Are you planning to build a full digital shipyard model where AI and smart sensors and modular systems will work together to reduce build time and improve global competitiveness? Is there a roadmap to make Cochin Shipyard a global center for smart naval manufacturing?
We will invest into modern systems, especially on the engineering side. On the production side also, there would be digital tools and gadgets being adopted. But as you pointed out, we are not currently talking about moving entirely into a smart shipyard kind of a configuration. We will take facets out of what is smart, but we will not be a fully fly-by-wire kind of smart shipyard. That is not on the anvil. But, yes, we will adopt technology wherever it is required.
From a financial point of view, as Cochin Shipyard is trying to invest in new tech, build modular yards and export plans, how do you decide where to spend first? Is there a system that helps balance short-term profits with long-term growth?
We have a long-term plan. This is 2030 and 2047, based on which we have set certain priorities based on the sectors in which we have to invest. So, based on that, we have a long-term investment plan. Accordingly, we will do that based on the merits of each case.
On the HD KSOE, Drydocks and Maersk announcements — at what stage are we in terms of getting anything on the ground? What could be the medium-term revenue potential?
With HD KSOE, we are talking largely ship building and that too merchant ship building. The initial approach would be to make sure that the new 310 meter dry dock is leveraged to its optimal capacity, creating additional fabrication capacities aligning with HD KSOE's thought process. With Drydocks World Dubai, it is actually ship repair to start off with, leveraging the newly completed international ship repair facility at Cochin. Overall we are talking about anything between three to five years for these things to mature. Ship repair part could happen in next one and a half to two years onwards. With Maersk, initially ship repair and people skilling — trying to get one vessel of Maersk to be repaired in our ship repair facility at Cochin this financial year. I am not in a position to paint any financial figures.
On the order pipeline given on the slide of Rs.2.2 trillion, out of which Rs.1.29 trillion is at RFI stage for defense and Rs.65,000 crores commercial. Also, IAC-2, any developments since last earnings call?
The pipeline on the defense — there is enough and a strong order pipeline. There are a few projects which has already crossed the bidding stage and we have bid against that. On the commercial side, what Cochin Shipyard is looking at where there have been some form of interactions and some thought process. IAC-2, again, we are not in a position to convey anything. I can say that there are no fresh developments to report. We are hopeful, but we are not in a position to hazard a guess on the timelines.
On both JVs, do we expect further CAPEX to be incurred or the new JVs should be CAPEXed?
On the HD KSOE side, as we are moving forward, there will be CAPEX in new workstation facilities. We are discussing this. We are not in a position to comment at this stage, but there will be more CAPEX. On the Drydocks World side, we are already having the ship repair facility with a ship lift and six workstations already completed. So, for that, there would not be further CAPEX. But teaming up with Drydocks World, when we expand further the business, we will look at CAPEX. These are early days, we may not be able to comment on it, but it will call for further investments given the opportunity.
On the increased Maritime Development Fund that the government has announced around 70,000 crores, how much of it are we going to tap onto?
The Maritime Development Fund, the contours have not come in fully in public domain. But it is essentially a fund for multiple uses. It will help fund ship owners to place orders for ship building in India, it will support in case an organization like Cochin Shipyard Limited wants to, there could be an equity part in it, there could be a debt part in it. It is not a grant from the government. It is not just money it is not just available as a freebie kind of thing. We are not in a position to say exact figures on this, but we are factoring in the MDF into our discussion.
What is the current utilization rate of your new drydock or ISRF facilities? And do we have any plans to expand to offshore renewables or allied?
The new ISRF, as we are speaking, we have 14 vessels are under various stages of repair in the ISRF. When we say this, we say that the total strength of ISRF is 82 ships per year. On the new drydock, we are not in a position to talk about a utilization factor kind of a thing. Right now, there are three vessels being built in the dock and there will be one dredger which will come in for ship repair. It is actually being utilized to the full right now. Plans to expand to offshore renewables — No, not right away.
Can you give me a breakdown of the profitability profile across your domestic commercial and export orders? Working capital requirement for such large order pipeline?
We have put in a few more details in the presentation that is already uploaded. But if you have a few pointed questions, maybe we will be able to answer it. Otherwise, it is going to be difficult because it is very general what we have been asked for. Can we request you to send in your most important question by e-mail to company secretary? We will respond to it.
What opportunities do we see in India's defense push and how is company placed to benefit? How should investors interpret the shift in revenue mix between shipbuilding and repair? Where can I see Cochin Shipyard in the next five years?
Overall, the company is today more confident, and it is a robust company from an operational and financial point of view. From a country's point of view, the country is very strongly promoting shipbuilding. We have generally guided 14% to 15% top line growth for this particular financial year. But generally, we say a guidance of 10% to 12%. I would desist from answer that mix question. That is something which people like you should advise them. Our job is to run the company transparently, trustfully and with credibility. In five years — somewhere around double this turnover, strong company and very strongly alive and kicking.
Could you throw some light on the government's focus on the upcoming shipbuilding clusters across the country, how will that affect the industry and our company?
The government of India is putting an emphasis on developing shipbuilding as a large industry. Multiple clusters are being looked at across various Indian coastal states. The central government along with the states are trying to work on this. It is too early days to comment on how exactly these clusters will come up. But the Indian shipbuilding industry will have significant growth into the future. We will see potential foreign players, collaborations, especially countries like Korea and Japan, potentially investing into some of these clusters in India.
