Thank you very much. We will now begin the question -and-answer session. Our first question is from the line of Deepak Krishnan from Kotak Institutional Equities. Please go ahead.

I just wanted to understand, you said the EBITDA margin previously guided, so in the range of 18% to 19% on a consolidated. Is that understanding correct?

Can you just repeat that last part of the question? You were talking about the EBITDA margins?

Yes, sir. You said EBITDA margins will be in the range of previous guidance. So does that imply more closer to the 18% to 19% on an annual basis EBITDA margin guidance?

That's right.

Sure, sir. And maybe just a follow-up on that. Factors that drove such high EBITDA margin this quarter. Is it largely due to the INR400-odd crore ship repair contract that we have that continues till Q1 FY '25 and the IAC-1 sitting in our book? Are those two factors having margins ahead in this particular quarter? Or was there any one-off factor?

It's not one -off. It's the large things, as you rightly said. We had good projects and project execution, both on the ship repair side, aided by the aircraft carrier in the dock and the IAC revenue is also coming in. So there has been good traction, both on the execution side, ship repair and shipbuilding. So it's not largely one-off.

Sure. And maybe just a follow-up question. The agreement that we have, the MSRA, when do we kind of see any orders coming through? Or is it just like a prequalification? And how does things really progress from the signing of the MoU?

Sure. But is there like a guaranteed volume or anything that you can kind of comment on?

No guaranteed volumes. But the company has been evaluated thoroughly and the final inspections were in Jan by a 17 -member team spread over 3 days and the feedback has been excellent.

Maybe just one follow -up. If you could indicate the order backlog within sections, defe nse - you've given the overall number of INR22,000 crores, but within defense, commercial , commercial exports.

It will be uploaded immediately after this call.

Okay, maybe I will just come back on the questions after a while.

Our next question is from the line of Umesh Raut from Nomura. Please go ahead.

Good evening and Congratulations for the good set of numbers. Sir, my first question is pertaining to future prospect pipeline on the ordering side , both on shipbuilding and ship repairing. Could you please highlight key projects which you are expecting in next couple of years?

Ship repair, Rajesh, can you just throw light on the ship repair part in brief?

Yes. Ship repair, as was mentioned briefly, typically, ship repair, we don't maintain a long term order book because inquiries keep coming and we quote and take orders. But this particular year is slightly different because we already have secured firm orders for almost for the full year and most of them are mainly from the Navy, a couple of large weapon platform refit projects and of course, one major conversion project from the Navy. Along with that, there are also MoU projects which we are handling for the Lakshadweep Administration. These are all almost assured projects. So from that sense, the order book for this particular year for ship repair looks quite well settled and final figures will actually be revealed when we complete the negotiations especially on the naval projects.

On the shipbuilding side, you're talking about further order inflow. You'll have to wait a little bit to see on the defense side. And on the international side, as was briefly mentioned, we have secured this recent two contracts for the Hybrid SOVs. And I won't be able to give you much more information, but I can tell you that there is good traction we are seeing on similar vessels from Europe and we expect to sign more contracts. Naturally, with a caveat that's ‘all going well’.

Okay. A follow-up on shipbuilding prospects. So basically, there is a next corvette order which is in the pipeline. And what we are hearing, there are about 4 shipyards which are now shortlisted by MoD to participate into the tender. So just wanted to clar ify whether Cochin Shipyard has qualified in that particular order or not.

I wouldn't want to comment on that specific information because it's not a formal communication kind of a thing. So we would not want to comment on matters which would be the prerogative of the Indian Navy.

Okay. Got it, sir. My follow-up on repairing side is more of on the utilization of new facilities, which got commenced recently. How you are planning to kind of ramp up revenue from that particular facility? And maybe in the medium to longer term, maybe 3 to 5 years down the line, what kind of repairing top line you are seeing? And along with that, maybe what kind of margins you are kind of seeing more of sustainability to maintain on the repairing side?

See, the facility for ship repair, ISRF has been commissioned, as I briefly mentioned. We expect this to be put into operations from August '24 onwards. We are coming up shortly with a global tender for a global operating partner, which will be out in the open shortly. And over the next few years, we expect significant revenues to come in, but I wouldn't want to put figures on to this, we have our internal projections and we have a plan of action. But it probably would not be proper to put this across in the open at this stage. But number of vessels, there will be , because as we already said, the facility is to cater to 82 vessels in a year of size less than 130-meter in length. So you were wanting a guidance in 3 years to 5 years' time, but I can say for sure that in 3 years to 5 years, it will actually touch that kind of numbers on the ship repairs. We would not want to put money values into it at this stage.

