RVNLNSENovember 14, 2022

Rail Vikas Nigam Limited

8,313words

88turns

12analyst exchanges

4executives

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Management on call

Rajesh Prasad

DIRECTOR (OPERATIONS), RAIL VIKAS NIGAM LIMITED

Sanjeeb Kumar

DIRECTOR (FINANCE), RAIL VIKAS NIGAM LIMITED

Rajesh Prasad Ji

Director

Sanjeeb Kumar Ji

Director (Finance), RVNL. As usual we will have

Key numbers — 40 extracted

19,381 crore

. Rajesh Prasad: So, if you see the performance of this particular company we had a turnover of 19,381 crores in FY21-22 this is excluding GST and for the first time we had crossed the mark of 1,000 crores

1,000 crore

19,381 crores in FY21-22 this is excluding GST and for the first time we had crossed the mark of 1,000 crores in PAT that is the profit after tax and we had done the commissioning to the extent of 1,020 for

20%

then we have started FY22-23 in a very big manner. In first quarter we had a jump of turnover by 20% and then in Q2 this jump has again by 21% with respect to the turnover of Q2 of FY21-22. The prof

21%

g manner. In first quarter we had a jump of turnover by 20% and then in Q2 this jump has again by 21% with respect to the turnover of Q2 of FY21-22. The profit after tax also increase from 551 crores

551 crore

ain by 21% with respect to the turnover of Q2 of FY21-22. The profit after tax also increase from 551 crores to 750 odd crores that is an increase of 37%. The PAT also increase from 433 to 580 crore and th

37%

1-22. The profit after tax also increase from 551 crores to 750 odd crores that is an increase of 37%. The PAT also increase from 433 to 580 crore and then the commissioning the physical part I alway

580 crore

e from 551 crores to 750 odd crores that is an increase of 37%. The PAT also increase from 433 to 580 crore and then the commissioning the physical part I always connect both are linked. So, physically t

5.49%

ilometers. Now, if you see the gross margin by turnover the ratio in first quarter in FY21-22 was 5.49% which has increased to 5.9%. So, there is an increase in the gross margin also. Now, if we want

5.9%

e gross margin by turnover the ratio in first quarter in FY21-22 was 5.49% which has increased to 5.9%. So, there is an increase in the gross margin also. Now, if we want to highlight a few things w

1,500 crore

2013 then for the first time we are in the process of getting an overseas assignment of more than 1,500 crores. We are going to increase our footprint in the metro construction in Chennai and Surat. For the

500 crore

e metro construction in Chennai and Surat. For the first time we have bagged two orders for about 500 crores for development of some canal in Ahmedabad. We are already working in the HAM model, NHIDCL mode

40,000 crore

ember 14,2022 overall we have started bidding in the market and we have participated in more than 40,000 crores of project and we have backed or have become L1 in projects worth 8,200 crores plus. So, what I

Guidance — 20 items

Rajesh Prasad

opening

“We are already working in the HAM model, NHIDCL model and I am also happy to announce that we have participated in expression interest of a project by Exim Bank for construction of 10 kilometers of metro in Mauritius and we have been shortlisted in that.”

Rajesh Prasad

opening

“So, Rail Vikas Nigam Limited November 14,2022 overall we have started bidding in the market and we have participated in more than 40,000 crores of project and we have backed or have become L1 in projects worth 8,200 crores plus.”

Rajesh Prasad

“So, if you compare with respect to the previous financial year yes we are on the upward trend this year we should cross this 1,000 kilometer again, but subsequently there could be a downward trend because we are getting the assignments from the market which are not the typical railway project, but this financial FY22-23 we are definitely going to touch this 1,020 kilometers we must exceed that.”

Ranodeep Sen

“My next question sir was on the I think you mentioned about some huge opportunity in the Kyrgyzstan railway project worth 20,000 crores, sir can you throw some light on that project?”

Rajesh Prasad

“See RVNL had earlier signed an MoU with government of Kyrgyzstan and basically we have identified four number of such projects and this is about 1,000 kilometers and first project is around 225 kilometers, second project is 180 kilometers and there is a ring railway and then some reconstruction of the existing track.”

Rajesh Prasad

“So, all together there are four projects and we are working on this and total length of the project is 1,000 kilometers and costing again the DPR etcetera has been prepared it is around 20,000 crores and in time to come we can see that this project is moving and we are happy to again announce that this project will be on nomination basis.”

Jimit Tanna

“So, I wanted to ask about the update on Char Dham project because as per previous quarter MOR was yet to sanction the project, so can you shed light on that?”

Rajesh Prasad

“See the role and responsibility in Char Dham project given to RVNL was for the preparation of the feasibility, studies and the DPR which we have already done.”

Rajesh Prasad

“The project is yet to be sanctioned, the ministry is yet to decide through what basis and through what procedure they would like to get it executed, but since we have got a expertise and experience of undertaking the project in the hilly terrain we are confident that whatever maybe the model we will be one of the players who will be considering very actively and executing this project this is number one.”

