Garden Reach Shipbuilders & Engineers Ltd

NSE:GRSE

Q4-2025 Earnings Call

[Operator]

Good afternoon, ladies and gentlemen. I am Navya, the moderator for this conference. Welcome to the conference call of Garden Reach Shipbuilders & Engineers Limited, arranged by Concept Investor Relations, to discuss its Q4 and FY '25 results ended March 31, 2025.

We have with us today, Commodore P.R. Hari, Indian Navy Retired, Chairman and Managing Director; Shri R.K. Dash, Director, Finance and CFO; and Shri Sandeep Mahapatra, Company Secretary and Compliance Officer. Please note, this conference will be 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, sir.

[P. Hari, executive]

Thank you, Navya. Ladies and gentlemen, a very good afternoon to each one of you. I am P.R. Hari, Chairman and Managing Director of the company. And with me here are Shri Ramesh Kumar Dash, Director Finance and CFO; Mrs. Aparajita Ghosh, General Manager Finance; and Shri Sandeep Mahapatra, the Company Secretary and Compliance Officer.

At the outset, my warm regards to each one of you who have taken time out of your busy schedule to attend this call. I look forward to this analyst and investors meet. And it is always a pleasure to interact with you and that gives me an opportunity to provide the highlights of our performance and also address your queries.

Touching upon the financial performance. Yet another very strong set of numbers. And here, I have to state my stock dialogue, the performance during the quarter ending and financial year ending 31st March 2025 have been the best ever in the history of the company.

If you are comparing quarter-to-quarter, our revenue from operations have moved up from INR 1,015 crores to INR 1,642 crores, registering a growth of 62%. EBITDA has moved up from INR 166 crores to INR 335 crores, registering a growth of 101% and the profit after tax has moved up from INR 114 crores to INR 244 crores, registering a 118% growth and so has the operating profit moved up from INR 77 crores to INR 209 crores.

If you are comparing financial year to financial year, our revenues from operations have moved up to INR 5,075 crores. We have broken the INR 5,000-crore barrier, registering a growth of 41%, and the profit after tax has moved up by 46% from INR 360 crores to INR 527 crores, and the operating profit has moved up from INR 181.30 crores to INR 368 crores, registering a 103% growth.

This has been backed by a very strong difficult performance, supported by efficient and effective treasury management system. Our order book as on 31st March 2024 was INR 22,652 crores. And despite strong revenue accrual to the tune of nearly INR 5,000 crores, we have managed to maintain the order book at INR 22,680 crores as on 31st March 2025.

This comprised of 9 projects consisting of 40 platforms, including 16 warships for the Indian Navy from 4 projects: P17 alpha frigates, 7 antisubmarine shallow water crafts, 2 survey vessels large and 4 next-generation offshore patrol vessels.

In addition, we are also executing a 8-ship multi-purpose vessel project for a German client, plus 1 acoustic research vessel from one of the DRDO organizations, the NPOL Kochi, an ocean research vessel for the Ministry of Earth Sciences, one of the units, the NCPOR Goa and 13 hybrid ferries for the Government of West Bengal.

During the period, intervening the last financial year and now, we have delivered one subway vessel large, that is the second in a series of 4 ships that we are building for the Navy. And also happy to inform you that we have delivered the first antisubmarine shallow water craft to the Navy very recently, as early as the second week of this month. This particular event is very prestigious and a matter of pride for team GRSE because this is the first ship in a series of 16 ships being built for the Navy by 2 shipyards, another PSU shipyard, and we are happy that they have been able to deliver the first of these 16 ships.

In addition, we delivered an unmanned surface vessel to our DRDO organization, the NSTL Visakhapatnam and also completed the patrol vessel -- patrol boat project for the Government of Bangladesh.

I'll now give you a glimpse of the progress of the ongoing projects. As I have mentioned, we are constructing 3 P17 Alpha ships. And happy to inform you that the first ship is well on track for delivery, and we have completed the final machinery trials. When I say final machinery trials, these are the trials conducted with the presence of customer representatives, as a Navy representatives at sea. And we are now getting the ship ready for delivery and the ship has already completed nearly 95% of physical progress of construction. We intend delivering the ship 2 months from now ahead of the contractual delivery period.

The second ship is moving along smoothly. The ship has attained 73% physical construction, and this ship we intend delivering early next year. And the third ship has attained 54 percentage of physical progress and this ship is planned for delivery during August 2026.

Coming to the Survey Vessel Large project, I had mentioned that 2 of these ships have been delivered with the last ship being delivered last year. The third and fourth ships are well on track for delivery. The third ship has attained 88% physical progress. The ship has already completed her contractor fleet trials and now she is being prepared for final machinery trials and delivery. We intend delivering the ship by July this year.

The last ship of the project, the Survey Vessel Large 4, has attained 77% physical progress. And by end of this year, this calendar year, we'll be delivering this vessel.

Coming to the antisubmarine shallow water craft project. I had mentioned that the first ship has already been delivered. The second ship has completed the final machinery trial, and this ship is planned to be delivered during July this year. The third ship has attained 82% progress, the fourth 68% and so on. And as per our current estimate, all the ships of these projects will be delivered during calendar year 2026 with 4 of these vessels, that is 3 more vessels planned to be delivered during 2025-'26.

Coming to the next-generation offshore patrol vessel project. The first 2 ships have crossed 50% of physical progress and the last 2 ships of the project have also moved along fast and they have attained 43% physical progress. What I would like to state with respect to the next-generation offshore patrol vessel project is that the keel of all the 4 ships have already been made and we intend launching 2 of these vessels during the current financial year.