And sir, on the margin side, is it fair to say that 25% to 30% is more of a sustainable EBIT margin range for ship repairing business?

My Director Finance would like to guide you to 22 to 23 percentage.

Okay. So sir, that is more of at the company level, right, at a blended shipbuilding plus ship repairing level, right? I was asking more of from the repairing point of view only.

It would not be prudent to take Q4 performance or this FY23-24 performance be taken as the guidance, because in FY24, since there a better execution, the EBITDA level is higher. But going forward, the blended level, you can expect around the 17% - 19%.

We always say 17% to 19% for the blended level. We would like to be conservative, but we would like to say 17% to 19%. Ship repair, we would like to say 22 to 23 percentage. Probably, you can take a little bit of your view s, but we would like to convey these levels on a prudent basis.

Got it. Fair enough, Sir, you have mentioned in your opening remarks that depreciation costs from '24 onwards will go up significantly. Is it fair to assume that new capacity will have a depreciation rate of closer to, say, 6% and maybe additional cost of about INR50-odd crores incrementally on a base of '24?

Okay. But would that be applicable from FY '25 onwards? Or that will come up in phases?

We are planning to fully commission that project by August '24. So around 8 months, it will be there. The depreciation will be there for almost 8 months of the financial year.

Got it, sir. My last question is more of on the balance sheet side, where if I look at inventory position for FY '24, that has increased by about 40 days. If I look at on an average in the last few years, we were maintaining closer to about 45, 50 days, but for '24, it was closer to 100 days. So was there any particular reason behind this?

Now both ASW and NGMV, projects are coming to the production stage. So a lot of materials have started reaching CSL. So the inventory has g one up this year and high value equipments also. For NGMV project, the material component is quite high.

Okay. Got it. And similarly, advances from customers, that has also seen marginal drop as compared to FY '23 and FY '24. So would that continue, assuming that our execution from ASW Shallow Water Craft and NGMV will go up only from current level?

Yes, it is likely to come down. The advance of customers was mainly from the NGMV project, but now since the execution started, the advance will come down.

Okay. Got it sir. Thank you.

Our next question is from the line of Pritam from Wealth Way. Please go ahead.

My question is regarding decarbonization and the opportunity for Cochin Shipyard in green vessels. So how big is the opportunity for the hybrid vessels, zero emission vessels, both large and the medium-sized as well as the green tugs, patrolling boats, etcetera? We saw some orders coming along on those fronts and also how we are technologically advanced when we will have to compete against a few of those Japanese or Korean companies also perhaps with the European policy that is coming up by 2027-'28 that they are probably levying penalties for the diesel petrol boats and more efforts towards green?

On the green vessels, from an international point of view, CSL had has got a generally good footing in the European market and we expect orders to come in from that segment. Many of the companies are looking at opt ions and would like to talk to Cochin Shipyard. We are expecting orders from that side. So we have set in motion. I don't want to use the word firmly entrenched, but we are almost there in the international functional vessel part. Specialized vessels like wind construction vessels and other specialised vessels, we are generally good. Coming to the Indian market, you were alluding to the green tug policies and other things. And we again feel there woul d be a good opportunity for CSL and for other shipyards also. But we have been working on this for quite some time. We are expecting at least 8 to 10 vessels being ordered over the next year or so by the major ports through private entities and of course we expect to be very much actively parked in those process. I'm not in a position to say exactly what we will get, but both international green vessels on the functional vessels side and Indian vessels on the green tug side, we are good. The other thing on the green vessel side, green ferries and other things, what we are talking, it will not translate into too much of business at this stage, but we would be frontrunner in all those aspects. You also asked a question on the technology and competition. We are good on that. We are good from a competitive point of view and we have our methods to do appropriate partnerships and collaborations. So that is not a great worry at this stage. I presume this gives you an overall feel of this space.

And regarding Kochi Water Metro station, do you see replicas of those coming in other areas of India? Are there any inquiries or potential sales could be coming?

It is not exactly the same, but definitely, there is. I can confirm that the Bengal government is talking projects. We are actively involved there. There are others also. So we ar e also waiting for the outcome.

