FY26 best-ever: revenue Rs.7,002cr (+38%), PAT Rs.748cr (+42%), 8 warships delivered.

So, my first question is on Corvettes. So, if you receive this order by this financial year, what is your execution cycle? And second question on Bravo, at what stage the talks has been came?

The next generation Corvettes, yes, if we conclude the contract during the current financial year, the first phase is the pre-production phase where the design activities are progressed and based on the design activities, the equipment procurement actions commence. But as far as you are concerned, the revenue accrual will commence two years down the line, which means if FY '26 end we are concluding the contract, FY '28 end, that means the 4th Quarter of FY '28 we can expect revenue accrual. And the second part on the P-17 Bravo, the AON of the Defense Acquisition Council has already been accorded almost six months back. And it is moving very fast. Navy is very keen on this project and I expect the RFP to come out, let us say, in April. If April the RFP come, then the bid submission time and all. Akin to NGC, we expect the contract for P-17 Bravo to be signed maybe February, March 2027.

Sir, some time back we had a MoU with Swan Defence. And we don't know anything about what is the, so kindly elaborate on that Swan Defence? And recently few days back you have a tied up with Hindustan Shipyard. So, what is the position for these two entities?

Yes, we have live MOU with Swan Defence. The intent of this MOU was for bidding and executing large platforms, the platforms which we cannot handle at our premises. So, we are in discussion with couple of foreign owners for vessels above 250 meters length. We expect this to see light of the day, I mean, translating into an order in the next financial year. So, it is live. Coming to HSL we have signed a consortium agreement with them and MOU with them very recently. This is with an intent to put our hat in the ring for the LPD project, because we as GRSE purely because of the dock size, we would not have been able to bid for that. So, with this MOU, we will be able to bid. So, the moment we realized that we didn't want to miss the bus, so we caught hold of HSL and with HSL we have signed an MOU. It is a good, let us say, way ahead for both the shipyards. Our expertise and their infrastructure availability, it will benefit both the shipyards for the LPD project.

And sir, regarding the platforms we are moving from 24 platforms to about 32 within next one year. Sir, any outlook for next three years where we would like to be to fructify all the orders?

As far as these platforms are concerned, yes, by the end of this calendar year, we will be able to get it to 32 ships concurrent construction within our own premises. And I had mentioned in passing that two of the facilities, brownfield facilities in Kolkata, we already started the revitalization process. We expect that to be put to operation from end of this calendar year. So, I am keeping a conservative figure. As far as the shipbuilding capacity is concerned, we should be able to get to around 35 ships by 2026, end of 2026. So, now this year if you are ending with Rs.50,000 crores and with next year likely to be one of our peak years with respect to revenue. P-17 Bravo also I would like to go conservative at this stage, that, hypothetically, if GRSE becomes L2 shipyard, the order book, order value is likely to be to the tune of around Rs.30,000 crores. So, if things go on well, we would like to look at ending FY '27 with an order book plus around Rs.70,000 crores.

And sir, what about margins? Orders are not at the cost of margin, I assume.

None of these, what I just discussed, none of them. Yes, we have taken a few orders at very low margins. That was for sustenance and entry, like I will give you an example. There was a point of time when we were not sure about the NGC project. So, we had to take a couple of orders to sustain. So, we had taken them at low margins. The first ferry project that we took, the electric ferry project that we took, very small project, but we took it at, actually we subsidized the project. It was to make an entry. But right now, having consolidated our position in both the different shipbuilding as well as to an extent in commercial shipbuilding, margins will be, let us say, healthy. Order book enhancement will not be at the cost of margins.

Could you please give us an order book break up in terms of the ship-wise order book break up?