In addition, the other nondefense platforms, the ocean research vessel, the production has already commenced, and the keel of the vessel has already been laid in March 2025, and the delivery of the ship is planned during October 2027 as well as the acoustic research ship for the DRDO, the design and preproduction activities are in progress and the project is well on track.

We are also executing one project for the Government of Bangladesh, a Dredger project, design and preproduction activities are in progress. And the same is the case with the hybrid series, the 13 hybrid series, the keel of all the 13 series is planned to be launched during this month -- end of this month. This has provided you a brief on the status of the ongoing projects.

Now coming to the projects on the anvil. I had mentioned during an earlier interaction that we were declared L1 for 2 vessels for the Geological Survey of India coastal reference vessel, we already received the letter of intent and the contract for this vessel is expected to be signed during June this year.

We also expect the formal bid declaration of the next-generation corvette project in a couple of days. In addition, Navy has already come out with an RFP for 5 next-generation Survey Vessels Large and GRSE will definitely be bidding for this project and having the experience of building the Survey Vessels Large and earlier platforms of similar kind. In our appreciation, we stand a good chance of providing an aggressive bid for this project.

Another bid with that is live is a bid for 18 next-generation fast patrol vessels for Indian Coast Guard. GRSE will be bidding for this project. This is an interesting project. This was not a conventional fast patrol vessel. This is an advanced vessel with helicopter staging facility. So GRSE would be interested in taking part for this project.

These are the 2 live RFPs which are there as of now. In addition to that, in addition to these 2, we expect RFPs for 6 next-generation ocean-going patrol vessels for the Indian Coast Guard to multipurpose vessels for the Indian Navy, 120 fast interceptor crafts for the Indian Coast Guard and 31 follow-on water jet FACs for the Indian Navy to come out in the near future.

These are all small to medium-sized projects. What we are eagerly looking forward, as I had repeatedly mentioned regarding the next-generation corvette project over the last 2 years, another project that we are expecting the RFP to come out is for the P-17 Bravo follow-on of the P-17 class of ships. As you are aware, we are building 3 of these vessels now.

And with this experience, again, we are confident of providing a good bid, a competitive bid, for this project. In our appreciation, the RFP is likely to come out during the calendar year.

In addition, Navy is also -- they already obtained the Defence Acquisition Council for 12 mine countermeasure vessels. And in addition, the other 2 large projects, at this moment, there is no clarity as to when the RFP will come out, but as per Navy's perspective plan, the LPD project and the next-generation destroyer projects are also definitely on the anvil.

To give you -- this has provided you, what I have tried to provide you is a glimpse of our financial performance and how this financial performance has been derived through our physical performance, the status of the ongoing projects and the orders on the anvil.

As far as the yard capacity is concerned, we were having a shipbuilding capacity to construct 20 ships concurrently. But during 2024, we have enhanced this capacity from 20 to 24 through rejuvenation of our existing facilities. And we feel this capacity itself is inadequate to meet the ongoing and future requirements. So we have put in capital to revise some of the defund facilities earlier held with us and also through certain long-term lease of drydocks on the -- one of the other agencies in Kolkata. So we intend increasing the shipbuilding capacity from 24 to 28 ships by 2025 year-end.

In addition, we are also looking for opportunities outside Kolkata with respect to creation of shipbuilding facilities. This is in line with the growing demand for defense and nondefense platforms. And we feel there is opportunity -- adequate opportunity and to meet this opportunity and the potential that is available in the defense as well as nondefense market, we will be looking for facilities, I would say, Kolkata and perhaps look for creation of a greenfield facility.

I would also like to state that to mitigate the existing limitations with respect to capacity and also to meet the leads that we are getting towards construction of commercial ships, we also got into a memorandum of understanding with capable shipbuilders, both on the East and West Coast. This in a nutshell gives you what we are looking for in the near future.

And one of our core focus areas would be for capacity enhancement; two, technology adoption to improve production efficiency; three, development of autonomous platforms where we see opportunities both in the Navy and the Coast Guard; and four, towards the development of green energy products.

Thank you, ladies and gentlemen. I have -- this brings me to the end of my comments. And now I'd like to leave the floor open for questions, and we shall try and answer these questions to the best of our ability. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Vaibhav Dalal from Niveshaay.

[Vaibhav Dalal, analyst]

Yes. So congratulations, sir, on a good set of numbers. So my question is very generic. I just want to ask you on the opportunity of ship building in here in India. So currently, how many naval ships do we have in the Indian Coast Guard and the Indian Navy? And how much is the Ministry of Defense planning to add to the respective fleet?

And my second part of the question will be, like out of the new ships which the MOD is planning to add, the tendering has been done for like how many of the ships, you have any idea, that would be great?

[P. Hari, executive]

Thank you, Mr. Dalal. I'd like to answer this question in 2 parts. One, as far as the current fleet strength of Navy and Coast Guard are concerned, Navy has got around 150-odd platforms and Coast Guard about -- all put together, when I say platforms, they include small vessels like fast interceptor crafts to larger platforms, nearly 100 platforms. Right now, currently, 61 platforms are being built for both the forces put together. And of the 61, 60 are being built by Indian shipyards.

Now coming to their capacity augmentation plans. Both the forces have got their perspective plan. And as per what is available in the open domain, both these forces, Navy and the Coast Guard, want to expand their numbers, Navy perhaps to a figure of plus 200 and Coast Guard perhaps to a figure of around 150. Why I'm adding the term perhaps is because I do not have absolute clarity on the exact numbers that they are looking at.

Now coming to the RFPs, which are live, as I mentioned during my initial statement, in addition to the next-generation corvette project where the bids have already been opened and the formal -- the results are awaited, we expect it to come in a couple of days from now.

