Garden Reach Shipbuilders & Engineers Limited (GRSE) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good afternoon, and welcome to the conference call of Guard and Reach Shipbuilders and Engineers Limited, arranged by Concept Investor Relations to discuss its Q1 FY27 results. We have with us today management representatives, Commodore P. R. Hari, Indian Navy, retired, Chairman and Managing Director, Srinaranjan Mukund Bhalerao, Director, Finance and CFO. Srimadhi Aparajitav Ghosh, GM Finance, Sri 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.

Thank you. Good afternoon, ladies and gentlemen, and a warm welcome to each one of you to the conference call. to discuss the results for quarter ended 30th June, 2026. With me here are Shri Niranjan Bhada Rao, Director of Finance and Chief Finance Officer, Srimadhi Abharajita Ghosh, Chief General Manager of Finance, and Shri Sandeep Mahapatra, the Company Secretary and Compliance Officer. I shall brief you on our financial and physical performance. And the execution plan. One financially at 27 has again been an interesting quarter. 914 crores, recording a year-on-year growth. And the revenue from operation has increased. Department of India, Department of Public Enterprises. This was recorded to us on 19 June of 2026. Nagarjuna's status comes at a pivotal time as the shipyard is actively pursuing an ambitious exercise. The company is... ...capacity expansion initiatives to strengthen our shipbuilding capabilities, support future growth, and enhance our ability to execute larger and more complex... Here I see built shifts. The B-17 Alpha Steel Brigade, INS Sun, showed that the last of the four And INS Arklay, the fourth ship of the eight-ship anti-sutheran shallow watercraft project, were commissioned into the Indian Navy by the Honorable Prime Minister of India, Sri Narendra Modi, at Kolkata on 21st June, 2026. Oil and Natural Gas Commission, ONGC, for construction of coal.

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This is much better. Yes, sir. Please go ahead.

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Yes, sir, this is loud and clear.

Okay. I was talking about the order book, the current order book span set, which is 13,596 growth, and this comprise mostly of shipbuilding. And the other two divisions, the engineering and engine division. I've been delivered air. In this calendar year, by November, we should be able to deliver this ship. Four of the eight anti-submarine shallow water crafts have already been delivered, and the balanced four ships shall be delivered during the current financial year. The fifth ship has achieved almost 91% physical performance. Very closely following with the 88%, the 7th and 8th, around 65%. All four ships will be delivered during the current financial year. Coming to the third naval project, the next generation offshore patrol vessel, the first ship has already been launched, and the second ship is being launched on the 11th of this month, next week. The third and fourth ships shall be launched during the third and fourth quarter of the current financial year. These ships shall be delivered commencing Q2 FY28, the first ship, and the last ship shall be delivered during Q2 FY29. Coming to the research vessel, all the three projects we have started. Thank you. The schedule shall be laid during September, which is an important project milestone. Thank you. Thank you. The government of Bangladesh is processing smoothly, and we are currently at about 70 percent. We have already commenced the construction production of five of these ships, and the balance shall follow as per the contractual. It's a high-value project, and we expect the contract to be signed any time. Now we are waiting for the contract conclusion, and this will give a much-required boost. We have received a letter of intent very recently, that is a platform support vessel for the ONGC and the green tug for the Shama Prasad Mukherjee Port. Five tenders are currently live from the Indian Navy and the Indian Coast Guard. Indian Navy has a requirement of 120 fast interceptors. It could be to the tune of around 3,500 tours. The 21 Waterjet FAC project, the 21 Waterjet FAC project, this is the Indian Navy. It could be to the tune of around 3,500. The order value could be to the tune of around 1,200 to 1,300, of course. Thank you. Thank you. The value of this project is 70,000 crores. In the current calendar year, the 12 mines on the measure... It is expected that this will be split between two shipyards. AON value as accorded by the DSC is 36,000 crores. Similarly, another big ticket item, that is the landing platform docked for LPD. This RFP is expected to come out during the calendar year. The order value is to the tune of around 35,000 crores. So, in a nutshell, about 80,000 crores worth RFPs are currently live. Nearly 70,000 crores RFPs are expected from two of these projects, that is the NCMB and the LPD, in the current calendar year. And in addition, what I have just mentioned is only about the defense orders, that is both from the Navy and the Coast Guard. In addition, based on the demand aggregation. Non-defense PSUs, that is GAIL, ONGC, VPCL, and so on. Few tenders are already out. The MR tanker, four MR tanker, the tender has already been published. And another tender, high-value tender for container ships is the... Nearly 80% coming from the RFPs, which are live, and... Good morning, everyone. And non-defense segment. We have decided to go in for both brownfield and greenfield expansion, both on the western and eastern seaboard. In West Bengal, we already have four shipyards. We dedicated leave for shipbuilding and one for ship repair. In addition to this, we have taken two more premises on long-term lease basis from Samaprasad Mukherjee Port, and the expansion and revitalization project for these two facilities have already come in. In addition, we are setting up a shipyard in West Bengal, Rai Chak, which is closer to the sea. And we expect the necessary approvals to be accorded during the current calendar year, and we will commence the infrastructure built up from 2027. This project is likely to take, as with any shipbuilding facility creation, this will take about three to five years for fully operationalization. Similarly, on the Western Freeboard, we are setting up a full-fledged... Total ship solution facility, that means a facility that would... Green Ship Recycling. We are proceeding on a PPP model, and we again expect... Thank you. As well as in daily bread fabrication. And also a glimpse on our expansion plan. With this, I conclude my opening remarks and the floor is open.

