as I said, this is a mutual win-win situation for both of them and RITES. We would be doing their consultancy for their possible investments in various areas of infrastructure. And since we have the wherewithal to do consultancy across infrastructure sector, we would be doing that for them. And they would be looking at tapping opportunities through us for being able to invest their finances in various areas of infrastructure.
The next question is from the line of Viraj from Jupiter Financial.
Yes. Sir, this is regarding the last question only. What is the export target you -- you talked about QA of INR 300 crores, any export numbers we would like to put as a target, if you can share that?
So you see the export orders as they mature, they have different lead times. And as I mentioned and explained in detail, depending on the type of rolling stock, it varies anything from 9 months to 12 months to about 2 years, 2.5 years. So the aim is to be able to -- be able to have a steady flow, and that is only possible if you have 2, 3 orders in hand rather than see cyclical booking of revenue because in export scheme, you can only book the revenue when the shipment actually is shipped out. I mean, the consignment is shipped out. So the aim is to have a steady stream of revenue down the FY over quarter-on-quarter rather than the fluctuating revenue. And as we grow on that, the aim would be that, that will replace, as I explained some time back, the turnkey segment of revenue, which we'd like to limit it to 25%.
Any target in ticket size of the export orders or any [indiscernible] while ticket size, we will be looking, as export order then?
Sorry to interrupt, Mr. Viraj...
It's the same question, ma'am. It's the same question.
Okay. Okay. Let me clarify again. As I mentioned, both the export someone or some time back, they are right now not finite orders, and we are only hopeful that they get converted into finite orders in the coming months. And as I said, parallelly, we have also bid for a number of opportunities, both the global tenders across continents, which we are hopeful that they are able to -- as get finalized in the coming months. So our effort is to minimize the lead time, so that at least by end of the FY some revenue starts flowing in, in the export stream of revenue.
The next question is from the line of Dixit Doshi from Whitestone Financial Advisors Private Limited.
Sir, one clarification. You mentioned about the QA revenue, the 60% impact on our annualized revenue, so the price has been reduced or the order has been given to someone else?
No, no. So what a few months back, railways floated a tender and they divided the entire QA business. between 4 players, and RITES is one of the 4 players. And in that, the slabs of revenue for the different slabs of the orders, on an average, if you translate it to an average, the reduction in the rate is about 1/5 of the rate at which inspection was being done earlier. So that's the impact. So there is an impact in terms of being one of the 4 players. So that's the impact on the top line. And there is further impact that the rate of inspection is about 1/5. So that has also compounded the impact It's a double impact, which is affecting 60-odd percent of my QA business, which is coming in from the stream, which is impacted by this new order.
Okay. Understood. Can I ask one more question?
Sir, may we request that you return to the question queue. [Operator Instructions] The next question is from the line of Uttam Kumar Srimal from Axis Securities Limited.
Sir, what is our CapEx guidance for FY '24 and '25?
See, we are traditionally the pattern, which you've seen maybe for the last few years, we are a low CapEx company doing about CapEx about INR 100 crores, INR 125 crores, and that's the trend, which is going to remain moving forward. We are not a high CapEx company. We are a consultancy company, and that's the trend that is going to remain.
The next question is from the line of Viraj from Jupiter Financial.
Yes, sir. Any guidance on RMCL, any color on that?
Yes, I must say RMCL performed extremely well in this quarter. The revenue grew quarter-on-quarter from INR 28 crores last year to INR 43 crores. The profit grew by about INR 10 crores. And we could give or declare a dividend of about INR 21 crores, that is 90% of the profit, the profit of PAT was about INR 24 crores. So moving forward, RMCL has steadily, as you've been maybe seeing sequentially also, RMCL has been showing steady growth. Now it's a debt-free company, which it became last FY. It has been declaring very high dividend. So RMCL, moving forward is going to definitely grow. I see this good trend going on.
The next question is from the line of Dixit Doshi from Whitestone Financial Advisors Private Limited.
Yes. Sir, in export segment, you mentioned that we have -- we are participating in a number of global tenders. Any rough idea you can give that how many tenders -- how much value of tenders we have participated and awaiting the results?
I think, Dixit, that would be speculative. I can only say that let some [ final ] clarity merge, as they get finalized or at least they start getting open. That would be a better stage to apprise. And let's assured, in terms of pure transparency, when any major development happens, we -- with all due clarifications, we'll definitely declare it to the stock exchange.
Sure. And in terms of consultancy, what are the major projects or opportunities we see in, let's say, next 9 months to 12 months from where the orders can come?