There are 2 bids from the services which are active now. One is an 18 fast patrol vessel, next-generation fast patrol vessel for the Indian Coast Guard and 5 ship next-generation Survey Vessel project for the India Navy.

In addition to that, again, as I mentioned, the multiple projects are on the anvil, where in a few cases, they have already obtained the DAC approval. For example, the 12-mine countermeasure vessel project for the Indian Navy; the P-17 Bravo project, it's a 7-ship project for the Indian Navy; 2 multipurpose vessels for the Indian Navy; 6 next-generation offshore patrol vessels for Indian Coast Guard and so on.

So I'm trying to convey is that what is available right now, the order book of the Indian shipyards and what is likely to come up in the near future, the opportunities are phenomenal. Does it answer your question or you want something more -- any further clarification you need?

[Vaibhav Dalal, analyst]

I think I'm good, sir. Best of luck to you.

[P. Hari, executive]

Thank you.

[Operator]

Next question is from the line of Harshit Kapadia from Elara Capital.

[Harshit Kapadia, analyst]

Congrats for a very good set of numbers. Just wanted to give -- get a sense on the order book breakup project-wise? And secondly, on the order inflow, which you have -- pipeline which you have mentioned, can you also give the size, what is the tentative order size, which one can expect?

And then on the NGC, you said in few days, we'll get to announce the order as in the bids will be out in few days or what is the likely -- is there any LOI, which is expected, anything clarity on that?

And lastly, on the other expenses side, sir, if you can explain, there was one provision write-back, which you did of INR 433 crores. So what was that related to and by when this completely amount will be dispensed out as it would be added back to the profit?

[P. Hari, executive]

Thank you. I will start with the order book breakup. As I mentioned, our order book stands at INR 22,680 crores. And P-17 Alpha still continues to be our -- the biggest bread earner. We are left with around INR 11,435 crores from P-17 Alpha project. The antisubmarine shallow water craft project, INR 3,946 crores. The Survey Vessel Large project, which is actually on the anvil of closing, so INR 530 crores.

The offshore patrol vessel, NGOPV project, INR 3,327 crores. The nondefense platforms, the NCPOR ocean research vessel, INR 785 crores. The acoustic research ship, INR 466 crores. The Ferry project, INR 226 crores. And the export projects, the multipurpose vessel, dredger and so on, around INR 1,200 crores. And the 30mm gun project, INR 201 crores. So this is the order breakup.

Now coming to -- you had asked a question about what is the likely -- the value of the projects that are on the anvil. As I mentioned, the next-generation corvette project is a high-value project. And here, we expect, our anticipation is that the total order value could be to the tune of INR 40,000-plus crores. But this INR 40,000 crores will be split between 2 shipyards, the L1 shipyard getting 5 ships, that is 5 by 8, which means the L1 shipyard, the order value could be to the tune of plus INR 25,000 crores, which is a very big order.

Coming to the next-generation survey vessel, our appreciation is that the order value could be to the tune of around INR 3,500 crores and the 18 NG-FPV project could be to the tune of INR 3,000 crores. The OPV project could be to the tune of around INR 2,500 crores and the multipurpose vessels to the tune of around INR 1,200 crores. The waterjet FAC project, the 31 waterjet FAC project could be to the tune of around INR 3,000 crores. It could be plus or minus INR 200 crores depending upon how the bidding goes. And the fast interceptor craft vessel to the tune of around INR 1,500 crores to INR 1,800 crores.

The big ticket items, the mine countermeasure vessel project, the AoN itself has been taken for INR 32,000 crores. And that's a 12-ship project, single shipyard getting all the 12 ships as per the AoN conditions. And the P-17 Bravo project, this, again, is a high-value project. There are 2 shipyards -- there's 7-ship project, 2 shipyards would be involved in this project with the total A1 value to the tune of around INR 70,000 crores. And at this juncture, I would not like to give any assumptions on the LPD and NGD because they are still in liquid form.

As regards -- anymore -- you had asked something about the INR 433 crores?

[Harshit Kapadia, analyst]

Yes, INR 433 crores of provision write-back is something which you have mentioned in the press release, so what is that related which -- and when it would be recovered?

[P. Hari, executive]

This is linked to the P-17 Alpha project. The first ship is actually at the verge of delivery. I'd mentioned that the first ship has completed her final machinery trial, and she is actually getting ready for delivery. So we have reasonable clarity on the cost to completion. Accordingly, the provision reverse and -- we will be -- this profit will be accounted over the next 1 to 2 years when the entire project gets completed, which means this is a 3-ship project. So the first ship now ready for delivery. And the next 2 ships, as I had mentioned, will be -- one of them will be definitely spilling over to the next financial year. So the spill get regularized within 1 to 2 years.

[Harshit Kapadia, analyst]

Okay, sir. And is there a possibility this amount can even increase since now more ships will be in the -- as in, will be closer to the completion mode. So probably is there a possibility this increase would be there of INR 433 crores. Any number could be higher...

[P. Hari, executive]

It will be more or less the same. Since we know the costing of -- the cost to completion of the first ship, the condition is going to be more or less the same, which is the positive sign.

[Harshit Kapadia, analyst]

Understood, sir. And finally, sir, on NGC, sir, you mentioned when is the order likely to be awarded, sir? Just final one.

[P. Hari, executive]

See, in the normal course of events, you're as much [indiscernible] as me. After the L1 is declared, then the contract negotiations start. The contract negotiation is the long-drawn process for major projects like this. We expect a very, very optimistic time line of contract conclusion by December this year and a conservative time line of March next year. But I personally feel if together, whoever the L1 shipyard and the Navy pushes, the contract can be signed by end of this calendar year.

[Operator]

Next question is from the line of Rohit from Aditya Birla Sun Life.