We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touch tone phone. If you wish to remove yourself from this question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question comes from the line of Amit Dekshit with Goldman Sachs. Please go ahead.

Yeah, hi. Good evening, everyone, and thanks for the opportunity. Congratulations for a good set of numbers, sir, a good set of numbers again. Two questions. The first one is on next-generation Corvette. Now, the order has been on Anvil for quite some time. Just wanted to understand where is it stuck? Are there certain concerns around the orders that have been raised by the relevant authorities? I just wanted to get a brief construct of this, because this order has been struck for quite some time. Part B of the question is, assuming the order is given to us, let us say, today, then how much time will it take for us to actually start recording revenue?

Thank you. Thank you for your compliments on the results. Yes, I would like to state that this is the 17th quarter on a trot that our financial results have been on an upward trend, and hopefully we'll be able to maintain this tempo in the coming quarters too. Coming to the much-awaited next-generation Corvette... Thank you. This equipment ordering will take place. The first revenue recognition will come and serve. And, uh... Thank you. Thank you. We are... And it is good, good. The Navy... The government there, a large number of unmanned And I'm meant for this. We had a project for the NST, Naval Scientific Technique. Vishakapatma, a DRD organization for an unmanned surface vessel. In addition, an autonomous underwater platform, which was developed by us, again, the prototype successfully proved in the Tangansu Lake Lake about a year back. So we are...

Thank you.

My first question is on the line of your KPX announcement that you did. Can you help us with the quantum of KPX that you are envisaging for greenfield as well as brownfield side of it, and what kind of capabilities will it add to your current existing ecosystem in terms of whether the dry dock size will be the bigger one, especially in Gujarat, and how will it help you? That's my first question.

Very clear expansion. And in turn, a clear CapEx inclusion plan. Now, if I divide this into two buckets, one is the minor projects that we are undertaking. Thank you. There, the capital infusion is expected to be. One in West Bengal, I mentioned, it's towards the sea. The land is already with us again on a very long-term basis, a long-term lease comes with us. We're pledged shipping. You know, the DPR is in its final stages. So I'll be able to give you only an approximate figure. It'll be about 2,200. So the facility would take three to five years because it is a completely greenfield setup. Coming to the west, what we are intending here, the DPR is complete. The capital infusion would be to the tune of around 2,000 crores. As I mentioned during my opening remarks, that the comprise of... So, coming to the specific question which you asked, Our current capability, as I mentioned, is to undertake shipbuilding, concurrent construction of 28 platforms. And I say 28 platforms that include... Well, it'd be just... So there, we have a difficulty at this moment. Thank you. And we will have the capability to build 43 platforms and 11 types of platforms that we have added, 11 number, that means from 32 to 43, there will be large vessels of Afromax and VLGC type. So this is the benefit of this particular expansion project that we are going to go to the ship here. Second is, here in Kolkata, there are four. Be there for worship and together. Green ship recycling and building of large-sized ships. I hope you answered your question.

I mentioned about the tenders which are already out on the commercial side, namely MR Tank, VLDC, Aframax, and even the container ship tender, which is expected soon. So, sir, right, now, how does our technological capability stand for these large-size carriers, and at the same time, how do we participate in this tender with the current capacities? Are we looking to partner with some company or take some tech from foreign companies? How are we participating?