Rajesh Prasad

“Number two we are executing this Karnaprayag-Rishikesh project.”

Risks & concerns — 7 flagged

Right now, as on Q2 2022 this year it is expanding around 3,600 crore, is it allowing that cash in hand is heading towards downwards, are we expecting the new challenge in a short period of time maintaining the minimum required balance?

— Shubham Shukla

It would be slightly difficult to answer the point, but what I will say is that Ministry of Railway has got huge plan for the station redevelopment they have got 200 stations.

— Rajesh Prasad

Now, if you see the turnover of the last three years FY19-20 which was 14,530 crores I am talking about the turnover and 2021 was affected by the COVID wave 1 21-22 was again affected by wave 2 and these two financial years we had the economic slowdown, but we exceeded all the physical performance and the financial targets in FY2021 then again we surpass in FY21-21.

— Rajesh Prasad

Sir, I just have one question see thing now is the company has been focusing on a domestic markets and now the focus seems to be on the international markets see what kind of project level risk that you expect in international market and how are we equipped to manage this risk?

— Prithvi Raj

So, how are the position to manage some country level risk in these international projects?

— Prithvi Raj

So, this is the idea behind having this 1 lakh crore order all the times and see it is very difficult to change the model earlier we were in a CAPEX arm or executing arm of Ministry of Railways contributing more than 35% of the railway infrastructure I think one year time we have changed our model.

— Rajesh Prasad

We have not only survived; we have not only exceeded the targets physical and financial during the COVID years and the period when the economy was slowdown.

— Rajesh Prasad

Q&A — 12 exchanges

Sir, in FY22 as you rightly said we had seen a physical construction of 1,020 kilometers of railway line, so will we seeing in FY23 that number being overtaken in the backdrop that as on date we are at 488 kilometers?

Rajesh Prasad

We had commissioned 1,020 kilometers to be precise enough and till date we have commission more than 488 kilometers and last year up to this period it was around 250 kilometers or 260 kilometers. So, if you compare with respect to the previous financial year yes we are on the upward trend this year we should cross this 1,000 kilometer again, but subsequently there could be a downward trend because we are getting the assignments from the market which are not the typical railway project, but this financial FY22-23 we are definitely going to touch this 1,020 kilometers we must exceed that. My nex

So, I wanted to ask about the update on Char Dham project because as per previous quarter MOR was yet to sanction the project, so can you shed light on that?

Rajesh Prasad

See the role and responsibility in Char Dham project given to RVNL was for the preparation of the feasibility, studies and the DPR which we have already done. The project is yet to be sanctioned, the ministry is yet to decide through what basis and through what procedure they would like to get it executed, but since we have got a expertise and experience of undertaking the project in the hilly terrain we are confident that whatever maybe the model we will be one of the players who will be considering very actively and executing this project this is number one. Number two we are executing this

Sir you have mentioned that we have already bagged 8,200 crores of orders in first half is it right?

Rajesh Prasad

Yeah what I have said is that till date we have participated in bidding for about 40,000 crores plus out of which we have bagged or we have become L1 to the extent of 4,000 crores. 4,000 or 8,000? Sorry 8,000 crore. 4,000 crore figure was Q1 after this Q2 it has become 8,200 crores plus. In your results in the foot note you have mentioned that we are waving some charges for KRCL, so in this Krishnapatnam Railway Company has said that we have entitled for departmental charges of 5% of total cost work and we have received representation from KRCL for waiver of this charges, so if we wave this ch

My question is regarding the shift in the Indian railways ordering process from nomination basis to tender basis, how will competitive intensity changed from both private as well as public players and how will our margins plan out from here on?

Rajesh Prasad

Just try to be slightly louder because the last part we could not hear from you. So, with the shift from nomination basis to tendering basis, how will competitive intensity changed from both private as well as public players and how will our margin get impacted due to this? So, first part is the nomination to the bidding. See this railway infrastructure projects are Rail Vikas Nigam Limited November 14,2022 complicated, complex and it requires a lot of integration and interface. RVNL has been pioneer in this. We had executed more than 120 projects for the Ministry of Railways and we were invol

So, can you just give me the order book position as of Q2 FY23 exact point if you can?

Rajesh Prasad

See I said we have got the three kinds of models. One model is the project which has been given on nomination basis by Ministry of Railways or by some other government so this will be around 50,000 crores and in FY22-23 we have got zero, but again we have signed an MoU with Government of Kyrgyzstan and their we are expecting an order of 20,000 crores in time to come. We have got the second model that is bidding from the market till date we are having 8,000 crores of new work, new projects which we have backed from the market. We are eyeing another 6,000 to 7,000 crores by March 2022 and SPV mo

Let me first quote public relation finance advisor what he said in investor call June 2022 around 2,500 to 3,000 crores is a real estate cash balance required for this business. Right now, as on Q2 2022 this year it is expanding around 3,600 crore, is it allowing that cash in hand is heading towards downwards, are we expecting the new challenge in a short period of time maintaining the minimum required balance?