[Unknown Analyst]

Sir, my first question is, as I understand, we have close to INR 230 billion-odd order backlog. And typically, we work with a 5-year execution cycle. Would it be fair to say the current revenue is somewhere the peak revenue and maybe we will be flatlined, given that we already have some 20 yards we work with? And even if the new order, let's assume, hypothetically gets next-generation corvette, it may not start at least before 1, 1.5 years, so is it fair to assume that are we in a peak-ish kind of execution phase?

[P. Hari, executive]

Thank you, Mr. Rohit. See, the shipbuilding, of course, the revenue accrual, revenue recognition is depending upon the project execution phase. We are now at an execution phase where maximum revenue accrual takes place with our major breadwinner. There is a P-17 Alpha project at a mature state where the maximum number of equipment get lowered and integrated to the ship system.

To answer your question, whether we have peaked, I would not like to say so because from our appreciation -- okay, I'll put it this way. When we started the last financial year, our order book was INR 22,651 crores. And as on 31st March 2025, it is almost same quantum, that means INR 22,680 crores, which means in the last 1 year, while we have generated revenue of over INR 5,000 crores, we have also got orders worth INR 5,000 crores.

So in our appreciation, the peak year perhaps could be the next year, that is financial year, the current year. What I mean is financial year '25-'26 could be the peak year. Thereafter, it could flat out. And hypothetically, if a big project comes to us, as you rightly said, the revenue recognition from that project will start only 2 years down the line.

The gap, which could happen, is already being filled up with a plethora of orders ranging from -- coming from the nondefense platforms and the commercial ships. So to answer your question in a simple sentence, this perhaps is not the peak year, the peak year is yet to come.

[Unknown Analyst]

Got it, sir. I really appreciate that part. My second question is more to do with the competitive positioning. We see Mazagon Dock is going for a greenfield expansion. Cochin Shipyard is also planning for a greenfield expansion. They are looking at a port nearby Cochin Port and they are planning something over there. What is our plan? As in, we have been doing some leasing around as such, but is there any concrete greenfield road maps for us that can take us to another trajectory?

[P. Hari, executive]

Yes. Today, with the Ministry of Shipping having charted out a clear road map for enhancing the share of India and the global shipbuilding market from less than 1% to 10% in a finite period of time. There is a need for all the Indian shipyards to augment their shipbuilding capacity.

What we have started was -- I had mentioned during my initial briefing, our capacity, just about 2 years back, was to construct 20 warships -- 20 ships, large and medium put together concurrently. We started off by rejuvenating our existing facilities and enhance the capacity to 24 ships. Along with that, we have also gone ahead with acquiring drydocks within Kolkata, long-term lease drydocks, which are ours today. So with this, we intend increasing this capacity to 28 ships by end of this year. But we fully acknowledge the fact that this will just not be adequate to meet demand, the shipbuilding demand that is going to be there in the next 5 to 10 years.

So yes, to answer your question, we are, as with MDL or as with Cochin Shipyard or any other shipyard in India, we are in the process of creating a greenfield shipbuilding facility. At this venture, since negotiations are in progress with multiple agencies, both on the West and the East Coast, all I can say is that, yes, we too are in the process. And we expect clarity on this in the next 6 months to 9 months.

[Unknown Analyst]

Got it, sir. Sir, my final question is more on the industry perspective part. This naval perspective plan of 200 vessels that we had in the past, it seems that there is some sort of a delay both in terms of awarding and subsequently the commissioning of the vessels. Is there a strategic realignment that is happening at a country level, some sort of a -- the priority is going backwards on naval front and probably are we putting more on electronic warfare front? Because we have been reading a lot of the defense analyst reports who has been saying that even the Chinese threat that we face is more towards the territorial part and not on the naval part. And we have had a military exercise in the past -- I mean just few weeks back, where we saw it's more of electronic warfare.

So I'm just trying to understand what happens to this naval prospective plan of 200 vessels. And we have also seen next-generation corvette getting delayed for a long time. AoN has happened a long way back and yet the awarding hasn't taken up, the last big order I could recollect at least was with NGOPV. So is there any thoughts on those aspects, sir?

[P. Hari, executive]

Okay. I'll put it this way. Yes, Navy has -- I actually wouldn't like to agree with you nor would like to disagree with you, but I'll put a completely different perspective. For any nation, any nation to be a global power, she has to -- she means the nation has to have a blue-water navy. And India's coastline from around 7,600 kilometers have gone up as per the latest survey to 11,000-plus kilometers. So there is no way that the naval progress, that means the plans for Navy to augment or Coast Guard to augment their capability is diminishing. Even in the current situation, the deployment of Naval platforms is available in the open media.

Now coming to the ships under construction, when I say 61 ships under construction, 61 warships under construction, this is no mean number, 61 is the number of platforms many nations put together own. 61 platforms are under construction and of this 61, 60 are being built by Indian shipyards.

The numbers that you're looking at, 18 NGOPV, that is next-generation fast patrol vessels, 6 -- 5, sorry, 5 Survey Vessel Large, 18 plus 5, 23; 31 waterjet FACs you add this number, plus 120 FACs, plus 8 NGCs. These numbers are no mean numbers. Yes, the processes take time. But when these fructify, the construction phase starts. Even the NGP, as per our own procurement time line, from the time an AOL is accrued by the DAC, the acquisition -- rather the Ministry of Defense has a 30-month period, which is a defined 30-month period for issuance of RFP. They have done it well within that time.

So I don't see there is a shift in focus in developing the maritime capabilities, and I have just stated the numbers. The numbers are here for you to see. And in our own perspective, from GRSE's perspective, of the 16 platforms, which we are currently building, 4 of them, we have -- one, we already delivered in the current calendar year and 3 more of them, we are confident delivering in this calendar year, plus one more in the financial year.