Our next question is from the line of Vivek from Shanti Financial. Please go ahead.

Congratulations. The entire shipyard sector itself catching the fancy of the market and Cochin is probably the pioneer for everything to do within defense. I'd like to understand, broadly, you mentioned that you have an order book of some sort, but then there are so many other projects in the pipeline. So I guess to understand the breakup of - what are orders on hand? You mentioned around only INR1,200 crores. What is the size of the volume of such mix? What's the size of the revenue that is part of your pipeline? And I'd also like to understand if there's going to be a call transcript that's going to be posted on your website or any of the normal financial websites for us to take stock of the numbers that you mentioned, because there are many projects and many different n umbers that have been discussed?

Regarding the order book and the order possibilities, I would request you to kindly wait till end of this call and immediately thereafter, we are uploading a presentation in which there are 2 slides giving a fair bit of information on the order position. But the overall for a figure, INR22,000 crores from both shipbuilding and shiprepair out of which about INR15,000 crores is the defense part and the balance is the non-defense part. The ship repair component of order book is about INR1,250 crores, which normally, if you have been following us earlier, we always used to guide about the order book of INR600 crores, INR700 crores. So ship repair order book is also at much better level right now. But you will get more information when we upload this after this call.

Our next question is from the line of Viraj from Jupiter Finance. Please go ahead.

Congratulations, sir, on the good set of numbers. My question is regarding the guidance. You gave a growth of 25% and EBITDA of 19% to 20% EBITDA margin. So the PAT should be in the range of 12% to 14%, is that correct to think, number one? Number two, what are the factors making you - giving you some confidence that the growth will be double digit, maybe 20%, 25% on the revenue growth? That's my question number two. My other question is on the sh ip repair sir, like with U.S. the strong connection plus Europe, what kind which will give you more colour in terms of growth in the ship repair business for a bit of time. Just your sense. I'm not asking for a guidance, but just your sense for a period of time to understand? Thank you sir. That's it from side.

On the growth guidance, 20 percentage to 25 percentage on the overall turnover in FY25. You are aware that shipbuilding and ship repair for the year, we talk based on contracts in hand and our current execution status and the confidence is based on that. So that's the top line growth on both shipbuilding, ship repair together. Your next question was on ship repair, connected with the MSRA with the U.S. Navy. Currently, financial figures from MSRA has not been factored in. Our ship repair story, what we have conveyed is based on what we are currently in and what we are seeing our potential to see over the next 12 to 18 to 24 months. We will not be able to record it, but we are also tracking continuously in the market what kind of orders in the ship repair space will come, both from defense and from our friends in the commercial space. So it is based on that. Specifically on the U.S. MSRA, see, all I can say is it's a very significant step for Cochin Shipyard. Because the U .S. vessels, both the - what we call the MSC sealift vessels and the combatant vessels, there are a lot of challenges and a lot of requirements, but Cochin Shipyard has been cleared after a long and detailed assessment. The entire team have been happy with our performance and what we have done. But we are waiting for the first order and probably the second order to come in and to exactly convey to people like you how exactly it is going. But all in all, if I may use the word, it is a very positive step for Cochin Shipyard. I would not want to add figures on it.

Sir, my follow-up on this would be that as the aircraft carrier comes, this will be additional to all the guidance, right? My thinking is correct in this direction?

That is correct.

Thank you Sir and good luck.

Our next question is from the line of Sagar Gandhi from Invesco Mutual Fund. Please go ahead

My question is related to IAC-2. So I'm not asking you whether it will come or not, but if it has to come, will it be '26 or '27?

Okay. Sir, my second questio n is considering that next 2 years are likely to be very heavy in terms of delivery or revenue bookings, so in absence of IAC -2 will FY '25 or '26 still see peak revenue?

We don't want to consider it that way. Because with IAC -2, there is a p lan of action. Without IAC-2, if at all such a scenario happens, I think we should still have a plan of action, both on our defense and non -defense side. Defense also, there are projects coming in. We will be there strongly. Non-defense and the export side, as we have just explained in interactions earlier, we feel things are good. So we don't want to talk about peak revenue as a company. We want to continually grow both top line with a steady -state margin levels. So IAC -2 coming in definitely would be great and welcome, but in case, because it's not under our control and there are lot of other reasons how it will move forward, but we would nevertheless confidently talk growth at least for the next 5, 6 years as of today.