To start with, during the initial discussions I had mentioned, we already won an order for a set of four platform support business, and I'm going to understand that... Thank you. Collaborating with one of. Under itself, there is a condition that of the number of vessels they have promulgated, I think it's eight ships they have promulgated, but two of them have to be built. We've already got proven capacity. So, we, along with our partnership in India, we only tied up with one of the foreign ships. So, we have a very clear strategy for addressing the limitations that we currently have so that we don't miss out on any of the high-value orders which are coming from this non-defense.

Thank you. That is very encouraging to you, sir. Thank you so much. Sir, if I can squeeze in one last question. Sir, can you help us understanding the execution momentum in FY27? Will we maintain the similar execution momentum, or do you expect some softness in growth numbers from, say, 38%, 35%, 40% might get slightly lower in FY27?

Currently, we are in an execution phase. Actually, if you see last year, we have delivered eight shifts. So naturally, when the shifts have delivered, the revenue and in turn the... ...which are on the envelope...

Next question comes from Drainap Kavish Parek with 361 Capital. Please go ahead.

Hi, sir. Thanks for the opportunity. My question is on GRSE's indigenization levels. Sir, could you elaborate on the current level of indigenization across our portfolio and also identify the key systems, subsystems, or components where we continue to remain dependent on imports?

Thank you. A very interesting question, and this has been the focus of our government, also, indigenous people. See, one thing we all must clearly understand that we are... When we are platform integrators, most of the equipment and weapons or, let us say, the propulsion engines, they are all nominated by the customers, be it defensibly. Thank you very much. Thank you. But we know exactly what is the kind of indigenization that we can achieve. Let's say, marine diesel engine. We have a collaboration with one of the foreign OEMs of co-production of... But then again, I go back to my first treatment. Very interesting question. See, almost all the major private companies are into defense manufacturing, be it L&D, be it Adani, be it Mahindra, be it... Each one of them has contributed expenses. A broad answer about which are the major private companies. I may have missed out somebody, but I'm just... 17,000 MSMEs. 675 innovators are involved in defense benefits. New technology-based, and I'm talking about the innovators and startups, most of them are focusing on new technology-based indigenous production. Here, the limitation is... and innovators, we ourselves, my company has taken an initiative and started an open challenge scheme for startups. We kept an acronym called GAMES, GRSCI Executive Innovation Metering Scheme. Believe me, the response has been overwhelming. About 101 startups took part last year. So the entire ecosystem is striving towards We also have some links with the JL because the marine gas turbines that come from them. Of course, it is recruited from the... And there are other PSUs like Kelton who also are contributing towards supplying indigenous products.

Thanks a lot for that, sir. Very, very detailed explanation. Hope to see the long-anticipated contract getting signed soon. All the very best.

Thank you. Thank you. The next question comes from the line of Imanchu Pandey with Shanmika Motors. The line for the current participant has been dropped from the queue. We'll move on to our next question. But before we take the next question, a reminder to all the participants that you may press star and then want to ask a question. Your next question comes from the line of Arshad Kapadia with Ilara Capital. Please.

Thank you.

Thank you, Mr. Hashid. Order book total current is 13,996. Ship repair, rope 96, close the Bailey bridges, 115. Now, I'll just give you a break-up of the shipbuilding order book break-up. Sure. The last ship was 4,519 crores, and it's happening in shallow watercraft, about 1,815 crores. Per waves and large, we are left with about 225 crores. The NGO PV project, about 3,000... Shipbuilding order book was comprised of...

Thank you for reiterating. On the other expense side, you know, the expenses have reduced significantly. Was there any one-off here or what would you attribute here?

Once again, could you repeat the question?

The operating costs have come down significantly.

Other expenditures are coming down. Thank you.

This comes from the line of Kasia Pramesh, an individual investor.

Congratulations on a great quarter. My question is on export. After the German order, there is... Thank you. Inter-government team. for the question.

Firstly, for Now, defense exports mostly are through G2G. Thank you. You had mentioned that we have not gone in for any export orders after the multipurpose vessel contract. It's a very conscious act. When we went in for multipurpose vessel, obtaining the multipurpose vessel export order, at the point of time, our government had not aggregated the demand of... Fantastic. About 200-plus platforms are required. So when we have... We will explore more. We are not taking any export order, considering that there are huge opportunities available within India. Having said that, if an attractive, profitable, and visible order opportunity comes from Europe, This is the strategy which we have taken. Again, to reassure you that there are enough opportunities available between India and India. Looks to India for giving the product. Now, coming to the Navratna status. Navratna status definitely.

Water Metro projects of Mumbai and other cities. Is DRSC actively bidding? Because I saw some of your official... Water project people. So, you didn't mention anything about that.