So I do not see any dilution be it from the government or from the shipyards' perspective with respect to focus and delivery, delivery in terms of placement of order, delivery in terms of publishing the RFP, delivery in terms of active delivery of the ships. Thank you.

[Operator]

[Operator Instructions] We take the next question from the line of Dhavan Shah from AlfAccurate Advisors.

[Dhavan Shah, analyst]

So my question is on the agreement that you had signed with the Western-based player, Swan Defence. So what is your strategy and plans over there? If you can share thoughts on this?

[P. Hari, executive]

Okay. Swan Shipyard with respect to infrastructure, they are one of the biggest shipyards in the country with drydock, which is perhaps the largest in the country and the infrastructure is one of the best in the country. As what is available in the open media and as you are fully aware, the facility has not been utilized for some time for reasons known.

And as a shipyard, which is located in Kolkata with the current order book that we are executing and a few assured orders, which are on the anvil, we felt it necessary to open front in the Western front -- front and the western front, where we can partner and build a commercial business. It is within this intent that we signed an MoU with Swan, where we will be jointly building commercial ships of the large size. It's an MoU at this juncture. We are negotiating with a few clients for orders. And once this materialize, the MoU will get translated into an actual coproduction. Thank you.

[Dhavan Shah, analyst]

Understood, sir. And normally, in a year time frame, how many ships do you foresee that can be manufactured commercial ones over there?

[P. Hari, executive]

You meant commercial ships...

[Dhavan Shah, analyst]

Yes. In the Swan Defence, the location.

[P. Hari, executive]

It purely depends upon the order. Like I'll put it in a different perspective. Right now, I'm executing an order for a German plant for 8 multipurpose vessels. So these are medium-sized ships advanced platforms, but medium-sized ships. There, the contractual delivery time line for each ships put together is 4 years. So depending upon the size and complexity of the ships, this duration varies.

It could be -- the first ship could be delivered in a period of 3 years because the first ship always takes time. The follow-on ships, there's the second, third, fourth in a series of 4, if it is a series of 4, could be 6 months thereafter.

[Operator]

Next question is from the line of [ Divyesh Shah from Uchit Capital ].

[Unknown Analyst]

Sir, congratulations for an excellent result. And first of all, our best complement to all Defence Department of India because of the Operation Sindoor, we realized the importance of defense. So I convey my heartiest congratulations to -- through you to all 3 Defense: Army, Navy and Air Force. Kindly convey to respective departments, sir. We Indians are proud of you.

Sir, regarding the carryforwarding the last question about Swan Defence. Sir, I want to know what -- whether we have taken the full Swan Defence speciality over the part, what is the understanding between the 2 companies? And sir, what will the financial implications, whether it is in revenue sharing or a lease agreement or how it will be carryforward? This is my first question.

[P. Hari, executive]

Okay. Any more questions, then I will answer together. Any more questions?

[Unknown Analyst]

Yes. And second question is same, regarding we have entered lease agreement with Syama Prasad Mookerjee Port Kolkata, so what will the financial implications of this agreement, whether and what will be the payout per year for this facility? And how many ships we will be building there? So these are my 2 basic questions.

[P. Hari, executive]

Okay. At the outset, let me thank you for congratulating the Indian Arm Forces. And since we deal very closely with the services, we shall convey your appreciation to the services.

Coming to Swan Defence, the agreement is project-specific agreement, which means whenever a project is executed, it will be based on a revenue-sharing model. Again, project-specific as the project comes, we will conclude the terms and conditions of the project.

Coming to Syama Prasad Mookerjee Port, we have taken over 3 drydocks fully from the port. And these are taken on a long-term lease. We are paying them a nominal rent and we have a profit-sharing methodology with them. In addition, we have also taken over one more drydock very recently. It's 125-meter by 25-meter drydock, again, on a similar model.

Now what we intent doing in these facilities, the 4 drydocks, and just to put you in the right perspective, drydocks are very vital assets towards shipbuilding and ship repair. Since our primary facilities within the physical confines of the company, my 3 shipbuilding units are focused shipbuilding.

And since we wanted to venture into ship repairs, this is not today, it is almost 3 years back, we decided that we must have a facility which is completely separate from the shipbuilding facilities, so there's no dilution of attention and that is the reason why we took over these facilities from Syama Prasad Mookerjee Port.

And so far, we have completed nearly 41 repairs in this facility, including multiple coast guard ships and naval ships. And we will also be executing the refit on an export platform there. This is on a profit-sharing methodology with them. So, so far, the project -- relationship has been successful.

[Unknown Analyst]

And sir, regarding what will be our total capacity, suppose everything goes well with Syama Prasad Mookerjee and others, which you have talked just now, so from 28, where we will reach in the next 3 years in shipbuilding capacity?

[P. Hari, executive]

Yes. As on today, it is 24, I repeat 24, it is our intent to increase it to 28 by end of this year, which we are well on track, and we are confident of meeting this target. And since you asked this question 2 to 3 years down line, including -- I'm keeping the greenfield facility, what we have in our plans away from the current discussions because that is still in liquid form and under discussion. So with the facility in Syama Prasad Mookerjee Port and our existing facility, including rejuvenation and modernization, we intend taking it up to 30 ships within the next 4 years.

[Unknown Analyst]

How much, sir, how much, please, I missed?

[P. Hari, executive]

3-0.

[Unknown Analyst]

30 ships?

[P. Hari, executive]

Yes.

[Unknown Analyst]

And sir, one more last question, sir. This year, we had an excellent EBITDA margin of about 13%. Sir, same margin is sustainable or it is one-off, sir, will you please guide us for the future?