Okay. And sir, whe n is our new shipbuilding facility getting commissioned? Ship repair y ou said August 2024?

Shipbuilding, also August '24. It is actually that the crane is getting installed, we probably are putting a picture after this call. So, the crane is halfway through. So the crane gets commissioned and a little bit of work. So August this year, we expect to start shipbuilding work in the new facility.

Okay. Thank you so much sir.

Our next question is from the line of Dhiraj from Samvad Financial Services LLP. Please go ahead.

My one request, which you have already said that we will be putting the presentation, but it would have been better had the presentation being circulated in advance. That would help reduce and improve the understanding for all of us. So just a request, in future, whenever you do con call, please pre-circulate presentation in advance.

We will do that. That's a positive suggestion and we'll do that for sure.

And second part, while we do kind of path breaking work, but at least there is no update about what kind of R&D, whether do we have an R&D laboratory or research lab or IP kind of things, patents, etcetera. Can you share some insights and share whatever y ou can disclose on those parts? Are we protecting our IP , because we are doing so much good amount of work. A ny thoughts of management? And if you can disclose what exactly your effort on that side?

You're bringing out a very, very important point. See, Cochin Shipyard, due to historical reasons, we have been a shipbuilder and ship repair and it's not been too much of an R&D and IP kind of thought process. But over the last many years, the kind of knowledge that is coming up in the company that is why by 2021, we set up a new division called the CSL Strategic & Advanced Solutions (C-SAS). And I can tell you, we have set it up as a new division. Our divisions are shipbuilding and ship repair, the business division, so we did not call this new C-SAS as a group, we actually call it as a division, wanting to convey to ourselves and to the external stakeholders that this is actually potential growth area for us. And within the new C-SAS is where we are doing this innovative work, including the hydrogen fuel cell vessel and various other things which we have conveyed. Currently, we have commenced works on a fully indigenous autonomous surface vessel and it is a 24-month project. We are already about 6, 7 months into the project. And we are teaming up with the DRDO , IITs and at least 7 startups. Similarly, there are other work also being undertaken. Regarding IP and protecting the knowledge, yes, there are certain aspects and certain things which we are doing. But a little bit beyond the IP, w e are recording, we are documenting and we are holding on to the knowledge spot much better and C-SAS will be our vehicle to take this forward.

Thanks a lot for updating and performing so well. Just one more suggestion. In the annual report for FY '24, if you can give some , whatever you can disclose about your research and IP, that would be appreciated. Anyway you are supposed to disclose the answer . Just a humble suggestion.

And whatever that's possible we can do, we'll absolutely do.

Thanks a lot and wish you all the best.

Our next question is from the line of Gagan from ASK Investments. Please go ahead.

The first question is on this very significant addition to gross block of almost INR2,800 crores. What could be the peak fixed asset turn one could expect on this?

Kindly repeat that questioin please?

I'm saying that your current gross block is probably closer to INR1,300 crores, on which you are doing a sales turnover of INR3,400 crores or more. On this new gross block addition that you're doing, this new capex of INR2,800 crores, which will get added to the gross block? What could be the potential fixed asset turnover on that? What could be the peak fixed asset turnover on that?

It will be around, I don't have the exact numbers right now. It will be around 2, once the operation in both new facilities get stabilised.

I think it's safe to assume that way.

And would it be possible for you to elucidate in a little more detail your pipeline on the commercial side pertaining to hybrid vehicles sorry, hybrid vessels, especially which we're getting from European or Scandinavian countries. Some idea of the pipeline that is possible from there?

What we already have contracted, you will get this information when we upload these figures. But when we are talking about pipeline and what the potential possibility of the pie outside is, all I can say is there's enough on the green vessel, on the short sea vessels getting replaced that's enough. But Cochin Shipyard what we are looking at it is not just about grabbing orders. It is also to make sure that we are generally good. I won't say exact, but we are generally and largely good with execution and what we can handle. And within that, we want to maximize the, what shall we say, the value for the company, which would be a combination of financial and strategic insights. So we are also a bit choosy. Choosy about the project, choosy about the client, choosy about how much of risk, because any new aspect we are getting into the European market, because these are new things even in the European market. So risk is also a factor. So it's a combination of these things. As an organization, we want to be prudent. We want to be aggressive, but at the same time, we want to be very prudent in what we do. But I can tell you, currently, there is enough in Europe for a company like Cochin Shipyard. That is what I would like to say, if that answers your question.