I had mentioned, our total order book is at Rs.18,482 crores, and of this, still P-17 Alpha takes the major chunk. It is around 46% at Rs.8,236 crores. Survey Vessel Large Rs.343 crores, Anti-Submarine Shallow Water Crafts Rs.2,559 crores, the OPV project Rs.3,136 crores. So, from the defense segment, it is Rs.14,276 crores. That comes to around 77% of our total order book. The non-defense segment, the Ocean Research Vessel, Acoustic Research Ship, the Coastal Research Ship and the West Bengal ferries, put together, it comes to about Rs.897 crores. The export, both the projects put together, come to around Rs.1,481 crores. So, the defense segment is contributing about 77%, the non-defense segment around 18%, and the balance 5% is from the other smaller verticals, like the portable steel bridges, the Diesel Engine Plant, the Naval Surface Guns as well as the ship repair. Ship repair we started with point something percentage when we started. Now we have crossed 1%, and it will keep increasing.

Just in the order book which you mentioned at the yearend that you want to reach Rs.70,000 crores, are you assuming...

50, this year end, 50. Next year is based on an assumption that we are getting the P-17 Bravo at least as the L2 shipyard, and if we get that, then that is a figure which would automatically arrive at.

But in history, sir, we haven't seen any tender in shipping which has come out and got execute as in got awarded in a year's time frame. Look at the NGC order. So, is that something that you can tell us that progress has been very good or extension of the earlier order, so the timelines are much lesser?

I will explain. See, you are absolutely right. There was a time when the tender used to come, then it used to take 1.5 years. We also experienced similar, like the OPV tender. From the time L1 declaration to contract signing, it took one year. We got declared in somewhere 2022. '23 we signed, but you see the P-17 Alpha project, sorry, NGC project, the tender was out in August, the L1 was declared in October, and now we are almost good to go. So, definitely there is an improvement because there has been a total change in the way, at least my ministry is pushing the cases. So, again, I would like to reiterate, if the RFP comes out in April 2026, then the contract signing would happen in the next financial year.

On the tie ups which you have done, one on with Swan and the other with HSL, Hindustan shipyard. Now, who will get the technology, sir, as in, we have to look at foreign companies for a tie up for getting technology either on the commercial side or on the LPD side, because who will be getting the technology?

See, as far as the medium size platforms or less complex platforms, like what we are doing, or what is being currently executed by the Indian shipyards, there is no need for a technology partner. My vessels what I am building or what MDS is building, we don't need a technology partner. We are fully good to go. But for LPD project or the VLGC project, the VLGC EOI conditions itself stipulate that an experienced and proven VLGC manufacturer. So, we got to collaborate with perhaps a Korean company who has built. So, there would definitely be a need to collaborate for the design of a VLGC. Similarly, for the LPD project, because it is a complex project. There would be a need for a design partner, which we have identified together along with our partners.

Sir, we have done two tie ups with Hindustan Shipyard and Swan. So, are we through the requirement of next five years with two ties up or still we are prospecting much bigger than this?

See, these tie ups are with specific intent. The intent of having a tie up with Swan is because it is still active, is to handle large size commercial vessels, which we cannot physically handle purely because of infrastructure constraints. As far as HSL is concerned, it is with an intent to qualify us and use our expertise, their facilities for the LPD project. There would be a time. Once we develop this capacity, which will take a finite amount of time, let us say, 3 years, for a full-fledged operational readiness, 5 years, then we would use these partnerships only to supplement them. We may not need them because of capacity constraints, but if we get excess load, we can utilize spare capacity of other shipyards.

Are we looking at still some tie up? Not bigger size. So, nothing NCLT, Bharati Shipyard or something, nothing like that, NCLT, any projects, nothing like that.

At this juncture, no. At this juncture, no. I am talking about bigger size only. See, in India, there are shipyards which infrastructure capacity, one, Swan has got the biggest dry dock available, is around 650 meters, L&T has got certain capacity, which is slightly more than us, with respect to size of ships, not number of platforms. And of course, HSL. So, we already have tie up, one active with L&T, which we have not tapped so far, one with Swan, and of course with HSL. No, because what is available in the yards which have either undergone NCLT or which is still, see, they are just not adequate to meet the expectations or the requirements. No, absolutely no.