[P. Hari, executive]

Very interesting question. Since you mentioned one-off, it has not been one-off, it has been similar margins over the last few times. Yes, this time, we have touched a new high. It is certainly not -- it's not one-off. But see, in shipbuilding, you -- ideally, we shouldn't be doing a quarter-to-quarter comparison to take a year -- because see, most of our projects are long-drawn projects where the execution structures over a period ranging from for a small platform 2 years to a big platform 5 to 6 years. So to answer your question, we will be able to maintain more or less the same margins. It's not one-off anyway.

[Operator]

Next question is from the line of [ Utkarsh Somaiya from Eiko Quantum Solutions Private Limited ].

[Unknown Analyst]

Just like you mentioned your delivery time line in the beginning of the call, can you quantify it year-wise, how much can you execute in FY '26 and probably 2027 and 2028? Just a ballpark would help.

[P. Hari, executive]

I will give you -- are you intending -- thank you for the question. I'm sure you're asking ballpark numbers, correct? Numbers in terms of number of ships?

[Unknown Analyst]

Yes.

[P. Hari, executive]

Number of ships, correct?

[Unknown Analyst]

Or revenue, either. Both would be more helpful.

[P. Hari, executive]

I will rather go by number of ships, just one second. Yes, so in 2025-'26, we will be -- I will also try and correlate with revenue, so you can get general idea though I will not get into specifics, but I will try and correlate with the projects, you can make an estimate.

So in 2025-'26, we will be delivering 1 P-17 Alpha, 2 Survey Vessel Large and 4 antisubmarine shallow water crafts. In -- that itself covers 4 plus 2 plus 1, 7 ships. In 2026-'27, we will be delivering 2 P-17 Alpha. These are major high-value projects. Three, the last 3 Survey Vessel -- sorry, last 3 antisubmarine shallow water crafts and 1 next-generation offshore patrol vessel and the acoustic vessel ship. And the next year, that is FY '27-'28, we'll be delivering 2 next-generation offshore patrol vessel, the oceanographic research vessel and the coastal research vessels for which we are going to sign the contract now.

I have not mentioned about the hybrid ferries that we are building for the Government of Best Bengal or the dredger because these are small-value projects which will get covered during this period. Maybe this year itself we'll be able to deliver a couple of ferries, for instance. So does that give you an indication? Because a major project, that's the P-17 Alpha, first ship this year and the next 2 ships next year.

[Unknown Analyst]

Right. Yes, that helps. And the realization per ship would vary in each case, I'm guessing, right?

[P. Hari, executive]

Yes, yes. Because the P-17 Alpha, as I mentioned, P-17 Alpha, the remaining revenue is around INR 11,000-odd crores.

[Operator]

Next question is from the line of Sanjeev Zarbade from Antique Stock Broking.

[Sanjeev Zarbade, analyst]

Sir, my question is regarding the outstanding order book in P-17 A. You have INR 11,400-odd crores. So how much -- what could be rough ballpark account for revenue that we can book in FY '26 and FY '27? Will it be in the ratio of 1:2, as in terms of how...

[P. Hari, executive]

Can you -- actually, Mr. Sanjeev, your voice is cracking. I mean, can you repeat once again? I couldn't decipher what you are telling.

[Sanjeev Zarbade, analyst]

Yes, sir. Am I audible now?

[P. Hari, executive]

Yes, you're audible. Please.

[Sanjeev Zarbade, analyst]

Yes, sir. Sorry for the disturbance. Sir, my question was regarding the P-17 A, in which we have INR 11,400 crore of order, that order book that is pending. So how the distribution in the sense that revenue booking would be in FY '26 and '27? Although you shared the delivery time lines, but would the revenue booking be also in the same kind of ratio, in the sense, more would be booked in FY '27 because you would be delivering 2 vessels in FY '27? Or would it be the other way around?

[P. Hari, executive]

Yes. We have around INR 11,400 crores remaining as on 31st March 2025. And one of these ships we intend delivering in next 3 months. And in this ship, we have accrued most of the revenue. And the bigger chunk of this would be coming from the second and third ships. So if you're asking me for a proportion of revenue from the project, which is going to be accrued this year and next year, I would say 40-60.

[Sanjeev Zarbade, analyst]

Okay. 40 in FY '26 and 60 in 27?

[P. Hari, executive]

FY '27.

[Sanjeev Zarbade, analyst]

60 in '26 and 40 in '27?

[P. Hari, executive]

40 in FY '26 and 60 in FY '27.

[Sanjeev Zarbade, analyst]

Okay. Then in that case, sir, FY '27 could be the peak year in terms of revenues and...

[P. Hari, executive]

You take a guess. Maybe this year -- see, the other projects are also maturing now because we got around INR 4,000 crores remaining in the ASW Shallow Water Craft, around INR 3,000 crores and so on. So I mean what -- to an earlier query I had mentioned, that's a very specific question asked, are you flatting out -- are you flattening? I said no. So I think that should give you a good enough...

[Sanjeev Zarbade, analyst]

Yes. And sir, on the cost revision side, if I understand it correctly, we -- for the remaining 2 frigates, there is potential that we can book another INR 200 crore cost revision in terms of profits? Because for the first period, we have taken INR 100 crores as cost revision related to profit. So is that understanding correct?

[P. Hari, executive]

Yes. Your understanding is more or less correct.

[Operator]

Next question is from the line of Sunil Shah from SRE PMS.

[Sunil Shah, analyst]

Sir, first of all, heartly congratulations to everybody. I think my friend, Divyesh bhai, has already mentioned that in the beginning. But really a heartfelt bow to each one of you for the action that has happened in the last month. So sincerely congratulating each and everyone.