All right, sir. And this shipbuilding, ship repair order book of INR1250 crores, is that executable in less than 12 months? Or is it executable in 12 months or more?

It spreads beyond that also. But then that is not the ship repair. There will also be orders we'll pick up as we go also during this year. It is not t hat we pick up, for example, if we are talking about everything today, that means that for the next 10 months, we won't pick up any new work for this year. That is not the way we do ship repair. Maybe 2 months down the line, I would be picking up various other orders also for execution within this year itself. But we are, again, targeting significant growth in our ship repair top line also for this year as we move forward. We are happy and you would have noted that for the first time in our history, we crossed the INR1,000 crores on ship repair. It's a tough job, ship repair, but between Cochin Shipyard units, the three ship repair units elsewhere and the upcoming ISRF, we are still hoping to do a good increase in top line as we move forward. And we again feel there is good traction in the market to support that kind of a growth.

Final question, sir. You mentioned the additional depreciation from the new facilities, but there would also be additional employee and overhead costs related to the new facilities. Can you give some idea of what could be the additional leverage and inventory costs coming from the new facility?

We may not be able to put an exact figure on it, but all I can say is like the new facilities, which the new dry dock, let me say, the new dry dock is not a stand -alone facility. It is contiguous to the percent Cochin Shipyard main unit. So largely, we are leveraging the existing facility. So it would be marginal additions on the labour side. And wherever is core labour, that is what it will be our own. Otherwise, there will be a significant part which is outsourced on a business on need basis. But the core aspects, let's say the plant maintenance because i t's a brand new facility, we would put our own people to handle that facility. Similarly, on the ISRF side, if you were there earlier on the call, I have mentioned that we are looking at an operational partner. I can't disclose more details at this stage, but this will be coming out in the open when we do the tender hopefully within a month from now. We are trying to bring in a global operating partner. So again, it is not just about increasing the number of people, but again, in ISRF also, it's a brand-new ship lift and crane, which would be our own core people who will handle the electronics and the ship lift. So we are cognizant of the fact. We don't want to b rought up anything. But it will be more marginal. It will not be a multiplier kind of a thing, depending on the size and scale.

When you say you're looking for a partner, can you elaborate a little more on the business contents of this? Is the partner the one who will operate the ship repair facility, which will be owned by you? What exactly are the contents of this project?

I won't get into too much detail, but the partner is not just to do the work, it is to make sure that we are best-in-class in the world. Turnaround times for us in ship repair, we are good in India. We are good generally, but we are not the best. We still need significant improvement. And for that significant improvement, we need to learn and work with some of the best in the world. We need to leverage some of the ecosystem, which is supply chain and service provider chains, which many of them have developed in places like Singapore or the Middle East. And we also would like to see them coming in with their clients. So it is, a close example would be the Indian airport, when it's been, some of the leading Indian operators have worked on this, but then they are also in league with some of the best international operators. I would like to stop at that, but that is our whole intention.

Thank you.

Our next question is from the line of Deepak Krishnan from Kotak Institutional Equities. Please go ahead.

Maybe just one follow -up. Just wanted to understand how are we looking at a potential IAC execution time line, given that we've already guided in the past. So suppose the order comes through, how many years for design and typical execution after that from fit -out launch as well as in final delivery?

Again, this is something which we wouldn't want to talk too much. But whatever we have said on record earlier, if next carrier, when it comes, is largely based on the same or similar platform as what was Vikrant, then we have said we are somewhere around 8 to 10-ish years. This is what we have said. But I would like to stop at that because, again, it's the prerogative of the MoD and the Indian Navy to talk more on this.

Sure, sir. Maybe just any outlook on the landing platform though? Initially we had indicated that, that project could be potentially coming up for RFP over the next 2 years. Anything that you're seeing incrementally positive on that front?

Not yet. Probably maybe after the elections and the new government comes in, maybe there will be traction on that.

Thank you.

Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to Ms. Chandni Chande for closing comments.

Thank you, everyone, for joining the confe rence call of Cochin Shipyard Limited. If you have any queries, you can write to us at research@kirinadvisors.com. Once again, thank you for joining the call.

Thank you. On behalf of Kirin Advisors, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thanks.