You see in consultancy, as I mentioned, we have reaffirmed our core strength in that and built up on a strong base. This quarter itself, we got about 70 orders totaling to more than INR 300 crores, out of that 70%, about [ 60-plus ] for consultancy. And the consultancy in fact, contribution has been 53% of my total revenue.The kind of orders, which we have got, just to give you a few examples, we've got the Hyderabad airport line Metro consultancy; we've got the orders recently for the DPR for the Chandigarh Metro and expansion of the Gurgaon Metro. We have got a mobility -- city mobility plan for the Kolkata City. We have got ropeways order for the number of ropeways, where feasibility for about INR 10 crores. We have got the orders from 4 different semi-high speed survey orders from railways totaling to about INR 34 crores. We've got sustainability orders covering Swachh Bharat Mission 2.0 from MoHUA, as well as in clean air pollution, as well as in solid waste management.So the point underscore -- the point, I'm trying to underscore is that if you see the flavor of the orders, they are across sectors, different types of orders across states, across ministries, and all of them are on the -- all the orders that I mentioned are on the competitive mode. So moving forward, we are confident that we will be able to maintain this trend and leverage our strength and tap in on the high CapEx allocation during this budget across sectors.
[Operator Instructions] The next question is from the line of Shreyans Mehta from Equirus.
Sir, as far as consultancy is concerned, can station redevelopment be a big opportunity for us. And secondly, what's the status of our investments in IRSDC?
So to answer your second question first, IRSDC, we had a share of 24%. And then the, all due processes are being followed in its closure, and we don't expect to have any hit. We don't expect to take any hit from that. All due diligence has been done and it is following its timely due process and its closure.As far as opportunity in station development is concerned, in the last few months, we did -- we are doing the -- we got an order for the Kollam station development in a turnkey mode. We are doing the Ayodhya station and the Varanasi station, 2 iconic projects, which are -- which we are doing. And parallelly, we are doing the consultancy, PMC for various station. We've made a foray in that, and we've got the consultancy order for the Somnath station. So moving forward, this is an opportunity. Our focus on station development will be on consultancy, but periodically, we may take some orders on the EPC mode also, but that would be limited, as I said, within the overall pie of limiting our turnkey revenue to not more than 25%. But in terms of PMC in various station development projects across Zonal Railways, we would be definitely bidding for that, and we are hopeful to get some orders.
The next question is from the line of Viraj from Juptier Financial.
Sir, if you may ask you, what would be your vision on the RITES, say, 3 years from here? And secondly, some color on sustainable business, which is there for RITES certainly?
So as far as answering your second question first, in terms of sustainability, we started this vertical last year. We found that we had been doing a lot of work in sustainability across our various verticals, which was part of the consultancy, let us say, for highway project or a metro project or a building project, et cetera. We group these sources, tapped into some more resources and form the sustainability, dedicated sustainability vertical.And in the few months itself, as I mentioned as examples, we have got forays into orders for such Swachh Bharat Mission and air pollution and solid waste management, et cetera. So moving forward, we see this as a very good opportunity. There are a lot of large budget allocations from various states and the central government in this, and we will be with our experience and our credibility, we will be looking to leverage this opportunity.As far as vision is concerned, we are clear that we are a core niche consultancy company, and we would like to reaffirm that and move in that direction that we are the go-to consultancy company, both domestic and international and grow in that area.
Any numbers on that, sir, like for 3 years down the line any targets, which you -- no compression, which you would probably love to achieve it?
I wouldn't like to speculate our numbers, but I think the aim would be to have a healthy growth in the -- we are a bottom line-driven company. We would like to grow on a good healthy manner in the bottom line and as well in spite of the changed ecosystem, where a number of policies have changed wherein most of the opportunities now are on competitive bidding, we are geared up for that. So while the margins would be under stress, but to the extent possible to secure and maintain the margins, while giving out to our investors, the trend of investor shareholder value, which we've been maintaining in the last few quarters.
[Operator Instructions] The next question is from the line of Uttam Kumar Srimal from Axis Securities Limited.
Sir, what was the impact in the quality assurance business in this quarter in terms of revenue?
So you see the new orders started cutting in the order. The inspection calls, as per the reduced rate started cutting in from this quarter. And this will only -- this impact will only grow, as all the old inspection calls as per the old inspection rates are now nearly over. This quarter itself, the quarter-on-quarter, if you compare [ Y-on-Y ], the impact on the revenue has been INR 15 crores and the impact on the profit has been about INR 10 crores. So while we parallelly, as this -- the new rates were cutting in, we parallelly took action to build up on the other client base, as well as rationalize some cost, so that the impact could be blunted to the extent possible.