First question on the capacities which you said from 24 to 28 and 32 and by end of this CY. So, first question is, will the Gujarat capacities will be jointly developed and with those capacities plus 35, what would be the number of vessels we will be able to produce? And you said 3 years, I think, for Gujarat at least.

Three years, it is a very optimistic figure in, again, for creating a ship building facility, one is putting it to operation. We can start manufacturing, but for a full-fledged facility, which has got end-to-end capability, which means starting from plate cutting to ship launching to delivery, I am talking about large size platforms, it takes 3 to 5 years. So, if you take a mid-path of 4 years, let us say, 4 years for both these facilities to come up, then, in that case, we would be having a capacity to build around 12 ships in these facilities, large size ships. That is the aim. Ultimate aim is large size ship, VLGC or above. I mean, 300 meters, around 300 meters length vessels, 12 of them between these two facilities, while utilizing the existing facilities for the weapon, that is the defense platforms and the smaller multipurpose vessels and so on. So, 12 vessels is what we are targeting in these two facilities large size vessels in a span of, I put a band of 3 to 5 years.

So, in terms of pipeline which you highlighted, 1.5 lakh for defense and about 1 lakh for non-defense, what is the number you are looking for yourself in line with the capacities you are creating? So, cumulatively, what is broad number or conversions you are looking for in next 2-3 years?

See, this mix of 7 projects what I don't think I mentioned the 7 projects. I just highlighted 3 of them, big ticket items. These 7 projects alone come to Rs.1,55,000 crores to be exact, 52.5 or something. So, these comprise large platforms like P-17 Bravo, the LPD and the main counter measure vessels plus smaller platforms like interceptor boats and in fast interceptor board, FICs, fast interceptor crafts and water jet FICs. They are very small platforms. With the current capacity what we have or what we are going to have by end of this year, the projects which I am only speaking about this Rs.1,55,000 of defense alone, we will be able to handle if we get P-17 Alpha and around 20% only of the balance projects. Coming to the other segment that non-defense segment, which I mentioned, approximately about Rs.1 lakh plus crores, they contain large size platforms. For that, at this juncture, we may not be able to handle them within our premises. When our facilities come up, let us say, in 3 to 5 years, again, around 15% because here the pool of competitors is large.

You mentioned about the outsourcing models. Just wanted to understand in terms of capability building for you and the volumes of orders you are looking for, what is the indigenous component now and with the new book massive orders coming in, will it require some imports or you can highlight on all this aspect in terms of capability building for the upcoming book?

See, as shipbuilders, we are primarily platform integrators. The customer, be it a private customer, domestic, abroad, or a defense customer, in 90% of the cases, 95% of the cases, they indicate the equipment to the extent private players, they say, I want so and so engine from so and so manufacturer. Therefore, as platform integrators, our responsibility is to get the best commercially beneficial for us and also meeting the customer requirements. The government thrust is very much on indigenization. So, we play a major role in promoting Indian entities who are into indigenous manufacturing. Having said all this, the indigenous content of the 3 projects that we have completed in the last 5 years completed, completed means done and dusted, it is plus 85%. The balance 50% so far is coming, it is comprising mostly of the propulsion package where India still does not have the technological maturity yet to do a fully indigenously developed marine diesel engine, marine gas turbine and weapon systems to an extent.

So, just one question. Do we run a risk of commodity price inflation eating up our margins?

Commodity price increase has got minimal impact on our margins, because in our case, in a project, if you take 100% as a project cost, around 65% come out of equipment. Most of this equipment being customer-nominated, or in a pool of customer-nominated band. So, fluctuations really don't affect, because they all would have been finalized at the commencement of the contract. Then comes the yard material like steel. So, in case of steel, which is a major component of our shipbuilding industry, so we have tie-ups with most of the major steel manufacturers, including MOUs with the biggest manufacturer in India, SAIL. So, the impact is minimal. Yes, there is an impact, but the impact is very minimal. And logically, it should not have any impact on the margins.

A few months ago, we disclosed an MOU with Andhra Pradesh Maritime Board for another greenfield facility. So, can you please help?