Sir, just my 2 questions here. In next couple of days, you will be hearing on the next-generation corvette project, which has been long pending. Sir, what should be announced in the next couple of days? Would it be that L1, L2 would be decided? And thereafter, we get into a process of negotiating on the price? How does it work for a layman like me to understand this thing? That is my first question.

The second question is, since now we've got a tie up with Swan Energy -- Swan Defence, sir, we -- last time when we had met up, we were talking about clusters, which Indian government is looking at for shipbuilding. Now that we have got into an MoU with Swan, does that take care of the cluster thing that we were intending to use eventually for our growth? Those are my 2 questions on the Swan and on the next generation.

[P. Hari, executive]

Okay. Thank you, Mr. Sunil Shah. And at the outset, thank you on behalf of -- because since we are a Ministry of Defense entity on behalf of the Indian Armed Forces, thank you for your good wishes and appreciation.

Coming first to Swan and clusters, I would like to clarify and clearly that I had answered to an earlier query, we have MoUs or agreements not only with Swan, we also have with competent private players -- private and public players for collaboration towards the construction of vessels.

I'll give you an example. I have a running collaboration with one of the south-based shipyards for construction -- part construction of a few of the vessels. So these are project specific, and this has got nothing to do about the clusters that I mentioned. A cluster what the Ministry of Shipping had talked about and what we expect to be implemented is creation of a greenfield facility.

When I say a greenfield facility, which would mean a shipyard surrounded by its ancillary industry. This is still in liquid form, multiple state governments. These are all open domain information, multiple state governments like Gujarat, Maharashtra, Karnataka, Orissa, Andhra and Tamil Nadu have envinced the interest and approached the various shipyards and also floated the expression of interest for creation of greenfield shipyards there and we also responded -- responding to few of this.

The Swan relationship for shipbuilding collaboration is project-specific, restricted to large-sized commercial ships and I would like -- again like to reiterate that we have a similar relationship with multiple shipyards and a few of them, we already exercised and explained successfully.

Coming to your first question on the next-generation corvettes, what is likely to happen in the next couple of days is the L1 declaration and L2 declaration by the Ministry and Navy. And this will be followed by a natural process of contract negotiations, depending upon the complexity of a project, this project definitely is a complex and high-value project. This could take in my appreciation, a very optimistic time line of around 6 months from now, that means, let us say, December this year for contract and conclusion or a conservative time line of another -- you add another 3 months, March 31, 2026. I hope this clarifies.

[Operator]

Next question is from the line of Hardik Gandhi from HPMG Shares and Securities Private Limited.

[Hardik Gandhi, analyst]

Congratulations for the good set of numbers. Sir, just 2 questions from my end. First, on execution side, are you seeing any headwinds?

And second being that I know we -- usually this question comes up, but given that Mazagon and Cochin are in a similar industry, their operating margins are quite high as compared to us. Of course, we've bettered our margins over the quarters. But again, is there a scope for further improvement or are we seeing margins staying at these?

[P. Hari, executive]

Okay. Thank you for the question, Mr. Hardik. I will answer the second question first regarding margins. Conventionally, one of the shipyards, whom you mentioned has been operating on projects which were awarded on nomination basis. The second shipyard, what you mentioned, has been operating on ship repair projects primarily and another nominated very high-value project. And we have been more or less operating on projects won on competitive bidding.

As of now, all the projects that are coming out from the services are on competitive bidding. So while we have improved, there could be a situation where all the Indian shipyards in addition to the shipyards that you named will be at an even platform with respect to margins.

Coming to the headway, I'm sure you would have -- your question would have been specific to the project progress. Yes, we are happy with the project progress. Despite the challenges faced and the cascading effects of the COVID, which many -- the impact is even after 5 years, there is impact, but we have surmounted these challenges effectively and that's how the ships are getting delivered.

I just made a specific mention in my introductory talk regarding one particular project, which is the matter of great pride for us and every -- I would like to state this that there is a 16-ship project being constructed for the Indian Armed Forces that's the Indian Navy, the antisubmarine shallow water craft project.

The first of this 16 has been built by 2 shipyards, 8 by us and 8 by another shipyard. And we are proud to state that our first ship has already been delivered and will be inducted into the naval fleet a month from now. And the second ship also has undergone the contractor fleet trial.

The first P-17 Alpha is ready for delivery. Two months from now, the ship will be delivered. So yes, there is definite headway. And with the figures, the numbers that I mentioned regarding delivery of ships to an earlier query, we are confident of meeting the time lines that we have committed to our customer for the ongoing projects.

[Hardik Gandhi, analyst]

Understood, sir. Just a follow-up. Is there any supply chain issue at present, given the geopolitical tension as well as like if and how much are we importing from outside? And is there a bottleneck there?

[P. Hari, executive]

See, as of now, no, no direct impact as of now. Yes, there is import content, especially for the export platforms that we are building. But the sources from where we are procuring, they have not been impacted by the current situation. And considering that the situation overall including the conflicts at various parts of the globe are still going on, still we have not faced any impact. And we will not see any impact in your supply chain with respect to the ongoing projects that we are executing.

[Operator]

Next question is from the line of Parimal Mithani from Credential Investments.

[Parimal Mithani, analyst]

All my questions are answered. And sir, congratulations to you and your team for a wonderful set of numbers. That's it. Thank you.

[P. Hari, executive]

Thank you. Thank you, Mr. Mithani. And we acknowledge your appreciation. It means a lot to us.

[Operator]

We take the next question from the line of [ Vikas Kasturi from Focus Capital ].

[Unknown Analyst]

First of all, congratulations on a fantastic financial year. And also thanks to you, sir, for answering all questions with so much patience and such detailed responses. Sir, I had just one question. So with respect to the ships that we are going to deliver, is there any retention amount that the clients will withhold as a warranty or a guarantee kind of a thing?