Sanjeeb Kumar

No, we have the minimum required balance we keep getting our system is such that we work for the railways and every month we get the reimbursements so cash balances are not allowed. So, I have one more question so how revenue from execution work to segregate it like which segment in execution work brings a most benefit to the firm? Your voice is not at all clear to me you please tell again. How revenue from execution work is segregated which segments in execution works bring most business to the firm Actually our revenue model as you must be aware is on the railway work that we get we have a m

Sir, I have two questions the first question being for whatever bidding has happened you said you have bid for 40,000 crores worth of projects in the first 6 months if you can help understand what is it that what is the proportion of railways orders in this and whether let us say it is similar kind of orders were bid last year, what was our market share and whether we have been able to maintain the market share even at the competitive bidding space with railways itself?

Rajesh Prasad

We started bidding about a year back maybe slightly more than that and the 40,000 crores plus is the cumulative figure. So, maybe some will be in the previous financial year, but more than 90% will be during this financial year FY22-23 we have got the basically orders or we have become L1 that is around 8,200 crores so that makes around 20% of the strike rate. Coming back to your question that what is the percentage of the railway segment we want to remain connected with the Ministry of Railways, we want to remain very active executor, railway infrastructure executor, but unfortunately we have

Rajesh Prasad

Last question you please tell me again? So, how are the position to manage some country level risk in these international projects? See for the international project our focus was to remain confined to the railway infrastructure, metro and some project of importance by the Exim Bank or Ministry of External Affairs. So, we Rail Vikas Nigam Limited November 14,2022 have got the expertise of the railway infrastructure. So, if we are getting the projects in the railway infrastructure there will not be a problem. Second is the metro we are executing metro projects in Kolkata, Indore we are likely t

So, let me first explain you asked about Kyrgyzstan. See we had signed an MoU about a year back and there were four projects which were identified and the total number of kilometers involved in those projects was around 1,000 kilometer, costing around in terms of Indian rupees 20,000 crores. We have to get the DPR and before projects basically I do not remember the names of the projects. One project was of 225-kilometer, second project was 180 kilometer and the third project was for some ring railway and the fourth project was reconstruction. So, if you see and this will again impact RVNL in a

Management

If you can share us of various SPVs, what is the profitability for the 6 months and what is the amount of investment RVNL has in equity and debt in various SPVs?

Rajesh Prasad

I do not have all the figures, but briefly I will tell you that the equity participation varies from 30% to 50%. It cannot be more than 50%, it cannot be less than 26% as per the policy guidelines issued in December 2012. In Kutch Railway we have got a share of 50%, in KRCL 49.76%, in ASRL 32.70%, in BDRCL it is 35.46%, in HPRCL 30%. We have already commissioned four number of SPV, fifth SPV ASRL it is again a matter of price that we are going to commission in FY22-23 it will be a game change in transportation in Odisha and East Coast Railway, what exactly we will be doing is that it will impr

Sir, I had one question when I am seeing standalone and consolidated figures I see the revenues and expenses are same, but we get the share from JV, so it maybe some accounting concept anywhere?

Sanjeeb Kumar

In consolidated we have JV in which we are not it is not a subsidiary we have up to 50% or less as a share. So, there the only take our portion of their profits.

Very good evening and close this because I have got another Investors meet and if you are having any other question then you can mail it to the Company Secretary and then we will see what best we can do and then we will also send the answer.

Management

Speaking time

Rajesh Prasad

Moderator

Hardik Jain

Sanjeeb Kumar

Ash Shah

Shubham Shukla

Deepak Mehta

Jimit Tanna

Riken Gopani

Prithvi Raj

Opening remarks

Vishal Periwal

Thanks Chris and Good afternoon everyone and good afternoon to RVNL management and first of all thanks to the management for giving us this opportunity to host their Quarter 2 FY23 Earnings Call. From the management team we have with us Mr. Rajesh Prasad ji – Director (Operations), RVNL, Mr. Sanjeeb Kumar ji – Director (Finance), RVNL. As usual we will have a brief comment from the management on the gone by quarter and then we will open the lines for Q&A. Yes, Sir, Over to you.

Rajesh Prasad

So, if you see the performance of this particular company we had a turnover of 19,381 crores in FY21-22 this is excluding GST and for the first time we had crossed the mark of 1,000 crores in PAT that is the profit after tax and we had done the commissioning to the extent of 1,020 for the first time we cross the 1,000 route kilometers. So, what I wanted to say is that FY21-22 we had all-time high in physical as well as financial performance and then we have started FY22-23 in a very big manner. In first quarter we had a jump of turnover by 20% and then in Q2 this jump has again by 21% with respect to the turnover of Q2 of FY21-22. The profit after tax also increase from 551 crores to 750 odd crores that is an increase of 37%. The PAT also increase from 433 to 580 crore and then the commissioning the physical part I always connect both are linked. So, physically the commissioning part has increased and this year we have commission more than 488 kilometers and last year it was around 250

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