We are fishing. We were fishing. What I meant, we were fishing at the point of time. We were touching base with Gujarat; we were touching base with Andhra Pradesh. So, finally we home, the first action was to show our intent. That is why we concluded, it was only to show intent, yes, we are there. Then we backtracked because we found it was not required, having identified two other locations. That is the reason.

Second question is on our exports. So, considering the geopolitical situation evolving now, and we are looking at a lot more procurement happening globally, so what kind of opportunities that you foresee coming in and some opportunities that may currently be under discussion or in pipeline?

See, in national business, you can just segregate into two buckets. One is defense and one is non-defense. In defense, it is mostly government-driven. It will be either through a line of credit or a G2G grant. So, I am just keeping that aside and say, if it comes, it is a bonus. Coming to the non-defense segments, today the opportunities are phenomenal. We are not able to take the orders because of collective capacity constraint. If I did not have the capacity, if somebody else had the capacity, I would have pushed it to him and partnered. The potential is huge. Most of the European countries, be it Netherlands, be it Germany, be it Sweden, be it Norway, they are actually looking at India. Most of the customers who approached us and Belgium, most of whom we are engaging are all European customers. They were going to China, Korea. They are no longer taking orders for the kind of platforms which they approached us. The numbers are large. The order value is good. I see huge potential in this. Not only for me, not only for GRSE, but for all the Indian shipyards. And certain Middle East countries are also approached, though we have not been able to break the ice so far.

I just wanted to know, when you start the Next Generation Corvette signing, will you get an advance payment for that? Or how do we figure this out because in the past, we had advance payments?

You know, very interesting, this thing. Whenever we interact with the finance people in various ministries, they ask advance. I say, I don't want any advance. Don't give me any advance. I want a stage payment. It is as per the DAP. There is a stage payment. I don't get any advance. I get a stage payment. So, to answer your question, yes, we will get a stage payment as soon as we sign the contract. That is the first stage payment with an intent to facilitate the pre-production activities, which involves design commitment, certain OEM commitment and so on.

And assuming that you bid for and win the LPD and the MIMCV order, since it is in collaboration mode, so their margins will be similar to what we are right now having?

If it is a collaboration mode, naturally the overall margin will be good. But when we share the profit, there would definitely be an impact. P-17 Bravo, definitely we are not partnering anybody. We are going independent. P-17 Bravo, we are going independent. We will look after the margins.

My second question happens to be with regards to the 30mm guns that we are doing. Can you give us some outlook on the same with regards to the manufacturing capacity, margins, and how is the segment supposed to grow in the next three to five years?

30mm gun project started about a year and a half. We had a collaborator from abroad and an Indian partner and 10 local manufacturers getting various components made. Here the margins are good. Margins are, let us say, healthy margins are there. Currently we got order for 17 guns and all from the Indian Navy. And of these 17 guns, 4 guns have already been installed on board the various platforms and the sea trials and so on and so have been completed. We intend completing this project by mid of 2027, when all the 17 guns will be supplied. In addition, Coast Guard has shown interest. We are having a discussion with Coast Guard for 49 more naval surface guns. We expect the contract to be concluded by mid of this year. That means in the 1st Quarter of FY '27, we intend concluding the contract. So, opportunities are huge. And we also got an agreement with our partner that we can export these guns. So, what we intend doing is once the naval product stabilizes, once they run in operation for more, once they run at sea for more than six months, then we will start our export process. The potential is huge here. And so far, there is no competition in the Indian, so far. So far, in this segment, there is no competition.

I wanted to know about the non-defense platforms that we are making, or we make. How long it takes to get the order, means the to and fro, till the final order we get. And how means other, is the time, like because there is no flow in that. So, is there more time given in the to and fro with the clients? If you can explain that process.

