Garden Reach Says Shipbuilders Will Get Rs 1.2-Lakh-Crore Orders In Three Years

Garden Reach Shipbuilders and Engineers Ltd. expects the shipbuilding industry to get contracts worth Rs 1.2 lakh crore over the next two to four years even as India's push for localisation is already driving its order inflow.

"Our Q1 results have been very, very encouraging," Commodore (Retired) PR Hari, chairperson at Garden Reach Shipbuilders, told BQ Prime's Sajeet Manghat in an interview. "It's the best in the history of the company, with our revenue from operations moving up by 30% year-on-year."

The order book position of the shipyard as on June 30 stood at Rs 24,546 crore, he said. GRSE expects to complete the order book by 2027. It comprises four projects for the Indian Navy consisting of 19 warships, three P17 alpha advanced frigates, eight anti‐submarine shallow watercraft and four large survey vessels.

The alpha project alone would generate a revenue of around Rs 13,700 crore, out of which approximately Rs 2,000–2,200 crore will translate into revenue in the current financial year, he said. "The peak years with respect to revenue accrual will be 2024, 2025 and 2026."

CMD PR Hari. (Source: GRSE website)

GRSE Q1 FY24 Highlights (Consolidated, YoY)

Revenue up 30% at Rs 755.9 crore vs Rs 579.8 crore.
Margin at 6.09% vs 5.77%.
Net profit up 53% at Rs 76.7 crore vs Rs 50.2 crore.
Ebitda up 38% at Rs 46.1 crore vs Rs 33.5 crore.

Also Read: Mazagon Dock Q1 - Euphoria Shrouding Reality; Reports Better Ebitda Margin, Higher Orderbook: ICICI Securities

Projects Outlook

Over the next couple of months, the company is expecting price bids of two coast guard projects to open, with an aggregate order value of approximately Rs 3,000–4,000 crore. "We are aggressive in this bid and expect to stand a good chance to win these orders," Hari said.

Projects for 14 fast patrol vessels as well as five oceangoing patrol vessels are set to open in the coming months.

The company has submitted a bid for a project of the National Centre for Polar and Ocean Research that has an order value of roughly Rs 800–900 crore. This bid is to open in the second quarter of the current financial year, according to Hari.

The request for proposal for the corvettes project was to open next year, while the bids will be placed in the following year and the company is looking to participate in that, he said.

Two other projects that the company is expecting to bid for are the P17 Bravo and the next-generation destroyers, both of which are "big ticket items", the chairperson said.

Also Read: India Defence Sector Outlook - Potential Submarine Orders In Focus: ICICI Securities

Capex Plans

In terms of capital expenditure plans, Hari said the company is "systematically investing to the tune of Rs 50 crore per annum to match the requirements that may come up in the future".

The company had taken three dry docks on a long-term strategic lease from the Kolkata Port Trust. Hence, in case of a spillover, the company can construct ships there as well, he said.

GRSE currently has three shipbuilding units at a span 2 km from each other, connected by a river. "We have the infrastructure, capability, vendor base and a robust project management system," Hari said. "We will be able to deliver these ships and meet the expectations of both the Navy and the Coast Guard."

Also Read: Mazagon Dock To See 'Peak Year' In FY25, Says CMD Sanjeev Singhal

GRSE recently received an order from the Navy in the first quarter for manufacturing 30 mm naval standard guns, for an order value of Rs 250 crore. This marked the company's foray into the arms and ammunition space.

Hari said the company was still "testing waters" with regard to the new ammunition business and it would continue to do so for the next one year.

GRSE aims to observe the extent to which it can achieve indigenisation in this space and then decide as to how aggressively the company should move in this space.

It will be implementing a "hybrid" business version, where without diluting its core warship-building capabilities, it will look to diversify into businesses other than shipbuilding as it has the capacities and capabilities.

"As far as the gun manufacturing is concerned, there are enough opportunities available because where there is a ship, there is a gun," Hari said. "With both the Navy and the Coast Guard expanding their fleets almost by 100%, naturally, the weapon requirement also will multiply twofold."

Over the next two–four years, the orders placed on the Indian shipyards could be to the tune of over Rs 1.2 lakh crore via both the Navy and the Coast Guard. There will also be "order fructification" seen during this period, according to Hari.

There is a change in the way the system is functioning and things are moving fast, he said.

Also Read: India Aims To Become Global Hub For Green Shipbuilding By 2030, Says Sonowal