The next question is from the line of Harshit Kapadia from Elara Securities.
And sir, just 2 questions from my side. So this is the fourth export order, which you got for wagons. So just wanted to understand, since we are not going to manufacture these wagons or probably we have a subsidiary called a SAIL-RITES JV, would they be manufacturing wagons or it would be given to PSU or the private company?
So you see, first of all, as I clarified, Harshit, we have didn't yet got an order. But in terms of the SAIL-RITES, SAIL-RITES is already now got an order for wagons for CapEx. And they are also -- we are trying to get some orders from in the railway wagons, which they are tendering, aiming for about 900 wagons. So we are trying to build up on that. And moving forward, as we are able to cater to these orders, maybe expand and see how SAIL-RITES can cater to export orders also. We have a MOU with RDSO approved firm called Jupiter Wagons. And we would be sourcing whenever we get an order for wagons, we would be sourcing wagons for them -- from them for export. At least as of now, till maybe -- till the time SAIL-RITES could be able to expand its capacity after completing its current order book and we geared up for export.
[Operator Instructions] The next question is from the line of Harshit Kapadia from Elara Securities.
Yes. Sir, just another question. Since -- just wanted to get a clarification on the quality assurance business. So does it mean, you were earlier doing some inspection work already for railways, and RDSO and others, a few agencies were doing other work for railway in terms of inspection. Now it is an open-door thing, so, you can also bid for something, which you were earlier not doing, and you can get that business, as well at a -- the price at which you quote. Is that or you're only confined still to your domain and where the prices are lower, just understanding on that.
No. So let me clarify. You see traditionally, we were doing both railway inspection, and we had a number of clients, who were not railway clients, and we were doing both. This particular tender, which got finalized a few months back is for the railway portion of business, where 4 agencies, RITES is one of them, have been fixed for those products. And there, the rates on an average have come down by [ 1/5 ] from the earlier rate.So we would, in any case, while doing that for the railway inspection portion would -- to, as I said, to blunt the impact would like the other portion of other clients, which we have, that volumes to grow and that type of inspection or the rates of inspection or the quantum or the scope of inspection, they are decided on a client-to-client basis. That is being done even today. The inspection, which we do for a client and with such a wide variety of inspection, with the scope of work is that, in any case, even today, lesser or higher than on a case-to-case basis than the rate, which railways used to offer us for inspection.
Understood, sir. Just another question on how you look at the consultancy -- domestic consultancy business pipeline in present time, sir, if you can highlight some projects, which you are working on some large projects that would be great, sir?
So the domestic -- the overall consultancy order book, as of 30th June is INR 2,700 crores, a good trend of getting more than [ 60-plus ] orders in consultancy itself in quarter 1. We are -- some of the orders of consultancy, which I mentioned show the kind of orders, which we are getting across sectors. Q1 has shown a very healthy trend that in spite of the impact on the other streams of revenue, which I mentioned, export and QA, the project consultancy, the domestic project consultancy grew by about 10% year-on-year, and in fact, gave good margins, and that is why we could overall in consultancy, including QA, we could maintain margins of 44%.So moving forward, both executing the existing order book of INR 2,700 crores. In fact, the first time, the overall contribution of consultancy is 53%, which is in line with our vision, as I said, having consultancy always above 50%. International consultancy in the total consultancy pie has contributed about 12%, which I would -- we would want that it grows, and this contribution grows in the coming quarter.So both in terms of securing fresh orders across sectors of infrastructure or expediting the existing orders, especially the high-margin consultancy order, as well as getting fresh international consultancy orders and getting revenue from the existing international consultancy orders, I see a healthy trend in these -- all these areas in the consultancy [ wing ] moving forward in the coming quarters.
[Operator Instructions] As there are no further questions, I now hand the conference over to Mr. Harshit Kapadia for his closing comments.
Thank you, Lizanne. We would like to thank Shri. Rahul Mithal, Chairman and Managing Director; Shri. A K Singh, Director Projects; B P Nayak, Director Finance; and Shri Dr. Deepak Tripathi, Director Technical for giving us an opportunity to host this call. We thank all investors and analysts for joining for this call. Any closing remarks, Rahul sir?
Yes. Thank you, Harshit. So as I said at the outset, our strategy moving forward will be in line with the strategy at the beginning of this FY, which saw the movement in the right direction, blunting the impact of the changed scenario to the extent possible and building up on our core strength. And I'm confident that as the Q1 trend has shown, we will build up on this trend and tap the opportunities, both in the domestic and the international sector moving forward. Thank you.
Thank you. Ladies and gentlemen, on behalf of Elara Securities Private Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.