Okay, ma'am. Non-defense orders, again, I will put it in two buckets. One is the non-defense orders coming from government entities, like the research vessels. They are all coming from government entities. And second is the orders which are coming from non-government entities, like the German client. So, the overall non-defense order book composition, contribution, is about 20%, that is 18%. In this, the export content is almost about 8%. So here, it takes time. Time is not taken for the contract conclusion. Time is actually taken for establishing a relationship. We took nearly six months to get into the, more than six months, to get into the first contract for the four vessels of the German client. Then the next four and the next four came almost back-to-back. So, it is just a question of making the break. And I mentioned that one project where we wanted a collaboration with another shipyard, because of the size of the ship. The discussions have been going on for almost one year. But when it happens, then the flow becomes more.

So, after that one year, the approvals again and again, we have to go...

There is no approval involved, ma'am. It is the owner and the shipyard. They are the ones who are giving the approval. The one year, I am exaggerating, but let us say in the first project of MPV, it took six months. The six months was not for any, it was only for the negotiations to close, because some of the conditions, what they demand and expect, are not acceptable to us. So, we reached a mid-path, which is financially viable for both the parties. So, once that relationship and the contractual terms are established, then it is a question of concluding the contract. So, as I said, it is a question of the first break. We already got it. And now, one, we are not able to handle because of the capacity constraints. Second thing is, in the major project what I discussed, it is a question of concluding the negotiations. Approval is between us and them. There is no government involved in this.

My first question would be with regards to the NGC order. I just wanted to understand that we are expecting the order finalization by the end of this financial year. Could you say as to when the orders for the equipment, especially electronic equipment that goes on to that platform, by when, if we are able to receive that order by the end of this financial year, would the order for the equipment be placed right away or could that spill over to the next financial year, that is FY '27?

The order for the equipment would spill over to the next financial year. The contract signing is the kickoff for the equipment decision, finalization and the decision. But on a proactive note, we have already commenced discussion with most of the major OEMs because now we know who are the OEMs. In some of the cases, the technical requirements have been already frozen because here we need to take the concurrence of the customer also. This process commenced almost from the time we became; we were known that we were the L1 shipyard. And we expect to sign the contract with our OEMs within the first 6 months of placement of, I mean, receipt of contract which means in the first half of the next financial year, we will be able to place. And that is what is the realistic time. And we also would like to maintain, because we cannot place too early also. We also need to ensure that the deliveries are just in time.

One last question with regards to the NGC execution. Now, we appreciate the fact that you are looking at the fact that '27 is going to be a peak year in terms of revenue. And there is not a lot of plateauing of growth in FY '28, which is why NGC related revenues being booked in 4Q. But since that revenue will only come in 4Q, it would be safe to assume that at least on a nine-month basis for FY '28, growth could slow down on a Y-o-Y basis?

Not necessarily, not necessarily, because what I had mentioned was that almost 10 to 15 percentage of project cost is from the spares. So, these will start coming and we contractually are supposed to provide them within X period after the ship delivery, last ship delivery completes. So, we will be able to pad up FY '28 with adequate cushion. At this juncture, no concern. That is all I can say.

I had a question around people and automation, mechanization. Given that in the next three to five years, the scale is going to be very different, could you tell us about any initiatives you are doing to train people, attract more people, number one? And secondly, investments in mechanization and automation from a perspective that the execution excellence is maintained.

Very interesting question. Yes, people first. See, ours is a manufacturing company, but as our permanent strength, we intend maintaining a reasonably lean strength, where the non, let us say, the blue-collar force is limited to handling core activities. So, we are maintaining a lean strength, which means the white-collar strength would increase. So, as recently, there is a live, I think it is concluded, which is concluded as in the window is concluded, we are inducting another 150 executives, 137 executives. And all of them, I can assure you, come from top institutions of the country, the best. As far as automation is concerned, yes, this is an imperative, and we already started investing, and should you visit our facilities, we have some of the best in terms of the welding machines, the plasma cutting machines, the robotic welding machines, and so on. And we will continue investing in that. Naturally, it will be need-based, because we don't want to unnecessarily pump in capital, but yes, there is a need, and we are investing. Robotics has also been brought in. We have a robotic welding machine, which is being almost used to a certain capacity, so there is no issue with that.