[P. Hari, executive]

As per the contractual -- thank you for your appreciation. And as per the contractual terms, a certain percentage fee in warship building orders which majority of our orders are warship building orders. In all these contracts as per the DAP based on which these contracts are formulated, there are various stage payments.

One of the stage payments is the retention of I think 10% of the project cost till completion of the guarantee refit, which in the conventional sense, the guarantee refit will happen 1 year, it means we are bound to provide 1 year of guarantee. And once the guarantee period is completed, the ship will undergo a guarantee refit and on completion of that, the retained amount will be paid.

[Unknown Analyst]

Got it, sir. And this is more or less this 10% is withheld for all ships, sir, all your platforms?

[P. Hari, executive]

Pardon me?

[Unknown Analyst]

So this 10%...

[P. Hari, executive]

Yes, yes. It's purely as per the DAP. And for all the orders that are being executed and this is applicable in my appreciation to all the shipyards executing similar orders.

[Operator]

We take the last question from the line of Vaibhav Dalal from Niveshaay Investments.

[Vaibhav Dalal, analyst]

I just have a question around a very specific product, which is being used in your shipbuilding. So these are the bulb bars, which are used in the construction of the hull of a ship. So I just want to understand like how much bulb bars are required in the overall making of a ship in terms of volume as well as in terms of the value of the ship?

[P. Hari, executive]

Very interesting question, and it's a very unique question that I am facing. I've been attending analysts and investors meet. Now this is my 12th meet running -- yes, 12th or 13th meet running. Very interesting question, bulb bar. Since I know shipbuilding, I can answer this question. It is around 10% of the overall steel requirement.

[Vaibhav Dalal, analyst]

In terms of the weight of the ship or the displacement of the ship...

[P. Hari, executive]

See, I'll put it this way. See, in a ship, let us say, when we talk about a 3,000-tonne ship, when you say a 3,000-tonne ship, the steel weight would be around 2,000 tonne, 1,800 tonnes to 2,200 tonnes depending upon the type of steel that is being used. If you take a warship, in warship, there's a particular type of steel, which again is open domain information, DMR 249 Alpha steel which is used.

So this could range depending upon the size, type and the type of platform. Sometimes steel, thin steel is used for the hull, sometimes thick steel is used, various types of thicknesses is used in a particular ship. So this -- if you take a ballpark figure, this comes to around 1,800 tonnes to 2,000 tonnes of steel in a 3,000 tonne to 3,300 tonne displacement ship.

The balance weight comes from the equipment and systems that is plumbing, the main propulsion system, blah, blah, blah. Now within this 2,000 tonnes, around 10% comes the bulb bars. Thank you.

[Vaibhav Dalal, analyst]

Got it, sir. And my last question will be, sir, like so where do you sourcing bulb bar from, like are you importing these? Or are there any domestic players you are buying these bulb bars from? And to be last -- yes, sure, sir.

[P. Hari, executive]

Please go ahead, you were asking something.

[Vaibhav Dalal, analyst]

So my last part of the question will be like since there are 61 warships, which are being made here in India, like out of the 61, what is 60 are being made in the Indian shipyard? So I just want to understand like as the procurement for the bulb bar already being done by the shipyards or the process is still going on? Like I just wanted to understand that part.

[P. Hari, executive]

Okay. I will answer this question in a broader perspective. Shipyards are platform integrators, bigtime platform integrators. We source equipment. Everything is sourced, starting from steel to -- since you mentioned bulb bars to the piping material to something as minor as cables to cable plants to cable trays to, you name it to major equipment. We are platform integrator.

As customers, the Indian Navy or Indian Coast Guard, they do the capacity and capability assessment of suitable firms, make them eligible in certain category of equipment like main propulsion system, main propulsion engine, maybe, for example, for a project, maybe short list based on the capacity and capability for firms. Similarly, for steel, the Navy or the Coast Guard determine who are the qualified sources from whom steel is to be procured. They go through a capacity assessment by the customer.

Coming to bulb bars, your specific question on bulb bar, bulb bars are also not indiscriminately procured. They have to be procured from the sources, the manufacturers who are qualified by the customer, that's the main. The shipyards are provided with this list and the shipyard go through a procurement process and source them from these firms.

So since you asked this question, any firm who considering themselves capable of manufacturing bulb bar, to answer your specific query, can get themselves registered with Navy, get a capacity assessment done, get that formally communicated to the shipyard through Navy and the shipyards would definitely buy from them. Thank you.

[Vaibhav Dalal, analyst]

And just to add up a follow-up here, sir. So do you have like any approved suppliers from the Navy on this? Like are there Indian suppliers or like suppliers from the abroad?

[P. Hari, executive]

To answer your question, Indian suppliers.

[Vaibhav Dalal, analyst]

So we have Indian suppliers. So do you have any name like on top of your head, sir?

[P. Hari, executive]

I will not be able to answer this question now. If you have any specific query, what I would suggest is that you ask Navy about the specific question, they'll be able to provide you absolute clarity on who are the firms who are qualified to build -- sorry, fabricate that bulb bar. That would provide you a clearer answer than what I would be able to provide in an investors' meet.

[Operator]

Ladies and gentlemen, in the interest of time, that was the last question. I would now like to hand the conference over to the management for closing comments.

[P. Hari, executive]

Thank you, Navya, and thank you, Gaurav, from Concept IR for organizing this conference call. I'd like to pay my sincere gratitude to all my analysts and investor friends who have taken time out of their very busy schedule and listen to what I had to say and also ask very interesting queries ranging from profit margins to bulb bar.

Thank you, and looking forward to the next time we meet. Thank you.

[Operator]

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