We are currently executing one project for the government of West Bengal. It is a World Bank funded project for 13... We are engaging in with the various state governments for their respective water metros, and you will understand that even Goa, they are coming up with a water metro development. I think they have engaged KMR, the Kerala water metro, as a nodal agency for coordination. Yes, we are engaging with these various state governments, and as and when the RFPs come out, we will definitely take part, because this is an area where we have already established ourselves. Because our ferry that we have provided to the government of West Bengal is the largest and the fastest. Thank you. I expect some of them to come out in the coming one year. We will take part.

Thank you.

Our next question comes from the line of Yash, an individual investor. Please go ahead. Really sorry to interrupt you, sir. Your audio is very feeble. Can you speak a bit louder? Is it audible? This is much better. Yes, sir. Please go ahead.

Yeah. Hi, sir. Good morning, and congratulations on good set of numbers. And most of the questions are planned to ask. So I'd just like to reiterate the question which I asked in the prior course. Are you going for any bonus or a stock split?

Question part, once again.

Thank you.

And Deepam will abide by that. Let us wait for their directives.

Next question comes from the line of Alok, an individual investor, please go. Sir, your line is unmuted. Please proceed with your question. As there is no response from the line of current participants, we'll move on to our next question. Our next question comes from Harshit Kapadia with Dilara Capital. Please go ahead.

Thanks for the opportunity. Sir, your employee costs have also come down despite such a strong increase in revenue. Is that because you're nearing ending the completion time, so mainly the contractual workers are reduced? Is it because of that?

See, yes, you are absolutely right that the contract expenses are controlled. The deployment of contract workers varies from the project execution phase. The final stages of outfitting, if you see the contract expenditure during Q4, FI 26 would have been high, because that is when we delivered, in that last quarter, we delivered pre-ships. I've been there, and so that's the contract value has been high. It's a sinusoidal thing. You will definitely see some increase in that in the coming quarter, because that is when we expect to deliver a couple of ships. So, as you rightly said, it is purely on the project. It's very normal in a shipbuilding cycle.

Understood. And just in relation to that, just a second, sir, just in relation to that, the mixture is going to be the pay commission which will happen. So how much increase in employee cost can we expect? Will it be in the range of 15-20% which we see earlier, or will it be lower, sir? Any number or any colour on this would be helpful.

See, I agree. I understand the question. But our anticipation is that it could be of similar range of 15 to 20 percent, which is normal in every Bay Commission. We don't see any abnormality, and we have already factored this in our, let us say, future projections and calculations.

Okay. Okay. Fair enough, sir. Okay. Thank you, sir.

Thank you.

Thank you, sir.

Thank you. Your next question comes from Pratap Malewal with Mount Intrafinance. Please go ahead.

Am I audible? I just wanted two clarifications. I believe you mentioned a water metro project that you may be executing, but could you give us an idea of what could we do? Maybe on the...

We are now looking at... Thank you. Very high value project. The order value could be to the tune of around 200 to 300 crores. They're small platforms, but... The attractiveness or the overall necessity. Here again, the volume is the height. In terms of numbers, it could range from 30 to 40 platforms. So, this in a nutshell, I think, would give you a hint as to what are the numbers and the order value involved. Coming to the major project of Navy, I think you asked about the next generation destroyer. Is that what you asked? Yes, sir. Okay. This is one of the projects which, as we are given to understand, this is in their perspective. This is a high-value project where, as per my understanding, this is not yet gone for a DSC approval. After a DAC approval is taken, it will still take about a year and a half to two. I have a position again that I do not expect the RFP to come out for NGD till F5-20 man, because currently we are in F5-207, so considering, depending upon the priority, what the media has got, even if the DIC approval is taken in the current financial year, it could take about an year and a half to two for the RFP to come out. Now, keeping the NGD apart, as I mentioned during my introductory remark, there are enough opportunities. So, that itself, the volume is around 140,000, and the stakeholders, the contenders for these 140,000 to 50,000 crores, This is where we stand today. The opportunities are adequate. This is why we're excluding the NGC contract that we expect soon, and also excluding the commercial building opportunities that are available.

Thank you. Thank you for the detailed answer. Those were my questions. Thanks. Thank you.

Thank you. Ladies and gentlemen, we will take this as the last question for today. I would now like to hand the conference over to the management for closing comments.

Thank you, and thank you, Chintan, from CONCEPT, and thank you, all the investors and analysts for participating in this conference and showing interest in our company, as always, and I definitely look forward to future interactions, waiting for the next quarter. Thank you.

That concludes this conference. Thank you, everyone, for joining us, and Human Autism Connected Alliance.