On ship repair number for FY26 and the US Navy MSRA — are we expecting ships from them for repairs?
Last year we had the aircraft carrier. This year, we are expecting to do about Rs.1,500 crores of ship repair revenue in FY26. We have grown from about Rs.1,000 crores to Rs.1,875 crores which was a one-off because of the aircraft carrier repair. But we hope to do good this year also at about Rs.1,500 crores. We have the master ship repair agreement with the US Navy. There are discussions ongoing, but we are probably not in a position to comment. We have not concluded any ship repair engagement with them as of today. We are working towards it. Being the US Navy and being an MSRA, we will not be able to comment, but we are working towards it.
In terms of ship building, what is the capacity in terms of how many ships can be built? Do we have the design and technology for Panamax, FSRU, LPG or crude oil ships?
It depends on the size and scale of the ship, the complexity of the vessel. Within the group there are 75 vessels under contract — 37 plus 13 that is 50 numbers are under various stages of construction, 25 are under design and engineering stage. It is very difficult to say what is the number of vessels to be constructed. Typically, there are a fair bit of capabilities available in India, but it is also a measure of the market and what the client would need. There may be clients who may want to look at ships which are in the market, what I call proven designs. So, we will look at both options, but largely we will look at teaming up with international players to build merchant vessels.
Do we expect to get these aircraft orders again in future?
The ship repair ones will come. It is a cycle through which the ship repair ones will come. As we discussed the next aircraft carrier, we are not in a position to discuss at this stage because we hope it will come, but timeline we are not in a position to talk.
Ship repair margins were strong due to two IACs. Now that those are out, how are you looking at overall margins for the year and the split between ship building and ship repair for FY26?
Ship repair last year there were two aircraft carriers. So, we may not have that much margin coming from ship repair this year. Still, ship repair will do a decent performance this year maybe around Rs.1,500 crores levels. But the margin may not be at the level of what you have seen last year. Ship building margin is around 10% to 12% normally. So, that kind of margin we can expect from ship building also. Around 15% on a PAT margin level.
You gave PAT guidance of 15%. Can you also give top line growth guidance for the year?
Top line, for the current year from where we were last year, we consider 14% to 15% top line growth.
On the two new facilities — ISRF and new drydock — what sort of asset turn or maximum top line can you potentially generate before additional CAPEX?
For ISRF, we hope in about the initial 18 to 24 months we should go to about Rs.250 crores of extra revenue. And then, full blown condition, we go to about a Rs.600-plus crores. For the new drydock that is a little bit difficult to decipher it that way, because that gets reflected in the overall top line, because shipbuilding you cannot exactly put it into one facility because a drydock does not produce ships, the overall ecosystem produces ships. Ship repair, again is much more with clarity.
Based on current facility and revenue, how much more CAPEX is needed to double shipbuilding revenue in 4-5 years?
In various discussions earlier, we have said by about 2030-31, somewhere around that period, we should double our turnover kind of a level for which we may not need too much CAPEX as we are, because we have already completed almost a Rs.3,250 crores of CAPEX cycle across the two facilities and some of our subsidiaries. That has been done over the last about seven years. Going beyond double that figure, which is something like Rs.10,000, 11,000, Rs.12,000 crores in about 2030-31, crossing that threshold and moving forward is where we will invest the CAPEX now. We are talking about that CAPEX which we will invest over the next five years or so.
What is your strategy to build recurring revenue streams beyond ship building? How significant are exports as part of long-term growth strategy? What cost pressure are you facing in steel, equipment or manpower?
Essentially, the company is in ship building and ship repair. Ship building, we do not build the stock, it is an EPC business. Ship repair is a continually flowing market — a continual business where we look at requirements over the next anywhere within three months to the next year, year, and a half kind of future business. Exports are very important as part of our long-term strategy — focused on specialist vessel export into Europe and now with HD KSOE on the merchant vessel export segment also. The defense ship building is 100% Indian. We are not building to stock; we bid for projects and tap our supply chain. Largely at the bidding stage, we consider the current market pricing to be passed on to the clients.
On the defense order book of Rs.13,700 crores, can you give a rough breakup for the larger platforms? And on the Rs.2,20,000 crores defense pipeline, what larger platforms are in the bid/RFP/RFI stage?
Rs.13,700 crores, 14 vessels spread across two projects; one project is in ASW Corvette, which is about Rs.3,700 crores unexecuted order, and the remaining part out of Rs.13,700 crores is a project called the Next Generation Missile Vessels, that is six ships. There are two projects worth about Rs.10,000 crores for which bids have been submitted — one is the Next Generation Fast Patrol Vessels (18 vessels for the Coast Guard) and the Next Generation Survey Vessels for the Indian Navy. There are a few small projects about Rs.1,000 crores in the RFP stage. RFI stage are MCMV (Mine Countermeasure Vessel), the P-17 Bravo Vessel, the LPD.
In FY24, we had higher EBITDA margins of almost 24% and now close to 19%. Even last year was expected to be lower because of changing product mix. Is there a difference in mix versus FY24?
The EBITDA for the company for the Q1 is 28%. The year before we had the aircraft carrier building. The last year we had the aircraft carrier repair also. So, both the margins were on slightly higher side. But this year, we do not have such large projects. So, the EBITDA will be around 20%, that is what we guide overall.